The views expressed here are those of Maura Cochran, Bartram & Cochran, Inc., and Marc Thompson, Bank of the West, and not necessarily those of the The Counselors of Real Estate. "THE MARKETS ARE IN DISARRY, LIQUIDITY HAS VANISHED AND none of us has adequately been able to dThe markets are in disarray, liquidity has vanished and describe a new model for capitalization of the real estate industry." So summarizes the status of the real estate capital markets by the economists who spoke at the recent Counselors of Real Estate meeting in Chicago. Indeed, many of the conversations at the meeting focused on the CMBS market, the lack of trust in the rating agencies and potential solutions to what is best described as a frozen capital market. Some members argued for fundamental changes such as a resolution to the conflict of interest that characterizes the rating agencies. Others believed that commercial real estate was being unfairly penalized as a result of the residential housing subprime debacle. They would return to the status quo once the financial system ultimately, albeit painfully, absorbs the subprime debt. Everyone seemed to agree that research on the situation was not much more than "Monday morning quarterbacking."