Downpours Flood the Camps of Sri Lankan Refugees

By LYDIA POLGREEN

NEW DELHI — Downpours in northern Sri Lanka have flooded camps housing more than 250,000 people displaced by the fighting between the government and the Tamil Tigers, according to aid officials.

The rain, which fell heavily for much of the afternoon on Saturday, sent rivers of muck cascading between tightly packed rows of flimsy shelters, overflowed latrines and sent hundreds of families scurrying for higher ground.

The flooding raised fears for the safety of the displaced, who are being held in closed camps guarded by soldiers. Monsoon rains are expected to begin in little more than a month, and many aid groups worry that the hastily built camps will not survive the inundation.

“If only three or four hours of rain cause this much chaos, only imagine what a full monsoon can cause,” said David White, country director for Oxfam.

The camps occupy vast tracts of formerly forested land near the northern town of Vavuniya. Because the ground on which many of the camps were built was cleared of trees recently, the soil is soft and porous. It turns into mud almost instantly, making it nearly impossible to get trucks through to deliver food, water and medicine, aid officials said.

Life in the camps was already tough, but the rain has made it almost unbearable, according to people who have visited the camps in the last 24 hours. The pegs holding down plastic tents have come loose, leaving some families without shelter. Latrines have collapsed, sending waste spilling into nearby rivers. Silt has clogged water treatment plants that are essential for providing drinking water and preventing the spread of waterborne disease.

Groundviews, a citizen journalism Web site in Sri Lanka, published photographs that showed a grim scene of mud and squalor. Aid workers said that they were able to restore some services, like food deliveries, and get temporary shelters for families that lost their tents.

The people in the camps are displaced ethnic Tamils. Most were trapped, along with the last fighters of the Tamil Tiger separatist group, on a narrow strip of land in northwestern Sri Lanka. Government troops wiped out the senior leadership of the rebel group after a fierce battle in May. Thousands of civilians died alongside the fighters, according to the United Nations.

Those who survived fled to camps around Vavuniya, where they have been held ever since. The government has said it cannot allow the displaced people to go home because the areas they fled are sown with land mines, and because Tamil Tiger fighters remain hidden among them. Human rights organizations and several Western governments have criticized the government’s handling of the displaced, calling it tantamount to internment.

As the heavy rains approach, the government will need to move much faster to get displaced people out of the camps, Mr. White said. The government has pledged to get most of the displaced out of the camps by the end of the year.

“Really, we have run out of options and the only option that is left is to speed up the resettlement process,” Mr. White said.

A Global Surge in Tiny Loans Spurs Credit Bubble in a Slum

By KETAKI GOKHALE

RAMANAGARAM, India -- A credit crisis is brewing in "microfinance," the business of making the tiniest loans in the world.

Microlending fights poverty by helping poor people finance small businesses -- snack stalls, fruit trees, milk-producing buffaloes -- in slums and other places where it's tough to get a normal loan. But what began as a social experiment to aid the world's poorest has also shown it can turn a profit.

That has attracted private-equity funds and other foreign investors, who've poured billions of dollars over the past few years into microfinance world-wide.

As WSJ's Ketaki Gokhale reports, India's booming micro-loan industry could be headed for trouble as more people seek the loans just to pay the bills -- not start businesses.

The result: Today in India, some poor neighborhoods are being "carpet-bombed" with loans, says Rajalaxmi Kamath, a researcher at the Indian Institute of Management Bangalore who studies the issue. In India, microloans outstanding grew 72% in the year ended March 31, 2008, totaling $1.24 billion, according to Sa-Dhan, an industry association in New Delhi.

"We fear a bubble," says Jacques Grivel of the Luxembourg-based Finethic, a $100 million investment fund that focuses on Latin America, Eastern Europe and Asia, though it has no exposure to India. "Too much money is chasing too few good candidates."

Here in Ramanagaram, a silk-making city in southern India, Zahreen Taj noticed the change. Suddenly, in the shantytown where she lives, lots of people wanted to loan her money. She borrowed $125 to invest in her husband's vegetable cart. Then she borrowed more.

"I took from one bank to pay the previous one. And I did it again," says Ms. Taj, 46 years old. In four years, she took a total of four loans from two microlenders in progressively larger amounts -- two for $209, another for $293, and then $356.

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At the height of her borrowing binge, she says, she bought a television set. The arrival of microfinance "increased our desires for things we didn't have," Ms. Taj says. "We all have dreams."

Today her house is bare except for a floor mat and a pile of kitchen utensils. By selling her TV, appliances and jewelry, she cut her debt to $94. That's equal to about a fourth of her annual income.

Around Ramanagaram, the silk-making city where Ms. Taj lives, the debt overload is stirring up social tension. Many borrowers complain that the loans' effective interest rates -- which can vary from 24% to 39% annually -- fuel a cycle of indebtedness.

In July, town authorities asked India's central bank to either cap those rates or revoke lenders' licenses. "Otherwise, the present situation may lead to a law-and-order problem in the district," wrote K.G. Jagdeesh, deputy commissioner for the city of Ramanagaram, in a letter to the central bank.

Alpana Killawala, a spokeswoman for the Reserve Bank of India, said in an email that the central bank doesn't as a practice cap interest rates for microlenders but does press them not to charge "excessive" rates.

Meanwhile, local mosque leaders have started telling people in the predominantly Muslim community to stop paying their loans. Borrowers have complied en masse.

The mosque leaders are also demanding that lenders give them an accounting of their finances. The lenders say they're not about to comply with that.

The repayment revolt has spread to other communities, including the nearby city of Channapatna, and could reach further across India, observers say.

"We are very worried about this," says Vijayalakshmi Das of FWWB India, a company that connects microlenders with financing from mainstream banks. "Risk management is not a strong point for the majority" of local microfinance providers, she adds. "Microfinance needs to learn a lesson."

Nationwide, average Indian household debt from microfinance lenders almost quintupled between 2004 and 2009, to about $135 from $27 or so, according to a survey by Sa-Dhan, the industry association. These sums are obviously tiny by global standards. But in rural India, the poorest often subsist on just a few dollars a week.

Some observers blame a fundamental shift in the microfinance business for feeding the problem. Traditionally, microlenders were nonprofits focused on community service. In recent years, however, many of the larger microlending firms have registered with the Indian central bank as a type of for-profit finance company. That places them under greater regulatory scrutiny, but also gives them wider access to funding.

This change opened the door to more private-equity money. Of the 54 private-equity deals (totaling $1.19 billion) in India's banking and finance sector in the past 18 months, microfinance accounted for 16 deals worth at least $245 million, according to Venture Intelligence, a Chennai-based private-equity research service.

The influx of private-equity cash is the latest sign of the global rise of microfinance, pioneered by Bangladeshi economist Muhammad Yunus decades ago. On Wednesday, Mr. Yunus, a 2006 Nobel Peace Prize winner, was one of 16 people honored by President Barack Obama with the Medal of Freedom.

"We've seen a major mission drift in microfinance, from being a social agency first," says Arnab Mukherji, a researcher at the Indian Institute of Management in Bangalore, to being "primarily a lending agency that wants to maximize its profit."

Making loans in poorest India sounds inherently risky. But investors argue that the rural developing world has remained largely insulated from the global economic slump.

International private-equity funds started taking notice of Indian microfinance in March 2007. That's when Sequoia Capital, a venture-capital firm in Silicon Valley, participated in a $11.5 million share offering by SKS Microfinance Ltd. of Hyderabad, India, one of the world's largest microlenders.

"SKS showed the industry how to tap private equity to scale up," said Arun Natarajan of Venture Intelligence.

Numerous deals followed with investors including Boston-based Sandstone Capital, San Francisco-based Valiant Capital, and SVB India Capital Partners, an affiliate of Silicon Valley Bank.

As of last December, there were over 100 microfinance-investment funds globally with total estimated assets under management of $6.5 billion, according to the Consultative Group to Assist the Poor, or CGAP, a research institute hosted at the World Bank.

Over the past year, investors have poured more than $1 billion into the largest microfinance funds managed by companies, a 30% increase. The extra financing will allow the industry to loan out 20% more this year than last, much of it to countries such as the Ukraine, Cambodia and Bosnia, CGAP says.

Here in Ramanagaram, Lalitha Sharma recalls when the first microfinance firm arrived seven years ago. Those were heady times for her fellow slum-dwellers: Money flowed freely. Field agents offered loans to people earning as little as $9 a month.

Ketaki Gokhale/The Wall Street Journal

Ketaki Gokhale/The Wall Street Journal

Lalitha Sharma, top, racked up 10 loans from the many microlenders who have set up shop in her slum over the past few years. Here she helps with her husband's snack stand. Like many of her neighbors in Ramanagaram, India, she can earn about $8 a week, on average, working in the city's silk factories, one of which is shown above.

They came to Ms. Sharma's door, too. She borrowed $126. Under the loan's terms, she said she would use it to finance a small business -- a snack stand she runs with her husband. Many microfinance providers require loans to be used to fund a business.

But Ms. Sharma, a 29-year-old mother of three, acknowledges she lied. "You have to mention a business to get a loan," she says. "There was no other way to get the money." She used it to pay overdue bills and to buy food for her family. Ms. Sharma earns $8 a week, on average, in a factory where she extracts silk thread from cocoons.

Over the next four years, she took nine more loans from three different lenders, in progressively larger sums of $209, $272, $335 and $390, according to lending records reviewed by The Wall Street Journal. A spokesman for BSS Microfinance Private Ltd. of Bangalore, another of her lenders, declined to comment on her borrowing history, citing central-bank privacy rules.

This year, she took another $314 loan to pay for her brother-in-law's wedding, again saying the money would be used for business purposes. She also juggled loans from two other microlenders -- $115, $167 and $251 from the Bangalore lender Ujjivan, and $230 from Asmitha Microfin Ltd.

Ujjivan confirmed it issued three loans. An Asmitha official said he had a record of a loan to a Ramanagaram resident named Lalitha, but at a different address.

"I understand that it is credit, that you have to pay interest, and your debt grows," Ms. Sharma says. "But sometimes the problems we have seem like they can only be solved by taking another loan. One problem solved, another created."

Many of the problems in Indian microlending might sound familiar to students of the U.S. mortgage crisis, which was worsened by so-called "no-documentation" loans and by commission-paid brokers. Similarly in India, microlenders' field officers are often paid on commission, giving them financial incentive to issue more loans, according to Ms. Kamath.

Lenders are aware that applicants often lie on their paperwork, says Ujjivan's founder, Samit Ghosh. In fact, he says, Ujjivan's field staffers often know the real story. But his organization maintained a policy of "relying on the information from the customer, rather than our own market intelligence."

He says that policy will now change because of the trouble in Ramanagaram. The lender will "learn from the situation, so it won't happen again," he says.

It's tough to monitor how borrowers spend their money. Ujjivan used to perform regular "loan utilization checks," but stopped because it was so costly. Now it only checks in with people borrowing more than $310, Mr. Ghosh says.

BSS checks how loans are being spent a week after disbursing the money, and makes random house visits, according to S. Panchakshari, its operations manager. The company doesn't have the power to insist that borrowers not take loans from multiple lenders, he said in an email.

Lenders also tend to set up shop where others have already paved the way, causing saturation. There is a "follow-the-herd mentality," says Mr. Ghosh at Ujjivan. Microlenders "often go into towns where they see one or two others operating. That leaves vast chunks of India underserved, "and then a huge concentration of microfinance in a few areas."

In Ramanagaram district, seven microfinance lenders serve 22,500 women (most microloans go to women because lenders consider them less likely to default than men). Loans outstanding here total $4.4 million, according to the Association of Karnataka Microfinance Institutions, a group of lenders.

Lenders in Ramanagaram say the loan-repayment revolt was instigated in part by Muslim clerics who oppose the empowerment of women through microfinance. Most lenders are still servicing loans to Hindu borrowers, but have stopped issuing fresh loans to Muslims. "We can't do business with Muslims there right now," says Mr. Ghosh. "Nobody wants to take that kind of risk."

The irony is that, for years, Indian microlenders have touted themselves as bankers to the nation's impoverished minority Muslim community, which has long been excluded from the formal banking sector.

A 2006 report commissioned by India's prime minister found that while Muslims represented 13% of India's population, they accounted for only 4.6% of total loans outstanding from public-sector banks.

Islam prohibits the paying of interest, but mosque officials don't cite that as the reason for the loan-payment strike. They stressed the overindebtedness of the community, and the strains it's putting on family life.

Ramanagaram's period of wild borrowing irks some residents, both Hindu and Muslim. Alamelamma, a 28-year-old vegetable seller, says that she has benefited from microfinancing and that the profligate borrowers "have ruined it for the rest of us."

One gully away, Ms. Sharma, the heavy debtor, has a different view: She would like to see the microlenders kicked out of the community entirely. "Not just for now, but forever," she says.

—Rob Copeland contributed to this article.

Tales of Tent City

by Ben Ehrenreich

"This is the bigger picture," said John Kraintz, with a sweep of his arm, indicating the roughly two dozen remaining tents pitched around him on a muddy, pockmarked field between the city dump and the slow green waters of the American River. Kraintz is a thin man of 57, a former electrician who had lived in Sacramento's parks and riverside lots for seven years. His home had been right here--in Tent City.

Kraintz had relocated to Tent City's outer boroughs. Its downtown, which briefly attracted camera crews from all over the world--a Third World shantytown in the capital of the richest state in the richest country!--was a couple of hundred yards away. Depending on whom you ask, somewhere between 150 and 300 people lived in Tent City between November and April. But by the third week in April, when I visited, most had already packed up. Some had migrated to this spot to avoid police attention. But the cops came, handing out notices announcing, "It is unlawful to camp in the City of Sacramento" and giving people two days to leave. ("This is not camping--we're living!" yelled one of Kraintz's neighbors.) By the end of the week, everyone had left. Tent City, for that moment at least, had disappeared.

Few people there, though, doubted that it would be back. Tent City is less a single location than a nomadic but constant phenomenon, a shifting blue-tarped shadow to the glass and steel American metropolis. In good times and bad, Tent City comes and goes, forms and scatters and takes shape again. Despite its momentary dispersal in Sacramento, it is still out there--in Seattle, Portland, Reno, Providence, Fresno, even in the sprawling exurbs of southern California in the small city of Ontario. Tent City existed at the height of the real estate boom too, hidden in plain view, an omen for anyone willing to look.

While recent media accounts portrayed Tent City's incarnations as creatures of the recession--reborn Hoovervilles for the laid off and the foreclosed--shantytowns have been a periodic but permanent feature of American urban life for at least the past two decades. They are what connects us to São Paulo, Lagos and Mumbai, physical manifestations of our growing inequality and societal neglect. Seattle saw its first Tent City in 1990. The area now boasts three, one dating back to 2000, another to 2004. Portland's Tent City ("Dignity Village") has been around since 2001. No one living there, says resident Gaye Reyes, is recently homeless. In California's San Joaquin Valley, the City of Fresno last fall began distributing a $2.3 million settlement to homeless people whose property was destroyed when the city repeatedly razed its Tent City between 2004 and 2006, at the apex of the economic boom.

As early as 1989, dozens of homeless were pitching tents on the precise site of this year's Tent City in Sacramento. They called their community, without irony, "Camp Hope." Since then, other tent cities have sprung up there for a few weeks or months. It's hardly an idyllic spot--no sanitary facilities, few trees, no shelter from the wind or rain--but it's out of sight and a short walk to Loaves and Fishes, a nonprofit that provides free meals and other services.

This latest Tent City was notable mainly for its density, a product of increased enforcement of anti-camping ordinances in the city's parkland, where Sacramento's homeless were once able to spread out unmolested. In November police broke up a camp of more than 100 people on the sidewalk outside the Union Gospel Mission. Police officers instructed them, Tent City residents said, to resettle here. The Sacramento Bee first reported on the newest Tent City in December. Oprah Winfrey sent a correspondent in February. After that, said Tent City resident Danny Valadez, "It went like a cyclone," buzzing with journalists and new arrivals. Most reporters focused exclusively on the few Tent City residents whose predicaments could be linked directly to the economic collapse. "They were all looking for Henry Fonda [in The Grapes of Wrath]," laughs Paul Boden, director of the Western Regional Advocacy Project.

The rise of Tent City, though, says John Foley, director of the nonprofit Sacramento Self-Help Housing, had "almost nothing to do with the recession." But the recession has made poverty visible again, and Tent City tells the grueling backstory to the current recession--nearly thirty years of cuts in social services to the poor and mentally ill, the decimation of the industrial economy and the cruel underside of the housing boom. Kraintz, despite his soil-caked clothes and matted hair, summarized that narrative with more precision than most white-shirted economists can manage: "We've seen falling wages and rising rents. The two finally collided."

The economic collapse has without question pushed people out of their homes. The National Alliance to End Homelessness warns that 1.5 million Americans could be thrown into homelessness over the next two years. In Sacramento, homelessness has jumped 14 percent since 2007, even though the population categorized as "chronically homeless"--the disabled and mentally ill--has fallen by 35 percent. Sacramento was hit particularly hard by the mortgage crisis--the city had the third-highest foreclosure rate in the country in 2007--and folks who have recently seen their incomes disappear are finding themselves with nowhere to turn.

California's ongoing budget crisis hasn't helped. Last year Governor Arnold Schwarzenegger slashed the state's already meager funding for emergency shelters. The year before, he vetoed a $55 million program that would have provided housing for 5,000 people with mental illness. His most recent budget proposal slashes nearly all the services that aid the growing ranks of the poor--cutting eligibility for Social Security and disability and eliminating what's left of the state's welfare system, as well as its entire health insurance program for children. The governor plans to borrow $2 billion from cities and counties, which will mean severely reduced funds on the local level. All of this likely will throw more people onto the streets.

But Tent City, says Joan Burke, advocacy director of Loaves and Fishes, "is the least desirable place to be homeless," and the last place the newly homeless are likely to end up. They stay with friends and relatives until those relationships fray, then in motels, cars and finally shelters. Thus, only a very few of Tent City's inhabitants could pin their plight on the recession.

Karen Hersh, 53, her skin red and peeling from poison oak, attributed the failure of her trucking company to rising fuel prices. She lived in her truck when she lost her home and stayed with friends when she lost her truck. Eventually, Hersh ended up in a shelter--"I didn't like it one bit. They steal from you. They gang up on you"--and finally in Tent City.

Fred and Linda, a Latino couple in their early 50s who preferred to keep their surnames to themselves, have been homeless for a year and a half. Fred worked as a mason until he burned his arm in an accident. He took time off to recover, but "when I went back to work, there wasn't a job for me." Construction had ground to a halt. Linda, a sometime warehouse worker, was out of work too. After they lost their apartment, no landlords would consider them. "If you're not employed," said Linda, "it's no go." They had come to Tent City in the hope that the media attention would mean a better chance of finding housing. So far, it hadn't. But Fred's unemployment payments hadn't run out yet, and the pair had rigged makeshift trailers to their bicycles to tow their belongings. If the police push them out, said Fred, "it ain't no big deal. We have three places we're thinking about."

Most of Tent City's residents, though, have been homeless for years. The original causes of their homelessness--an illness or injury, addiction, some life-shattering tragedy--blurred out in the distant past. "But on a structural, societal level," says Burke, the causes of homelessness are far from hazy: "It's the lack of housing that people can afford."

"I used to be a Republican. I voted for Ronald Reagan," a man who identified himself only as Tom M. told me, laughing. But it was Reagan who in his first year as president halved the budget for public housing. Over the course of his first term, more than half a million people were thrown off the disability rolls. "Until then," says Tim Brown, director of Sacramento County's Ending Chronic Homelessness Initiative, "basically there was no homelessness." Since then, neither the disability nor the housing budget has come close to recovering. Clinton-era welfare reforms cut all but the last remaining threads of the Great Society safety net.

Meanwhile, the real estate boom led to a drastic reduction in affordable housing. Through the 1980s and even into the '90s, says Sacramento Self-Help Housing's Foley, the city had no shortage of housing options for the poor: rooming houses, single-room-occupancy hotels, motel-like labor camps for cannery workers. "Almost all of that's gone," he says, victims of the insatiable housing market. Gone also are the vast majority of the unionized cannery and food processing jobs that for decades made it possible for workers here to become homeowners. Tent City sprawled just across the railroad tracks from one of the few major food processing facilities left in the city: the nonunion Blue Diamond almond plant.

Since 1996, the federal government has budgeted precisely zero dollars for new public housing. The waiting lists in Sacramento for Section 8 and public housing are five digits deep. Between 2001 and '09, however, the monthly income required to rent an "affordable" studio apartment here jumped from $1,025 to $1,433, "and wages have not gone up proportionally," Foley says. Working full time at minimum wage in California gets you just $1,280 a month. "It takes two people to rent an apartment," said Tent City resident Jessica McFarlin, "one to pay the bills and one to pay the rent, if you want to have food."

In Sacramento, some subsidized housing options remain for those with disabilities. "If you're disabled," says Brown, "your chances [of finding housing] aren't too bad in the next year." But as to the swelling ranks who are not disabled but simply can't find work--or who have jobs but still can't make their rent--Brown says, "they're shit out of luck."

For Tom M., the math was simple. He fell out of the corporate world several years ago and lived in his van until January, when he could no longer afford to keep it registered. He is 56, with high blood pressure, a heart condition and, he said, "the mental thing"--he's convinced he's being stalked. "It gets pretty intense sometimes," he said. But he has been unable to qualify for disability, which left him with what little money he could earn recycling cans and a monthly county General Relief check for just over $200.

The day before I met him, Tom M. had left Tent City to apply for subsidized housing. His experience, he said, was typical: "I was in line for hours and never got to see them. There's so many people," he shrugged, "and only so much resources."

In the end, Sacramento dealt with its Tent City with more compassion than can usually be expected. "If they had a great big rug they could sweep us under somewhere, they would," predicted Karen Hersh, and she was right. The broom, fortunately, came in the form of temporary fixes, not arrests. The city scrambled to raise money for forty additional units of subsidized housing (few of which were ready before Tent City was cleared) and fifty additional shelter beds, which quickly filled. Local advocates for the homeless had vowed civil disobedience if any arrests were made, so to avoid an embarrassing confrontation, the city came up with motel vouchers for the last few dozen holdouts. "The bulk of the people," though, said Loaves and Fishes' Joan Burke, "just dispersed to more hidden camps." By April 20, everyone was gone.

No one pretended the problem had been solved. Renting hotel rooms for the homeless, said Steve Maviglio, a spokesman for Mayor Kevin Johnson, "is obviously not sustainable in the long term," particularly with homelessness on the rise. For now, the newly homeless, whose predicaments are directly related to the recession, are not yet desperate enough to camp in blighted fields. They look less like John Kraintz and Tom M. and more like 38-year-old Kysia Bell, a clear-eyed home healthcare worker and mother of two who lost the home she was renting when her landlord fell into foreclosure.

"I didn't know that the owner wasn't paying the mortgage," she said. "We got a note on the door that we had to vacate within two weeks." At the same time, her hours were cut, making it impossible to come up with the deposit for a new apartment. She and her daughters stayed with relatives as long as they could, then with friends and finally in her car until they found beds at St. John's, Sacramento's largest shelter for women and children. Bell was lucky: in 2007, St. John's was forced to turn away about twenty people a day. So far this year, that number is up to 300.

Nearly 400 miles south, in Ontario, California, Tent City hides behind a bureaucratic mask. City officials call it the Temporary Homeless Services Area, or THSA, but until March 2008, it was just Tent City. About nine months earlier, local police began directing everyone they found sleeping in parks and alleys to an empty field near the city's airport. Word got around that you could camp there unharassed, and the new encampment quickly grew.

As in Sacramento, the Ontario Tent City's inhabitants were victims not of the immediate recession but of older, less dramatic economic shifts. Take the white-bearded man who identified himself only as Cowboy. He was a long-distance truck driver until a stroke slurred his speech and paralyzed his right arm. The $900 in veterans' benefits and SSI he receives each month might pay for a small apartment but would leave nothing for food, so Cowboy lived with his mother until she died, then with cousins, then on the streets and finally, at age 57, in Tent City.

In March, after herding the local homeless population to Tent City, police and code enforcement officers descended on the encampment and required its inhabitants to prove they were residents of Ontario. Those who could not--all but 127--were evicted. The city bulldozed and graded the field, erected orderly rows of matching green tents, issued ID cards to those who remained, fenced the encampment and posted a list of rules: no re-entry after 10 pm, no alcohol, no pets, no minors, no visitors. Now private security guards patrol the THSA's perimeters, ejecting anyone who doesn't have permission to be there, including reporters.

None of the Tent City residents I interviewed from just outside the fence complained much. They were fed three meals a day and were otherwise left alone. The rules were infantilizing, but the people largely shrugged them off. Still, more than a third of those permitted to stay in the THSA have left for good. No new arrivals have been admitted. Isaac Jackson, coordinator of the county's Office of Homeless Services, credited Ontario with doing "a great job" of reducing Tent City's population. Neither city nor county officials, though, knew if any of those who have left Tent City have found a better source of shelter than a tent.

It seems unlikely. The federal stimulus package will give California $189 million in homelessness prevention funding and another $100 million in community service block grants that local governments can use for homeless services. The Homeless Emergency Assistance and Rapid Transition to Housing Act, passed in May, authorizes another $2.2 billion nationwide. But as the feds give with one hand, the state takes away with the other, and no one at any level of government is attempting to tackle the systemic roots of homelessness, or to reconsider housing as something more vital to human dignity than market forces allow. For now, Cowboy and his neighbors are unaware of any resources available for more permanent lodging than a tent in a fenced-off field.

In April I asked Brenda Hill, who had been there from the start, if she knew where she'd go if Sacramento closed Tent City. She shook her head sadly. "Nope," she said. "Nowhere."

About Ben Ehrenreich

Ben Ehrenreich, a journalist and novelist based in Los Angeles, is the author of The Suitors.