Risk Rap

Rapping About a World at Risk


Yesterday’s post on the theme on the New American Diaspora neglected to mention the impact of mortgage foreclosures.

Diaspora is a Greek word that means “to scatter.” Yesterday we speculated on how high energy prices and climate change may impact the changing demographics and population shifts in the urban centers and rural areas of America. Today we offer a brief comment on mortgage foreclosure and its potential impact on the New American Diaspora.

Due to the excesses of the credit marketing orgy and the implosion of sub-prime lending market, it is estimated that during 2007 1.5 million mortgages were in foreclosure. The Department of Treasury estimates that during 2008 approximately 2.5 million mortgages will enter foreclosure and subsequent quarters will experience 800,000 home foreclosure run rate. That’s a staggering amount of potentially displaced people.

It is heartening to see that our governmental institutions are moving to address this growing problem. The financial and political impact on state and local governments and the economies of local communities can be severe.  Over 4 million mortgage foreclosures have been or are forecast to occur. If we surmise that each mortgage is tied to a house that shelters 3 people we are speaking about 12 million people who are being put out of their homes. This does not translate into 12 million newly homeless people. Many former homeowners will return to renting their dwellings. But the pressure that this will put on affordable housing markets ability to absorb this dramatic spike in demand will drive affordable  housing prices up and will contribute to a rise in homelessness.

State and local governments rely heavily on property tax receipts. As defaults grow the level of tax receipts will recede forcing state governments to raise taxes and cut back on critical services. State governments are moving to address this problem. The Federal government is also trying to develop market solutions to keep people in their homes. If market solutions fail the government may have to dust off some New Deal Programs to address this mass dislocation.

The California town of Weedpatch was created by the Farm Security Administration in 1935 as a settlement community for the displaced Dust Bowl dirt farmers. Lets work to create a solution to this problem so we don’t have to build these camps.

Lets listen to this Woody Guthrie Dust Bowl classic, I’m Going Down the Road Feeling Bad.

Risk: homelessness, local government, tax ratables, social programs, market solutions

July 10, 2008 Posted by | Bush, credit crisis, homelessness, recession, social unrest | , , , , , , , | Leave a comment

A New American Diaspora

Ever since our ancient ancestors first walked out of the Great Rift Valley to populate other regions of the globe our species has been on the move. Critical turning points in world history have always been marked with dramatic shifts in population and settlement of people. The Phonetians, Greeks, Polynesians, Vikings, Crusaders, Mongols, Hebrews and the Pre-Columbian Asians who crossed the Baring Strait land bridge are storied migrations, explorations and conquests that shaped civilization and continue to inform our understanding of world history.

American history is full of examples of dramatic population shifts. The arrival of European settlers, the introduction of African’s through the slave trade, the westward expansion of America, the Trail of Tears of Native American resettlements onto reservations, the arrival of Chinese laborers in San Francisco, the second wave of Ellis Island European immigrants, the migration of African Americans to northern cities at the beginning of the 20th century, the Dust Bowl migrations of Midwest farmers and the most recent immigration of Hispanics, Caribbean, Middle and Far Eastern people are dramatic examples from our country’s short history of major population shifts.

Global climate change and the economic impact of high energy prices are causing dramatic shifts and migrations of people throughout the world. The United States will not be immune from its affects. Hurricane Katrina depopulated the City of New Orleans and is altering our propensity to build houses on barrier islands. The floods along the Mississippi River Valley, drought in the Southwestern states and the devastating wildfires in California and other western states are climate influenced events that are forcing populations to resettle to more eco-friendly locations. History may be rereading and we may be witnessing a reenactment of John Steinbeck’s great historical fiction masterwork, The Grapes of Wrath .

The permanent rise in energy prices will reverse the urban exodus of the middle class to suburbia. As the car culture took hold of post war America, cheap gas, and vast highway systems encouraged the development of suburbs. Now that gas prices are skyrocketing and mass transit infrastructure continues to be neglected the middle class will migrate back to the city to live in close proximity to resources, jobs and services. Urban exclusivity will be protected by congestion pricing programs, the absence of affordable housing and high cost of services. This will create a dramatic demographic shift in the America as lower income people are forced out of the city creating a growing population of rural poor. Social service reservations may need to be created to assure subsistence for the rural poor.

The stated intention of airlines to restrict and eliminate service to second tier cities will tend to isolate these communities and create high concentrations of the economically disadvantaged. This will create tremendous strain on local city and state government’s ability to provide basic services to the new classes of disenfranchised people. High energy prices and the changing American topology due to climate change pose a multitude of risks to the fiscal viability of local governments.

Let’s close with Bruce Springsteen’s Ghost of Tom Joad.

Risk: demographic, tax base, urban, rural, climate change, population,

July 9, 2008 Posted by | bankruptsy, credit crisis, environment, folk, homelessness, social unrest | , , , , , , , , , , , , | Leave a comment