U.S. Economic/Financial News

Housing Headed for New Collapse; Foreclosures Everywhere

May 5 (EIRNS)—The foreclosure tsunami in the United States is still rising in its fifth year, having increased another 7% in the first quarter, reaching 16% higher than the first quarter of last year, and headed for an unprecedented 4 million foreclosures in 2010, according to RealtyTrac. And the U.S. home market—home prices and the bank assets based on them—is now going into a second-wave collapse, joining the ongoing collapse of commercial real estate in a bank-destroying wave.

If LaRouche's Homeowners and Bank Protection Act (HBPA) had been passed back in 2007, when he first proposed it, we would be telling a different tale.

Scorning Obama's pathetic "foreclosure prevention" program for more than a year now, home losses were spiking by another 19% even from February to March. And banks repossessed 35% more homes in the first quarter than they had in the terrible year 2009, reaching the highest level ever in a quarter—256,000.

Now the White House's speculation-driving "homebuyers' tax credit" giveaway of $8,000 for home purchases has ended; and with millions of foreclosed homes to be sold by banks or "short sold" by distressed households, residential housing values—falling slowly for the past four months—will go into a new plunge in the second and third quarter.

In the commercial real estate/securities collapse, the national average commercial real estate market price has now fallen 41% from its 2007 peak, and is continuing to plunge. In 2010, through last week, 64 U.S. banks had failed, totalling $61 billion in assets, more than double the 2009 rate of failures. Of the 100 banks that had the highest ratio, on Jan. 1, of commercial real estate loans to their total capital, 42 have already failed. "Commercial real estate exposure has become a frighteningly accurate predictor of bank health"—or death—reported Fox Business News.

'Jobs, Jobs, Jobs'? Study Shows 30 Million Unemployed

May 5 (EIRNS)—Despite House Speaker Nancy Pelosi's renewed "jobs, jobs, jobs" chant on May 4, no action to relieve the misery of more than 30 million unemployed is being allowed to come before Congress by the Obama White House. Obama made clear to Congressmen, and to his economic advisory team on April 24, that creating public employment is not on his administration's agenda now, and won't be.

A new national study by the Rutgers Center for Workforce Development shows a grim picture of the way two years of mass unemployment has spread poverty among tens of millions of Americans.

It has also spread "political mass strike" anger and action among those millions, who now despise Obama only slightly less than they do Pelosi and Congress.

The Rutgers study surveyed Americans who lost jobs since the end of 2007—a population of 12 million. But they represent more than 30 million overall, who are unemployed, out of the work force, underemployed in part-time work on which they cannot live. Here is what it found:

* 80% of those who lost jobs have not found new employment in periods ranging from a few months to two years;

* Another 16% have found jobs, but either part-time, with pay cuts, and/or no benefits;

* 70% have been out of work for six months or more;

* 70% are spending their retirement savings; 60% have had to borrow money from friends to live; 50% have run up their credit card debt.

* 40% are skipping medical care; one-third are using food stamps;

* 20% have had to move in with family or friends;

* 60% report depression. More than 10% have undergone psychological counselling.

And the "optimistic view" of the April 7 national employment report from the Labor Department is that it will show that the unemployment rate "hasn't changed."

More Pressure Builds on Goldman Sachs

May 4 (EIRNS)—Six shareholder suits have been filed against Goldman Sachs, for violations including breach of fiduciary duty, unjust enrichment, mismanagement, and abuse of control, since the SEC charged the bank with fraud last month, Goldman Sachs revealed today. The suits, brought by a pension fund for electrical workers, and several individual shareholders, charge that the company's fraudulent behavior lost money for the investors.

The SEC also disciplined the equity arm of Goldman Sachs for violation of rules on short-selling. NYSE Euronext imposed a censure and a $450,000 fine, which will be reduced by a $225,000 civil monetary penalty related to the SEC proceedings.