If You Thought the Housing Meltdown Was Bad… Doug Hornig, Senior Editor, (Casey Research):

…wait until you see what’s in the cards for commercial real estate.

That’s right, the next train wreck will be in commercial real estate. Couldn’t be worse than last year’s residential market crash? That remains to be seen. But it’s coming soon, probably as early as the second quarter of next year, and there’s nothing that can prevent it. The government will intervene, trying desperately to delay the day of reckoning, and may even succeed. For a while. But make no mistake about it, that train is going off the tracks no matter what.

Every part of the sector – from multifamily apartment buildings to retail shopping centers, suburban office buildings, industrial facilities, and hotels – has accumulated a huge amount of defaulted or nonperforming paper. It’s an impossible, swaying structure that cannot long stand.

Just ask Andy Miller.

Andy

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Hedge fund legend Julian Robertson is betting the farm against long-dated US Treasurys. As Notes readers will be aware, we have been banging the drum on the vulnerability of long-dated US debt for over a month now. But Robertson, of Tiger Management fame, has a different way to make this short long-term Treasurys play (hat tip Market Folly).

Robertson is shorting long-dated US debt using something called a steepener swap play. Although the mechanism of this trade may be unfamiliar, at heart it’s a simple bet on inflation.

Robertson reckons inflation could easily hit 7% and that it could even reach 18%. Again, Notes readers will be familiar with this market script. This from eFinancialNews:

Steepeners are a type of interest rate swap, where one party agrees to pay the other a fixed rate in exchange for

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pa href="http://feedads.googleadservices.com/~a/5R0IjqQAWslnfwIDim2ROCul2xA/a"img src="http://feedads.googleadservices.com/~a/5R0IjqQAWslnfwIDim2ROCul2xA/i" border="0" ismap="true"/img/a/pIn recent days it's been tit for tat between the White House and Jim Cramer the host of a href="http://en.wikipedia.org/wiki/CNBC" title="CNBC"CNBC/a's ia href="http://en.wikipedia.org/wiki/Mad_Money" title="Mad Money"Mad Money/a/ibr /br /Cramer’s claims: "Obama has caused the greatest wealth destruction I have seen by a president.”br /br /“I’m not sure what he’s pointing to, to make some of the statements,” responded the White House via the press secretary. The secretary even tried to marginalize Cramer -- pigeon-holing him to a niche audience, while Obama's audience "is the whole country."br /br /Cramer pointed to stock averages down significantly and associated "main street" savings and 401K plans suffering. Jim further pointed to the government's spending plans as the cause of such stock market depths.br /br /But then get this. Amidst all this jousting, span style="font-weight: bold; font-style: italic;"both men actually agree. Stocks are oversold./spanbr /br /President Obama: "Right ...

As the worst financial crisis since the Great Depression continues to worsen, decades of deregulation and the growing independence at the state level are being reversed as a deteriorating national economy forces the federal government to increasingly take on responsibilities that no other institution has the power or resources to handle.

This dismantling of the so-called “New Federalism” will be readily apparent again this week as the federal government is once again at the forefront of the most-closely watched  crisis-fighting initiatives at hand: With Congress pushing forward on an $827 billion stimulus plan and the Treasury Department planning to unveil its new banking bailout blueprint on Tuesday, economists and other experts say the federal government is taking its biggest role in the economy in a generation.

States that once pushed away from the federal government as part of the New Federalism are now essentially begging

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