By now, everyone knows that the housing market has been bad. Even here, I’ve talked about the problem with the housing market.

It’s now time to get ready for the next danger; the commercial real estate market is also on the verge of collapse. That’s what came from a report by the Joint Economic Committee, headed up by New York state congresswoman Carolyn Maloney. Their study concludes that if the banks don’t find a way to rework commercial loans by next summer, business owners could end up defaulting on properly to the tune of $700 billion; you read that correctly, and that’s considered a low estimate. With other losses, it could get pretty close to one trillion dollars; ouch!

Right now, commercial real estate debt is sitting around $3.5 trillion dollars. Businesses are suffering the same kinds of losses that everyone else is, and even though many businesses have pared down staff to try to keep up with the fast decreasing economy, they’re finding themselves having problems paying for the physical properties they have now. Even large mall owners are having problems, as one of them, General Growth Properties, the second largest mall company, filed for Chapter 11 bankruptcy protection in April; that’s scary.

Locally, we’re hearing that our biggest mall, right now called Carousel Center, but which was supposed to eventually become DestinyUSA, which would have been the third largest mall in the nation, has had to stop building because Citigroup has decided they don’t feel comfortable with what’s going on, and has stopped giving out the loans. In an interesting move, the mall property owner is suing them in state court, trying to get the courts to force Citigroup to give them a loan; that should prove to be interesting. If it gets passed, I think I’ll sue Donald Trump for the same thing.

Why is commercial real estate important to the rest of us? How about the estimated 9 million jobs that could potentially be lost if these businesses have to close their doors? If we thought unemployment was bad already, think about averaging nearly 800,000 people filing for state unemployment benefits being added on to what we’ve already lost?

I hate to be the bearer of bad news like this, but as Dr. Phil says, we can’t fix what we don’t acknowledge. The government is trying to do something, but it may not be enough. Frankly, this is probably scarier than what was going on in December and January; it’s going to take more than a stimulus package to pull us out of this mess.