The new president faces economic disaster
By
Saul Landau Read Spanish Version
If
you ain’t got the do re mi, boys,
You
ain’t got the do re mi,
You
better go back to beautiful Texas,
Oklahoma,
Kansas, Georgia, Tennessee.
California
is a garden of Eden,
a
paradise to live in or see;
But
believe it or not, you won’t find it so hot
If
you ain’t got the do re mi. (Woody Guthrie)
The
new President will inherit the financial meltdown that has begun to
reach beyond the “developed” countries and into Russia, Korea and
Brazil. As he makes plans to reissue New Deal measures to get people
back to work and reinforce the crumbling infrastructure at home, he
might hum Woody Guthrie songs of the Great Depression.
One
symptom of the economic malaise is the proliferation of yard sales in
very middle class neighborhoods throughout the San Francisco Bay
Area. Indeed, the October 25 NY
Times
ran a story about what might become the unofficial yard sale capital
of the country, Manteca, California. I drove the hour plus from the
San Francisco Bay Area to see for myself. By the end of the day, my
wife and I stopped counting to see if Manteca had more “for sale”
or “yard sale” signs to go along with a record number of
foreclosures. In the city itself, as many as 2,000 homes are in or
going into foreclosure. According to REALTORS® web site, the
Manteca area currently has 8,511 foreclosures, 3,269
pre-foreclosures, 1,469 bankruptcies, 15 for sale by owner (FSBO),
4,995 tax liens.
This
in a city of 67,000 souls. Unbelievable? Go to:
http://www.foreclosure.com/citySearch.html?st=CA&cno=077&tab=c&ci=Manteca)
I
assume this includes the surrounding towns and rural areas. Another
web
site
offers typical American incentives to shark-like real estate sellers.
“Make a Killing Selling Foreclosures!” reads the headline.
“Foreclosure buyers are opportunity-seeking, quickly adapting,
Web-savvy, real estate survivalists who are seeking expert
professional help to navigate the choppy waters of foreclosure
transactions.”
(http://www.foreclosure.com/education/webinars/realtors.html)
Add
to the number of foreclosures, the dropping value of homes in
California’s Central Valley (about 45%), the rising level of
unemployment (almost 11% officially) and worsening prospects for job
seekers, especially in construction. Along California
Highway
120, hundreds of unfinished and empty homes dot the landscape
alongside ubiquitous billboards extolling the virtues of cars and
gasoline brands.
In
San Joaquin County — one of the world’s largest food producers —
the bright sun contrasts with the dark shadow of recession. Some old
timers recall the early 1930s, when rickety trucks full of people and
possessions arrived to pick fruit — a dramatic reminder of the Joads
(John Steinbeck’s Grapes
of Wrath)
and how they met successive disappointments on their way from
Oklahoma to the mythical Garden of Eden in the West.
Many
descendants of Okies still work on farms, or even own them. Some have
just dropped into the growing homeless population. They also make up
a substantial percentage of whites in California’s Central Valley
jails and prisons.
Latinos
outnumber whites in several Valley towns.
But not
in Manteca, where whites are the majority. Almost half of its working
population commutes to the San Francisco Bay Area. “Imagine what
this has meant as gas prices rose over the last two years,” a clerk
at a gas station said. “And how many of those jobs were in
construction or marginal high tech industries! No wonder people can’t
make payments! No jobs, no mortgage payments. You can use yard sales
to survive, but not pay the bank for the house.” The man next to me
nodded in agreement.
In
Ricardo’s Mexican Grill, in nearby Oakdale, the owner also waited
on tables. She explained how her brother-in-law had bought a house in
Manteca for $200,000 “just three years ago. And he only made about
$25,000 a year. But the salesman told him not to worry, he wouldn’t
pay no money down, his payments wouldn’t be expensive for three
years and by the time they balloon you’ll sell it at a big profit.
Well, it didn’t work that way. He got foreclosed and he lost his
job to boot — with his wife and kids to take care of.”
She
shook her head as if acknowledging the gloomy nature of our time as
she served the sopas de carnitas. “My husband and I sold our house
just in time, but I tell ya, the dream most of us had, ya know, we’d
make it and our kids would make it, well, that don’t seem so
possible any more. California’s not what it used to be.”
In
the 19th
Century, before the Okies got lured into “Paradise,” caravans of
miners and pioneers imagined they had found a short cut to the
California gold area. Many of them died in Death Valley, 300 miles
southeast of Manteca.
Successive
processions found silver deposits and other precious metals. With
each strike they built settlements. But Nature — extreme heat and
dryness in summer — drove these tough pioneers away or killed them.
The shiny rocks enticed the greedy prospectors, an emotion they
shared with contemporary “Greed is Good” Wall Street equivalents.
The rocks contained traces of wealth-making metals, but the economics
of extracting them did not coincide with the supply — no comparison
with how money gets made on Wall St.
Today,
metal has morphed into liquid. Chants of “drill baby drill” echo
throughout the political world, implying a utopian hope that
perforating technology will save the country. Screw the bears and
birds!
California’s
Central Valley residents, however, might hope some genius figures out
how to subdue the economic down cycle or magically turn dry, dusty
towns into lucrative tourist sites. Even in the clean, cool air of
the Sierra Nevada town, Twain Harte, the hotels and restaurants are
more than half empty.
During
Fall, the mammoth pines and redwoods, the clear streams presumably
loaded with trout, should lure city dwellers. Every other store
window in Twain Harte adorns its windows with photos of bargain
houses — for vacation or retirement. Logging still exists, but isn’t
expanding and, a resident tells me: “My husband works in Sonora.
They have a hospital and Indian casinos there, and the Forest
Service, the kind of places that still have jobs around here.”
Manteca
billboards still say it’s a great place to shop — especially for
fishing gear. Maybe the fishing market still lures people but the
rest of the retail economy has gone yard sale. In these hard times,
asking people to shop brings about the sound of checkbooks closing.
It’s not just high gas prices — driving for two hours to save $5?
— but hard times for consumers.
The
Conference Board, a The New York based research organization that
provides business with crucial research affirmed this dismal economic
picture. Its board’s trustees include chief executives of leading
global corporations. Using the 1985 level of 100, it makes monthly
judgments of consumer confidence. Five thousand U.S. households
answer questions about their views of the economy, the nation’s and
their own. In October, Board economists determined the “consumer
confidence index” had fallen to 38, an all-time low. Consumer
spending accounts for two-thirds of the economy.
As
holiday sales season approaches, consider the following: Mervyn’s,
the giant department store chain, filed for bankruptcy. Linens ‘n
Things and Ann Taylor are closing their stores; Eddie Bauer has
already closed 27. Cache, the women’s clothing chain, discontinued
23 stores; Lane Bryant, Fashion Bug, and Catherine’s
closed
150 “underperforming” stores nationwide. Gap will shut 85 stores
plus some of its Old Navy and Banana Republic outlets. Foot Locker
will abandon 140 outlets and Wickes Furniture is going out of
business — after 37 years. Levitz (since 1910) will close all 76 of
its stores in December.
Within
two months, Home Depot will shut 15 outlets. Thirteen hundred
employees will lose jobs. CompUSA closed all its stores. Macy’s
will close 9 stores and Pacific Sunwear, 153. Movie Gallery filed for
bankruptcy, and plans to close 400 of 3,500 video stores. Last fall,
it shut 520. Sprint Nextel sealed 125 retail locations and will fire
4,000 employees after losing 639,000 customers. Last year, Sprint
laid off 5,000. Wilson’s the Leather Experts plans to shut 158
stores. Bombay Company will close all 384 U.S.-based stores. Bankrupt
KB Toys will close 356 stores. Whew!
If
alive, Guthrie might have sent the President the following song to
sing to foreclosed and yard sale people — (Tune of The Wabash
Cannonball):
The
system’s heading southward with the weather and the birds
Those
white bears in Alaska are facing thinning herds
Folks
that live on Main Street they’re unhappy as they seem
Life
is now a nightmare that’s killed the American Dream
We
can’t get credit flowing, the banks just make it freeze
The
President’s only mortal, aint got no magic trapeze
So
citizens come together, let’s share our collective brain
`Cause
the way
our country’s going, will drive us all insane.
Saul
Landau is an Institute for Policy Studies fellow. His films are
available on DVD through
http://roundworldproductions.com/Site/Films_by_Saul_Landau_on_DVD.html.
