Neff Zone Column -- August 8, 2009

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Print Edition: August 8, 2009

LET ME KNOW WHEN TRICKLE-DOWN ARRIVES

A couple of weeks ago I wrote about the banking firm of Goldman-Sachs and how an article in Rolling Stone magazine took them to task about their manipulation of the United States economy. Some people might call that a crazy theory, but then last week, almost on cue, Goldman-Sachs did everything it could to prove the RS article correct.

With all the economic problems in this country and with the massive bank bailout fresh in everyone’s minds, Goldman-Sachs posted the richest quarterly profit in its 140-year history. To celebrate, GS began handing out $11.4 billion in bonuses to its workers.

This might be hard to swallow for Americans scrambling just to make ends meet, but then things got even more infuriating. According to the Wall Street Journal, " A Senate panel has subpoenaed financial institutions, including Goldman Sachs Group…seeking evidence of fraud in last year's mortgage-market meltdown, according to people familiar with the situation. The congressional investigation appears to focus on whether internal communications, such as email, show bankers had private doubts about whether mortgage-related securities they were putting together were as financially sound as their public pronouncements suggested. Collapsing values for many of those securities played a big role in precipitating last year's financial crisis." Now isn’t that just peachy? Well, there’s more.

The WSJ also noted that, "…a bipartisan group of 10 members of Congress sent a letter to Federal Reserve Chairman Ben Bernanke, questioning whether Goldman Sachs is being too lightly regulated and too generously backed by taxpayers. An idea for taxing high-value health insurance plans has even become known on Capitol Hill as the "Goldman Sachs tax," after criticisms of its executives' $40,000 health plans."

What was the reaction of Goldman-Sachs to all this? Goldman Sachs CEO Lloyd Blankfein told employees to avoid displays of conspicuous consumption, the New York Post reported. Blankfein was trying to convince employees to keep a low profile – and maybe put off buying fancy new mansions until the economy has improved. "This is a sensitive time for us, and we want to make sure that we're not being seen living high on the hog," a source told the Post. What a compassionate guy!

Okay, so now add in another $33 billion that nine other banks (including Bank of America, Citigroup, JP Morgan Chase and Well Fargo) are handing out in bonuses to their muckity-mucks and you come up with over $44 billion in bonuses revealed in just the last two weeks. All these banks took TARP money – your money.

While those banks have done a great job of handing out bonuses, though, you’ll be interested to know that they have not been so proficient at actually squaring away mortgages for common home owners, which (you know) was the whole point of Tarp in the first place. So far only 9% of mortgages have been modified says the Treasury Department. Bank of America has the worst track record, modifying only 4%. Hey, what do you expect? Handing out bonuses takes a lot of time and energy. These banks can’t do everything at once.

I know it would be easy to get disheartened over this, but do not despair. According to conservative economic theory, which we all know is etched in stone and is always correct, that $44 billion issued to the top echelon will begin to trickle down onto the peons below any time now – maybe it’s happening as we speak. I’ll be interested in finding out when some of that Goldman-Sachs bonus money trickles down to the folks in Cadillac. When it gets to you, let me know.

Outta the Zone…Various sources report that almost two-thirds of Americans are overweight and 30% of the population is categorized as obese. In Michigan, 28% of the citizens are obese (9^th highest in the country) and the obesity rate among children has tripled in the last 25 years. With this in mind, explain to me why the Obama administration wants U.S. carmakers to produce more sub-compact cars. Who is going to wedge into these mini-vehicles? As for me, I’m buying stock in the Manakey Corporation of Coopersville, Michigan. They manufacture shoe horns.

…I attended almost every Buick Open golf tournament, starting as a young nipper when the admission was 50-cents. The tournament at Warwick Hills in Grand Blanc has always been a highlight of my summer. I’m sure you know that this year’s tournament, the 51^st, was the last. Buick has pulled its sponsorship, claiming the company’s bankruptcy now prevents it from spending money on the tournament. I understand that but I still elected not to attend this final tournament. You see, in spite of its public pronouncements Buick still found the cash to host a lavish hospitality tent for its executives and foot the $5000 per person entry fee for executives who wanted to play in the pro-am the day before the tournament. Not attending was my way to protest the hypocrisy.

…We’re just weeks away from the college football season. I’d like to send all the players in the 7 of 11 Division I conferences who have no chance of playing for the national title my condolences. Once again, due to the rigged scam called the Bowl Championship Series (BCS), teams in 7 of the 11 technically BCS conferences do not qualify for a chance at a championship. Players, no matter how many sprints you run, how many weights you lift, how many hits you take, how many sacrifices you make, you will not be allowed to compete to see if you’re the best in the country. Sorry about that.

…Finally, ticket sales for the big KISS tribute concert featuring the nationally acclaimed KISS tribute band Mr. Speed have been brisk. Although the concert is on September 26 and tickets have only been on sale three weeks, it’s already looking like a sellout crowd will be on hand. Ticket orders have come from as far away as Toledo, Indianapolis and Detroit. All proceeds will go to the Cadillac Viking Boosters, so go to www.neffzone.com/kiss for ticket information. He who hesitates does not get to Rock and Roll All Nite.

Jim Neff is a local columnist. Comments to neffzone@gmail.com. Read Neff Zone columns online at www.neffzone.com/cadillacnews.