are tough! No, I’m not talking about the
plummeting dollar or the sub-prime mortgage crisis or even the winless Miami
Dolphins. As our national economy staggers like an intern at the office
Christmas party, wise investors are glad they hedged their bets with
America’s brightest financial minds.
if you were smart enough to gamble your hard-earned
and rapidly-shrinking middle class wages in the stock of the five biggest
investment banks in the U.S. -- home of the aforementioned best and brightest
-- you shared in the loss of 74 billion dollars of equity – that’s “billions
with a B” as those nutty Bloomberg radio guys like to say!
any other business, that might call for some
belt-tightening, course-correcting, or even artery-severing. But not on
Wall Street, where eight decades ago they at least had the good sense to jump
from a great height upon hearing bad news. Instead, the securities
industries are collectively handing out record bonuses totaling 38 billion dollars.
(That, too, is with a “B.”) Happy New Year!
to those of us who have to work for twenty years
before earning a piddling million
– with an “M” -- (the median national annual income of
$48k would still leave you short), let’s put those numbers in proper
perspective: When you divvy up a third of a trillion dollars among
186,000 workers, as they will at the five biggest firms, that’s a paltry
$204,300 per person -- which even an average Shmo like you can earn over five
or ten years.
in a year that saw record losses in the banking and
brokerage industries (Merrill Lynch lost $8 billion in the 3rd quarter alone), where did the “B”-for-“bonus”
money come from, and what gave these investment deities the “B”-for-“balls”
to shower their employees with riches while company stockholders got
“F”’d? Let’s skip over the rhetorical part of that two-part question
and answer the first: FEES. According to the nice folks at
Bloomberg who keep track of these things, this Olympic-size bonus pool was
generated largely from a record $9 billion in “fees” for arranging
acquisitions, and $5 billion for underwriting IPOs and sales of junk bonds
(which, despite their name, are highly lucrative. It would be like a
“crap sandwich” actually tasting good).
of granting ginormous bonuses to already-rich
workers who, on the face of things, don’t appear to have earned them,
shouldn’t that fund be used to offset shareholder losses? Why not
“share” those record fees with “shareholders,” one might ask, only to be met
by derisive laughter from men in suits with big bags of money bearing dollar
wisdom says the top investment banks can’t
afford NOT to shower gold on their best people – the most brilliant investment
minds in the industry – or they’d just take their golden shower
elsewhere. One might argue that losing the brilliant minds who cost
them billions by investing in wobbly-as-a-Weeble sub-prime mortgage bonds
might actually be good for the company, especially if
they wind up at the competition.
at least it’s nice to see the little guy – the lowly
financial worker-bee, scurrying about the hive, regurgitating great gobs of
gooey money for the Queen – enjoy his sloppy seconds... while the
"Queen" of the biggest investment hive, Goldman-Sachs CEO Lloyd
Blankfein, takes home $69 million for 2007, up from 54 million last year.
want to see the math for how long it would take
to earn that at $48k a year?