From Anchorage to Ushuaia by Bike

You’ve all heard that a financial crisis the likes of which we’ve never seen is threatening the global economy. Many of you have asked what we think about it, and what we’ve seen here in the US, where everything started.

But first, a quick reminder, much abridged, but hopefully clear. In 2004, the American banks considered the economy to be in relatively good health, and taking into account the low interest rates and the constant rise in the housing market, became much more lax in granting mortgages. They sold the mortgages through independent agents without really checking up on the solvency of the borrowers, and the agents were concerned only with selling the credit and getting their commission. For many ill-advised people, the opportunity seemed too good to pass up. Imagine: no capital payments for a year or two, a very low interest rate for the first few months, and no requirement (or pretty minimal) to prove your income! And don’t forget the pervasive conviction that the housing market simply never goes down…

Many families were able to buy the homes of the dreams by taking out these (sub-prime) mortgages. Some of the people that we have met did confess that they had wondered how their neighbours were able to afford such big and luxurious houses considering their jobs (and respective incomes).

Then the big day arrived… the day when they had to start paying back the principle of the loan. The interest rate went back to “normal,” and of course many mortgages in the US have flexible rates, and in the intervening years the interest rate had gone up quite a lot.

All those households with low incomes were unable to make their payments and they had to sell their houses to pay their debt. In the worst cases, the banks seized the homes and families found themselves suddenly on the street.

We didn’t actually see this first hand, but we heard many stories: “Yup, there were a couple of houses in the neighbourhood that were sold like that, and the people up and left without a saying a word.” We haven’t seen the last of the crisis either, since the banks continued to give these kinds of loans until the end of 2006. And if the contract !!!include!!!d a two years “grace period,” the payments on the principle will start to come due very soon…

The supply on the housing market is greater than the demand, and so the market goes down… But why did the crisis go global? The problem could have been confined to the US banks, but as soon as they saw the risks of these sub-prime mortgages, they tried to sell the debt on the financial market as integrated investment packages. Investors, unsure of what exactly was being offered, initially refused to buy the debt, but finally relented after being assured that they would be refunded if the investment should turn sour. So many investment institutions (banks, insurance companies, pension funds) from all over the world found themselves with bad debt in their portfolios.

When the true risk of these investments became apparent, the banks refused to lend to each other, not knowing how much bed debt the other bank had and so unable to be sure that they were financially viable. The inter-bank loan market started to dry up about nine months ago, and the end result was that some banks were so undercapitalized that they had to declare bankruptcy. Those that survived now have very strict lending conditions, and many businesses and individuals can’t get access to the loans necessary to invest in their business plans, which in turn slows down the whole economy. The decrease in the stock market these past months is in anticipation of a general economic slowdown, since no one wants to invest in a company that will undoubtedly run into some trouble in the near future.

All the Americans that we’ve met so far were very worried about the drop in the stock market.  The US doesn’t have a retirement system based on inter-generational payments like in France, and so each person is responsible for accumulating their own nest-egg, their own capital stash that they can live on once they retire. They either do it themselves, or through a pension fund. And since the return over the long term is the highest in stocks, many people put most of their funds in the stock markets. The big drop in the markets over the past couple of months has meant that these people have watched all their retirement savings just disappear. Everyone that we have met is very worried. And although they do put a lot of faith in the new Obama administration, they are still cautious.

Along with the economic slowdown, people are starting to worry about unemployment. The labour market in the US is much softer than in France: it is easier to find a job, but it is also a lot easier to lose it.

One of the most striking things that we have noticed recently is the difference in what the American and European media are reporting. Not a single American that we’ve met had any idea that the whole rest of the world was blaming the US for the crisis and was calling for much stricter regulation of the banking and financial sectors. We still can’t believe it!

Enough about the financial crisis… dream a little with us… the American dream! These past few days we’ve been biking through cities whose very names inspire dreams: Santa Barbara, Malibu, Santa Monica, Venice, Hollywood, Beverly Hills…. It is true that the weather is lovely, and huge bougainvillea in bloom line the roads, giving way only for rose bushes. The sky is blue and the temperature warm (20°C). Yup, this is November in Southern California!

Sébastien

Since our detour through the Monterey Aquarium, a few things have happened! We’ve met some more people, biked with Adam and Kate (from Canada) and Uli and Eva (from Germany). We met Jim and his dog Elke who are biking across the US to support a cure for diabetes. We used the warmshowers.org network and stayed with Joel in San Luis Obispo and with Terry in Lompoc. A friend of Joel’s, Debbie, put us in contact with her brother and we were able to stay with him the night of the elections.

The further South we go, the more we feel that we are getting close to Mexico. The air is warmer and the flowers abundant: actually, Bougainvillea grow by the treeful here and are almost considered as pest in Southern California, but in France they are pretty much impossible to grow (and I know what I’m talking about). There are Mexican restaurants on every corner, and we’ve met lots of people originally from Mexico, happy and smiling.

Some points of interest:

• Sébastien’s legs have been hurting ever since we started biking again. He finally understands what it means to have sore muscles!
  
• We got a new free-standing tent, which means we don’t have to drive the tent pegs into the ground every night to pitch the tent. Hurray!
  
• On a gently descending faux plat I was attacked by a UFI (unidentified flying insect). It landed just on the corner of my mouth and before I could swat it away, it stung me! I stopped short, and Sébastien had to look everywhere for the tweezers. Just another day in the life of a cyclist, I guess, but an experience that I would really rather not repeat. My bottom lip was swollen for 3 days…!
  

And, of course, the elections. Everyone that we have met was supporting Obama, but nothing was for sure, even though the media was announcing an Obama victory before the votes were in. In the US, you can vote by mail, on the internet, and in a polling station up to two weeks before the actual election day. No excuse whatsoever for not voting!

We were lucky enough to experience the election first hand since we were staying with Doug (Debbie’s brother, who was a friend of Joel’s from San Luis Obispo) and his wife, Shirley. At 9:00 pm the victory cry went up: Obama is the new president! Even though at this point the official results aren’t in, and people are having a little trouble believing it (remember the 2004 election when Kerry was announced president-elect before California had finished voting – they’re 3 hours behind the East Coast – and Bush ended up winning), still, the 2008 elections have made history in the United States. An African-American leader heading up the most powerful nation in the world! We watched John McCain’s concession speech, and he graciously congratulated his opponent and set a re-match in four years’ time. Barak Obama spoke more about the challenges he will face, about working with the Republicans to unite the country and move forward. It was an eloquent speech, from the heart, one could say. Obama will take office at the end of January, and until then, both Republicans and Democrats have to share the White House!

Sara

Since Monday morning, a strange but not unfamiliar feeling has been with us: a feeling of freedom. A cool autumn wind, with just a hint of the approaching winter, blows in our hair, the muscles of legs warm up ... After 3 comfortable weeks sitting in a car, getting back in the saddle hasn’t been as hard as we thought.

We took our time in the small village of Monterey, and even saw the aquarium. The ticket price wasn’t cheap ($25), but it was worth it. We spent the whole afternoon there, and were rushed towards end since we wanted to see absolutely everything before they closed!

Our spirits are rising as we go, and especially as we meet new people. In the 3 weeks that we spent in the car we didn’t meet anyone, but in the 2 days we’ve been back on the bikes we’ve already met about a dozen people from all over the world: Canadian, Germans, Americans and Belgians!

There’s no question in our minds: biking is great for meeting people – it keeps encounters casual, relaxed, and friendly!

Sara

We finished off our road trip by visiting three more national parks: Death Valley National Park, Yosemite National Park, and Sequoia National Park.

Death Valley is impressive because of its altitude: 86 meters below sea level, and entirely surrounded by a mountain chain. Inside, it’s easy to lose your bearings, and climb up and down without knowing (in a car though!). One of the valley’s most distinctive features is its inhospitable environment and extreme temperatures of up to 57°C… how typical of the US: they have to hold the record, and be the “hottest/highest/driest/coldest/lowest/wettest in the world.” If it’s not true, then they’ll settle for being the “-est in North America,” or even the “-est within the United States.” So here we learned that Death Valley wasn’t the lowest valley in the world, but in the Western hemisphere! There was a little explanation with a world map showing the US in the West and France in the middle, just to make the point clear. We wondered whether we missed something back in elementary school when we were learning about the East and West hemispheres.

To tell the truth, we found Yosemite Park distinctly underwhelming. It was pretty touristy, and seemed quite similar to Lake Tahoe and to the mountainous countryside that we’d already visited. We weren’t impressed like we had been in the other big national parks. Actually, we learned that one day isn’t enough time to visit any of these parks. In order to really appreciate their secrets, you have to take long trips in the interior, but we simply didn’t have the time.

Sequoia National Park was another park where we could have spent several days driving around. But we did get a chance to see a shelter hollowed out of a giant redwood and the biggest tree in the world ... by mass!). As we were leaving, we saw a car stopped by the side of the road with all its passengers craning their necks looking at something above their heads. We stopped and looked too, and saw what everyone was staring at: a bear cub up in a tree! It’s mother wasn’t far away, keeping a close eye. And to think that we’ve been advised that when travelling through bear country to hang all our food up in a tree!!

In Fresno, we met up with Ben and Nathan, our two friends that we had biked with for 10 days. They had biked all the way down the Pacific Coast to the Mexican border, and had only been back 3 days. We had a really nice time with them, and cooked them a real French dinner which they definitely enjoyed!

In the past 3 weeks, we’ve sat in the car for 109 hours and driven 7712 km. We got to “try out” 3 different cars and saw 9 national parks. We’re back now with Thea in Aptos, where we left our bikes. We plan to rest up this Sunday, reorganize our packs and check the bikes. We leave tomorrow morning (Monday) to take on the second half of California.

Sara & Sébastien

Our road trip is separate from the Association Planète Durable et Solidaire, but don’t worry, we are still going to post our adventures on the website to keep you all updated.

- Meet Audrey, a friend of Sara’s, who moved to the US three years ago?

- Get married in your car, in just a few minutes?

- Gamble 24 hours a day?

- See some shows on the “Strip”

- Live in the middle of a dry desert and yet be surrounded by fountains and swimming pools with almost no water usage restrictions?

Take a guess!

Sara & Sebastien

Our road trip is separate from the Association Planète Durable et Solidaire, but don’t worry, we are still going to post our adventures on the website to keep you all updated.