From Bridges to Hedge Funds

September 06, 2007 by susan
walkers on Mackinac bridge

Susan writes:

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.

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Comments

Anonymous (not verified) | September 7, 2007 - 1:28pm

Nice piece, Susan. I've often thought I'd like to take that Mackinac Bridge walk. But re the Middle Class. Even though most bridges are holding, many of the members of the middle class are slipping off their now precarious perches and falling among the poor as you say. Having run a job center for many years, I've watched the jobs available for middle and lower middle class people providing a living wage slip from those, primarily in industry, to service jobs providing minimum wage or barely above, and no benefits. The service industry keeps its employees working slightly fewer than the 40 hours per week which would require them to provide benefits. Gone are the good jobs at Rustoleum Corp, or Fel-Pro, and Hines Lumber. Instead we have fast food jobs, K-mart clerks, restaurant and hotel "servants." Along with the fading of decent jobs goes the hopes of families who'd planned on their children doing better in life than they did, not worse.
The government must help. Raising the minimum wage is a beginning, but universal health care, better subsidized child care, more affordable housing, better schools and help with college tuitions, cheaper and more available transportation, and regulations for big companies regarding the treatment of their employees must follow. As the huge store chains swallow up smaller businesses that looked out for their workers, they must be held accountable.
Personally, I would also like to see a mandatory National Service program within the USA to help our citizens recognize and try to deal with the huge issues of poverty confronting us in America. Thanks for your blog, Ann

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susan | September 7, 2007 - 2:10pm

Hey, I agree with all you say, what a shock! And that's what I was trying to say in the bridge piece, that the middle class is collapsing along with the bridges. And that the current administration -- and that of future president Fred Thompson (vomit bags for all) -- doesn't give a rap. They'll bail out those at the top, because gubmint help is good for the economy, but neglect those unlucky enough to be on the collapsing bridges, economic or literal, because they might become dependent on gubmint handouts. You know, programs like the GI Bill. Look what an epidemic of needy slackers that created.
So I really did feel that I was walking over America's past -- the ore boats below, the steel cables on top, and the union workers by the thousands streaming over the deck -- and onto a horribly uncertain Wal-Mart sort of future.
Thanks for reading/writing.

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Poet (not verified) | September 8, 2007 - 8:02am

Probably too obvious to mention, but i liked the metaphoric value of your imagery. A bridge is intended to connect those otherwise seperated. A hedge is meant to seperate those otherwise connected. One is a conduit, the other a barrier.

We are moving from a society of bridges (upward economic mobillity, ,multi-ethnic, racial, and religious tolerance) to a society of hedges (gated communities, suburban bedroom community sprawl, increasingly concentrated urban cores for the "beauriful people", and of course ghettos).

As St. Paul gets ready to prostitute itself for the arrival of the Republicans and Denver for the Democrats (it's less than a year away--be very bored!) I came across an echo of a time not too long ago that was also very dangerous ecohnomically but very different in its political orientation.

It was a speech given by FDR at Madison Square Garden less than a week before the 1936 election. As you listen to this master political tactician speak, please note:

1. How many of the issues he addresses then are still relevent today. (there are no new things under the sun!)

2. How clearly, unequivocally, and forcefulkly he makes his arguments. (no need for focus group or "handler" tweeking)

3. How the crowd is hanging on his every word. (during several bursts of applause and cheering groups in the audience start chanting rogether).

The punditry will say that today's Americans are too sophisticatred, too media savy, too "well-educated" to respond to such appeals. If so, what a pity!

The link below will take you to a whiole page of FDR speeches and radio addresses. When you get there, scroll down to the October 31, 1936 speech and give a listen.

http://millercenter.virginia.edu/scripps/digitalarchive/speechDetail/24

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barbara aka babs (not verified) | September 8, 2007 - 8:47am

Susan, there's more than one anonymous. You can tell the difference because one of them spouts thoughtful commentary and the other spews inane garbage from under the bridge.

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susan | September 8, 2007 - 12:21pm

The nice anonymous signed her name -- Ann. I think. And call me crazy, but I have a sister named Ann and . . .

Also, thanks Poet for all of that. I will check out the link. People all think they hate the government, but that's because all they've known for at least the last seven years is hypocritical, lying, inept, corrupt, stinking rotten government. Isn't the goal good government?

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Anonymous (not verified) | September 10, 2007 - 7:31pm

No, that was me. Confused?

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susan | September 10, 2007 - 8:08pm

Yep. Having a name, any name fake or real, would be helpful. But it's up to you. Obviously.

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