I've Never Been Behind Like That

This article brings back a few memories for me since a commute similar to the one featured in this story was part of my weekday routine back in the early 1990s - back before there were carpool lanes or a zillion houses along many of the Southern California freeways.

In fact the gentleman profiled in this story reminds me of an amiable fellow of similar age who lived down the street at the time. Of course, that was a different era - instead of an endless truck driving career, the soon-to-be retired mechanic down the street was just a couple of years away from a generous pension from a major defense contractor.

Many comments have been offered at this blog before about how high energy prices are affecting the middle and lower income crowd, Elizabeth Douglass at the L.A. Times does a nice job of relating how rising gasoline costs and debt service are affecting a few Southern California residents.

Stopping for gas on a recent evening commute, Joseph Godino paused to make a call before feeding his credit card into the pump's built-in reader.

He listened as a recorded voice delivered welcome news: His card still had $88 of credit available.

The gas-up was a go.

"I had to phone up to find out if I had enough credit on there to fill up," said Godino, 58, whose workday round-trip commute is a whopping 200 miles.

"The gas is just really hurting me. I don't know what to do…. I can't quit my job or I'd lose my house."

Godino, an Apple Valley resident whose truck driving job is based in Buena Park, signed up for extra shifts and financial counseling, and his wife went back to work to add income. But he has fallen further behind. With his gas cards maxed out, Godino has switched to filling his tank using a Visa card.

California's sky-high gasoline prices are slamming Godino and other motorists who had been barely getting by. Californians, saddled with the nation's priciest gasoline outside of Hawaii, are paying more than 70 cents a gallon extra compared with a year ago and nearly $1 more than two summers back.

Joseph is like many other Americans who now find themselves squeezed by higher energy costs and higher debt service. Not more than two years ago, when interest rates were at 40 year lows and energy was cheap, everyone looked around and figured they were finally doing something right - the prosperity that had eluded them during the rise and fall of the stock market had finally arrived at their doorstep in the form of housing prices that were rising at annual rates far exceeding the median income in this part of the country.

Two years later they must feel as though they've been duped.

It all probably makes sense to economists who look at statistic after statistic and today still feel that the ultra-easy lending that fostered the housing boom was the right thing to do. After the stock market boom turned into a bust, something needed to be done.

But, for people like Joseph, monetary policy means little.

He's having a tough time making ends meet and he may end up losing his home - a home far away from work that in prior decades he probably wouldn't have been able to afford. But, with the bubble economy that has developed in the last ten years or so, he was just doing what everyone else was doing.

From Joseph's point of view what has happened in recent years will ultimately seem so unnecessary - he probably would have been content to carry on as he was doing before he bought a big house far away from work when gasoline was still cheap.

This story relates a few other accounts of individuals who are being squeezed today - some going to pawn shops in order to get money to fill up their tank. This piece is well worth reading in its entirety - well written and a bit touching actually. It's easy to picture the pawn shop operator telling someone that their DVD player is of no value to them, then buying five DVDs for a dollar apiece, something for which the owner probably paid $15 or $20 each not more than a year ago when money flowed more freely.

It's as if there was a conscious decision made at the highest levels of economic policy making where it was decided that we're going to screw all the middle and lower income folks - trick them into borrowing lots of money and they'll go out and spend it and the economy will be revived and somehow things will all work out.

This is the legacy of Alan Greenspan - Joseph Godino. A mostly innocent bystander in the train wreck that is contemporary monetary policy and global finance.

He tried to refinance his mortgage earlier this year, but it fell through after he had shelled out a $400 appraisal fee and used the monthly mortgage payment to whittle down credit card debt. Suddenly behind on his mortgage, Godino saw his monthly payments balloon to $2,300 from $1,800 to make up for the deficit and stave off foreclosure.

"I've never been behind like that," said Godino, a Vietnam veteran who has spent 38 years as a truck driver.

He moved to the high desert two years ago because he was unable to afford a home closer to work. At the time, Godino's Volkswagen Beetle was getting good mileage and his employer, Oak Harbor Freight Line, was talking about opening a terminal near Apple Valley.

But the Volkswagen got totaled in an accident, forcing Godino to commute in his less-thrifty Ford Ranger pickup. His monthly fuel bills have jumped to $650. And so far, Oak Harbor hasn't opened that inland terminal.

"The commute is killing me," he said. One oil company credit card has a balance of more than $1,000. His wife cut up the other one.

"There's more money going out than coming in," Godino said. What's more, the Oak Harbor terminal where he works is moving to a larger site in Montebello at the end of July.

"It's farther," a dejected Godino noted.

Joseph says, "I've never been behind like that".

Well, there's a good reason for that - money's never been so easy. Easy money has been the cure for what ails the economy for some time now - borrow more and spend more.

The economy booms, asset bubbles inflate, and everybody wins - for a while.