Sunday, December 09, 2007

"The Economic Rape of Cleveland"


If you aren't aware, there is an economic meltdown underway in America, particularly in our urban centers. There is a rot at the core of the system that preys upon poor neighborhoods and communities of color. The most recent sign of this meltdown is the sub-prime mortgage fiasco. Sadly, my hometown, Cleveland, Ohio, is being ravaged more than any other in the nation.

Harry C. Alford from the Washington Informer recently wrote an interesting essay on the impact of this economic crisis in Cleveland. The article, "The Economic Rape of Cleveland," briefly explains how the sub-prime scheme worked:
This game broke all of the rules. It exaggerated housing appraisals to boost lending amounts. It eased credit rules to allow people who did not qualify for mortgages to get them anyway and pay the consequences later. Hedge fund investors fell into the same trick that made Enron famous. They fronted asset investments that were really poorly collateralized loans that would soon default and leave the investors holding the “bag.” Middle men brokers and package dealers ran these schemes for quick fees and cash. In the end, the investors and new mortgage owners would take the big hit.

He goes on to look at Cleveland as
a typical Chocolate City in regards to this matter. Cleveland, Ohio seems to be a perfect example. It’s a hardworking town with a strong history of neighborhoods producing some of the greatest American citizens. A black middle class was formed decades ago and is indeed an institution in this population center. Maybe this is why the subprime hustlers targeted Cleveland. It had plenty of established black property owners who could be exploited while the activity remained under the “radar” for a while.

In a devastating conclusion that should outrage us all, Alford writes:
There is one particular zip code in Cleveland that has over 1,000 present foreclosures. The neighborhoods in this part of Cleveland have become slums overnight and the blacks living there didn’t see it coming. It was fast and there appears nothing they can do. This city has been violated in every economic sense of the term. Their virtue has been quite lessened and the repair is not even imaginable. The elected officials, community leaders, chambers of commerce, etc. are lost in trying to find a solution to this devastation. All they can do now is stop the hustlers so that the present state can be termed the “bottom." But even doing this doesn’t mean that “which way is up” can be visualized anytime soon.

And then, plaintively:
Yes, the lovely city of Cleveland has been ripped off. There are other cities, counties and rural communities around the nation facing the same crisis. Greed and hustle coupled with bad policy and weak laws have hurt us miserably. Our children will pay the price and all we can do is start over once again. It hurts. t hurts real bad and will have a very long-term effect. Cleveland was raped. She was not alone. Lord, help us please!

This is the cost of conservative economics, people! These are real live human beings, devoured by large economic interests and then cast off in a seedy profit scheme that counted on their vulnerability... and relative invisibility to the rest of the nation. These white-collar criminals assumed no one would care in the end about these poor neighborhoods, about these communities of color. They believed no one would raise alarm or protest.

Well, now is the opportunity to prove them wrong... or right.

Is this the world you want to live in?
Is this the kind of economy we should countenance?

What will you do?
What will we, as a society, do?

10 comments:

  1. Paul Krugman's take on subprime relief:
    Henry Paulson’s Priorities

    Yet another example of a horrific conservative policy that has proven the sociopaths currently running our government into a hallow state really don't give a shit about you, me, our neighbors, or our communities.

    The movement against the republicans is no question gaining momentum through crisis after crisis that affects so many people on so many levels.

    The only question is, will the people be too occupied with just trying to survive than to work at changing this corrupt political system.

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  2. ... or, are enough of us pacified just enough by the glaze of consumerism that we don't struggle for change?

    ... or, do too many people simply not know how to go about trying to create real, sustainable change? It is one thing to talk about ending poverty, for instance, but it is quite another thing to actually go and change it, particularly as an individual. Do Americans understand what citizenship is, what social action is, how to build a social movement, how to work through the political system, etc?

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  3. This crisis is also having a bad impact on media that serves communities of color. Here is a piece on the Asian American media:
    http://news.newamericamedia.org/news/view_article.html?article_id=f63ecf3ec6d0dd26bbb4f53a94225a61

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  4. Having never purchased a house in the states I don't know but, is this really a political issue? Isn't this between the banks and their consumers?

    Someone I know very well did buy a house in the states, her and her husband were able to purchase a 300k+ home thanks to the low interest rates. Are there other consumers out there like her benefiting from the low rates?

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  5. There's an interesting article in last month's Adbusters called The Trap, which addresses our generation's "needs" that keep us occupied from doing anything about the political landscape. It's all iPods & cell phones that aren't seen as luxuries. And of course it takes more time & work to afford such trinkets, so there's no time for politics.

    I'd also say that in our consumerist culture that citizenship is forgotten. It isn't seen as a responsibility. The notion of civic duty is something I've was never exposed to until I came to college. It was as if the fight was over, history had ended, now let's just get fat on consumer goods.

    I haven't purchased a house yet. I'm not really looking forward to the day. But it's part of the American Dream right? And how accessible is that dream these days? Not very and it's falling more and more out of reach.

    A big reason why this whole mess happened is because these financial dealings were taking place outside the realm of regulation. And in conservative America where there is no place for government, the rumbles of the market will be felt more and more by citizens in an increasingly burdensome way.

    So what then? Do we actually engage & start voicing our desires for a just society where the wealthiest country in the world (who knows for how much longer) provides vibrant communities where life, liberty & happiness are there for all, not just a wealthy few.

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  6. Phil,

    In fact, broad homeownership in the US is a relatively new phenomenon, really since WWII. What has put home ownership into the hands of millions of people, including our parents and many others you know, is federally guaranteed loans that are made to consumers through private lending companies. This, coupled with the social welfare policies of the early-post-war period, most importantly the GI Bill, is what created a broad middle class in America. So, to answer your question, yes it's a political question and no it ain't just between banks and consumers.

    Go back to my early archives (month # 1, 2 or 3, I think) and read the red-lining entry. It explains this all much better and also discusses the racial bias imprinted into those policies which, in turn, helped create lily-white affluent suburbs and concentrated poverty in inner-city black and brown neighborhoods.

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  7. Yeah, no doubt government policies are biased against minorities. But social welfare polices, the GI Bill, and federally guaranteed loans sound like a totally different issues than private banks offering cheap loans.

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  8. Phil,

    No, because:

    A. The feds set the key interest rates

    B. Banks would not give "cheap loans" without being backed up ("subsidized") by the federal government. Currently, in the US, we are seeing a bit of a credit crunch because of all the bad loans given out in recent years...

    ReplyDelete
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