for a chilling look in to a bleak future: James Fallows’ Countdown to a Meltdown

Tell me about it.
I’m lucky to have an incredibly cheap house (one of the benefits of living in a long-depressed city like Philly), but I have to admit if it wasn’t for my housemates I literally wouldn’t keep my head above water. As it is, I can’t keep above water, because our housemate’s rent isn’t even going toward the mortgage: it’s all getting saved for our heating oil, which is now completely unaffordable, and we’re too “well off” (HAHAHAHA yeah that’s not funny) for LIHEAP.

So while I’m not homeless, I don’t expect to have much heat this winter. Too bad you can’t burn hopes and dreams for fuel…

Howdy, punaise — it is awfully bleak, and it’s been a slow motion train wreck headed downt he tracks for a while, hasn’t it?

hey Christy – it could be called the great unraveling, or something like that. general sense of unease.

I remember when “the economy was booming” under reagans tax increases which they called tax cuts, family businesses were closing on every block, and everywhere I saw homeless, in parks, on streets, sleeping in the woods under cardboard blankets

that seemed to turn around for a while but man, the homeless are back and they are growing again

I saw a couple yesterday in the park, emptying garbage cans and collecting the returnable containers, then cleaning up after themselves when they were done

tears whelled in my eyes and the lump grew in my thoat

and my company will possibly not survive another losing season, this is the second in a row, we never lost money ever before

what are we leaving our children?

off topic, I know when I was growing up there were stray cats everywhere…and stray dogs…I wonder what we did to eliminate those animals

I’ve been thinking a lot lately about folks who have to work with home heating oil. My granny had to do that as well when she was alive, and I can remember us chipping in any number of times in a hard winter to fill her tank because her fixed income didn’t allow for much more. Given how high energy costs are at the moment, this winter is going to get mighty tough for a lot of folks if it is a cold one…

Thanks for the reminder..

iirc, David Niewart wrote about this one night not too long ago, called them Bushvilles.

from Christy’s “close to homelessness” link

-Poverty rate among married couple families: 5.7%; among male-headed households, 13.8%; among female-headed households, 30.5%

like the author of the piece, I too am stunned. I knew it was bad for single women but jee-sus !

A lot of those folks became instantly homeless when the Reagan administration cut a substantial amount of mental health funding. So people who were least able to cope or to adapt without help and/or continued therapy or medication were suddenly cut off from what they thought of as their safe place. And as a result, many of them ended up on the streets. Heckuva job, indeed…

this one got to us, prompting a diversion of a portion of our whopping economic stimulus check:

Jamon’s funeral expenses have left his mother, Jamie Ware, in a financial crisis so that she was unable to pay the family’s PG&E bills this month, district officials told the Planet Tuesday.

“A Bank of America account was set up by someone in the community to help Jamon’s family, but the last time we checked, nothing was deposited,” said Washington’s Family Resource and After-School Coordinator Ann Callegari.

Callegari said the family had barely been able to afford the funeral.

Looks to me as if we will have another year or so of significant foreclosures- followed by a few years of flat housing prices…(at least in this area). Prices on the bank owned properties are incredible- HALF what the same houses sold for a few years ago.

Many of those giving up their homes are real estate agents who got caught up in the pixie dust of eternal summer and constant 20% increases…now they’re walking away from their properties.

I think about how stressful it must be now to work in a supermarket or at an oil/propane provider. To see people struggling to afford bread and milk. Little kids being wheeled around in empty shopping carts looking hungry. Old folks with a can of spam and another of tomato sauce in their cart. Depressing. Angry too. I’m hearing a rising tide of discontent in line at the supermarket. Disgust at the war, treatment of veterens, economy, environment.

As an example, here’s an article from American Prospect discussing the invaluable link between mental health services and help for the homeless — and the enormous benefits that society as a whole can get from just a small investment of resources at the front end and maintenance over time.

strangely, the housing collapse if offering great opportunities for home ownership. The prices are very low on the bank owned stuff and they are getting 5-10 offers on each in the first week..the inventories do NOT seem to be growing (of bank owned homes that is).

We just bought a bank owned property- it was a pit like most of em- holes kicked through walls and doors- carpet that looked as if motor oil had been poured over it- etc.

When we got to the clean up part, we discovered hypodermic syringes all over the place..there’s a very sad story there – but few clues as to the details.

Just for the record, not all ARMs are that horrible. I checked out the terms on my son’s ARM recently to determine whether he would be in serious trouble or not. Although I’m worried that his house has lost a portion of it’s value, I think if he holds on to it for a little longer than he initially planned, it will once again even out. I also determined that, if his ARM first change came due now, his payments would actually drop. That may be because the change is only 2 points and it is tied to LIBOR, not a US based index. While I figure that will change by the time his first change comes, I’m not as worried as some. Luckily I refi-ed to a fixed loan over a year ago, but even so, I probably could still refi again to a lower rate because I am not overextended or upside down on my house. That is more lucky timing than foresight, though.

I think that is true either for people who have the assets to pick up bargain-priced homes and/or folks who were not caught up in a prior home purchase that went sour. But the folks who were caught up in that are in a world of hurt — and most likely not getting credit any time soon to get another home due to foreclosure or other financial issues. And, in urban areas especially, a lot of those are over-leveraged rental owners whose rental houses are being foreclosed en masse, and whole swathes of families are being booted because the new buyers want more money down on a lease and/or don’t want to rent the property any longer.

Very true — individual contracts need t be read carefully, with an eye toward each individual’s circumstances. What is bad for one person can be advantageous for someone else, depending on how their finances are set up and such.

Unfortunately, a lot of folks may not have read the documents closely and/or weren’t capable of understanding them very well and were told one thing when they said another. It’s the buyer’s responsibility to check on that — but outright fraud needs to be looked at in some cases, and has been prosecuted as well.

This has a far-reaching impact and, unfortunately, it’s one with which far too many of our readers are familiar, just based on some of the e-mails I’ve gotten after these types of posts.

There was a story in Atlanta, recently, where a low-rent apartment home got forclosed on. Those people had absolutely nowhere to go. One woman had just paid ahead 6 months of rent so she would not have to worry about it for a while. All of that – gone.

Redd

Yes the upside is for those who stayed out of the last ”bull” phase.

I am sure that there are many who are being forced to leave rental properties- although I have no statistics on the issue…banks should have some obligation to help with moving expenses- and perhaps they do in some states. I don’t think that there’s a shortage of rental properties per se- but if the one you are in gets foreclosed on- you have to move.

OMG — what a nightmare for that woman! Every time some wingnut barks about “poor people are just too lazy,” that story should be throw up in their face…

Will the newly homeless be permitted to vote without a valid address, or will their driver’s licence suffice? Just wondering. I don’t suppose they will be allowed to vote in states that have Rethug Secretaries of State. Anyway, that party doesn’t think people without assets should be permitted to vote anyway, on principle.

Ot Did any of you listen to Barack’s speech on Patriotism today ??

Hew as awesome! He said the things that needed to be said such as:
Quoting Mark Twain that patriotism/loyalty is to the country and not necessarily to the government or something like that… How True! How true ! This government has lost most of the people’s loyalty … maybe except those who have their head in the sand and think that the rethuglians can do no wrong and would follow them to the gates of hell..

Just a quick drive by before I have to leave for the day…. See ya all on the late late night!

Why don’t they call this what it is – 2nd great depression. And we haven’t seen the bottom yet.

Oh it’s gonna be bad either way.
My oil tank is 300 gallons. When I bought the house in 2003, I could fill the entire tank for about $300, maybe a little more.

Last year? $300 didn’t even a third of a tank. And this year, the fuel oil companies won’t let you buy upfront and pay in installments, because the price of oil is fluctuating so much.

and i don’t think it’s going to get better, ever. I think we as a nation are hopelessly, utterly screwed.

I believe you’re one of the few who thinks that the significant foreclosures will only last “another year or so.” I estimate the foreclosure rate will remain high until apx. 2011 (unless there is significant government relief or some sort,) because I believe there were still quite a few sub-prime loans being doled out through 2006, with the first change occurring up to five years thereafter. I was wondering where you got your figures from? What am I missing?

Redd

It’s been a long time since I read Grapes of Wrath- but I dimly remember that the family name was “Joad”.

Is the election just too far away to see the truth now? Currently, it seems like the Republics are escaping blame things that are clearly their fault. The whole supply-side fantasy is theirs alone. This election needs to be the Repulbic’s Waterloo.

It would not suprise me to learn that the Decider already loves dressing up as Napoleon.

I mentioned it before so pardon the repeat but all of you must read “Deer Hunting With Jesus.” It’s about the people in Va. and W.Va. who are truly poor and angry and lost. It’s wonderful.

No numbers- but I watch the market closely. In THIS area- bank owned property is getting bought up as fast as it comes onto the market- which leads me to believe that we will not see a stockpiling of bank owned inventory- I could be wrong of course.

They call it the Great Unwinding, speaking only of the financial markets.

Have been thinking of all the new homeless vets who will be sleeping under bridges in the next couple of years. Can we get ahead of the curve this time?

There’s plenty of room at the Bush Brush Ranch for rows of tents.

Dang it — you are correct. I should have known that from the Springsteen song, if not from reading Steinbeck. *G* Ooops — it’s fixed…

The County budget has $18 million shortfall…so they cut social services. State and federal programs have been whittled down for three decades. Housing cost are rising as a percentage of income…disposable income is shrinking (except for the rich).
Adequate food shelter and clothing are all out of reach for 50 million Americans. Thank you Milton Fiedman for the benefits of Free Market economy. The “Chicago School of Ecomomics” has devasted the lower income people of the USA and the rest of the world. The answer for repukes will be build more prisons! It is heart breaking to see the dishevelled and mentally ill homeless show up for the meal at the homeless kitchens.
The contempt I harbor for the progenitors of human misery is well earned by their callous treatment of fellow kind. It is as if they have invented a special breed apart from humanity…”Super Race” if you will.

Christy,

Great White Father Reagan did the same thing as Gov of California – with predictably tragic results.

personal note: my sister and I were given up to a Childrens Home (probably saved both our lives) once he’d eviscerated the State’s Mental Health apparatus, he moved on to other social welfare programs including attempts to halve funds counties had for kids like us – our home’s director was a wily commie type – his first move when the Reagan’s came to town was to blow all kinds of Donna Reed smoke up Nancy’s skirt. Made sure there were lots of photographs of her serving us dinner, helping with homework. His coup de grace was to name a cottage after her :D

she figured out his ploy too late – at a time where she was already under attack for not wanting to live in the current gov mansion

Needless to say our funding not only remained in tact, but a second facility, a mental health treatment center was added

sorry for the personal, always lightens me up when I think of how he got over on them

I predict a whole lot of people heating with wood this winter out where I live. Last time I looked, home heating fuel oil was over $4.70 a gal. And that is NOW.

I think those rows of tents would serve us all more effectively if they were set up outside Boehner and McConnell’s homes oooh and a certain ‘cabin’ outside Sedona :D

I’ve seen diesel at $5.25. When does McCain have to start running against Bush instead of as Bush?

recently i was googling around in an attempt to learn more about our current energy woes and in particular the deregulation that has permitted the grown of a speculative bubble.

in my ignorance, i thought the info in the recent energy hearings (especially the senate commerce committee’s hearing with greenberger) was news to congressional dems and although they were only now paying attention at least some good policy changes might come soon.

to my very great surprise i found this press release and report, dated June 27, 2006 :

LEVIN-COLEMAN REPORT FINDS SPECULATION ADDING TO OIL PRICES: PUT THE COP BACK ON THE BEAT

WASHINGTON – Senators Carl Levin (D-Mich.) and Norm Coleman (R-Minn.), Ranking Minority Member and Chairman of the Senate Permanent Subcommittee on Investigations, today released a Subcommittee staff report finding that market speculation has contributed to rising oil and gasoline prices, and that too many energy trades are occurring without regulatory oversight. The report recommends that Congress enact legislation to close a major loophole in federal oversight of oil and gas traders, slipped into law in 2000 at the behest of Enron and other large energy traders.

“It’s time to put the cop back on the beat in our major energy markets,” Levin said. “Millions of Americans are suffering as the prices of oil, gasoline, diesel fuel, natural gas, and other vital energy commodities go through the roof. These record-high energy prices threaten our economic security. At the same time, our government is less and less able to monitor U.S. energy markets to figure out what’s going on and ensure that energy prices reflect supply and demand rather than market manipulation or excessive speculation. More and more trading is being conducted by large oil and gas traders on electronic markets where there is no oversight. It’s time to put the cop back on the beat in these markets to make sure that ordinary Americans aren’t being ripped off.”

that’s right – senator levin knew what was going on and what to do about it (there was even a bill which was promptly buried in committee), and did nothing.

my first thought was astonishment – how weird is it that levin – senator from Michigan – would see this coming and do nothing? i’ve started getting the fact that most dems in congress don’t care about things like the constitution and starting wars over resources. but i really thought they would care about the economic health of their states. but if the senator from michigan – a state that depends on the manufacture of gas guzzling automobiles for jobs and for the overall economic health of the state – can know about the need for re-regulation and do nothing, then i need to re-evaluate my thinking on what even the dems in congress are thinking.

hoping someone can tell me that levin has been all over this for the past 2 years and i just missed it, because this is a very serious indictment of the dems economic policy concerns.

They had something on this last night on PBS. I think it may have been a Bill Moyers segment. A woman was crying. as a single mother she always felt tight, but never felt the roof threatened over her head. I remember listening to stories of older members of my family and felt lucky I didn’t get to experience the Great Depression, although they felt my “mtv generation” lacked the grit. Now . . . ? I want that older generation back.

–Any update on Seymour Hersh’s article?
–Also seems Glenn Greenwald begs to differ from Jonathan Alter and Olbermann. And can someone tell me what is up with Olbermann? Why on earth would he accept such a stupid fatuous explanantion of Obama’s support for telcom amnesty, when he was so gosh darn “firm” and “passionate” a year against telcom amnesty and warrantless wiretapping.
All idols come crashing down eventually.
–And Christy, do we know what Feingold and Dodd will be doing during the delay on the FISA debacle?

You should ask Marcy about that — she’s keyed into MI political action more than I am off the top of my head. And she might know what may or may not have happened with that between then and now.

good point. thanks.

I know that both Dodd and Feingold are working a lot on stripping telecom immunity and also pushing for other improvements to the bill. I also know that task would be a bit easier for them if we are all also pushing on our elected folks as well at the same time…

You are lucky to be in an area where the banks are more realistic about their prospects. Around here, banks are more arrogant and intransigent even when things are this slow. I remember one of our teachers in RE school talking about having an investor wanting a certain piece of property that was on the banks books as an REO for two years. She thought it would be a no-brainer to sell, that the bank would be a “motivated” seller and would take what seemed to be fair terms to her. Yet she was confronted with the bank quibbling over $200 for a piece of vacant acreage. That’s $200 sum total, not per anything! She ended up reducing her commission by $200 to close the deal. My nephew just looked into buying some REO properties for an investment, but he decided not to make an offer when he saw what he considered unreasonable terms. They wanted to charge him a $5,000 penalty fee if he was unable to close the deal within 30 days. That is, on the 31st day, he would owe them $5,000 more. He said thanks, but no thanks and walked. My guess is, the banks are not hungry or desperate enough yet, or they think they don’t have to be, since the Fed will come along and bail them out anyway.

Don’t forget the poor pharmaceutical technicians. They see people who say “I hope I die” before I have to fill/pay for my next prescription. They also have to deal with people dealing with their insurance companies (as if that weren’t bad enough.)

Senators? I feel the only thing I can do at this point is encourage Dodd. The other one is hopeless.

Bad news LIBOR spiked today.

There is so much fear of bank failures around the world that Interbank lending rates are accelerating. None of the banks trust the accounting of other banks, since most banks are all being propped up by accounting gimmicks

Wait would those require amendments to be voted on. Or is it backroom stuff.

Amendments to be voted on — but the negotiations on votes and pushing for support is both backroom and from constituents. We need to step up as much as we want them to do so as well — they can’t put this pressure on alone.

Most of the houses being sold today are REO from banks.

I love it when someone games the system and makes it work! To me, it’s the only way to go!

They’re a pain to deal with here- takes for ever to close a deal- but they are VERY realistic about price- they want em GONE!

How is the “other one” viewed in CT these days?

When you say “spiked” did you happen to catch what it’s at now? If not I can look it up. He’s got a couple of years before his first change, but thanks for the info.

Umm, I would say he’s finished politically.

I urge pups to revisit your post
Taking Back The Reins Of Government

Spacefish,

Is it actually legal for the landlord to take her money and give it to the bank for the consideration of six months of living in the apartment or house and not give her that consideration? I’m Canadian, so I don’t know the applicable US law, but that seems like theft to me.

Curious and horrified,
Heather

Whenever I read Glenn Greenwald I feel a little pessamisstic.

and Peterr’s
FISA Fun on the Fourth of July

Well, I think everyone is feeling a little pessimistic these days — but I’ll be damned if I’m handing Bush and Cheney anything without a big, stinking fight. *g* They want immunity for their sorry asses, then they are going to pay a very loud, very painful price for it as far as I’m concerned. We’ve managed to eke it out for three freaking years now — with little dribbles of information leaking about about what they have done all along the way. I’m not backing down now…

Yeah I think the most uplifting part of this Greenwald article I read, was that we can always make a big loud stink.

I’m getting very good at writing rather cutting e-mails to Congressmen/women asking for money. I just sent one to Sestak to whom I donated last time. These people have disappointed me – not on all things but some that really counted. No more money from me.

You need to read

http://www.theoildrum.com/

Where there is a very good discussion about what is driving the price of a barrel of oil. According to those genius it is NOT speculation.

There is a distinction between options contracts with are commodities trades and futures which are just bets about the price and are not related to product delivery. The latter is pure speculation and has no real impact on the price.

read the Oil Drum – a terrific resource

But really, I realize Olbermann wants Obama elected, but by having Alter on and defending a position of being okay with telcom amnesty (because there can always be criminal suites; false according to Greenwald) or okay with warrantless wiretapping, it’s really not helping the cause much.

if i understand correctly, another cloture vote is expected july 8. that means that with 41 votes the dems could block it. (pow wow explains in glenn’s comments)

we got 29, i think, in feb…. if obama were to lead…

BT has some fresh thready goodness, up and running, btw…

if you will give me a specific link to a post that you think makes the best argument, i would like to read it. thanks!

fyi – there were clear indications in Bernanke’s Senate Confirmation Hearings that certain senators were already concerned about the housing bubble – look at this question from Sarbanes (D- MD)

SEN. PAUL SARBANES (D-Md.): “You’re on record as opposing the use of monetary policy to control asset bubbles, as I understand it, whether in the stock market or in the housing market

. . .Are you concerned about the potential for a bubble in the housing market? And specifically, does the drastic increase in the use of risky financing schemes, including interest-only and even negative amortization mortgages, concern you?”

there are tons of smart people on staff- I’m jes sayin plenty of them are privy to the wonky stuff long before we hippies get our hands on it

Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, Senate Intelligence Committee chairman John D. Rockefeller IV, and House Intelligence Committee chairman Silvestre Reyes

Hmm. Iran (Gang of 8), telcom immunity. What a coincidence. Any speaking events or meet and greats scheduled for these folks?

excellent catch re bernanke’s confirmation hearing – if i can find the time i may try to give it a listen.

there are tons of smart people on staff- I’m jes sayin plenty of them are privy to the wonky stuff long before we hippies get our hands on it

yeah. i’d love to know who they are so that we can get an early warning – while there is still time to do something before the shit hits the fan.

I follow a lot of Econ Blogs but all you have to do is Google LIBOR.

The problem with LIBOR is that up until the past few weeks the UK over site of the banks posting interbank rates was a gentleman’s agreement.

Then the regulators caught the bank lying about what rates they were actually paying and LIBOR rates started to widen. The reason for the current spike is more central banks are now agreeing that the worst is not behind us but directly in our path.

It will get very ugly world wide.

I don’t know enough to predict a Depression but I have live though some severe resessions and they were not pleasent.

reminder Firedogs,

emails don’t mean crap to these klowns

in order of effectiveness

In Person visits to either DC or local offices
(look up Roots Project in fdl search to see how it’s done)

Phone Calls to both DC and local offices

Faxes
(said faxes containing your LTE to local paper about their cowardice tend to get noticed and often result in phone calls from staffers)

That link goes to the wrong post. Here is the correct one:

Blue Texan

One wonders what our elected officials think when they’re told by former donors that they should get their future donations to their future campaigns from those segments of their constituency that they perceive were pleased by this or that of their votes or actions.

Thank you msmolly. Fixed now.

I’m probably wrong, but…a depression, isn’t that what happens when you try to equalize pay for jobs across several continents and third world countries on this continent and the pay on the other continents and third world countries is much lower than your pay? Just sayin’…

Sorry but the futures markets were developed to allow those holding commodity products, farmers, oil producers etc to hedge their risk and yes there are deliveries with futures contracts.

Now it’s a small percentage of contracts that actually make delivery but that is by design, not proof of speculation.

Options can be on futures contracts or on commodities themselves. I think you have mixed up the FOWARD market of cash commodities with the futures markets. Forward marketing can be done with a handshake agreement or complicated contact. Futures market are for very specific products, LSC instead of HC.

The current problem is that there is a segment of oil trading, know as the ENRON exception that allows a portion of the oil market to trade out side of the regulators watchful eye. That is how Enron gamed the CA electricity markets before they went under. Much of the talk about speculators driving the oil markets has to do with the unregulated segment of the oil market.

Ann

A depression is when 1% of the population controls 90% of the wealth.

Nuf said

Jane is upstairs!
Wes Clarke Walks Into McCain’s Giant Wood Chipper