There are really two principal things.
One is the debt ceiling in the U.S. This political theater is going to come to a head over the next couple of months. Partizanship in the United States is a blood sport and using history as a guide, deals are usually done 5 minutes to midnight to raise the debt ceiling.
The bottom line is that if a deal is not struck, it will be very bad. Basically, you will see jobs that are lost. You will see people won't get paid. So basically, there will be an instant recession and you're going to see the credit worthiness of the U.S.
Treasury be downgraded, the reputation of the United States be downgraded. It will be very bad. So we hope that level heads will prevail on the debt ceiling.
This is really the major issue right now, of course, is these regional U.S. banks. These banks are predominantly lending to small medium enterprises, SMEs. These small medium enterprises
constitute more than 50% of employment in the US. They are the backbone to the American economy.
What we have right now is is a beautiful book of run on regional banks. So you've got scares on deposits, you've got credit conditioning, credit conditions that are tightening.
What a lot of people don't realize is that these regional banks in the U.S., part of their asset base is about 25% and 25 to 30% in commercial real estate loans. And, if you look at the too big to fail banks in the U.S., like the Jp morgan's the Bank of America's of the World, they have about 6% in commercial real estate loans.
So the sick kids on the block are office shopping centers. And there's other parts of real estate
that are starting to fall apart.
