The debates lately have focused a lot of attention on taxes and interest rates, specifically how the 0% interest rate policy has hurt income growth but helped Wall Street. Everyone here has seen steady and healthy deal flow, but it raises an interesting question: how will analysts and associates fare when rates are raised, or tax loopholes closed, because these will undoubtedly have impacts on the ability (ease?) of raising debt and equity, or finding buyers.
Blackstone just bought that huge housing complex from Fortress, which was the same transaction that occurred with Tishman before the housing crisis. I've only been working since 2012, so I've only really seen deals happen in this financial environment. I can't help but think current inputs in the equation (interest rates being raised, tax loopholes and treatments being closed, extremely high valuations inflated by rates, wage stagnation which cannot feed rent growth assumption) will lead to some kind of correction or collapse in values through defaults, leading to tons of analysts and associates being laid off.
If you look even further, you see many problems in other sectors, like huge corporations missing earnings targets, or targets only being hit through financial engineering. Wouldn't this also lead to commercial tenants maybe needing to reduce space, or be unable to meet expected rent growths. It all looks like a big circle that would fall apart when 1) tenants (res and commercial) can't meet underwritten assumptions and 2) rates and tax breaks no longer suffice to fix gaps in making deals work.
This is a pretty big picture question, so I'm hoping some users with experience pre-2008-2006 might be able to chime in with their insights or opinions. Or has this kind of talk always been flung around by politicians/the fed?
