Turning further

Investors will this week be offered the chance to buy a novel security backed by thousands of foreclosed homes across the US purchased by the private equity giant Blackstone and converted into rental properties.  The sale will be closely watched by bankers, hedge funds and private equity firms, with a belief that strong demand for the bonds could give birth to a new asset class and provide a fresh source of capital to finance their purchases of foreclosed houses in the US…

Read more here:
Blackstone tests waters with the first security backed by rented homes

Again we see history repeating here.  Compare the above to what happened out of the 1970’s land-price-led downturn and also in the 1990’s; it is almost exactly the same.  This is clearly detailed in Secret Life.  Wall Street is very good at this process.  It is effectively refloating all the bad loans of the prior downturn.  And the cycle turns further out of the low point. 

(PS, I am not passing judgment on the morality or otherwise of such Blackstone actions, or whether one agrees with it all or not; I am just trying to show you how relatively simple it is to identify the repeat of the cycle and what it reveals for moving forward into the next part of the cycle.  We are going to get a repeat.) 

Meantime, St Joe, one of the largest property owners in Florida, has just reached a deal to sell some 384,000 acres – the majority of its rural (forest) land in Florida – to AgReserves, a land development company.  (Sold for 565 million, or $1476 an acre.)  Seems to me that’s quite a few acres to plat into the next cycle.  No shortage of land there.  AgReserves, by the way, is the land development arm of the Church of Jesus Christ of Latter Day Saints.  So you can see; the very institutions that perhaps ought to be reminding us of the natural laws, are right in there amongst it.