fwd.. my reply on economics... typical.. some may be inter..

On Feb 8, 8:49 pm, Vide... DeleteThis @tcq.net wrote:
> commercial real estate lending risk soaring, loss of jobs may be a
> million, or more
>
> http://suddendebt.blogspot.com/
>
> FRIDAY, FEBRUARY 8, 2008
> Commercial RE Lending Risk Soaring
>
> Credit risk for commercial real estate loans has been soaring
> recently. Yesterday rate spreads for every single series in Markit's
> CMBX index (there are 27) rose to new all-time highs. Even the AAA
> tranches have now reached 200+ bp (2%) over, coming from lows in the
> single digits just six months ago.
>
> CMBX AAA Series 3
>
> The low grade tranches (BB and BBB-) are closing in on the 2,000 bp
> level (i.e. 20%), while the BBB tranches - considered investment grade
> - are topping 1,400 bp (14%).
>
> CMBX BBB Series 3
>
> This is clearly the next area where significant loan writeoffs will
> take place in the financial community.
>
> For the economy, these developments could not come at a worse time.
> Private non-residential building activity reached $350 billion last
> year (up 18.3% from 2006), while residential building declined to $524
> billion (down 18.2% from 2006). Thus, total private building activity
> - residential plus non-residential - managed to drop only -6.7% versus
> 2006.
>
> This explains why construction jobs remained solid in 2006 and the
> first months of 2007, but are now dropping fast. If commercial
> building slows down significantly from here, as seems likely given the
> financing prospects, then the overall job picture will darken even
> further.
>
> Total Construction Jobs (Chart: BLS)
>
> The last construction boom created many more jobs than before. Given
> the depth of the bust, I wouldn't be surprised to see around 2-2.5
> million jobs lost in the sector, to bring us back to trend. The
> 1990-91 recession saw a loss of 16% of construction jobs; the same
> percentage today would result in a loss of 1.2 million jobs.



The last recession was during a time with most high end engineering
jobs and most Mfg still in the USA... the souces of real GDP...how
thats gone to a large extent.... pooooof.

This time no base for recovery...and the precursors spell
depression...not recession.....and an uphill fight against a national
dept growing not at hundreds of billions a year as it was last time,
but at *Trillions of dollars a year... More than the curent net
domestic product by a wide margin,


...... and a new aging demographic, with fully half of the current work
force, the most experienced, retiring over the next 5 years or so.
(77 million out of a total work force of approx. 168 million)


Most of those 77 million will be moving to smaller digs to reduce or
eliminate their property tax. seeing as how their retirement savings
are devastated by the government printing funny money..... the
crashed tax base will fruther..defund local govt, most are already in
dire straights.

..Retireees selling will put a glut of homes on the already fast
collapsing housing market..... the illegal imigrants will not be
able to afford these 500k+ pptys...so prices will collapse, along with
the tax base.

The continuing hyper inflation in the cost of real goods and services
(medical and oil etc) will insure that the newly collapsing tax base,
makes it impossible for the state to pay its retirements.... which it
will pay to the bloody end...so you will see no street repair, faster
collaspe in the national infrastructure and more lying from
govt....right to the end...then sudden defaults oh its obligations,
including SS, stalling that off for a bit will continuing hyper
inflation... a slower collapse mechanism is all.

But there are *still solutions...see those at the end this comment.


...

what will cities do? One, forgot which, has instuted the $3,500
speeding ticket fine... thats impressive...as soon as the public
finds out which cities those are, gridlock at 5 mph will
follow....great for the economy.


****

Solutions:
Reduce the size of govt and its budget by 70% or more immediately,
before a collapse. after that its too late.
However a collapse will end up reducing the size of govt by that
amount regardless.


I suggest govt gets a clue and suffers a voluntary reduction rather
than ride the taxpayer to death, and the national production and its
brain trust into the ground.


Import tarrifs relative to the workers standards in the producing
country...
if the exporting nation pays wages equal to ours, no tarrifs, if they
use slave labor and starve the workers... massive tarrifs. thats
both fair and rational.

Cease with tax incentives to US firms for sending mfg and jobs
offshore.


etc.


Phil Scott

> ..... and a new aging demographic, with fully half of the current work
> force, the most experienced, retiring over the next 5 years or so.
> (77 million out of a total work force of approx. 168 million)

Some won't be able to afford to retire. They'll just keep on working
until the very day they die.

> Most of those 77 million will be moving to smaller digs to reduce or
> eliminate their property tax. seeing as how their retirement savings
> are devastated by the government printing funny money..... the
> crashed tax base will fruther..defund local govt, most are already in
> dire straights.

They'll just shut down "unnecessary" things like: libraries,
underutilized schools, etc ...

In town here, they closed down three high schools and almost a dozen
elementary schools over the last decade or so.

> .Retireees selling will put a glut of homes on the already fast
> collapsing housing market..... the illegal imigrants will not be
> able to afford these 500k+ pptys...so prices will collapse, along with
> the tax base.

Will these neighborhoods turn into war zones with lots of drive by
shootings + stray gunfire?

> what will cities do? One, forgot which, has instuted the $3,500
> speeding ticket fine... thats impressive...as soon as the public
> finds out which cities those are, gridlock at 5 mph will
> follow....great for the economy.

Only way to enforce something this ridiculous everywhere, would be to
make the system into a Nazi style state. Also a Nazi style state
would be the only solution to arrest every illegal alien. (ie. Death
penalty without trial).

> Solutions:
> Reduce the size of govt and its budget by 70% or more immediately,
> before a collapse. after that its too late.
> However a collapse will end up reducing the size of govt by that
> amount regardless.

This won't be done until there is a complete utter collapse.

> I suggest govt gets a clue and suffers a voluntary reduction rather
> than ride the taxpayer to death, and the national production and its
> brain trust into the ground.

This won't be done. Nothing is ever done voluntarily when it comes to
the government or large organizations in general.

> Import tarrifs relative to the workers standards in the producing
> country...
> if the exporting nation pays wages equal to ours, no tarrifs, if they
> use slave labor and starve the workers... massive tarrifs. thats
> both fair and rational.

This is not going to be done.