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When a referee flips a coin on the football field, we are not surprised that the outcome is either heads or tails. However, the lack of a surprise does not mean we can predict a coin toss.

Similarly, asset valuation bubbles are often identified during the inflationary stage, yet predicting when and why bubbles burst is nigh impossible. Consternation about the housing and commercial real estate bubble was widely reported in the media during 2005 and 2006. The dire predictions slowed but a few.

During asset bubbles, herding behavior is often done unwittingly.  It’s the same people sharing the same ideas, all drinking the Kool-Aid together.

That the global banking system may enter into liquidity crisis should not be a surprise to most readers of financial news. While Europe is an obvious flash point for a worldwide liquidity crisis, we know that sovereign risks exist globally. All the banking titans tell us not to worry about their august institutions.

The rub is in predicting where and when the crisis will occur. The catalyst to another banking meltdown might be less economic and more geopolitical, such as potentially destabilizing strategies employed by Iran and Syria. Most commercial real estate investors should not be surprised if (when) a liquidity crisis occurs, but they don’t want to be caught swimming naked when the tide recedes.