A (3:24)

So they're either week to week, they're either poor or they're. Alice.

C (3:27)

Right, exactly.

A (3:28)

So they're employed, but they literally month.

C (3:31)

To month, they're one car repair repair or one medical emergency away from insolvency.

A (3:36)

So this is like that statistic that the Federal Reserve puts out that they use the number $400. If you had a $400 emergency on you, you don't have it. You would have to either borrow from other people or, or sell things you own to be able to cover the $400.

C (3:56)

Right. And this cohort has been growing over time. And as a matter of fact, since in the case of New Jersey, and I zeroed in working with wbgo, the NPR JAZZ affiliated network, we zeroed in on New Jersey because by looking at one state's data, it's easier to get a sense of the trends. And what the United Way found was that before the Great Recession, around 913,000 households were in this mode of struggle. Today currently it's 1.2 million households. So you see that irrespective of what's happening with the so called top line unemployment number, 3.8%, the lowest ever, the Trump miracle, that the reality is this unraveling is continuing, that is people are having trouble meeting the basic economic requirements of shelter. And it comes up in very strange ways. As a reporter, how many times have we seen stories in the newspaper where a mother, a single mother, is arrested for child endangerment and it's because she went to get a thing of milk because she left a 7 year old in charge of a 3 year old. If you drill down to those stories, Richard, I submit to you what you see. People struggling in poverty where because they don't have economic resources, their options are miserable. And that's just not discussed.

A (5:10)

That number you gave me, I find it so striking that you have, if I heard you right, something on the order of 300,000 more families in trouble in New Jersey, in the last couple years than you had before the meltdown. So that the 2008 crash, so that all this story, that's your unraveling, right? All this story of recovery that we read is not matched by the actual circumstance of a huge part of the population.

C (5:43)

Well, and this is the blind spot that corporate media has had that set the stage 50 election of Donald Trump. You can make an argument that there was Russian involvement in the election. But the other reality that you can't escape is there were 200 counties in Michigan, Pennsylvania and Ohio, places like that, that voted for President Obama in 2008 and 2012 and then switched. About 70,000 votes made all the difference for those folks. Their home values had declined. In fact, the national association of Counties right around the time leading up to the election said out of 3,069 counties, only 7% of those counties experienced what was a recovery. So what we see is, and part of it is that our corporate news media is increasingly driven by analytics that are about selling stuff. So really, if you're not capable of buying the luxury Cruz of the late model Mercedes Benz, they really don't want to hear from you. Okay? If you're not clickbait, you're not in their conversation. And it's reflected even in the stories they tell. Because if you were to talk about Alice struggling, well, that's not a fun story. And it doesn't create the optimism to go out and buy a Viking cruise. I mean, you know what I'm saying? It's counter the prosperity narrative. And that's the thing that corporate news media wants to continue going because that's the basis of the legitimacy.

B (6:56)

Sounds very close to the prosperity gospel here.

C (6:59)

Exactly.

A (7:00)

Anyway, let me take it another direction. What's happening to building housing? In other words, are we creating the housing for the American people? I mean, one of the ways you judge an economic system is how well does it provide for people's needs. And food, clothing and shelter are fundamental. Is this housing crisis that's so difficult for people struggling? Are we responding as an economy? And if so, what? What houses are being built? What's happening to home ownership, to rentals and so on?

C (7:35)

Well, as we sit here in New York City, this would be the penultimate example of where international capital is coming into the city and forcing out all kinds of affordable housing circumstances. Two family homes, sro, single room occupancies, things that people and even young artists that came from around the world to just get a toehold in New York could count on to start making their way. That is Disappearing in its place or luxury condos where ironically people may only be from December 25 to January 1 and it sits empty while we have a huge homeless population that's going by leaps and bounds. In some ways, New York City is apocryphal for a broader conversation. In New Jersey, we have a situation where because of the foreclosure Crisis, there's some 40,000 zombie homes in New Jersey, even as the price of housing is creating a stress on so many households. So you have this, I call it late stage vulture capitalism. It's turning on a point where it's not just making it impossible, it's criminalizing the poor because people end up making these bad choices out of the fact that they can't find shelter.

B (8:43)

Tell me, what exactly is a zombie home?

C (8:45)

Well, a zombie home is, you may remember that the greedy mortgage industry, the Wall street folks, had this great idea that, yes, we had a title system in America where every time you bought or sold a property, you went down to the county seat and talked to ascending being an entered the deed. Well, we decided, hey, let's get away from that and we'll just centralize it in this automated thing where they had, you know, mers, you know, just record it and some central location will create like some kind of data code. And that's all you need to do. Well, what ended up happening was that whole thing was based on the notion that no, there'd never be a foreclosure. Well, when all these mortgage backed securities started popping up, these same folks that wanted to automate the function of local county court tried to go back to some of these courts and say, by the way, we'd like you to push these people, you know, use your armed police power to throw these people out. And some judges were like, hey, you never stop by here to get this memorialized. Well, this happened across the country. And so you have a situation where it's not really clear in many cases who has title to these places. And also the banks often do these things where they force people out and then they do this very cynical thing of not taking it the next step to actually take title to it. So they intimidate folks to run them off and get them to leave and evict them. But then they won't actually go and actually follow through because then they'd be responsible to mow the lawn. So that's late stage mobility.

A (10:05)

So where does the house sit vacant?

C (10:06)

It sits vacant. And in some places it creates a tremendous burden on the community. Because what this does, when you have an existence of a critical mass of these. The people that are holding on, that are paying their taxes, that are trying to keep the community vital and working, find their housing prices are depressed because of the zombie homes. It often becomes a flashpoint. I've done these tragic stories in Newark. We had a case where drug addicts got into a place like that, set a fire, and it created a situation where people living in a home, three children died next door in a home that people were paying the mortgage on.

A (10:39)

You know, for me as an economist, it's a wonderful example that if you allow the economy not to serve large segments of the population, the result will affect everybody. The notion that you can keep this over there so it doesn't affect you. This is a perfect example. If these houses are abandoned because people can't afford to live in them anymore, everybody, including those that are paying and trying to survive, are undercut, and you have a growing rot in the system.

C (11:11)

And I'll give you a case of where local government's response to this, incredibly, has been to raise the property taxes to try to cope, right? So when the Raidwell base begins to erode because of the predatory nature of Wall street banking, the response is to hit the homeowner even harder who's decided to try to make a stand. And so this creates a situation where if you didn't lose it because of redlining and predatory lending practices, the municipality comes and takes it away.

A (11:37)

So you have this phenomena of deeply distressed cities and towns beginning to. I mean, we all know the story of Detroit and Cleveland and Camden, New Jersey and places like that, which are the extreme version. But you're seeing a whole economic system beginning to show the spots of rot which are not being resolved that are sitting there.

C (12:01)

Right.

A (12:01)

Because you can't resolve them with an explosion of minimum wage jobs because they don't solve the problem of housing access because of the affordability issue.

C (12:11)

Well, when you lost $20 trillion of household wealth, as we did, that has generational consequence because historically grandparents used to be able to offer sanctuary to their children and grandchildren. And incredibly, that's something they're being pressed to do. But many of them are in a situation where that's increasingly impossible.

A (12:32)

Also in America, because of the ideology here, a lot of people poured the wealth that could in any way accumulate into their homes. They spent free time. If they were unemployed for a while, well, they improved the basement or they did. The wealth accumulation was in a house which the crisis of capitalism in 2008 wipes out. And so the ability of people to give their children if no cash, if no, but at least a stake. A property that could be either lived in or sold for a nest egg to survive with has also been eroded.

C (13:08)

And that's why it's particularly hard hit African American communities where the asset base was concentrated in the home. And so the great irony is that while President Obama had the White House for two terms, for many, many African American families it meant the house. Because here's the thing, the banks, they got bailed out but they don't grant principal relief. I mean that's the thing. Like you'll have cases and I've worked these stories where someone before the recession the home was worth 350,000. They have a job, they have two people, two income earners in the house and now the home is only worth 150,000. The bank will not cut the principal. They insist on enforcing that old mortgage. Meanwhile, that got bailed out. So that's really where there's bad faith. If this was fair, they would have rolled back the principal to match the value of the home.

B (13:55)

Bob, thank you again.

C (13:56)

Pleasure.

B (13:57)

And to all of you, we hope you found interesting and value in this economic update Extra. There will be more of them being posted up on Patreon for all of you in an ongoing effort to spread the word and to spread the news. Thanks again for participating.

C (14:24)

Sam.