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Published on Thursday, January 29, 2009 by Inter Press Service

Poverty Safety Nets Fraying Nationwide

by Adrianne Appel

BOSTON - The global economy is barely showing a pulse, and the world's poor are especially at risk, the International Monetary Fund declared Wednesday.

[A homeless man sits on a bench with a cup of chili that he received from the Salvation Army's 'Gate Patrol' in Washington, December 9, 2008. The Patrol runs every night providing food and clothing in the city for up to 200 homeless people and the working poor. Picture taken December 9, 2008.(Jim Young/Reuters)]"We now expect the global economy to come to a virtual halt," in 2009, said IMF Chief Economist Olivier Blanchard.

The IMF released its latest report as leaders of the world's richest companies and nations were meeting in Davos, Switzerland for the annual and exclusive World Economic Forum, and activists, indigenous peoples and progressive NGOs gathered in northern Brazil at the World Social Forum, to brainstorm about alternative economies.

The IMF predicted the world economy will grow just 0.5 percent in 2009, down from 3.8 percent in 2008. It is the slowest growth in 60 years.

According to the U.N.'s International Labour Organisation, 30-50 million jobs worldwide may be lost if the recession continues through this year.

The wealthy U.S. is home to tens of millions of poor and low-income people, and they are especially endangered by the downturn, advocates here say.

In Boston, Massachusetts, in the north of the U.S., it is winter, when temperatures stay below 0 C for three months or more.

"There is a risk of death here without heat," John Drew, the executive vice president of ABCD, Action for Boston Community Development, told IPS. The agency helps thousands of families pay their heating bills, so they can stay warm through the winter, he said.

ABCD assists 80,000 poor people in Boston, a glitzy city of 600,000 in a region known as a centre for biotechnology, finance and universities. Many of the people work full-time but don't earn enough to pay for food, rent, heat, medical care and clothes, Drew said.

According to the U.S. Department of Agriculture, 36 million people in the U.S. in 2007 were not paid enough to buy enough food.

These include people who work in low-wage jobs in Boston's hotels and restaurants. The service industry employs 14 million people nationwide who earn an average, poverty-level wage of 470 dollars per week, according to the Bureau of Labour Statistics.

With the recession, ABCD is assisting many more people than usual, with food, shelter and emergency heat.

"We helped 15,000 people with fuel assistance last winter. This year we are already at 20,000," with two more months of winter to go, he said.

"We have people coming in for the first time. There are no jobs," he said. "And at a time when people go to the state government for help, the government is cutting services."

Massachusetts is among many of the 50 states that are in deep financial trouble as a result of the recession or their poor investments in hedge funds and trading. ABCD, like other NGOs, rely on state funding to survive. Tuesday, ABCD was waiting word on whether its funding may be cut.

Regardless, "We're going to try to hold it together," Drew said.

The global economy is being dragged down by 2.2 trillion dollars in worthless assets created by Wall Street, and held by banks the world over, the IMF said.

The assets are based on many risky mortgages made in the U.S and Europe under questionable terms. The world's banks, seeking fast profits, engaged in high-flying trading of the assets. Now that millions of the mortgages are in default, the value of the assets has plummeted.

Governments in Europe and the U.S. have handed over billions to the ailing banks to try to prevent their collapse. Despite the cash, the biggest banks are not willing to lend at normal levels and the entire trade and credit economy has slowed way down.

About 2.6 million people in the U.S. lost their jobs in 2008, and tens of thousands more have been laid off in January.

The U.S. overall jobless rate now stands at 7.2 percent, with pockets of very high unemployment of 20 percent or more among certain groups, including young black men without a high school degree, and in Michigan, where the auto industry has laid off thousands.

Consumers are not spending and prices of goods are beginning to drop, bringing fears of deflation.

President Barack Obama called the economic situation "perilous" and in need of immediate attention. He has drafted an 819-billion-dollar stimulus bill that was approved 244-188 by the House of Representatives Wednesday in a sharply partisan vote - not a single Republican voted in favour - and must now pass the Senate.

"We don't have a moment to spare," Obama said Wednesday.

In New Orleans, the Dragon Café soup kitchen at St. George Episcopal Church is doing its usual, brisk business, serving up a free, hot meal to 125 people twice a week in this university neighbourhood. Many are regulars.

"A lot of the folks we see here are getting paid by their day jobs. For them to buy a cheap meal at a restaurant would be five dollars. This saves them the five dollars. This is a home cooked meal," Stan Jahncke, café manager, told IPS.

About one-third of those served are elderly, one-third are low-wage workers and one-third are young people or parents with children, he said.

"We're seeing about five to six new faces each week," Jahncke said. "People are asking for money to pay for their utility bills but we don't do that," he said.

Copyright © 2009 IPS-Inter Press Service
Posted in financial crisis, food,

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