Fears of Crime Wave Grow in Canada

Two articles call out fears of crime wave happening in Canada.

From Toronto -- Agencies brace for crime wave
Experts say 2009 may mimic recession of 1990, when job loss drove people to desperate measures, Dec 27, 2008 04:30 AM, Robyn Doolittle STAFF REPORTER

"No one knew exactly how bad it was going to get, but economists warned of a difficult year ahead. It was December 1990. All predictions indicated a deepening recession and further job cuts. Worse still, a rapidly emerging crime wave was beginning to paralyze the city. Two weeks before Christmas, Toronto was hit by a record 26 robberies in one day – banks, cabs, stores, restaurants, pedestrians – many involving weapons. It was more than just a holiday blitz.
Police blamed the deteriorating economy and rising unemployment. Things only got worse in 1991, when Ontario experienced record high crime rates. It wasn't until the mid-1990s that the numbers began to taper off. Today, the GTA is one of the safest regions in Canada. The last decade has seen dramatic – and consistent – decreases in almost every criminal classification.
But now some experts are worrying that history may soon repeat itself."

From Alberta -- Canadians prep for economic induced crime wave.
By TAMAS VIRAG, SUN MEDIA, January 28, 2008.

"Cops and criminologists are warning that a serious downturn of Ontario's economy could mean more organized crime for Alberta. ""People go where there's money. If there's money here and it's disposable, someone's going to be looking for a piece of it," Sgt. Peter Ratcliff of the Edmonton Police Association said yesterday. "What that might look like, I don't really know." Criminologist Bill Pitt, however, has an idea of what that future may look like. And it's not pretty.
"You're going to see more narcotics on the street, pushed at lower prices. You're going to see more prostitution on the street, pushed at lower prices," he said, adding that the fallout from an increased number of gangs competing for one of the last pieces of prime Canadian turf might reach rarely seen proportions. "I think there's going to be issues between and among organized crime groups that are going to be fought out in the street, as they were in the recession in the '30s in Chicago ... fighting for dominance," he said, adding that all-out gang warfare - such as the one seen a decade ago in Quebec between two competing biker gangs - is not out of the question.
Part of the problem, he continued, is that police forces in Alberta have been facing west, working hard to keep out bad influences from Vancouver, but have largely ignored threats from the East.
"It's our back door and it's wide open ... I think we're going to see more movement from the East, we're going to see more intrusion from major organized crime," he said. "We're playing catch-up to them, and they're on the way."

Australia, UK, and US prepare for financial crises led Crime Wave

Preparations for economic misery led crime wave are being made in Australia, UK, and in parts of the US. Others will join the preparation bandwagon as unemployment rises in the coming year. Researchers point to a one-year time lag between the onset of significant negative financial events that cause economic misery (including unemployment, loss of purchasing power, asset devaluation) and crime waves. Preparations are now being made for this likely consequence of our steep financial downturn. From recent headlines we read the following.

Australia's Victorian police warning as hard times spur crime wave
The Australian reported on 12/27/08, "POLICE are bracing for a new wave of economic crimes driven by the financial crisis and rising unemployment, such as theft and burglary, after studying crime patterns from the previous downturn. Senior officers have drawn on crime statistics from the 1990 recession, when so-called property crime jumped sharply, to pinpoint the types of offences expected to rise as the financial crisis deepens."

The Australian further reported, "By tracking crimes over the past six months, police have found offences such as theft of valuables from motor vehicles, house burglaries, street robberies, handbag and wallet theft, shoplifting and other types of theft have begun to rise, as they did in 1990. Victoria's Deputy Commissioner of Police Kieran Walshe told The Weekend Australian: "We are starting to see crimes against property beginning to trend upwards. We have also seen an increase in petrol theft and those sorts of things. "Those are the kind of things potentially that are going to increase if you have a slowing economy. Particularly as unemployment starts to rise, that's going to cause people in some circumstances to seek other means of getting money."
With the article, the Australian reports, “Crime figures show that, in 1990-91, there was a sharp jump in property crime in Victoria compared with the previous year. Theft rose 13.6 per cent, robbery 12.3 per cent and burglary 8.1 per cent. The rates of those crimes began falling again as the economy began to pick up in following years. Victoria Police this month arrested a gang that had carried out eight ram-raids on retail outlets in Melbourne's northern and western suburbs in recent months, resulting in $700,000 in stolen and damaged property. About $150,000 in stolen goods was recovered. Mr Walshe said research on previous economically driven crime sprees would help develop preventative strategies, such as increasing police patrols in certain areas or encouraging the community to be more vigilant. “

UK public officials prepare for crime wave
Martin Gill, Ph.D., the well-respected criminologist cross-over Academic/Practioner, wrote the following this past week in his monthly Perpetuity newsletter to industry colleagues -- "Will crime rates rise with the failing economy? The Home Secretary, Jacqui Smith, certainly thinks so warning that violent crime could grow by nearly a fifth based on increases seen during the 1991-2 recession. But the academic evidence suggests that won't be the only crime type that's set to rise; fraud, forgery, burglary, robbery, theft, and arson have all been linked to recession and unemployment So what does this mean for you? It's clear that at a time when budgets are being reduced cutting back on security is not an easy option; with crime rates set to rise cutting back on security could result in rising costs of crime. Instead it's a good time to review your existing processes to identify any opportunities to improve efficiency and work smarter to cut costs, achieving greater value for money. "

US law enforcement prepares for crime wave, not uniformly, but in noticeable hotspots
Within the US, police chiefs are preparing for a coming crime wave of sorts, from the experienced professionals such as Chief Bratton of LAPD, to others that are dealing with increasing crime rates in south Florida, the Midwest and other locations impacted by economic misery harder than most.

Unemployment continues to rise; business capital still contracting; nimbleness key

On unemployment. This morning CNBC posted a list of firms that have announced or pre-announced job cuts at their firms. The article appears under the heading, "Layoffs Continue to Grow—Is Your Firm on the List?" http://www.cnbc.com/id/28193752/page/2/ The article relates a sizable list of firms that have reported job increases, but does not state how many of these have already occurred, leaving us to guess on how many job losses might be yet to come.

On business capital availability. Despite the optimism voiced by market pundits that report that we are bottoming, or near a bottom, there is still no bottom in site. Businesses are dealing with a sharp drop off in demand since 9/15/08. Some businesses will not recover through Q4, and are expected to file bankruptcy in 2009. The only certainty is that the future is cloudy, capital is still tight, and for-profit businesses are seeking to jettison costs to get to cash-flow positive, or bust. On this note, I have observed recently that several companies operating on business models based on debt-based growth are now dead. Cool technologies are locked in bankruptcy, proving once again that supply does not create demand, and oversupply for goods that don't sell can be costly. The market sentiment towards debt has now come full circle. Vultures look ready to pick the bones of bankrupt companies for pennies on the dollar.

Nimbleness. In these times, it pays to be quick to respond, proactive in cutting costs, focusing spending on needs and not wants. There is opportunity, but you must be willing to get out of your comfort zone and seize it. The age of debt-based finance business strategies is over for a season, perhaps longer. Promising companies that appeared to have great technologies and rapid growth that were funded on debt are now falling fast. Calls from business owners looking to dump their cash-guzzling business units are increasing and there is little capital out there for continuing operations beyond factoring receivables, that assumes companies are indeed making money. Just like the Kenny Rogers line, you need to know when to hold them, and know when to fold them. Some business plans are dead now, and it takes a brave heart to move nimbly and thoughtfully to where the cheese has been moved.

Future opportunities. I mentioned in an earlier post that my own security consulting business experienced a 'lock-up' or freezing of pipeline of sorts since 9/15/08, as a sizable block of contract suspensions and stop-work orders were focused on future construction projects where the monies for job completion were uncertain. At the same time as the construction related pipeline was freezing, I noticed a small bounce in restructuring related security consulting opportunities, which bounce has now turned into a sizable bounce. Being nimble means being willing to move on from the old plan when it is not working. What is working today is focusing businesses on reducing operating costs through restructuring and replacing routine manned operations by automated processes where possible. Remote monitored and delivered business process business opportunities are huge. While the economy is clearly down, buildings, physical assets, and other operations frequently remain with tighter budgets -- and having a labor saving technology to automate routine processes to save time and money are the new rage.

Lessons from Life in the Great Depression (1930s)

From the collapse of the NY Stock Market in 1929, economic misery spread quickly throughout the country. The misery started first in the financial sectors most hit by the crash, and then the circle of waves of bank failures, insurance company failures, and business failures vibrated out into the broader economy in unemployment and lost wealth. Locations like Idaho were somewhat isolated from the financial shocks for a short season, but within one year, all were to come and understand the devistation of capital and crises of confidence in the broader economic markets.

The photo shown aside is a clip from a riot of unemployed individuals marching to protest their unemployment as they sought jobs to feed their familes. http://www.5min.com/Video/The-Great-Depression-1354261

The debt that the US has amounted today, and that political leaders are throwing at the severe recession is unparalled in scope or size. If current stimulous and market stabillity funding fails to support the current economic base, then home prices may fall further, and we may see another downfall of mortgages and abandoned homes. Consumer credit cards, commerical loans, and commercial real estate appear to be next for the downturn.

While our times have certainly changed in terms of population, communications, transportation, technology, and culture -- it would behoove us all to be mindful of the past and take whatever lessons we might gleam from our history. In this post I put up a few stories of people who describe living through the Great Depression.




There will be many that look to the past to see what we can learn. One short film that was prepared recently was one that covered the lives of five individuals that lived through the Great Depression. http://www.youtube.com/watch?v=hbEVeKIghCk

Recent Business Leaders Survey reporting upwards of 18-24% Increase in Employee Crime

Crime and unemployment are inexorably linked together, and frequently move in step. Research on the relationship of crime and unemployment shows mixed results, sometimes showing a relationship, and at other times not. The research that found a statistical relationship between crime and unemployment found that for every 1 percent increase in unemployment, that crime rose 1.1 to 2.2 percent. As unemployment conditions worsen and employees become fearful of losing their jobs, or seek to regain that pay they were denied in bonuses or the annual holiday party, businesses need to be every watchful for the crime within, as the crime opportunity is increasing.

The Wall Street Journal reports results of a November 2008 business leaders survey that found that "Businesses Say Theft by Their Workers Is Up"Wall Street Journal (12/11/08) ; Needleman, Sarah E. The subtitle for the article reads -- "Companies Find That Trusted Employees Often Commit the Crimes, and They Believe the Recession Is to Blame." http://online.wsj.com/article/SB122896381748896999.html

WSJ Needleman writes, "In the wake of the recession, more businesses are facing a growing financial threat: employee theft. New research shows that employers are seeing an increase in internal crimes, ranging from fictitious sales transactions and illegal kickbacks to the theft of office equipment and retail products meant for sale to customers. Employers suspect that workers are pilfering from them to cope with financial difficulties at home or in anticipation of being laid off. What's more, it's often the most trusted workers who are committing the thefts."

Summarizing the article, Security Management Daily writes, "approximately 20 percent of employers polled in a new survey said workplace theft has become a moderate to significant problem recently. The survey was conducted by the Institute for Corporate Productivity and HR.com, and involved supervisors and executives at 392 U.S. firms. Eighteen percent of respondents said they have noticed a recent increase in monetary theft among workers, such as missing cash or bogus transactions. In addition, 24 percent of respondents said they had seen a rise in stolen, non-monetary goods like office supplies and retail products. Data from PricewaterhouseCoopers (PwC) reveals that in 2007, companies lost an average of $2.4 million to fraud, most of which was committed by workers, up from $1.7 million in 2005. Brian J. Mich, head of anticorruption compliance and investigations at BDO Consulting, says during tough financial times, "people have a tendency to give in to temptation to commit criminal behavior," and that employers tend to become more vigilant. Mich also observes that people viewed as the most trustworthy--those who have "access to systems and information"--often commit the biggest thefts. A 2007 PwC survey found that in general, 85 percent of people who commit workplace fraud are male, 44 percent are between the ages of 31 and 40, and 38 percent hold at least a bachelor's degree.

New US War Front -- Mexican Border Corruption and Killings

"Hey Lucy, we have a problem," and its in our backyard. If we are not careful, the corruption, violence, and murder raging along the southern side of the southwest Mexican border may spill over. With illegal drug gangs terrorizing each other, law enforcement, newspaper reporters, and the local communities, getting a grip on crime in Mexico is critical for the financial viability of the Mexican economy, and the safety and security of Mexico and the US, particularly our states along the southwest border. If President Elect-Obama is looking for an expansion of his New Deal employment-based infrastructure and energy projects, I suggest the new war front to fight, is right here at home. Perhaps that is why Arizona Gov. Janet Napolitano has been tapped for the Homeland Security Director position?

The issue of lawlessness and violence along the border is an order of magnitude more baneful than the free trade and migratory worker issues discussed in the campaign. The number of Mexican gang related slayings along the US border exceeds 4,500 to date in 2008. This number greatly exceeds the total number of US military deaths in Iraq since the war began in 2003, totaling 4.209 US personnel deaths in Iraq conflict at the time of this writing.

"Mexico has one of the highest kidnapping rates in the world, with dozens of Americans among the victims. Officially, an average 70 people are abducted each month, although private security firms say the real figure is 10 times higher. Most Mexicans don't report kidnappings for fear of endangering the victims' lives or that the police may be involved," reports the Houston Chronicle on 12/06/08. http://www.chron.com/disp/story.mpl/world/6150186.html

Citing examples of the violence, the HC reports, "In a recent high-profile case that shook the nation, Fernando Marti, the 14-year-old son of a sporting goods magnate, was kidnapped and killed in Mexico City in August. Marti's driver and bodyguard also were tortured and killed. Two Mexico City police officers, including the head of the airport's anti-kidnapping squad, were later implicated in the murder and 14 more officers were under investigation."

The news of violence along the border has reached worldwide attention. Even far away Australia posted this recently -- "As the cartels compete for control of lucrative trafficking routes and fight against newly attentive authorities, bodies are routinely mutilated, videos of executions are posted on the Internet, corpses are dumped on playgrounds and heads roll in the streets.

"No one is immune to this anymore," said Roderic Ai Camp, a Mexico expert at Claremont McKenna College in California. "It has really brought home on a personal level that there's corruption and crime and, in extreme cases, violence that's touching everyone." Many of the kidnappings are carried out by the drug syndicates, which are diversifying their criminal activities amid a government crackdown on the narcotics trade. The recent deployment of 30,000 Mexican soldiers and federal police to areas controlled by the drug gangs, together with tightened U.S. border security and a slump in U.S. cocaine use, has dramatically cut the traffickers' profits, security officials here say.

Meanwhile, more than 5,000 Mexicans have been slain gangland-style since January — twice the rate for all last year. "The real issue isn't the death penalty," said Miguel Sarre, a Mexico City law professor. "It's the death sentences that are being carried out every day with no legal process against people who are involved in crime, and those who aren't." Spill over violence of this type if left unabated is a risk, particularly on the border, and the routes of interconnected gang transit and traffic.

# # #

For an earlier blog on this topic read -- my blog first posted on 11/12/08.
http://d2crimewave.blogspot.com/2008/11/hard-times-hit-mexican-illegal-drug.html

Massive job losses since September 2008, Portends crime wave by September 2009

This morning I write about bleak times now for the broad economy, and bleaker times ahead -- unless you are in the business of security which will experience boom time conditions by Q3 2009. A rise in property and violent crime is forthcoming if current trends persist: shoplifting, burglaries, robbery, intimidation, extortion, kidnapping, robbery, arson, or worse. The history of severe economic negative economic shocks show a crime wave following within one year.

The US economy is in an economic death spiral of sorts with real estate, equities, commodities, business investment, and employment heading downwards fast. The animal spirits that encouraged investors of times past to invest in equities and bonds are in retreat and seeking to hold treasuries and cash. Indeed, holding cash today is viewed as a store of value as assets are rapidly losing their store of value -- homes, cars, assets, and commodities have retreated in value. Without a sizable exogenous event, within one year, indeed by Septembers' end 2009, there will be a widely recognizable, and vicious crime wave that hits this country the likes that have not been seen since the great depression. In that day, a man will set a tool down, and it will be gone.

Statistically speaking, for every rise in the unemployment rate you will notice a multiplied increase in the local property crime rate between 1.4x to 2.6.x depending on the local geography, population density, and job opportunity climate. These figures are taken from years of individual and time series data research conducted by economists and criminologists that examined the impact of rising unemployment on crime rates. One can only imagine what it must have been like living through the first great depression with unemployment rates of 24%.

Now I don't expect (or care) if anybody necessarily agrees with me -- the facts will speak for themselves. But I do hope that you will prepare yourselves for more difficult times ahead. Unfortunately for us all, time and the consequence of actions taken to date, and the downward trend are in my forecasting favor. I am putting this out now so that everyone can wake up and understand that we need to address the serious question of unemployment, loss of household income, and lack of access to capital (in homes that are depreciating monthly). Without income, people make up the difference by other means. The question is this -- how quickly do you take heed to this forecast? how will you prepare? what can you do now to make yourself much less a 'victim' or target of crime opportunity?

The economy fell off a financial cliff with the siemic event of 9/15/08 and the Lehman Brothers bankruptcy and the subsequent market events that followed. Commercial lending has literally ground to a halt, businesses have contracted spending, consumers have covered their wallets and pulled back from large purchases, and unemployment has spiked -- and this condition is not likely to turn around for many months. President Elect Obama's New Deal broadbased jobs based employment plan as announced will not cover the enormity of the jobs lost at current forecast. More creative thinking must emerge.

Leading off the front page of the New York Times on December 5, 2008, is a headline that reads -- U.S. Loses 533,000 Jobs in Biggest Drop Since 1974 . "The nation’s employers cut 533,000 jobs in November, the Bureau of Labor Statistics reported Friday. Not since December 1974, toward the end of a severe recession, have so many jobs disappeared in a single month — and the current recession, far from ending, appears to be just gathering steam." Most importantly, a total of 1.9 million jobs have been lost since December 2008, the start of the deep recession and two-thirds of these loses have occured since September 2009. This trend will continue for the foreseeable future of months and several quarters. The NY Times articles goes on to post - "More significantly, the unemployment rate does not include those too discouraged to look for work any longer or those working fewer hours than they would like. Add those people to the roster of the unemployed, and the rate hit a record 12.5 percent in November, up 1.5 percentage points since September. "

http://www.nytimes.com/2008/12/06/business/economy/06jobs.html

The chorus call asking if we are going to have a crime wave has began. Today's article of interest has the heading, "Now that the recession is official, is a crime wave coming?" http://www.daily-journal.com/archives/dj/display.php?id=432114 The article provides the following comments -- "Richard Rosenfeld is a professor of criminology and criminal justice at the University of Missouri-St. Louis. He believes it is inevitable -- no matter where you live. "My research has shown that crime rates tend to rise when consumers become pessimistic. Why? Economic theory predicts that people weigh the costs and benefits of law-abiding versus criminal behavior," he recently wrote. "Like it or not, a failing economy increases the temptation." And Rosenfeld added, "Worried consumers do not necessarily resort to street crime. But some will resort to buying stolen goods when they can no longer afford the prices at Target or Wal-Mart. As that demand increases, so does the incentive for the street criminals who supply underground markets."

It's time to prepare. In pioneer times they would circle the wagons to protect themselves. What is the equivalent of circled wagons today? More on this in coming blogs.

Second Great Depression Not Off The Table

I like Jim Cramer of CNBC's Mad Money and think he is both witty and smart. I have also found that he is objective, hard-hitting, and a truth teller -- until this week. It seems that Cramer wants to be considered for the position of the new SEC Chairman, and with it, he has adopted the very optimism of the politicians he seeks to thrash for their non-awareness of the problems. This week Cramer declares, the great depression 2 is off the table -- “Enough with the hysteria,” Cramer said during Tuesday’s Mad Money, we’re not going to suffer another Great Depression." http://www.cnbc.com/id/28017109


oh really.......... awareness of the problem is the root of solving it. If people think that we are not going to go through the pain, they will hold out thinking falsely that somehow this time is different; it is not. With collective voice, nearly all acknowledge that the global economy is contracting rapidly with many developed nations now in declared recessions, and even more developing nations at great risk from economic dependence in terms of trade with developed nations. During this downturn we have observed the speed and depth of the downturn surpass prior barriers -- the post 9/11 downturn, the 1991 recession, the 1987 stock market crash, the 1974 deep recession. Each time the bar was lowered as the market continued to retract faster and more severely than past experience.

The only remaining comparable to our current market is the Great Depression of the 1930s, sparked by the dramatic collapse of the stock markets in the fall of 1929. Those were extraordinary times that nobody seeks to repeat. Optimists for subscribing to the theory that this time will not be as bad as the Great Depression point out that we have learned from the Great Depression and have pulled out all the stops to create a soft landing for the economy, and hopefully, wishfully, prayfully to declare that the Great Depression Two is off the table for the following reasons.

More response monetary policy and interconnected or correlated international banker actions including massive coordinated interest rate cuts to spur investment and liquidity.
US Federal Reserve policies to provide needed liquidity to markets through multiple tools introduced since the 1930s with advantage of lessons learned.

1. US Federal government responses like the US TARP provide liquidity and capital to financial markets.
2. FDIC insurance safeguards individual depositor accounts in banks up to $250k preventing runs on banks.
3. Federal and state unemployment insurance for employees losing jobs preserving a modicum of income for households for the first few months of unemployment while workers find new work opportunities.
4. Many other New Deal policy actions of the federal government.

Some also comment that since we are not now at Depression levels that somehow are times are irrelevant. Take for instance this post commenting on the parallels of the Great Depression to today, and how times are somehow different now.
“By the afternoon of March 3, scarcely a bank in the country was open to do business,” FDR said in his March 12, 1933, fireside chat (now available on a very cool podcast at the Federal Deposit Insurance Corp.’s Web site). In 1933, some 4,000 commercial banks failed, causing depositors to take huge losses. (There was no FDIC back then.) The recession that started in August 1929 lasted for a grinding 43 months, during which unemployment soared to 25 percent and national income was cut in half. By contrast, through mid-November 2008, only 19 banks had failed. The Federal Reserve last week said it expects unemployment to top out at 7.6 percent in 2009. Economists surveyed by the Philadelphia Federal Reserve Bank believe the recession, which started in April 2008, will be over by next summer. (Of course, back in January the same guys forecast that the economy would grow nicely in 2008 and 2009.) But don’t take it from me. Take it from this year’s Nobel laureate in economics. “The world economy is not in depression,” Paul Krugman writes in his just-reissued book The Return of Depression Economics. “It probably won’t fall into depression, despite the magnitude of the current crisis (although I wish I was completely sure about that).” This quote and more on this line of thought can be found at http://www.outsidethebeltway.com/archives/not_the_great_depression/

Balderdash. From a factual frame of view, no economic downturn in the past 100 years has occurred more sharply or deeply as our current condition. Perhaps it is our electronic broadcasting, rapid news transfers, or speed of transactions and movement of capital, or perhaps or recollection of history that has caused this downturn to hit with more speed than any other of recorded history in the past century. The scary facts are this -- the stock market collapse, an indicator of market sentiment and store of value, has now reached (touched) market levels not seen since the 1929 stock market crash. While it took more time for the market to reach it current levels than in 1929, there are many conditions that exist that portend extremely stormy weather ahead. Here are some trends that bespeak more negative news in the future.

First, despite political leadership commenting otherwise throughout last year that the fundamentals of the economy were sound -- they clearly were not. We are now confirmed as being one-year into the Recession that started December 2007, as reported by the National Bureau of Economic Research, as reported 12/01/08; http://www.washingtonpost.com/wp-dyn/content/article/2008/12/01/AR2008120102771.html You simply cannot listen believably to political leaders that in the face of negative facts hope to prop up the markets with their unbridled optimism when the facts speak otherwise. Political leaders are cheerleaders and hope to not yell 'fire' in the theatre causing greater mayhem, so while we need political leaders to conduct actions for the benefit of the general public, to rely on their boldfaced statements is to put your head in the sand.

Second, housing prices continue to slide downwards impacting individual wealth and prosperity and wealth-making options in the US. Massive unemployment and layoffs announced during the past 90 days, if continued, may cause a would-be housing bottom in spring 2009 to fail, and we could be headed further down if more home loan defaults occur. Home equity is one of the primary vehicles used by entrepreneurs, small business owners, and new business start-ups to provide cash for their businesses whether the homes are used as collateral for business loans, or more simply as credit lines in the form of Home Equity Loans. When housing prices are expected to continue falling, the amount of capital that banks are willing to lend on an asset-backed basis severely contracts.

As a small business owner since 1994, I too have used the equity in my home(s) as a backstop for my business enterprises both as collateral for loans and performance bonds, as well as home equity loans. The appreciation in real estate values in the 1990s and early 2000s enabled me to provide capital to my company relatively easily and quickly. And when business cycles impacted my business, such as the NASDAQ market crash in 2000 or post 9/11 terrorism events, I was able to use my home equity to create a soft landing and recovery means for my business to conduct a business-cycle recovery that would not otherwise been available to me or my employees.

Third, massive unemployment announcements continue to weigh down on the overall market, suppressing consumer views of the economy and market, and reducing expectations. There has been much written on this topic elsewhere. The important thing here is that unemployment impacts other variables, and lack of income creates crime opportunity for those that would otherwise be law abiding. "The national unemployment rate rose last month at the fastest pace in 26 years, foreshadowing what economists fear could be the biggest increase in joblessness since the recession of the 1970s. There are now more than 10 million Americans out of work, nearly 3 million more than a year ago, with manufacturing, construction, and retail sectors particularly hard-hit."
http://www.boston.com/news/local/massachusetts/articles/2008/11/08/unemployment_rate_in_us_surging/
The unemployment levels of the mid 1930s at massive levels occured some four years after the 1929 stock market crash. The banks that collapsed at their peak in the mid-1930s collapsed within four years of the crash. While the recession started December 2007, the market crash actually is pin-pointed to the collapse of Lehman Brothers on 9/15/08. It is too, too early to say that today's unemployment and massive layoffs will not lead to further deterioration. Just look at what happens in Detroit with the massive restructurings, whether through bankruptcy or not, will grossly impact the current unemployment rolls, along with the associated microcosim of markets of suppliers, servicers, etc.

Fourth, another shoe to drop in this centipede market is the credit card bubble and contraction of consumer credit, just at a time when many employees are losing their jobs. Credit cards have been viewed falsely by individuals as a store of value, safety, or safe haven for consumers to smooth the periods between financings. I have openly chastised financial planners such as CNBC's On the Money analyst for encouraging individuals to pay-off all of their credit card debt with available cash, when she fails to tell these same individuals that once they pay-off their credit cards, that the credit card companies can unilaterally cut their credit availability and they would end up with no credit and no cash -- the worst of the situations in an economic downturn. On an individual basis, the only prudent move is to hold as much cash and credit available to make it through the rough patches ahead -- if you spend all your cash, you are prone to paying higher prices as you have fewer options ahead.

On this note, the Motley Fool cited, "Meredith Whitney -- bank analyst extraordinaire -- predicts that the credit card industry may slash more than $2 trillion of existing credit lines -- 45% of the total -- over the next year and a half. Yikes! The obvious outcome here would be a huge risk reduction for companies that issue consumer credit, such as JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), and Citigroup (NYSE: C), while kicking an already-bloodied consumer -- and to a lesser extent, card processors Visa (NYSE: V) and MasterCard (NYSE: MA) -- while they're down." Read more on this at: http://www.fool.com/investing/dividends-income/2008/12/01/the-death-of-credit-cards.aspx

Fifth, residential and commercial lending crises in regional banks to be a future shoe to drop. Regional banks have financed home loans and loans for small businesses and construction loans throughout the US. Reuters reports that "Regional banks exposed to deteriorating home equity loans are facing a greater risk of bankruptcy, possibly extending a U.S. credit crisis to 2010, a senior Morgan Stanley credit analyst said on Monday. Wall Street bank exposure to sub prime mortgage debt and structured finance products already has resulted in more than $400 billion of write-downs and losses since last year. Now other consumer debt, such as credit cards and auto loans, may be the next source of busted loans. See http://www.reuters.com/article/InvestmentOutlookMid08/idUSN0964320080609

Sixth, commercial real estate bubble to burst in coming year. Massive unemployment of white collar positions in banking, advertising, and other traditional salaried positions will be leaving massive amounts of commercial real estate empty. Of the trillion notes to be refinanced in 2009, over 1/3 are underwater, meaning they cannot be refinanced. One blogger posts, "Fitch has been saying since last April that commercial real estate was exhibiting the same sort of frothiness as subprime. CMBS spreads started widening sharply last August. Investors started pulling back from purchases in September, expecting prices to fall considerably. In November, Nouriel Roubini added commercial real estate to his list of impending financial train wrecks, estimating the damage at $100 to $150 billion." http://www.nakedcapitalism.com/2008/03/surprise-commercial-real-estate-woes.html

Seventh, government receipts from tax collections are impacted significantly and will be another source of economic harm in the economy. California has warned of danger of running out of operating capital in 2009 without significant financial assistance; they are not alone. "Led by California with a $28 billion hole in its budget, 41 states are in financial trouble, and many of their leaders are looking to Congress to bail them out." http://www.idahostatesman.com/1425/story/571171.html Not only are the states in trouble, but many cities are in financial trouble and looking for ways to cut services and costs at a time of peaked needs. It is not just the tax revenues that are down, but also the state and local governments ability to borrow as many tax-based finance bond auctions have gone under-subscribed since 9/15/08.

I could go on, but you get the idea. The confluence of the above negative events if left unabated will create an economic death spiral for the economy that will lead to the second great depression and the concomitant other ills such an economy brings. Our leaders are using the playbook of lessons learned from the great depression, and that book of experience has its limits. Communication is faster, transportation quicker, capital moves electronically, news reaches a boiling point swifter, and the world is more interconnected. Criminals are more sophisticated and using complex instruments and technology to dodge responsibility and capture. Add to this milieu the fact that we live in a troubled world of anarchists, terrorists, pirates, and extremists, and you have a cocktail of misery for the next year and several years.

Consequently, not talking about the second great depression will not forestall it. We do however need to focus attention on solutions as being a town-crier on its own does not solve the problem. However, recognition of our current dilemma and its gravity, is necessary to proactively combat the economic forces that weigh us down today. Only the collective genius of all working to make active change to our current circumstance will make a difference.

Unfortunately, a hard landing is in the offing, and if you live in the pockets of misery such as Detroit, what was bad, is about to get unbearable; http://www.youtube.com/watch?v=ufexZnViDiU It was sad to see recently in a local Detroit newspaper print 137 pages of tax foreclosure notices, and only 4 pages of employment opportunities -- and the massive layoffs from the automotive industry have not occurred in any meaningful way yet. Many of the tax foreclosure notices were on properties that are underwater or homes that cannot sell in this market. This story also illustrates the loss of working capital of state and local governments that need funds to operate.

At this holiday season of gift giving, let us pray that US law makers move, not for the industry, but for the broad market and the families of the automakers and allied industries to create a softer landing for the over 1.2 million workers vulnerable in the mid-west from a prolonged downturn in the US automotive industry.

News report - Bad Economy, Dangerous Holiday Shopping

While not rising to crime wave proportions yet, this year's holiday shopping season is starting out rougher and more violent than any years in recent memory. From stampedes for bargain priced items, to breaking down doors to get in first, to gun violence at a few malls, to spikes in shoplifting reported by great numbers of stores, this year has been notable for bad behaving shoppers. This is the essence of an article on the topic that appeared on ABC News on 12/2/08, titled,

Bad Economy, Dangerous Holiday Shopping, Violence Marks Holiday Shopping Season; Some Say Stores Haven't Done Enough to Increase Security http://abcnews.go.com/Business/Economy/story?id=6371057&page=1

The article points out that in addition to the Wal-Mart employee killed by a human stampede for the low-marked item, that other violence has accompanied this years Black Friday shopping seaons. Here are the low-lights -- ABC News reported that "In addition to the Friday morning stampede that led to the Wal-Mart worker's death, there was a spate of shootings: Two men shot each other to death at a Toys "R" Us store in Palm Desert, Calif., Friday; a pregnant woman was injured in a shooting at an Atlanta mall Saturday and armed robbers killed one man at an Express store in a suburban Miami mall Monday. "

The article further reports, "According to the National Retail Federation, at least one kind of crime -- shoplifting -- is on the rise. Of the more than 100 retail executives surveyed by the federation in October, 74 percent reported an increase in shoplifting. "We do feel the economy is a trigger for someone taking an opportunity to commit a crime that they otherwise would not think about," said Joseph LaRocca, the vice president of loss prevention at the federation. "

LA Police Chief - Bucks Trend - Increases Officer Count as City Budget Contracts

Applaud goes to LA Police Chief Bratton who has successfully persuaded LA city execs to support his expanded police manpower requirements in the face of significant down turned economic conditions. At a time when city governments and police chiefs around the country are reducing headcount due to budget shortfalls, LA's top cop has countered this trend and made a successful argument to city leaders that funding police operations is the key to safeguarding public order, supporting real estate prices, jobs for commercial enterprise, as crime and public fear of crime erode property values in crime plagued areas. Chief Bratton has rightly observed that "The irony is that as we go into this economic downturn, we're expanding… which is exactly what you need to do when the economy turns bad."

Top Cop in Los Angeles Says Cutting Crime Pays
http://online.wsj.com/article/SB122791606618265561.html?mod=googlenews_wsj