Many houses of that sort have since been repossessed and are the property of banks. (That is to say, they are now the acknowledged property of banks, since an occupant with an unpaid mortgage doesn't really own the house in which he lives.)
And now an increasing number of foreclosed houses aren't fit for resale because thieves have literally been taking money out of them by cannibalizing their copper plumbing and wiring, as well as any other metals that can be bundled together and sold to scrap metal dealers.
The phenomenon of what could be called "metal poaching" -- stealing copper from houses, building sites, and anywhere else it is found unattended -- first attracted my attention about two years ago. At the time it struck me as a leading indicator of the dollar's decline.*
In early 2006, as the price of copper and scrap iron started to climb, it became common for thieves to descend on construction sites and extract whatever they could find. In some cities, air conditioners accessible from outside homes or other buildings were frequently gutted. Some metal theft rings even stole manhole covers to be melted down for resale as pig iron.
Now, foreclosures pockmark the face of this severely over-leveraged land, and each tract of vacant, repossessed houses is a happy hunting ground for metal poachers.
"In areas hit hardest by foreclosures, such as the Slavic Village neighborhood of Cleveland, Ohio, copper and other metals used in plumbing, heating systems and telephone lines are now more valuable than some homes," reports Reuters.
Real estate broker Marc Charney of Brockton, Massachusetts describes how thieves sacked one of his most promising properties:
"They cut it [the copper wiring] here and then pulled it right out of the wall.... I had this property under agreement. We negotiated. The offer was accepted. The buyer came back to the property three weeks later only to find they [the thieves] had gotten in and stolen the copper, so we had to go back to the bank and renegotiate."
As the collapsing real estate market pulls home prices downward, a property "distressed" by copper thieves can lose nearly all of its value. Cleveland city councilor Tony Brancatelli notes that "Houses are getting stripped pretty quickly once they go through the foreclosure process.... We're seeing houses sold for $100 that are distressed houses that should not be recycled."
Three years ago, scrap copper sold for about 70 cents a pound. The same quantity now commands about $3.50. As is the case with the dramatic price increase for other commodities, the copper price surge reflects the dollar's decline. Another factor is the insatiable demand for copper (and other non-ferrous metals) by Beijing.
So, in a sense, this could be one of those "circle of life" arrangements: Beijing bought the T-Bills that helped keep the U.S. consumer economy afloat; American consumers dutifully refinanced their mortgages to consolidate credit card bills, or to "take money out" to spend on more Chinese-manufactured amenities; they then lost those homes when the market went south, leaving their houses to be denuded of copper and other metals that are shipped back to Beijing (as well as Mumbai).
Collateral damage: This Friday night high school football game had to be moved to a different venue because copper thieves had stripped copper wiring from the stadium lights.
The wide-scale pilferage of copper is neither the only, nor the most ominous, example of predatory opportunism triggered by the unfolding economic debacle.
A headline from the March 28 issue of Canada's National Post conveys the odd news that "Grain is the new copper" -- that is, a commodity proving to be an irresistible target for thieves.
Once again, monetary inflation has combined with a dramatic increase in demand to drive the price of this commodity toward the ionosphere: "A bushel of spring wheat, which has historically traded between $3 and $7, has spiked as high as $24 in recent weeks," observes the Post. This creates potent incentives for "grain rustlers" to ply their trade.
"In January, Kansas police began investigating nearly a dozen reports of thieves driving their trucks up to farm bins and siphoning out tens of thousands of dollars worth of wheat," the paper continues. The same kind of crime has become quite common in Canada -- home of triticale, and a major producer of wheat and other grains. California almond farmers have recently been targeted by rustlers as well.
Repeat victim: Gary Barton, a walnut farmer in Ripon, California, inspects irrigation pumps from which copper wiring has been torn out twice. Chances are that his crop will be targeted next.
All that's necessary in order to anticipate future crime waves is to look at the trends in agricultural commodity prices: Barley futures are trading at twice what they did in 2006; soybean futures have tripled; the prices for oats and corn are similarly heading skyward, and rice is now at an all-time high. The Post exaggerates not one whit in reporting that "Farms have become treasure troves for looters."
The Urban Institute calculates that losses from agricultural theft across the United States amount to at least $5 billion annually. The actual amount may be as much as 10 times higher, owing to the fact that such thefts are generally unreported by uninsured farmers, and underreported by those yet to notice shortfalls in their inventories.
Market signals operate with complete indifference to morality, and can be read by honest producers and intelligent criminals alike. World-wide, grain supplies are at a 50-year low, and demand is growing relentlessly.
Food riots have taken place in Egypt, Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan, Yemen, and elsewhere. In Pakistan, a much-afflicted country, armed soldiers deployed to guard wheat and flour deliveries enforce government-imposed sales quotas. Taking a page from the common syllabus of economic errors, President Arroyo of the Philippines has begun a government crackdown on people accused of “hoarding” rice and other grain.
This turmoil is not just the product of harvest shortfalls. It also reflects Washington’s ability to export inflation world-wide, thanks to the role of the fiat "dollar" as the world's reserve currency. Price inflation is always severely regressive, hitting the poorest the hardest. So it's not surprising that people at the periphery of the global dollar empire are victims of the first big wave of food price inflation. But they won't be the last.
The soaring cost of staple foods is giving American consumers a small but thoroughly disagreeable taste of the same kind of desperation that drives food consumers in the developing world.
Most Americans -- your sheepish servant, among them -- display an equatorial expanse attesting to a crisis of abundance, rather than scarcity, where food supplies are concerned. But there is reason to believe that the Fed, ever and always eager to make sure that Wall Street's uber-rich remain well-fed, will soon put the rest of us on the Hoover Diet -- and I'm not talking about liposuction.
"Belt-tightening" is a phrase indissolubly linked with the Great Depression, and an economic collapse would inevitably mean that most of us would soon be casting smaller shadows. This might be an ironically welcome development, since we're going to have to be fleet of foot** in order to stay ahead of the predators who are arising to exploit the unfolding economic catastrophe.
Dum spiro, pugno!
*Unfortunately, it appears that my erstwhile colleagues have scrubbed my previous treatment of this subject from the Web.
**Not to mention armed to the teeth, as well.