Let's start by stipulating that I don't "like" this forecast. I'm not "talking my book" (for example, promoting nuclear power because I own shares in a uranium mine) or issuing this forecast because I favor it. I simply see it as the most likely trajectory of the global financial system, based on history and the dynamics of human systems. "Liking" it or not liking it has nothing to do with it: the opinions of Titanic passengers who didn't "like" that the ship was sinking didn't affect the outcome.

You already know the global financial system is untenable. In a nutshell, the expansion of production and consumption has been funded by the expansion of credit–money borrowed from future resources and income. The rate of expanding debt far surpasses the anemic rates of expanding production, and this rapidly expanding mountain of debt is perched precariously on the phantom collateral generated by The Everything Bubble, the astounding expansion of asset prices as those with the lowest cost access to credit have bid up every asset class, from real estate to gold to bitcoin to stocks to fine art.

All these assets are phantom collateral because they were bid up on the wings of cheap, abundant credit. History is rather decisive: all credit-asset bubbles pop, and the price of the assets round-trips back to pre-bubble valuations. As the bubble pops, credit shifts from being abundant and near-zero in cost to being scarce and dear.

The commercial real estate sector (CRE) is a real-time example of this dynamic. Half-empty buildings are being dumped at a fraction of their peak valuations, and then sold again for even less or abandoned to default and liquidation. This is how all bubbles pop; there is no other template supported by history. Humans cling to magical thinking and grasp at straws rather than face the unwelcome reality that the cycle has turned and there is no happy ending for those who believe the "real value" of an asset is the peak price at the top of the bubble.