Easy Money SunCal

Get this from the Wall Street Journal:

When the housing market was booming, Lehman Brothers Holdings Inc.'s bankrolling of a California land developer looked like the ideal marriage. Now, though, the mix of easy money and land speculation helps show why Lehman is scrambling to pare back its $40 billion commercial real-estate portfolio.

Lehman bet on the California real-estate market through its financing of SunCal Cos., a closely held developer that buys land, prepares it for houses and sells it to home builders. Flush with cash from Lehman and other Wall Street firms, SunCal acquired thousands of acres stretching from the desert to the Pacific Coast. ...

SunCal spokesman David Soyka says: "With the benefit of hindsight, it appears that everyone overpaid at the peak in this unprecedented credit crunch."

I just love that part.  I read it over and over aloud with different accents.

Others were clamoring for a piece of SunCal during the boom period. In late 2005, Lehman syndicated $320 million in loans on several SunCal projects.

The properties include the 2,000-acre McAllister Ranch in Bakersfield, Calif., which was supposed to give rise to 6,000 homes and a professional golf course. Today it is a shimmering expanse of construction debris and dirt, and is in default on some of its debt.

Lest we forget, there's that shimmering expanse of tens of thousands of acres of high desert edging our burque burg.  Lehman has a piece of that too, I hear said.  And to believe Forbes about it, they should be so lucky, what with how fabulous our housing market will be (because they say so).   Whatever. 

I hate to be a naysayer (yes I do really) but not so much.   The size of the crystal ball does matter. The  Forbes prediction could be crafted to cause a residual bounce of a couple more land flips to benefit somebodies.  But then I'm paranoid like that. 

One thing is for sure.  More of the same type of development  will not make Albuquerque thrive.  It will prolong the inevitable painful shift from our present "homebuilding" paradigm and suck more water and more energy and create more traffic.  Just as it has done everywhere else.  But it will make some people some money as they flounder out of overbuilt credit crunched markets elsewhere. 

And screw it up here last.