And if you’re already afflicted with psychological problems, the ongoing economic crash is making harder for you to receive needed assistance.
And that’s just the lead item in today’s post, which ranges from the American heartland to Europe and Asia.
Crash cripples mental health services
Our daily wrapup begins at home, with a look at one of the more devastating impacts of the crash.
Julie Steenhuysen and Jilian Mincer report for Reuters:
The National Association of State Mental Health Program Directors (NASMHPD), an organization of state mental health directors, estimates that in the last three years states have cut $3.4 billion in mental health services, while an additional 400,000 people sought help at public mental health facilities.
In that same time frame, demand for community-based services climbed 56 percent, and demand for emergency room, state hospital and emergency psychiatric care climbed 18 percent, the organization said.
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In the emergency room, this increased demand has meant doctors and social workers are spending hours and sometimes days trying to arrange care for psychiatric patients languishing in the emergency department, taking up beds that could be used for traditional types of trauma.
More than 70 percent of emergency department administrators said they have kept patients waiting in the emergency department for 24 hours, according to a 2010 survey of 600 hospital emergency department administrators by the Schumacher Group, which manages emergency departments across the country.
In California — the state hardest hit by the crash — state mental health cuts reached nearly $600 million, they report.
Sears, Kmart closing more stores
With two of America’s biggest retailers losing value, the inevitable happens — closing of stores and layoffs, with the impacts certain to spread to towns hit by job losses and reductions in sales tax revenues.
From the BBC:
Shares in US retail giant Sears have fallen 19% after announcing plans to close up to 120 Sears and Kmart stores amid poor figures.
Sears Holdings, the department store group which owns the two major retail chains, blamed falling sales.
In the eight weeks to Christmas Day, sales at Kmart fell 4.4% and by 6% at Sears.
The company, which has 2,200 outlets in the US, says the closures should raise up to $170m (£108.5m; 130m euros).
It added that it expected fourth-quarter earnings to be less than half of last year’s amount.
Both Sears and Kmart have experienced a decline in demand for consumer electronics, amid fears of another US recession.
Kmart has also reported a decline in clothing sales over the same period.
Home prices? They’re down
Following up on our recent post on huge regional hits in home property values, the latest bad news for homeowners, from Agence France-Presse:
US home prices fell in October for the second straight month despite record-low home loan borrowing rates, a key index of the industry showed Tuesday.
Prices across 20 leading metropolitan areas fell on average by 0.6 percent from September, and were 3.4 percent lower than a year earlier, according to the S&P/Case-Shiller 20-City Composite index.
The figures suggested the US housing market remained stuck in the trough of a second recession in four years, and that cheap rates for mortgages have not yet sparked a much hoped-for turnaround in the depressed housing industry.
Housing prices remain at the same level of mid-2003, having plunged sharply from their peak in July 2006.
Current prices are now 32 percent below their peak, according to the Case-Shiller data.
And falling house prices mean less for governments.
The other side of the housing crash
The carry-on effects of the crash are coming home to roost. And while homeowners may be relieved at the lower taxes resulting from the loss in value of their homes, it’s killing cities.
From Brady Dennis of the Washington Post:
The nation’s housing crisis is five years old, but for local governments across the country, the worst of the reckoning might only now be at hand.
Because of the time it often takes for property assessments to reflect falling home values, the bust that began in 2007 has just begun to ravage tax revenues in communities from coast to coast. The problem is unlikely to subside soon.
For instance, Baltimore collected $815 million in property taxes during the most recent fiscal year, according to Bill Voorhees, Baltimore’s director of revenue and tax analysis. Next year, the figure is predicted to shrink to $803.5 million. The following year, $773 million. The year after that, $735.7 million. The year after that, $729.4 million.
Only in 2016 do city officials anticipate tax revenues increasing again.
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Thomas Fitzpatrick, an economist at the Federal Reserve Bank of Cleveland who co-authored a recent study called “Municipal Finance in the Face of Falling Property Values,” said many cities will have little choice but to make deep cuts. He added that “you will see it most for firefighters, police and teachers.”
“It appears that the dramatic fall in property values across the country will accelerate the financial distress of municipalities in the wake of the Great Recession,” he wrote in the report. “If creative ways to make up for this lack of revenue are not found, local governments may face the undesirable choice of either raising property taxes or reducing funding for essential services.”
One result of lost taxes? Municipal bankruptcy
And lots of cities are heading down that path, the result of both declining property taxes andreductions in federal revenues as Republicans demand ever more budget cuts.
From Australia’s Sky News:
Major cities across the United States are declaring themselves bankrupt in the face of huge debts and declining revenues.
Birmingham, in Alabama, and Harrisburg, the state capital of Pennsylvania, are the latest high-profile cities to file for bankruptcy. Analysts warn as many as 100 American cities are at risk.
They are taking their lead from a scenic California city which has become the poster child for the blight of municipal bankruptcy.
Vallejo, home to 115,000 and perched on wooded hills across the water from San Francisco, has just emerged from three years in bankruptcy but still bears the scars.
Public services were slashed. Half the fire department were laid off, the police force cut by a third and libraries, parks, senior citizens services all drastically reduced.
Congress, however, isn’t hurting
The very folks who carry out the corporateer and bankster agenda by passing the laws they demand are doing better than the rest of us.
A whole lot better.
From Eric Lichtblau of the New York Times:
Largely insulated from the country’s economic downturn since 2008, members of Congress — many of them among the “1 percenters” denounced by Occupy Wall Street protesters — have gotten much richer even as most of the country has become much poorer in the last six years, according to an analysis by The New York Times based on data from the Center for Responsive Politics, a nonprofit research group.
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What is clear is that members of Congress are getting richer compared not only with the average American worker, but also with other very rich Americans.
While the median net worth of members of Congress jumped 15 percent from 2004 to 2010, the net worth of the richest 10 percent of Americans remained essentially flat. For all Americans, median net worth dropped 8 percent, based on inflation-adjusted data from Moody’s Analytics.
Going back further, the median wealth of House members grew some two and a half times between 1984 and 2009 in inflation-adjusted dollars, while the wealth of the average American family has actually declined slightly in that same time period, according to data cited by The Washington Post in an article published Monday on its Web site.
With millionaire status now the norm, the rarefied air in the Capitol these days is $100 million. That lofty level appears to have been surpassed by at least 10 members, led by Representative Darrell Issa, a California Republican and former auto alarm magnate who is worth somewhere between $195 million and $700 million. (Because federal law requires lawmakers to disclose their assets only in broad dollar ranges, more precise estimates are impossible.)
And here’s a graphic from the a report on the same findings from the Washington Post showing the rising Congressional wealth.
Brazilian economy overtakes Britain’s
For the first time ever, a Latin American has overtaken a major European economy, in this case, the same one that gave the world the Industrial Revolution.
From the BBC:
Brazil has overtaken the UK as the world’s sixth largest economy, an economic research group has said.
The Centre for Economics and Business Research (CEBR) said its latest World Economic League Table showed Asian countries moving up and European countries falling back.
The CEBR also predicted that the UK economy would overtake France by 2016.
It also said the eurozone economy would shrink 0.6% in 2012 “if the euro problem is solved”, or 2% if it is not.
CEBR chief executive Douglas McWilliams told BBC Radio 4’s Today programme that Brazil overtaking the UK was part of a growing trend.
“I think it’s part of the big economic change, where not only are we seeing a shift from the west to the east, but we’re also seeing that countries that produce vital commodities – food and energy and things like that – are doing very well and they’re gradually climbing up the economic league table,” he said.
French unemployment soars
More bad news for Nicolas Sarkozy as he heads toward a presidential election in the spring, a contest oin which economic policy promises to be a major focus.
From euronews:
Unemployment in France was higher than many other European countries before the euro crisis began.
But in the last year, the number of people out of work has climbed by more than 5 percent.
New figures suggest in November alone, an extra 30,000 people were looking for work taking the overall unemployment figure to a 12 year high of 9.3 percent.
The under-25s and over-50s are the worst affected. 53-year-old Isabelle Léger is a former engineer who has been out of work for two years.
Meanwhile, in the cradle of democracy
As the austerity measures demanded by the bankster-installed technocratic government take hold, Greeks are taking direct action in response.
Consider this from a report by Hara Kouki and Antonis Vradis in The Guardian:
In early October, a peculiar news item barely made its way into the back pages of Greek national press: in the northern city of Veria, a small group of people had started reconnecting the electricity supply of households disconnected from the national grid due to bill non-payment. This kind of solidarity action seemed rather abnormal.
Then again, it is difficult to define what constitutes normality in the country nowadays – the upper echelon of political power is in an unprecedented turmoil, and Tuesday’s referendum announcement by prime minister George Papandreou, followed by him reportedly preparing to step down, has thrown his political allies and foes into a tailspin. Parliamentary opposition parties are calling for a “national unity” government, snap elections, or a succession of the two; the entire mainstream political spectrum in the country seems to have entered a delirious state of panic. In a stunningly surreal scene, eurozone leaders and global markets are nervously waiting for people in Greece to cast a vote.
And yet, at this precise moment, Greek people are realising they are left with what they had at the outset – that is, absolutely nothing to hope for from the mainstream political scene.
Take Yannis, a 43 year-old man working in a bank in Athens, who doesn’t want to return home because it is going to be cold again. The heating will be off, as nobody in the block can afford the heating prices. His 16-year old daughter, Sophia, does not want to go to school, as she finds little meaning in preparing for her exams: why would she want to enter university knowing full well she will never find a job in Greece, anyway? Or take Eleftheria’s father, a 72-year old pensioner leaving in the village of Kymi, who called her today while she was returning home and hesitantly asked her for money to buy his medicine that the state fund no longer covers for. His pension was recently cut by 50%. “But, please,” he pleaded, “do not tell your mother.” Back in the city, Eleftheria’s streets are lined with garbage which has been lying there for more than three weeks.
American looters swoop in to slice/dice Europe
While the 99 percent are struggling to survive back home in the United States, those are the very top are finding the crash extremely profitable.
And with all that extra cash, they’re buying up some of Europe’s choicest property and institutional offerings.
From Nelson D. Schwartz of the New York Times:
As Europe struggles with its debt crisis, American businesses and financial firms are swooping in amid the distress, making loans and snapping up assets owned by banks there — from the mortgage on a luxury hotel in Miami Beach to the tallest office building in Dublin.
The sales are being spurred on because European banks are scrambling to raise capital and shrink their balance sheets, often under orders from regulators. European financial institutions will unload up to $3 trillion in assets over the next 18 months, according to an estimate from Huw van Steenis, an analyst with Morgan Stanley.
This month a team of three bankers from the London office of the buyout giant Kohlberg Kravis Roberts headed to Greece to examine a promising private company that cannot get Greek banks to provide credit for future growth. The Blackstone Group agreed to buy from the German financial giant Commerzbank $300 million in real estate loans that are backed by properties, including the Mondrian South Beach hotel in Florida and four Sofitel hotels in Chicago, Miami, Minneapolis and San Francisco. Commerzbank is under pressure from regulators to raise 5.3 billion euros ($6.9 billion) in new capital by mid-2012.
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Last month, Wells Fargo bought the $3.3 billion in real estate loans, which are backed by commercial properties in the United States, that had been owned by the former Anglo Irish Bank. Wells has also bought $2.4 billion in loans and other assets from the private Bank of Ireland, which is trying to raise 10 billion euros ($13 billion) after a bailout by the European Union and the International Monetary Fund.
Even with opposition from consumer advocates, Capital One Financial could soon win final approval from the Federal Reserve for its $9 billion acquisition of ING Direct in the United States, one of the year’s biggest banking deals. Based in the Netherlands, ING has been forced by European authorities to divest ING Direct, an online bank, after ING required a $14 billion bailout following the 2008 financial crisis.
Major moves afoot in Russia
Two major economic moves to report.
We’ll begin was an announcement of an easing of interest rates.
From Agence France – Presse:
Russia’s central bank cut its main refinancing rate for the first time since June 2010 on Friday citing uncertainties about global economic growth.
The bank said its cut of 0.25 percentage point to 8 percent was “based on the assessment of inflationary risks and risks to stable economic growth, including those caused by uncertainty over the foreign economic situation.”
It marks the first time that rates have come down in Russia since June 1, 2010. The move underscores concerns over how Europe’s sovereign debt problems may affect the domestic economy.
Russia raised rates for the first time since the 2008 global financial crisis in May 2011 when inflationary pressures began to threaten a fragile recovery. But officials have since voiced much greater concern about European contagion spreading to Russia while inflation has been tempered by modest growth of around 4 percent.
President Dmitry Medvedev warned on Thursday that a “global economic depression could last several years” and called for new efforts to step up competitiveness.
And then there’s this from Deutsche Welle’s Roman Goncharenko:
On January 1, 2012, a new version of the common economic area between Russia, Belarus and Kazakhstan comes into effect. The three countries had already founded a customs union in 2007, and Putin has said integration with the EU could take place by 2015.
The EU is a model for the Eurasian Union right down to its name. The “Eurasian Economic Commission” is to be the union’s regulatory body, reminiscent of the European Commission, the EU’s Brussels-based executive body. Boris Gryzlov, until recently the speaker of the Russian parliament, has already envisioned a Eurasian parliament. The creation of a common currency is not impossible either. Putin says the principle of equality should be especially important for the union – but the success of that principle is in doubt.
The Eurasian Union is the pet project of Russian prime minister and designated presidential candidate Vladimir Putin. It’s not about copying or restoring the Soviet Union, he wrote in October 2011 in an article published by the national daily newspaper Izvestia.
Putin’s suggestion was “a new, strong, supranational union that could become one of the poles of the modern world, and could play the role of an effective bridge between Europe and the dynamic Asia-Pacific region.” Russia is first and foremost touting the economic benefits of such a union, like cheaper gas. Kyrgyzstan and Tajikistan are in talks about joining as well.
Italian unions challenge austerity plans
Mario Monti, the second of the bankster-imposed technocrats appointed to carry out austerity on the Mediterranean, is getting some blowback from organized labor, unhappy with the scope of the cutbacks mandated by the banksters of naitons to the north.
From Agence France-Presse:
Italian unions on Saturday warned the government of Prime Minister Mario Monti that it must better address social concerns in its austerity programme that was passed by the Senate this week.
“We suggest that the government handles phase two better than phase one, by speaking with social partners,” Susanna Camusso, the secretary of the CGIL union, told a union meeting.
“The game is not over on the pretext that there has been a vote of confidence” in the government austerity measures, she said.
“If we don’t want 2012 to be full of problems and unemployment, the government must confront reality… if it thinks it can continue as is, it will find obstacles,” she said.
In a joint statement, the CGIL, CISL, UIL and UGL unions deplored “not having found in the austerity plan a trace of structural reform needed for growth,” adding that employment taxes must be reduced.
Economic warning bells sound in a surprising venue
Consider the headline on an Angela Shah of Architectural Record in a post: “Has Abu Dhabi Gone Bust?”
And by the signs she recounts in her story, there’s good reason to wonder if the crash hasn’t finally spread to the city dubbed by Fortune Magazine as world’s richest:
Abu Dhabi announced in October that the marquee projects in its $27 billion Saadiyat Island development, slated to be the emirate’s cultural hub, were stalled. Three flagship museums—branches of the Louvre (by Jean Nouvel) and Guggenheim (by Frank Gehry), along with the Zayed National Museum (by Foster + Partners)—would no longer open between 2013 and 2014, and could be delayed up to five years. Gehry told a Bloomberg reporter in October that construction had come to a halt. “The Abu Dhabi building we’ve been working on in the last five to six years has been stopped, and that’s painful,” he stated.
A week after the setbacks were revealed, Aldar, the developer behind the Saadiyat projects, announced it was laying off 25 percent of its staff. (Earlier in 2011, the Abu Dhabi government had to bail out Aldar, upping its stake in the company from 38 to 60 percent.)
Stories of such retrenchment don’t fit the profile of Abu Dhabi, the world’s fourth-largest oil producer and holder of a sovereign-wealth fund estimated to be worth $500 billion. In recent years, Abu Dhabi—regarded as more judicious than its neighbor Dubai—has embarked on initiatives to diversify its economy, including boosting its tourism sector. In 2008, Abu Dhabi unveiled its sweeping Plan 2030, which outlined massive undertakings, such as Saadiyat Island and the zero-emissions mini city, Masdar Headquarters. Other big projects included Yas Island, with a Formula 1 racetrack and Ferrari World amusement park (both completed); and Sowwah Island, featuring a new central business district and full-service hospital. The building spree was expected to yield 3,000 hotel rooms, many of them housed in high-end resorts.
But the emirate is now reprioritizing its spending, and moves to scale back high-profile projects have forced design firms operating here to cope with construction setbacks and even delays in payment. “Times are tough,” says Fares Kekhia, managing director of the multi-disciplinary design firm Otak, which opened its Abu Dhabi office in 2006 and is working on several master plans. “We’ve been awarded a number of projects whose contracts have not been executed, or which have been canceled. Most of our projects face delay.” In turn, the firm has been forced to cut its headcount.
China makes another move
For our final post, a major new move for China.
For the first time. China and Japan have agreed to exchange their currencies, a move that reveals the dollar’s declining role in two of the world’s major economies.
From the BBC:
China and Japan have unveiled plans to promote direct exchange of their currencies in a bid to cut costs for companies and boost bilateral trade.
The deal will allow firms to convert the Chinese and Japanese currencies directly into each other.
Currently businesses in both countries need to buy US dollars before converting them into the desired currency, adding extra costs.
It is the latest step by China as it seeks a more global role for the yuan.
“Given the huge size of the trade volume between Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” Ren Xianfang of IHS Global Insight was quoted as saying by the Bloomberg news agency.
China is Japan’s biggest trading partner. According to the Japan External Trade Organization, trade between the two countries stood at 26.5tn yen ($339bn; £218bn) in 2010.
eats shoots 'n leaves 