Tuesday, January 26, 2010

The Effects of the Crisis - Part 6


This is part six in a set of articles about the losers of the American economical crisis. The first article set out to describe the background to the following texts (including the connection to Peak Oil). In the previous text I wrote about those who desperately try to enter the labor market after substantially lowering their demands. In this text I go on to those who risk going hungry unless they receive support from state authorities and/or NGO’s. Sensitive readers who think that all stories (may) have happy endings are warned.

After the summer, in August, the number of evictions in the US exceeded 300 000 for the sixth consecutive month. The desert state of Nevada had the highest numbers of all states - in August every 1 out of 62 households received an eviction note. Half of the state’s population live in Las Vegas with surroundings. The reason behind these evictions is of course the state's outstanding unemployment numbers reaching the highest level in 26 years. “As long as 15 million Americans are unemployed, record foreclosures will continue.”

Let us remember that many of those who are now losing their homes did not have the vilified sub-prime loans, but the less risky prime loans. The difference is, to put it simply, that those who got sub-prime loans in hindsight should never have been given any loans at all, but by now, also ”ordinary” people are affected. When house prices have lost 30-40% of their peak values, many find themselves in a position where they can not sell their houses without losing (a lot of) money. Losing you job on top of that quickly becomes a recipe for being foreclosured.

The situation is sad, but since the number of evictions decreased marginally with 0,5% from July to August (from 360 000 to 358 500), there must have be a non-marginal number of economy journalist who positively but misleading stated that ”the bottom has been reached”, and ”we are turning a corner now”. I'm sure you recognize the chirpy chatter of those who always report on bad news with phrases such as "no-one could have foreseen that...". Some things really have to be believed to be seen, and nothing is more alluring than seeing (or inducing that there just have to be) a light at the end of the tunnel. But the light at the end of the tunnel has unfortunately been turn off due to budget cutbacks...

In reality there seems to be few lights at the end of tunnels - only more tunnel ahead. The question is not any longer what parts of society are affected, but what parts, if any are not? After the previous years’ shopping spree and a hangover that saw the middle class’ savings decrease with 40% in value, unemployment can be followed by a quick leap into the captive arms of poverty. Where American poverty was previously associated with the countryside or run-down inner city areas, it is now spreading to suburbia, including the most luxuriuos suburbs.

“The crisis is also making itself felt in posh Georgetown, a historic residential neighborhood in Washington D.C. which is home to many politicians, lobbyists and attorneys. Anyone who forgets to lock his car at night can expect to see unwanted guests sleeping in it by the next morning. When one local woman, who works at a Middle Eastern embassy in Washington, opened her car door one morning, she was astonished to find a woman holding a purse and wearing a pearl necklace sitting on the seat. The humiliated woman covered her face, apologized politely and quickly left her sleeping quarters.”

Sergio Gallardo, a 33 years old Californian ex-construction worker is perhaps a more representative victim of the economic crisis. He belongs to the formerly middle class and lived in a four room apartment together with his wife, his five children (between 3 and 13 years old) and the family’s German Shepherd. He has now lost his flat, his wife, his car and has had to pay almost 1000 USD a month to live together with his children in a 10 square meter big (small!) room in a cheap motel for the last six months. Dogs were not allowed there so he was forced to leave his dog at an animal shelter. As if this was not enough, the Gallardo family are living right in the middle of, and can look straight into a world of luxury that has now become utterly unattainable for them:

“The Costa Mesa Motor Inn is in Orange County, an upscale area not far from Los Angeles, familiar to many TV viewers as the setting of "The O.C.," a series about the glamorous love lives of spoiled teenagers. The motel is next to an exceedingly green golf course, and a new shopping center across the street offers lattes for adults and play zones for children. But there is nothing glamorous about the Costa Mesa Motor Inn […] Toy cars lined up on a windowsill in room 1108 serve as a reminder of better days. "We were able to take the toy cars with us, but I had to throw most of the toys into the dumpster," says Sergio Gallardo.”

The only comfort they have is that they are not alone. Being forced to move to a motel is a fate they share with many others, and at least there are many kids in the motel for Sergio’s children to play with. But we can expect the childrens’ school performance to suffer from the cramped new circumstances; children that are crammed together in a tiny motel room are probably not excelling when it comes to homework, or perhaps even when it comes to getting to school in the first place

Several examples of the effects of the crisis come from California, a state with so many problems that "California is on the verge of becoming the first failed state in America". The quote is remarkable as the term ”failed state” usually refers not to American states, but to the world’s poorest and most chaotic countries; places like Somalia, Sudan, Zimbabwe or Afghanistan.

On the other side of the continent, in one of the US’ most impoverished states - West Virginia, we find a more traditional picture of poverty. A wooden house with white paint flaking and located in the outskirts of a town with less than 1000 inhabitants, is home to a family who never thought they would have to ask for help. The father of the family works in a fast food restaurant and makes 6 dollars an hour, but he has to drive almost 100 km to get to work. He says that he went down for count last year when gas prices spiked and were then followed by a drastic increases in food prices. Even the town mayor blames the oil price for impoverishing his citizens:

“‘I blame everything on the price of gasoline. When it went up to $4 a gallon 18 months ago it affected everybody. It forced up the cost of food and utilities. People were working all day and they still weren't earning enough to pay all the bills,’ he said. ‘Food prices you can combat a bit because people can grow their own gardens. They can kill deer, fox. You can eat 'coon. But gasoline affects everybody. They just can't make it.’“

Most recipients of social benefits like food stamps or social welfare payouts in West Virginia do have a job, they just don't make enough money to make ends meet in order to pay for gas, food and the utility bills. Many food stamp recipients need more and have to ask for food packages from food banks (food pantries) or visit soup kitchens. Soup kitchens which used to mainly serve single homeless men now see entire families with children lining up to get themselves a hot meal.

In West Virginia's schools, teachers look out for children from families they know have a hard time - children that might not get enough food at home. Without telling neither the children, nor the parents, the teachers slip ”backpack snack packs” with peanut butter, fruit and energy bars into the childrens' packpacks on Fridays to ensure that they will not go hungry over the weekend. The teachers try to be discreet since parents are often ashamed to admit that they must accept help in front of neighbors and friends.

Judging from the high unemployment numbers and the picture I draw above, it is not very surprising that the numbers of people receiving food stamps in the US is reaching new heights. After the seventh consecutive month of increase, the number of needy exceeded 35 Million individuals in June (more than 10% of the entire population and the highest numbers since the food stamp program started 40 years ago). We are here talking about ”the (supposedly) richest country in the world”... Nevada, where the number of needy increased by 45% year on year, is again ahead of the pack.

"In a year, despite food stamps and other resources, the USDA reports that 17 million Americans went hungry. One out of every *FIVE* children went hungry last year – a jump from one in six last year. Child hunger is increasing dramatically, much faster than adult hunger. In some states in the Midwest, including Ohio and Illinois, the numbers were one out of three. Think about that – about the fact that in the middle of the densest stands of calories in the world, one out of every three kids in a classroom goes hungry. Half a million children are frequently hungry."

The Food Research and Action Center asserts that the high numbers do not only reflect the high unemployment figures, but also a combination of other factors such as low salaries and the fact that many Americans have been forced to work fewer hours as a result of the economical crisis. As I have highlighted above, some who actually do have jobs still don't make enough to buy food and other neccessities.

When you receive food stamps, you do not actually get vouchers any longer, but a kind of credit card which can only be used to buy food in stores that are associated with the program (and you can not buy alcohol, tobacco, cat food, soap, dental paste, toilet paper or medicine). A single person on average gets around 125 USD a month, and a family with four members get around 275 USD. Almost 80% goes to households with children (these numbers are a few years old though).

There are also many private initiatives in the US beyond the state-financed system. When I search the internet for Swedish soup kitchens the results are scarce. The Salvation Army’s soup kitchen in Norrk√∂ping had to close when a zealous civil servant recently deemed their premises to be too small and difficult to keep clean. The Sundbyberg Salvation Army’s soup kitchen serve food two days a week. I am sure there are other soup kitchens out there, but they are either few or difficult to find online.

In the US there are 63 000 soup kitchens and food pantries handing out food packages to those in need. They are currently flooded by visitors and are under pressure because of he overwhelming need. According to Feeding America, ”The nation's largest domestic hunger-relief charity”, the demand has increased by 30% since the beginning of 2009 and until mid-year. On Manhattan, The Church of the Holy Apostles serve 1250 meals a day, but that is not enough and many who turn up are forced to leave without receiving anything. While the demand has increased, in these times of crisis, corporations and individuals are cutting down on donations to soup kitchens, shelters and other initiatives for very poor.

In the last example, we move back to California, but this time not to the great cities, but to the heartland of Californian agriculture - Central Valley. Central Valley is as large as quarter of Sweden and has a population of around 6.5 Million people. Agriculture is the main industry, and Central Valley is one of the most high-yielding regions in the world. In spite of this, a combination of disasters have put this granary in a dire situation.

“The Central Valley […] has suffered in the recession amid low demand for products like milk and almonds as well as a collapse in its once-booming housing market. At the same time, the region is grappling with drought and federal environmental rulings that have reduced water shipments to local farmers to as little as 10% of their normal allotments.”

For these reasons, many farmers have decided to only use a part of their land, and thus the demand for workers to harvest and package the agricultural products have diminished. Unemployment in Central Valley is now higher than in the rest of California, and it is higher in California than in most other American states (Michigan with its former car industry and Nevada have higher unemployment numbers). The result is that authorities find themselves forced to distribute food to poor agricultural workers who live in one of the most fertile agricultural regions in the world! In some communities around 80% of the inhabitants need food support!

“At the recent food distribution in Selma, 46-year-old Leticia Reyes waited to load food in her car. Laid off a few weeks ago from her $1,200-a-month job at a fruit-packing plant, the mother of four said the family is left to pay its $600 monthly rent and other bills on her husband's $900-a-month pay as an auto mechanic and her $600 in monthly unemployment benefits. "We're really struggling, so this food helps a lot," said Mrs. Reyes.”

This text has been about those who are unemployed or under-payed and struggle to pay for the bare necessities of life - including food. In spite of terrible living conditions they at least have a roof above their heads. In the next text - the last in this series, I will continue to those who live on the very bottom; those who were poor already before the crisis, and also those who weren't, but now have slipped and landed hard in shelters, on camping grounds and in tent camps.

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