bank run blog

The Congressional Budget Office reported that Americans have lost over $2 trillion in pension savings over the past 15 months. The Associated Press reports;

“The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers’ savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.”

The AP quotes Orszag who said, “Public and private pension funds and employees’ private retirement savings accounts — like 401(k)’s — have lost some 20 percent overall since mid-2007.” Orszag said retirees across America will be effected and speculated;

“Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working.”

see story-
Associated Press : Retirement accounts have lost $2 trillion

The Society of Business Economists in the UK said that it will take years before falling housing prices in England rise again to their 2007 heights. The Guardian writes that members of the socitey said;

“House prices could fall by up to 20% from the top of the market, according to 56% of respondents, although 20% took an even more pessimistic view, forecasting that property values could slump by as much as 30%…The market will hit rock bottom in 2009, according to 44% of those surveyed.”

The downturn has been driven, said The Guardian, by a “loss of confidence among potential buyers and a fall in the availability of mortgages as a result of the credit crunch.” The Society’s chairperson, Bronwyn Curtis, said that new home buyers in England may have to wait “a long time” to get their money back. Curtis said, “It does look as though it’s going to go on, and we’ll have slow growth for some time.”

At the same time property values are declining, lenders in the UK have tightened lending standards making it more difficult to buy a home. The Guardian reported, “UK’s largest building society, Nationwide, announced it would be putting up rates on some of its fixed-rate and tracker deals with effect from tomorrow. This the second time in two weeks the lender has increased rates, a move it blamed on sharp increases in money market rates and changes by its competitors.”
full story here-
Guardian : House prices: Market ‘could take years to recover’

These reports, one from CNN and another from local California TV station KCRA, focus on a tragic consequence of the foreclosure crisis in America, pets that are abandoned by owners who are faced with losing their home. Pets are turned out into the street or left in abandoned homes by their owners.

The reporter from KCRA relates that she has talked to realtors who find pets as they show properties to potential buyers “abandoned in foreclosed homes.” The reporter says, “you walk in there to show it to sombody and there’s an animal left there, for months.”

Many of these pets are given to shelters. Contact your local Anti Cruelty Society or municipal animal shelter to find out how to adopt an abandoned pet.

CNN report-

KCRA report-

A report by Challenger, Gray & Christmas revealed that US employers fired and laid-off more employees in May than at any time in the past two years. Firing announcements rose to 103,522 in May up more than 30,000 from last year. The number of planned job cuts also increased by 15 percent. The firm reported that job losses in the banking and automobile manufacturing industries led that way with significant numbers of firings. Bloomberg quotes the chief executive of the firm who said;

“There is no end in sight for the crisis in the financial sector. Every time it looks as though banks will turn the corner back toward prosperity, we hear about another major loss, which is often followed by a job-cut announcement.”

Bloomberg added that the Labor Department “may report this week that the U.S. lost jobs for a fifth straight month in May, matching the longest string of declines in five years.”

see story-
Bloomberg : May Job Cuts in U.S. Up 46% From Year Ago, Challenger Says

Reuters reports that shares in US self-storage companies have risen over the past two quarters, in part, due to the wave of foreclosures sweeping across America;

“Self-storage companies had performed strongly in 2005 and 2006, helped by occupancy increases in areas hit by hurricanes. But their market value fell significantly in 2007 as reconstruction efforts picked up in hurricane-hit regions and concerns about a slowing U.S. economy grew. The sector staged a comeback this year as foreclosures swelled and fourth- and first-quarter results proved reassuring.”

Self-storage company’s stocks have risen between 30 percent and 75 percent since early January, but analysts now say that they may have reached their peak. Reuters says that analysts believe that “mounting foreclosures may help the companies’ margins, but they are not going to create a massive inflow of new rentals.” Therefore, the stocks of self-storage companies will hold, but not see the type of growth that they experienced over the past eight months.

see story-
Reuters : US self-storage stocks’ foreclosure ride nearing end