I had lunch with Wall Street magnate Thaddeus Ziegheil at one of the fancy eateries on the Upper West Side, to discuss the current state of the economy. Ziegheil was ecstatic.
“Things couldn't be going better,” he said as he dipped his lobster tail in drawn butter, then washed it down with a glass of white wine at 89 dollars a glass. “Yes, we've certainly got the economy right where we want it. Another couple of years like this, and I'll be able to buy the island I've been hoping for all my life.”
By way of disclaimer, I should note that I've known Ziegheil since our days at college, when we pledged the same fraternity. He came from a poor farm family in southern New Jersey. When he graduated with a Bachelor's Degree in Business Administration, he took a job selling life insurance. After working for a few different insurance companies, he landed in a stock brokerage, where he gradually created a portfolio that enabled him to raise his family into the middle class. But now he seemed to have money to burn...literally, while we waited for our table, he lit his Cuban cigar with a fifty-dollar bill. “It's the only cash I've got on me until my secretary can get to the bank for me,” he'd told me with a wry smile.
Now at our table, I marveled at his ability to stuff down his food without, of course, looking like he was stuffing it. He'd obviously had lessons in etiquette somewhere along the line, because back in college he'd eaten like one of his farm animals.
I'd lost track of him in the past few years, but had heard that he'd made his way into one of the big time brokerages, working on Wall Street. Ziegheil made his vast fortune only recently as one of the hotshot arbitragers and brokers in subprime lending at one of those financial institutions deemed by President Obama as “too big to fail.” “Ziggy,” as he likes to be called, wasn't always this happy. Sure, during the days before the big crash, he was making money.
“I thought I already had it all: I had the Mercedes, my wife had her Beemer, my son had whatever car he wanted after he crashed the last one, and my daughter had her Mustang. Life was good. We went on vacations I'd never dreamed of as a kid.
“We thought it couldn't get any better than that. Then came the crash, and we suffered a great deal. Some of us had to let go of properties at a loss and, certainly, fat stock portfolios became skinny. But who could have foreseen that the government would start giving us taxpayer money? What a bonanza!”
Of course, Ziggy was talking about the TARP funds that were intended to keep the big banks from failing and, therefore (so the thinking went), stave off financial catastrophe for the entire country. Those who believed in free markets wanted to allow the banks to fail. True capitalists waited in the wings to pick up the assets of these behemoths for pennies on the dollar, and build a much more diverse financial sector.
The thinking was, if a financial institution is too big to fail, then it must be too big to exist.
But market forces be damned, the government went ahead and offered an anemic 900 billion dollars—when top economists were calling for a minimum 1.5 trillion...so the Obama Administration couldn't muster leadership on a potent enough financial package to rescue the country back from the brink of disaster—and the next few weeks found Wall Streeters falling all over each other trying to see who could treat themselves to the biggest cash bonuses. Of course, the financiers justified their largess for, ostensibly, being the only folks who knew where the land mines were buried and could get us out of their mess.
“This was the biggest financial bonanza for guys like me since the savings-and-loan debacle back in the 80s,” Ziegheil drooled. “I never thought I'd live to see the day when I could benefit from government stupidity...er...I mean controls the way those guys did!” He paused, choking on emotion, tears welling up in his eyes. “I couldn't have sold it better if I'd made the whole thing up myself,” said Ziggy.
“We'd already gotten away with murder,” he said, smacking his lips and wiping away the black caviar that had smeared his lower lip. “After the Republicans took back power in the mid-90s, we had the Clinton Administration eating out of our hands. When we won repeal of Glass-Steagall in 1999, which had prevented us from using depositors' funds for speculation in the financial markets, all bets were ON, baby! Now we could really make some money!” Ziegheil was practically standing at this point, so excited that others in the dining room were staring. He waved them off with his napkin.
“And even before that, the Reagan Administration had lifted restrictions on interest rates, so we were able to entice people into mortgages they couldn't afford, but didn't dare pass up because the interest rates were so low. I had a bonanza!” He lifted his napkin to his chin just in time to catch some drool that threatened his $3,000 hand-tailored suit. He leaned toward me, his voice falling to a whisper. “And keep this close to the vest, but the Fed has been giving us billions of dollars that the taxpayers will never know about!”
“Well now,” I said, “I imagine these protests all over the country must be worrying you a bit? After all, they're talking about coming after those who profited from the misery of others.”
“First of all,” he said, “anyone who's suffering now as the result of 'business as usual' deserves every bit of misery that they're getting. Didn't they ever hear the term, caveat emptor? Buyer beware! If they got caught with their pants down, well then, let that be a lesson to them. Many of those people were getting paid too much money for the work they did, anyway. Unions were destroying this country long before we got our hands...er...managed to make the necessary corrections to save the economy from government over-regulation. Those people need to get jobs and stop blocking the sidewalks.”
“But there are no jobs, Zig,” I replied. If they had jobs to go to, and homes to sleep in, they wouldn't be out there on the sidewalks.”
“Well, once we've made sure that our savings and investments are secure—not that I haven't moved a hell of a lot of money offshore already, believe me--and that our tax breaks are permanent, we'll make sure to get the economy moving again.”
“And how do folks like you propose to put people back to work with your tax breaks?”
“I was thinking maybe we'd hire another maid, and another gardener...and maybe someone to scoop the dog poop in the back yard,” he sneered as he dug into his white Italian truffles drizzled with Noka chocolate.