TheLoop21.com

By: Devona Walker (Add to your loop)
Wed, 10/15/2008 - 00:01

Joanne Golden, right, and her daughter might not be able to keep their business afloat.

(Read more of our stories about the Covenant with Black America.)

Suspended in the throes of one of the most severe economic crises since the Great Depression, the entire country is in distress. We worry daily about making the mortgage and car payments, the ever-rising cost of fuel and groceries. And what's worse is there appears to be no clear path for resolving the situation.

The financial distress has called into question the very premise of supply-side, trickle-down economics. It has also reaffirmed the age-old adage that all the trouble rolls down hill. The problem in this case is that it appears to be rolling back up again.

Rolling back up to touch even wealthy communities, like California's Baldwin Hills, a section of Los Angeles that's often been called the black Beverly Hills. (Read more about the community here.)

At the base of Baldwin Hills, on the corner of Hillcrest and Martin Luther King Jr. Boulevard, is a thin, commercial strip mall without a marquee. Half its stores are vacant. The remaining tenants are struggling.

"I've made up my mind, I'm giving it a deadline. If it doesn't change by January 1, I'm giving up," said Joanne Golden, who owns the Golden World of Herbs in the strip mall.

Golden has been in business since Oct. 31, 1980. She was been at her current location, running it with the help of her daughter Andrea, 39, since 1995. It was the same year she bought the Jaguar she still drives.

"Bush was on TV saying everything is going to be alright, it just takes time. Well time takes time. I might be gone by then," Golden said. "And the sad part is, you can't even afford to advertise right now."

Besides the store, Golden's wealth comes from monthly dividends, representing a considerable "nest egg" in the stock market. This too, she knows, is at risk.

"I know I've lost money in the stock market, but I haven't even called the broker about it,  because there's nothing I can do, but worry," said Golden, 67. "At my age, the last thing I need is something else to worry about."

A crisis of confidence

The G7, the finance ministers and central banks of the top seven industrial countries in the world, met for an emergency summit in Washington Friday, looking for solutions to the growing international financial crisis and panic-stricken marketplace. But the panic continues.

"Nobody is trusting anybody," said Barry Bosworth, a former presidential adviser and senior fellow at the Brookings Institution. "Even if you stop the collapse, it is not clear how you are going to be able to rebuild the system. I think the fundamental framework under a lot of modern banking has been called into question. By next week, we are going to end up with a lot of economic systems in many countries that are run by the government. That's not a long-term solution."

Until a solution is found, communities and their people continue to suffer.

About 20 miles up the road from Baldwin Hills is Porter Ranch, Calif. It's often a mind-numbing, bumper-to-bumper crawl up Interstate 405 to and from Los Angeles. There, a 45-year-old out-of-work financial manager, Karthik Rajaram, killed his wife, his children, then turned the gun on himself. He went from taking home $1.2 million annually for a London-based venture fund to losing his job, and then more recently his assets, in the tumbling stock market.

Nationally, unnemployment rates for adult men, at 6.1 percent, and blacks, at 11.4 percent, spiked in September, according to the U.S. Bureau of Labor Statistics. In the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points.

At the same time, home values are deflating rapidly. According to Trulia.com, a real estate tracking firm, the average listing price for a home in Baldwin Hills as of Oct. 8 was about $385,000 — that's down from $419,000 since Sept. 17. Year over year, the median sales price, according to the same firm, was about $340,000, down 15 percent year over year. The averages sales price was down 26.8 percent year over the year.

In the community of Baldwin Hills, there have only been 18 home sales in the past 12 months. That represents a near 30 percent decline year over year.

The Catch-22

These dour statistics are affecting those who serve the community. In the same commercial strip mall as Golden's World of Herbs is Holla Hubbard's Baldwin Hills Convenient Store. Hubbard, 79, went into business knowing she would have to compete with 7-11 and Circle K. But in recent months, she is also competing with the nightly news.

"People are hurting. They are not buying as much as they use to. I think it's the same everywhere," Hubbard said. "This economy is hitting everybody."

These days most of her revenue comes from WIC vouchers, as opposed to cash.

"I just do what I can afford to do," she said.

Hubbard is in a classic Catch-22. Her shelves are only sporadically stocked, because she does not have the liquidity for much inventory. But the lack of inventory puts her at a competitive disadvantage with the chain stores.

"I didn't take out a loan to do this. I didn't want to have to owe a bank. But that means I don't have much," Hubbard said. "It is tough. But it would also be tough worrying about how to pay it back."

Devona Walker is The Loop's senior reporter/blogger.

Are you affected by the major retail closings?

Yes, I have to travel further now

No, stores aren't closing near me

Major retailers were never near me

I would be, if I planned to shop