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NYC Goes Out “Euro-Style” As It Experiences The Results Of “Applied, Stealth Austerity” And Its Citizens Suffer Like Never Before!
In 2008 I gave explicit warning that an unprecedented swath of US
municipalities were at risk of default. I was pooh poohed by many
“experts” who consistently said that the history of default in the US
muni bond market is slim to none. Well, my friends, that is history and
this is now. The dearth of revenues from declining building permits,
sales taxes in the absence of real sales, property taxes from
depreciating properties, etc. – all built upon budgets that were carved
at the peak of bubble economics groupthink combine to make a disastrous
brew.
NYC, arguably the richest economic “city state” in the world and the
mecca of banking and real estate is experiencing “applied austerity”
programs, effectively going through the service and government payment
cutbacks that the Europeans are “promising” to deliver. Keep in mind
that NYC is comparable to, if not larger than, from an economic
footprint perspective Greece and Portugal. I have accurately determined
that the EU is in it very deep – deep enough that default of several
nations is a foregone conclusion (see the complete Pan-European Sovereign Debt Crisis series for more on this).
Despite the nearly guaranteed default of the Euro-area nations, it
ain’t pretty over hear either, particularly as those eliminated services
that have been taken for granted are needed, as in the post Christmas
mini-blizzard. I say mini-blizzard because real New Yorkers know that 16
inches of snow ain’t nothing, and we’ve received more snow than this
regularly. We get snowstorms nearly every year, but this one literally
shut the city down – completely down.
BoomBustBlog:
An upper middle class, tree-lined neighborhood in NYC pictured a full
72+ hours after the snow storm. These are the bankers, doctors, judges
& lawyers that cannot go to work to generate the wages that the city
needs to tax to generate the revenues that could clean these streets.
Nornally, these streets would be cleaned down to the blacktop by
sunrise!
MTA
NYC Transit Delays Continue 4 Days After Snow Storm. Up To 48 hours
after the storm, the entire mass transit system was effectively shut
down. This is how the vast majority of NYers get back and forth from
work.
From the NY Times:
A woman with stroke symptoms in
Midwood, Brooklyn, waited for an ambulance for six hours, finally
arriving at the hospital with telltale signs of advanced brain damage.
In Forest Hills, Queens, bystanders waited for three hours next to a
man lying unconscious in the snow before they were able to flag down
help. And in Crown Heights, Brooklyn, a mother in labor who started
calling 911 at 8:30 a.m. on Monday did not get an ambulance until 6
p.m., too late to save the baby.
As a blizzard bore down on New York
City on Sunday and Monday, 911 dispatchers fielded tens of thousands of
calls, trying to triage them by level of severity, from snowed-in cars
at the low end to life-threatening emergencies at the highest. But
even the ambulances assigned the most serious of the calls sometimes
could not get there. At least 200 ambulances got stuck on unplowed
streets or were blocked in by abandoned cars, city officials said
Tuesday.
As the backlog of calls grew — it
ultimately reached 1,300 at its highest point — an unusual directive
went out across the computer screens within ambulances, emergency
workers said. It told them that after 20 minutes of life-saving effort
on a nonresponsive patient, they should call a supervising doctor, who
would make the call about whether to give up. While it is rare for a
person to be revived after 20 minutes, it is usually up to the medical
crew to decide when to call the doctor.
… nearly 170 stranded ambulances had
been dug out by emergency crews, with 40 more still stuck Tuesday
morning. Still, the impassibility of many streets made routine
ambulance runs into odysseys, sometimes with life-threatening or fatal
consequences.
LOSING TIME A Fire Department ambulance got stuck on Madison and Nostrand Avenues in Brooklyn.
In East Midwood, volunteer ambulances
managed to complete nine calls on Monday between getting stuck in
drifts and between abandoned cars. One was to a 74-year-old woman on
Lawrence Avenue who appeared to be having a stroke. Her home-health
aide had called 911 at 9 a.m. on Monday, said Yakov Kornitzer, the
chief of operations for the East Midwood Volunteer Ambulance company,
and in the early afternoon, she finally ran to the local precinct
station for help.
When the ambulance arrived at 3 p.m.,
it was unable to get closer than several blocks away. Two emergency
workers, two paramedics and six police officers carried her on a
stretcher through knee-deep snow, but by then she was unresponsive and
her limbs were already flexed, indicating serious damage to her brain
tissue.
…
When a fire broke out five blocks
from Elmhurst Hospital, emergency workers pulled patients in on sleds
and toboggans, said Dario Centorcelli, a hospital spokesman. As at
other hospitals, doctors and nurses stayed, sleeping on cots. At
Lutheran Medical Center, a registered nurse and an orthopedic
technician spent the day Monday driving around Brooklyn in a Hummer, to
ferry exhausted staff members back and forth.
…In Rego Park, one volunteer
ambulance partnered with a four-wheel-drive Suburban to patrol streets.
About midnight, they were flagged down on Queens Boulevard and 62nd
Drive, where bystanders said they had called 911 three hours earlier
for a man lying face up in the snow.
He was unconscious but still alive,
suffering from severe hypothermia, said Ron Cohen, the public
information officer for the Forest Hills Volunteer Ambulance Corps. The
emergency workers carried him about a block to the vehicle, and he
made it to the hospital alive. “I think a short time longer and he may
not have been,” Mr. Cohen said.
… Fire Department officials said they
received a 911 call at 8:30 a.m. on Monday from a woman in labor in
Crown Heights. But because her birth was not imminent, she was assigned
a nonemergency status. Dispatchers tried to call back several times in
the next few hours to check on the woman, but got no response, the
Fire Department said.
At 4:30 p.m., a second call came in,
saying there was bleeding and the baby was crowning, and dispatchers
called for police and medical crews.
Around 5:20 p.m., police officers,
trudging through the snow because their cars could not get through,
found the woman outside 97 Brooklyn Avenue and brought her into the
vestibule. It was not clear if the woman was just waiting outside or
was trying to make it to the hospital on her own; Interfaith Medical
Center was about eight blocks away.
The baby emerged. Satomi Onikura, 34,
a nurse who lives in the building, said she saw five or six police
officers surrounding a woman swathed in blankets. The baby was laid out
on blankets and was not breathing. The umbilical cord was still
attached. “We were all in a panic,” she said.
An officer got scissors and dental
floss to sever the cord from another neighbor, Valerie Veator, 24. Her
father had been an emergency medical technician, and spoke on the phone
with the police.
The lobby was freezing and wet from
the snow and wind. Ms. Onikura did chest compressions until the
emergency medical crew, whose ambulance had been stuck, finally arrived
to take the mother and baby to the hospital, but the baby did not
survive.
This is the real deal! This is the UGLY side to the greed that brought upon the Asset Securitization Crisis
which spawned all of this nonsense. Did anyone believe that banks could
do this much damage. I know I sure warned many! Here are some more
examples…
Crain’s New York: Mayor: Doing ‘everything we can’ to clear snow
In the face of mounting criticism
over the city’s strained response to a post-Christmas snowstorm that
left ambulances and buses stranded, trains stalled and roads blocked,
Mayor Michael Bloomberg on Tuesday defended his administration’s
efforts.
“We are doing everything we can
think of, working hard as we can,” he said at a press conference
Tuesday morning in Brooklyn. “This city has pulled together. I don’t
think we should sit around and think the end of the world is near. We
cannot be every place at all times. We won’t get to everybody. We will
make mistakes.”
… “By all accounts, the collective
storm response was not anywhere near up to the standards New Yorkers
are accustomed to,” said City Council Speaker Christine Quinn, in a
statement.
I fear New Yorkers will have to get use to a new normal for the next
couple of years, at a minimum. Professional and institutional Subscribers
can download our Shadow Inventory worksheet to see just how long and
far real asset/derivative malaise is forecast to drag this city – 
Shadow Inventory.
Ms. Quinn scheduled oversight
hearings for Jan. 10 into the city’s “unacceptable” blizzard response,
which she said underscored the need to “protect core public services
from potentially life-threatening budget reductions.”
… the No. 1 obstacle facing workers
as they continue to try to clear snow from the streets. Teams cleared
168 ambulances overnight that had been stuck, but some 40 remained on
the list as of this morning.
“Until we can pull out ambulances, fire trucks and buses, the plows just can’t do anything,” he said. Some
600 buses got stuck, 250 of which remained trapped in the snow and ice
as of Tuesday morning, leaving officials at a loss. “We typically have
not had difficulty with stuck buses,” said Metropolitan Transportation
Authority President Jay Walder. “They’re heavier and have typically
been able to get through the snow. For whatever reason, this snow they
did not get through. I’m not a snow expert to say why.”
This is the kicker, below!
The mayor rejected the
notion that the problems clearing the streets were the result of a
rumored slow down by workers upset over the administration’s
reclassification of sanitation supervisors and by looming budget cuts. He said Deputy Mayor Steven Goldsmith met with union officials Tuesday, who assured him workers were doing all they could.
…
“The response was an epic fail,” he
said. “We have not received answers to basic questions: Where the hell
were the plows? The plows did not exist on side roads in the outer
boroughs. We need to know why.”
State Sen. Carl Kruger, D-Brooklyn,
said the emergency room at Beth Israel Medical Center in Brooklyn was
blockaded by snow until Tuesday morning and that a stalled city bus was
blocking an oil delivery at Maimonides Medical Center.
“It defies comment,” he said. “I
don’t know how we can be caught off guard when they were predicting the
storm for a week in advance.”
Mr. Kruger compared the city’s
response to that of the infamous 1969 snow storm that nearly wrecked
the administration of Mayor John Lindsay and made snow removal outside
of Manhattan a key litmus test for any city leader.
“I’m 61 years old and I’ve lived
through a lot of 16-inch snowfalls before,” Mr. Kruger said. “It’s not
just me hyperventilating. It’s a city that’s frustrated and not
understanding the lack of management and control of the situation.”
The last statement is key. NY gets snowstorms – a lot of them! They
not only fail to shut the city down, they rarely even close the schools
for more than a day. This is obviously the effect of the “stealth
austerity” plans that have stricken the city, and every occurrence that
will require a strain on the city’s services will have similar outcomes
until the city has more resources to bring to bear. That will not be
anytime soon. Keep in mind that this malaise was after the federal
government literally pumped trillions of dollars into the industries
that are the life blood of NYC, the FIRE sector (finance,insurance and
real estate). For more on this multi-trillion dollar stealth bailout of
both FIRE and NYC, see:
- Buried
Deep Within The Files That The Federal Reserve Released On Thier MBS
Purchase Program, We Found TARP 2.0!!! More Taxpayer Money To The Banks! December 16th, 2010 - Continuing
With The Revelation of The Fed’s Stealth Bank Bailout (TARP 2.0), We
Present Our Analysis Of The Use And Abuse Of The Primarily Dealer Credit
Facility December 17th, 2010
It is not inconceivable to fantasize about crucial city services that
save lives getting more of that multi-trillion federal assistance than
bondholders behind failed and fraudulent banking practices, no? As for
the anticipation that this will resolve itself by next year…
.
So, where does this leave us? Well, if it is clear that European
states will probably default, why wouldn’t the same apply to US
municipalities? Three years ago (in 2007) I warned of an extreme spike
in muni defaults. Here is an annotated excerpt of a more detailed
warning written in 2008 when everyone thought I was being a “bear”
(actually, it should be called a realist with a spreadsheet and
objective perspective)…
From the Municipal bond market and the securitization crisis – part 2
Further building on the Municipal bond market and the securitization crisis – part I,
we have calculated the likely default amount on the municipal bonds
issued in the last four years (2004 to 2007). We have assigned default
rates on the municipal bonds for various states on the basis of property
price decline and the decline in the building permits witnessed in
each state. In this analysis, we have also considered defaults on the
general obligation bonds (GO bonds) as the macroeconomic conditions have
deteriorated and could result in increased stress on municipalities.
Although historically, the GO bonds have defaulted rarely (the
contribution to total default by Municipal bonds is 3.54% for GO bonds
and the remaining 96.46% defaults is on Revenue bonds), declining
property prices and rising foreclosures are likely to have a negative
impact on municipalities’ revenues in the form of taxes.
Since we have maintained from the beginning that this crisis is far
worse than any crisis that the US economy has witnessed for close to
half a century, our underlying assumption while calculating the default
probabilities by GO and Revenue bonds has been a premium over
historical default rates on the munis for the period 1979-97. This
premium is dependent on the degree of decline in housing prices,
building permits and the broader infrastructure investment. In the case
of Revenue bonds, the multiple has been considered higher as compared
to GO bonds since historically; Revenue bonds have defaulted more than
the GO bonds.
|
House price decline |
Building permits decline |
Premium over historical defaults for Revenue bonds |
Premium over historical defaults for GO bonds |
|
-5% |
-10% |
1x |
1x |
|
-10% |
-20% |
2x |
1.5x |
|
-15% |
-30% |
3x |
2.0x |
|
> -15% |
> -30% |
4x |
2.5x |
We have calculated the likely defaults on municipal bonds issued
since the year 2004 since this is the period where most US state and
local governments had prepared budgets based on the existing real
estate boom. In addition, the prevailing low interest rate environment
was very conducive for muni bond issuance. However, with the collapse
of the housing market, property values went down and increasing numbers
of homeowners applied for the property revaluation to reduce their
property tax burdens. This increased the burden on the respective
municipalities, as homeowners, in an attempt to mitigate the increase of
their financial obligations obtained during the housing boom equity
spending spree, cut corners by any means necessary. Construction permits
and the associated fee income dropped precipitously, further
constricting the bloated budgets of municipalities who, like the fabled
subprime refinancing, SUV driving 1st time homeowner binged on easy equity-sourced cash.
Additional strains in the revenue sourcing for municipalities are
the rampant foreclosure rate increases and the actual volumes of
foreclosures. Up until the event of actual foreclosure, property taxes
are usually not paid, further hampering the cash flows of
municipalities that relied on these funds. It gets worse. Even after
foreclosure, and even on behalf of the municipality, the back taxes
cannot be monetized and actually paid until the property is sold. Many
auctions in high foreclosure areas are seeing properties with no bid at
the upset price.
This is being exacerbated by the continual fall in prices (see As
Clearly Forecasted On BoomBustBlog, Housing Prices Commence Their
Downward Price Movement In Search Of Equilibrium Scraping Depression
Levels).
This portends very bad things for the banks, the municipalities and the insurers who wrote insurance to cover them! See
- What is the Fallout of the Ambac Bankruptcy on the Investment Banking Industry? Robo-signing Conspiracy Theory Grows Some Balls Monday, November 15th, 2010
- Banks,
Monolines, and Ratings Agencies As The Three Card Monte (Wall)Street
Hustlers! Its a Sucker’s Bet, Who’s Going to Fall for it in QE2? Tuesday, November 9th, 2010 - The Inevitable Has Come To Pass and Those That Insured Guaranteed Blowups Are Being Blown Up! Monday, November 1st, 2010
These developments are likely to have a severe negative impact on
the tax inflow for the state and local governments which forms the
basis of our underlying assumptions. According to our estimates, on the
total municipal bond issuance of US$1.6 trillion in the year 2004-07,
the potential losses due to defaults will be US$22.8 billion or a
default rate of 1.44% with Revenue bonds contributing majority of the
default amount of US$22.5 billion while GO bonds account for US$304
million. This indicates a default rate of 2.12% for the Revenue bonds
and 0.06% for GO bonds.
In the multifamily housing segment, default rates increased
significantly and were extremely high for the period 1987-90, i.e. at
the time of the S&L crisis when real estate lending was reckless
due to declining lending standards by banks and other financial
institutions. The default rate peaked in 1988 in the eleven year period reviewed to 4.31%, followed by 3.41% in 1989.
Those who are interested in reading more on my 3 year old muni sector analysis should read Municipal bond market and the securitization crisis – part I and Municipal bond market and the securitization crisis – part 2. Those interested in subscribing to our research services can do so by following this link.
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I wonder how long until New York goes out Italian style as they did to Mussolini and his central bankers?
Mussolini Executed! 1945/04/30
http://www.youtube.com/watch?v=YFSsRTDACCo
People still too fat and drugged to even realize there are "problems", forget about something else.
99ers will be expanded until they are 200ers, everyone will be happy without needing to work anymore.
Mayor Michael Shalom only cares about building the 9/11 Victory Mosque for the Saudis at Ground Zero to insure he keeps access to Islamic financial markets and so he stays on those middle eastern islamic TV satellites. This is also to please his pal Hussein-Mugabe.
Reggie-- If I met you, I'd give you a hug!
The information you post is very correct, but reality and fundamentals no longer matter in this mad, sick, depraved, corrupt world in which we live. Only GOD can save us now.
While it is unfortunate that many people suffer and perish due to the heavy snowfall, what solution is there to the fact that CLIMATE CHANGE - and this is my word for the world returning to it's NORMAL state of glaciation, where NYC is under miles of ice - is happening? There is no amount of money that can fix this problem - even Hummer ambulances - to prevent fatalities and losses.
The people in New York, and many places - are going to have to MOVE or PERISH as there is an ICE AGE COMING.
www.iceagenow.com http://theintelhub.com/2010/12/22/you-are-being-warned-freezing-temps-worldwide/
This is nothing new.
Suggestions to those living anywhere where ambulance services might be interrupted - and that is everywhere - keep medical supplies on hand. A person who is apt to have a heart attack or stroke (anyone overweight or old?) keep a bottle of aspirin handy - my friend's step-dad was exhibiting signs of stroke - my friend got to him within a couple of hours - administered two aspirins (chew aspirin, swallow water) and got him to the hospital asap. Brain damage resulted, but the doctors told him had he not administered aspirin it would have been much worse or his step-dad might have died...
The baby was not breathing, but did you know the umbilical cord could have still been breathing for him/her? That's an essential function of the umbilical cord - supplying oxygen to the baby - if the placenta was still attached to the mother, it should have been left in place till medical help could arrive and perhaps the baby might have lived. There is no telling and it's hard for me to really believe any of this because part of me thinks it's all a hologram and we're in this spiritual nightmare world and our goal is to wake up, so never mind...
My heart goes out to the people who are suffering, and I wish everyone the best - but we need to all look to our pioneer great-grandparents and be ready to supply as much of our own care and sustenance as possible (self-sufficiency) and accept that there are many things beyond our control. They did not want huge government stealing the fruit of their labors and would not have traded (the illusion of) security for freedom, and neither should we.
Okay I'm done ranting on this...
I feel bad for the people who cannot get care when needed. Communal living would solve many of these problems. A woman about to give birth should never be alone in my opinion. She should enjoy the company of generations of her family well-versed in childbirth - be supported and nurtured, and not forced to go through delivery of her baby without skilled, experienced help. I cannot imagine the nightmare she went through, and is still going through.
This whole system is going to vanish, not overnight, but a death by 1000 cuts. Best to get with the program. Keep medical supplies available, take a first aid class, keep water, food & fuel at home in case you cannot leave or get any deliveries. Anything can happen in an infinite universe, so if you have the ability to imagine it, it can happen, and there is no down side to being prepared, only to not being prepared.
Happy New Year everyone - get prepared!!
Save yourself and God will smile.
"Save yourself and God will smile."
Saving yourself, is not even close to a "goodwork".
That type of mentally, is the root of what is our destiny and destruction. Glad, you are not my neighbor.
....from her condo in St. Bart's