My wise old grandmother used to invoke the Spanish phrase, “When money is tight, a nickel isn’t worth a dime.”
Actually, that’s not a phrase in Spanish (I think it’s Yogi Berra). And my grandmother has never passed along anything resembling sage-like insight. She’s much more likely to complain that young people don’t wear enough clothes.
The point is that we Latinos don’t have any special wisdom for dealing with this economic disaster, which has become (say it with me) the worst crisis since the Great Depression. In fact, the statistics indicate that Hispanics are ill-suited to weather this financial maelstrom.
Looking at one specific economic indicator, the almost laughably bad housing market, we see that Latinos have the highest foreclosure rate of any ethnic group in the country, according to the Pew Hispanic Center. In addition, Latinos tend to spend more of their income on housing than other demographics do, and we are more likely to have firsthand experience with the horrific phrase “subprime mortgage,” which has supplanted “Bush-Cheney administration” as the scariest word combo in America.
The Pew Hispanic Center goes on to say that over a third of all Hispanic homeowners are worried that their house may go into foreclosure, and that over half of foreign-born Latino homeowners share this fear. The Wall Street Journal adds that “In U.S. counties where Hispanics account for more than 25% of the population, banks have taken back 6.7 homes per 1,000 residents since Jan. 1, 2006, compared with 4.6 per 1,000 residents in all counties.”
Of course, the collapse of the housing market has become the prominent symbol, main indicator, and root cause/boogyman for the financial shitstorm raining down upon the nation. As a Latino who bought a house near the peak of the boom (my first house, thank you very much), I was surprised to learn that my home has dropped little in value since I signed on the dotted line. Nevertheless, at this point, I’m calling for a cyber show of hands from all those who miss their old apartments.
In any case, besides carrying the brunt of the economic blowback, Hispanics also have the burden of getting blamed for this mess. That same Wall Street Journal article points out that “in 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%.” The article goes on to present statistical and anecdotal evidence that Latinos, more than other groups, got in way over their heads with houses they had no hopes of affording. They then apparently dragged down the market in several regions by indulging in their pesky habit of getting foreclosed on.
To its credit, the Wall Street Journal does not explicitly claim that too many Latinos buying too many houses caused the market to collapse. After all, doing so would be both morally dubious and an extremely shaky economic hypothesis. But some obvious questions arise.
Who was soliciting all those optimistic dreamers, who were often less educated individuals or recent immigrants unclear on the concepts of their new country’s system? Who thrust documents at people who had been fed the American Dream, telling them that despite their rational hesitations, everything was going to be fine because trained professionals said that they could afford the house? More specifically, who marketed housing materials in Spanish, then performed the closing in English?
The answer ranges from sixth-generation Americans with a lot of money to Latino politicians trying to score some cheap points. Of course, some flat-out greedy Hispanic homeowners share the blame. But the bottom line is that Hispanics, as a group, are more likely to be kicked to the curb (possibly in a literal sense) because of system-wide epic stupidity engineered by people who should have known better.
The details of the Obama plan to help homeowners are still being worked out, so it remains to be seen if more Latinos can hold on to their houses. The only thing we know for certain is that once this plunge bottoms out – and it will eventually – many Hispanics will hesitate before applying for mortgages. They will wonder if they once again being lied to, and they may decide that the ideal of owning a home is some absurd fantasy that they would be better off ignoring.
How can that possibly be good for them, or for America?