In recent months, there haven't been all that many things that have slowed down the relentless return of exchanges to something approximating normalcy. Despite the fact that people are still losing their jobs -- and winter is coming -- and a lot of Big Projects are coming to a close, the slow climb back towards a DJIA figure of 10,000 continues unabated.
Yet this will be a week of major releases of economic statistical data, and who knows what will happen. As of now, however, the DJIA is down about 40 points, but that comes right before President Obama is to address Wall Street on the subject of financial reform. Considering that last year, Wall Street's invariable response to any declarations of any intentions to impose any sort of top-down stabilization or regulation was to throw the biggest tantrum it could manage, I don't expect the rest of the day to go all that well. The dollar is at one of the lowest levels ever, with gold above a thousand dollars an ounce, but this is good as it means that when we have to start repaying the Chinese in astonishing sums of dollars, those dollars won't actually be worth much. However, it seems to me that there will be significant shorting of gold in Euros for a while, just as a bit of a propping-up effort. Then that exchange will be let to go where it wants, and the dollar may pop up a little bit. Then perhaps we can see some changes in the price of oil, where speculators are trying to hedge, driving up prices far beyond what industrial or consumer demand would indicate it should be. Then again, with the dollar in the tank, maybe that's what even cheap oil is worth. Whatever.
Meanwhile, the Washington Post reports what I was saying back in July. And what was I going on about back in July, in between the boring boringness and bitching about wandering packs of assholes slandering me to all newcomers? Why, I was pointing out that the next big market mess -- especially here in the Greater Washington DC Metro Region -- would be the impending utter collapse of the markets in New Commercial Real Estate and all underwriters thereof.
The Post seems to be trying to play it down, but it's really really bad and only going to get worse:
[ ... ] Constitution Center in Southwest Washington seems the ideal place for a federal agency or security-minded company to locate. So says an online sales pitch.
But property managers for the 1.4 million-square-foot building, which is scheduled to be completed in November, have yet to land any tenants, according to data compiled by Delta Associates, an Alexandria-based real estate and economic research firm.
Constitution Center is just one of several dozen existing, newly constructed or soon-to-be-completed office buildings in the Washington region that had vacancy rates in the 80 to 100 percent range as of midyear.
[ ... ] ("Region's Office Space Vacancies Soaring: Owners Must Compete Fiercely For New Tenants", Hayes, V Dion, Washington Post, September 14, 2009)
Now, this is bad news for the construction industry, since last year's collapse of the Housing Bubble and the consequent crushing of the global interbank loan system pretty much put a stop to new housing starts, and even the trusty steady-state business of home renovation has dried up as homeowners are reluctant to invest more of their dwindling investment dollar into a home that's dropping in price. In the last year, of course, the value of the region's homes has dropped almost 25 percent, and foreclosures have skyrocketed.
So, who's going to be building any new commercial real-estate around here? Nobody.
[ ... ]
"We have 14 million square feet [of office space] vacant," said Jerry Gordon, president and chief executive of the Fairfax County Economic Development Authority. Gordon said that numerous agencies have cut their budgets because the county is losing tax revenue as housing values decline. "We need more revenue from the commercial side of real estate" to make up for shortfalls on the residential side, he said. "That revenue comes from new construction, which won't happen until we fill the old space."
The seeds for the current glut were planted after the terrorist attacks of Sept. 11, 2001, when commercial real estate collapsed in New York. Investors began pouring money into commercial real estate in the Washington area, where the economy was growing as the government ramped up its war on terror.
But many buildings that were financed through the subsequent boom are entering the market now, during the worst economic slowdown since the Great Depression.
[ ... ]
In a rare fit of sanity coming out of anyone remotely associated with the Montgomery County government, former Councilman Steve Silverman had this to say:
We may see the commercial version of the subprime situation.
Of course, I do not expect that note of sanity to have the least bit of influence at the County Council sessions debating and deciding on the Master Plan revisions.
You see, the construction industry takes a long view, and despite the fact that there's simply no market for new commercial real-estate, White Flint is to be turned into a giant beehive with huge square footages of retail.
And meanwhile, there's simply no market for new housing -- foreclosed single-family residences are a glut on the market, so much so as to have dropped home prices by 25 percent and dropping new-home starts in the region to a standstill -- White Flint's retail is to be mixed with lots and lots of "walkable" high-density housing.
Well, as Cavan Wilk says in that article about Retail and Housing Mixed, "it's all about the incentives" and despite the declarations of astroturfing notable union shills, there are simply no incentives whatsoever for any mega-scale construction in retail. Regardless of how desperate some may be to increase the power of the Construction Industry and thus the Construction Unions -- and even the "pseudo unions" such as cheap-labor organized-crime fronts such as CASA de Maryland -- nobody cares about their desperation. There's no money to be made in anything to do with Commercial Real Estate in this area, and the housing industry is pretty much down the tubes.
So wave bye-bye to the aspirations of anything thinking to give handouts and favors to Developers; mostly they aren't interested anymore, and are quietly laying off entire subdivisions, contractors are being "finalled", subcontractors haven't heard anything for months, mom-and-pop are holding off even getting that roof fixed that really needs fixing.
So, all of these folks are looking for work, and this new glut of labor is about to flood the restaurant and food-service market, so the SEIU ("Service Employees Union International") is about to discover that they have absolutely no leverage and the employers they're trying to squeeze can find 100 "scab" workers to cross union lines, for every SEIU member trying to strike or threaten a strike.
So, my love and kisses to the folks who got excessive power and political influence because of a freakish boom in housing values. That's over, and so is your influence.
Now excuse me, I have markets to go manipulate.
More to come?
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