Data predicts economic “black hole,” poverty, collapse
In what sounds like the makings of some future country music hit songs, the poverty rate in Nashville TN has hit epic proportions. At 17.5%, the music cities poverty rate is a troubling sign. “The kinds of jobs that were sustaining the neighborhood in the past aren’t there,” said Christopher Sanders, the development director for St. Luke’s Community House in West Nashville. “People are running out of options.”
What is behind this decline, which is mirrored in many cities around the country? According to some hard data, the economic collapse may have just begun. The Economic Collapse Blog gives 2o reasons why the economy will continue to decline into depths from which it cannot recover from.
May of these have been written about here over the past year, such as the municipal debt, employment prospects, and foreclosure overhang of shadow inventory. The article does put some factual data behind it, however. This chart of impending defaults is a good visual example of looming crisis’.
At the same time, the National Realtors Association released figures today showing that home sales are tumbling once again. “Existing home sales fell 16.7 percent in December to an annual rate of 5.45 million units. It was the sharpest decline on records dating to 1968 and the slowest sales pace since August. Analysts, who had expected a 5.90 million unit pace, said the slump month underscored the degree to which the housing market recovery was reliant on government aid. ”Today’s numbers clearly indicate that the rebound in housing demand observed so far has been largely supported by government programs and therefore that the recovery is far from becoming self-sustaining,” said Anna Piretti, an economist at BNP Paribas in New York.”
Some commercial property experts are similarly troubled: “”The level of defaults will come as a shock to the general public,” asset-receiver Bill Hoffman said. “I don’t think we have seen anywhere near yet how dramatic that is going to be. The tunnel is still dark.”
“Receivers have firsthand knowledge of what the bottom of a real estate cycle looks like. There is a lot of interest in becoming a receiver right now. Robert Mosier of the California Receivers Forum, an industry trade group, said that enrollment in a recent course the forum sponsored on the occupation was double what it was the last time it was offered, four years ago.” ”There is an influx of people in the trade, and most of them are busy,” said Mosier, who is president of Mosier & Co. in Costa Mesa.
“With trillions of dollars’ worth of commercial real estate loans in the U.S. coming due this year and next — and many lenders unable or unwilling to refinance them — a wave of foreclosures is expected. Nearly every hotel that was financed or refinanced during the peak of 2006 and 2007 probably is financially upside down because its debt surpasses its falling value, according to hotel consultant Alan Reay of Atlas Hospitality Group.”
All of the glimpses of positive news of the past few months has been called a “one-quarter wonder” by The Economist, claiming it is just a quarterly blip “driven by a rebuilding of firms’ shrivelled inventories. Output growth will slow in 2010—the question is by how much. But a gloomier outcome seems all too plausible. There are few signs of job growth. Much household-debt reduction still lies ahead. And there is the risk of a correction in stockmarkets.”
