Worse conditions since the Great Depression now ?
What will they say when we hit :
- 30-40% inflation, possibly 100% or more
- 20% unemployment
- job losses @ 500,000 per month ( -500K net with +300K in the public sector and -800K in the private sector )
- real GDP @ -20%
- 15-20 million foreclosures
- collapsing infrastructure
- soaring crime and social unrest
- 90% drop in housing values in real terms
- 90% drop in stock prices in real terms
- $15 gasoline
- $500 oil
- $10,000 gold with 20 grand on a panic spike
- $50 wheat
- nationalized banking system
- ghost cities with millions of empty, rotting homes
- 50% of commercial real estate abandoned and boarded up
- massive public works projects
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March 12 (Bloomberg) -- Mortimer Zuckerman, co-founder of Boston Properties Inc., the largest U.S. office real estate investment trust, said the U.S. economy is in a recession and there's no sign of a recovery.
``We are looking at the worst set of macroeconomic conditions since the Great Depression,'' Zuckerman said in an interview with Bloomberg Television. ``I don't know where the bottom is. The federal government's going to have to do a lot more to contain what I think is the potential of a perfect storm.''
Employers are cutting jobs and demand for housing is tumbling. On March 7, the Labor Department said payrolls fell by 63,000 in February, the most in five years, after a revised decline of 22,000 in January.
U.S. economic growth slowed to a 0.6 percent pace in the fourth quarter of 2007 from a 4.4 percent rate in the prior six months, according to the U.S. Commerce Department's Bureau of Economic Analysis. The share of economists in a monthly Bloomberg News survey predicting a recession rose to 50 percent in February from 40 percent in January.
``The most dangerous part in my judgment is what is going on in the housing world, where we're now running foreclosures at the rate of 2 million a year, where 9 million homes, according to the government, just slightly under 9 million homes, have either no equity in them or negative equity,'' he said.
``That will go up to 15 million if housing prices continue to go down this year as they've done last year,'' Zuckerman added.
``We are clearly heading down. We are in a recession even if it's not technically a recession. The February unemployment numbers were terrible,'' he said.
Federal Reserve
Zuckerman said the Federal Reserve and the government need to take more action to stem rising foreclosures. He said the Federal Reserve's move yesterday to lend, in return for mortgage debt, $200 billion of Treasuries to the securities firms that trade directly with the central bank, was not enough.
The Federal Reserve can't solve the problems of banks that aren't willing to make loans, falling home prices or a lack of confidence in the economy over the next year or two, he said.
One bright spot, Zuckerman said, was the New York City office market, where the lack of new construction has helped keep prices high.
``The real question is, is there a shadow inventory of space?'' he asked. ``Because right now there's virtually no inventory of space and I assume at some point there will be some inventory of space built up from tenants who are putting space on the market as a sublease.''
Still, he said, ``clearly there is going to be a pullback from both commercial space and residential space over the next year. It's going to come about as a result of the recession that we are entering into.'' |
