Jan 31, 2009

wall street bonuses

On some level I can't believe the response to this Wall Street bonus uproar and on some level I can completely believe it. Just so I am clear, I think any argument that Wall Streeters should get big bonuses is total horseshit. Let's go through the arguments.

We work hard. You know what? Wall Streeters do work hard. Very hard.  So what? They guy who bussed my table last night works hard. Teachers work hard.  You get paid a lot because you create economic profit.  Not because you work hard.

I didn't cause the problem.  In most cases that is true.  If you aren't in the proprietary trading or the securitization investment banking part of one of the bulge bracket firms then for the most part you may not have caused the problem.  Your division may have even generated a profit.  So what?  I'm sure there's a division within GM, let's say the hubcap division, which lowered costs, improved productivity, improved quality, and makes the best darn hub caps money can buy for the lowest price.  Does anyone feel sorry for those guys losing their job?  You are part of a company and that company is now insolvent and does not make any money.  No bonsues.

Bonuses would eliminate spending.  You've got Guiliani spouting this rationale.  So what?  Other people are out of work and getting reduced pay as well.  Did any of these Wall Streeters care about that?  Why should Wall Streeters be exempt.  Sorry.  No bonuses.

Most of the pay is bonuses.  This is true.  Most people make $70k-150K in salary.  Barely enough to get by in NY.  Take half away for city, state, and federal taxes and $40K for the most modest of apartment expenses and you haven't go much left over for food or whatever.  So what?  Most of the pay is in bonus form so that Wall Street firms can drastically cut back expenses in times like this.  You signed up for this when you joined a Wall Street firm.  If everyone deserved and was required to have bonuses all the time then it wouldn't be a bonus. It'd be a salary.  Bonuses are based on performance.  Your performance sucked.  No bonus.

We'll lose talent.  No you won't.  Where will these people go?  Most don't have transferrable skills in my opinion except when tranferring to another Wall Street firm.  There are no jobs right now.  None.  Zip.  People won't go anywhere.  There's no where to go.  No need for a bonus.

We're not using bailout money for bonuses.  Yes you are.  Money is fungible.  If these companies didn't get a bailout then they wouldn't have had that money for bonuses.  In my mind all these companies are insolvent anyway so there would be no bonus and no job if there wasn't a bailout.  No bonus.

It boggles my mind that people aren't in more of an uproar over this bailout.  I really am surprised you don't have rioting in the streets.  You had the Treasury Secretary, Henry Paulson,  handing out money with no strings attached to these investment firms with no oversight under the TARP program.  Didn't we all fall for this 'we need to act fast' crap with Iraq.  I can't believe the American public and Congress fell for this again.  And who do you put in charge of it?  The ex-head of Goldman Sachs.  You gave the keys for the hen house to the friggin fox.  What the hell?

And what's worse is that I personally think this guy is just plain dumb.  I don't think he's smart at all.  Maybe I'll post how to fix this banking crisis one of these days, but what he has done with TARP is pointless.  Literally like throwing money away.  But he and his friends got paid.  Maybe they're not so dumb after all.

1 comment:

Ryan Biddulph said...

Hi,

Nice post. I pretty much ignore the headlines. If they did the wrong thing they will eventually be punished anyway. You always reap what you first sow. Any bailout will only be temporary anyway. Keep a tab on these people and how their lives progress after making the headlines. Many life rich lives materially but have wretched personal lives. It's not my job to judge them though. I keep my mind on my own wealth and how I can help others.

Ryan