A report says that a very large number of commercial real estate loans are underwater, and commerical mortgage modification is on the horizon.
Undoubtably, that modification could be “means tested” in the sense that successful businesses would be ask to pay more, and means tests are expected to reduce economic activity. (On the other hand, commercial mortgages might be large enough that lenders could gather the necessary information about borrowers, without having to use borrower income as a proxy).
However, consumer spending and business investment seems to be too high right now to reflect an expectation of widespread layoffs in 2010 or 2011. That’s why I have concluded that labor is about close to the bottom now, and GDP has already hit bottom.