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Fed’s Powell says inflation could be 'higher and more persistent' than expectations
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Federal Reserve Chairman Jerome Powell said that inflation could be more aggressive and last longer than central bank expectations.
Powell, fresh out of a two-day meeting with top Fed officials, told reporters that while inflation could be more intense than previously thought, indications are that it will settle back down in the future and the Fed is still not ready to begin talks about raising interest rates to mitigate price increases.
“As the reopening continues, bottlenecks, hiring difficulties, and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect,” Powell said during a Wednesday afternoon news conference.
“Indicators of long-term inflation expectations appear broadly consistent with our longer-run inflation goal of 2%,” he continued. “If we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal, we would be prepared to adjust the stance of policy.”
Consumer prices increased 5.4% for the year ending June, the highest rate of inflation since 2008, the Department of Labor said earlier this month. The figure was well above predictions of 4.9%.
The Fed is targeting 2% sustained inflation and full employment and has said that it is not concerned about inflation overshooting that goal as long as it sinks back down. Powell noted on Wednesday that current inflation is “well above” 2% and also emphasized that there is “absolutely no sense of panic.”
The chairman said that the central bank sees current price growth as driven by the supply side, which is having trouble handling the massive spike in demand as the United States emerges from the COVID-19 pandemic.
Following the meeting, the Federal Open Market Committee hinted at tapering its purchases of government bonds, which would be a first step toward reversing the emergency easy-money policies implemented as the pandemic took hold last year.
Fed maintains money flow to Wall Street
The US Federal Reserve has kept its base interest rate at near zero and maintained its asset purchases at the rate of $120 billion a month. That decision, announced yesterday after a two-day meeting of its policy-making committee, was expected.
But in response to concerns by some members of the Fed’s governing body that the present sharp rise in inflation may prove to be permanent rather than a “transitory” effect of economic recovery from the pandemic, the official statement from the meeting hinted that “tapering” of its bond purchases may be closer than previously thought.
Last December, the Fed said its asset purchases would continue until “substantial further progress” had been made toward its goals—full employment and 2 percent inflation.
“Since then,” the statement said, “the economy has made progress towards these goals, and the committee will continue to assess progress in coming meetings.”
This was widely interpreted as a signal that it was at least moving to a closer consideration of a wind-back in asset purchases.
But Fed chair Jerome Powell, who has been characterised as occupying a centre position between the so-called doves and hawks within the governing body, made clear there were no immediate plans to withdraw the unprecedented levels of support the central bank has provided to financial markets and Wall Street.
With US employment levels still some 7 or 8 million below where they were before the pandemic, he said further gains in employment would be needed before any tapering of asset purchases.
“We have some ground to cover on the labour market side,” he said at his press conference following the meeting. He repeated his assertion that inflation was “transitory” while insisting the Fed would use its “tools” to counter any permanent rise.
In his prepared remarks he said conditions in the labour market had continued to improve and demand for labour was “very strong” but “nonetheless, the labour market has a ways to go.”
The focus on the state of the labour market as the reason for the maintenance of flow of money is essentially a cover for the real objective which is to ensure that the monetary props for Wall Street remain in place—a fact that is well known in financial circles.
As Thomas Hayes, chairman of Great Hill Capital, an investment management firm, commented to the Wall Street Journal on Powell’s remarks: “I don’t think he could have been more dovish. There’s nothing that the Fed could do that would be more accommodative to the stock market.”
Despite the Fed’s claim that the US economy is on the road to recovery there are significant contradictory signals. While inflation is rising, along with economic growth, the yields on Treasury bonds have been falling—an indication that financial markets consider growth could stall, if not develop into a recession.
Asked about the divergence between the economic growth outlook and the bond market at his press conference, Powell could offer no explanation apart from saying that it may be due to “technical” factors “where you put things you can’t quite explain.”
The fall in bond yields, a result of increased demand and rise in their price (the two move in opposite directions), has been significant.
At the end of March when there was an expectation of increased growth and inflation, the yield on the 10-year Treasury bond was at a 13-month high of 1.75 percent. By the middle of June it had fallen to 1.57 percent—a significant movement in this market—before dropping further to 1.26 percent on Wednesday. This could well be on the back of financial market expectations that what lies ahead is stagflation––higher prices combined with lower growth.
In an interview on CNN Financial Times columnist and editorial board member Rana Foroohar said in her 30 years in finance journalism she had never seen so many variables—from the effect of the Delta variant, inflation, to lower growth in China—impacting on the global economic outlook.
Apart from the continuing stimulus for Wall Street, another significant decision by the Fed was to establish a new facility to provide liquidity to big Wall Street banks as well as foreign central banks in times of financial turbulence.
Under the facility, the Fed would enter overnight repurchase (repo) agreements in which it would take in Treasury debt and mortgage-backed securities in return for cash at a rate of 0.25 percent. There would be a daily cap on the facility of $500 billion. A similar facility would be extended to foreign central banks with a daily limit of $60 billion. The facility may also be expanded in the future to include deposit-taking banks.
The new facility has been developed in response to the financial market crisis of March 2020 when the $21 trillion US Treasury market—the bedrock of US and global financial system—effectively froze in what was dubbed a “dash for cash” as buyers for Treasury debt disappeared.
The measure has been under discussion for some time as the Fed continues to try to assess what took place in the March crisis. New York Fed chief John Williams said earlier this month that a standing repo facility would not be used much in normal times but if there was an “unanticipated shock” it would keep short-term interest rates from spiking.
Its establishment indicates that another crisis on the scale of March 2020 could take place because none of the underlying problems and contradictions that gave rise to it have been resolved.
The decision of the Fed is in line with recommendations in a report from a group of 30 former central bankers and financial policymakers issued yesterday. The group, which includes former US Treasury secretaries Timothy Geithner and Larry Summers and former Bank of England governor Mervyn King, said reforms were needed to ensure that the most essential bond market was able to function smoothly in times of financial stress.
It said a “standing repo” repo facility was the “single most important near-term measure” that should be adopted.
But it pointed to deeper concerns. “This is a market that has outgrown its infrastructure and its regulatory framework, Oversight is fragmented and diffused. The capacity of existing market makers has not grown with the size of the Treasury market itself,” the group said.
According to Geithner, in remarks reported by the Financial Times, the pressure for reform could be “undermined by the belief that the Fed can always step in and fix things” and this was “not a particularly wise approach.”
The report underscores the findings of a report by the G20 Financial Stability Board last November. It said that while the intervention by the Fed in March 2020, when it pumped out trillions of dollars, may have stabilised the situation, the “financial system remains vulnerable to another liquidity strain, as the underlying structures and mechanisms that gave rise to the turmoil remain in place.”
US banks post record second-quarter profits as millions face social disaster
US banks this week released their second-quarter earnings, showing record second-quarter profits as large sections of the working class continue to struggle to survive on meager unemployment benefits while searching unsuccessfully for well-paying and safe work.
Ultra-loose monetary policies enacted by the Federal Reserve, first under former president Donald Trump and continued under Joe Biden, resulted in major banks Goldman Sachs, Wells Fargo, Bank of America, Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co. posting a combined $42.17 billion profits in the April-June period.
- Goldman Sachs reported $5.35 billion in profit for the quarter, double last year’s figures.
- Citigroup’s second-quarter profit jumped to $6.19 billion, up from $1.06 billion during the same period last year. Despite the billions “earned,” shares of the company fell by 0.3 percent on Tuesday. Overall, the bank’s share price has increased by 11 percent through Wednesday.
- Wells Fargo, which last year agreed to pay $3 billion to settle outstanding civil and criminal charges resulting from a years-long scandal over defrauding customers, posted a second-quarter profit of $6 billion.
- JPMorgan also saw its second-quarter profits more than double from last year, reporting $11.9 billion this week, compared to $4.7 billion last year.
- Bank of America, the second largest bank in the US, was the only major bank that missed revenue expectations according to analysts cited by the Wall Street Journal. This did not prevent the bank from nearly tripling profits from a year ago, from $3.53 billion to $9.22 billion.
- Morgan Stanley reported on Thursday that second-quarter profits rose by 10 percent compared to a year earlier, with a reported profit of $3.51 billion. Investment bank revenue increased by 16 percent to $2.38 billion, while the bank garnered $71 billion in net new assets, triple last year’s second quarter.
The combined $42.17 billion in profits exceeded analysts’ expectations and exceeded last year’s figures by more than $6 billion.
Bank profits were buoyed by the release of billions of dollars in “loan-loss reverses” that the banks had been holding back in case of pandemic-related losses, which never materialized.
Testifying before the House Financial Services Committee on Tuesday, Federal Reserve Chairman Jerome Powell made clear that the Fed had no intentions of raising interest rates or stopping its monthly purchases of $120 billion in financial assets, despite inflation concerns, which were amplified by the 0.9 percent increase in the consumer price index (CPI) reported in May.
Overall, the year-over-year CPI increase of 5.4 percent is the highest in 13 years, driven by double-digit increases for nearly every single basic consumer item from milk, meat, bread, gas, to used cars and electricity.
The over $42 billion in profits raked in by just six banks in only three months would be enough to pay 210,000 doctors annual salaries of $200,000, or pay some 694,000 teachers an average yearly salary of $60,500, or build 140,000 homes at the cost of $300,000 each. The single quarter in profits from the banks is just $3 billion less than the $45 billion proposed in Biden’s American Jobs Plan to replace all of the lead-pipe service lines in the US.
In addition to banks posting record profits, the world’s largest asset manager, BlackRock, reported a second-quarter profit of $1.38 billion on Wednesday, with a net income of $8.92 per share. The company reported $4.82 billion in revenue for the same period. Assets under management by the firm jumped to a record $9.49 trillion, up from $7.32 trillion the year prior. It will soon become the first company with $10 trillion under management.
By comparison, the 2019 gross domestic product of the United Kingdom was $2.82 trillion, while India’s was $2.86 trillion and Japan’s was $5.08 trillion. The only countries that had a 2019 GDP larger than the assets controlled by BlackRock were the world’s largest economies, the US and China.
Shares of BlackRock’s stock have risen by 26 percent since the beginning of the year, while in the last 12 months the stock has increased by a staggering 64 percent. Demonstrating the parasitic character of the capitalist system, BlackRock reported spending $300 million in the second quarter repurchasing company shares.
While life has never been better for Wall Street shareholders and bank executives, the latest unemployment claims report from the Department of Labor (DOL) shows that the worst economic calamity to hit the working class since the Great Depression is far from over.
The DOL reported that 360,000 new unemployment claims were filed for the week ending July 10, only 26,000 less than last week’s revised total of 386,000. In addition to state claims, over 96,000 federal claims were filed under the Pandemic Unemployment Assistance (PUA) program, which is set to expire September 6. The PUA program has been a much-needed lifeline for the increasing number of so-called gig and contract workers who would normally be ineligible for state unemployment benefits.
Overall, labor force participation is down nearly 3 percent since February 2020, with some 13.8 million people collecting some form of unemployment through June 26, roughly 11 million more than the pre-pandemic average, but less than half of the 30.59 million that were collecting at this same time last year.
While the combined 456,000 unemployment claims are more than double the pre-pandemic average, this did not stop White House Press Secretary Jen Psaki from boasting on social media Thursday that Biden’s “economic plan is working.”
As part of Biden’s bipartisan “economic plan,” on June 4 Psaki gave the White House’s blessing to right-wing Republican governors to begin ending pandemic-related unemployment benefits, passed in the misnamed American Rescue Plan, months before their slated expiration in September in what the media sickeningly described as a “bold experiment” to blackmail workers into accepting low-paying and dangerous work as the Delta variant of the coronavirus continues to spread in the US.
While there is no talk in the White House or by the Democrats of turning off the money spigot to Wall Street, by the end of July over half of US states will have eliminated unemployment benefits and the federal Centers for Disease Control eviction moratorium will expire, putting an estimated 4.2 million adults at risk of eviction in July and August according to an estimate by the Urban Institute.
US banks this week released their second-quarter earnings, showing record second-quarter profits as large sections of the working class continue to struggle to survive on meager unemployment benefits while searching unsuccessfully for well-paying and safe work.
Ultra-loose monetary policies enacted by the Federal Reserve, first under former president Donald Trump and continued under Joe Biden, resulted in major banks Goldman Sachs, Wells Fargo, Bank of America, Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co. posting a combined $42.17 billion profits in the April-June period.
- Goldman Sachs reported $5.35 billion in profit for the quarter, double last year’s figures.
- Citigroup’s second-quarter profit jumped to $6.19 billion, up from $1.06 billion during the same period last year. Despite the billions “earned,” shares of the company fell by 0.3 percent on Tuesday. Overall, the bank’s share price has increased by 11 percent through Wednesday.
- Wells Fargo, which last year agreed to pay $3 billion to settle outstanding civil and criminal charges resulting from a years-long scandal over defrauding customers, posted a second-quarter profit of $6 billion.
- JPMorgan also saw its second-quarter profits more than double from last year, reporting $11.9 billion this week, compared to $4.7 billion last year.
- Bank of America, the second largest bank in the US, was the only major bank that missed revenue expectations according to analysts cited by the Wall Street Journal. This did not prevent the bank from nearly tripling profits from a year ago, from $3.53 billion to $9.22 billion.
- Morgan Stanley reported on Thursday that second-quarter profits rose by 10 percent compared to a year earlier, with a reported profit of $3.51 billion. Investment bank revenue increased by 16 percent to $2.38 billion, while the bank garnered $71 billion in net new assets, triple last year’s second quarter.
The combined $42.17 billion in profits exceeded analysts’ expectations and exceeded last year’s figures by more than $6 billion.
Bank profits were buoyed by the release of billions of dollars in “loan-loss reverses” that the banks had been holding back in case of pandemic-related losses, which never materialized.
Testifying before the House Financial Services Committee on Tuesday, Federal Reserve Chairman Jerome Powell made clear that the Fed had no intentions of raising interest rates or stopping its monthly purchases of $120 billion in financial assets, despite inflation concerns, which were amplified by the 0.9 percent increase in the consumer price index (CPI) reported in May.
Overall, the year-over-year CPI increase of 5.4 percent is the highest in 13 years, driven by double-digit increases for nearly every single basic consumer item from milk, meat, bread, gas, to used cars and electricity.
The over $42 billion in profits raked in by just six banks in only three months would be enough to pay 210,000 doctors annual salaries of $200,000, or pay some 694,000 teachers an average yearly salary of $60,500, or build 140,000 homes at the cost of $300,000 each. The single quarter in profits from the banks is just $3 billion less than the $45 billion proposed in Biden’s American Jobs Plan to replace all of the lead-pipe service lines in the US.
In addition to banks posting record profits, the world’s largest asset manager, BlackRock, reported a second-quarter profit of $1.38 billion on Wednesday, with a net income of $8.92 per share. The company reported $4.82 billion in revenue for the same period. Assets under management by the firm jumped to a record $9.49 trillion, up from $7.32 trillion the year prior. It will soon become the first company with $10 trillion under management.
By comparison, the 2019 gross domestic product of the United Kingdom was $2.82 trillion, while India’s was $2.86 trillion and Japan’s was $5.08 trillion. The only countries that had a 2019 GDP larger than the assets controlled by BlackRock were the world’s largest economies, the US and China.
Shares of BlackRock’s stock have risen by 26 percent since the beginning of the year, while in the last 12 months the stock has increased by a staggering 64 percent. Demonstrating the parasitic character of the capitalist system, BlackRock reported spending $300 million in the second quarter repurchasing company shares.
While life has never been better for Wall Street shareholders and bank executives, the latest unemployment claims report from the Department of Labor (DOL) shows that the worst economic calamity to hit the working class since the Great Depression is far from over.
The DOL reported that 360,000 new unemployment claims were filed for the week ending July 10, only 26,000 less than last week’s revised total of 386,000. In addition to state claims, over 96,000 federal claims were filed under the Pandemic Unemployment Assistance (PUA) program, which is set to expire September 6. The PUA program has been a much-needed lifeline for the increasing number of so-called gig and contract workers who would normally be ineligible for state unemployment benefits.
Overall, labor force participation is down nearly 3 percent since February 2020, with some 13.8 million people collecting some form of unemployment through June 26, roughly 11 million more than the pre-pandemic average, but less than half of the 30.59 million that were collecting at this same time last year.
While the combined 456,000 unemployment claims are more than double the pre-pandemic average, this did not stop White House Press Secretary Jen Psaki from boasting on social media Thursday that Biden’s “economic plan is working.”
As part of Biden’s bipartisan “economic plan,” on June 4 Psaki gave the White House’s blessing to right-wing Republican governors to begin ending pandemic-related unemployment benefits, passed in the misnamed American Rescue Plan, months before their slated expiration in September in what the media sickeningly described as a “bold experiment” to blackmail workers into accepting low-paying and dangerous work as the Delta variant of the coronavirus continues to spread in the US.
While there is no talk in the White House or by the Democrats of turning off the money spigot to Wall Street, by the end of July over half of US states will have eliminated unemployment benefits and the federal Centers for Disease Control eviction moratorium will expire, putting an estimated 4.2 million adults at risk of eviction in July and August according to an estimate by the Urban Institute.
Debtors’ prisons on the rise as COVID-19 ravages the southern United States
On July 6, 55-year-old Charles Anderson spent his last day in Marion County Jail. He was arrested 28 days prior for unpaid debts regarding his failure to make monthly payments and fees associated with three court cases dating back to 2003. Upon his arrest, he was jailed with three other men in a 6-by-10-foot cell.
After a long period of unemployment, Anderson found a job working as a carpenter two weeks prior to his arrest. He had intended to resume payments toward the court-ordered debts that have haunted him from a 2003 conviction on methamphetamine trafficking.
On June 9, in the town of Winfield, a police officer pulled Anderson over for running a stop sign on his way to help his new boss fix a flat tire. The officer then issued him a ticket for driving without a seat belt and a warning for failing to adhere to the stop sign. However, he was arrested and taken to jail in Hamilton, which was built in 1979 and meant to house 86 men and women, but it is often overcapacity at more than 120 people. According to Anderson, he was fed nothing but white bread, bologna and peanut butter for the 28 days he was incarcerated.
According to the arrest report, Anderson was arrested on three counts of “failure to pay.” Like so many others before him, he was ultimately charged with failing to appear at a payment review hearing, which in his case was held in November 2018.
Anderson was only able to be free of Marion County’s debtors’ prison because Linda Jacobs, his indigent 72-year-old mother, cashed her monthly $1,400 Social Security check on July 3, arriving at the circuit clerk’s office in the county seat of Hamilton on July 6 and paid $1,000 toward his court-ordered debts totaling more than $2,500. As a result of his arrest, his vehicle was towed, and his mother had to pay more than $200 to retrieve it.
Jacobs, in an attempt to raise the necessary funds, placed the family’s tractor, Bush Hog mower and a small boat up for sale. She even offered to sell her three Yorkshire terriers, but Anderson rejected that.
In an interview with AL.com on July 2, Jacobs noted, “I offered to pay $300, and they called and told the judge, and the judge said he had to pay $1,000 to get out. They take away your freedom, they lock you up, and you pay or they keep you locked up. It’s not right.”
Marion County in northwest Alabama, according to a 2019 United States Census Bureau report, has a population of 29,709, of which 94 percent are white, 3.9 percent black, 2.7 percent Hispanic or Latino, 0.4 percent American Indian and 0.3 percent Asian. The median household income is $35,930, and it has an unemployment rate of 3.1 percent (up from 2.2 percent in May), according to a 2021 Alabama Department of Labor report.
As a result of the coronavirus pandemic and declining hourly wages, several people remain incarcerated in Marion County Jail because they dared to commit the crime of being poor and have neither family nor friends with the financial resources to purchase their freedom. Prior to the pandemic, Alabama was rated among the poorest states in the country; in the city of Birmingham, the poverty rate is over 28 percent.
One man arrested in Winfield, Alabama, has been jailed since March on three counts of failure to pay court-ordered debts. According to a court document, he would be released from custody immediately upon payment of $2,819.70. Another man met a similar fate, being held in custody since he was arrested in April for failure to pay “court costs, fines and restitution of: $4,182.56.”
The incarceration of people over unpaid debts, particularly when these “debtors” do not have the wherewithal to pay, violates federal laws and constitutional protections against the operation of debtors’ prisons. From the colonial era to the 1830s, the United States regularly jailed people for failure to pay their debts.
Imprisonment for indebtedness was so commonplace that two signatories of the Declaration of Independence, James Wilson, later an Associate Justice of the Supreme Court, and Robert Morris, a personal friend of President George Washington, were sentenced for failure to pay loans.
However, debtors’ imprisonment could turn into a life sentence for those without positions which grant certain privileges. In myriad jurisdictions, debtors were not to be freed from bondage until funds were acquired in full, or they had worked off the debt through years of penal labor. As a result of economic turmoil which ravaged Southern and Northern states and colonies alike, many languished in prison, dying even more impoverished than they were prior to their arrest.
After the War of 1812, so many Americans were indebted that prisons held five times as many people on charges of debt than actual crimes. Between 1821 and 1849, 12 states outlawed debtors’ prisons. With the advent of bankruptcy law, citizens were granted a means of escaping insuperable debt, while creditors were made to share some of the risk associated in lending funds. Bankruptcy laws were revised in 1841, 1867 and 1898, eventually requiring payment of as much debt as the debtor could afford while absolving the balance.
Over the course of the 20th century, the US Supreme Court affirmed that it was a violation of constitutional rights to incarcerate those too financially straitened to repay their debts. In 1970, in Williams v. Illinois, the high court decided maximum prison terms could not be extended on account of the defendant failing to pay court costs or fines. In 1971, in Tate v. Short, it was ruled that defendants who are too destitute to pay their fines may not be jailed. Most significantly, the 1983 decision in Bearden v. Georgia compelled judges to distinguish between debtors who are “too poor to pay” and those who have the financial ability but “willfully” refuse to do so.
Federal imprisonment for debt was abolished in 1833, although some, particularly Southern states were allowed to continue imprisoning debtors, even leasing prisoners, who could not buy their freedom, out to plantation owners, effectively continuing slavery after the Civil War.
In places like Marion County, the justice system has a consistent stream of low-income people in and out of jail for failing to pay their debts. “In my opinion, [it is a] debtors’ prison because I owe money and you’re [going to] lock me up for it,” Charles Anderson told the media. Reflecting the impact of the social crisis on the thinking of workers, Anderson continued, “How is this the United States, where we’re supposed to have more freedoms than anywhere else in the world, and we’re incarcerating people for not having money?”
Marion County Sheriff Kevin Williams, in an interview with AL.com on July 7, said he does not draft the laws but is tasked with enforcing them, including issuing arrests for unpaid debts in accordance with judges’ orders. “If you’re sitting here and you can’t pay your fines, but you’re court-ordered to pay them, how do you fix that? How do you make them pay other than to throw them behind bars?”
According to court records, debtors have remained jailed for weeks or months in the Marion County Jail due to indigence. Marion County has incorporated a practice which relies on failure-to-appear charges, issuing arrest warrants to people with unpaid debts before demanding payment for their release. Moreover, court records also reveal many people never receive a letter informing them of their payment review hearings.
Hamilton resident Daniel Ables, another victim of this vendetta against the working class, sat in Marion County Jail for more than four months without an appearance before a judge to have his case heard.
On February 22, a Marion County deputy arrested the 41-year-old Hamilton resident on an outstanding warrant for failing to appear at a March 2020 hearing regarding a plan to pay down his court-ordered debts pertaining to a 2009 drug case. Typical in Marion County, Ables’ arrest warrant had two boxes checked. The first of which stated, “[y]ou may release the accused person without taking the accused person before a judge or magistrate,” and the second, “[i]f the person posts a cash bond in the amount of $1915.60 with the court clerk.” However, the “bond” equaled the exact total of all the defendant’s fines, fees and restitution owed at the time.
When interviewed by AL.com during a jailhouse phone call, Ables said if he were wealthy, this would not have happened. “It’s extortion. That’s pretty much what it is, is it not? They’re [going to] lock me up and hold me here for a year or some crap just because I can’t pay? What would you call it?”
Ables’ family members tried for months to raise the amount of money the county was demanding for his release but found themselves too short. Shortly after his arrest, Ables’ girlfriend offered to pay $700 toward his court-ordered debts but was informed if the amount was not the full $2,000, he would remain jailed.
District Attorney Scott Slatton confirmed via email that Ables was cleared to be released after he had requested “judicial review as to why Inmate Ables had been in jail for 5 months.”
A Zoom hearing was held on the morning of July 8 to review Ables’ case. His required monthly court-ordered debt payment was reduced from more than $100 to $60, or $20 for each of the three cases on which he still owes fines, fees and restitution. According to three court filings, Ables is not required to begin making the payments until October.
After a review of the case, Slatton claimed going forward, his office “will seek judicial review of any inmate being held for [‘failure to appear’] for payments longer than the quarter in which they should have appeared on a docket.” After 137 days, Ables was released from Marion County Jail custody, paying nothing to secure his release following the hearing.
In response to a query on why some people remain in jail for longer than 90 days awaiting a court hearing, Williams directed all inquiries to the judges on their respective cases and the circuit clerk’s office.
When the inquiries were followed up, Marion County Circuit Judge Daryl Burt, who signed the orders stating that Anderson and Ables could be released if they paid off their court-ordered debts, did not respond to myriad requests for comment, including from Circuit Clerk Denise Mixon.
Cody Cutting, an attorney at the Southern Center for Human Rights who litigates cases related to the criminalization of poverty in the southern United States, said there is no justification for the imprisonment of impoverished, like Anderson, and is unequivocally unacceptable. “If someone who is arrested can avoid incarceration by paying if they’re able to pay their entire court debt, but someone who is unable to pay that court debt through no fault of their own is forced to languish in jail for months, that violates the Constitution.”
The Southern Center for Human Rights and the Southern Poverty Law Center have found that judges in Alabama consistently jail people for “failure to pay” without conducting inquiries or investigation into a debtor’s ability to make payments.
“It could not be clearer that it is unconstitutional to jail someone for failing to pay a fine if the ability to pay that fine is beyond that person’s control,” Cutting said. “In spite of how clear that constitutional command is, it’s completely apparent that jailing people for being poor is common practice in courts across the South.”
Dearborn, Michigan residents languish without government assistance in flooding aftermath
On June 25–26, heavy rains overwhelmed the Detroit, Michigan metro area’s shoddy infrastructure system, causing flash floods and power outages throughout the region. Just three weeks after the first flood, many were hit again with rain and sewage water pouring into basements for the second time in less than a month.
One of the worst-hit areas is Dearborn, a working-class suburb of Detroit. The city opened up a Disaster Relief Center at the Henry Ford Centennial Library on July 23 where those impacted by the flooding can apply for assistance. Nearly 70,000 people are expected to apply for assistance.
Many residents never fully recovered from historic flooding in 2014 which severely damaged homes and businesses. Most received little to no assistance from either the insurance companies or the Federal Emergency Management Agency (FEMA) and many residents who spoke with the WSWS are finding the 2021 situation to be no different.
Trash lines the streets. Furniture, carpets, appliances and floorboards are attracting flies. Much of the garbage, soaked in raw sewage, has been rotting in the sun on the curb in some cases for several weeks. The stench, in particular in the city’s South End neighborhood, is overwhelming and a major cause of concern for the health hazard that it poses to residents and their families.
On Saturday evening, just hours after these interviews were collected, severe weather hit southeastern Michigan and the same scenes emerged again. Over 125,000 households were without power through Sunday evening; major freeways were flooded, cars abandoned underwater and more sewage and rainwater gushed into homes.
Mohamed is a mechanic. He has lived in Dearborn his whole life. He lost the entire contents of his basement in 2014 and was hit by both of last month’s floods. He did not receive insurance money or federal assistance in 2014 and is not expecting help this time around. He and his wife were hauling parts of their basement to the curb when he spoke with the WSWS.
“A sewage backup happened in the basement. It was just shooting out the toilets, the drains, everywhere it could come out—it was up to my waist. Everything was damaged. We had to get rid of everything. Everything, everything, everything is gone. One guy estimated $60,000; another estimated $55,000 in damages.”
He explained how residents have been instructed to wait for insurance company or FEMA representatives to assess damage before tearing out waterlogged drywall, which has allowed the mold to grow. “I can’t sit and just wait around anymore. We sent my son to my brother’s house [to get away from the mold]. Now I am clearing it all up so I don’t get sick from the mold. This is a major, major health issue.
“Our trash had been sitting here for two weeks. In fact they just came to pick it up this morning. What are we going to do? It took too long and it got piled up so bad in the streets that I had to take it to the city dump. Everyone on this block had the same thing happen. What are people supposed to do? The City of Dearborn does not want to comply with nobody, they are all hiding. People cannot live like this.”
He gestured at the growing pile of debris sitting at the curb. “This is just one load out of four that I took to the dump. We had to throw away everything.”
He described how the floods happened. “When it was going on this time they had all the sewage systems closed. They had the firetrucks going around to open them back up and after about three or four hours it slowly, slowly started to drain again.
“The thing about it is, Dearborn knew about the flood. But they did not warn nobody. Everybody here could tell you the same thing: the city knew it was a flood possibility but they did not mention it to anybody.
“In 2014 we lost everything and now again, everything. I cannot go through this again. I’m honestly at the point where I am trying to move out of Dearborn. I cannot deal with it any more—getting flooded twice in one month. The first time it was rainwater and sewage, the second time it was all sewage. I stayed for a whole week cleaning all this up.
“The city of Dearborn does not want to do nothing about it. You cannot go by what anybody says nowadays. They do not care. Nobody cares here, I’m telling you. The neighbors look out for each other, but neighbors can only help so much, you can only do so much. And look, when you are flooded and your neighbor is flooded, what can you do? Life goes on, it doesn’t stop.”
He gestured at the Ford Motor Company headquarters across the street. “They do not care. If there is money involved, they will help. But if there is no money involved, they do not care. I saw the flooding happening in China and Germany, too. It is everywhere, it is climate change, but they do not care.”
Kamal and his brother Bilal were both raised in Dearborn with their siblings. Everyone in their family, including their mother, was flooded in their respective homes.
“It’s crazy because 2014 was brutal. But 2021 was way worse. Then two weeks later, it happened again. Similar damage was done both times, but in 2021 the water just went higher. If you count the appliances, the furnace, washing machine, dryer, refrigerator, drywall, two-by-fours, furniture—it’s at least $10,000. But that’s a pretty low estimate.”
Kamal explained how many Yemeni-American families such as his make use of the basements in their homes to visit with family members and others in the community. “A lot of people don’t have finished basements but we do, and my brother I know spent $30–40,000 on his basement. It was very, very unfortunate and it is a bad situation, not just for us but for everyone. Lucky there are many of us who can help each other, but I feel bad for those who don’t have someone who can help and support them.
“We need to have a better sewer system. [After 2014] the city of Dearborn invested a ton of money to help the sewer system and the hope was they would do a better job, but obviously that is not how it went. There are certain areas that never got flooded. West Dearborn has like 13 sewer openings; versus the East or the South where there are only two or three openings,” he said, referring to the uneven infrastructure in the city.
“I think everyone needs to be treated the same across the board, and I think there’s a lot that needs to change. There needs to be more grass than concrete, there needs to be in general a better foundation to help the systems execute right. The leaders need to step up—the mayor, city council members—the federal government needs to get involved and help community members. We should be getting all the help we can get. The fact that it happened twice in three weeks is scary. My wife no longer goes to the basement because she is so scared. I even got the kids asking me, ‘Dad, did it flood?’ It’s a shame.”
Kamal described how residents have been left to fend for themselves. “In 2014 I was accepted to get FEMA, but most recently I was declined because I have insurance. But my insurance company only covered up to $5,000 in damages. That barely pays for the furnace itself, and when you are losing the washer and dryer, carpet on the stairs, your furniture—and then, all the kids’ toys. Those are sentimental. You cannot take that back. The photos, pictures, all that. In 2014 I lost all that stuff. So, I do not want to say I have learned my lesson, but after 2014, I stopped fixing my basement. I am done. We were hoping that because the city said they were improving the sewage system that it would be okay. So my brother went ahead and fixed his basement after 2014. Whereas I just did not trust the system.”
“While it was flooding, we were just filling up buckets with water and throwing it all outside for like three hours until we just gave up,” Bilal, Kamal’s brother, said. He explained that local big-chain hardware stores were engaging in price gouging: “We had to go price our kitchen cabinets. We originally bought the top and bottom cabinets for about $6,000 but when we went to get pricing now, they said $5,000 for just the bottom ones.”
Bilal also explained how FEMA and the insurance companies pass the buck, leaving everyone to pay for their own restoration. “We didn’t get no FEMA money for my mom’s house. She applied and got rejected because she has insurance. The insurance company’s name is Berkshire Hathaway. Then the insurance company denied my mom. The reason was they claimed that there was nothing wrong with the sewers, that Dearborn came out with a statement stating that it could only hold up to three inches but it rained seven inches, so they are claiming it as a flood and not a sewer backup. And I do believe they denied everyone through Berkshire Hathaway.”
Kamal said, “This was not the first time. This was the second time. They [the city of Dearborn] got a lot of money last time and they never used it wisely. It’s 2021. Technology is growing. If people are paying for things, why is it like this? It is funny, I was talking to one of the ‘politicians’ who’s running for city council or mayor or something. They admitted it, it is a crime—when it boils down to it, it is a crime, really, what is happening.
“Everybody wants to say, ‘It is global warming.’ Okay well, we understand. Then, ‘It is mother nature.’ Okay, we understand. But there are certain things you can do to prevent this.
“We have family and friends whose businesses have been ruined. Then you go and apply for FEMA, and you get rejected because you have insurance, and your insurance gives you $5,000. Well, guess what, $5,000 does not even barely cover anything. And then they want receipts! Come on—I do not have receipts for something that I purchased 10 years ago. And besides, how can you give them receipts for sentimental pictures? Or my friend’s varsity jacket; those are memorable, priceless, I do not have a receipt for that.
“They have to do something. I told my family to just leave it, do not even fix it. If it happens again, they [the City of Dearborn] are not doing anything for us. We kind of gave up. My mom has dreams at night. She is thinking every time it rains, ‘Check the basement!’ It can cause some serious illness, health issues. It stinks. There’s mold and pollution and all that nonsense we have been taking into our lungs.
“It looks bad here but where I was at before, the South End of Dearborn, I mean, man—it is even worse over there. You got more senior citizens over there and less money. That is why they do not do much over there. The West End is more taken care of on that side. It is known as the ‘rich’ area.”
Ahmed lives in the South End of Dearborn, where many residents have protested against uneven investment in infrastructure due to residents’ lower income. He has lived in the city for 40 years.
“This neighborhood, this area here, got hit real bad. You see the new houses across the street? You could look into their basement windows and it was like a swimming pool. You could see the water all the way up to here. You could hardly walk. I had to go around the side of the house and when I went into the basement I was very sorry. It was all the way up to here,” he said, touching the top of his chest.
“Here in the South End of Dearborn it’s so expensive. We have the highest taxes on our houses and look at where we at: this is the cemetery,” he said, pointing across the street. “There’s Ford,” he said pointing to the Ford plant. “The train, blowing its horn all night long,” he said pointing at the train station. “And the ships coming in from the river making noise all night,” he said pointing at the Detroit River. “All this and it smells like a dead dog. I do not know how they treat people like this. I am thinking about selling my house, to be honest with you. It is a big mess. They did not pay attention to us. The streets were all stopped up. We did not get any of the services into which we pay as taxpayers.”
He described how the sewage has been rotting out his basement. “If you go inside the house you can hardly stand up from the smell. I’m getting a company now to clean up the inside because I did everything I could myself but it makes no difference. The kitchen, the walls… it’s a big mess.”
He pointed again towards the river. “They have a sewer over here. They have gates that go to the river and if they open those gates then we would not have drowned. But they [the city of Dearborn] worry about Ford. You understand what I’m saying? They do not want Ford to drown, but for us, it is fine. I wish Ford would buy this neighborhood, just buy us out, because to be honest with you we are getting tired of it. Just pay us so we can leave. This is the second flood in the last few weeks. We wake up and the basement is all filled up.
“I just applied for FEMA last night and I do not know what they are going to say about it. I have insurance but they did not show up yet. I have good insurance, but it only covers up to $10,000 and I know the cost of my basement will be at least $27,000 with all the losses I have had and I am out of a job so I do not how I am going to keep up with this. My washing machine, dryer, water heater, the heater to the house… Until now we did not get one single penny, no help, we call the city and make emails, they have a page to find out more info—but we did not get any answers from day one until today.
“We have to lock up the door to the basement and put something under the door to keep the smell out. I did not break down the kitchen yet because I have been waiting for the insurance people and the FEMA people to show up. I did not want to do too much work yet without them seeing it. Because then they say, ‘It did not happen.’
“The garbage piled up all over for almost two weeks. No one touched it. You could pass by the neighborhood and it smells like rot, and it still does now honestly. I am just trying to get some tools together now to start breaking apart the kitchen to try to get to where I think the smell is coming from. But I have a back problem, I am tired.
“This is the number one that we are worried about: the health of our families. I do not care about a basement, my family is first priority. But there is no other choice we have. Honestly if I had the money I would go somewhere else at least for a couple months until everything is cleaned up, or maybe pay someone to help break up the basement.”
Ahmed explained that his neighborhood is ignored by politicians and the media, and described the terrible living conditions being so close to an oil refinery and a major auto plant. “Nobody wants to look at us. Nobody ever pays attention to this neighborhood honestly.
“I cleaned my car the other day and I wake up and my car is covered in ashes from the factory chimneys. The train when it is passing, in the middle of the night, it blows its horn and you wake up five, six times through the night. And the same with the ship when it comes from the river to Ford, it blows its horn until everybody is up. I am getting tired of it.
“My memories and everything is in this neighborhood and we do not want to leave but we know it is not worth it, it is poisonous. We are getting tired of it and we wish we could leave. People get cancer in this neighborhood from the toxins. If I was still young and thinking right I would not live in this neighborhood. But at this time, at my age, what can we do?”
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