Now and then//1929, 2009//the coming Depression. Part V

By , September 23, 2009 8:08 pm

Now and then//1929, 2009//the coming Depression. Part VThe greatest wealth building generator in America is “Real Estate” ownership, at the personal level and at the corporate level (industrial and retail space). “Foreclosure rates rose in 47 states in March; in Texas, Florida and Colorado the rate was almost double the national average. A mere 17% of California families can afford or could purchase the same house they live in. Foreclosures in middle-class neighborhoods are on the rise. Should the housing bubble deflate, as many economists and federal officials expect, the foreclosures could lead to a national crises”. The above was written as quotes from and the Washington Post and available on the internet on September 2005. Since 2007, plunging home values and stock prices have wiped out a record $13.9 Trillion of household wealth. If all of this information is available to me and I have been able to acquire these facts from four years back; where in the hell is our Congress, where in the hell is our President, the Secretary of the Treasury and why do we need a FED Chairman. I wrote back in April, May and also in June that things would start looking good and that economists and Federal officials would be talking about a possible end to the bottom; I also stated at that time “be not deceived” that the Real Estate bust would not bottom until major defaults in the commercial real estate sector. Here it is: on 9 September Bloomberg reported that the default rate of office buildings, shopping malls and other commercial properties more than doubled in the second quarter of this year. While Congress, the Administration, the FED and most of our economists deal with fancy explanations, charts, rosy outlooks and projected future growth which is never supported by substance, I deal with reality, the reality of historical data, the real “what got us there” and an uncanny gut feeling for seeing things as they really are. You see, when foreclosures in commercial real estate occur, it’s more than one bad mortgage gone bad; it is the jobs of all the people employed by these retail buildings, shopping malls, professional office space, industrial space and small business owners that support the “big businesses” that occupy these commercial buildings. At one point, and this time around it will be sooner than later, this new round of “unemployed” individuals will have no choice but to also default on their mortgage. Here it is: in the second three months of this year, defaults on home mortgages hit an all time high. One in every 25 properties was in foreclosure-the greatest number ever reported. The two statements above could possibly be called “Bad” and “Worst”; now here is what follows “Worst”: bankruptcy filings among the wealthy exploded 73% from a year earlier, homes listed for sale priced at over one million surged 27.3% over the last year but those that actually sold plunged by 23%. I had wanted to discuss “real unemployment” but I want to look at the methods used by the Bureau of Labor Statistics. Let me simply say at this time that the “real Unemployment rate” at the end of August is NOT 9.7% as reported by the government but actually a minimum of 16.8% and possibly as high as 19.4%. I have to say this; I wrote back on 8 April 2009 that “between October 2009 and March 2010 unemployment would be at 13% National average with some parts of the Nation at 19-25%”, I believe that certain parts of California are in fact at 19% as I write this. Just remembered I was supposed to talk about bank failures in this writing; we will get to that also in part VI and look at some disturbing trends I had not even thought of back in April when I boldly went this route of the coming depression.

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