U.S. Economic/Financial News
FEMA Plan: Mass Evictions, Forced Relocation, Lack of Health Care for Hurricane Victims
An estimated 150,000 people who fled from their homes during Hurricanes Katrina and Rita now face eviction Dec. 1 from the temporary hotel-housing arranged and paid for by the Federal Emergency Management Agency. FEMA has failed to utilize vacated military bases, as Lyndon LaRouche has proposed, for temporary housing, or to get serious housing construction projects going in the Gulf States, especially Louisiana and Mississippi; now the agency insists "there are too many people living in hotel rooms" and that "across the country there are readily available, longer-term housing solutions." That means forced relocations. Thus, FEMA will hold to its Dec. 1 cutoff for hotel reimbursements to evacuees and/or to states who may have signed leases for storm victims.
As EIR has reported, New Orleans faces a "Code Blue," with its medical infrastructure gone and no aid from the Federal government to begin restoration of facilities and staffing. The city's premier trauma center is gone, and half a dozen hospitals may never reopen. Of the thousands of doctors and tens of thousands of nurses and other medical support staff who fled Katrina, only a small number has returned. The lack of housing, power, and hospitals threatens the ability to maintain a population in the city. The failed Federal policy is de facto depopulation, just as Bush's Housing Secretary Alphonso Jackson called for.
Meanwhile, FEMA has advised the 96 insurance companies that sell flood insurance to stop payments to policyholders until Congress says the agency can borrow more money.
Nation's Capital: 80% of Homes Out of Reach for Average Household
The prices of homes for sale in Washington, D.C., has increased at such a rapid rate during the last five years that more than 80% of the homes are out of reach for the average-income city household, according to a joint Fannie Mae-Urban Institute report. D.C.'s housing prices have soared at a rate of 15.9% per year between 1999 and 2004. By 2004, the median home price reached $320,000, and the average home price reached $450,000.
A teacher with a typical $45,000 annual income buying a first home could have afforded one-third of the D.C. homes for sale in 2001. By 2004, earning $52,000 per year, that teacher could have afforded only 17% of the D.C. homes on the market. The median D.C. household income is only $44,926 per year.
The housing crisis in Washington represents the genocidal contours that Lazard Freres-directed Mayor Tony Williams gave to the city's future by closing down D.C. General Hospital in 2001, and similar actions. By design, the shutting of the city's only full-service public hospital increased gentrification in the city.
D.C. overall has an average unemployment rate of 20%, reaching almost 39% in regions east of the Anacostia River. Yet home prices have been shooting up at double-digit rates even in the poorest African-American and minority communities. The result: Between 2000 and 2003, the share of minority home buyers in the District fell from 43% to 37%.
This has led those seeking housing to take drastic steps. In the first half of 2005, one-half of all D.C. home buyers purchased their homes through high-risk "interest-only" loans. As for renters, the proportion of households spending more than half their income for housing jumped from 18% to 23% during the past four years.
Private Equity Firms Buying Up Economy
Private equity firms like Kohlberg Kravis Roberts and the Blackstone Group, which get funds from institutional investors, are buying up and destroying companies. These outfits are closely allied with hedge funds, which operate somewhat differently, but are committed to speculative investments.
Private equity firms engage in takeovers that range in size from a few hundred million dollars to more than $10 billion; they now own Hertz, Nieman-Marcus, Metro-Goldwyn-Mayer, Toys 'R' Us, and Warner Music, to name a few. So far this year, these private equity buyout firms have spent more than $130 billion gobbling up parts of corporate America. In Britain, they own so many companies that they now employ 18% of the private sector, according to the British Venture Capital Association. They are also invading Germany and France.
These firms are doing what Drexel Burnham Lambert did in the 1970s and 1980s, but on a far larger scale. According to Thomson Venture Economics, big institutional investorslike pension funds, insurance companies, and so onhave poured $491 billion into these private equity funds' investment pools. The private equity funds borrow from banks between three and five times the size of their investment pool. Assuming that these private equity firms borrow only $3 for every $1 they have in their investment pool, then combined, they have $2 trillion in their war chest to overrun companies and wreck them.
For instance, in 2004, the Blackstone Group bought the German chemical company Celanese Corporation. Then in 2005, after owning Celanese for less than 12 months, Blackstone sold it to the public through an IPOinitial public offering. Blackstone quadrupled its money, and swallowed up all the predatory proceeds between itself and its investment partners, through a special dividend.