Tent city pictures threaten Australian recovery

The tent cities now springing up in places like Sacramento, California, are an ominous sign.

They are signals of Depression, not Recession.

And as powerful pictures of these settlements hit Australian television screens, they could have serious repercussions here, too.

The Federal government’s first round of stimulus cheques, issued just before Christmas, worked well.

People, mostly, spent that money.

Retail sales rose, despite the approaching recession.

And retail jobs were saved.

The second round of stimulus cheques, from the government’s $42 billion stimulus package, are now in the mail.

But will people be prepared to spend them again, as they did before Christmas?

There must be some doubt.

Those in  Sacramento’s tent city, like Christine Hopper, are there because they have lost either their homes, their jobs, or both, in America’s worst post war recession.

Another Sacramento tent city resident, Therese Vaughan, says both she and her husband are “college graduates.”

Yet neither can get a job.

US lenders precipitated the present crisis, by recklessly lending to people who could not afford to repay their loans.

The results are now becoming all too clear, not only in the US, but also in Australia, where unemployment has already risen to 5.2 per cent.

Even the Rudd government now expects that grim figure to pass 7 per cent in the near future.

In these circumstances, inspiring confidence will be all that much harder.