The recent arrival of a handful of farmer’s markets to the Bronx and the speed with which fresh fruits, vegetables and fish are bought up on market days is proof positive that people on limited budgets do in fact enjoy eating exactly like the monied classes. Fresh foods undercut the preposterous notion that poor people prefer junk. They eat what’s available and affordable, and when that’s fresh produce they are all over it. In fact, the fishmonger on the Concourse in the Bronx at the Tuesday market is sold out by 11 a.m.
Bronx boy, Chairman and CEO of Goldman Sachs, Lloyd Blankfein, heads the most influential bank in the world. While the distance from the Bronx to Goldman’s HQ on Wall Street is barely five miles, it is worlds away. Blankfein probably has the equivalent of a farmer’s market in each of the kitchens in each of his residences, including his digs at 15 Central Park West in Manhattan, the most expensive residential tower ever built, a pad he may have bought after pocketing $68 million in 2007, the most among execs on Wall Street. He is the Patron Saint of Ambition, telling an interviewer from The Sunday Times why he opposes bonus limits on Goldman income, “I don’t want to put a cap on … ambition,” which in his case has allowed him to gather up a rather ambitious $500 million in GS stock and, from all indications, a lot more is coming his way soon given the strength of his bank’s returns in 2009 and beyond– making money on money. He may even be rich enough to run for mayor. Lloyd Blankfein has cornered the market on ambition.
From bankers you expect a love of money. What you might not expect is a love of government. But love it is, as the door from bank to government revolves non-stop, and Goldman Sachs knows it best. The list of top Goldman execs turned top government managers is a mile long, with Barack Obama the latest in a roster of compliant door monitors, also known as U.S. presidents. These government managers saved Goldman about $25 billion during the credit crisis, loaned it lots more, and showed the firm the way to cheap credit forever, transforming it into a bank holding company, thus assuring access to low interest government funds. Profits from usurious credit cards, money made on subprime mortgages set at high interest rates … and now access to U.S. Treasury funds, our money, virtually interest free to help heal the credit markets. Ambition at its finest.
But how to keep feeding that boundless ambition, the creative drive that gives pack leader Blankfein and our species its edge in everything (except affordable food, drinking water and medicine)? No so easy when reports keep coming in that consumers can’t keep up. The multi-decade wage decline, lack of credit relief for consumers, escalating sub and prime mortgage defaults mean fewer trips to the checkout stand. “Consumers Unlikely to Keep Pace,” is the way the Wall Street Journal put it on October 30, adding, “… it isn’t clear what part of the economy can replace them.” Enter Blankfein and his army of ambition seeking clarity. How to replace those out of pace consumers?
One answer is through exports, which rose 14.7 percent in Q3, and whose rise is much assisted by surging productivity in the workplace (work harder = keep your job). Another area is business investment, in things like software and equipment, which went up a bit last quarter, except in one sector: commercial real estate which is, by the way, collapsing. Conservative estimates put home foreclosures at about 2.5 million in 2010. Commercial mortgage collapse will dwarf that. On famed 42nd Street in New York’s Times Square, a spanking new office tower that sits right next to New York Times HQ is reported to have not a single tenant—zilch. Across the country thousands of commercial buildings sit empty without any prospects on the horizon. So much for business investment. But analysts continue to hold out hope that expanded exports, buttressed by a devalued dollar, will help drive the U.S. economy and stoke Lloyd Blankfein’s ambition.
But there is caution, still, not just at banks, sitting on $13 trillion, resisting efforts to provide mortgage relief, and counting on credit card fees to get by (rates are back up over 20 percent, even though the Fed loans banks money at 0-.25 percent— now there’s an ambitious spread!). But non-financial companies are holding off too. As of Q2, S&P 500 companies had just under $3 trillion in cash and short-term investments in their coffers, searching for the best bang for their shareholder buck in an economy that can no longer look to the same, or even a close, magnitude of consumer activity. U.S. policy – in some significant part devised by and carried out by Goldman/Wall Street and Goldman/Government – to underpay America for four decades is here and not going away.
People of lesser ambition than Blankfein would wonder why $16 trillion in money held by banks and big non-financial corporations is not making its way to the American workforce, in new jobs, better pay, a future. Why sit on so much cash while American communities go down the tubes? With so many kids in poverty?
Like Blankfein, President Obama understands the dynamics of ambition all too well, whereby recovery hinges on achieving return on investment without emotionalism or compromise, a concrete goal that inspires Lloyd Blankfein and keeps alive the wellspring of human ambition. And sells lots of yachts.
Said President Obama this fall to a group of high school students, “Don’t ever give up on yourself, because when you give up on yourself you give up on your country.” Most of all, don’t expect much from your country, unless you’re an ambitious banker looking for relief.
CARL GINSBURG is a tv producer and journalist based in New York. He can be reached at firstname.lastname@example.org