I doubt there will be any tears on Main Street America today. News is hitting the street that Goldman Sachs top seven executives, including CEO Lloyd Blankfein, are giving up their bonuses for 2008. According to the Wall Street Journal article today there were “months of debate” about this decision. Can you imagine how well it would have come out to the millions of people that have lost their homes, 401K investments and even their jobs over companies like this?
Last year Blankfein received a compensation package of roughly $68.5 million, and I suspect that will tide him over fairly well this year – since he’ll only be making $600,000 from his base salary. Are these people really worth that much more than the average General Motors or DHL employee that will be losing their job this year? Sure, they know things that the average person doesn’t, but if you look at the Wall Street masses this year it would appear that they make plenty of mistakes too, and the difference is that the impact can tear apart the global economy. Mess up on a car and it doesn’t sell – doesn’t seem quite so bad.
Experts are predicting that there will be somewhere between 3 and 5 million foreclosures next year alone. These figures amount to somewhere between 8,000 and 14,000 people evicted from their home every day. This is obviously not a small problem and with the continued acceleration of foreclosures it is very unlikely that it’s going to get better any time soon. Something has to be done; the situation has gone from bad to worse and the world economy is now free-falling into a global recession unlike anything imagined before.
I’ve already expressed that Henry Paulsen is not able to help the economy and I believe that time will show he prolonged and worsened the problems that he/Goldman Sachs helped create. I’m hopeful about Barack Obama coming into office because I believe that the world needs change and hope to empower the average citizen to help with improving the economy – to help the consumer believe. Unfortunately, I don’t think that Barack Obama will be enough and that’s where I believe the United States (and the world as an extension of the US) needs a bailout/stimulus plan that helps stabilize the markets while simultaneously improving consumer confidence. Some components should include:
My position has shifted from being angry about the $700 billion financial rescue program to downright scared. Every day Treasurey Secretary Henry Paulsen (former CEO of Goldman Sachs) comes out with some new screwball plan to use the remaining dollars, but like Chicken Little, his whining reasoning is becoming less and less believable. Today, for example, he’s suggesting to relieve pressures on consumer debt, including credit cards, car loans, and student loans, which he believes are “creating a heavy burden on the American people and reducing the number of jobs in our economy.”
Somehow I don’t believe that my student loans, credit card bills, or car payments are creating any undue burden on the American people, and I’m not sure how reducing or changing the terms of my agreements will significantly impact or benefit anyone. For people that it will impact, I’m not sure that I agree this will be of any help to the long-term improvement of our economy. Quite the opposite, actually, because the money will be spent and spooked consumers will be unlikely to jump right back into school, a new car, or even additional credit card payments.