Sunday, September 18, 2011

Buying the American Dream, on Credit

by Pasckie Pascua
[photo by Joe Longobardi]

THREE years ago this month, the national unemployment rate was 6.1 percent—the highest level in five years that time. The year was 2008, and the US economy has lost 605,000 jobs. That was also the year, close to Christmas, that Filipino immigrant Godofredo Ruiz Diaz, 48, accountant for at least five Las Vegas and Reno hotel-casinos, lost it. His world caved in when his stunning 8-room stucco bungalow in nearby upper middle-class Sunrise Manor neighborhood went on foreclosure proceedings when the great American mortgage bubble of the 2000s blew up big time in the desert.
Godofredo’s valued property—a labor of love and sacrifice with his wife, Romina—was suddenly thrown in to beef up a doomsday financial meltdown stat: one in 25 homes in Las Vegas was in foreclosure that time. September of the same year, lenders nationwide took over a rec­ord 102,134 properties. That same month, more than a third of all home sales were distressed properties. All told, some 820,000 Americans have already lost their homes in 2008, and another 1 million faced foreclosure.
The Ruiz Diaz’s house of glass finally crumbled to smithereens when Romina, 42, a pediatric nurse at St Rose Dominican Hospital was cut a week before Christmas. Two months before, the couple—with kids, John, 14, and Lynette, 17—visited relatives in Pasadena on a Midnight Madness shop-till-you-drop weekend.
“We figured, it was the perfect time for Christmas shopping—a Midnight Madness sales weekend,” Lynette, an incoming junior on dialectical research at UCLA, told The Indie. “Mom always reminded us that Filipinos love bargains and energy conservation.”
A 4-hour, 260 mile drive from Vegas to Pasadena on one vehicle to visit folks and “bargain-shop” at the same time makes sense—that is, if such a trip and purchases weren’t on credit. Godofredo and Romina—high school sweethearts from a tiny village in impoverished Isabela province in north Philippines, who migrated to the US on their 20s—grew up in a culture that is alien to “plastic money,” bank loans, and home mortgages. Just like how an average starry-eyed immigrant from a third world country looks at America—the couple were mystified and perplexed by what money could buy here, “as long as mom and dad work to death for dollars paid on hours rendered,” as Lynette coldly puts it.
The Southern California break brought home a stash of acquisitions via maxed out AmEx’es and Visas: plasma TVs, iPads, XBOXes, De Beers diamond earrings, Grand Palais and Williams-Sonoma kitchenware, Pradas and Fendis, Blackberrys, power tools, iMacs, and “an assortment of hi-tech knick-knacks.”
But that was just a weekend in the life of the Cruz Diazes. The lavish lifestyle, a dream come true, was blatant.
Godofredo and Romina also invested in two high-end restaurants in Santa Monica and West Hollywood, plus a condominium in Manila’s financial district and a resort island in Cebu province in the south of the Philippines. On top of those, Godofredo’s major “guilty pleasure” was all about cars. He owned, among others, three SUVs: a Porsche Cayenne Jeep, Grand Cherokee, and Lincoln Navigator.
“Dad also did accounting work for who knows how many private companies, mostly owned by his friends,” Lynette adds. “Dinner together was like—only happening on Christmas and Thanksgiving. He was working like there’s no tomorrow.”

BACK HOME, Godofredo Ruiz Diaz’s family prides itself from a very humble beginning. His grandfather, who wasn’t able to step foot in a classroom, raised his son, Arnulfo (Godofredo’s father), and 7 other children, by farming a 4-hectare (10 acres) vegetable patch and ricefield that he rented from a local politician-landlord for 600 pesos a month (almost $12 in current conversion). Godofredo’s ticket to America came by way of wife Romina’s petition; Romina received instant H1B work visa upon sponsorship by a hospital in Seattle, where they used to live until they moved to Nevada in 2003.
To avoid foreclosure “and embarrassment,” Lynette admits, Godofredo and Romina had to sell their house almost half its supposed market value. Three of Godofredo’s priced vehicles were repossessed, some appliances went to Craigslist and eBay boards, and Romina had to embark on two-month long yard sale in front of their house to get rid of “five truckloads of stuff and things”—before the couple flew back home to the Philippines to save whatever business they could salvage. The restaurants had to close. John is currently under the care of a relative in Echo Park in LA, while Lynette took a break from school. She currently co-manages a cafĂ© in Silverlake that her boyfriend owns, and works the second shift at a Costco.
Lynette, however, is unperturbed.
“This is a lesson. I am still young. I will go back to UCLA and finish college. I just have to believe that if mom and dad stuck to how it was back home—when people subsist with whatever money or resources they have and not rely on credit and loans—this wouldn’t have happened.”
“My parents worked hard because they only wanted to give their kids what they only dreamed of when they were our age,” the 17-year old promising poet and artist adds. “If they didn’t fall on this bank lending schemes, credits and mortgages, and just took things slowly… we would still be together these days.”
The good news is both Godofredo and Romina recently landed jobs in Macau—as accountant and house nurse, respectively. “My father believes that his Great American Dream isn’t done yet. His sand castles may have been washed away to the sea in this current storm, but my dad will be back with a sturdier castle of concrete. We are a people of hardened journeymen, we never falter—we always get up.”

WE MAY be looking at this story only on economic angle though. In a capitalist society, we are conditioned to ignore the moral bankruptcy that devours the culture while taking good care of the practical ends.  
“We are slowly giving in to a futuristic nightmare ideology of computerized greed and unchecked financial violence. The monster in the foreclosure crisis has no face and no brain,” writes Rolling Stones’ Matt Taibbi. “The mortgages that are being foreclosed upon have no real owners. The lawyers bringing the cases to evict the humans have no real clients. It is complete and absolute legal and economic chaos. No single limb of this vast man-­eating thing knows what the other is doing, which makes it nearly impossible to combat — and scary as hell to watch.”
Of course, the real estate crisis is reflective of the macro malaise. Dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase are screaming manifestations of a credit card culture that buys a dream by a mere mouse click—just because the willing victim just landed a “good job,” hence good credit. So we spend money that we haven’t earned yet.
But do we have a choice? No credit means no life.
While huge corporations’ CEOs continue to receive fat paychecks and party aboard yachts in Ibiza or Palau, the average American bleeds some more—laboring on 14 work hours a day, 6 days a week, just to practically pay up credit interests. Investments wheeler-dealer David J. Stern, for example, tried to foreclose on 70,000 homeowners across the country in 2008 alone, while he bought $60 million in property for himself.
What we hear and read can be very confusing, as well. So-called "economic pundits" on television present contradictory messages in regards US economy.  One expert pulls a wad of statistics that claim that we have entered a time of solid recovery.  Another pundit showcases data that suggest we are headed for more trouble. 
The recent truth is -- unemployment rates rose in a majority of states in August for a third straight month, further evidence that the depressed job market is widespread. As we go to press, the Labor Department said that unemployment rates increased in 26 states. Nationwide, the economy added no new net jobs in August, and the unemployment rate stayed at 9.1 percent for the second straight month. Remember, it was 6.1 percent before Barack Obama took the helm in White House.
Many employers pulled back on hiring after the economy barely grew in the first half of the year. The economy added an average of just 39,500 jobs per month from May through August, down from an average of 178,500 jobs per month in the first four months of the year.
Nevada had the nation's highest unemployment rate among states for the 15th straight month. The rate there rose from 12.9 percent in July to 13.4 percent in August. The state has been hampered by foreclosures, a depressed construction industry and a decline in tourism. California had the second-highest rate, at 12.1 percent.
Hence, Godofredo and Romina Ruiz Diaz’s decision to leave Nevada and thought better of moving to California was smart, after all. They also considered moving to Arizona and Florida—but both states’ real estate market was no different with Nevada, where 67 percent of mortgages in the third quarter of 2010 were “underwater.” In Arizona, it’s 49 percent; Florida, 46 percent.
Meantime, Macau—the Cruz Diaz’s choice of country to recover losses—is on the upswing. Macau’s GDP (gross domestic product) rose 21.5 percent this year—owing to the continued rise in gambling and related leisure activity that lifted growth to 26.2 percent last year and will keep it strong in 2011-12 as new resorts come on stream.
While thousands of US factories, millions of jobs and hundreds of billions of dollars of national wealth continue to be shipped overseas—so is the exodus of citizens to greener pastures beyond the mainland.  In 1985, the US trade deficit with China was 6 million dollars for the entire year.  In the month of August alone last year, the US trade deficit with China was over 28 billion dollars
Nobel economist Robert W. Fogel of the University of Chicago projects that the Chinese economy will be three times larger than the US economy by the year 2040 if current trends continue.
The number of Americans that have been out of work for an extended period of time has absolutely exploded over the last few years.  As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer.  Today, there are over 6 million Americans that have been unemployed for half a year or longer.
Meantime, the middle class continues to be squeezed out of existence.  According to a poll taken in 2009, 61 percent of Americans "always or usually" live paycheck to paycheck.  That was up substantially from 49 percent in 2008 and 43 percent in 2007.
The number of Americans living in poverty is absolutely on the upswing.  42.9 million Americans are now on food stamps, and one out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.  Unfortunately, many of those that have been hardest hit by this economic downturn have been children.  According to one new study, approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.
More elderly Americans than ever are being forced to put off retirement and continue working.  In 2010, 55 percent of Americans between the ages of 60 and 64 were in the labor market.  Ten years ago, that number was just 47 percent.  Unfortunately, it looks like this problem will only get worse in the years ahead.  In America today, approximately half of all workers have less than $2000 saved up for retirement.
I can go on and on and on.
As we struggle to pay up credit by breaking our backs at work and popping more pills or chug in more beers to de-stress ourselves, financial assets continue to become concentrated in fewer and fewer hands.  The "big four" US banks—Citigroup, JP Morgan Chase, Bank of America and Wells Fargo—had approximately 22 percent of all deposits in FDIC-insured institutions back in 2000. 
But there is hope. And it is reflected in 17-year old Lynette Ruiz Diaz’s words: “We need to look back. The days of misery, the Great Depression, the time when we had nothing—we valued what we had in our hands. Our families were intact because we didn’t need to work 3 jobs to pay for what we owed. We only consumed based on what we had or could afford. We can still achieve our own Great American Dreams. It’s just that we have to pay each way, each road—in cash.”
Credit is no good, says an old sign in an old corner store. The wisdom of the past, indeed, becomes the salvation of the present and hope for the future.
[with data from,, and Rolling Stone Magazine]

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