U.S. Food Banks Going Broke

Apparently tighter inventory controls by retailers, the mortage crisis, stagnant wages, lack of grain surpluses and higher gas prices have combined to create a perfect storm.

From the NY Times:

MANCHESTER, N.H., Nov. 26 — Food banks around the country are reporting critical shortages that have forced them to ration supplies, distribute staples usually reserved for disaster relief and in some instances close.

“It’s one of the most demanding years I’ve seen in my 30 years” in the field, said Catherine D’Amato, president and chief executive of the Greater Boston Food Bank, comparing the situation to the recession of the late 1970s.

Experts attributed the shortages to an unusual combination of factors, including rising demand, a sharp drop in federal supplies of excess farm products, and tighter inventory controls that are leaving supermarkets and other retailers with less food to donate.
...
“Donations are down, and people who need help is up,” said Liz Carter, executive director of the food bank. “So what are we going to do. We just made the decision that instead of giving people six or seven days worth of food, we’re going to give them three or four days of food, which is a drop in the bucket.”

Ginny Hildebrand, executive director of the Association of Arizona Food Banks, said many pantries were facing similar situations.

At a recent conference for food bank employees, Ms. Hildebrand said, “Everybody was saying the same thing. They’re all hit by an increase in demand, all hit by the impact of the higher costs of food, and all hit by federal reductions. We just don’t have the quantity of products available that we used to.”

Ross Fraser, a spokesman for America’s Second Harvest, which distributes more than two billion pounds of donated food and grocery products annually, said the shortages at food banks were the worst the organization had seen in 26 years.

“Suddenly it’s on everyone’s radar,” Mr. Fraser said. “Food banks are calling us and saying, ‘My God, we have to get food.’”

So this holiday season please take some time to clean out your pantry, pick up a few extra nonperishables, and drop them off at your local food bank or collection center. Thanks.

Credit Crunch 2.0?

From The Financial Times

Defaults on credit card bills in US rising

US consumers are defaulting on credit card payments at a significantly higher rate than last year, raising the prospect of problems in the stricken US subprime mortgage market spreading to other types of consumer debt.

Credit card companies were forced to write off 4.58 per cent of payments as uncollectable in the first half of 2007, almost 30 per cent higher year-on-year. Late payments also rose, and the quarterly payment rate - a measure of cardholders' willingness and ability to repay their debt - fell for the first time in more than four years.

Analysts at Moody's, the rating agency, said the trend could be related to the slowdown in the US property market and fewer borrowers rolling mortgage debt into new, cheaper home loans.

"The combination of higher interest rates and a softer real estate market diminished the attractiveness of mortgage refinancings in which many borrowers reduced their more expensive credit card debt by drawing on the equity in their home," Moody's said.

From the Chicago Tribune:

"Now that the easy money in home mortgages is all but over, consumers may soon be caught in a financial squeeze with their credit cards.

That's the worry among some economists and credit counselors as home lending has shifted abruptly into low gear this summer. That leaves homeowners owing big sums to Visa or MasterCard without an important escape hatch -- the ability to pay down the plastic by dashing off a check from their home equity line of credit or rolling the debt into a new, bigger mortgage.

Now admittedly a lot of this is fallout from the subprime mortgage situation. However I can't help but wonder how much of the current crisis and this current depressing credit card default trend aren't attributable to the changes in credit card and bankruptcy laws that W pushed through a few years ago.


h/t to The Big Picture