American real estate market crashing - could stagflation be the outcome?

Question:

Answer:

1. increasing nominal cost of debt
2. aggrevated real costs of short debt
3. dimished and deteriorating consumer purchasing power
4. increase in the cost of equity (due to valuations)
5. increased risks associated with debt burdens related to failures/distressed debt
6. decreasing costs of real wages in the short term related to rising unemployment
7. PP&E: the P&E portion (plant and equipment) impacted by depreciation effects; more costly to replace depreciation in both nominal and real terms
8. The P portion (property) unaffected in terms of balance sheet valuations for property held (an accounting artifact), but diminishing as property is disposed of longer-term (but still a gain to book-value for most property) Note, this is exclusively commercial property, not housing

• Winner: Larger M&A activity because well capitalized companies will have an opportunity to acquire at smaller premiums. Most of my work is M&A related today, and accelerating.
• Winner: M&A related lawyers, because more companies will implement poison pills, etc trying to stave off takeovers
• Winner: Quality VC firms and PE firms as capital havens. Probably more PE activity in M&A space. But, a weeding out of low quality VC/PE
• Winner/Loser: LBO firms; probably more LBOs (publics taken private) in the short-term, but dying out as debt becomes too costly for the mechanics to work. Note, this is complicated by SOX (Sarbaines Oxley)
• Winner: Energy companies and many commodities
• Loser: A ton of hedge funds. (Maybe this is wishful thinking). But at least a real test for HFs
• Winner: Ultra wealthy individuals who can exploit a lot of the above…these are the guys who are limited partners of quality VCs, investors in PEs, etc.
• BIGGEST LOSERS: consumers. Stagflation is a terrible draining of wealth out of consumers pockets and very real hardships in terms of unemployment
• Winner or Loser? The (American) government. There are ood arguments for both directions. The (American) government “won” in the 70s (more tax revenues), lost in the 80s (less tax revenue). But the government is a lot more than economics, so I defer this to greater political discussion (the government got much worse in the 70s, a good bit better in the 80s, in my opinion). Both were stagflation cycles.