The boom went bust in 2008, and banks incurred huge debts from bad real estate loans while the economy slowed, the jobless rate increased, and consumer spending stalled.
What we need is for the Fed and the Administration to unleash capital trapped in bad real estate to restart sustainable job creation and economic growth in this new, asset-light, Internet-based world.
FORBES: A Monster Real Estate Paradigm Shift Demands A New Direction for Capital
Bankia was created just 17 months ago by the merger of seven regional savings banks in an attempt to shore up their combined defences against the bad real estate loans, worthless building land and unsold apartment blocks they had accumulated.
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"Stuyvesant was not necessarily a reflection of the bad real estate market, but rather over-ambitious assumptions, lack of risk controls and poor contingency planning, " explains Burt White, managing director of research and chief investment officer of LPL Financial, further asserting that the bottom dropped out of the market months ago.
The collapse of Lehman Brothers Holdings Inc. in 2008 was partly due to bad real-estate deals.
But still, an all-debt floating-rate purchase does bring back memories of the bad old days of real estate.
The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.
Still burdened with bad loans left over from the real estate crash in the early 1990s, banks are slashing lending.
And, of course, tighter inventory and lower sales are bad news for many in the real estate industry who depend on sales.
Accept that losses will be higher than initial estimates, as bad loans come in waves with corporate real estate first, then unsecured credit, then small business loans, and finally residential mortgages.
What makes this story more than simply one of a massive real estate investment company gone bad is the double-edged sword so prevalent in the chase for oil-based Middle East wealth: sovereign wealth funds and Shariah-compliant finance.
Focusing on those markets should help Wal-Mart get past the mistakes that forced it to fold its tent in South Korea, where poor real estate choices gave it bad locations, and in Germany, where it misread the local norms for shopping hours and labor laws.
Commercial real estate loans could be as bad as feared and take down a few hundred banks in 2010.
In real estate, for example, the bad news is not yet fully priced-in.
Whether it's buying Internet stocks, or speculating on real estate, lots of people can make very bad investment decisions or fall for scams.
One part ("the bad bank") will assume all the residential and commercial real-estate loans and securitized mortgages as assets, and all the long-term debt as liabilities.
Buyers also are hoping to see more sales this year by the so-called bad banks being formed by national governments primarily to dispose of distressed real estate.
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Her goal: to pay down her mortgage and replace some of the income she lost when a real-estate loan she had made on another property recently went bad.
Japan's real estate market collapsed, the country's banks were paralyzed by bad debt, and for 15 years Japan was economically stalled.
Bad REITs Our Aug. 10 story on mortgage REITs warned that this brand of real estate investment trust was ripe for a crash.
The signature of a New York real estate developer who worked with Stern, Joshua Safrin, was also on the Citigroup bad boy guarantees, but Safrin claimed his signature had been forged and Citigroup seemed to believe him, stopping its lawsuit against Safrin.
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