Finally I recalled the last resort of a great princess who was told that the peasants had no bread, and who responded: Let them eat cake. -- Jean-Jacques Rousseau, 1769
According to noted economist David Rosenberg, since the multitrillion-dollar bailout of Wall Street began over a year ago, we have lost 6.2 million jobs, auto sales are down 23%, housing starts are down 30%, bank credit is down $500 billion, household net worth is down $7 trillion, and hundreds of thousands of small businesses have failed or are near failure.
Yet Wall Street is booming. Bonuses on Wall Street are expected to set new records this year. The big Wall Street banks are making a fortune even as the rest of the country is still mired in the worst economy since the Great Depression.
Maybe due to guilt, or noblesse oblige, or just as a public relations stunt, Goldman Sachs (GS) and Warren Buffett, two of the largest beneficiaries of the taxpayer-funded Wall Street bailout, announced that they would give $500 million to small businesses to promote job growth. Because that amount is basically what Buffett's Berkshire Hathaway (BRK.A) and Goldman Sachs earn in a couple of days, it is so small and pathetic that any reasonable person can only see it as adding insult to injury. Why are very smart people like Buffett and Lloyd Blankfein, CEO of Goldman Sachs, unaware of this? For the same reason that, hundreds of years ago, in pre-revolutionary France the royalty could not understand why the peasants were starving.Although it is not known which spoiled French princess originally uttered the phrase "Let them eat cake" in response to a question of what the starving peasants should eat if they had no bread, those words have become immortalized as one of the most egregious examples of what happens when the ruling class becomes completely disconnected from regular people. It is sad to say that I think we face something like this in America right now.
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