Angry Mortgagees Protesting Bear Stearns Favouritism

Things continue to slip, slide, and shift strangely Out There.

Last Wednesday, a bunch of peeved mortgagees protesting government favoritism in the Bear Stearns case entered the lobby of the company’s (soon-to-be-former) headquarters building in midtown Manhattan. While it might not seem like much, I view the symbolic “penetration” of this corporate stronghold as the very first sign of a much broader citizen revolt against the extraordinary protections being shown to crapped-out investment banker boyz – at the expense of millions of equally crapped-out poor shlubs facing the default and re-po of their McDwelling places.

Occupying an office-building lobby peacefully in broad daylight is one thing. Wait until summer gets underway and The New York Post gossip page resumes its coverage of hijinks in the Hamptons. The executives of Goldman Sachs, J.P. Morgan / Chase, and other dealers in fraudulent securities, plus the art world and show biz glitteratti who party together out there, might all find themselves the object of considerable grievance and resentment as the beaching season ramps up, and the limos roll around the charity lobster roasts, and the guests stray down the lawns, chardonnays in hand, to plot divorce from their over-leveraged husbands…. God knows what seekers-of-vengeance will be creepy-crawling the privet plantings along Gin Lane in the crepuscular gloom, searching for trophy wives to garrote.

Perhaps a bankrupt landscaping contractor from Lake Ronkonkoma, recently stiffed by a hedge fund manager over the installation of a half acre of pachysandra, will be arrested on the Wantagh Highway with blood on his sleeves and a high-C piano wire in his pocket. The non-Hampton precincts of Long Island, which make up more than 90 percent of the fish-shaped appendage to New York State, will be full of angry repo victims, and the Hamptons lie at the very dead-end tail of the geographical fish. Will the banker boyz attempt to flee by yacht? And where might they escape to? Newport, Rhode Island? Labrador?

I maintain, of course, that the media (and the public itself) has no idea how quickly things might get weird in this country – or how weird they might get.

Now bear with me while I shift gears. [Recently,] I went to a pretty major environmental conference put on by the Aspen Institute in their odd little mountain town – and nobody needs to tell me how un-correct it was that I flew all the way out to Denver and then drove a rent-a-car the size of a humpback whale deep into the heart of the Rocky Mountains to attend this thing. (I assure you, I wasn’t paid to go.) The Institute grounds – which looked like the set of a 1950s Raymond Massey movie about the future – were thick with many eminentissimos of Climate Change (minus Al Gore) and activists in “green” politics, more generally. The latest frightful measurements of retreating glaciers, vanishing species, and creeping deserts were proffered and everybody was suitably impressed by the acceleration of scary conditions facing the human race.

Being such a formal conference, though, with the putative mission to advance understanding and set agendas-for-action, a great effort was made through the medium of panel discussions to set forth various “initiatives” to deal with all the scariness, especially by enlisting the agencies of the U.S. government – and most especially with the prospect of a new administration sweeping out the detritus of Bush-dom next January.

I confess I found most of these well-intentioned proposals utterly implausible, along with their trains of hopes, wishes, and fantasies. The main conceit is that we can keep all the normal operations of the American Dream humming by some “non-carbon” related energy source – in other words, run Wal-Mart without oil, methane gas, or coal – and that all the forces of government and capital can be marshaled to make that happen. The secondary conceit is that they would accomplish these things in an orderly process, harnessing “new technology,” as though it were a higher sort of school science fair.

My own opinion is that these birds have the scale issue wrong. The exigencies of the Long Emergency imply that virtually everything organized at the grand scale will tend to wobble and fail as the problems of energy scarcity and climate change converge. Institutions from the federal government to Wal-Mart to the University of Arizona will face increasing impotence, incompetence, and bankruptcy. Vesting our hopes in propping up activities run at that scale is bound to be disappointing, to say the least, and the precursor to social upheaval to go a bit further. There’s probably a lot we can do at the finer and more modest scale, but that is not the scale that conferences like this focus on – in particular because so many of the participants are current or former high-up government wonks themselves. Anyway, the scale of global distress tends, by plain inference, to invoke the wish for global “solutions,” however detached from reality they may be.

At the center of all this conferencing was the movement’s lead eco-guru, Amory Lovins of the Rocky Mountain Institute (RMI), located just up Highway 82 from Aspen. Lovins’s long-running emblematic project with that outfit is something they call the “hyper-car,” a car that gets such supernaturally great mileage that it will save the human race’s threatened Happy Motoring program from extinction. The hyper-car program, which RMI still trumpets to this day, has, of course, the unintended consequence of promoting future car dependency – which is about the last thing that America needs – but that hasn’t prevented RMI from pushing it. Beyond that, Lovins’s RMI program-for-America resembles an actuarial exercise in “carbon credits” and other statistics-based fantasies aimed at inducing theoretically rational behavior among the Wal-Mart executives (and “greening” up Wal-Mart has been another of RMI’s consulting projects – I’m not kidding).

Here lies my third dissent from what I heard at the conference: since America is bankrupting itself so comprehensively at every level, the wished-for “funding” for the green rescue program will not be there in any case. Capital, as represented by Wall Street, is itself flying to pieces this year as its stock-in-trade of paper certificates loses legitimacy in the face of the overwhelming fact that the society behind that paper will be decreasingly capable of producing surplus wealth – which is what capital is. The unwind of “positions” now underway among the big bankz is the process of previously anticipated capital accumulation vanishing down a black hole. It will be gone forever.

This is the year we find that out. Bear Stearns was not the only sick puppy in the kennel. When another one wobbles and crashes, will the Federal Reserve step in again and accept its worthless CDO paper as collateral on another $30 billion loan, and another, and another, and so on? And will the individual mortgage default homeowner shlubs just watch all this go down on CNBC without any action beyond “penetrating” the lobby of a Manhattan skyscraper? I don’t think so. What goes down in the Hamptons will go down in Aspen, too.


James Howard Kunstler
for Markets and Money

James Howard Kunstler
(born 1948) is an American author, social critic, and blogger who is perhaps best known for his book The Geography of Nowhere, a history of suburbia and urban development in the United States. He is prominently featured in the peak oil documentary, The End of Suburbia, widely circulated on the internet. In his most recent book, The Long Emergency (2005), he argues that declining oil production is likely to result in the end of industrialized society and force Americans to live in localized, agrarian communities.
James Howard Kunstler

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7 Comments on "Angry Mortgagees Protesting Bear Stearns Favouritism"

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Great article James.

I think it would be a good time for everyone to read or reread, “The Grapes of Wrath”.

Coffee Addict

James Kunstler’s article pretty much sums up Australia’s situation as well – except that:
1) Privet is a designated noxious weed in most states (a bit like the guests at a celebrity party) ;and
2) ANZ is starting to behave like the local version of Bear Sterns.

In Australia, we should of course be running vehicles on CNG and building a more effective public transport systems but no one is interested.


I heard on the radio today that the number of migratory birds visiting Australian shores has decreased by 73% in the last 20 years.


Invest in calories.


Sounds like a Gurdjieff styled wit about some mess the silly people have gotten themselves in again. Always true.

gilles o.
Great article, though a bit provocative. More often than not, these shortcuts have an influence on social behavior. There is obviously a recession in the US traditional faith vis-a-vis the quality of their political organisation and regulation, but this could prove to be only a starting point: 1. The major environmental issues are still to come, and they will come sooner than later. The planning issue is of critical importance in this change. Democracy as a thought model consumes a lot of time and energy. Confronted to major crisis, this model will be show some limits, and public opinion will… Read more »

isn’t it wonderful and at the same time so sad that those of us who have advocated less government,less taxes and a sound currency have been proven right by the most rigorous master, time?


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