Real World Economics: Banking, investment are great but need regulation

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Edward Lotterman

Need some last-minute gifts but unsure what to buy?  Well, cases of tuna and Spam are good, dry rice and beans, matches, maybe a 50-pound sack of flour – don’t forget a pound of yeast. Oh, and maybe Sterno cans for stocking stuffers.

What’s the emergency, you ask?  Well, our president just told us the economy is in fine fettle, Everything would be hunky dory if not for Joe Biden. And recent headlines like “Treasury Secretary Bessent calls for looser regulations for the U.S. financial system” should strike fear into every heart. Anytime our nation’s top economic officials brag about how things are going and how the rules should be reduced, things soon go south.

There are historical precedents.

Alan Greenspan was similarly sunny in his sermonizing memoir, “The Age of Turbulence,” released on Sept. 17, 2007. In it, he waxed lyrical about how financial derivatives such as options, swaps, repos and reverse repos together with new credit default swaps would bring unprecedented stability and efficiency to financial markets. Uncertainty would be reduced, he argued, and risk would be assumed by those best able to handle it and the economy would grow briskly.

The Sept. 17 date was bitterly ironic because just a month earlier the European Central Bank had been forced to pump about $130 billion into short-term credit markets over one night. The U.S. Fed put in something around $55 billion. Its policymaking Open-Market Committee held two emergency teleconference meetings in a week with an unprecedented sharp division between the seven governors and the five district bank presidents.

From there, problems in markets for derivative securities worsened. Major investment bank Bear Stearns failed eight months later.  Greenspan’s publishers hurriedly rushed out an edition “with a new chapter on the current credit crisis, but his lyrical odes to derivatives, along with his successor Ben Bernanke’s statement that problems would be “well contained” will go down in the pantheon of cluelessness. When Lehman Brothers went bust on Sept. 15, 2008, exactly a year after Greenspan’s ode to unfettered financial jerry-rigging, the Fed was forced to launch an unprecedent bailout of financial markets. The aftereffects still plague our society today.

Such blindness was nothing new. Even though both President Herbert Hoover and Treasury Secretary Andrew Mellon had private qualms about the meteoric rise in stock prices in 1929, both issued statements describing “a great revival of prosperity” being ‘just around the corner” once the collapse began.

Moreover, one can dredge up similar blandishments by officials as crises unfolded in 1920-21, 1907 and 1873.  Moreover, in the 1980s and 1990s, as we progressively demolished decades-old government regulation of banking and financial markets, officials and politicians told us such deregulation would unleash economic growth.

Yet reality is that such promises were moonshine. The last two decades have had the poorest growth since 1940. And, leaving out WWII output boom years, inflation-adjusted growth of output from 1950 through 2000 averaged 3.7% a year, Since 2000, despite relatively deregulated financial markets and tax cuts for high earners in 2001, 2003, 2017 and 2025, annual output growth has been only 2.1% a year. Thus, despite Bessent’s cheery promises, the historical record of the stimulative effects of financial de-regulation has not proved out.

What does this all have to do with the gloom and doom predicted above?

— The answer is that financial markets have become both more complex and more opaque in this century.  Relative to overall complexity and the number of new financial institutions and financial instruments, government supervision and regulation of financial markets has shrunk.

— In successive steps after the 2007-09 collateralized debt debacle and the 2020-22 COVID-19 crisis, the Federal Reserve has increased the size of the money supply relative to output to the highest level since its inception in 1914.  More technical measures of the increase in liquidity such as the “monetary base” and “Factors Affecting Reserve Balances of Depository Institutions” tell the same story.  The textbook prediction of a rapidly increased money supply is that prices will go up. The emphasis is on inflation consumer and producer prices. That did occurr from 2020 into 2023, only not at a level historically commensurate with the increase in money.

— If, instead, one looks at prices of housing, farmland and financial assets, including stocks, cryptocurrencies and hedge funds, there has been an enormous runup in prices. Irving Fisher, a great economist a century ago, warned that inflation in asset values rather than goods-and-services prices was possible. Yet that has gotten little attention in contemporary economics. It is hard to read financial news over the last couple of years without concluding that a financial bubble mentality has set in for many.

— History shows that very rapid run-ups in real estate, stock and investment fund values seldom unwind in a gradual or orderly manner. There is no reason to expect things to be any different in the next year or two or three.

— All of this is taking place against a backdrop of exponential grown in federal deficits and debt manifesting itself into huge monthly borrowings. We are borrowing $1 trillion in additional debt every 60 days and we have to roll over at least $6 trillion in existing bonds that mature this year. The wolf has finally come after decades of warnings. I have slides from presentations I made on deficit and debt problems when I still worked at the Minneapolis Fed, a position I left in 1999. Former Treasury Secretary Peter Peterson was loudly banging that drum by the mid-1990s. Boston University’s Lawrence Kotlikoff and many other economists have been consistent voices, even if apparently in the wilderness. Why does this matter? Because in case of a full-blown financial crisis as in 1930-33 or 2007-09, the ability of the Treasury and Federal Reserve to act is circumscribed by these institutions already being tapped out.

— There are new and very imperfectly understood financial instruments.  Cryptocurrencies are one. Regardless of their long-term functioning in economies, recent years show all the land-office-rush mentality of a classic bubble. And then there is “private credit” and “private equity,” new and largely unregulated financial intermediaries whose size and potential for explosions are not apparent.

— Just as warnings about the wolf of federal debt finally coming, so is that of Fed bailouts, not just of failing financial institutions but of entire markets. It’s a shame, but broad-ranging reactions after 2008 to a problem it was partially responsible for creating has negative outcomes that will become apparent in the next bust. The Fed took actions that stretched its statutory powers, lending enormous sums in ways that would have flabbergasted economists and Fed officers prior to 2005. A genie got out of the bottle and has not yet been forced back in.

St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.

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Other voices: Hegseth and ‘Zombie Reaganism’

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You almost have to admire Defense Secretary Pete Hegseth taking the stage at the Ronald Reagan presidential library and immediately opening fire. “Most who invoke Ronald Reagan’s name today, especially self-styled Republican hawks, are not much like Ronald Reagan,” he said. “Donald Trump is the true and rightful heir of Ronald Reagan.” Who says the Gipper is irrelevant in Republican politics?

Mr. Hegseth aimed to locate the Trump project in Reagan’s mantra of peace through strength, and their slogans are the same. But the history of Reagan’s success is worth recalling as Mr. Hegseth accuses others of besmirching the 40th President’s legacy. Reagan rebuilt the U.S. military but also took political risk to negotiate with communists to win the Cold War, and Mr. Hegseth says President Trump is rerunning that playbook.

That doesn’t get the Reagan history right. Reagan negotiated from strength because he first built up that strength, both military and economic. He deployed midrange nuclear missiles in Europe despite ferocious Soviet opposition. The Soviets tried to break the U.S. alliance with Europe, and they only turned to serious negotiating when they concluded they couldn’t compete with the U.S.

Today the U.S. faces two nuclear peer adversaries, China and Russia, both global and ideologically hostile powers like the Soviet Union. And they are working together. Mr. Trump is so far making concessions to both and is spending less on defense as a share of the economy than Jimmy Carter did in 1979.

Mr. Hegseth said the defense budget is going up. “My kids and yours will someday talk about the Trump buildup,” he said. We’re ready to help the President make the case, and his one-time cash infusion in this year’s Republican budget bill was a start. But now what? Mr. Trump’s fiscal 2026 budget proposed a defense cut after inflation.

The defense secretary is right that Reagan hesitated to use military force abroad. But then Mr. Hegseth revived Reagan Defense Secretary Cap Weinberger’s test for U.S. intervention abroad. That doctrine prescribes force only as a last resort for a vital interest, and only if it’s popular, among other requirements. “This is sound stuff,” Mr. Hegseth said.

But Reagan and his administration never fully accepted those tenets. Bill Safire, the conservative columnist, described the doctrine in the New York Times at the time as “only the fun wars” and a vow not to defend ourselves until the stakes are dire. As Safire put it: “Our tradition has been to accept risks for a just cause.”

That point matters because you can’t reduce Reaganism to “out with utopian idealism, in with hard-nosed realism,” as Mr. Hegseth averred. The Reagan grand strategy blended idealism with realism — naming an evil empire, while arming even unpalatable enemies of communism across the world.

The Chinese Communists may not be fomenting revolution abroad the way the Soviets did — for now — but their ambitions are still to become the pre-eminent global power, and Vladimir Putin is their junior partner. Mr. Trump casually said recently that Ukraine is losing its war, but Reagan would understand that Ukraine’s defeat would be a loss for the West that makes the U.S. less secure.

Mr. Hegseth’s lines that the “unipolar moment” of American primacy “is over” and talk about “respecting” China’s massive military build-up — designed to defeat U.S. forces — is a call for detente. But Reagan rejected detente with the Soviets in the 1970s. He rejected the view, common at the time, that the best the U.S. could do was negotiate a balance of power. This also may not be the best week for Mr. Hegseth to denounce “globalism” as the Trump Team argues that America can trust Beijing with Nvidia ’s advanced AI chips.

Mr. Trump has made several policy choices worthy of Reagan, notably his Golden Dome homeland missile shield and enforcing his word that Iran can’t have a nuclear weapon. Both presidents evince a genuine hatred of nuclear weapons and the awful human cost of war. President Trump carries an instinct for U.S. primacy in the world, albeit without Reagan’s decades of arguments about freedom and the virtues of free societies.

America’s enemies are doubtless pleased that Mr. Hegseth is so focused on settling scores about the Iraq War and firing inside the GOP tent. But if there’s a silver lining to his historical rewrite, it’s that the Trump team understands that Reagan’s legacy is important to embrace. Some in the MAGA coalition have dismissed this as “Zombie Reaganism” and claim that the U.S. would be better off if Pat Buchanan’s isolationism had prevailed.

Don’t believe it. The Administration is associating with Reagan because Republican voters still see themselves in his tradition and coalition. Mr. Trump knows who is the standard bearer for Republican electoral and strategic success. We wish his policies were as similar to Reagan’s as his slogan.

— The Wall Street Journal

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Vikings at Giants: What to know ahead of Week 16 matchup

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What to know when the Vikings travel to play the New York Giants on Sunday afternoon:

Vikings at Giants
When: noon Sunday
Where: MetLife Stadium
TV: FOX / KMSP-Channel 9
Radio: KFAN
Line: Vikings -2.5
Over/Under: 43.5

Keys for the Vikings

— There have been signs of growth from quarterback J.J. McCarthy over the past couple of games. Though some of that improvement can be chalked up to the opponent — Washington Commanders, Dallas Cowboys — it’s also been a byproduct of the Vikings sticking to the run game. That has taken some of the pressure off McCarthy while setting up deep shots down the field. It needs to be more of the same from the Vikings against the Giants. They must fully commit to running the ball, even if they struggle to generate explosive plays in the process.

Keys for the Giants

— It’s of the utmost importance that rookie quarterback Jaxson Dart takes care of the ball if the Giants want to have a chance to beat the Vikings. That could be easier said than done against defensive coordinator Brian Flores. There are going to be a bunch of exotic looks for Dart to sift through at the line of scrimmage. Will he get rattled in the heat of battle? The answer to that question could be the difference between the Giants winning or losing the game.

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Roger Barr’s annual holiday story: ‘Secret Santa Christmas’

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St. Paul author Roger Barr continues a more-than-25-year Christmas story tradition with “Christmas Longings.” 

Author Roger Barr (Courtesy of Brad Stauffer)

The series began with “The Last Christmas,” which was published by the Villager newspaper in 1997, Barr says. With the exception of 1998, there had been a new Bartholomew story in the Villager every year until 2020, when the tradition moved to the Pioneer Press. 

Thanksgiving weekend had been busy for the Bartholomew family, Matt thought as they gathered in the living room. On Thanksgiving Day, he and Deidre, son Christopher and daughter Allison and her fiancé, Erik, had enjoyed a traditional holiday dinner at home. On Friday, while the others took in a movie, Matt had set up the 50 life-sized, lifelike creche figures in the front yard, positioned the spotlights and footlights to illuminate the scene and set up the food donation barrels. On Saturday afternoon, the extended Bartholomew family — Matt’s siblings, their spouses, children and grandchildren — had gathered here at the home the siblings grew up in for the annual potluck supper and creche lighting ceremony. Honoring Deidre’s “No Politics” posters, everyone had avoided politics, save for the occasional comment about the state of the economy and how divided the country remained.

Now, after an early Sunday supper, before Matt drove the three kids to the airport so Allison and Erik could fly back to Washington, D.C., and Christopher back to San Francisco, it was time to draw names for Secret Santa. A 20-year tradition, Secret Santa’s rules were simple: each family member drew a name from a hat, kept it secret and on Christmas Eve gave that person a gift that cost no money.

Allison wrote their names on identical slips of paper and dropped them into her rainbow stocking cap, which she raised above her head.

“Who’s first?” she asked.

“Wait!” Christopher interrupted, “Before we draw, I wanna say something. Every year we talk about cutting back on Christmas presents but we never do. How about if we really do it this year? I’m serious. None of us really needs anything.”

Allison lowered her stocking cap. “What are you suggesting?”

“It’s rough out there. People are suffering. Who knows what’s going to happen? I think we should give the money we’d normally spend on presents to some organization we believe in, or someone who really needs it.”

For a long moment, no one offered an opinion.

“Well?” Christopher pressed.

“It’s a noble idea,” Allison said.

Noble idea, Matt thought. Noncommittal.

“Christmas morning would look pretty strange with nothing under the Christmas tree, no presents to open,” Deidre observed.

“I thought about that,” Chris said. “How about we just extend Secret Santa to everyone? Instead of drawing just one name, let’s all give each other gifts using Secret Santa rules—in other words, gifts that cost no money. Instead of having Secret Santa on Christmas Eve like always, we do it Christmas morning. Everyone would have four gifts to open. We always say that Secret Santa gifts are our favorite gifts every year. It’ll be four times the fun and still feel like Christmas. The creche is already on display; Mom will decorate inside. She’s already playing Christmas music. We’ll have Christmas Eve dinner and go to church just like always. On Christmas morning, we can open our Secret Santa gifts.”

“You’ve put some thought into this,” Deidre said.

“I have. I want to do something!”

“I like it.”  Allison glanced at Erik who nodded. “We’re in.”

“If it’s what you kids want to do,” Matt said. “It’s okay with me.”

“OK,” Deidre agreed. “Let’s do it.”

“Any ideas on where the money should go?” Matt asked.

“We don’t need to decide that tonight,” Chris said.

“We could give it to Open Cupboard,” Matt said. “Handyman says food prices are up, donations are down and demand is sky high.”

“We could,” Chris agreed, “but you’re already collecting food donations from creche visitors and I know you supplement that with a monthly check. Something will come up. We’ll know it when we see it.”

***

Home from the airport run, Matt inspected the creche figures before calling it a night. In the garage, he disarmed the security system so he could walk freely among the figures. One by one, he inspected the Holy Family, the cow and donkey in the stable, the Wise Men and their camels, the multitude of hovering angels and, finally, the shepherds and their flock. As he worked, Chris’s words haunted him.  People are suffering. Who knows what’s going to happen? He walked down to the boulevard sidewalk to view the scene as if he were a visitor. In the theatrical lighting, the reverent figures always filled him with a sense of awe. He rested his hands on the split rail fence and recited the tenet by which he lived: “I have faith in the possibilities that lie before us.” He waited for the embrace of spiritual assurance those words always gave him, but the feeling remained elusive. The possibilities that lay before them, he had to admit, seemed few and grim.

Last Christmas season, opposing sides of a divided America had been hunkered down in their ideological trenches, just like in 1914 when British and German soldiers occupied opposing trenches along the Western Front, separated by No Man’s Land. On Christmas Eve of that year, weary soldiers from both sides had ventured into No Man’s Land to exchange food and small gifts. As 1915 began, trench warfare had resumed, lasting all year. As Christmas approached, both British and German artillery had shelled No Man’s Land to keep soldiers in their trenches and thwart any unofficial overtures toward peace.

This Christmas, Matt thought, felt just like 1915 on the Western Front. The only thing both sides agreed upon was that it was the other side’s fault. Leaders on both sides of the ideological divide hurled insults, charges and accusations like cannon shot. People were numb, as if the constant ideological shelling was something normal. No one seemed willing to risk stepping out into No Man’s Land to make overtures towards solutions acceptable to all.

His eyes fell on the shepherds and their flock. What was wrong with people anyway?  Were they all just sheep, allowing their leaders to herd them blindly toward . . . what? Who knew what would happen? What could they do?

Matt checked the food donation barrels at the end of the driveway. They were still nearly empty. It’s early in the season, he reasoned. But he worried that under economic stress people would not be generous this year.

*****

Every Monday morning, Matt had breakfast with his friends Handyman, who ran Open Cupboard, and Carter, a retired police officer. Today, they were meeting downtown at Mickey’s Diner.  At the Seventh and Fifth Streets intersection, Matt stopped for a red light behind a white van. Just ahead on his left, a man and woman, bundled heavily against the cold, stood on the meridian. Each wore a red Santa hat trimmed with white fur and pompom. The man held a homemade sign. The woman held a bundle against her shoulder. The van rolled forward when the man stepped toward it, extending his sign. Avoiding the couples’ eyes, Matt read the crude black letters, barely legible against the brown background: LOST FEDERAL JOB! PLEASE HELP. He suddenly realized that the woman’s bundle was also wearing a Santa hat.

Normally, Matt drove by such pleas for assistance, preferring to support the needy through Open Cupboard, but the sight of a baby wearing a Santa hat out in the cold tugged at his heartstrings. Who were they? What happened? Did they have enough to eat? Did they have a place to stay? He reached for his wallet, conscious that the light had turned green. He pulled out a twenty, tapped his horn and rolled down his window. The man stepped forward and reached for the bill, mouthing a thank you. The light turned yellow, then red. Behind Matt, a horn blared a sustained blast to express the driver’s annoyance at having to wait through the light again. The light changed to green. Before Matt could move, the car behind him shot past him on the right. The driver flashed an obscene gesture as he sped away.

Handyman and Carter were sipping their coffee when Matt slid into a seat. As the server poured his coffee, he told them about the family and the angry motorist.

“Well, at least they’ll have something to eat tonight, thanks to you,” Handyman said.

“That motorist,” Carter sniffed. “I’ll tell you, these days I’m glad I’m not walking a beat. When things in Washington, D.C., get crazy, it trickles down. I’ve seen it before. People get angry, blow up over the littlest things, because they can’t do anything about the big things that are really bothering them. You never know these days when someone’s gonna explode.”

Matt told them about Christmas along the Western Front in 1915. “It’s just like 1915. Everybody’s pinned in the trenches, afraid to come out. Nobody knows what to do.”

“Oh, we know what to do,” Handyman countered. “People just don’t have the power to do it. Until leaders on both sides of the aisle put people above politics, nothing’s gonna change.”

“So what do we do?” Matt asked, “Besides stand around like a bunch of sheep!”

“What we do is take care of each other as best we can.” Handyman said. “Like you did with your twenty.”

“They needed more than a twenty,” Matt said.

“Every bit helps,” Handyman said.

“I’ll drink to that!” Carter raised his coffee mug.

On the way home, Matt drove through the intersection again, but the family was gone. He was still thinking about the family when he arrived home.

“How was breakfast?” Deidre asked.

“Fine.”

“Did I hear a silent ‘but’ behind that word ‘fine’?”

“I saw this family downtown. A man, a woman and a baby. They were panhandlers.”

“Panhandlers,” Deidre echoed. “Ugly term.”

“I don’t know how else to describe them.” He reached for his phone and checked an online thesaurus. “Synonyms for panhandler: ‘vagrant, vagabond, ne’er-do-well, moocher, deadbeat.’”

“We do take a dim view of people in need asking for help,” Deidre agreed.

Matt nodded. “Anyway, all three were wearing Santa hats. The man’s sign said he’d lost his federal job. The Santa hats are what did it. I gave them a twenty.  I wish, now, I’d been more generous. I drove through that intersection on the way home, but they were gone.”

“Every little bit helps,” Deidre said.

“That’s what Handyman said. But—” He shook his head.

“What?”

“I just . . . here we sit safe in our comfortable home. We congratulate ourselves because we collect a little food for the needy. We can weather shifts in the economy, but what about people living paycheck to paycheck? People like this man, who lost his job and is on the street begging for money. At Christmas! I hate even the thought that this baby might spend its first Christmas on the street, let alone the reality of it. It’s a family decision, but if it was up to me, I’d give them our Christmas money. Chris said we’d know it when we saw it. Well, I saw it.

“A baby,” Deidre said, “You’ve convinced me. Why don’t you text the kids on the family text?”

Matt composed a lengthy text describing the couple, the man’s sign, the baby and the Santa hats, finishing with “If I can locate this family, could we give them our Christmas money?”

Allison’s answer arrived almost immediately. “Love the idea! We could be Secret Santa for them!”

An hour passed before Chris replied. “Was in a meeting. Sounds like they really need the money. I’m in if you can find them.”

Matt was excited by the possibility that lay before them. If only he could find the family. Like Handyman said, people needed to take care of each other.

***

Where to start looking? He knew nothing about them. Would he even recognize them without their Santa hats? He tried to picture them in his mind. The man and woman were about 30. The man wore a black beard. Black hair extended beneath the woman’s Santa hat. Did they have possessions with them? He couldn’t remember; it had all happened so quickly.

Shelters for the homeless seemed a good place to start. Handyman, a social worker by trade, would have a list of shelters. At breakfast, he’d said he was working remotely today, so he would be at Open Cupboard. Matt loaded the food donations into the back of his SUV and drove over to the food shelf.

Open Cupboard was housed in the double garage behind Handyman’s house. Matt parked on the apron. A handmade sign on the service door warned patrons to “Watch out for the ice!” Inside, six rows of shelves held canned goods and nonperishables, arranged by ethnicity. Along one wall, a cooler housed milk, eggs and, when available, fresh produce. On one wall, red letters spelling out “Merry Christmas” hung in an arc in front of posters reading “Black Lives Matter” and “Can’t We All Just Get Along?” Under the holiday greeting stood a Christmas tree, decorated with candy canes, there for the taking.

Handyman greeted him from his desk. Matt explained that he wanted to find the family wearing Santa hats. “Do you have a list of shelters?”

“I do,” Handyman said, “But be forewarned: staff members won’t tell you who’s staying there. Safety reasons. You can leave a message that staff may or may not give the family. If they come in.” He tapped the keys of his laptop. The printer on his desk came to life. “There you go.”

Matt stocked the shelves with the food he had brought in. Too often these days, there were empty spaces on the shelves. As he was finishing, a young Latino man entered through the service door. He looked around apprehensively.

“Can I help you?” Handyman asked.

“I heard I could get food here.”

“You heard correctly, my friend.”

“Do I fill out a form?”

“No, forms.” Handyman’s voice shifted into the tone Matt knew well. “Everybody has the right to a full belly. We got no income or work requirements, no applications, no waiting. We don’t care if you’re rich or poor, black, white, brown or polka dotted. Documented, undocumented, makes no difference to me. No limitation on how much you take. Just honor the sign.”  He pointed to a nearby sign: TAKE WHAT YOU NEED, LEAVE SOME FOR OTHERS.

The man picked up a basket and turned down an aisle. When he was out of hearing, Matt leaned toward Handyman.

“I love hearing you recite that speech.”

“Just taking care of people,” Handyman replied. “So, you’re gonna look for this family?”

“We decided to donate the money we’d normally spend on Christmas presents for each other to something or someone who really needed it.”

“Good for you! Try the shelters. Better yet, look for them on the streets. People living on the streets tend to stay in the same general area. I’ll let you know if they come in here.”

***

He drove downtown to start his search. In succession, he drove the east-west streets and then the north-south streets. Nothing. He drove the city’s freeways, taking exits where he had seen people asking for assistance. Again, nothing. That night he posted a note about the family on his social media accounts, asking anyone who had seen the family to contact him.

Since he had given the family a twenty at Seventh and Fifth, he hoped they would consider the intersection a place of good fortune and return there. Every day for the next week, he drove through the intersection, hoping to spot them on the meridian. This time, he would put on his flashers so he could talk to the couple and offer the family’s assistance. He then drove all of downtown’s streets, scanning the sidewalks for the family.

In winter, where did people go to stay warm? He walked the skyways, searching the tables near the food courts. He asked people eating their lunch if they’d seen a family of three wearing Santa hats. His queries were greeted with suspicion. “Why?” one diner demanded, “You gonna arrest them?” He felt like a stalker.

At the St. Paul Union Depot, he searched the headhouse and walked down the concourse and searched the waiting areas. Nothing. At the central library he walked through the public areas on each floor. He asked the librarians and clerks if they had ever seen the family. None had.

It was as if the family was invisible.

Through Carter’s contacts at the police department, he learned that there were no large homeless encampments in the city. Periodically, when too many homeless people had gathered in one place, the city stepped in and dispersed the residents. But as he drove about the city, he spotted little camping tents set up on public land or tucked into a stand of trees. Every time he saw a tent, he stopped and checked it out. He always gave its occupant $2 to compensate for the interruption.

Every night he checked social media for posts about the family. He texted updates to Allison and Christopher, receiving words of encouragement in return. One night Christopher texted back a frowning emoji.

At bedtime, he went out and tucked in the creche for the evening. He checked the food donations and wished there were more. Standing on the boulevard sidewalk and looking at the Holy Family, he thought about the Santa family. Where were they sleeping tonight? Inside, he hoped. Did they have enough to eat? Had one of them found work? Should he keep searching? They could have left town for God knows where. But their predicament seemed to symbolize all that was amiss in the country. He recited the tenet of his faith and prayed that among the possibilities that lay before him was one in which he would find the family around the next corner, or that a post would pop up on social media from someone who could tell him how to contact the family.

***

One evening, Matt and Deidre decided to look at Christmas lights. From their house on Pinehurst Avenue, they wound their way through the streets. Many houses had trimmed their rooflines with multicolored lights. White lights turned stately evergreens into Christmas trees. Leafless oaks and maples were transformed into trees of light. In some houses a single candle glowed elegantly in every window.

“I think there’s more lights this year,” Matt said. “It’s as if people are determined to spread a little light into these dark times.”  In one yard, Santa’s sleigh and reindeer had landed. Santa waived at passers-by.

“So how are you coming on your Secret Santa gifts?” Deidre asked.

He wasn’t. Secret Santa gifts came from the heart. Each gift seemed to capture the essence of the relationship between giver and receiver. Past Secret Santa gifts consisted of original songs, music playlists, coupons for services, poems, proclamations, baked goods and crafts. It was a challenge each year to come up with one perfect gift, but four!

“OK,” he fudged. “How about you?”

“I’ve got ideas for everyone. It’s a matter of execution.” They drove on in silence.

“There’s only 10 days until Christmas,” Deidre reminded him.

“I’ll be ready!”

***

As the days passed, he recognized some of the same transients in the same places. In Rice Park, a man wearing an army field jacket sat on the same bench every day, his possessions piled beside him. At his feet sat a plastic bucket, a sign propped against it. ANYTHING HELPS.

Matt parked and approached the man respectfully. He smiled and placed a five-dollar bill in the bucket.

“God bless you, sir.”

“You’re here every day?”

“No law against it. Yet.”

“I’m looking for a little help.”

“Ain’t we all?”  The man glanced at his bucket. Matt dropped another five into it.

“I’m looking for a family, a man, woman and a baby. They’re around thirty with black hair. The man has a beard. The woman is carrying the baby. When I saw them, they were wearing Santa hats.”

“Saw them a couple hours ago.”

“Where?” Another five-dollar bill went into the bucket.

“Walking that way.” He pointed west.

Matt felt his spirits rise. That would take them toward the intersection where he first saw them. He dropped one more five into the bucket. “Thank you. Merry Christmas.”

“I’m here every day!” The man called after him, rattling the change in his bucket.

Matt hurried back to his car. At Seventh and Fifth, he saw only cars. He circled the block and drove through the intersection again, wondering if he’d been given accurate information or the man had simply told him what he wanted to hear so he would be more generous.

***

If he couldn’t find the family, maybe they could find him. He decided to follow Handyman’s suggestion to visit shelters and leave a message. He carefully composed a message. “Hello. I saw you and your baby recently at Seventh and Fifth in downtown. You were wearing Santa hats. I gave you a twenty-dollar bill. My family and I want to help you if we can.” He added his address, house and cellphone numbers and printed multiple copies. He studied the note, then signed each copy and wrote a postscript. “This is not a trick to locate and arrest you.”

One by one he visited the shelters, described the family and his motive to a staff member and left the message.

***

With only days until Christmas, he had to get cracking on his Secret Santa gifts. His wife was easy. Deidre bemoaned the lack of good news. So, every day he would find a piece of good news on the Internet and send her a link. Seeking out good news would be therapeutic for himself as well. With any luck, his first good news story could be finding the family.

Over Thanksgiving, Erik struggled to remember who was who in the extended family. For his future son-in-law, he could make a family directory that included his siblings and their spouses, their children and grandchildren. Everyone’s contact information.

When Allison was a child, he often tucked her in at night with stories about Bunny and Goose, shadow characters he created with his hands on the bedroom wall. For old times’ sake, he would point his phone at the wall in Allison’s room and record a new story about Bunny and Goose, now adults.

Chris remained a problem. The perfect idea popped when he heard Bruce Springsteen’s raucous rendition of “Santa Claus is Coming to Town.” They had planned to attend Springsteen’s concert in 2023, but Chris had been transferred to San Francisco. Audio of the concert could be purchased from the artist’s website, but Secret Santa rules applied. On YouTube he found 11 videos from the concert. He’d give Chris the YouTube links and his ticket stub from the concert.

He felt ready for Secret Santa.

Christmas Eve morning. Matt picked the kids up at the airport and broke the news that he still had not located the family. But he would keep looking. There was always the possibility that the family would turn up in the new year. For those still needing food for Christmas, he made a final delivery of food donations to Open Cupboard. On impulse, he drove the streets of downtown St. Paul one more time. Disappointed, he headed home.

***

On Christmas morning, Deidre was already up when Matt came downstairs. They wished each other Merry Christmas. Halfway through their coffee, Allison and Erik joined them. The minutes ticked by as they waited for Chris to come down so they could open their Secret Santa gifts.

“Where is that boy?” Matt wondered. “It’s Christmas morning!” he headed upstairs to wake him.

“He’s not here!” He hurried downstairs, a concerned look on his face.

“Last night he was still working on one of his Secret Santa gifts,” Allison said. “Maybe he’s out doing something related to that.”

“On Christmas morning? Nothing’s open.” Through the picture window, Matt saw the SUV swing into the driveway and disappear into the garage. They heard the door that led from the garage into the kitchen open and bang shut.

“Merry Christmas, everyone!” Chris proclaimed as he entered the living room. “Sorry, I had to run an errand.” He winked at his mother.

“If you’re ready, then let’s open our Secret Santa gifts,” Deidre said. “I’ll start.” She disappeared into the kitchen and a moment later returned, followed by a man and woman. The woman cradled a baby against her chest. They were wearing Santa hats.

“Oh, my God!” Matt exclaimed.

“Matt,” Deidre said, “I’d like you to meet Michael, Jessica and Isaac. I hope you don’t mind, but I’ve invited them to spend Christmas Day with us. Merry Christmas from all of us.”

Michael extended his hand. “Mr. Bartholomew, it’s an honor.”

Matt seized his hand and didn’t want to let go.

“Call me Matt! Of all the possibilities in the world, I never expected this! My prayers were answered!”

“So were ours,” Jessica said. “I’m so glad to meet you.”

“How did you find them?” Matt demanded.

“Yesterday, someone at the shelter where they were staying saw their Santa hats and remembered your message,” Deidre explained. “Michael called yesterday while you were making your delivery to Open Cupboard. It took all of us to pull this off. Allison and Erik went over to meet them and explained everything to them. Chris was supposed to slip out and get them during the night, so they would be here when you got up, but he overslept.”

“Sorry, Mom!”

“I should have contacted the shelters earlier,” Matt lamented.

“You wouldn’t have found us,” Michael said. “We’ve been sleeping in the storage unit where we keep our furniture. Jess didn’t want to spend Christmas there.”

There would be time later to hear their story in full and learn how the Bartholomew family could assist them. They’d open their other Secret Santa gifts and embrace all of their Christmas Day traditions. But first things first.

“May I?” Matt held out his arms for the baby. He cradled Isaac against his chest.

“Hello, Isaac! I’ve been looking for you! Merry Christmas!”

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