As I noted in my previous blog, I'm having that strange quiet feeling you get before a storm. There are a number of reasons to be cautious in this environment, not the least of which is the increasing number of people who are excited about the market climbing a "wall of worry".

But let's get granular here. There are specific reasons to be concerned - notably the commercial real estate market which is facing hundreds of billions of dollars of losses in the next three years. To put things into perspective, 2 Trillion - with a capital T - of commercial real estate mortgages are maturing between now and 2013. Of those, $450 billion are not expected to be refinanceable, assuming they survive to maturity, which many wont. Delinquency rates on these mortgages are going through the roof - growing at levels that far outpace the early 1990s- spanning Industrial, Hotel, Multi-family, Office and Retail mortgages. In terms of delinquencies, this past summer was a disaster and, all in all, 2009 is not looking great. This time it's the larger loans that are at risk, as opposed to the historical norm of small loans being the problem child.

All things considered, what concerns me is, how traditional financial institutions, which are already on their heels (and loaded with taxpayer money), are going to survive these write downs. Again, it is not a question of money. There is more sidelined cash sloshing around now than ever before in history. The problem is that the traditional mechanism for allocating this cash efficiently to the end user is already in a weakened state and it seems as though an assault is soon underway.

The majority of these financial institutions remain focused on their fiduciary responsibility to their shareholders rather than making sure America's small and midsize companies are getting the capital they need, when they need it, at a reasonable price.

I prefer to be an optimist and I generally am, but I'm having difficulty not thinking about this like an earthquake aftershock. I don't think we are headed back towards the mentality of 12 months ago, questioning "will there be a tomorrow?" But, there is cause for some real concern. The only shred of solace lies in my clarity of the situation and the hope that others who must be seeing what I am seeing, and therefore, should have already priced these consequences into various asset prices. That said, if you are a small or midsize business, diversifying the sources of working capital for your business should be a top priority. The time for betting on one source to be there for you when you need them has come and gone.

One of the rules that I live by is: "Generally, things are never as bad or as good as you first think they are." So, I'm looking for that truism to be in effect this time around. On a more positive note, the IPO market is looking pretty robust this last month or so. This increased activity level of companies successfully entering the public markets is certainly promising. So, we have that going for us. More on that next time.