> Nadeau: 03.08

Thursday, March 27, 2008

Spain's property market meltdown

Spain's once-booming property market is in freefall, official statistics have revealed for the first time.

The announcement that house sales had plunged has dashed government hopes for a "soft landing" in the sector that has driven the Spanish economy for more than a decade.

The buying and selling of homes fell by 27 per cent in January compared with the same period last year, Spain's National Statistical Institute (INE) announced yesterday. The collapse coincided with a 25 per cent fall in the granting of mortgages, the biggest drop since 2004. The size of individual mortgages has also fallen, by nearly 4 per cent, as providers fear for the security of their loans.

The indicators published by the state organisation for the first time confirm the widespread fear that Spain's property sector is not just cooling off, but falling sharply. "We have to accept this is not a gentle correction, but a full-blown crisis. We can only hope it will be sharp and short," says Fernando Encinar, a director of Spain's leading online estate agent, idealista.com.

The news will scare millions of Spaniards – and hundreds of thousands of Britons and other northern Europeans – who stretched themselves to get mortgages on homes they believed were a cast-iron investment.

Elizabeth Nash
The Independent/UK
March 27, 2008

posted by Tom Nadeau at 4:56 AM 0 comments

Age concerns ground many flights

American Airlines announced the cancellations Wednesday morning of approximately 200 flights, all involving large MD-80 jets. Each craft holds some 170 passengers, meaning that travel was interrupted for tens of thousands of people across the country.

American Airlines uses 300 MD-80 planes, which are on average 18 years old. The oldest MD-80 still used began flying for the company in 1983.

According to a report in the Dallas Morning News Wednesday, these are not even the oldest craft in the fleet. AA also operates a fleet of Boeing 767-200s that are on average 21 years old, as well as 18-year-old Airbus A300s.

The machinery of the entire airline industry is worrisomely old. The Morning News noted that American Airlines operates the second-oldest fleet among the top US carriers, behind Northwest Airlines. In a cost-cutting restructuring scheme in the 1990s, Northwest expanded its fleet of Douglas DC-9 planes, which are on average 35 years old.

The decision to continue using aging aircraft is based solely on profit. The Morning News quoted a January statement by AA chief executive Gerard Arpey, who said that the company would wait until it was cost effective to replace the MD-80s with more fuel efficient planes. “We continue to be a little bit discouraged by the timing of the next-generation narrow-body airplane,” Arpey said, “which will probably push us in the direction of more 737-800s for MD-80 replacement than the next-generation airplane. But you’ll have to stay tuned on that.” At present, industry analysts project new narrow-body models will not come into production until 2017 to 2020.

Naomi Spencer
World Socialist Web Site
March 27, 2008

posted by Tom Nadeau at 3:04 AM 0 comments

Wednesday, March 26, 2008

Global 'Great Depression' expected

But are things really that different almost 80 years later? For instance, the popping of major asset bubbles almost defines a recession by itself. And one can argue that the 1930s collapse of the banking system is the consequence, or reflection of the real economy, rather than its cause. So saving one insolvent institution isn’t going to prevent the unraveling of the rest of the system early in the new century. And yes, the international situation is okay, but that’s just because America is the cause, rather than the recipient, of global economic problems this time around; falling stock prices abroad are saying that foreign GDP growth will soon collapse as a result of America’s troubles.

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And what’s worse, we are only in the early stages of the crisis. Last year, 2007, was the year that the mortgage market unwound. This year, 2008, will feature the collapse of major financial institutions, starting, but not ending, with Bear Stearns. Next year, 2009, will be the year when the problems make their way to the rest of the U.S. economy, including the still-buoyant industrial sector. By 2010, the recession (or worse) will be global.

Some take comfort in the fact that we haven’t yet seen soup lines, or 25% unemployment. But soup lines are merely an unnecessary (and hopefully unrepeated) appendage of the above. And anecdotal evidence suggests that many welfare agencies are now stretched to the absolute limit, meaning that new soup lines will appear if the system is tested just a bit more. And unemployment hasn’t risen because companies have so far chosen to cut health care and pension contributions rather than lay off workers. One can easily get to the 1930s 25% unemployment with a 0% headline unemployment rate – by assuming that half the work force will be “temps” working half time without fringe benefits.

But perhaps one of the better definitions of the modern 1930s was given in a previous article on this site – a two decade pullback in the American standard of living to the 1980s (the original took American consumption back to the 1910s). Such a pullback seems inevitable from the deleveraging and loss of wealth that is now taking place. Moreover, such a retreat would last for an extended period of time. That’s because we had the best of all possible worlds (relative to the true state of the global economy) for most of the past decade and half. The next decade and half will probably see the worst of all such worlds.

Tom Au
The Daily Reckoning
March 26, 2007

posted by Tom Nadeau at 4:39 PM 0 comments

Rich live longer; candidates like it that way

Nancy Krieger, a professor at the Harvard School of Public Health, has found that trends in life expectancy have paralleled the decrease or increase in social inequality over the last four decades. Kreiger ,who investigated the rate of premature mortality—dying before the age of 65—and infant death from 1960 to 2002, told the Times that inequities shrank between 1966 and 1980, but then widened over the next 20 years.

“The recent trend of growing disparities in health status is not inevitable,” she said. “From 1966 to 1980, socioeconomic disparities declined in tandem with a decline in mortality rates.” She said the creation of Medicaid and Medicare—the two major federal programs for the poor and elderly—along with health centers, the social programs under President Lyndon Johnson’s “war on poverty” and the Civil Rights Act of 1964 had likely contributed to narrowing the earlier inequalities in health.

The dismantling of these programs—by both Republican and Democratic administrations—over the last three decades, and the radical redistribution of wealth to the top that has resulted, has produced a catastrophe for masses of people, including cutting their years of life.

Jerry White
World Socialist Web Site
March 26, 2008

posted by Tom Nadeau at 6:30 AM 0 comments

Sunday, March 02, 2008

Oh, Careless Love

Delta Jazz Band of Argentina with Maria Eugenia Castro singing.




posted by Tom Nadeau at 3:13 AM 0 comments