Warning: highly digressive post ahead. It starts talking about suburbia

and ends up in the more familiar realm of meta-media. Feel free to dip in and


No posts for the past week – I was away on a work trip to the Midwest.

My days were spent in a cubicle in a bland office building by the side of the

highway; my nights were spent at the Homewood Suites in Chesterfied,

MO. It was an eye-opening view into suburban life in flyover country, and

I learned a lot.

Naturally, the main point of concern was the food situation. My office building

had nothing like a cafeteria: the closest that it comes is vending machines

selling salty and sugary snacks. So one’s lunch options are limited: you

can either bring in your own food from home, or you get in your car and drive

along the highway to the shopping mall, which has a typical shopping-mall food

court. There are a couple of restaurants which are open for lunch as well: I

tried Aquavin, which

despite its name and general nautical theme seemed to have little if any fish

on the menu. Which might be just as well given its location.

If the selection of restaurants in a midwestern suburb is unsurprisingly unexciting,

the selection of foods in a midwestern supermarket is superb. I love US supermarkets

(not the ones in New York, of course), and I think that places like Missouri

might be home to the very best. Schnuck’s,

where I shopped, is by all accounts nothing special by local standards, but

I was very impressed by the fresh food and the wide range of (admittedly nearly

exclusively Californian) wines.

There’s even genuinely local food if you look hard enough: I found a

barbecue place called Smokin’

Al’s where I ordered snoot (that’s pig snout, to you). Crispy,

crunchy, a little bit bitter, very interesting. Great local beer, too.

But the vast majority of anything retail-oriented, from restaurants to shops

to hotels, is part of a national chain. I suppose there must be huge economies

of scale somewhere which allow these chains to make more money than a mom-and-pop

operation might be able to make on their own. But I also suspect that most midwesterners

simply don’t share the New Yorker’s native mistrust of any chain.

Given the choice between Starbucks and a locally-operated coffee shop, they’ll

choose Starbucks because in places like Missouri Starbucks is nearly always

better than the locally-owned coffee shop.

And the Homewood Suites was a revelation: an enormous two-room suite, complete

with two (!) televisions, friendly staff, free breakfast, and even free dinner

(which might not have been very good, but hell, it was free). With

a corporate discount, I paid $79 per night. Normally when I stay in deeply-discounted

hotels, it’s clear that they make money on the extras: room service, spa service,

the minibar, restaurants, bars, internet service, phone calls, that sort of

thing. But the only food service at the Homewood Suites is free, the internet

is free, there is no minibar, and everybody uses their cellphone if they want

to make a call. Even the beer at dinner is free, if confined to Bud and Bud

Light. And there’s certainly no spa, although there is a (free) pool which is

open in the summer. When you pay the bill, it’s the room rate plus taxes: that’s

it. So how they make money off me I have no idea. After all, they have 24-hour

staffing, full maid service, a fully-functional kitchen, the whole bit. No wonder

all the hotels are chains: I just can’t see how any independent hotel could

compete with that.

The Homewood Suites’ amenities also helped me to understand why the broad

mass of Americans always seem to be so ill-informed whenever surveys are done

on what they think they know. The Homewood Suites helpfully provided me with

a copy of USA Today every morning, and I rapidly came to the conclusion that

it’s the only newspaper in the world about which it can be said that reading

it makes you know less than you did before.

I didn’t read much of USA Today: basically just the front page while

wolfing down a quick buffet breakfast before heading off to work. But the weird

thing was that every story I read seemed to be fundamentally wrong. There was

the one which said that the best way to understand the IMF is to think about

it as a global central bank: huh? (And no, IMF was not a misprint for BIS.)

And then there was the lead

front-page story on petrol prices: that was a doozy.

The headline was "Drivers curb use as gas goes up;" the lede was


Americans have cut back gasoline use in apparent response to increasing prices,

separate surveys by the government and a petroleum trade organization showed


But then you looked at the accompanying chart, which showed US gasoline consumption

of 9.1 million barrels per day last year, and, um, 9.1 million barrels per day

now. Not much drop there. Indeed, reading on, we were told that

Gas use last month was 0.6% less than a year ago, the American Petroleum

Institute reported… The U.S. Energy Information Administration (EIA) said

gasoline use the past four weeks was up a slight 0.8% vs.

a year ago.

Yes, up. One survey said consumption was down a little bit, one survey said

consumption was up by a slightly greater amount. And so USA Today leads with

a front-page story saying that gasoline use is down.

We then got this priceless quote, presented without any skepticism:

"If everyone decided to drive 3% less the next 30 days, prices would

crash," says Tom Kloza, senior analyst at the Oil Price Information Service.

‘Cos of course that would be enough to normalise relations with Iran and Saudi

Arabia and Venezuela, and bring full Iraqi capacity back on stream, and create

access to Mexican oil reserves, and basically bring oil back down to $35 a barrel.

I suppose. I have no idea.

And USA Today, I’m afraid, is what passes for news in Chesterfield. This New

Yorker might have made it out there, but The New Yorker certainly doesn’t. When

I was flying out to St Louis from La Guardia on Monday morning I reminded myself

to buy a New Yorker in the airport, but I never got the opportunity. And indeed,

once I got to Chesterfield there was no sign of the New Yorker in the huge magazine

rack at Schnuck’s. More surprisingly, when I went back to St Louis airport

on Friday, the CNBC Newsstand (one would think its sponsor would want to be

seen as delivering up-to-the-minute information) still had the previous week’s

New Yorker on display – the one with the Sy Hersh story that people were

talking about two weeks ago.

I suspect that national distribution of a weekly magazine is a very expensive

business, and that the New Yorker is the only nationally-distributed Condé

Nast weekly, and that its newsstand sales are very low in any case compared

to its subscription sales, and that therefore Condé doesn’t put

much effort or money into getting it to big cities and airports on a timely

basis. Every time I’ve tried to buy the New Yorker outside New York, I

always find a week-old issue for sale. Most distressing.

So instead of being able to read a good magazine on the flight back, I had

to make do with Harper’s instead. The May issue still lists Lewis Lapham

atop the masthead: why does this dreadful man refuse to go away? After the embarassment

of the March issue, which led with a long

essay by one of those nutjobs who refuses to accept that HIV causes AIDS,

one hoped that Roger Hodge, the new editor, would get rid of Lapham and his

atrocious column entirely. But evidently Lapham held on for at least two more

gruesome months. The May issue leads with a bad story bearing a very apocalyptic

headline: The New Road To Serfdom. Subhed: "An Illustrated Guide to the

Coming Real Estate Collapse".

In fact, there’s nothing in the article to make anybody think that housing

prices are going to collapse, and everything to make the reader mistrustful

of what he reads. The first illustration, for instance, shows a big house representing

Mortgage Loans 90%, next to a small box representing all other loans 10%. Do

mortgage loans now really make up 90% of all outstanding loans? Of course not.

The text in fact gives us a different statistic: “Since 2003, mortgages

have made up more than half of the total bank loans in America” –

by which the author, Michael Hudson, means not that mortgages became half of

the total loans in America in 2003 and have stayed at more than half ever since,

but just that mortgages made up more than half of new loans in 2003 and onwards.

This is not surprising. After the stock market collapsed in 2000, US companies

found themselves with wildly unbalanced balance sheets: too much debt and not

enough equity. So they stopped borrowing money from banks. At the same time,

banks discovered that they made much more money from their credit card operations

than they did loaning money directly to their customers, so they stopped loaning

money to consumers. In other words, mortgage loans were pretty much the only

type of loans that banks were still interested in making – so it’s

hardly surprising that they made up an increasing proportion of total loans.

Nowhere does Hudson give us the numbers on total mortgage lending, in dollar

terms, because that would look far less apocalyptic. He does say that total

mortgage debt will surpass national GDP by the end of the decade, but that’s

a silly ratio: GDP is a measure of annual production, while a mortgage lasts

for 30 years. Maybe increase in mortgage debt to GDP would be a useful ratio,

but Hudson doesn’t give us that.

And we still haven’t worked out where the 90% number comes from. Looking

more closely, we’re told that “Mortgages account for 90% of the

net growth in debt since 2000”, in a statistic attributed vaguely enough

to the Federal Reserve.

This could mean anything. On the face of it it simply can’t be true:

think about the total increase in debt by the federal government alone in that

time (Something over $2.5 trillion, according to this

page). If mortgage debt really outpaced the growth in federal government

debt by a factor of nine to one, then some $22.5 trillion in new mortgages would

have to have been written since 2000 – which I’m pretty sure is more than

the value of all US residential real estate combined.

So I suspect that Hudson was being incredibly sneaky, and used some measure

of debt which didn’t increase very much from 2000 to date – one

which excluded the federal government, say. In that time, some types of debt

would have increased in size (mortgages, for instance), while other types would

have decreased (like, say, unsecured personal lines of credit). Then it’s easy

to imagine that the total increase in mortgage lending might be 90% of the total

increase in whatever measure Hudson was looking at. Could that be what he means?

I hope not, because of that box saying that “all other loans” make

up 10% of the increase. But that’s only after subtracting all

the loan types which shrank in size. Hudson would be comparing the gross

increase in mortgage lending to the net increase in all other lending,

which seems very misleading. But since his footnotes are so weak, we have no

idea what the truth is.

In any case, I certainly read nothing in the May issue of Harper’s to make

me regret my decision to cancel my subscription. Roger Hodge, the incoming editor

of Harper’s, said

in New York magazine that magazines like his are "sort of the anti-blogs".

He’s right: all my favourite blogs are much more accountable to their readers,

and much more interesting to read, than anything in Harper’s.

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2 Responses to Chesterfield

  1. David Sucher says:

    And that was a perfect blog post.

    But I am surprised about the NY’r problem.

    It’s been my impression that it’s simply a demographic matter and that anywhere in the USA where you have a mall upscale enough to have a Starbucks (and that’s not very upscale) there will be a drugstore or bookstore etc which will have a fairly decent magazine selection. Moreover, you could get Harper’s. From a mass level, isn’t that the same market as the NY’r?

  2. Wyn says:

    You wrote,

    “The first illustration, for instance, shows a big house representing Mortgage Loans 90%, next to a small box representing all other loans 10%. Do mortgage loans now really make up 90% of all outstanding loans? Of course not. The text in fact gives us a different statistic: “Since 2003, mortgages have made up more than half of the total bank loans in America” — by which the author, Michael Hudson, means not that mortgages became half of the total loans in America in 2003 and have stayed at more than half ever since, but just that mortgages made up more than half of new loans in 2003 and onwards.”

    The data I have in front of me is somewhat different in timing, but isn’t so different from what Michael Hudson reported. I’m looking at Currents and Undercurrents: Changes in the Distribution of Wealth, 1989—2004, dated January 2006, from the Federal Reserve Board, and for 2004, it appears that mortgages on primary residences represents $6.7 trillion out of 8.9 trillion of consumer debt. If you throw in debt on “other residential property,” you’re at $7.4 million, which is 83%. (Installment loans are the next largest category, at about $1 trillion.)

    Take a look at the wealth tables linked from for more detail.

    You’ll also find a couple of other articles by Michael Hudson there.

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