Happy Birthday Steve

I mean Steve Schwartzman, the CEO of the Blackstone group. Somehow the story of his 60th birthday bash has made it to the media’s attention again. Me, I missed it the first time. The $3 million bash took place in February, 2007, before the Blackstone IPO, while it was still privately held. I find the mix of outrage and/or sarcasm to be misguided. This was not another Dennis Kozlowski, not a CEO raiding the company’s coffers.
I have the opposite view of the critics, I think every person with million dollar plus income should spend, and start tomorrow. Consider, that $3 million was money spent somewhere. Chefs cooking the food, busboys cleaning up, security people, etc. Would we be better off if he kept the money in the bank?
When this crisis first started, and I read blogs suggesting that we all save, save all we can, I remarked that such advice would surely lead to a worsening recession if not a depression. We spent too many years with a saving rate near zero, and flipping the switch to a 5% or higher saving level would have a drastic impact to GDP. I don’t kid myself that we can party our way out of this recession, but I know the spending needs to start somewhere and given the choice between 30,000 couples dropping $100 on a nice dinner, or one guy throwing a bash, I think it’s no choice at all, we need both, just not on credit. That’s part of how we got here in the first place.
Joe