Cities begin to cry for help

The wave of economic fear is quickly spreading to the Midwest as Chicago's Mayor Richard M. Daley sounded dire warnings that massive layoffs will occur in several of the cities largest corporations before the end of the year, and the beginning of next year as well.

Saying, "Each one [company] tells me what they're laying off, and they're going to double that next year. We're talking huge numbers of permanent layoffs for people in the economy. It's going to have a huge effect on all businesses."

With grim repercussions in shrinking the tax-base even further, it is now left up to the final solution of raiding lock-box funds in order to prevent the city's looming bankruptcy.

While only the most prepared cities throughout the country have special funds tucked away, others have to take a direct approach like reducing services, cutting operating expenses, raising fees and taxes further stressing out consumers.

As home foreclosures continue unabated in October, like a dog caught between two bowls of dog food on either side of the kitchen, Fannie May and Freddie Mac continue to loose money like a sieve while being mandated to stop all future proceedings.

In fact, a judge has just prevented another mortgage underwriting company to do the same. Saying in essence, go take a huge financial loss and cease all home reposessions. Needless to say, the 50,000 homes it's no longer making money from will most likely force H & R Block to request Federal Assistance in the near future as have most companies in the US.

From banks large and small, investment firms, (now quickly becoming a thing of the past), the auto industry and Governors across the country, the 700 billion looks like a small drop in the pond compared to what is really needed to stop the bleeding.

Especially now that it looks like Treasury Chief, Hank Paulson, will be spending most of it just trying to keep our largest banks solvent by directly purchasing stock. This while over 44 million adults don't have health care, let alone a job or a home to come to at night.

The thing that scares me concerning Daley's comment yesterday is mention of the word, "permanent" which to me suggests a pretty long time. Now, with no other jobs or opportunity available the city will be placed in a quickly deteriorating situation of needing to provide more services with a continuing decline in resources.

Now, Chicago is a big city and has been witness to several difficulties in the past, so I would assume at some point it will recover again but unfortunately I wouldn't bet on too much assistance from the Federal Government as Daley noted, "[who] can just print the money."

Word on the international markets is that no one is buying US backed IOU's anymore which are what need to be sold in order to print the money. As our national debt spirals out of control, so goes the Federal Government's ability to pay it back. Right now all we can hope to do is pay interest. Can you imagine that monthly check?

Now that we really need help, it looks like the Fed has been out drinking pretty heavily and spent our money on other stuff.

Looks like we're due for a long hangover.