Margin Calls Are Coming on All Sides

I suppose the easiest place to start is that one of Donald Trump’s real-estate investor buddies is calling on the government to decree that real-estate investors shouldn’t have to pay their debts, that’s a thing that is happening:

Here’s the white paper. It’s fine, really, I could not resist a little sarcasm above but I don’t really object. We talked last week about a commercial real estate investor suing its bank to stop a margin call, and I said that my instinctive sympathies are with the bank—if your stuff loses value, you get a margin call—but I see the investors’ point. The Fed is trying to prop up … I was going to say “the commercial mortgage market,” but of course I really mean “every single financial market in the world all at once” … and margin calls and forced liquidations are not helpful for that mission. I don’t know what is, really; a ban on margin calls—a government decree saying “you can’t get your money back” (or “you can’t have price discovery,” etc.)—is not exactly good for confidence. Some sort of collective voluntary denial of reality—“we all feel so good that we won’t even ask for our money back, everything is great, la la la”—probably is good for confidence, but it’s harder to coordinate.