Self-Fulfilling Prophecy?

The Chrysler Building in New York City was recently sold to Dubai.

Anheuser-Busch was purchased by Belgian brewer InBev SA, a company essentially controlled from Brazil.

Properties in America, commercial and otherwise, are being sold left and right.

However, if you recall in the mid-to-late 80’s, everyone was concerned when Japan apparently went on a buying spree of properties in the U.S. Yes, Japan made many purchases and then Japan’s economy tanked and those purchases became later sales themselves.

Much of this movement is opportunistic. Property is cheap, and not just at the level of the individual home. The dollar is weak and those able to do so are taking complete advantage of this fact but on a larger commercial basis.

What is truly starting to become frightening is the portent of all of this: the rumbling roll of growing fear with regard to the weak dollar, the stock market, the price of a barrel of oil -- and now banks:

July 14 (Bloomberg) — U.S. stocks fell, sending financial shares to their lowest level since October 1998, on heightened concern that bank failures will spread.

Washington Mutual Inc. posted its biggest drop ever and National City Corp. tumbled to a 24-year low after last week’s collapse of IndyMac Bancorp Inc. spurred speculation that regional banks are short of capital. The companies said they’ve seen no unusual depositor activity. Fannie Mae and Freddie Mac erased an earlier rally fueled by Treasury Secretary Henry Paulson’s plan to help rescue the largest U.S. mortgage lenders. Alcoa Inc. jumped, limiting the Dow Jones Industrial Average’s drop, after Goldman Sachs Group Inc. advised buying the shares.”

Unfortunately, in the markets, perception and NOT truth is everything.

If people perceive banks are falling like a house of cards, they will. “Self-fulfilling prophecy” comes directly to mind.

There's a significant amount of grave concern about the banking sector,'' said T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York, the investment-banking arm of Canada's biggest lender. ``Now what we're having is solvency concerns.''

Self-fulfilling prophecy? More:

July 14 (Bloomberg) -- The U.S. Treasury Department's plan to shore up FannieMae and Freddie Mac is an "unmitigated disaster'' and the largest U.S. mortgage lenders are "basically insolvent,'' according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling.

Self-fulfilling prophecy? More:

PASADENA, California (Reuters) - Hundreds of worried IndyMac Bancorp Inc customers descended on the company's branches on Monday to withdraw their money, after regulators seized what was once one of the largest mortgage lenders in the United States.

Regulators took over the Pasadena-based lender on Friday after a bank run in which customers -- panicked over IndyMac's survival prospects -- withdrew $1.3 billion over 11 business days, regulators said.

We are on the potential cusp of a remarkable crash, not unlike 1929. And should this occur, it won't be because of reality -- it will be because of perception. In my opinion, this isn't anything we cannot resolve -- unless we choose not to.

New: Dollar drops to new low.

On the other hand, when I write that now might be a great time to buy ammunition, do you wager I am kidding?

BZ