By Brian Burnsed, BusinessWeek

Jefferson County, Ala., may be headed for the largest municipal bankruptcy ever. With the economy shrinking, it may not be alone.

It’s not just on Wall Street where dubious financial decisions are creating casualties. Municipalities, many of which made enormous financial promises when the economy was strong, are now confronting heavy fiscal burdens. When the last major bank crisis hit public coffers in the late 1980s, 33 municipalities declared bankruptcy. And despite only eight municipal bankruptcies since 2005, some experts believe that Wall Street’s troubles could soon squeeze a growing number of municipalities, which will be forced to cover bond payments and outlays to retirees. One prime example of this problem is Jefferson County, Ala., where the state’s largest city, Birmingham, is located. The county is now saddled with $3.2 billion in debt from sewer upgrades and finds itself on the brink of becoming the largest municipal bankruptcy in U.S. history.

The current troubles began in 1993 when Jefferson County was sued by residents living near the Cahaba River, who claimed that the county’s sewer systems were pumping raw waste into local streams. The county settled the suit three years later, agreeing to fix the situation by overhauling its sewage system and to issue bonds to fund the project. Read more….

By Jason Hicks, American Coin-Op

WASHINGTON — Problems on Wall Street are creating tightening credit and slow economic growth, which is hampering activity in commercial real estate sectors, according to the National Association of Realtors’ (NAR) latest Commercial Real Estate Outlook.

“Although capital remains available for residential loans, the credit crunch is pronounced in commercial lending,” according to Lawrence Yun, NAR chief economist. “Combined with a slowing economy, the lack of credit is curtailing activity in the commercial real estate sectors. As a result, there’s been a slowdown in the net absorption of space, which is leading to higher vacancies and more modest rent growth.” Read more….

By Tony, Bank Implode

The victims of the bubble burst are rolling over and dropping rain, there’s a new one every day and today it’s likely National City Corp..  The Cleveland bank indulged in subprime lending as the bubble expanded and is now upchucking the ill-gotten feast.

Shares of National City Corp. crumbled to an all-time low as investors appeared to be looking anew for the financial crisis’ latest victim following Washington Mutual Inc.’s federal seizure.

Bearish investors focused Wachovia Corp. in premarket trading Friday — its stock was recently off 28% to $9.83 — and then apparently set their sights on National City.

The Cleveland-based bank’s stock was subjected to intense selling pressure. It was down 40% to $3 and earlier reached an all-time low of $2. Volume topped 155 million shares at early afternoon, six times the daily average.

One would normally call that exhaustion volume meaning exhaustion of sellers, but clearly the only thing exhausted today or national cities last chance of remaining independent. In fact lacking a bailout the bank finished the day seeing its shares hammered by over 50%. Read more….

RAB Capital wins a vote to freeze redemptions for three years, relieving pressure on – at least some – mining stocks.

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By Chuck Butler, Daily Pfennig

Good day… And a Terrific Tuesday to you! Well… Guess who was wrong AGAIN! That’s right, King Henry Paulson, he of the U.S. Treasury Sec. throne… He told the world on Friday, that the bailout package was a “done deal”… And he told us again on Sunday that it was a “done deal”… The markets rejoiced, the stock jockeys danced in the streets, the karma flowed and all the stars were in alignment… And then… A (not so) funny thing happened on the way to the forum…

King Henry’s men revolted, and the bailout package did NOT have the votes to pass it, and the “done deal” was “undone”! Once again this man has led investors down the wrong path. I’ve documented the wrong statements by this man in the past year, and still, investors hang on every word by King Henry… When will they ever learn? When, will, they, ev-er learn?

The Dow posted its biggest one point drop ever… 777 points… It wasn’t the biggest percentage drop in one day ever, that belongs to the Crash of October 1987, but still, that was enormous! There needed to be a tourniquet to stop the bleeding, and not one was given to the stock market. The S&P 500 suffered too…

And… Was the bailout package the “only” reason stocks dropped like a rock? Difficult to say… But let me say this so you can hear me now and listen to me later… Even in the face of the other bailout plans (remember Bear Stearns, Fannie & Freddie, AIG, the mortgage bill?) stocks had a difficult time putting together a rally that would last a couple of days… There’s an underlying problem here folks… And if you ask me, and I know you didn’t, but you’ll get my answer anyway! I think it’s the recession we’re in, but no one wants to admit it. We’re so deep into a recession that the NBER doesn’t know their way out, much less call it for what it is!

I had a reader chastising me because his currencies aren’t going through the roof. Hmmmm… Let’s look around the bar room, and take stock of what’s going on here… Currencies are performing better than stocks… Bonds… Mutual funds… Housing… Commodities… I wonder where it would have been better to have money? I’m sure there’s somewhere… But, for the most point, Currencies may be down… But they are outperforming most other investments! Read more….

By Pam Martens, CounterPunch

Pity poor President Bush.  He’s been pushed aside as The Decider.  The Decider’s strut and press entourage, along with the coffers of the United States, were to be handed to Henry M. (Hank) Paulson, U.S. Treasury Secretary, who was to have sweeping authority to share newly augmented plunder with his cronies on Wall Street and set up a vast new bailout bureaucracy, all at taxpayer expense.

But, at last, the People’s House may be listening to the people. The House of Representatives voted yesterday to reject the bailout measure 228 to 205.

What a truly Orwellian message this proposal would have sent to our nation’s children and honest, hard working people everywhere: loot and collapse a 200-year old financial system and you’ll be rewarded with a fresh $700 billion of public money to disperse among your cronies who aided and abetted in the collapse.

Mr. Paulson worked as Chairman and CEO of Goldman Sachs until he was sworn in as U.S. Treasury Secretary on July 10, 2006.  Exotic instruments created and peddled by Goldman around the globe while Mr. Paulson was Goldman’s Decider have contributed to the collapse.  His former firm has also benefited to the tune of tens of billions from taxpayer money already doled out by the Federal Reserve.  Other firms like Merrill Lynch and Citigroup/Smith Barney that broke the backs of Fannie Mae and Freddie Mac by selling them billions in explosive derivatives have also seen their prior execs appointed to plum spots in the “rescue” mission.
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Commodity prices have fallen further as investors lose confidence after the shock rejection of the U.S. bailout plan.

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Copper prices have fallen to an 18-month low, and aluminium to an 8-month low, on fears of a recession.

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Platinum trades below USD 1,000 an ounce, the lowest since February 2006, and nearly 60% off its highs.

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Workers at Polish copper miner KGHM will vote on whether to hold a strike over wages in mid-October.

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