Wall Street benefits from destruction of working-class homes
All across the Rust Belt, cities are tearing down working-class housing — in Buffalo, Pittsburgh, Youngstown, Cleveland, Detroit. Nearly $2 billion in federal money is being used to raze homes that have been left vacant because of the economic crisis.
A generation ago, the Rust Belt — the industrial Midwest, — was the powerhouse of North American manufacturing, especially steel and auto. Workers there commanded the highest rate of pay in the U.S., which they used to buy and maintaining their homes with a great deal of pride.
Today, the number of empty and abandoned homes in Detroit, for instance, has now reached 80,000, and the Motor City may be a fearful preview of urban America’s future. Mayor David Bing has pledged to raze 10,000 houses in his first term. Nearly 13,000 were bulldozed before he took office.
Today, block after block in Detroit has essentially been returned to prairie, complete with pheasants, grouse, and the occasional coyote. Some eighty percent of the once vibrant Recovery Park neighborhood has been denuded of homes — nearly 2,000 acres.
Many of the demolished houses were beyond repair. But their working-class owners were not the cause of that. By computerizing production, driving down wages and benefits, laying off workers, and moving plants out of the area entirely, the auto companies have cut Detroit’s population in half.
Now it’s Wall Street’s turn to whack Detroit, as the big banks foreclose on working-class homeowners reeling from the economic crash. “It’s class warfare on steroids,” says one Michigan activist. City planners around the world are watching to see how it turns out.
RECORD FORECLOSURES
Unless people stand up the way they did in Wisconsin, things are unlikely to get better any time soon. With a glut of housing already on the market, analysts now fear there will be a “double-dip” recession in real estate.
Besides the two million houses for sale nationwide, there is an equally large “shadow inventory” of homes either in foreclosure or so far “underwater” they’re worth less than half the mortgage — and whose owners will probably walk away.
Add the record number of foreclosures expected this year, and you can understand why some analysts see home prices as again “falling off a cliff” — with yet more people pushed out of the door and onto the street.
This was not supposed to happen. To keep people in their homes, the Obama administration promised many billions of dollars in mortgage relief — not the hundreds of billions used to bail out the banks and auto companies, but serious money nonetheless.
So far, very little of that money has seen the light of day. Tens of billions of dollars have gone unspent, and hundreds of thousands of homeowners have been turned away. The program for helping the jobless pay their mortgages is not even taking applications.
“TOXIC ASSETS”
So it’s hard not to conclude that Obama’s real housing policy is not to rescue homeowners, but to demolish a good part of the nation’s housing. The administration has already put up $2 billion for the job, which is going to Detroit and other cities. There are rumors that the federal government is considering this for as many as 50 cities, largely in the Rust Belt.
Though this is being billed as “neighborhood stabilization,” that’s probably just a smokescreen.
Instead, it’s apparently just another gift to the banks. By demolishing houses rather than repairing them, “excess” housing is reduced, driving up prices and pulling the banks part way out of the hole they dug with the sub-prime loans. “We need to move these toxic assets off the banks’ books,” a Wall Street financier wrote in the Washington Post.,
In the cities where the thousands of homes are being demolished, there is much talk of turning the vacant blocks into green space, parks, or even farms.
So far, that’s mostly just talk. “What will replace these neighborhoods is anybody’s guess,” commented Canada’s National Post in a story about Detroit. “But it could redefine the way cities around the world deal with urban blight and the exodus of residents.”
What that means is that, if ordinary, working-class Americans want a decent urban life in their future, they’d better make sure that it’s them — and not the banks or corporations — who oversee the remaking of the cities.
