bank run blog

Six years after shocking and awing those who hate our freedoms, it is left to the Obama team of trivials to attempt to clean up the shameful mess in Iraq by prolonging it. The war did not destroy the already rotted US economy, but it will certainly reduce the chances of a meaningful recovery during the Obama, Jindal, Jenna Bush or Bristol Palin administrations.

The apologies and reparations demanded by decency and international law may be too much to hope for, but it must be amazing for foreigners to watch America grapple with the ignominious anniversary through a series of narcissistic thought pieces. The Associated Press offers a brief summary of the catastrophic fiasco, employing, apparently without irony, the phrase “America’s costly mission” :

“Six years after the U.S. invaded Iraq, the end of America’s costly mission is in sight, but the future of this tortured country is much less clear.

With violence down sharply, most Iraqis feel more secure than at nearly any time since the war began March 20, 2003 — March 19 in the United States.

But violence still continues at levels that most other countries would find alarming. Last week, suicide bombers killed a total of 60 people in two separate attacks in the Baghdad area, and an American soldier was fatally injured Monday on a combat mission in the capital.

Fighting still rages in Mosul and other areas of the mostly Sunni north. Competition for power and resources among rival religious and ethnic groups is gearing up, even as the U.S. military’s role winds down.

Both the Sunni and Shiite communities face internal power struggles that are likely to intensify ahead of national elections late this year. Sunni-Shiite slaughter has abated, but genuine reconciliation remains elusive.”

Reuters covers much of the same territory, describing the fragile, violent situation without reference to the fact that it was illegally imposed on Iraqis by Americans through what is recognized around the world as a criminal invasion and occupation :

“The announced end to the U.S.-led occupation overshadows everything in today’s Iraq, where a government beset by rivalries struggles to put a stop to violence that has killed tens of thousands and displaced 4.7 million people since 2003 and to piece together an economy and society shattered by war.

Washington’s plan to withdraw all troops by 2012 focuses attention on whether Iraq can prevent violence from flaring anew and whether it can defuse explosive feuds over oil and power.

Hazim al-Nuaimi, a political analyst in Baghdad, said the six years after the toppling of Saddam Hussein’s had been traumatic for Iraq’s economy, its political conflicts and the security of its people.

’The only thing that has changed is that now there’s a light at the end of the tunnel. But it seems six years is not enough to be able to reach that light,’ he said.”

As for the costs, beyond the inestimable damage to America’s reputation, very few ever believed the rosy scenarios floated by Cheney, Rumsfeld and Wolfowitz. The enormous true costs of the war have long been clear to public policy experts and were discussed by veteran economist Joseph Stiglitz and Harvard lecturer Linda Blimes in this excerpt from their book The Trillion Dollar War, published more than a year ago year in the Times :

“The Bush Administration was wrong about the benefits of the war and it was wrong about the costs of the war. The president and his advisers expected a quick, inexpensive conflict. Instead, we have a war that is costing more than anyone could have imagined.

The cost of direct US military operations – not even including long-term costs such as taking care of wounded veterans – already exceeds the cost of the 12-year war in Vietnam and is more than double the cost of the Korean War.

And, even in the best case scenario, these costs are projected to be almost ten times the cost of the first Gulf War, almost a third more than the cost of the Vietnam War, and twice that of the First World War. The only war in our history which cost more was the Second World War, when 16.3 million U.S. troops fought in a campaign lasting four years, at a total cost (in 2007 dollars, after adjusting for inflation) of about $5 trillion (that’s $5 million million, or £2.5 million million). With virtually the entire armed forces committed to fighting the Germans and Japanese, the cost per troop (in today’s dollars) was less than $100,000 in 2007 dollars. By contrast, the Iraq war is costing upward of $400,000 per troop.”

Associated Press : Iraq better but future shaky

Reuters : Iraq traumatised and divided six years on

Times : The three trillion dollar war

The other shoe has dropped.

Bloomberg reports that mortgage delinquincies of commercial properties are beginning to been seen across the US. Bloomberg writes;

“Loans secured by properties that were writtenassuming rental growth have been unable to meet targets, leading to increased defaults. The delinquency rate for North American commercial real estate loans in mortgage backed securities may triple in 2009 as loans default.”

Some regions have been hit hard and hit early, Bloomberg reports;

“Office, retail, apartment and industrial properties with mortgage payments 60 days late or more rose to 3.93 percent as of March in Cleveland area and 3.75 percent in the Detroit area…The North American commercial property delinquency rate is 1.1 percent according to Standard and Poor’s.”

Cleveland had a commercial real estate vacancy rate of 14.8 in 2008 which is forcast to rise to more than 20 percent by 2010. Ohio has unemployment levels that outpace the national average. In December, the unemployment rate in Ohio was 8.8 percent and the state lost a further 214,000 jobs in January. Detroit’s unemployment rate is even greater, with 10.6 percent of its workers receiving unemployment insurance.

The service also said that that Phoenix area had the “second highest percentage of 30-day late commercial real estate loan payments” and that other regions, such as the Las Vegas area, could see commercial defaults increasing over the course of 2009.

“Cleveland and Detroit are just the first to see the stress. They’re the canaries in the coal mine”, Bloomberg qoutes chief economist for Grubb Ellis, “There is really no part of the country being spared.”

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Bloomberg : Cleveland Commercial Loan Delinquencies Signal More Declines