The Homeless in NYC Are Now Living in Tiny Spaces in the Frame of the Manhattan Bridge

I just got back to Colorado from 10 days in my hometown of New York City. It’s always fun to see friends and family as well as take stock of how much things have changed since I left. There is no question about it, NYC feels more like “Disneyland for Wall Street” than ever before. The very rich are doing very well, everyone else, not so much. We are often told by charlatans and mainstream media propagandists that this mythical rising tide of wealth lifts all boats. If that’s the case, I find it quite perplexing that the homeless population in America’s financial center is exploding five years into the so-called recovery. Meanwhile, let’s not forget that 22% of the city is on food stamps.

How is this possible? Because we have witnessed five years of egregious corruption and crony capitalist theft, not a genuine recovery. That’s how.

The war on the homeless has been accelerating in recent years, as city officials across the nation would rather hide the problem that admit the economic recovery is bullshit. In most cases, the measures are subtle, but have the desired effect of pushing homeless people away from public view (in Columbia, South Carolina it is not so subtle and you need a $120 weekly permit to feed the homeless). NYC officials are a bit more nuanced. For example, I was shocked to see a sign posted in a park in Manhattan that said adults can’t come in without children. It looked something like this:

Screen Shot 2014-04-14 at 10.25.22 AM

No matter what spin somebody may put on this, the primary goal is to keep homeless people away.

I grew up in New York City and was a toddler in the early 1980’s, not exactly the safest period in the city. I remember playing in the parks around my parents’ apartment and there were homeless people everywhere. It was a part of my childhood for better or worse, but it was reality. I think I was better off knowing the homeless existed than if they had all been pushed away to the outskirts and everyone pretended they weren’t there.

The thing is, many of the very wealthy in New York City want to believe this bullshit story that things are generally getting better. Meanwhile, the statistics speak for themselves, and according to HUD, the homeless population in NYC increased 13% last year. That’s quite disturbing five years into raging bull market for stocks.

Moving along, we now we find that homeless people are living in coffin-sized spaces inside the frame of the Manhattan Bridge.

From the New York Post:

Crafty hobos are turning the Manhattan Bridge into a veritable shantytown, complete with elaborate plywood shacks that are truly “must see to believe.”

One of the coffin-sized living spaces — which have been built into the bridge frame near the Manhattan entrance — is secured with a flimsy bike lock and bolted to a metal beam by its inhabitant.

The pods are built into the underside of the upper deck, below car traffic but above the subway and bike lanes.

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Reverse Mortgages Spike 20% in 2013 as Baby Boomers Scramble for Cash

So what exactly is a reverse mortgage?

In a nutshell, it’s a specific type of home equity loan available only to people aged 62 and over, which has the added benefit of not carrying any interest payments and is only due upon death or once the homeowner is no longer using it as a primary residence. As you can see, this might be viewed as an attractive cash flow option for older Americans who didn’t save for retirement. That could be a lot of people, considering that Fidelity estimates 48% of baby boomers have not put away enough to retire.

While I have covered the various ways in which Americans are scraping by in the current feudal economy, from food stamps and disability fraud, to student loans and living in mom and pop’s basement, this reverse mortgage thing is a piece of the puzzle I have been missing.

These mortgages are not insignificant either. According to Inside Mortgage Finance, originations were up 20% in 2013, hitting $15.3 billion. So when you see that older guy working the cashier at Wal-Mart and wonder to yourself how he is surviving, the answer may increasingly be a reverse mortgage.

Oh, and since the FHA is originating many of these loans, you the taxpayer will be on the hook!

Let’s start out with some excerpts from the U.S. Department of Housing and Urban Development’s post: Frequently Asked Questions about HUD’s Reverse Mortgages.

The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program, which enables you to withdraw some of the equity in your home.  The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements and more.

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.  However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.  You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

5. What are the differences between a reverse mortgage and a home equity loan?

With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

See there really is a magic money tree. Thanks FHA!

6. Will we have an estate that we can leave to heirs?

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid.  All proceeds beyond the amount owed belong to your spouse or estate.  This means any remaining equity can be transferred to heirs.  No debt is passed along to the estate or heirs.

Moving along, we learn from the New York Post that:

Cash-strapped baby boomers, taking the TV advice of the Fonz and former US Sen. Fred Thompson, have opted for reverse mortgages in increasing numbers.

Inside Mortgage Finance, a trade publication covering the housing industry, said borrowers took out some $15.3 billion of these loans last year, an increase of 20 percent over 2012.

Reverse mortgages, which let homeowners age 62 and up borrow money against the value of their homes, have become a popular way for boomers without significant assets to fund retirement.

Is this something you’d expect to see five years into a genuine economic recovery, or it is a reaction to a ponzi consumption based economy plagued with zero income growth?

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Walmart Admits in its Annual Report that its Profits Depend Heavily on Corporate Welfare

Following up from my post earlier today, A First Look at a New Report on Crony Capitalism – Trillions in Corporate Welfare, some really juicy additional corporate welfare queen news has now come across my screen. It appears that Walmart has admitted the potentially severe adverse impact a reduction in food stamp payments could have on its bottom line. This shouldn’t be a surprise to anyone who reads this site, as I have written about this many, many times. Most notably in the very popular post: McDonald’s Math: You Can’t Survive Working for Us.

Well now we have further evidence of this disturbing economic trend straight from the horse’s mouth: Walmart.

The LA Times reports that:

Wal-Mart’s annual report, issued late last week, puts a different spin on things. Buried within the long list of risk factors disclosed to its shareholders–that is, factors “outside our control” that could materially affect financial performance–are these: “changes in the amount of payments made under the Supplement Nutrition Assistance Plan and other public assistance plans, (and) changes in the eligibility requirements of public assistance plans.”

Yes, that says “materially impact.”

Wal-Mart followers say this is the first time the company has made a disclosure like that. 

I’m not sure if that is the case, I think they have mentioned it before, but I’m not sure. Either way…

Wal-Mart says it gets more than half its sales from its grocery departments. Since low-income shoppers are a big part of its clientele, it’s unsurprising that that squealing you hear is coming from its annual report. There’s no indication that Wal-Mart executives stepped up to the plate during the debate in Washington to warn Congress off these cuts in assistance to its customers.

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McDonalds’ Latest Advice to its Peasant Employees: “Quit Complaining” and “Sing a Song”

Back in July, I highlighted a ridiculous and insulting campaign that McDonalds ran with Visa in which the company tried to help its impoverished employees plan a budget. The only thing the campaign did was embarrass the company by proving that you can’t survive working there. Well the company is right back at it in … Read more

McDonald’s Math: You Can’t Survive Working for Us

This ridiculously condescending budget put out by McDonald’s in partnership with Visa has been making the rounds today. I’ll allow excerpts from the Gothamist article on it and their corresponding video do most of the explaining, but the key point I want to hammer into people is that food stamps are corporate welfare. They actually … Read more

I Pledge Allegiance…

I’m on a plane about to take off for Colorado, but figured I’d leave everyone with my updated Pledge of Allegiance applicable for modern day America.  Enjoy comrades. I pledge allegiance to the Fed of the United States of Bernakistan, and to the S&P 500 for which it stands, one ponzi, under Federal Reserve Notes, with … Read more

R.I.P. Retirement: 28% of Americans are Raiding Their 401k Plans

This trend has been in place since the financial crisis, but the fact that it is accelerating is extremely disconcerting.  First off, this is not the kind of behavior that should be witnessed in an “economic recovery.”  Second, we need to remember the huge percentage of Americans on food stamps and/or disability.  As I have discussed previously, many of them also have jobs.  So essentially, a wage and a check from the government is still not enough to survive.  They still need to tap into a loan from their 401k plans.

From the Washington Post:

More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.

A report due out this week from the financial advisory firm HelloWallet found that more than one in four workers dip into retirement funds to pay their mortgages, credit card debt or other bills. Those in their 40s have been the most likely culprits — one-third are turning to such accounts for relief.

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Food Banks in the U.S. Running Low on Supplies…Ominous Sign for 2013

This is a very interesting yet ominous article from Reuters about the current food bank situation in these United States.  As a result of the drought this summer the Federal government ended up buying less food than normal, and because this excess food is used to provide assistance to the poor in many cases, there … Read more

AMAZING. The USDA Has Partnered with the Mexican Government to Encourage Food Stamp Participation

As more and more information emerges about the food stamp program in the United States, the more absurd and downright disturbing the entire thing becomes.  I first posted on the topic in late June with the piece The Government is Encouraging More Food Stamp Usage, Calling it “Stimulus”.  I thought this was ridiculous enough, but only … Read more