Trump, Housing Inflation, and Regional Banks & Zombie CRE

Housing costs remain absurd, especially when considering the precariousness of employment for the typical upper-income American (lower-income Americans simply can't afford homes - period - and so they prove irrelevant, outside of a discussion regarding entitlement spending and subsidized housing).

Trump & Mamdani: Product of bin Salman and al-Thani detente

After reconciling "Team Blue" and its al-Thani faction with the Gaza peace deal, Mamdani could finally drop his mandate to demolish NYC real estate assets in an effort to hurt MbS' regime and instead collaborate with MbS' allies - Trump included.

Thus, the news of the Loew's heiress, Tisch, retaining her position as the eminence not-so grise (she's obviously in charge of NYC), illustrated the end of the Mohammad bin Salman - al Thani discord and its ramifications for Trump and Mamdani, respectively.

Trump & Mamdani: Fix Rents and Convert Zombie CRE

Trump mentioned that he and Mamdani "share some ideas". I'll tell you what they are: lower housing costs.

To this end, Trump and Mamdani agree to "flex" zoning: concretely, and best exemplified by the recent passing of HB 8002 in Connecticut, it means that towns and cities surrender control to the State, in exchange for the ability to add housing in towns and cities that previously restricted housing supply through "slow-rolling" the bureaucracy (e.g. one building inspector for a city of a few hundred thousand), parking restrictions for multifamily (two spots per home, for example), or other constraints that made high-density multifamily housing development economically and legally infeasible.

For Mamdani's base, they will see a significant increase in new units available for rent or purchase in urban areas or near mass-transit. For Trump's base, they ought to see the "3% mortgage crowd" finally sell their homes, either to developers or to escape the onslaught of "diversity" that comes when zoning rules get nullified.

In either case, as a Mamdani socialist or a Trump surivalist, the housing market will finally find itself refreshed with new supply: prices will go down.

What About Rents?

There is talk of a nationwide "rent freeze": however, rather than spooking the real estate markets in an already skittish investment environment, Trump's elite quietly blesses the suspension of zoning standards across major metro blue states and regions which face the most acute housing inflation costs.

Notably, Trump will NOT speak-out against CT HB 8002, for example, or other bills that overturn the zoning precious to his base, because to do so would eliminate the very necessary flexibility required to add capacity for housing in blue metro zones and only compound angst against the Trump administration.

Thus, there indeed is a "stealth collaboration" between Team Blue and Team Red, right now, in lowering housing costs for both buyers and renters.

Dropping Zoning & Zombie CRE: Regional Banks Have Powerful Friends

If one looks at bills akin to CT HB8002, it becomes very clear that the primary beneficiaries are the regional banks stuck with zombie CRE: with this renewed flexibility in zoning, otherwise "zombie" assets now become revivified into profitable development opportunities.

Team Red & Team Blue: Working Together to a Carbon Tax

This collaboration between Team Red and Team Blue will continue through the midterms, after which, we likely see the collaboration peak with the eventual passage of a nationwide Carbon Tax.

The bargain for Trump supporting a carbon tax is that Blue Metro zones will allow the expansion of natural gas infrastructure and consumption, but only on the condition that eventually Trump commits to ratifying a nationwide Carbon Tax.

After the Carbon Tax, the Love Ends

After the polarizing Carbon Tax and the complete disillusionment of Trump's base, the US likely could face renewed threats from Soviet antagonists, who clearly appreciate that America has no ability to draft an effective fighting force: remember, when Israel got hit by hypersonic missiles, those were Soviet missiles hitting land protected by the United States: we got hit, too, and we can get hit, again.

America's inability to draft an effective and motivated fighting force in fact remains her greatest weakness, and despite the indifference or casual suggestions of repression or coercion from the ruling men within the Administration, no serious solution exists to mobilizing a response to a Soviet push on Europe.

At least France acknowledges the late hour...