Guess whose numbers are in the freaking Wall Street Journal?

PHOENIX -- Along a 15-mile stretch of desert, amid strip malls and unfinished subdivisions, nearly a dozen giant warehouses sit silent and empty. They are relics of this city's dream of becoming a national warehouse hub, a
vision dashed by plunging imports and a reordering of the nation's biggest ports.

Decisions to site these warehouses were made earlier this decade as Americans were buying so many new cars, televisions and T-shirts that California -- the gateway for many Asian imports -- was running out of cheap storage space. With cash from pension funds and other investors, developers sought to turn the desert on the city's west side into a distribution hub, 370 miles from Los Angeles ports.

Oh, oh my god. We are having a tough enough time getting people to move 60 miles from the Ports of Los Angeles. 370 miles, really?

370 miles? 370 miles?

We have 25%+ vacancy rate with over 6 million added each year for the last 2 years.

If you have ever been to the Inland Empire, you realize that you don't have to go ALL THE WAY TO PHOENIX to find some vacant land.

In Phoenix, developers face headwinds beyond the drop in global trade. Shippers are increasingly turning to ports in Georgia, Virginia and Florida to transport goods bound east of the Mississippi, while space in the Inland Empire -- much closer to Los Angeles -- has become abundant.

"Instead of being the beneficiary of its location between Southern California ports and the East, Phoenix has become the victim," said Jeff Shell, head of corporate finance for real-estate brokerage Grubb & Ellis Co.

Feeding the commercial space boom were publicly traded real-estate investments trusts and private-equity funds that funneled cash from pension funds, endowments and other investors.

From 2001 through 2008, some $5.6 billion in industrial property deals were done
here, according to Real Capital Analytics Inc.

In a 2005 deal, Mr. Czerwinski paid $14 million for 300 acres of land 25 miles from Phoenix. Three months later, he sold the parcel for $24 million to a California developer, Voit Real Estate Services. Voit held on to the land for about a year before selling it to Duke

Realty Corp., an Indianapolis property company, for $36 million.

Duke Realty and SunCor Development Co., a subsidiary of Phoenix energy giant Pinnacle West Capital Corp., are among the developers stuck with big chunks of empty space. In Goodyear, 25 miles west of Phoenix, SunCor's year-old, 400,000-
square-foot warehouse features palm trees and rustic architecture but no tenants.
At the height of the frenzy, Phoenix brokers said, investors agreed to buy an empty warehouse for more than it cost to build it.

That is how LBA Realty, an Irvine, Calif., investment firm, ended up paying a reported $73 million for a four-building, 1.1-million square-foot complex early last
year.

And it is how ING Clarion Partners, the New York real-estate-investment unit of Dutch financial giant ING Groep N.V., ended up paying $44 million for a new, 700,000-square-foot complex around the same time.

Things like this make me think that at its heart, real estate is a giant Ponzi scheme. The music stopped and suddenly we realized we didn't have enough chairs. We didn't even have chairs, we had empty boxes 370 miles from anyone who cares. Each one a headstone to an ill conceived notion of endless greed and speculation.

Cheap money is a poor foundation for any viable business; strange things are allowed to grow when the normal constraints of economic reason are not applied.

What foundations am I talking about? The notion of scarcity. Leverage allows you borrow other people's money and take risks as if the money is free and without cost.

But money is in fact a scarce good, it does have a cost and it needs to be paid for. Leverage is great on the way up, but it burns on the way down.

And that is what we are stuck with today.