In Chicago on business this week
where the City has just been stunned by the announcement from the Olympic Committee
a minute ago – the 2016 Games will not
be here in Chicago. And the wind
blows and the rain falls . . .
This mid-morning news has crowded
out Media coverage of the bad employment statistics announced earlier this
morning – US National Unemployment now stands at a scary 9.8%, above estimates,
further clouding this stormy Friday here.
By the time you read this, it will
be next week. Media Talking Heads
& Wagging Tongues will have chattered endlessly over this past weekend
(which you can still, faintly, remember) and beyond:
-Should President Obama (and lest
we forget, Oprah!) should have made his personal mission to Copenhagen to plead
for the Olympic Games to return to the US seven years from now?
-Does this mean the US is indeed
losing its international stature?
-Does the nearly 10% national
unemployment figure mean that Mr. Bernanke’s recent announcement that the
Recession is over, was just a wee bit premature?
-How can the US truly recover from
this horrible economy if some 1 in
10 Americans are still out of work?
Last Thursday, stock markets
teetered a bit, handing back some extraordinary gains of this year so far,
particularly since the dark days of last January and February. If you bought – pick a corporate giant:
B of A, Citi, GE, and quite a few more, then you have made tidy profits so far
this year. Congratulations!
But, we are now in October – surely a world of difference from
October of 2008, but we are not out of the economic woods yet. The year-end holiday season approaches.
Retailers hold their collective breaths, awaiting the results of the season
that cures all monetary woes when things are good. This year, 9.8% of the American workforce will be seriously
curtailing their year-end Christmas/Chanukah/Kwanza shopping.
A truly scary statistic recently
held it that the unemployment rate among younger workers, the
twenty-somethings, I believe, is above 50% – that’s half of our grown kids,
many saddled with huge college loans, hoping to some day buy homes, raise
families, but out of work. California’s
state unemployment figures in August 2009 hit 12.2% – the highest in nearly 70
years back when California’s unemployment rate was 14.7 percent in 1940.
If all that were not enough,
viewing the world through the lens of commercial real estate, as I do
professionally, there are a lot of loans on a lot of commercial real estate
which will come due over the next couple of years and, in a healthy market,
would be re-financed in the normal course of things. A Double-Whammy awaits property owners who were planning on
re-financing as usual. Lenders are
not lending like they did a few years ago, and, even if they were, property
values have plummeted so deeply that they have left loan to value ratios, the
‘magic measure’ of what can be borrowed with real property as security, way
below what will be needed to re-finance.
Just try selling your ‘upside down’ (where loan amount exceeds fair
market value) commercial property – if you even have the stomach to look at the
recent ‘comps’ – recent,
comparable sales of similarly situated, comparable properties to yours, as a
guide to fixing fair market value – what a willing buyer will pay a willing
seller without coercion.
It sure would have been an economic
and prestige coup for the US to get the 2016 Olympics and a personal feather in
the caps of both President Obama and Mayor Daley in Chicago, the latter of
whose poll numbers are slipping badly.
It is hard to imagine that Chicago, the stereotype city of smoke-filled,
back-room politics, was out-maneuvered by other countries like Brazil. Coca-Cola is said to have gotten the
Olympics for Atlanta – Obama may yet be remembered as having failed to get the
Olympics for Chicago. The
President’s Chief Economic Advisor said Friday that we may have high
unemployment for years to come.
That is really bad news this Stormy Friday in Chicago, both for this
city and for America, both of whom could have used this boost in confidence and
promise of better economic things to come.