I watched a rerun of an Oprah episode from earlier this year, all about how the recession is affecting people in the US.
Multi-billion dollar stimulus packages and huge bonuses for finance sector executives gall when you see ordinary families reduced to walking the streets waiting for the homeless shelter to open.
Reporter Lisa Ling went to her hometown, Sacramento, which just five years ago was considered to be one of the fastest growing cities in the US. Now, it has a serious problem with homelessness.
Lisa highlights the plights of a number of families. The first is a woman and her three children, who have to walk the streets by day on the weekend, carrying their possessions in plastic rubbish bags, waiting for the night homeless shelter to open. Her husband is staying with friends and looking for work. A year ago this family lived in their own condo, drove a car, and both parents had jobs. Then they both lost their jobs, their adjustable mortgage rate went through the roof, and they could no longer afford to keep their home. Around 50% of all house sales in California are currently foreclosures by banks. The family moved into a rented house, but basically ran out of money.
Lisa Lang also looked at what happens to foreclosed homes. She talks to John Cloaker, a man who runs a very successful business, clearing out houses that have been left by people where the banks have foreclosed (click here for download video). Many of these are new homes in estates, where the purchaser is a subprime borrower. Some people leave everything behind – computers, televisions, children’s toys. Often the ex-owner just cannot afford to have their things moved or stored.
The tragedy is that the items left in the houses can only be dumped, because otherwise Cloaker’s company cannot keep up with the pace (up to 15 houses a day), so there isn’t time to preserve things. Furniture, bikes, clothes, dishes – all are thrown into wheelie bins and taken to the dump. Charity stores don’t have resources to collect everything.
This is a human tragedy. These people should never have been able to get so far into debt. They appear to be in a twilight zone of financial greed, where less choosy banks were willing to over-lend, and then when things got difficult, these banks ratcheted their interest rates up and suddenly the cashflow equation was looking very red. People are being thrown out of houses, they have nowhere else to go, the shelters are overflowing, and people are living on the streets. This is the Depression all over again.
Tags: homelessness, lisa ling, oprah, recession, subprime market