Rent in Tampa has been rising rapidly, with rents being 38% higher than January 2021. Since March 15, there have been 31,357 evictions filed in Tampa as many can’t keep up with the rising rent rates. The city council voted six to one on July 28 to declare a housing state of emergency, and the vote against rent control being on the ballot came as a slap in the face to Tampa residents.

Joseph Nohava, member of Tampa Bay Community Action Committee (TBCAC), stated in a speech at the event, “What’s most appalling is the betrayal of those on the city council who can acknowledge that there’s a housing emergency, but refuse to take action.”

Despite rain, the protesters continued to demand that rent control be put on the ballot in the November election and that more money be given to housing assistance rather than the police budget. Tampa Mayor Jane Castor proposed on August 4 the new city budget. It included $5.5 million to housing, but 40% of the general fund will be given to the Tampa Police Department. TBCAC is demanding, in its current People’s Budget Campaign, that $40 million be given to housing resources rather than the police.

TBCAC and other community organizations will also be present at future city council meetings to demand rent control be added to the November election ballot. There are public budget hearings on September 6 and 22.

#TampaFL #HousingStruggles #housingCrisis #rentControl

St. Paul, MN – It took several minutes for the people gathered outside on the front steps of the Minnesota State Capitol to filter through the doors and into the echoing rotunda, chanting, “Hey politicians, here’s the fix! Tax the rich! Tax the rich!” Nearly 200 protested here, Jan. 24, on the opening day of the Minnesota legislative session. Over two dozen Minnesota organizations endorsed the rally, under the slogans, “Make the rich pay for their crisis,” “Put a moratorium on foreclosures and evictions,” and “Stop the attacks on the 99%!”

The protest was organized the Minnesota Coalition for a People’s Bailout (MCPBO).

Deb Konechne spoke for the MCPBO, “This system that we live under, is a system where profit is the ultimate motive and a tiny percentage controls the wealth and power. It’s a system that was built on greed, aggression and outright thievery since its very beginning – from the stealing of land and resources to the stealing of people’s labor. Everything they have was made by us. Everything they own belongs to us all. We are in the biggest economic crisis since the great depression. We did not create it. Yet we are the ones who are being forced to pay for it!”

Darnella Wade, a member of the Welfare Rights Committee, a founding group of the MCPBO, said, “The Welfare Rights Committee is back here at the capitol, for the 20th year in a row. We will be fighting for the demands of the 99%. We are here to demand an end to the attacks on our families. We demand they pass legislation to stop foreclosures and to tax the rich!”

MCPBO is working on two bills this legislative session. One bill, SF1521/HF1886, puts a two-year moratorium on home foreclosures and on the eviction of tenants from foreclosed properties. The other bill, to be introduced Jan. 26, increases taxes on the richest in Minnesota.

Senator Scott Dibble and Representative Karen Clark, the authors of the bill to put a moratorium on foreclosures and evictions, addressed the rally. Senator Jeff Hayden, an author (along with Rep. Frank Hornstein) of the bill to tax the rich, roused the crowd as well.

Ramon Silva Hernandez spoke about the battle against his home foreclosure, “I worked hard to go back to school, to educate myself and I wanted to be a part of America by purchasing a home. I was given a predatory loan by Aurora. I tried for two years to modify my mortgage through President Obama’s program without any answer, and mailing the same package of requirements every month.” Silva Hernandez concluded, “I am here with hope of finding a solution to this situation. I am calling on politicians to put a moratorium on foreclosures.”

The “Occupy the Capitol Rally” ran well over its allotted time, as passionate representatives of many groups lined up to express outrage and determination to fight back against the wave of attacks on poor and working people.

After the speeches inside the rotunda, the crowd marched up the broad staircase to the second floor of the capitol and paraded outside the doors of the House and Senate chambers, chanting all the way.

Then, protesters surged into the hallway outside the Governor Mark Dayton’s office and packed his lobby until capitol security forced them out and barred the doors. Chants ranged from “Money for human needs, not for stadiums,” (Gov. Dayton advocates state funding for a Vikings football stadium) to “We are the 99%! We occupy, we represent!” After a standoff outside the doors of the governor’s office, people moved outdoors and pressed against a window to look in at Governor Dayton as he held a meeting in his office until, after a scuffle, state troopers forced the defiant crowd to the nearby steps, where the rally ended with vows to return. Besides the Minnesota Coalition for People’s Bailout and the Welfare Rights Committee, which organized the opening day protest, the rally was endorsed by ADAPT MN, Advocating Change Together (ACT), AFSCME Council 5, AFSCME Local 3800, Anti-War Committee, Communities United Against Police Brutality, General Assembly of OccupyMpls, Marriage Equality Minnesota, Minnesotans for a Fair Economy, MN Immigrant Rights Action Committee, MN Neighborhoods Organizing for Change (NOC), MN Nurses Association (MNA), MN Tenants Union, MN Peace Action Coalition, Occupy Homes, Occupy the Hood, Occupy Saint Paul Tactical Working Group, Poor Peoples Economic Human Rights Campaign, Saint Paul Regional Labor Federation, Students Association for the Advancement of Children as People (SAACP), Students for Democratic Society (SDS), TakeAction Minnesota, Twin Cities Peace Campaign, United Food And Commercial Worker Union Local 1189, Universal Health Care Action Network of MN and Women Against Military Madness (WAMM).

For more info, go to http://mnbailout.wordpress.com

#StPaulMN #Foreclosures #HousingStruggles #housingCrisis #Evictions #MinnesotaCoalitionForAPeoplesBailoutMCPBO

Minneapolis, MN – “You got bailed out, we got sold out! Stop foreclosures now!” was the rallying call during a protest here June 13 as a crowd of 75 people surged to the doors of a US Bank branch on Lake Street. Minneapolis police officers blocked the doors of the bank building, calling in more squad cars, which arrived with sirens blaring.

The protest and march was organized by the Minnesota Coalition for a People’s Bailout. It called on banks and mortgage companies to stop forecloses and the displacement of homeowners and to stop evicting tenants from rental properties that have been foreclosed upon.

In response to breaking news, the march first went to a branch of Wells Fargo Bank, in solidarity with the workers of Quad City Die Casting. Wells Fargo has pulled the financing of the Moline, Illinois based company and workers are waging a powerful fight to keep the plant open. The Moline workers sent a statement to the protest, which read in part, “Wells Fargo received $25 billion in taxpayer money, supposedly to keep the economy going. Instead, they’ve pocketed that money for executive bonuses and are closing down factories like ours and throwing thousands of workers into the street. It’s time we said enough is enough.”

The march then proceeded east on Lake Street to US Bank, in company with appreciative honks and shouts from cars and passersby. US Bank has received $6.6 billion in TARP, the federal bank bailout, yet it continues to foreclose and evict local families.

Deb Konechne, of the Welfare Rights Committee, a member group of the Minnesota Coalition for a People’s Bailout, spoke for the Coalition: “The bailout money would have been much better spent going directly to the families in need – to keep people in their homes – instead of to the financial institutions whose only motivation is their own profit. U.S. Bank received over $6 billion of the federal bailout TARP funds. Now they want to give the bailout money back, because it has too many ‘strings attached.’ The strings they apparently don’t want is that the money is to be used to refinance people’s homes, instead of lining the pockets of the greedy CEOs.”

Konechne added, “These greedy banks are like parasites, sucking the blood out of our communities and neighborhoods. They take our money in good times, but in bad times, they throw us to the curb!”

State Representative Jeff Hayden, a Democrat from south Minneapolis, compared the current foreclosure crisis to the crack epidemic of the 1980s. He pointed out that removing longtime residents from their homes was destroying the culture and history of the community. Minneapolis city councilmember Elizabeth Glidden, who was pushed the city council to pass a resolution against evictions, also addressed the crowd.

Niger Arevalo from the Minnesota Immigrant Rights Action Coalition, said, “It’s important for the Latino community to join in these protests to speak out against foreclosures and evictions, because they are affecting our community, together with other working class communities.”

Alan Dale, of the Minnesota Coalition for a People’s Bailout, stated, “The economic crisis is not the fault of working and low-income people. Banks and mortgage companies sold mortgages with escalating interest rates and penalties that were doomed to fail. Increasing layoffs and the economic crisis will lead to more people falling behind on mortgage payments. Working people and low-income people need a bail out. We need time to get through this economic crisis and to save our homes.”

Tom Lenius, before presenting a ‘notice of default’ to US Bank, said, “The banks are in the habit of sending notices of default to the people. Today, the people of Minneapolis gave notice to Wells Fargo and US Bank that they are in default of their obligations to ensure that their activities do not negatively impact the communities in which they do business.” Then the crowd went up to the doors of the bank.

The police snatched the notice and then informed the crowd that the bank manager was too afraid to come out and talk. Coalition member Mick Kelly spoke through the bullhorn to the crowd, “The banks are scared because we are building a movement of low-income and working people that is going to fight back to keep our homes and to stay in our homes and to demand an end to foreclosures and evictions!”

#MinneapolisMN #Minneapolis #MinnesotaCoalitionForAPeoplesBailout #HousingStruggles #capitalistCrisis #housingCrisis

Rosemary Williams, a long-time resident of the Minneapolis Central neighborhood, has won wide community support in her struggle to prevent her mortgage company from evicting her.

Ms. Williams is contesting the foreclosure and eviction on several grounds. Hundreds of neighbors, friends and community members have signed legal requests to intervene in her case. Her supporters argue that her eviction, which will lead to another vacant home, would create a public nuisance for the entire neighborhood.

Stef Yorek, of the MN Coalition for a People's Bailout, said, “Low-income neighborhoods with high concentrations of people of color have been the hardest hit by the foreclosure crisis. Foreclosures and evictions destabilize communities, we need to keep people in their homes, not create more empty houses and more homelessness.”

Cheri Honkala, Poor People’s Economic Human Rights Campaign said, “We are urging people to come to court on June 16 and June 22 to show solidarity with Rosemary Williams and her fight against foreclosure and eviction.”

#MinneapolisMN #CapitalismAndEconomy #News #MinnesotaCoalitionForAPeoplesBailout #RosemaryWilliams #AfricanAmerican #HousingStruggles #capitalistCrisis #housingCrisis

Minneapolis, MN – “Banks got bailed out, we got sold out! Stop foreclosures now!” was the chant on a spirited picked line here, April 28 at the Hennepin County Government Center. Rosemary Williams, who faces eviction from her foreclosed home, along with leaders of the Minnesota Coalition for a People’s Bailout and the Poor People’s Economic Human Rights Campaign announced some important developments in her legal case.

Organizers said that the eviction trial of Rosemary Williams will be pushed back to May 26. Rosemary Williams, a 55-year resident of the Central Neighborhood in south Minneapolis was scheduled for trial April 28. But now she will remain in her home while the legal proceedings continue.

“I intend to stay and fight,” said Williams. “We are building a movement to get a measure of justice for everyone who is facing foreclosures and evictions. We need a moratorium on foreclosures.”

Mick Kelly, of the Minnesota People’s Bailout Coalition, told the crowd “We salute the decision of Rosemary Williams to stay in her home and to stand up against the epidemic of foreclosures and evictions that is sweeping the United States.”

Williams’s efforts to fight the foreclosure and related eviction have drawn broad community support. In addition to the Minnesota Coalition for a People’s Bailout and the Poor People’s Economic Human Rights Campaign, the effort to defend Rosemary’s home and stop foreclosures has the backing of ACORN, the MN Tenants Union and the Central Area Neighborhood Development Organization.

Cheri Honkala, of the Poor Peoples Economic Human Rights Campaign, states, “With the trial delayed, we will use the added time to build the fight to keep Rosemary in her home.”

In a unique legal strategy, hundreds of neighbors, friends and community members have signed legal requests to intervene in her case. They argue that her eviction, which will lead to another vacant home, would create a public nuisance for the entire neighborhood. Low-income neighborhoods with high concentrations of people of color have been the hardest hit by the foreclosure crisis.

Linden Gawboy, of the Minnesota Coalition for a People’s Bailout, said, “We are sick of politicians – both republican and democrats – doing nothing about this crisis. In the weeks ahead we are going to turn up the pressure on the bankers and legislators so we can save homes, protect renters and save our neighborhoods.”

#MinneapolisMN #CapitalismAndEconomy #News #MinnesotaCoalitionForAPeoplesBailout #RosemaryWilliams #AfricanAmerican #HousingStruggles #housingCrisis

Minneapolis, MN – About 100 demonstrators gathered outside the Minneapolis Convention Center to protest a massive auction of foreclosed homes, March 28. The protest was initiated by the Minnesota Coalition for a People’s Bailout.

The protest called attention to the urgent need for action by the government to halt the foreclosure crisis and to demand actions that protect working and low-income people from the ravages of the current economic crisis.

The Real Estate Disposition Corporation (REDC), one of the largest private auctioneers of foreclosed homes in the country, is sponsoring the auction. More than 300 foreclosed homes were on the block. The houses being sold to the highest bidder are the homes of families who were forced out by banks and mortgage companies.

“We cannot and must not be indifferent to the ugly spectacle of the auctioning of the homes of displaced families,” said Alan Dale of Minnesota Coalition for a People’s Bailout.

Dale continued, “In the midst of the worst economic crisis since the depression of the 1930s, these auctions should not be taking place. These auctions are a symptom of the cruel and criminal economy that ignores people while protecting corporations and large banks.”

“Working and low-income people should not be paying for this crisis. Banks and corporations have received billions of dollars of government funds, while continuing to foreclose and evict people from their homes,” said Deb Konechne of the Welfare Rights Committee and Minnesota Coalition for a People’s Bailout.

The protest also called attention to the foreclosures of rental properties in Minneapolis and Saint Paul. The tenants in these rental properties are often evicted by the banks and mortgage companies that foreclose on the landlord, even though the tenants have been faithfully paying rent, assuming the landlord was taking care of the mortgage.

“Working people who have fallen behind in payments due to the economic crisis, or due to the predatory nature of the mortgage they were sold, need basic protections,” said Konechne.

“While this auction goes on inside, the families that used to live in these homes have been put out. Every day in Minnesota, more and more families are losing their homes to foreclosure,” said Stef Yorek, of the Minnesota Coalition for a People’s Bailout.

Yorek also said, “We need a statewide moratorium on foreclosures and a state law that stops banks and mortgage companies from evicting tenants in foreclosed rental properties. Without these steps, the housing crisis will only deepen.”

The Minnesota Coalition for a People’s Bail Out is a grassroots campaign that has brought together labor unions, low-income organizations, peace and justice groups, students, housing advocates and others to call on Minnesota state government to take action to protect working and low-income people from the worst effects of the economic crisis.

The coalition is working to build support for the People’s Bailout Act at the Minnesota legislature. For more information, visit www.mn-peoples-bailout.org.

#MinneapolisMN #CapitalismAndEconomy #Labor #News #Foreclosures #HousingStruggles #capitalistCrisis #housingCrisis

Minneapolis, MN – More than 40 protesters gathered here March 14 at the foreclosed home of Rosemary Williams, to demand that Williams be allowed to stay in her home and an end to foreclosures.

Rosemary Williams, a 55-year resident of the Central neighborhood is one of the many faces of the foreclosure crisis in Minnesota. Williams is facing eviction from her foreclosed home at the end of March. She said, “I became unemployed and then I couldn't pay the mortgage, now my house has been foreclosed on. President Obama is promising jobs but until the job market gets rolling people should not be foreclosed upon and evicted, as long as we make reasonable monthly payments.”

The protest leaders announced a campaign to demand a ‘stay in place policy’ that allows people to avoid eviction after foreclosure. This policy has already been adopted by mortgage holder Fannie Mae.

Rosemary Williams and members of the Minnesota Coalition for a Peoples Bailout will be delivering a letter demanding that Mortgage Electronic Registration Systems, Inc. (MERS), a leading forecloser in the state of Minnesota, allow Rosemary and others facing foreclosure to stay in their homes.

Peter Brown of the Minnesota Tenants Union said, “In the shadows of the foreclosure crisis stand those who make the decisions most damaging to families and communities. For every foreclosure or eviction there is a real person, who decides not only to foreclose, but to evict the residents of foreclosed dwellings. Eviction following foreclosure does not just ‘happen’ – it is the conscious decision of the forecloser.”

Stefanie Yorek, a spokesperson for the Minnesota Coalition for a People's Bailout said, “Rosemary's situation is like that of thousands on Minnesotans. It's another example of why legislators must pass the Peoples Bail-Out Bill (SF 542, HF626) which will, among other things put a two year moratorium on foreclosures and protects tenants in foreclosed buildings from no-cause eviction.”

A follow-up demonstration will take place at MERS's attorneys' offices in Burnsville on Friday, March 20 if the letter's demands are not met by Thursday, March 19.

#MinneapolisMN #CapitalismAndEconomy #News #RosemaryWilliams #HousingStruggles #capitalistCrisis #housingCrisis

The Mortgage Bankers Association of America (MBAA) reported that a bit more than three-quarters of one percent (0.78%) of all mortgages went into the foreclosure process in the three months ending in September. This was the highest level since the MBAA began reporting this statistic in 1972. In addition, 5.59% of residential mortgages were at least 30 days late, which was the highest since 1986. These numbers show that the housing market continues to worsen, as a perfect storm of adjustable rate mortgages resetting to higher rates, falling home prices, and a slowing economy batter home-buyers.

The problems in the mortgage market are spilling over into other credit markets, despite the Bush administration and Federal Reserve claims that they were ‘contained.’ Late payments for auto loans from finance companies and dealers rose to 2.77% in the April to June period, which is the highest since the recession in 1991. Many school districts, cities and counties in Florida were also swept into the growing credit crisis when the Florida State Investment Pool stopped withdrawals after almost half their deposits fled upon news that the pool held billions of dollars of investments backed by subprime mortgages. This left these local government without the cash to pay their bills and payrolls.

The Bush administration mortgage plan was worked out with big banks and mortgage lenders. It calls for subprime mortgages whose rates are resetting starting Jan. 1, 2008 until July 2010 to have the initial low rates continue for up to five years. However most homebuyers who are in financial trouble will not be covered by this plan. First of all, only homebuyers who have adjustable rate mortgages and poor credit will qualify. This covers a minority of homebuyers (45%) going into foreclosures. Homebuyers in this group who are already behind on their mortgages more than 60 days or in foreclosure are not covered. Also those who are deemed able to pay the higher rate are not included. Each mortgage borrower would have to negotiate their extension individually. With all these hoops to jump through, the California Greenlining Institute said that only 12% of subprime mortgages and 5% of oppressed nationality homebuyers would end up benefiting. Finally, the whole plan could be dragged out by lawsuits from investors who bought investments based on these mortgages.

One detail reported in the Wall Street Journal, but not in other newspapers, is that only subprime mortgages packaged into securities and sold to investors are covered by the plan, not loans made and held by banks. While mortgages made and held by banks are only a small part of the total subprime mortgages, this is another example of how the big banks who funded, processed and profited from the securitization of mortgages are being let off the hook.

Take, for example, the mess in Florida. Local governments want the state to guarantee their moneys in the State Investment Pool, while the state wants the local government to share the losses on investments. But nobody seems to be pointing their fingers at the big banks that set up the ‘Structured Investment Vehicles’ or SIVs that the state pool invested in. The banks should be forced to take over the SIVs and cover any losses to the local governments.

Tough times require tough solutions. The country is facing the biggest housing bust since the great depression of the 1930s. We know the Bush administration record on dealing with disasters from New Orleans after Hurricane Katrina. We can’t afford to let the Bush administration and their masters on Wall Street continue to propose band-aids while whole neighborhoods, especially poor, African American and Latino communities are engulfed in an economic disaster. What working people need is a New Deal on housing, which will put families and neighborhood needs over the greed of Wall Street.

We need a foreclosure moratorium of at least a year on owner-occupied homes together with a moratorium on evictions of tenants in foreclosed properties. During this time laws covering mortgages need to be fixed by banning prepayment penalties and putting a freeze on mortgages resetting to higher interest rates. We need to change bankruptcy laws so that they cover home loans and allow home buyers in financial distress to repay their loans at lower, fixed interest rates. Finally, owners of foreclosed properties must either maintain them or have them condemned and seized without compensation as financial, health and safety hazards to their communities. These condemned properties should be turned over to local governments who can sell some, rent out others or put them to some other use for communities.

#SanJoseCA #Analysis #crisisOfCapitalism #housingCrisis #bankBailout #mortgageCrisis

The August job market report that came out on Sept. 7 was a shocker. The Department of Labor reported that businesses reported a net loss of 4000 jobs, the first loss in four years. Even worse, a survey of households reported that 316,000 fewer people were working in August as compared to July. This report demolished the Bush administration and Federal Reserve’s reassurances that the housing bust was ‘contained.’

Reports on the housing and mortgage markets have gone from bad to worse. Both the number of permits for new housing and the start of new home construction fell again in August from July. New home construction, a major source of jobs, is now down 42% from its high in January of 2006. Late mortgage payments also rose again in August, to 3.56% of all mortgages. The rate of increase of borrowers behind on their mortgages is rising rapidly, as 2 million mortgages with low-interest ‘teaser’ rates and monthly payments made in 2005 and 2006 are resetting now to much higher interest rates and payments. The secretary for Housing and Urban Development reported to Congress that a half-million of these borrowers will end up in foreclosure.

Financial markets around the world have remained jittery. The latest sign of this came on Sept. 14 in England, where one of the largest British mortgage lenders, Northern Rock, had to get emergency loans from the Bank of England (Britain’s central bank, like the U.S. Federal Reserve Bank) and faced a run by depositors who lined up to withdraw their money.

While the U.S. corporate media trumpeted the interest cut as helping distressed home-buyers, the fact is that the interest rates on standard 30-year fixed rate mortgages actually rose slightly after the Federal Reserve rate cut. The biggest benefits of the rate cut will go to banks and other financial institutions who will be able to pay lower interest rates to their depositors while charging higher rates on the longer-term loans that they make. It was no surprise that the stocks of Wall Street firms rose as much as 10% in one day when the news of the interest rate cut broke.

Working families are now facing growing layoffs, declining home prices and higher interest rates on their mortgages. The Fed interest rate cut will further weaken the U.S. dollar, as foreign investors see less need to buy dollars to invest in the United States. This is likely to increase inflation, making it harder for workers to make ends meet. One sign of future price hikes can already be seen in record-high oil prices, which broke $80 a barrel after the interest rate cut.

Caught between a rock and hard place, working people will have to struggle even harder to maintain their standard of living and keep their homes – not mention the need to struggle to make the rich pay for the crisis that they have brought on the economy. The Bush administration has proposed to help about 80,000 mortgage borrowers. Much stronger action, beginning with a moratorium on all owner-occupied homes facing foreclosure, is needed. Ultimately we need an economic system where housing is a right, not just another market driven by greed and profit.

#SanJoseCA #Analysis #capitalistCrisis #interestRates #housingCrisis

Despite statements from the Bush administration and the U.S. Federal Reserve that the problem was “contained” to so-called “sub-prime mortgages” and despite over $300 billion of cash put into the banking system by European and other central banks, the crisis continued to spread and worsen.

In turn these problems in the financial markets are making it harder to buy homes as interest rates on mortgages rise and mortgages are harder to get, so the downturn in sales and prices of homes in the United States is all but certain to get worse. As the housing market woes spread to other parts of the economy, the possibility of an economic recession in the near future grows.

Over the past five years the United States has had the greatest boom in home prices and sales ever. This boom was fed by low interest rates set by the U.S. Federal Reserve and a host of new mortgage products combining variable interest rates, no down payments and little or no documentation of the borrower’s income. By 2005 there were few renters who could afford to buy homes. But rather than cut back on lending, banks and mortgage companies made many loans to people who really couldn’t afford to pay the mortgages, thinking that rising home prices would allow the borrowers to resell the home or refinance the loan.

But as home prices began to level off and then fall in 2006 and 2007, more and more homebuyers began to fall behind on their mortgage payments and then lose their homes to foreclosure. The rising loan defaults first hit mortgage companies, which began to go belly-up. Then a couple of hedge funds (investment pools aimed at wealthy individuals and institutions such as pension funds) owned by the investment bank Bear Stearns that had borrowed money to buy mortgages failed. This was followed a few days later by the failure of a hedge fund in France owned by a large bank.

These failures triggered a state of near panic where financial companies and wealthy investors didn’t want to loan money at all. The European Central Bank put over $200 billion into the banking system – almost three times as much as on September 12, 2001 – and other central banks, including the U.S. Federal Reserve put in smaller amounts. While this calmed the markets for a few days, problems continued to spread, first to mutual funds (pools of investments) and then to the commercial paper (short-term loans to businesses) market in Canada.

The slowdown in lending also began to affect so-called ‘jumbo’ mortgages, for more than $417,000. This is putting a crimp on the higher end of the housing market, which had been holding up better since these borrowers tend to have higher incomes.

Homeowners are also finding it harder or even impossible to refinance their homes or take out home equity loans. This in turn is putting a damper on consumer sales, with some of the largest retailers such as Wal-Mart and Home Depot lowering their expected future sales and profits. Layoffs and the unemployment rate, while still relatively low, have begun to rise.

Then on Aug. 17, the Federal Reserve lowered the discount rate by one-half a percentage point, to 5.75%. The discount rate is the interest rate that the Federal Reserve charges to make loans to commercial banks. While this caused a sharp rise in stock markets that day, it is not clear that this act will actually mean more credit will be available, since U.S. banks rarely borrow from the Federal Reserve. And even if the Federal Reserve is able to calm the credit markets, the crisis of overproduction could continue to grow, since the fundamental problem is not a lack of credit, but a lack of income to pay for the growing supply of expensive homes that continue to come on to the market.

#SanJoseCA #Analysis #capitalistCrisis #recession #housingCrisis

Falls in building permits and the construction of new homes leads to fewer jobs both directly in terms of less workers needed to build homes and indirectly in terms of fewer real estate, mortgage and building-material store workers. Home construction jobs were already falling at a 7% annual rate during the last three months of 2006 and will fall further as fewer new homes are started than are completed.

Homes have become a super-sized credit card for many households who borrow against their home’s increasing prices. Last July through September, homeowners borrowed over $100 billion through refinancing and home equity lines of credit. This amount is only half of the amount borrowed the same three months the year before, which could mean less consumer spending in the future, also slowing the pace of the economy.

In addition to the housing market, interest rates are also signaling a slowdown or even a recession in the future. Typically, long-term interest rates (for example, the rate that the U.S. government pays to borrow money for ten years) are higher than short-term rates on one or two month loans. However, for the past six months longer-term interest rates have been lower than short-term rates. This so-called ‘inversion’ always happens before a recession, although not every inversion is followed by a recession.

Many small and medium sized businesses are having a harder time borrowing money as sales slow and interest rates rise. While big businesses and the government are able to sell bonds – essentially corporate and government IOUs – to investors in the United States and around the world, smaller businesses must rely on banks and other finance institutions who are rejecting more applications as business fall behind on their payments.

Any recession could be a severe test for the U.S. economy. To get the economy out of the last recession in 2001, the Federal Reserve Bank slashed interest rates, setting off a boom in the housing market. At the same time businesses slashed jobs and sent their work outside the U.S., fattening their profit margins. But this has left households with record levels of debt and the United States has had to borrow hundreds of billions of dollars each year to pay for record imports.

A sudden drop in household borrowing or a sharp slowdown in money coming in from the rest of the world to the United States could trigger a more dramatic economic crisis. This has only been seen in indebted Third World countries in the last few decades, when a dramatic drop in the international value of country’s money (the ‘exchange rate’) coupled with sharply higher interest rates at home led to a severe recession and inflation.

Underlying the of danger of recession is the fact that the U.S. economy is periodically hit by crises of overproduction, where despite people’s real needs, corporations are no longer able to able to produce goods and services profitably. Big corporations respond by laying off workers and closing down workplaces.

#SanJoseCA #Analysis #capitalistCrisis #recession #housingCrisis

While the average homeowner spends about a quarter of their income on housing costs, the average renter has to spend one-third of their income on rent, leaving less for food, transportation and other necessities. The plight of renters was overlooked by much of the mainstream media who have focused only on the growing difficulties facing homeowners, showing again the media’s bias towards more well to do households.

Nor did any of the mainstream media use this report to expose how the official government measure of inflation, the Consumer Price Index, or CPI, understates the true increase in the cost of living. According the CPI for urban wage earners and clerical workers, housing costs have risen 15.6% over the past five years. The CPI housing costs are based on the cost of renting a single-family home, when the vast majority of households are either buying a home or renting an apartment. The true increase in housing costs between 2000 and 2005, using an average of actual data on renting and cost of owning a home, would be 19.3%, or 3.7% more.

The Department of Labor claims that workers’ wages were up 1.5% between 2000 and 2005 after taking inflation into account. However, using the actual cost of housing, the increase in purchasing power would be only one-half of one percent (0.5%), or just about no increase at all. This is, of course, no surprise to those workers who are struggling to make ends meet and who often end up borrowing when unexpected medical bills or job losses happen. In contrast, CEO salaries and the income of the rich have soared over the same five-year period.

In the last year rents have risen at an even faster pace. For example, here in the San Jose/San Francisco Bay Area, rents are up 7.5% over the past year, more than twice the general rate of inflation (3.6%). Fewer people can afford to buy homes with rising interest rates on mortgages, increasing the number of renters. At the same time there are fewer apartments available for rent as many were converted to condominiums during the past few years. Over the last two years the vacancy rate for rental housing has dropped, giving landlords even more power to raise rents.

#SanJoseCA #capitalistCrisis #renters #housingCrisis

But Fannie and Freddie only have about one-fifth of late mortgages. The other 80% are in the hands of big banks and investors. We need state governments and congress to act!

1. State legislatures should pass an immediate ban on foreclosure evictions for both owner occupied homes and tenants. This ban should last until Congress changes the law to protect tenants and owners who live in their homes.
2. State legislatures and Congress must pass a law banning evictions of tenants when their landlords go into foreclosure. Tenants should be allowed to stay under their previous contract (whether by lease or month-to-month).
3. Congress must change the bankruptcy law to allow residents to modify their mortgages. Bankruptcy judges should be empowered to reduce the principal amount of loans for owner-occupied homes to 80% of the home’s current market value and require the lender to offer a 30-year, fixed interest rate loan.
4. Congress must also change the law to allow a ‘right-to-rent for homebuyers who can’t pay their mortgages and don’t want to go through bankruptcy. This would allow the homebuyer to stay in their home and pay the market rent. It would also be an incentive for lenders to modify the mortgage.

Of course the big banks and wealthy investors will argue that this will be bad for them, which will mean that they will lend less, which will hurt homebuyers. But they are the ones who helped to cause the crisis with their fraudulent lending! They should pay! And they are not lending anyway! The banks are sitting on $800 billion in cash, despite getting hundreds of billions from the Bush bank bailout!

But the people should not just pressure their legislatures and congress. When African Americans were denied their rights under Jim Crow segregation laws, they used civil disobedience and direct action to desegregate businesses and public facilities. Working people need to confront unjust and unfair evictions where ever and whenever they can. The evildoers need to be exposed and their agents in the government need to be protested.

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