It's been 13 long months since the credit crisis was unleashed by a spate of subprime defaults and still no end in site. Of course, the lending fiasco has spread well beyond subprime to other types of residential and commercial loans as well as various corporate transactions. Financial institutions have very little money to lend while it appears cleaning up their balance sheets may take considerably more time. It's a delicate balancing act. If they could find all the dreck and recognize all the losses at one time, many banks could crater. If regulators push banks too hard they may create greater fears and more problems. The Fed has had a tough enough time keeping Freddie and Fannie above water while hoping a big money center institution doesn't go sideways on them like Bear Stearns. And Ben Bernanke may be running out of fingers to plug all the holes in the dikes.

So that's why we haven't seen much movement off near record low commercial default and foreclosure rates. Everybody is buying time extending forbearance rather than forcing refinancings at more difficult terms or dropping the hammer and raising too many balance sheet red flags. If the economy manages to rebound and property cash flows don't deteriorate then many borrowers may have a chance to skate through. But if tenant and consumer demand continues to fall off then bankers and special servicers may have no choice but to get tough.

This drama has a long way to go.

You have to feel for all those people in New Orleans. Thankfully they dodged this latest hurricane after a massive evacuation. As noted in this space before, the city faces heavy, if not impossible, odds in restoring itself. Put aside the fact the Crescent City sits at the bottom of a man-made bowl, one major storm away from another catastrophe and possible oblivion. New Orleans also confronts major economic hurdles not the least of which are overcoming its location off global pathways in the shadow of Dallas and Atlanta as well as its pre-Katrina loss of most of its key energy company operations to Houston. At this point would any major business locate there? Gustav just reminds everyone how vulnerable and weakened this market has become. The Bourbon Street scene will take this city only so far.

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Jonathan D. Miller

A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.