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This is the first in a series of articles designed to showcase the historical predictive success of BoomBustBlog and the research team behind it. We will detail several research topics from devastating bank failures to cataclysmic macro events, to unseen monopolies in the making - all to illustrate the value of BoomBustBlog relative to the mainstream media, specialized financial and business media, sell side Wall Street analysts and even think tank and regulatory bodies.

We will kick off this series with our research on what was the 2nd largest commercial REIT in the United States...

BoomBustBlog Coverage on General Growth Properties Inc.

Realizing the impending crisis in commercial real estate and the deteriorating economic fundamentals in the US, BoomBustBlog, written by Reggie Middleton, pointed out the trouble General Growth Properties Inc. had and its impact on its stock price in an article (BoomBustBlog.com's answer to GGP's latest press release), early in 2008. According to the article, the possibility of GGP filing bankruptcy was rising with debts payment falling due. The article was published in January 2008, 15 months before GGP filed for Bankruptcy.

Comparison Matrix

Key Highlights:

BoomBustBlog

Reggie Middleton, through his articles, provided comprehensive and some of the earliest warnings about a challenging operating environment for GGP in the wake of deteriorating macroeconomic environment in the US and the Company's substantial financial debt liability. Based on his analysis GGP, a highly leveraged firm was heading into a refinancing-induced liquidity crunch and might have to file for Bankruptcy. Some of the critical points, as highlighted by Reggie, which eventually led to GGP filing for Bankruptcy, includes:

• Declining rentals of commercial real estate pushed by a slowdown in US consumer spending and a rising unemployment rate
• Tightening credit market resulting in refinancing challenges for the huge debt liability for GGP
• The increasing interest burden on the huge debt obligation and inability to outperform in a tight operating environment
• Low capitalization rates for the properties acquired in 2006-2007 (they simply overpaid by buying at the top of a bubble)
• Falling Stock prices owing to a slowdown in the commercial real estate sector
• The distress caused by loose a lending market and sub-prime mortgage crisis
• Insiders trading activities

The Wall Street Journal

In its first article published in October 2008, WSJ hinted of probable distress in GGP as GGP replaced its chief executive officer and president in a bid to keep its debt load from dragging the Company into Bankruptcy.

In the second article published in January 2009, WSJ pointed the likelihood of a bankruptcy filing for mall giant General Growth Properties Inc., threatening to overlay one of the biggest real-estate bankruptcies ever as GGP was struggling to pay US$2.6 billion credit which was about to mature.

Notably, Reggie had pointed out these facts many months before the article released by WSJ, with his first articles released in the beginning of 2008. At the end of Q4 2007, GGP had US$2.6 billion of debt maturing in 2008. At the end of Q1 2008, GGP had USD2.8 billion due.

Reuters

In its article published in April 2009, right after GGP filing for Bankruptcy, Reuters discussed the reasons leading to Bankruptcy.

Reuters pointed out the failure of GGP to restructure its debt of USD27.29 billion due to the ongoing global financial crisis.

Reuters also pointed out the Bankruptcy of GGP could signal further troubles for other financial institutions who are General Growth creditors.

Notably, Reggie Middleton, in his article in BoomBustBlog, had already pointed this out over a year earlier - that GGP was finding challenges in refinancing its debt obligations due to tightening credit market.

The New York Times

In its article published in April 2009, right after GGP filing for Bankruptcy, The New York Times pointed out the reasons that let GGP file for Bankruptcy.

NYT pointed out that General Growth's Bankruptcy was widely expected as the commercial real estate market was weakening, and GGP was unusually dependent on mortgage financing, as its debts totaled US$27 billion.

NYT also pointed out that GGP could not persuade investors who own more than US$2.25 billion of its bonds to waive payments due in 2009 as debt maturities mounted.

According to NYT, the fall of GGP was seen as a looming crisis in commercial real estate.

Business Insider

In its articles published in December 2009, after 8 months of GGP filing for Bankruptcy, Business Insider pointed out the comparison between the two case studies published by Bill Ackman and Hovde Capital and also stating their facts, that led GGP file for bankruptcy.

Bill Ackman presented the report with its bullish views on the malls and retailers which according to the Hovde Capital are wrong and proved to be wrong. But according to Whitney Tilson’s rebuttal article, the Hovde’s bearish case paints an inaccurate picture of rapidly declining financial performance, then misstates NOI, and then applies an inappropriate capitalization rate a rare trifecta of poor analysis. Also what Whitney Tilson’s said in its article is that, GGP based on their belief that the Company is very likely in the near future to either exit bankruptcy or be acquired.

This is the first in a series of articles designed to showcase the historical predictive success of BoomBustBlog and the research team behind it. We will detail several research topics from devastating bank failures to cataclysmic macro events, to unseen monopolies in the making - all to illustrate the value of BoomBustBlog relative to the mainstream media, specialized financial and business media, sell side Wall Street analysts and even think tank and regulatory bodies.

We will kick off this series with our research on what was the 2nd largest commercial REIT in the United States...

BoomBustBlog Coverage on General Growth Properties Inc.

Realizing the impending crisis in commercial real estate and the deteriorating economic fundamentals in the US, BoomBustBlog, written by Reggie Middleton, pointed out the trouble General Growth Properties Inc. had and its impact on its stock price in an article (BoomBustBlog.com's answer to GGP's latest press release), early in 2008. According to the article, the possibility of GGP filing bankruptcy was rising with debts payment falling due. The article was published in January 2008, 15 months before GGP filed for Bankruptcy.

Comparison Matrix

Key Highlights:

BoomBustBlog

Reggie Middleton, through his articles, provided comprehensive and some of the earliest warnings about a challenging operating environment for GGP in the wake of deteriorating economic fundamentals in the US and the Company's substantial financial debt liability. Based on his analysis GGP, a highly leveraged firm was heading into a refinancing-induced liquidity crunch and might have to file for Bankruptcy. Some of the critical points, as highlighted by Reggie, which eventually led to GGP filing for Bankruptcy, includes:

• Declining rentals of commercial real estate pushed by a slowdown in US consumer spending and a rising unemployment rate
• Tightening credit market resulting in refinancing challenges for the huge debt liability for GGP
• The increasing interest burden on the huge debt obligation and inability to outperform in a tight operating environment
• Low capitalization rates for the properties acquired in 2006-2007
• Falling Stock prices owing to a slowdown in the commercial real estate sector
• The distress caused by loose lending market and sub-prime mortgage crisis
• Insiders trading activities

The Wall Street Journal

In its first article published in October 2008, WSJ hinted of probable distress in GGP as GGP replaced its chief executive officer and president in a bid to keep its debt load from dragging the Company into Bankruptcy.

In the second article published in January 2009, WSJ pointed the likelihood of a bankruptcy filing for mall giant General Growth Properties Inc., threatening to overlay one of the biggest real-estate bankruptcies ever as GGP was struggling to pay US$2.6 billion credit which was about to mature.

Notably, Reggie had pointed out these facts much before the article released by WSJ. At the end of Q4 2007, GGP had US$2.6 billion of debt maturing in 2008. At the end of Q1 2008, GGP had USD2.8 billion due.

Reuters

In its article published in April 2009, right after GGP filing for Bankruptcy, Reuters discussed the reasons leading to Bankruptcy.

Reuters pointed out the failure of GGP to restructure its debt of USD27.29 billion due to the ongoing global financial crisis.

Reuters also pointed out the Bankruptcy of GGP could signal further troubles for other financial institutions who are General Growth creditors.

Notably, Reggie Middleton, in his article in BoomBustBlog, had already pointed out that, GGP was finding challenges in refinancing its debt obligations due to tightening credit market.

The New York Times

In its article published in April 2009, right after GGP filing for Bankruptcy, The New York Times pointed out the reasons that let GGP file for Bankruptcy.

NYT pointed out that General Growth's Bankruptcy was widely expected as the commercial real estate market was weakening, and GGP was unusually dependent on mortgage financing, as its debts totalled US$27 billion.

NYT also pointed out that GGP could not persuade investors who own more than US$2.25 billion of its bonds to waive payments due in 2009 as debt maturities mounted.

According to NYT, the fall of GGP was seen as a looming crisis in commercial real estate.

Business Insider

In its articles published in December 2009, after 8 months of GGP filing for Bankruptcy, Business Insider pointed out the comparison between the two case studies published by Bill Ackman and Hovde Capital and also stating their facts, that led GGP file for bankruptcy.

Bill Ackman presented the report with its bullish views on the malls and retailers which according to the Hovde Capital are wrong and proved to be wrong. But according to Whitney Tilson’s rebuttal article, the Hovde’s bearish case paints an inaccurate picture of rapidly declining financial performance, then misstates NOI, and then applies an inappropriate capitalization rate a rare trifecta of poor analysis. Also what Whitney Tilson’s said in its article is that, GGP based on their belief that the Company is very likely in the near future to either exit bankruptcy or be acquired.

 FT.com reports: Central banks flip to gold sales after record rally

Henry Sanderson in London AN HOUR AGO 2 Print this page Central banks became net sellers of gold in August for the first time in a year and a half, in the latest indication that demand for the metal is slowing following a record-setting rally.  Global central banks sold a net 12.3 tonnes of gold over the month, according to estimates published on Wednesday by the World Gold Council, an industry-backed body. The shift came just as the precious metal reached a record high above $2,070 a troy ounce in early August. It has since fallen more than 8 per cent to $1,890 per ounce. The latest data reflect the pullback of some major buyers as countries free up resources to deal with the coronavirus crisis. “All central banks around the world are facing a lot of pressure for liquidity,” said Bernard Dahdah, an analyst at Natixis in Paris. “Now is not the time to hoard gold, the hospitals need the money,” he said. Uzbekistan led the sales, exporting $5.8bn worth of gold in the first eight months of the year, according to government statistics. Central bank purchases have been a lesser factor in this year’s surge in gold, which has been dominated by record demand for gold-backed exchange traded funds. Global investors have poured more than $60bn into such ETFs so far in 2020. But central banks have still bought between 200 and 300 tonnes, according to the WGC’s estimates — worth about $13bn at the lower end, on current prices.

Eurasianet reports: Uzbekistan pins economic fightback on gold sales

The State Statistics Committee revealed on September 21 that the country had exported $5.8 billion of gold in the first eight months of this year. That accounted for half of exports-based revenue.

Just to put that in context, Uzbekistan exported $4.9 billion worth of gold over the whole of 2019 – an amount that then accounted for 27.5 percent of trade turnover.

Uzbekistan became the world’s leading exporter of gold in July, easily outstripping Mongolia’s 6.1 tons with its 11.6 tons of sales. In August alone, it sold $2.5 billion worth of gold. Over the entire duration of 2015, it sold $1.9 billion worth of the metal.

... “The price of gold is at its peak, and economic activity has sunk to its nadir, so I think right now it is necessary to sell gold and foreign exchange reserves, and to use these funds to urgently save the economy from a further decline and to avoid more unemployment,” Nazirov (director of the Capital Markets Development Agency) said.

... Uzbekistan’s external debt burden has surged too. As of July 1, it stood at $17.3 billion, still only equivalent to what is generally deemed a highly manageable 30.3 percent of gross domestic product. It rose by $1.6 billion since the start of the year.

Uzbek economic expert Navruz Melibayev told Eurasianet that while gold is a lifesaver for Uzbekistan in how it generates revenue and helps bridge the trade deficit, reliance on it can only be a time-limited fix.

“We still need to develop industry and other spheres of the economy. Betting on the sale of gold is a temporary measure necessitated by the pandemic and rising prices for this metal,” he said.

The net sale of gold by central banks likely contributed greatly to, if not caused, the 8% drop in the price of gold - which has still risen 30$+ year over year. Of interest will be what happens next. Once the revenues from the gold sales have been used, there is no other ready source of liquid capital for many of the smaller and weaker nations, despite the fact that much of the world is going into a second phase of the COVID disease and related economic contractions. 

 

If I were a gambling man, I would wager the purchase of the gold form these central banks in need may be a worthwhile endeavor...

See what we have recommended central banks in highly inflationary countries do with their gold and our distributed tokenized gold system. It's almost as if we were able to predict this would happen (click a graphic to download and view).

NY Mag reports: Citigroup received the most federal funding during the financial crisis for a total of $476.2 billion in cash and guarantees. Next in line for a bailout was Bank of America with $336.1 billion. But between the billions in convenient funding and millions in settlements for failing to disclose risks and losses, the banks have definitely learned their lesson, right? Not according to the panel:

“Very large financial institutions may now rationally decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss,” the report concluded. “Ironically, these inflated risks may create even greater systemic risk and increase the likelihood of future crises and bailouts. 

 The bank was bailed out in 2008. The article above was published in 2011.It is now 2020. Did Citibank (or for that matter Bank of America, or for that matter any other "Too big to fail" bank) learn their lesson? The answers are "Hell no!" for Citibank (see below), "Absolutely not!" for Bank of America and "Nah!" for JP Morgan and everyone.

Here's a quick four minutes that will walk you through whats going on in 2020. 

Methodology for scrubbing the misleading reporting of Citibank:

• Step 1: Calculated the average Provision for credit losses quarterly during 2007-2009.
• Step 2: Calculated the average of Total delinquency quarterly during 2007-2009.
• Step 3: Calculated the average delinquency as a percentage of Provision for credit losses.
• Step 4: Calculated the average Provision for credit losses in Q2 2020, using adjusted delinquency in Q2 2020, divided by the average delinquency as a percentage of Provision for credit losses during 2007-2009. 

 The results? Uh Oh! We've seen this movie before, haven't we? Just send this information viral, and remember where you heard it first. We want the credit!

There's a lot more to see in the upcoming weeks. Stay tuned!! See also: Analysis of JP Morgan's Horrible, Terrible, No Good 2nd Quarter and 

A list of Reggie Middleton calls from the past....

 Is this the Breaking of the Bear?Joe Lewis on the Bear Stearns buyoutBSC calls are almost free and the JP Morgan Deal is not signed in stoneThis is going to be an exciting, and scary morningAs I anticipated, Bear Stearns is not a done deal

1. Correction, and further thoughts on the topicandHow Far Will US Home Prices Drop?
2. (not a single sell side analyst that we know of made mention of this very material point in the industry):Lennar, Voodoo Accounting & Other Things of Mystery and Myth!

3. (2 months before Bear Stearns fell, while trading in the $100s and still had buy ratings and investment grade AA or better from the ratings agencies):Is this the Breaking of the Bear?|Joe Lewis on the Bear Stearns buyoutMonday, March 17th, 2008:BSC calls are almost free and the JP Morgan Deal is not signed in stoneMonday, March 17th, 2008 |This is going to be an exciting, and scary morningMonday, March 17th, 2008 |As I anticipated, Bear Stearns is not a done dealTuesday, March 18th, 2008 []

4. :Is Lehman really a lemming in disguise?Thursday, February 21st, 2008 |Web chatter on Lehman BrothersSunday, March 16th, 2008 (It would appear that Lehman’s hedges are paying off for them. The have the most CMBS and RMBS as a percent of tangible equity on the street following BSC. The question is, “”. I’m curious to see how the options on Lehman will be priced tomorrow. I really don’t have enough. Goes to show you how stingy I am.) |I just got this email on Lehman from my clearing deskMonday, March 17th, 2008|Lehman stock, rumors and anti-rumors that support the rumorsFriday, March 28th, 2008 |It appears that I should have dug deeper into Lehman!May 2008
5. :
   
   1. Will the commercial real estate market fall? Of course it will.
   2. Do you remember when I said Commercial Real Estate was sure to fall?
   3. The Commercial Real Estate Crash Cometh, and I know who is leading the way!
   4. Generally Negative Growth in General Growth Properties - GGP Part II
   5. General Growth Properties & the Commercial Real Estate Crash, pt III - The Story Gets Worse
   6. BoomBustBlog.com’s answer to GGP’s latest press releaseandAnother GGP update coming…(among over 700 pages of analysis, review the January 2008 archives or search for “GGP” for more research).
6. Municipal bond market and the securitization crisis – part 2
7. The collapse of the regional banks (32 of them, actually) in May 2008:As I see it, these 32 banks and thrifts are in deep doo-doo!as well as
9. : “Can You Believe There Are Still Analysts Arguing How Undervalued Goldman Sachs Is? Those July 150 Puts Say Otherwise, Let’s Take a Look”,“When the Patina Fades… The Rise and Fall of Goldman Sachs???“andReggie Middleton vs Goldman Sachs, Round 2)
10. (potentially soon to be the Global Sovereign Debt Crisis) starting in January of 2009 and explicit detail as of January 2010:The Pan-European Sovereign Debt Crisis
11. :I Suggest Those That Dislike Hearing “I Told You So” Divest from Western and Southern European Debt, It’ll Get Worse Before It Get’s Better!
12. , May 2010:More on the Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars!»