How Detroit, the Motor City, turned into a ghost town

Excerpt from The Guardian Unlimited

Try telling Brother Jerry Smith that the recession in America has ended. As scores of people queued up last week at the soup kitchen which the Capuchin friar helps run in Detroit, the celebrations on Wall Street in New York seemed from another world.

The hungry and needy come from miles around to get a free healthy meal. Though the East Detroit neighbourhood the soup kitchen serves has had it tough for decades, the recession has seen almost any hope for anyone getting a job evaporate. Neither is there any sign that jobs might come back soon.

"Some in the past have had jobs here, but now there is nothing available to people. Nothing at all," Brother Jerry said as he sat behind a desk with a computer but dressed in the simple brown friar’s robes of his order.

Outside his office the hungry, the homeless and the poor crowded around tables. Many were by themselves, but some were families with young children. None had jobs. Indeed, the soup kitchen itself is now starting to dip into its savings to cope with a drying up of desperately needed donations. This is an area where times are so tough that the soup kitchen is a major employer for the neighbourhood, keeping its own staff out of poverty. But now Brother Jerry fears he may also have to start laying people off.

Officially, America is on the up. The economy grew by 3.5% in the past quarter. On Wall Street, stocks are rising again. The banks – rescued wholesale by taxpayers’ money last year – are posting billions of dollars of profits. Thousands of bankers and financiers are wetting their lips at the prospect of enormous bonuses, often matching or exceeding those of pre-crash times. The financial sector is lobbying successfully to fight government attempts to regulate it. The wealthy are beginning to snap up property again, pushing prices up. In New York’s fashionable West Village a senior banker recently splurged $10m on a single apartment, sending shivers of delight through the city’s property brokers.

But for tens of millions of Americans such things seem irrelevant. Across the country lay-offs are continuing. Indeed, jobless rates are expected to rise for the rest of 2009 and perhaps beyond. Unemployment in America stands at 9.8%. But that headline figure, massaged by bureaucrats, does not include many categories of the jobless. Another, broader official measure, which includes those such as the long-term jobless who have given up job-seeking and workers who can only find piecemeal part-time work, tells another story. That figure stands at 17%.

Added to that shocking statistic are the millions of Americans who remain at risk of foreclosure. In many parts of the country repossessions are still rising or spreading to areas that have escaped so far. In the months to come, no matter what happens on the booming stock market, hundreds of thousands of Americans are likely to lose their homes.

For them the recession is far from over. It rages on like a forest fire, burning through jobs, savings and homes. It will serve to exacerbate a long-term trend towards deepening inequality in America. Real wages in the US stagnated in the 1970s and have barely risen since, despite rising living costs. The gap between the average American worker and high-paid chief executives has widened and widened. The richest 1% of Americans have more financial wealth than the bottom 95%. It seems the American hope of a steady job, producing rising income and a home in the suburbs, has evaporated for many. A generation of aspiring middle-class homeowners have been wiped out by the recession. "Poor people just don’t have the political clout to lobby and get what they need in the way Wall Street does," said Brother Jerry.

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