There is increasing panic that America’s commercial real estate market is set to implode, which will hurl the world’s biggest economy even faster towards sovereign debt default, and a chain reaction global collapse that will swamp every national economy, especially Australia’s.

Stuart M. Saft, a partner at the international law firm of Dewey & LeBoeuf LLP, in a column posted on Forbes.com on 19^th November, reports that at least $1.3 trillion of commercial real estate financing comes due between now and 2013, but less than half of that can be refinanced. He notes that in Manhattan, office rents in prime areas are half of what they were in 2007. Saft is in a total panic about all this. “The commercial real estate market is on its last legs, and unless drastic actions are taken, the effects on the broader economy will be catastrophic,” he writes. But the measures that he demands to address the problem amount to reconstructing the bubble as it existed before the crash.

Saft’s conclusion about the impending doom was echoed at the Reuters Global Finance Summit in New York this week. Reuters reports that office buildings and other commercial real estate financed during the credit bubble “will generate hurricane-scale losses for the banks”, according to financial services executives who addressed the conference. Howard Lutnick, chief executive of Cantor Fitzgerald, noted that all the equity invested in almost every transaction during the peak bubble years of 2005-2007 has been wiped out. The problem is illustrated by a report, this week, by the real estate firm Grubb and Ellis, which shows some Washington, D.C. area business corridors experiencing commercial property vacancies of 25-34%.

In St. Louis, the St. Louis Federal Reserve Bank reported, this week, that 19 of 78 banks headquartered in the region are running at a loss. Combined, the 78 banks have lost $239 million so far, this year, but most of that is accounted for by one bank, First Bank, which lost heavily in California real estate loans and on lending in Chicago.

In Boston, the Boston Business Journal reports that the concentration of real estate loans at several Boston-area banks are such as to attract extra scrutiny from bank regulators. The Hingham Institution for Savings has exposure equal to 447% of total capital, as of 30^th September, and the Central Cooperative Bank of Somerville had over 500% exposure.

The United States bankrupted itself with its $23 trillion bailout of Wall Street and the City of London, so any more shocks—like a crash of its commercial real estate sector—could easily push it over the edge into sovereign default on its bonds, which will bankrupt its biggest creditor, China, and trigger a chain-reaction global financial tsunami.

While there is still time, the world must go with the LaRouche Plan: bankruptcy reorganisation using the Homeowners and Bank Protection Bill; and a Four-Powers agreement between the U.S., Russia, China, and India, to replace the failed monetarist system of globalisation with a new international credit system, and a reconstruction program for the world’s physical economy.