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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Hard Times

So: you think you have it tough with your adjustable-rate mortgage, your credit card balances, your skyrocketing health insurance premiums, and those neat little notes in your pay envelope threatening layoffs? Thanks to Vanity Fair’s Michael Shnayerson, we can now all feel better by feeling the pain of the former Masters of the Universe on Wall Street, who have lost far more than the rest of us will ever have.
Focusing especially on the big wheels of the now-defunct Lehman Brothers, Shnayerson provides a lot of snarkily delicious details about the painful lifestyle adjustments of the newly defunded:

Only months ago, ordering that $1,950 bottle of 2003 Screaming Eagle Cabernet Sauvignon at Craft restaurant or the $26-per-ounce Wagyu beef at Nobu, or sliding into Masa for the $600 prix fixe dinner (not including tax, tip, or drinks), was a way of life for many Wall Street investment bankers. “The culture was that if you didn’t spend extravagantly you’d be ridiculed at work,” says a former Lehmanite. But that was when there were investment banks. Now many bankers, along with discovering $15 bottles of wine, are finding other ways to cut back—if not out of necessity, then from collective guilt and fear: the fitness trainer from three times a week to once a week; the haircut and highlights every eight weeks instead of every five. One prominent “hedgie” recently flew to China for business—but not on a private plane, as before. “Why should I pay $250,000 for a private plane,” he said to a friend, “when I can pay $20,000 to fly commercial first class?”
The new thriftiness takes a bit of getting used to. “I was at the Food Emporium in Bedford [in Westchester County] yesterday, using my Food Emporium discount card,” recounts one Greenwich woman. “The well-dressed wife of a Wall Street guy was standing behind me. She asked me how to get one. Then she said, ‘Have you ever used coupons?’ I said, ‘Sure, maybe not lately, but sure.’ She said, ‘It’s all the rage now—where do you get them?’”

There are thousands of words more about the real estate crisis in Manhattan and the Hamptons, and the personal sagas of Lehman potentates who borrowed heavily against suddenly worthless stock compensation. And there’s even a poignant passage about the shadow being cast on the Xmas festivities of the newly not-so-rich:

Usually, December is the year’s most festive time in New York. Wall Street bankers either have their bonuses or know what they will be. Their wives have bought new gowns for the season’s charity balls—the Metropolitan Museum’s acquisition-fund benefit and the New York Botanical Garden’s Winter Wonderland Ball, and more, at ticket prices ranging from $400 to $15,000. Then it’s off to St. Barth’s for sun worshippers, Aspen for skiers.
But not this year.
Privately, some New York benefit organizers wonder if even half the stalwarts will show up. On St. Barth’s, rental villas are usually booked by early fall; this year, many were available as of early November. At Aspen’s St. Regis hotel, Christmas week was still available, at $13,920 for two.

And so the pain spreads from New York to Colorado and even to St. Barth’s.
There’s some rough justice in the fact that those who leveraged the entire U.S. economy into unsustainable debt also leveraged themselves into trouble, however manageable by most standards. But the real lesson to be learned, for the umpteenth time, is about the fatuity of the hardy American myth, born of a sort of corrupted Calvinism, that personal success is a sign of personal virtue or even of divine favor. As former Rep. Dick Gephardt once inelegantly but accurately put it: “A market is not a morality.” And unregulated capitalism does not create some sort of natural aristocracy of merit.

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