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The New President Faces Economic Disaster


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)

President Obama 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 thousand 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 sopes 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. 5,000 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 seasons approach, 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. 1,300 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.


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. His A BUSH AND BOTOX WORLD was Published by CounterPunch/AK.

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