Our Changing Globe » global slowdown

Who Are The World’s Biggest Debtor Nations? Slide-show!

Michael Redbourn — Thu, 22 Dec 2011 16:53:27 +0000

Debt-Free United States Notes Were Once Issued Under JFK And …

Our current debt-based monetary system was devised by greedy bankers that wanted to make huge profits by creating money out of thin air and lending it to the U.S. government at interest. Sadly, the vast majority of the …

The Corporate Cash Myth | Euro Pacific Capital

www.europac.net12/21/11

The death blow to US corporations could come when US interest rates rise to historically normal levels. A four-percentage-point rise in the interest rates paid on debt by US corporations would cost them nearly $300 billion per …

If you think that the US is in a terrible state financially, you’re right, because the US can’t pay the interest on its debts which is why those debts are getting bigger every second of every day.

But take a look at this slide-show and most likely be amazed.

Of the twenty countries listed, America is number twenty meaning that there are nineteen countries who owe much more of their GDP that it does.

And please note how the socialist countries are doing and perhaps cringe, knowing that this is the direction in which Obama would like to lead America.

Obama Modeled US Economy on California So Of Course It Failed!

Michael Redbourn — Sun, 06 Jun 2010 08:52:50 +0000

Obama's Economic Policies 'Fair' Or 'Poor,' Economists Say

www.huffingtonpost.com12/29/11

WASHINGTON — President Barack Obama gets mediocre marks for his handling of the economy and Mitt Romney easily outpolls his Republican rivals in an Associated Press survey of economists. The economy – and who …

Obama's Economics Reach a Hopeless New Low | Value …

www.valueexpectations.com12/27/11

ValueExpectations.com, by the founders of The Applied Finance Group and Toreador Research and Trading, provides institutional quality research to the investment community.

Instead of modeling the U.S. economy on successful states such as Maryland. New Jersey or Connecticut, Obama, Pelosi, Reid and other liberal lemmings decided to model the U.S. economy on California.

California is technically bankrupt so the result was predictable to all but the brain dead, and the U.S. is now heading for bankruptcy within the next ten years.

Ten years obviously seemed a long way off, so the administration is now speeding up America’s financial collapse by seemingly switching to a different economic model which is similar to the ones that are being used by the PIIGS, meaning Portugal, Ireland, Italy, Greece, and Spain all of whom are awash in debts.

Why The U.S. Financial System Is Collapsing

The increasing size of the federal work force is usually an early indication of what lies ahead and the Bureau of Labor Statistics reports that in the last year the federal government added 86,000 permanent (non-Census) jobs to the rolls.

And they were also high-paying jobs at that:

The number of federal salaries over $100,000 per year has increased by nearly 50% since the beginning of the recession and the average federal worker earns 77% more than the average private-sector worker.

To pay for this bigger and more expensive government, the private sector will obviously have to bear a heavier tax burden far into the future, which will likely suppress the innovation and entrepreneurship that creates growth and real opportunity.

And If No Changes Are Made Very Quickly

If these trends are not reversed, it’s hard to see how more and more Americans, especially younger Americans, will not be tempted into taking Government jobs that offer:

Better wages.

Offers the best job protection.

Allows the earliest retirement.

And guarantees the most lavish pensions.

A Look At Why Europe Is Going Bust

According to statistics from the Organization for Economic Cooperation and Development, the average Italian enjoys 42 days of vacation per year, whilst the average American has just 16.

The ISSP (International Social Survey Program) asked Americans and Europeans whether they believe;

“It is the responsibility of the government to reduce the differences in income between people with high incomes and those with low incomes?”.

In virtually all of Western Europe more than 50% thought that it was the government’s responsibility and in Spain 77% thought so.

Only 33% of Americans agree with income redistribution.

* The International Social Survey Program is a collaboration between different nations conducting surveys covering topics which are useful for social science research. The ISSP researchers develop questions which are meaningful and relevant to all countries which can be expressed in an equal manner in different languages. The results of the surveys provide a cross-national and cross-cultural perspective to individual national studies. As of 2009 there were 46 member countries.

In Greece, which just got bailed out, there are riots and its labor unions and state functionaries are still demanding that others pay for the early retirements, lifetime benefits and state pensions to which they feel entitled.

In America, however, the tea partiers are demanding less government growth, less public debt, and less bailouts.

The Pelosi Response

“It’s not really a grass-roots movement. It’s Astroturf by some of the wealthiest people in America to keep the focus on tax cuts for the rich”.

The Reid Response

Seemingly having nothing original to say, Mr. Reid held up a square of synthetic turf at a press conference last August, and declared that the town hall demonstrations were, “about as phony as this grass”.

The Charge Of The Liberal Brigade

The answer to the question, “What will happen as our increasing number of state employees confront a shrinking private-sector tax base?”.

Just look at the PIIGS.

Half a league, half a league,

Half a league onward,

All in the valley of Death

Rode the six hundred.

`Forward, the Light Brigade!
Charge for the guns!’ he said:

Into the valley of Death

Rode the six hundred.

From, The Charge of the Light Brigade by Alfred Lord Tennyson

The Fiscal Stimulus Package Of 2009 Was A Failure

Michael Redbourn — Tue, 23 Feb 2010 20:42:22 +0000

And A Second One Would Be An Even Worse Mistake

The stimulus package was introduced a year ago and there’s now a lot of discussion as to whether it was effective or not, and although a definitive answer is hard to come by, I’d say that an extra $600 billion of public spending at the cost of $900 billion in private expenditure, was a very bad deal indeed!

What’s more, the cost of the package has so far risen from an estimated $787 billion to $862 billion, and as I type the two major questions that need to be answered are;

1) Did the government’s spending reduce or increase private spending?

2) Did public-sector hiring reduce or increase private hiring?

The Good And The Bad

If we look at short term public investment and consider things such as building a bridge or a new highway or even fixing potholes, then the stimulus package might appear to have been a good plan.

But if you then factor in the fact that the $600 billion of government spending added heavily to government debt that will have to be paid for at some point by raising taxes then it looks bad.

And The Ugly – A Massive Reduction In GDP

Let’s suppose that the government will collect an additional $300 billion of taxes in each of 2011 and 2012 then using a tax multiplier of minus 1.1, and a allowing for a one-year lag, then the higher taxes would reduce GDP by $330 billion in each of 2012 and 2013 and to make things worse, countries with larger public sectors tend to grow slower over the long term.

What Do The Figures Mean?

Viewed over five years, the fiscal stimulus package is a way to get an extra $600 billion of public spending, but it comes at the cost of $900 billion in private expenditure which is clearly a very bad deal, and adding a further stimulus package in 2010 would be an even worse mistake.

Watchdog- “Causes Of Financial Crisis Have Not Been Addressed”.

Michael Redbourn — Mon, 01 Feb 2010 10:23:06 +0000

“The Bank Bailouts Have Created More Risk in The System”.

Neil Barofsky, who is the special inspector general for TARP (The Troubled Asset Relief Program) states quite clearly in a quarterly report that was released to Congress last Sunday, January 31, 2010 that the problems that led to the last financial crisis have not yet been addressed, and in some cases have actually grown worse.
“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car”.

And referring to the “Too big to fail approach” he added, “The government’s bailout of financial institutions deemed “too big to fail” has created a risk that the United States could face a worse fiscal meltdown in the future, and the $700 billion financial bailout has encouraged more risk-taking because bank executives, who are still receiving massive bonuses, figure the government will come to the rescue the next time they steer their ships nearly aground”.

The report warns that these supports mean the government has done more than simply support the mortgage market, and in many ways has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.

“The government has stepped in where the private players have gone away and if we take government resources and replace that market without addressing the serious underlying concerns, there really is a risk of artificially pushing up home prices in the coming years”.

The report also revealed that, while the Obama administration pledged to spend $75 billion to prevent foreclosures, that only a tiny fraction of it amounting to just over $15 million has been spent so far and figures indicate that under the Making Home Affordable program, only about 66,500 borrowers, or only 7% of those who signed up had completed the process as of December.

And it might be worth noting that even though there are growing calls for another stimulus bill, in spite of the fact that only 30% of the first $700 billion has so far made its way into the system and the real jobless rate is now at 17.5% if the jobless that have given up looking for work are included.

Sen. Susan Collins, R-Maine, who is the ranking member of the Senate Homeland Security and Governmental Affairs Committee said, “The market mentality now seems fixed that the U.S. government will continue to step in and bail out giant financial institutions. The IG’s findings confirm my decision to oppose releasing $350 billion in TARP funds last year and my recent vote to terminate the program altogether”.

And Rep. Darrell Issa, R-Calif., who is the ranking member on the House Oversight and Government Reform Committee added, “The SIGTARP’s report is just another reminder of how Congress and the administration have ignored the role that politics and government played in causing the housing crisis and the economic collapse while pursuing other regulatory reforms will not fix the underlying problem”.

Cap And Trade = Redistribution Of Wealth

Michael Redbourn — Sun, 13 Dec 2009 13:22:26 +0000

The Dark Side Of Cap And Trade

Like many others, I hadn’t really taken a good look at what Cap And Trade really is, until the onset of the negotiations in Copenhagen, but the more that I now look into it, the more horrified I am.

What Is Cap And Trade?

The stated idea behind Cap And Trade is the control of pollution (CO2 – greenhouse gas); with its end goal being the reduction of the overall pollution by a nation, region, or industry.

So What’s Wrong With That?

What’s wrong with it, is that it would cost the industrialized nations billions of dollars to move the pollution from one part of the globe to another!

The Mechanics Of Cap And Trade

1) A government would decide on how much pollution its country would be allowed, and then set a cap at that level.

2) Companies within that country would then be issued credits which would allow them to pollute up to the amount of the cap.

3) The amount of pollution that the company would be allowed to create would be based upon how large the company was and what industry it was in.

4) Companies that produced pollution below their cap, would then be allowed to sell their credits to ones that exceeded it.

So the intention is that the industrial world would pay the underdeveloped world huge sums of money for doing nothing at all, and you can easily imagine the bureaucracy and corruption that would occur if this nonsense were ever to come into being.

The flawed idea behind Cap And Trade is that companies that were penalized would work hard to reduce their pollution, and even though the technology is presently not available and won’t be in the foreseeable future, Obama is promising that the U.S. will reduce its pollution by 80%, which would take it back to levels that existed before the industrial revolution.

What Would The Near Term Effects Be?

The bill that was recently passed by congress (Waxman-Markey), and is now fortunately stalled in the Senate was hastily and badly written and would:

1) Drive up the price of energy.

2) Deter American job creation and send jobs overseas.

3) Make it far harder for the U.S. to exit the ongoing economic crisis.

Since the U.S. operates an overwhelmingly carbon-based economy, the EPA (Environmental Protection Agency) would end up regulating almost everything, and every company that emitted more than 250 tons of CO2 a year would fall under EPA control, meaning over a million building complexes, hospitals, plants, schools, businesses and related enterprises.

The Third World Has Tried This Before

The so called developing nations have long been the majority in the UN and in the early 80s they called for a "New International Economic Order" (NIEO) whose demand was to simply transfer fantastic amounts of wealth from the industrialized West to the Third World.

The stated reasons were "equality and compensation", a "redistribution of wealth which was owed the third world because of colonialism".

The reason that the idea went nowhere was because Reagan and Thatcher were in power, and they effectively said, "Get up off your asses and work, like the rest of us".

Most of us would more than likely be willing to do rational things to safeguard the environment, but the entire concept of perpetrators and victims breaks down when it comes to global warming because countries collude in pollution.

Does China Have The Largest Carbon Footprint?

It would be more correct to say, "China is the place where the world’s carbon footprint is presently located".

If China’s factories presently emit such a large amount of pollution (CO2 and greenhouse gasses), it is because it is manufacturing things for the west, and the west is therefore less polluted because of it.

If China were forced to produce less because of the high cost of buying credits, then the countries in the presently underdeveloped world would then start to manufacture, thereby causing more pollution in their locales.

The source of pollution would simply have moved from one location to another, but the industrialized world would be paying billions of dollars to have its sources of revenue taken away.

Things Are Getting Worse More Slowly

Michael Redbourn — Sat, 08 Aug 2009 16:16:24 +0000

Simply A Slower Decline

A quick glance at the economic headlines would lead one to believe that America is now on the road to recovery, but even a cursory glance at the details reveals that this is not the case.

The Pace Of Job Losses Slowed

1) Payrolls only fell by 247,000, after a 443,000 loss in June

2) And the official jobless rate dropped from 9.5 to 9.4%

Surely that has be good news?

On the surface yes, but the figures don’t include,

1) The increasing numbers of people working part-time who’d rather have full-time jobs.

2) Nor the large number of people who have given up looking for work.

3) They don’t reflect the many millions who have found new jobs that pay less than the old ones that they lost.

4) They don’t reflect one of the shortest typical workweeks on record.

5) They don’t include the 130,000 people who are coming into the labor force each month who can’t find jobs.

How much of a difference would there be if all of the above were added into the mix?

A good guesstimate would be that one out of five Americans who would otherwise be working full-time is now underemployed.

Purchases, Exports, Business, Unemployment

1) Consumers are still not buying.

2) Exports are still dropping.

3) Business investment is still in the doldrums.

4) Job losses continue to outpace the contraction.

5) Employers proportionally continue to lay off more workers than at any time since the great depression.

Let’s be happy that things are getting worse more slowly, but don’t be lulled by headlines that suggest that happy times are here again.

The truth is, that the U.S. economy is unlikely to ever regain its former stature. It has lost both its political and financial hegemony and new players are taking center stage.

America will continue to be a powerful force, but what is happening to it can perhaps be most easily compared to what happened to England at the turn of the 20th century.

When I went to school, 1/3 of the world map was still colored pink on our classroom map, dating back to a time when it belonged to England.

Will The U.S. Return To Its Former Glory?

Michael Redbourn — Sun, 12 Jul 2009 15:41:31 +0000

It’s hard to read an article about the present economic crisis without one pundit or another talking about when the U.S. will be fully recovered and they talk in depth about previous U and V shaped recessions, depressions and recoveries.

Those looking at a V shape believe that if the recession nosedived, which is one side of the V, then it should bottom out and quickly recover to its former glory, the other side of the V.

The U shapers believe that if a recession begins quickly, but then slows down, remains at the bottom for a while and then skyrockets back to its previous glory, that it is U shaped.

Which Are Right?

If you look at any of the previous recessions that were caused by the bursting of a huge speculative bubble, you will find that the recoveries took a long long time to come about, which suggests that the V shape believers are wrong in expecting a quick recovery from the present recession, because the economy cratered very quickly indeed.

Those that believe that we’re in a U shape right now are perhaps closer to the truth, because they believe that exiting from the present crisis will take a great deal of time.

U-shapers believe however, that what will drive the recovery is investors that slowly come back into the market to take advantage of the low prices.

This recession is so deep however, that it’s not investors that will have to bring about some kind of recovery, but consumers, and right now they’re not playing ball.

Consumers account for around 70% of the U.S. economy and they’re the ones that took a real beating this time, and until they start spending you can forget about any serious kind of recovery.

What, No V Or U Shaped Return To Former Glory?

The two chances of regaining what once was, are probably slim and nothing.

So When Will Consumers Start Fueling The Recovery?

The question might be better phrased, “how will consumers start fueling the economy?”.

The growing line of unemployed won’t fuel it, and householders will have a major problem getting home equity loans and perhaps worst of all, those that do have a little cash are intent on keeping it, and we just saw consumer confidence take another dive.

The probable truth is that America has seen the end of its economic, and perhaps its military hegemony, and Obama for right or wrong, certainly doesn’t want a return to either them.

America is surviving on loans right now, and will be for the foreseeable future.

The Chinese have a two billion dollar surplus, and will soon demand higher returns on their investment in the U.S. because they see it as overburdened with debt and that will only increase the U.S.’s debt mountain.

Americans will replace worn out cars and appliances of course, but who will invest in factories and businesses that build those things?

The original question was;

Will the U.S. Return To Its Former Glory?

The answer is almost certainly ‘no’, and a Scottish historian by the name of Professor Alexander Fraser Tyler, who wrote in 1787 about the decline and fall of the Athenian Republic over two thousand years before, perhaps explains it best.

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”

“The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence:

From bondage to spiritual faith
From spiritual faith to great courage
From courage to liberty
From liberty to abundance
From abundance to complacency
From complacency to apathy
From apathy to dependence
From dependence back again into bondage”.

Will China Cause America’s Next Financial Crisis?

Michael Redbourn — Tue, 30 Jun 2009 14:48:55 +0000

China and US Try to Make Trade Progress to Save Global Economy …

dgriffith401.wordpress.com12/16/11

“The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” he was quoted as saying by the official Xinhua news …

How The U.S. Is Quickly Becoming A Third World Country (Part 1 …

seekingalpha.com11/22/11

… 3rd world status. Economic data indicate a harsh reality that obviates mainstream political debate. The evidence suggests that, without fundamental reforms, the U.S. will become a post industrial neo-3rd-world country by 2032. … According to the Economic Policy Institute, the U.S. trade deficit with China alone caused a loss of 2.8 million U.S. jobs since 2001. Falling Real Wages and Household Incomes. Workers earning more dollars are actually poorer in terms of …

Major financial crises have occurred many times in the United States, and the one in 1929 wasn’t the first, and the present one won’t be the last.

The earliest one on record was in 1792, and there were several crises in the 19th century and also in the 1980′s

In short, recession cycles should be understood to be a normal part of living in a world of inexact balances, one in which there is an attempt to balance supply and demand.

The present world-wide economic crisis, which was caused by the United States wasn’t simply a result of unexpectedly large losses in subprime mortgages or because many of those loans were securitized in complex bonds.

In retrospect, it would seem that the major contributor to the collapse, was what are known as repurchase agreements, which are commonly known as repos.

A repo is a form of short-term borrowing for dealers in government securities. The dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day.

For the party selling the security, and agreeing to repurchase it in the future it is a repo, and for the party on the other end of the transaction, the one who is buying the security and agreeing to sell in the future, it is a reverse repurchase agreement.

Repos are classified as a money-market instrument and they are usually used to raise short-term capital and the Fed uses repos to manage the aggregate reserves of the banking system.

The size of the repo market continually varies so it’s impossible to state its actual size, but it’s generally thought to hover around the $10 trillion mark at any given time.

Banks rely heavily on repro loans, and what caused the collapse of Bear Stearns and Lehman Brothers, was that the repo market panicked because of rising doubts about subprime securities, and loans suddenly became more expensive, or totally unavailable.

So What Can Be Done?

The Obama administration has a plan to protect the country and the world from the next financial crisis, and it can basically be divided into three parts.

1) Stiffer Capital Requirements

Some banks and other financial institutions would be considered too important to fail, because their collapse would pose a threat to the country’s financial stability.

Citigroup, Bank of America, Goldman Sachs and similar institutions would I imagine, be on the government’s most protected species list.

The companies on the list would face stiffer capital requirements in the form of shareholders’ investment, with the idea being that greater capital would provide a larger buffer against losses and a crises.

It might be of interest to note however, that at the time of writing that none of America’s biggest banks are any longer in the top three world-wide.

The top three banks in the world by market capitalization are;

1) Industrial and Commercial Bank of China
2) China Construction Bank
3) Bank of China

Citibank and Bank of America are not even on the list of the top twenty.

Two Canadian banks, Royal Bank of Canada (RY) and Toronto-Dominion Bank (TD) have recently made it to the list.

Australia also has two banks listed, and in addition to the Chinese banks, the importance of emerging markets is confirmed by the presence of Itau Unibanco Banco Multiplo (ITU) and Banco Bradesco (BBD).

The problem with the administration’s protected species plan, is that the very largest financial institutions in America, would effectively become protected and pampered wards of the state and they would most likely squeeze out the smallest ones and lenders would compensate by raising their interest rates or by only lending to the safest borrowers.

2) The Policing Of Unethical Lending Practices

The administration foresees the creation of a Consumer Financial Protection Agency that would police what appear to be unethical lending practices, and ensure that loan documents for mortgages, auto loans and other types of consumer credit are comprehensible.

* The Securities and Exchange Commission would still retain power over the stock markets.

3) Changing The Rules

Financial firms that issue securitized bonds such as bundles of mortgages, auto loans and other credits, would be required to hold 5% of the bonds themselves, the thinking being that this would cause sellers to examine loans more carefully.

In early 2007, when the problems of subprime mortgages and repos first emerged, few if any regulators foresaw the coming meltdown, so the question needs to be asked, “should we trust government regulators instead of bankers, traders and money managers?”.

Due to their past failings, it would seem that we shouldn’t.

The dangers of overregulation should generally not be ignored or minimalized, but especially so in the U.S. whose economy is anchored on risk-taking and expansion.

We don’t yet know exactly what will cause the next financial crisis in the U.S. but its roots are already clearly foreseeable.

By 2019, the U.S. federal debt is expected to be $11 trillion and right now, the Chinese, who are presently supporting the U.S. economy are already preparing a retreat from the dollar.

China has now called for the creation of a new currency to eventually replace the dollar as the world’s standard, and is proposing, if not demanding, a sweeping overhaul of global finance that truly reflects the developing nations’ growing unhappiness with America’s role in the world economy.

If China decides to pull the plug, which is increasingly likely, we will soon understand what caused America’s upcoming financial collapse, but many will say that they didn’t see it coming.

Do Socialist Countries Fare Better In An Economic Crisis?

Michael Redbourn — Tue, 26 May 2009 06:26:38 +0000

Question for Ron Paul: Why Do the Most Socialist Countries Have …

my.firedoglake.com1/21/12

Also, the debate on war within these socialist style political regimes was much more intellectual because of the socialist nature of the government. These countries use smart tariffs, to protect their standard of living.Their model …

What “Classical America” Are You Talking About Newt? | FDL Action

fdlaction.firedoglake.com1/23/12

Only with a lot more people doing it. reply Login to Reply … Some of the “Socialist” countries, have done as well if not better, just as with the comparison between our predatory healthcare system and theirs. “…People are …

Results just published by the Swiss business school IMD, not only suggest that socialist countries are weathering the present recession better than outright capitalist ones like the US, but they also indicate that they are likely to recover much faster too.

The rankings are based on twenty criteria, then divided into four categories:

Economy Forecast/Perspectives – Government – Business – Society

Economic forecasts.

Government stability.

Which society is better equipped to weather the present global financial crisis.

The stability of the business sector.

Denmark achieved the highest overall score of 100 and is followed by Singapore, Qatar, Norway, Hong Kong, Switzerland and Sweden.

The United States finished a fairly shocking, overall 28th, due in part to its perceived weakness of resistance to the financial crisis.

Perhaps surprisingly, Israel (20) not only precedes the US, Germany and Britain on the list, but also leads Taiwan (21), Germany (24), Japan (26), South Korea (29) and Britain (34).

In spite of Britain’s poor score it still fared better than France (44), Italy (47) and Spain (50).

Singapore led the ranking of governmental steps taken in order to eradicate the crisis, while Italy came in last.

Russia ranked 51st and was followed only by Hungary, Croatia, Romania, Ukraine, Argentina, and Venezuela, which finished last.

You can download the report directly from IMD at Stress Test Rankings or if their link goes bad for some reason you can get it here,

Our Changing Globe, Stress Test Rankings.

More U.S. Cities Are Bulldozing Abandoned Homes

Michael Redbourn — Sat, 16 May 2009 08:18:55 +0000

Why Banks Are Using Bulldozers on Foreclosed Homes | The …

curiouscapitalist.blogs.time.com8/1/11

UPDATED (5:29 PM) Banks have a new remedy for America's ailing housing market: bulldozers. There are nearly 1.7 million homes in the U.S. in some state of foreclosure. Banks already own some of these homes and will …

Council to bulldoze 175 homes in Gateshead – Chronicle News …

www.chroniclelive.co.uk12/6/11

YET more families are being forced from their homes as Gateshead Council flattens a third housing estate.

The growing number of abandoned properties across the country has caused property values and tax revenues to drop substantially, which in turn has led to fewer buyers and a growing number of vacant properties.

As of March 31, about 4 million homes had been empty for at least three months, a higher figure than in 2008, and about 3% of all U.S. homes.

Many cities and States, are themselves struggling with potential bankruptcy, and they’re finding it difficult to pay the firemen and policeman who are expected to deal with the increasing number of abandoned homes.

All is not doom and gloom however, and an innovative solution is now rapidly spreading across the country which entails local governments bulldozing abandoned properties, and using the newly reclaimed land for parks and playgrounds.

It’s a seemingly win-win situation, because it not only pleases local residents, but also creates jobs, and the icing on the cake is that the federal government is funding the action.

Last summer, Congress allocated $3.9 billion in emergency funds for cities to acquire and rehabilitate foreclosed properties, and a further $2 billion was assigned after Cleveland and other cities lobbied Congress.

In fact, Cleveland, which has over 10,000 abandoned homes, says it will use more than half of its $25.5 million stabilization fund to demolish more than 1,700 houses.

In addition to Cleveland, Cincinnati, Detroit, Minneapolis and Youngstown all say they have plans to use at least one-third of their neighborhood-stabilization funds for demolition.

Housing supply presently stands at about nine months, which is almost double the historic level of around five months, and approximately one in four home-buyers is in arrears on their mortgages, both of which sadly suggest the appearance of more and more abandoned homes, but happily, more jobs and more parks and playgrounds.