Sunday, 8 November 2009
Now this headline really incensed me this morning:
The Sunday Times November 8, 2009 (There is your plug, you are welcome) – “Goldman’s boss: We do God’s work” - I'm doing 'God's work'. Meet Mr Goldman Sachs
How dare you! How dare you be so arrogant! Mr. Lloyd Blankfein.
I must have woken up today in quite a militant mood, this being remembrance day and all.
My daughter and I went to church this morning (my wife and son had a different engagement to attend at another church in town).
The entire nation was focused on the very poignant event of celebrating or more accurately commemorating fallen, but never forgotten victims of war, past and present, and then I made the fatal mistake of picking up the Sunday papers on the way back from church.
So, now let me explain my very limited understanding of trickle down economics and how it works:
We have a Credit and Liquidity Quake in the global financial system (see early posting on this site entitled “Comments from a 'lay-economist' on the Credit Quake of 2008 – 2009" ).
Either governments (read taxpayers) or investor angels (in Goldman Sach’s case Warren Buffett with a US$5 billion injection, see - LA Times article - "Buffett boosts Goldman Sachs with $5-billion investment" ), help re-capitalise broken and impaired financial institution’s balance sheets.
This ‘rescue cash’ starts looking for decent rates of return that money and other near cash equivalent assets cannot provide, and commences to froth up the stock markets. We have a big bounce over the last 6 months in global stock bourses, however, very little of this new cash seeps out (or trickles down) to the next layer in the economy. Fair enough, if big bonuses are paid to hard working bankers, (look you can only put 24 hours into a 24 hour day, no more, no less; if my mathematics does not let me down, whether you are an investment banker or a road sweeper) eventually they start spending this cash in the real economy and property assets and other non financial asset prices start experiencing a bounce and therefore all the folk who touch and are involved in trade and transactions connected to these other alternative assets experience an upturn in their fortunes. Ergo, the next layer gets involved when the trickle continues further down, and therefore services connected to the previous layer experience an upturn in their fortunes…and so on.
So, we either stop making so much beef about the bonuses and just get it paid out so that the cash can be spent; however, Mr. Lloyd Blankfein, WE DO NOT COMPARE THIS TO GOD’S WORK!
A little sense of humility and thought needs to go into your words and deeds so that ordinary folk can get on your side and support the ‘noble calling’ of banking; or you risk the wrath and fury of the general public and a lot of work for the PR industry to help repair the damaged reputations investment and retail bankers still face.
As for spirituality, I trust your conscience will seek some catharsis and quiet reflection in the days to come.
An apology will also do nicely.
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