We've heard it time and time again now: Over the past ten or so years, we, the grubby populace, were living a lifestyle that was way beyond our means. Once we got a little too comfortable with the plastic, we purchased too many televisions and Swarovski-encrusted pairs of jeans. Spurred on by the devils of reality television, we leveraged ourselves hugely in order to make home improvements, in hopes of selling our house and making even more cash with which we could buy even more denim and electronics, and now look what we've done.
But really, what did anyone expect, once they gave us the plastic? Of course we were going to make stupid decisions! We didn't know any better! We're the grubby populace, for fuck's sake!
We expected more of investment bankers. After all, they were genuinely rich, and also, supposedly, smart and good with money. You'd think, with all of the millions they were raking in during those years, they'd have started a little rainy-day fund for themselves. A little "what if the good times don't last forever" kitty. A savings account, at least.
Today's Times informs us that at least 1,000 employees at Goldman Sachs borrowed money during the boom times in order to invest in some of the firm's funds. And now that the funds have lost money, they have to take loans from their employer (which has itself taken a loan from the government) in order to keep up with their payments. It's a vicious cycle. How did this happen? Gustavo Dolfino, the president of a Wall Street recruitment firm, explains.
“It’s a problem with the culture of spending ... No matter how much you have, you spend like you have a lot more.”
That we understand. But still, reading this sent us into a spiral of depression and fear. Especially because this is happening at Goldman Sachs. If it's happening there, we can only imagine what's happening at all of the financial institutions that are worse off. Rich people borrowing, scrambling to cover debts, selling houses that are rapidly declining in value. Holy crap! The rich are just like us. They're poor.
Well. Maybe not exactly.
One former Goldman partner estimated that a quarter of the bank's roughly 100 partners are now worth $5 million or less because of losses on their company stock and other investments.
Oh, phew. They're not really poor-poor, then. They're rich-poor. That's an entirely different thing.