Reports on Crisis
THREE: California
We asked people in several countries to write down observations about social effects of the crisis.
The following is a report from California.LIVING WITH CRISIS
In the middle of September 2008 when Lehman Brothers failed, Bank of America took over Merrill Lynch, and the economic meltdown's effects were becoming so extreme that everyone seemed to be noticing. I took a bus to work several afternoons a week and passed through San Francisco's dwindling African-American community in the Western Addition District. The sense of fear was noticeable and I often overheard people talking on their cell phones about someone being laid off, having their houses foreclosed, or simply reaching such a deep level of debt that they were personally bankrupt. Often they would be talking about foreclosures taking place in suburbs with names like Antioch, Pittsburg, Brentwood, and Stockton, which are tract home developments that had been boomtowns with large areas of African-Americans and Latinos who had previously lived in the inner cities of San Francisco, like the Western Addition, and in the poor working class districts of East and West Oakland.
During the insanity of the housing boom many families were able to take the profits out of homes in the inner city that appreciated greatly during the last decade and move, like whites did in the period after World War II, to the suburbs. They had been denied the opportunity to do so until the civil rights struggles for housing in the 1960s and 1970s had finally opened up opportunities for home ownership in the following decades. They had been denied the ability to get loans and insurance by the racist practice of "redlining" where real estate agents, banks, insurance companies, and city planners colluded to prevent non-whites from buying homes. But beginning in the early 1990s the loans they were offered, sometimes even forced to take, were subprime with Adjustable Rate Mortgages (ARMs) even if they qualified for more stable fixed rate ones. The same was happening with car loans by the late 1990s and into the 21st century many homeowners in the U.S., of all races, were using their houses like ATM machines by taking out loans against the rapidly appreciating values of their homes, some to cope with wages that had been stagnant since the early 1970s and others to go on consumer spending sprees.
In 2007, some of the suburban neighborhoods at the outer edges of the metropolitan San Francisco Bay Area, where African Americans had pursued the "American Dream" of home ownership, had become the leading cities for foreclosures in all of the U.S. In 2007 the top three were Modesto, Stockton and Merced "all in California's Central Valley" with commuters traveling to the core cities of the Bay Area for work driving as much as two hours each way. Then in 2008 those same cities changed order slightly and the top three cities in the U.S. for foreclosures were Merced, Modesto and Stockton, and another Bay Area city, Vallejo, was eighth and nearby Sacramento was tenth. These same cities where African Americans, Latinos, Filipinos and other non-whites were finally able to buy homes are the same place having the highest rates of foreclosures.
I work with several African Americans in the Berkeley Public Library. Berkeley has seen its African American population drop dramatically as many people moved to the suburbs, but still work in Berkeley, Oakland or San Francisco. One of my Black co-workers moved to one of the most popular suburbs, Antioch, where she now drives over 65 kilometers and it takes at least one hour each way. It has been the same with many other of my non-white co-workers. Because of budget cuts at the level of the State of California for funding education, libraries and public parks, programs will be cut back by an across-the-board 10%. This will probably mean that either our salaries will be reduced by 10% or our hours will be cut back by the same percentage. It is the same with schools and other public facilities, affecting all the rank-and-file employees. My co-worker from Antioch is greatly stressed because if her wage is reduced, she will be unable to afford to pay her mortgage and might lose her house. Her house is clearly "underwater" meaning she owes more for than it is presently worth. Some banks will allow her to "sell short" meaning that she can sell the house for less than what she owes the bank and they will forgive the rest. But if she is underwater too deeply, her only option is either getting evicted because she is foreclosed or "walking away" from the house and letting the bank foreclose and repossess it.
In November 2008 some of us went on a tour of some of the hardest hit areas of the nearby Central Valley. First we went to Modesto, #1 city in the U.S. for foreclosures in 2007.
On the way there, we passed through a small completely new development called Mountain House that has the misfortune to be the city with the most upside-down mortgages in the U.S. right now. Here's what the New York Times said:
"Because of plunging home values, almost 90 percent of homeowners here owe more on their mortgages than their houses are worth, according to figures released Monday [November 10, 2008]. That is the highest percentage in the country. The average homeowner in Mountain House is underwater' as it is known, by $122,000."
On our way home, we passed through another town right on Interstate 5 further south called Patterson. Its population recently doubled to just under 20,000 by gaining lots of Bay Area long distance commuters because I-5 doesn't get the gridlock traffic conditions that commuters to Tracy, Modesto, Manteca and Stockton encounter daily. A young Latino who works in Modesto in his family's real estate agency (and who along with his dad, who owns the business, were the main organizers of the 10,000+ Latino workers in Modesto who walked out and refused to work on May Day 2006; police cars followed both of them for months afterward) said that over 80% of the brand new four and five bedroom houses in the developments right off I-5 sit empty with almost all of them either foreclosed or unsold. We drove through there at sunset and it was completely dark and eerie; it seemed like the place had been hit with a neutron bomb -- as in buildings intact, but no sign of life.
We were given our tour by a group of young anarchists in Modesto. Several of them have actually squatted and know dozens of people, mostly families, who have moved back into their foreclosed homes and continue to live there. But they cautioned us that they have to be very, very careful. The cops in Modesto are brutal thugs and look for the slightest provocation to harass and arrest people. But in foreclosed areas the neighbors who are still legally housed don't mind the squatters because they keep up the properties, e.g. mow lawns, do yard work and cleanup, which keeps up appearances and helps to stave off deterioration and the look of meltdown. This slows down the slide in property values – ever so slightly – and discourages drug addicts who break into houses to smash open the walls to strip out all the copper wiring and piping to sell for salvage. Some who still legally live in their homes run electrical extension cords to the squatters as an act of solidarity. Some cities near Modesto have changed the laws to make it a crime to live in a house where the water has been turned off, calling those house legally »uninhabitable.« So the squatters often have to illegally turn the water back on. But most squatters do everything they can to stay undetected by police and other authorities.
Some core Bay Area cities like predominately African American Richmond have been hit hardest by the crisis. In Richmond's "Iron Triangle" neighborhood 7.5% of homes have been or are in the process of foreclosure and property values have dropped 72.2%. The 94621 and 94603 zip code zones in East Oakland are also hit extremely hard and every street has several homes with all their windows boarded up with plywood to prevent squatters. Over 3,500 homes in East Oakland are in the process of being foreclosed (the population for all of Oakland is around 400,000) and whole areas have the feel of being ghost towns. Deindustrialization of much of East Oakland since the 1980s started the decline, followed by gang wars over the »crack« cocaine trade, and horrifically high homicide rates remain to this day; the present crisis is making this already devastated part of the city only worse.
So far the main form of resistance to these foreclosures that we have noticed has been mass meetings called by church groups in some of the outer suburbs hardest hit by foreclosures and falling property values, like in Contra Costa County to the east of Oakland. While usually drawing hundreds of angry people, most of these efforts become nothing more then reformist attempts to lobby politicians to force the banks to renegotiate the mortgage loans. Cities like Oakland have intervened and are trying to pass laws encouraging banks to renegotiate ARM loans into more affordable fixed-rate ones and making it more difficult to evict people still living in their homes.
One exceptional form of resistance was this inspiring action by the activist group ACORN in Oakland on December 15, 2008: when Victorio Senteno's family of six was offered »cash for keys« to leave their house by the mortgage broker evicting them, 25 members of ACORN "moved in" to the broker's office, furnishing it with chairs, tables, a crib, family photos, and even a Christmas tree. The Senteno's were like tens of millions of American working class families whose mortgage payments have risen sharply, while their home values has plummeted. Several family members lost their jobs because of the crisis and are looking for work. Their mortgage lender, Fannie Mae, has agreed to a foreclosure moratorium, but their broker failed to notify them about foreclosure proceedings and tried to evict them anyway. They can remain in their home for now and are trying to renegotiate their loan.
So like the factory occupation when Republic Windows and Doors closed in Chicago last December, people are starting to draw on the historical lesson of anti-eviction and unemployed direct action of the 1930s. As Rosenzweig, in an article entitled "Organizing the Unemployed: The Early Years of the Great Depression, 1929-1933" in Radical America (vol. 10, no.4; July-August 1976), pointed out:
The jobless employed a number of spontaneous survival strategies such as informal and formal cooperative movements, family and neighborhood networks for assistance, individual and group looting of supermarkets, coal bootlegging, determined searches for work, and innovative stretching of income. At the same time, radical organizers helped stimulate more formal and political jobless actions such as sit-ins at relief stations, national and state hunger marches, demonstrations at City Hall, and direct resistance to evictions... Not only did these radical organizations [the Communist Party, Socialist Party and the Musteites] of the unemployed stop evictions and raise relief payments, they also helped to intensify the class consciousness of many of their members.
We can only hope that the squatters, the occupiers of the mortgage broker's office, and workers at Republic Windows and Doors have set an example to be emulated by working class people everywhere – and these actions will help raise an internationalist class consciousness as people struggle against the crisis across the planet.