Bailout for Greece

It may not be pleasant to contemplate the bailout of an entire nation--Greece, of course--but at least the U.S. Treasury isn't expected to foot the bill on this one. Rather, "Europe" is going to take on the job, which is to say Germany, with other euro-zone nations along for the ride.

February 10, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user matze_ott

It may not be pleasant to contemplate the bailout of an entire nation–Greece, of course–but at least the U.S. Treasury isn’t expected to foot the bill on this one. Rather, “Europe” is going to take on the job, which is to say Germany, with other euro-zone nations along for the ride. The details of the German plan to offer the Greeks a kind of Euro-TARP haven’t been hammered out yet, however.

Greek debt is a serious problem. Greece’s latest national budget deficit is 12.7 percent of GDP, more than four times the limit supposedly allowed as a country that uses the Euro as its currency.

Is this the beginning of the end for that experiment in financial pan-Europeanism, the Euro? Maybe not, but investors are betting that the currency is going to take a beating. According to the Financial Times, currency speculators have made about $7.6 billion in Euro shorts in recent weeks, the largest volume of bets against the currency in its brief history.

Elbit Imaging on the Hunt for U.S. Retail

Through its subsidiary Plaza Centers N.V. and a newly created JV partner, Elbit Plaza USA, the Israeli company Elbit Imaging Ltd. has inked a deal with Eastgate Property L.L.C. to invest in U.S. commercial estate, mainly retail properties. The partners will invest about $200 million between the two of them, with each putting in about half of the total.

The partners are looking to buy low, maximize value, and someday sell high. “We believe that the new fund will be ideally placed to take advantage of the current dislocation in the U.S. financing and real estate markets,” Ran Shtarkman, president and CEO of Plaza Centers, posited in a statement. “We currently have an opportunity to acquire high-quality operating properties at very attractive valuations not seen in the recent past, with potential for significant appreciation.”

Simultaneously, Plaza Centers tapped Alex Berman as CEO of Elbit Plaza USA. Before joining Elbit Plaza, Berman was head of GGP International, where he oversaw the overseas growth of mall giant General Growth Properties, back when it was growing.

MBA Quits DC HQ

Details about the sale of 1331 L Street in Washington DC have been emerging recently, and they don’t reflect well on the real estate judgment of the Mortgage Bankers Association. The trade organization bought the property for $79 million in early 2007 as its shiny new HQ, borrowing most of that total to make the deal happen.

Last week, the organization sold the building to a real estate research firm for $41.25 million. Whether or not the MBA will be paying any part of the difference between the 2007 buy and 2010 sell figures isn’t clear, because borrower and lenders (a group lead by PNC Financial Services Group Inc.) aren’t talking about the deal they struck.

As an industry, mortgage bankers have been quick to lecture underwater homeowners about their moral duty to keep making payments on mortgages that make no financial sense for them. What’s the likelihood that the MBA has taken those admonitions to heart and paid off its entire bubble-era debt?

Wall Street seemed happy that Greece was someone else’s problem, with the Dow Jones Industrial Average closing up 150.25 points on Tuesday, or 1.5 percent. The S&P 500 shot up 1.3 percent and the Nasdaq gained 1.17 percent.