Consumer Recovery Experience at Goldman ...

Some pundits are arguing that fuel prices are helping to stabilise the consumer spending. Well, apparently there are other stabilisers too. Quite interesting experience at Goldman Sachs, as reported by The New York Times at CNBC.com today. Just in case, the story disappears due to whatever reason, the key message excerpted:

Goldman Sachs got its bailout. Now some of its bankers, those aristocrats of Wall Street, apparently need a bit of a bailout too.
Goldman, which accepted billions of taxpayer dollars last fall and, as learned Sunday, was also a big beneficiary of the rescue of the American International Group, is offering to lend money to more than 1,000 employees who have been squeezed by the financial crisis. The loans, offered via e-mail last week, could range from a few thousand dollars to hundreds of thousands.
Working at Goldman has long been regarded as a sure path to riches. But Goldman’s employees are losing money on their personal investments — particularly in Goldman’s own elite investment funds, which have been considered one of the perks of working at the bank.
Now these funds have stumbled, and some Goldman employees who financed their gilded lifestyles by borrowing in good times are suddenly short on cash needed to meet commitments to their personal investments in the funds. “It’s a problem with the culture of spending,” said Gustavo Dolfino, the president of Whiterock Group, a Wall Street recruitment firm. “No matter how much you have, you spend like you have a lot more.”

So, this is sustainable ...

Well, this leads me to the reminder of "Mother Of All Our Problems". The Lazard has a nice chart that also segregates the debtors, click to enlarge, courtesy of Lazard.


One should be wondering why someone is willing to force banks lend more money? More lending is going to solve the problem? The insatiable borrowing has led us to credit crisis. But there are still some credible borrowers.
Well, it may mitigate the impact and shift out further into the future the debt deflation ... Government with borrowing capacity may try to substitute the consumer spending, as long as they are paying off the debts and saving.

UPDATE: Felix Salmon focuses on the wealth aspects of the Goldman story: "Goldman Wealth Datapoint of the Day".