U.S. Economic/Financial News
Commercial Real Estate Collapse Unfolds
Dec. 1 (EIRNS)The default rate for U.S. commercial mortgages (CRE) rose to a 16-year high of 3.4% in the third quarter, up from 2.88% in the second quarter. Delinquent and defaulted CRE rose to 14% of the total, or $50.3 billion, according to a report released on Dec. 1 by Real Estate Econometrics. The FDIC and the Treasury's TALF have tried to throw money at the problem, but John Cushman, of property group Cushman and Wakefield, says, "Some of the major banks have more trouble than meets the eye. Rents are falling, vacancies and concessions are rising and sub-lease space is exploding," according to the Dec. 1 Financial Time. CB Richard Ellis Group, Inc. reported that midtown Manhattan rents have fallen about 30% over the past year, according to Bloomberg Dec. 1.
Accepting Urban Depopulation
Nov. 30 (EIRNS)Across the nation's "Rust Belt," cities are no longer trying to reverse population loss, but rather to "manage" it, according to this week's Newsweek magazine. "Cutting Down to Size" highlights the former steel-producing center of Pittsburgh, formerly "one of the nation's most populous cities, [which] today no longer even makes the top 50.... Between 1950 and 2009, [Pittsburgh lost] more than 100,000 factory jobs and 300,000 people, 50% of [its] population...." Beginning with Flint, Mich., today Cleveland, Detroit, and other cities have as much as 20% of their land barren or unoccupied (Youngstown, Ohio has 44% unoccupied). Urban planners, "who once dealt with such human and commercial hemorrhaging by trying to bring business and residents back," have given up on this "bigger is better" idea and are "deliberately going smaller to match shrinking realities."
As far back as the late 1970s, Cleveland started a program now known as "right-sizing" (euphemism for "down-sizing"), a Green program that involves rezoning, "bulldozers, grass seed and foreclosure law" to prepare "once booming urban environments" for a more "modest" future. The program has now evolved into the idea of "greening the rust belt," a concept that clearly fits with the fascist "greening" of the former blue-collar industrial belt of the country.
Proponents of right-sizing include the London Daily Telegraph, which tried to give Flint Mayor David Kildee's career a kick, reporting his claim that as many as 50 U.S. cities needed to be "bulldozed to survive ... razing entire districts and returning the land to nature." Kildee caught so much flack from that statement, that other cities, like Pittsburgh today, have chosen not to advertise its program, but to just proceed with it.
Seven Million Families of Unemployed Begin Losing Health Care
Dec. 1 (EIRNS)More than 7 million unemployed workers and their families could be facing another hole in the threadbare social safety net, beginning today, as a stimulus subsidy to COBRA insurance for laid-off workers begins to run out. Since February, any worker laid off after September 2008 had been able to qualify for a 65% subsidy to their health insurance premiums. Those subsidies had a nine-month time limit, however, which, for many, ended Nov. 30. (Workers laid off between February and December 2009 will still receive nine months of subsidies, but after that, nothing.)
COBRA (the Consolidated Omnibus Budget Reconciliation Act), enacted in 1993, allows a laid-off employee to continue on his or her former employer's health insurance plan for 18 months, the assumption being that he or she will have found another employer/insurance payer by then. The proviso is that the former employee pay the entire premium. The Obama stimulus covered 65% of those premiums for a nine-month period (about $50 billion total), which is now coming to an end.
A new report from FamiliesUSA documents the devastation. Numbers vary by state, but, on the average, a COBRA extension paid $722/month for insurance for a family of four. Without it, payments that were $389/month will now run over $1,100/month, consuming an impossible 83% of the average unemployment check. In nine states (Mississippi being the worst), the full premium would be larger than the unemployment benefits. Rep. Joe Stesak (D-Pa.) and Sen. Sherrod Brown (R-Ohio) have each introduced bills to extend benefits, but this will have to wait until the Senate finishes or drops its debate on so-called health-care reform.
Reported Unemployment Falls, Due to Statistical Fudge Factors
Dec. 4 (EIRNS)The Department of Labor claimed today that U.S. unemployment fell from 10.2% in October, to 10.0% in November, but the two-tenths-of-one-percent drop is a bit less than the statistical "fudge factors," by which they increased the supposed number of those employed. "Sounds like they shot the unemployed," said Lyndon LaRouche. "They lied."
First they applied "seasonal adjustments," which added 227,000 "employed" to the rolls during September, October, and November. But these adjustments are unreliable at best: Earlier this year, the Department had to subtract 500,000 "employed" they had added earlier in such "seasonal adjustments."
Then they added 89,000 more "virtual" employed to the November count, from the jobs-death/jobs-birth computer model, which supposedly attempts to model the new businesses created and old businesses closed during a month, before reports come in. Was it written at the University of East Anglia?
All these "adjustments" amount to 316,000 added jobs in total, amounting to over 0.2% of the 154 million labor force, more than the alleged drop in unemployment.