Linneman said a recession looked inevitable as long ago as 2005, when the market was at its peak, thanks to a combination of "excess, hubris and government mistakes." However, he asserted that by the traditional definition--two consecutive quarters of negative growth--the downturn did not begin in December 2007 but in the fourth quarter of 2008. As recently as last August, many US industries were still pulling in decent numbers. "Then the government decided to save us."

Treasury Secretary Hank Paulson's dire pronouncements turned a Wall Street panic into a Main Street one, Linneman asserted, while the constantly changing TARP game plan convinced the public that "nobody's home." As a result, a recession that was predicted to cost the US economy one million jobs and a 0.5% percent decline in GDP has already resulted in at least 2.5 million layoffs and a 3.5% drop in productivity.

Linneman likened the federal bailout efforts to triage, in which patients who are going to die regardless are not given medical attention. In the case of bailing out the Big Three automakers, he said, "We're giving blood to the dead." He added, "Show me a bailout that has ever worked. If it did, the fourth quarter of '08 would have been the booming-est ever."

Since the Obama Administration took office, Linneman noted approvingly, "We've gone almost two weeks without an overnight decision on who gets the money." However, he said the new administration's stimulus package was not likely to provide economic stimulus because it either would lead to projects that were not needed or, if directed toward infrastructure investment, would mean too long a term for the payoff.

As the spike in oil prices helped erode the economy, so its recent decline to $40 per barrel will help it recover, albeit with a lag. "That's the good news you don't hear about," Linneman said.

On a more local level, Andrew Simon, executive managing director of NAI Global's New York City office, predicted a continuing decline in asking rents and increase in vacancy, possibly reaching 15% to 17% when shadow space is factored in. He noted the 60% drop in Manhattan investment sale activity from '07 to '08, and said much of the dollar volume that did occur last year was due to the forced sale of Macklowe Properties buildings through Deutsche Bank.

As an example of current market conditions, Simon charted the recent history of two Macklowe assets that were on the verge of selling for $2 billion last summer: Worldwide Plaza and 1540 Broadway. The deal collapsed at the same time as Lehman Brothers did--partly because a scenario in which NBC Universal would take as much as 600,000 square feet at Worldwide Plaza did not pan out. More recently, the two properties were repriced at $1.2 billion, but together failed to attract bids higher than $750 million.