On Labor Day I walked across the Mackinac Bridge, a five-mile engineering wonder that connects lower Michigan to the Upper Peninsula, and spans the west end of the Straits of Mackinac, where Lake Michigan joins Lake Huron. I was with about 60,000 sturdy Michiganders, some of whom have been doing this since the bridge opened in 1957. It's a Michigan tradition, spawning other bridge walks all over the state, some on dinky little spans over drainage ditches, others on state highway bridges like the one that collapsed into the Mississippi in Minneapolis on August 1. We kept that thought to ourselves.
But it being Labor Day, and the bridge having been built by laborers, and with many walkers proudly sporting labor union T-shirts, and with the steel-mill bound ore boats passing below, I couldn’t help thinking about how the middle class has been left to crumble along with America’s infrastructure.
Read on, hedge funds ahead.
Lately, the New York Times and other MSM have been running photo essays of families being evicted from their homes for falling behind on their mortgage payments. Some of them are older people who were coaxed into re-financing by disreputable mortgage brokers and are losing homes they’ve lived in for over 20 years. Others are young families just starting out, the subprime borrowers who were irresponsibly lured into home ownership with offers of no-money down and 0% finance charges -- but monthly payments that they couldn’t reliably meet.
Now we all know that it takes two in this game, and the buyers were naïve or over-reaching, but that’s just who the subprime lenders and brokers were looking for. The buyers were motivated by a desire to get a leg up, to own a piece of the American dream, but the sellers, particularly the hedge-fund billionaires at the winning end of this Ponzi scheme, were motivated by greed.
I know this is a gross simplification of how it all went down, but it’s close enough. And it’s times like these when I sorely miss Paul Wellstone’s voice in the well of the Senate, decrying a society that allows people to be treated this way.
Because part two of this mess is the role of the government that free-market conservatives so detest.
I know lots of wonderful people with lots of wonderful dollars and I also know lots of them who are plain nasty. So when Katrina flooded 40 square miles of New Orleans, the nasty ones sent emails around about how the good (white) people of Fargo, when flattened by a blizzard, got up on their feet in no time flat, so what’s wrong with all those lazy (black) people of New Orleans? Years of welfare and government dependency, that’s what. Harumph.
They failed to mention years of government farm subsidies that prop up unsustainable farming practices on the Dakota plains, or more to the point, that as destructive as blizzards can be, they’re no match for what Katrina did to the city of New Orleans and the whole southern delta.
But the real howler here is how those same people who griped about government assistance for hurricane survivors are now looking the other way as the government, in this case the Federal Reserve, bails out the subprime lenders and hedge-fund gamblers who made such lousy bets.
But Bush and his government-drowning ilk are unwilling to say just what, if anything, the government will do for those who are losing their homes in record numbers. They made bad choices; they should live with the consequences. As for those guys at the top? Well, the Fed floods the market with money and bails them out because the whole economy depends on them.
Not really, as James Surowiecki writes in the August 27 New Yorker. “Bailing out hedge-fund managers was great for Wall Street, but it may not have been such a good deal for Main Street,” he writes, noting that much of what happens on Wall Street consists of “ the shuffling of assets among various well-heeled players, rather than anything that’s fundamental to the smooth functioning of the U.S. economy.
“Cutting the discount rate,” he continues, “is not going to help subprime borrowers get new loans, nor will it get the housing market moving again. What it will do is reassure investors and save some money managers from well-deserved oblivion. . . . But there is something unseemly about watching the avatars of free-market capitalism rely on the government to pay for their bad bets. And there is something scary about contemplating the even bigger bets they’ll make in the future if they know that the Fed is there to bail them out.”
Remember the thigh-slapper of a joke that Ronald Reagan loved to tell? That the two scariest phrases you can hear are, “I’m from the government and I’m here to help.” Har har har.
Well, apparently it’s not as scary as “well-deserved oblivion.” But if you're losing your home and your dreams and slipping back into poverty, that's not so scary. And you sure don't want the government coming around to lend a hand.
I don't know if this relates in any way to the bridge walk, other than that I felt thousands of footsteps of middle class America on the bridge that day, trudging over a suspended arc built of steel, built with American muscle and know-how. And for all the glimmering beauty and joy of the day, I felt that somehow we were walking over America's industrial past, into something unknown and -- scary.
So I'm one shaky American who's hoping to find government, good government that is, there on the other side to greet us.