President Barack Obama comforts family members of the 29 victims of the Upper Branch Mine explosion during a memorial service in Beckley, West Virginia, Sunday, April 25, 2010. Vice President Joe Biden on the right of the picture said: "To every member of every family that has been touched by this tragedy, I can say that I know what it’s like to lose a spouse and a child."

American Divide: Wall Street was beginning to regain its swagger after the post-Lehman Brothers meltdown and $140bn in compensation and bonuses was provided for in 2009. However, the revelations about  investment bank Goldman Sachs and its handling of junk mortgages as the boom was turning to a bust, will be harder to live down. Simply, money will not so easily buy credibility on Main Street.    

Writing in The New York Times, last Tuesday before Goldman announced its first quarter earnings of $3.3bn, William D. Cohan, a former senior mergers and acquisitions banker, said: "...it’s hard not to see something obscene in how Wall Street reaped massive profits and bonuses in 2009 - - and continues to do so, as is clear from Monday’s announcement by Citigroup that it had earned $4.4bn in the first quarter of 2010, which was even more than earned by Bank of America ($3.2bn) and JPMorgan Chase ($3.3bn) in the same period - - merely 18 months after trillions of dollars of American taxpayers’ treasure was used to save a financial system brought to the precipice by Wall Street’s greed and irresponsible risk-taking."

Cohan said Wall Street is making money by taking advantage of its rock-bottom cost of capital, provided courtesy of the Federal Reserve - - now that the big Wall Street firms are all bank holding companies -- and then turning around and lending it at much higher rates.

The easiest and most profitable risk-adjusted trade is to borrow billions from the Fed - - at a cost of around half a percentage point - - and then to lend the money back to the US Treasury at yields of around 3%, or higher, a moment later. The imbedded profit - -of some 2.5 percentage points — is an outright and ongoing gift from American taxpayers to Wall Street.

So while Wall Street banks were paying big bonuses from profits made on almost zero cost federal funding, others were paying a price.

Last month, Charles Schwab, the founder of the eponymous main street brokerage, said in the Wall Street Journal that in February 2006, when Ben Bernanke was first sworn in as chairman of the Federal Reserve, the federal-funds target rate stood at 4.5%. That same year, the average yield on a one-year certificate of deposit (CD) was 5.4%. A retiree who diligently saved for a lifetime and had amassed a nest egg of $100,000 could count on an added $5,400 in retirement income per year. Schwab said that may not sound like much to the average Wall Street Journal subscriber, but for a senior on fixed incomes that extra money improved the quality of his life.

Today's average rate for an identical one-year CD is roughly 1.3%. On the same nest egg, that retiree will now get an annual payout of just $1,300 - - a 76% decline in four years.

"To put the scale of this problem in context, consider the fact that more than $7.5 trillion in American household wealth is held today in short-term, interest-bearing products such as checking and savings accounts, retail money funds and CDs. At today's low interest rates, the return on those savings is hundreds of billions less than it would have been at 2006 interest rates. Retirees feel the consequences disproportionately, but because much of that income would have made its way into the economy, spending and job creation also suffer," Charles Schwab said.

US per capita personal income (personal income divided by population) fell 2.6% nationally in 2009 to $39,138, after rising 2.0 per cent in 2008. It was the first decline in 40 years.

The US personal saving as a percent of disposable personal income was 3.1% in February up from below zero at one point in 2005.

The Eurozone savings rate is about 14% and according to Eurostat, the EU's statistics office, in 2007, household income per capita, after correcting for price differentials across countries, was around 50% higher in the United States than in the Eurozone.  It was about 66% higher in the US than in the EU.

In the US, average income data  camouflages the plight of those on the lower parts of the economic pyramid.

In 2009, when per capita income fell,  the top 25 US hedge fund managers earned a total of $25.3bn in 2009 -- an average of $1bn each  -- with the lowest paid hedge-fund manager receiving $350 million. Heading the list was David Tepper, of Appaloosa Management who first made his name at Goldman Sachs. He made $4bn last year. “We bet on the country’s revival,” Tepper said in an interview (New York Times link) with The Times.

The Times reported that Tepper loaded up on the preferred shares and bonds of the big banks in late 2008 and early 2009, correctly assuming that the government would not permit bigger institutions to fail.

The newspaper said it did not hurt that the Treasury Department was a fellow investor, buying preferred stock and warrants to help steady the faltering balance sheets of the banks. The government has since sold many of its bank stakes at a considerable profit but that is peanuts compared with the monetary and human cost of the Great Recession.

Tepper, who manages about $12bn for investors, also benefited from a successful investment in bonds of American International Group, the giant insurance company that was also rescued by the government.

Saez says, in the economic expansion of 2002-2007, the top 1% captured two thirds of income growth.

This month, the liberal American Prospect magazine carries a review of two books: Working in the Shadows: A Year of Doing the Jobs (Most) Americans Won't Do by Gabriel Thompson, Nation Books, 298 pages, $24.95 and American Dream Dying: The Changing Economic Lot of the Least Advantaged by Peter D. McClelland and Peter H. Tobin Rowman & Littlefield, 127 pages, $32.95.

The review says that by 2004, authors McClelland and Tobin note that, 27% of borrowers in the bottom quintile of the economy were spending more than 40% of their income on debt payments. In the wake of the country's financial crisis, that number has likely increased. McClelland and Tobin argue, with an abundance of caution, that data such as these put the very concept of a vibrant American dream in jeopardy. The review says less scrupulously analytical observers might well go one step further: Such figures, along with the working conditions documented by Gabriel Thompson, point to the creation of new indentured classes in America -- people working to pay debts (to banks, to credit-card and payday-loan companies, to human smugglers, to employment-placement agencies) rather than to advance their family's well-being. For these individuals, the American dream is little more than a cruel joke at this point, a set of unreachable aspirations that serve mainly to pacify rather than empower those with the worst economic lot in life.

"Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!" the then 28-year old Frenchman Fabrice Tourre, who is charged with his firm Goldman Sachs, with subprime fraud, said in an e-mail to his girlfriend Marine Serres in January 2007.

"It's bizarre I have the sensation of coming each day to work and re-living the same agony - a little like a bad dream that repeats itself," Tourre wrote in another e-mail. "In sum, I'm trading a product which a month ago was worth $100 and which today is only worth $93 and which on average is losing 25 cents a day ...That doesn't seem like a lot but when you take into account that we buy and sell these things that have nominal amounts that are worth billions, well it adds up to a lot of money."

He says:"When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: 'Well, what if we created a 'thing,' which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?') it sickens the heart to see it shot down in mid-flight... It's a little like Frankenstein turning against his own inventor ;)"

Tourre also indicated the stresses of the money making machine.

"... I am now considered a 'dinosaur' in this business (at my firm the average longevity of an employee is about 2-3 years!!!) people ask me about career advice. I feel like I'm losing my mind and I'm only 28!!! OK, I've decided two more years of work and I'm retiring."

Daniel Sparks was the head of the mortgages department at Goldman in 2007.

"According to Sparks, that business is totally dead, and the poor little subprime borrowers will not last so long!!!" Tourre wrote in a March 2007 e-mail to his girlfriend.

It's not difficult to discern a Marie Antoinette "let them eat cake" tone or the more contemporary attitude of the vulgarian New York hotel heiress, Leona Helmsley, who remarked in 1989 - - "We don't pay taxes. Only the little people pay taxes."