More Evidence Of Economic Turmoil In NYC As Garment District Unravels

Yesterday we noted that New York City is turning into a retail wasteland, after the New York Times documented a plague of vacant storefronts along the city’s most popular retail corridors. 

Today, RetailDive shines a spotlight on the Manhattan-focused Garment District’s rapid unraveling, as office spaces from other industries encroach on the highly sought after real estate. 

The area, which roughly encompasses the streets between 35th Street and 40th Street, and the avenues between Broadway and Ninth, has been protected by strict zoning laws since 1987.

But times have changed. New York City has lost 95% of its manufacturing workforce since its heyday in the 1950s, and a 2011 report from the New York City Economic Development Corporation (NYCEDC), a non-profit centered on economic growth in New York City, indicated that fashion manufacturing jobs in NYC had further declined 61% since 2001. Recently, the Garment District Alliance reported that “from March 2017 to March 2018, New York City’s apparel manufacturing industry shrunk by an additional 7.7%, a loss of approximately 1,000 jobs.” And as of August 2018, the AP estimated that only 5,000 garment manufacturing workers remained. –RetailDive

New York’s Garment District isn’t the only part of the country to suffer from evaporating jobs in apparel; In 2012, the US Department of Commerce reported that “since 1990, employment in apparel, leather, and allied product manufacturing has shrunk by 912,000 jobs, or 84 percent.” Most of the remaining jobs are located in New York, California and Texas. Moreover, textile and apparel manufacturing shrunk from 0.57% of US GDP to 0.16% from 1998 – 2015, according to the Bureau of Economic Analysis

Preserving the district?

In February of last year, New York City Mayor Bill de Blasio said that it would rezone the Garment District; removing some outdated restrictions, while developing Brooklyn’s rapidly gentrifying Sunset Park district. The next month, the NYCEDC teamed up with the Council of Fashion Designers of America (CFDA) and the Garment District Alliance to provide financial incentives to companies who wished to relocate from Manhattan to Brooklyn. 

This did not sit well with some people…

Outrage over rumors of a Brooklyn relocation of the Garment District led to heated debates in public forums, and in summer 2017, the Garment Center Steering Committee was formed by Manhattan Borough President Gale A. Brewer, Council Member Corey Johnson, and Deputy Mayor for Housing and Economic Development Alicia Glen. The committee engaged with NYCEDC, as well as New York fashion industry interests, including costume theater industry workers and the Garment District Alliance. They released a report that provided recommendations on real estate and business development that would help the Garment District transition into a more sustainable manufacturing center. –RetailDive

The plan to pay companies to move was ultimately scrapped over the outcry.  

“People had it in their heads that the Garment District was being asked to move, but no one was being asked to move,” said Julieanne Herskowitz, vice president in the development department at NYCEDC. “But what was clear is that we had not sufficiently thought of the Garment District, and [Manhattan Borough President] Gale Brewer and [Council Member] Corey Johnson pushed the city to think about how the Garment District could remain a hub of fashion in the city if zoning were to be lifted. There are about 400 companies in the area, employing about 4,000 people. It’s still a critical hub.”

“We had agreed to help with relocation costs, and then Gale Brewer said she won’t support a plan that doesn’t include retaining a core in the Garment District,” said Garment District Alliance president Barbara Blair. “She didn’t want all these jobs being encouraged to leave for Brooklyn.”

Brewer’s office responded, insisting that “The whole fashion industry in New York depends on the tight-knit cluster of specialty suppliers and skilled workers in the heart of Manhattan, which is why we’re acting to keep it strong and successful,” adding “It’s not about choosing between the Garment Center or growth in the other boroughs. A strong foundation here lays the groundwork for success everywhere.” 

Brooklyn Exodus

Despite efforts to rescue Manhattan manufacturing, it seems nothing can stop the exodus. 

“People think this is a neighborhood-centric issue, but it’s not,” Blair said. “We used to have 150,000 manufacturing jobs in this neighborhood, and now we have 5,000 jobs. And this is a 40-year national trend.”

Blair said that although a lot of people blame the loss of jobs on rent issues, it’s more complex than that. “It’s easy to blame the landlords, but basically a lot of their business dried up,” she said. “If designers were still producing locally, [manufacturers would] be able to pay their rent. One of the manufacturers said to me, ‘if Ralph Lauren would manufacture even 1% of his product in New York City, that would be enough to save New York City manufacturing.‘ Of course, NAFTA also had a huge impact too, back in the early 1990s. There are definitely property owners in this neighborhood who have pushed people out. But that’s not the majority.”

Certainly, some brands, such as Yeohlee, still do all their manufacturing in Manhattan. But others have moved further afield, in search of bigger spaces and a different community. Complexes such as Industry City in Sunset Park, are attracting many of New York’s young creatives. “Over the past five years, we have leased more than 1 million square feet to manufacturers, including a wide range of fashion and garment production companies,” said Lisa Serbaniewicz, spokesperson for Industry City, in an email to Retail Dive. –RetailDive

Out with the old… 

While the garment district suffers, Brooklyn is flourishing. “Brooklyn is the second largest hub for apparel design [in New York City],” said Herskowitz. “The EDC manages and operates over 6 million square feet of industrial space at the Bush Terminal and the Brooklyn Army Terminal, and has been investing in these assets. And then also the Made in NY Campus, which will have a campus dedicated to the New York City fashion industry. The EDC is still actively doing that along with the city.” 

At the end of the day, however, manufacturers just can’t beat the allure of that cheap, cheap foreign labor. 

“There’s such a huge financial gap between overseas labor and local labor, and you could never close that gap,” said Blair. “We believe that manufacturing should be here [in New York City]. I always thought we would lose some manufacturing, but that eventually, the water would find its level. It just hasn’t yet. There’s an industry in decline that hasn’t found its footing in the new world.”

On The Brink With Russia In Syria Again, 5 Years Later

Authored by Ray McGovern via,

The New York Times, on September 11, 2013, accommodated Russian President Vladimir V. Putin’s desire “to speak directly to the American people and their political leaders” about “recent events surrounding Syria.”

Putin’s op-ed in the Times appeared under the title: “A Plea for Caution From Russia.” In it, he warned that a military “strike by the United States against Syria will result in more innocent victims and escalation, potentially spreading the conflict far beyond Syria’s borders … and unleash a new wave of terrorism. … It could throw the entire system of international law and order out of balance.”

Three weeks before Putin’s piece, on August 21, there had been a chemical attack in the Damascus suburb of Ghouta and Syrian President Bashar al-Assad was immediately blamed. There soon emerged, however, ample evidence that the incident was a provocation to bring direct U.S. military involvement against Assad, lest Syrian government forces retain their momentum and defeat the jihadist rebels.

In a Memorandum for President Barack Obama five days before Putin’s article, on September 6, the Veteran Intelligence Professionals for Sanity (VIPS) had warned President Barack Obama of the likelihood that the incident in Ghouta was a false-flag attack.

Despite his concern of a U.S. attack, Putin’s main message in his op-ed was positive, talking of a growing mutual trust:

“A new opportunity to avoid military action has emerged in the past few days. The United States, Russia and all members of the international community must take advantage of the Syrian government’s willingness to place its chemical arsenal under international control for subsequent destruction. Judging by the statements of President Obama, the United States sees this as an alternative to military action. [Syria’s chemical weapons were in fact destroyed under UN supervision the following year.]

“I welcome the president’s interest in continuing the dialogue with Russia on Syria. We must work together to keep this hope alive … and steer the discussion back toward negotiations. If we can avoid force against Syria, this will improve the atmosphere in international affairs and strengthen mutual trust … and open the door to cooperation on other critical issues.”

Obama Refuses to Strike

In a lengthy interview with journalist Jeffrey Goldberg published in The Atlantic much later, in March 2016, Obama showed considerable pride in having refused to act according to what he called the “Washington playbook.”

Clapper (far right): No slam dunk Assad did it. (Office of DNI)

He added a telling vignette that escaped appropriate attention in Establishment media. Obama confided to Goldberg that, during the crucial last week of August 2013, National Intelligence Director James Clapper paid the President an unannounced visit to caution him that the allegation that Assad was responsible for the chemical attack in Ghouta was “not a slam dunk.”

Clapper’s reference was to the very words used by former CIA Director George Tenet when he characterized, falsely, the nature of the evidence on WMD in Iraq while briefing President George W. Bush and Vice President Dick Cheney in December 2002. Additional evidence that Ghouta was a false flag came in December 2016 parliamentary testimony in Turkey.

In early September 2013, around the time of Putin’s op-ed, Obama resisted the pressure of virtually all his advisers to launch cruise missiles on Syria and accepted the Russian-brokered deal for Syria give up its chemical weapons. Obama follow public opinion but had to endure public outrage from those lusting for the U.S. to get involved militarily. From neoconservatives, in particular, there was hell to pay.

Atop the CNN building in Washington, DC, on the evening of September 9, two days before Putin’s piece, I had a fortuitous up-close-and-personal opportunity to watch the bitterness and disdain with which Paul Wolfowitz and Joe Lieberman heaped abuse on Obama for being too “cowardly” to attack.

Five Years Later

In his appeal for cooperation with the U.S., Putin had written these words reportedly by himself:

“My working and personal relationship with President Obama is marked by growing trust. I appreciate this. I carefully studied his address to the nation on Tuesday. And I would rather disagree with a case he made on American exceptionalism, stating that the United States’ policy is ‘what makes America different. It’s what makes us exceptional.’ It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation. There are big countries and small countries, rich and poor, those with long democratic traditions and those still finding their way to democracy. Their policies differ, too. We are all different, but when we ask for the Lord’s blessings, we must not forget that God created us equal.”

In recent days, President Donald Trump’s national security adviser, John Bolton, has left no doubt that he is the mascot of American exceptionalism. Its corollary is Washington’s “right” to send its forces, uninvited, into countries like Syria.

“We’ve tried to convey the message in recent days that if there’s a third use of chemical weapons, the response will be much stronger,” Bolton said on Monday. “I can say we’ve been in consultations with the British and the French who have joined us in the second strike and they also agree that another use of chemical weapons will result in a much stronger response.”

As was the case in September 2013, Syrian government forces, with Russian support, have the rebels on the defensive, this time in Idlib province where most of the remaining jihadists have been driven. On Sunday began what could be the final showdown of the five-year war. Bolton’s warning of a chemical attack by Assad makes little sense as Damascus is clearly winning and the last thing Assad would do is invite U.S. retaliation.

Haley: Already knows who did it. (UN Photo)

U.S. Ambassador to the UN, Nikki Haley, with remarkable prescience, has already blamed Damascus for whatever chemical attack might take place. The warnings of direct U.S. military involvement, greater than Trump’s two previous pin-prick attacks, is an invitation for the cornered jihadists to launch another false-flag attack to exactly bring that about.

Sadly, not only has the growing trust recorded by Putin five years ago evaporated, but the likelihood of a U.S.-Russian military clash in the region is as perilously high as ever.

Seven days before Putin’s piece appeared, citizen Donald Trump had tweeted: “Many Syrian ‘rebels’ are radical Jihadis. Not our friends & supporting them doesn’t serve our national interest. Stay out of Syria!”

In September 2015 Trump accused his Republican primary opponents of wanting to “start World War III over Syria. Give me a break. You know, Russia wants to get ISIS, right? We want to get ISIS. Russia is in Syria — maybe we should let them do it? Let them do it.”

Last week Trump warned Russian and Syria not to attack Idlib. Trump faces perhaps his biggest test as president: whether he can resist his neocon advisers and not massively attack Syria, as Obama chose not to, or risk the wider war he accused his Republican opponents of fomenting.

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Tepper: Trump’s China Tariffs Could Trigger A 20% Pullback In US Stocks

David Tepper was probably riding high after his Carolina Panthers bested the Dallas Cowboys in Sunday’s NFL season opener until Thursday afternoon, when he was forced to reckon with the fact that he’s been underweight US equities since he predicted back in April that the “highs are in.”

Of course, Tepper isn’t the only hedgie who dialed back his exposure after February’s volocaust whiplashed many funds and forced them to adopt a defensive posture as they waited for the other shoe to drop. And he deserves at least some credit for readily admitting during Thursday afternoon’s interview with CNBC’s Scott Wapner that he’s only been “about 25% exposed” to US equities – which, in retrospect, is about 75% short of the ideal allocation.

I probably don’t have enough exposure I’ve taken down my exposure. So I’m still long. But you know, not – I would in percentage terms of s&p-type exposure, might be 25% or something of that. And that’s been wrong, because the market has been very hot and the problem for people like me is I’ve had that express with long individual stocks and short you know, futures of some sort or the market in some fashion. And quite frankly our stocks have not done that well this quarter. Which you probably know, you’re going to ask me next or something like that, right

All things considered, assuming the market was fairly valued, a reasonable investor might expect to reap returns of up to 8% over the next year. But Tepper feels like some caution is warranted, which is why he still has cash he can put to work. Because anybody who has taken the president at his word would probably agree that the market has been too naive in pricing in the possibility that Trump’s trade conflict with China will come to an amicable resolution. In fact, Tepper said, he’s been surprised by investors unflinching optimism in the face of a conflict that could potentially disrupt the global free-trade order – particularly after Trump’s declaration that he’s ready to slap tariffs on another $267 billion worth of Chinese goods.

Trump, Tepper believes, will probably slap tariffs on most, if not all, of the Chinese goods streaming into the US. And when that happens, stocks could experience a pullback in the range of 5% to 20%.

Yeah. I have cash I can put to work.Listen I can change things very fast, okay, if we did something, china was solved, somehow which I don’t think is so easy to do. It may be this, we may have to get used that the tariffs just may be on, okay? Then there will be an adjustment in the stock market. Whatever it is, a 5%, 10%, to whatever, 15%, 20% adjustment. Then you’ll move up from there and look, that’s what will be. You know whatever that adjustment, because the currency adjusts, that’s what will happen if that’s the way it goes.

Tepper has taken some widely publicized swipes at President Trump’s trade policies in the past. But when asked for his assessment on the administration’s policies – and, more to the point, whether they’ve been responsible for the market’s resilience (not to mention the booming economy – Tepper had a few kind words to say about Trump and his policies.

While he isn’t convinced that Trump’s confrontational trade policies were the best response, as a “patriotic American” Tepper agreed that something needed to be done about China’s predatory IT policies.

Tepper: I’m a little surprised at the level it is right now. Okay a little surprised I’m not totally surprised. But a little surprised like I said, I don’t think everything is discounted in this price right now. I do think if you do get — again, I’m, listen, I’m a very patriotic American citizen, okay I do think we have to protect our national jewels, our technology so this is a very serious matter when you have very serious matters, sometimes you might have it take a little pain it’s just the way it goes. And I don’t know if this is the right strategy or not. That we’re taking, but we may have to. If it is the right strategy, it’s the right strategy. And we got to make a point I think that that’s not wrong because it’s been going on, I mean listen, as you asked me, trying to avoid it you asked me about some of my stocks, micron. Micron has a very famous case where they stole technology in Taiwan.

Wapner: Been getting beaten up a lot lately.

Tepper: I’m talking about the technology stuff. Absolutely happened in Taiwan with a Chinese basically were trying to steal technology from micron that can’t happen. We can’t allow that to happen. There’s other cases across the country I could bring up and stuff. We have to figure out a way to stop them and there’s been other things where they force the technology transfers I don’t know if this is the right policy but attacking it is not wrong. I think that is probably right policy.

To be sure, Tepper is also anxious about Trump’s decision to blow out the budget deficit, particularly at a time when growth was already robust as the economic expansion enters its ninth year. But will there definitely be a reckoning for these rising debt levels? It’s certainly possible, Tepper said. But as for when that reckoning will arrive, it’s just too difficult to try and time it. Particularly after the market and economy have proven so many doomsayers wrong.

Watch some excerpts from Tepper’s interview below:

Chinese Data Dump Shows Continued Slowdown In Local Economy

One month after China’s latest data dump disappointed across the board, moments ago the National Bureau of Statistics, released the latest Retail sales, Industrial output and Fixed investment data, which was a modest improvement with 1 beat, 1 meet, and 1 miss as follows:

  • China Jan.-Aug. Fixed Investment Miss; Rises 5.3% Y/Y; Est. 5.6%
  • China Aug. Industrial Output Meet: Rises 6.1% Y/Y; Est. 6.1%
  • China Aug. Retail Sales Beat: Rise 9.0% Y/Y; Est. 8.8%

While the rebound in retail sales was welcome (if modest) after several months of missing analyst expectations, China’s fixed investment – historically the biggest driver behind the economy – rose at the lowest pace on record.

On the positive side, property investment continues to be strong:

  • China Jan.-Aug. Property Dev. Investment Rises 10.1%
  • China Jan.-July Property Dev. Investment Rises 10.2% Y/Y

This was offset by another drop in car sales, while jewelry demand rose 14.1%.

While some have praised the beat in retail sales, recall that over the weekend Goldman showed the wide divergence between public (strong) and private (weak) consumption data, suggesting that Beijing is goalseeking yet another data set in addition to GDP.

That said, the latest drop in fixed investment – potentially a consequence of the trade war with the US and China’s own shadow deleveraging – will probably mean more pressure on the government to push growth, meaning more fiscal stimulus. In fact, the record low fixed investment suggests that contrary to the trade war rhetoric, China’s growth woes are homegrown, not just the trade tensions. And, as we have discussed previously, the ongoing sharp decline in investment spending by local governments due to develeraging campaign may be to blame.

Commenting on the data, Tring Nguyen of Natixis, summarized that “retail sales up but fixed asset investment down again. Not great news for growth expectations & growth is increasingly more dependent on consumption. So what is the reaction from the government? More pump priming? The worse the data, the more the easing?”

Meanwhile, as Bloomberg also notes, an August jump in local government bond sales from a year ago may be a signal that China’s infrastructure projects are kicking off again to support a wilting economy which has been hit by the twin risks of trade wars and deleveraging.

  • The data dump release was accompanied by the usual propaganda from the NBS in Beijing which claimed that:
  • There is no stagflation or stagflation-like conditions in China
  • China’s infrastructure investment may stabilize in the next few months
  • China fixed-asset investment may stabilize
  • China household debts remain at reasonable level
  • Effects of China pro- growth measures are showing up
  • China inflation pressure remains moderate

Maybe, but for now China’s modest slowdown is a sharp contrast to the sharp uptick up in U.S. growth, which has helped to explain why Chinese stocks have fallen into a bear market while the U.S. has hit record highs, and why Trump continues to press China on trade concessions: after all he is confident that the US is winning the trade war.

Ultimately, the biggest risk to China is whether the ongoing slump in the credit impulse accelerates. And if Goldman’s forecast is correct, and the credit impulse is about to plummet, China is about to unleash the biggest global recession since the financial crisis.

US Biological Warfare Program In The Spotlight Again

Authored by Peter Korzun via The Strategic Culture Foundation,

This is a scoop to bring the US biological warfare effort back into the spotlight. On Sept. 11, Russian media reported that the Richard Lugar Center for Public Health Research laboratory, a research facility for high-level biohazard agents located near Tbilisi, Georgia, has used human beings for conducting biological experiments.

Former Minister of State Security of Georgia Igor Giorgadze said about it during a news conference in Moscow, urging US President Donald Trump to launch an investigation. He has lists of Georgians who died of hepatitis after undergoing treatment in the facility in 2015 and 2016. Many passed away on the same day. The declassified documents contain neither the indication of the causes of deaths nor real names of the deceased. According to him, the secret lab run by the US military was established during the tenure of former Georgian President Mikheil Saakashvili. The viruses could spread to neighboring countries, including Russia, Igor Giorgadze warned.

The laboratory’s work is tightly under wraps. Only US personnel with security clearance have access to it. These people are accorded diplomatic immunity under the 2002 US-Georgia Agreement on defense cooperation.

Eurasia Review reported that in 2014 the Lugar Center was equipped with a special plant for breeding insects to enable launching the Sand Fly project in Georgia and the Caucasus. In 2014-2015 years, the bites of sand flies such as Phlebotomins caused a fever. According to the source, “today the Pentagon has a great interest to the study of Tularemia, also known as the fever of rabbits, which is also equated with biological weapons. Distributors of such a disease can be mites and rodents”.

It makes remember the statement made by Nikolai Patrushev, Head of Russia’s Security Council, in 2015. He warned about the threat stemming from biological weapons laboratories that operate on the territories of the Commonwealth of Independent States (CIS). He specifically mentioned the Richard G. Lugar Center in Georgia.

The US has bio laboratories in 25 countries across the world, including the post-Soviet space. They are funded by the Defense Threat Reduction Agency (DTRA). Foreign inspectors are denied access to them. It should be noted that independent journalist investigations have been made public to confirm the fact that the US military conducts secret research to pose a threat to environment and population. Jeffrey Silverman, an American journalist who has lived in Georgia for many years, is sure the Richard Lugar Center, as well as other labs, is involved in secret activities to create biological weapons. Georgia and Ukraine have been recently hit by mysterious disease outbreaks, with livestock killed and human lives endangered. The US military operates the Central Reference Laboratory in Kazakhstan since 2016. There have public protests against the facility.

In 2013 a Chinese Air Force Colonel Dai Xu accused the US government of creating a new strain of bird flu now afflicting parts of China as a biological warfare attack. According to him, the American military released the H7N9 bird flu virus into China in an act of biological warfare. It has been reported that the source of Ebola virus in West Africa were US bio-warfare labs.

Russian experts do not exclude the possibility of using a stink-bug by the US military as a biological weapon. A couple of years ago, mosquitoes with Zika virus have been spotted in Russia and South Ossetia to cause outbreaks of human and animal flu.

The US activities violate the Biological Weapons Convention (BWC), a legally binding treaty that outlaws biological arms. It effectively prohibits the development, production, acquisition, transfer, retention, stockpiling and use of biological and toxin weapons and is a key element in the international community’s efforts to address the proliferation of weapons of mass destruction. In force since 1975, the convention has 181 states-parties today. The BWC reaffirms the 1925 Geneva Protocol, which prohibits the biological weapons use. In 1969, US President Richard Nixon formally ended all offensive aspects of the US biological warfare program. In 1975, the US ratified both the 1925 Geneva Protocol and the BWC.

Negotiations on an internationally binding verification protocol, which would include on-site inspections by an independent authority to the BWC, took place between 1995 and 2001. The US did not sign up. Its refusal to become a party to the verification mechanisms makes any attempt to enhance the effectiveness of the BWC doomed. A Review Conference is held every five years to discuss the convention’s operation and implementation. The last one, which convened in November 2016, was a frustration with minimal agreement on the final document and no substantive program of work to do before the next event takes place in 2021. There is little hope the BWC will ever be strengthened to have teeth. With no verification mechanism, the US military bio-warfare labs will always be a matter of concern. The issue is serious enough to be included into global security architecture. The UN General Assembly is the right place to raise it. Its 73rd session will open on September 18.