U.S. shopping center and mall property owners took a thumping on Monday as investors feared Circuit City Stores Inc’s (CC.N: Quote, Profile, Research, Stock Buzz) bankruptcy filing would usher in more failures and take property owners down with them.
It has been reported that next quarter Eclipse Aviation might be closing shop. In China, people are abandoning the cities and moving back to the countryside. This is not just a U.S. recession. This is a major world recession, and giving AIG another $27 billion is not going to keep it from happening.
The government restructured its bailout of, raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.
The Federal Reserve and the Treasury Department announced the new plan on Monday as AIG reported a record third-quarter loss of $24.47 billion, largely from write-downs of investments.
The new package, at least $27 billion more than was previously extended, will leave the government exposed to billions of dollars of potential losses.
I was on the phone with a friend, and I predicted as a nation we could hit 10% unemployment before we hit the bottom. A bottom I don’t expect us to hit until after the 4th Quarter of 2009. This year’s retail holiday season could be one that shrinks for the first time in a long time, and my guess is that next year will be worse.
I’m a naturally optimistic guy, but there is a difference between being an optimist and a dreamer. Now, I do have one really big fear – newly elected New Mexico Democrats will overreach. Contrary to what some folks might suggest, I don’t think the Democrats need to “shut up about winning the election and go about maintaining the status quo.”
They won, they’re entitled to try their way. After all, campaign promises were made, and they are going to have to try and deliver on some of them. That’s not the problem. I think it’s a mistake, but hey, I’m obviously in the minority. The real problem is if they try and deliver on ALL of them. It is not possible.
Take cap and trade legislation on oil and gas for instance. I’ve mentioned once before that this was on the table for the legislative session. The thing is, there couldn’t be a worse time than right now to pursue this type of the legislation:
“If policy makers ignore the global nature of climate change, it will drive U.S. companies to relocate overseas to low-cost nations where there is little or no environmental regulation,” Mullikin said. “This relocation fails to accomplish the goal of reducing global greenhouse gas emissions, and will likely make global emissions worse.”
For example, Mullikin said that China’s carbon dioxide (CO2) emissions increased more in one year (2006-2007) than U.S. emissions have increased in the last decade (1997-2007). In 2007, China passed the United States and now accounts for 18 percent of the world’s CO2 emissions, releasing over 800 million metric tons more CO2 than the United States last year.
The shift of clean, regulated American industry to nations with little to no environmental regulation will result in lost U.S. jobs. Proposals like a cap and trade program will also increase energy prices for consumers.
A study by the National Association of Manufacturers showed the potential impact that federal cap and trade legislation could have on New Mexico, particularly if developing nations do not agree to reduce their emissions:
- New Mexico is at risk of losing over 11,000 jobs and up to $1.2 billion in gross state product by 2020;
- New Mexico’s household income could decrease by almost $2,300 a year by 2020;
- Electricity prices in New Mexico are estimated to increase by up to 133 percent by 2030, while gasoline prices are estimated to rise by up to 140 percent.
Can you imagine the loss of 11,000 jobs and $1.2 billion in gross state product on top of the economic recession/depression we are about to experience? Four or five years from now, while the rest of the country is experiencing an economic rebound, New Mexico could very well be falling further into a depression because some folks decide to regulate and tax our biggest economic contributors out of existence.
That’s my greatest fear.
Of course, there is a light at the end of the tunnel. And, it comes from an interview that Peter St. Cyr did with Democratic State Treasurer James Lewis:
Lewis tells us he’s looking at the election of the 44th President of the United States in its historical perspective. He says the country has come along way since the Jim Crow laws, used to block African Americans from voting. Lewis even reminded us that before the 1965 Voting Rights Act his relatives were prevented from voting because they didn’t know how many “bubbles were in a bar of soap.”
“This is a proud moment for me,” said Lewis. “It’s a sense of achievement.”
Lewis says any young person who goes out and gets a good education and has a strong work ethic can achieve anything they want.
We have come a long way, but let’s not forget how we arrived here. The secret is in Lewis’ last sentence above: education + work ethic… not government bailouts and additional regulation. If more Democrats keep this in mind, we just may be okay.