Posts filed under “Wages & Income”

Why Are Banks Paying Signing Bonus So Early?

I love the smell of napalm in the morning. You know, one time we had a hill bombed, for 12 hours. When it was all over, I walked up. We didn’t find one of ‘em, not one stinkin’ dink body. The smell, you know that gasoline smell, the whole hill. Smelled like [sniffing, pondering]  victory.

Someday this war’s gonna end…

-Robert Duvall (Lieutenant Colonel Bill Kilgore)

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I’ve recently learned from several MBAs graduating in 2010 about firm signing bonuses. They are being paid out unusually early.

I have been wondering why.

The FOMC’s Zero Interest Rate Policy has been a license to print money — literally for the Fed, and figuratively for the major banks.

Being able to borrow at near zero costs means that making billions of dollars is a no brainer, even for some of the planet’s most mismanaged bankers.

Banks are so flush, they have been repaying TARP funds, buying out toxic debt guarantees, and repurchasing preferred shares and warrants.

The most recent hint of their overflowing coffers are the class of 2010 hires. Traditionally, these new employees receive their sign on bonuses sometime in the spring. Some start work that summer; most (at least in my day) begin in September, following one last drunken promiscuous binge through Europe (Ahhh, youth).

I was surprised to learn that several firms, most prominently JPMorgan, are paying out their signing bonuses over the next few weeks.

Its not too hard to imagine why.

I doubt pending legislation has much to do with it, but who knows. Given how much cash they are throwing off, my best guess is they are trying to spend as much of it as possible in the current tax year.

The crisis, the bailouts, the obscene amount of taxpayer monies that have been usurped and wasted. One is reminded of Colonel Kilgore’s speech in Apocalypse Now:  While Duvall’s famous Napalm line gets quoted all the time, it is that last wistful sentiment that is really is the most poignant — and relevant — to the present license to steal.

Someday this war’s gonna end…

Category: Bailouts, Corporate Management, Wages & Income

How Many Hours of Work Are Required to Purchase S&P?

Are stocks cheap or expensive? Are wages up or down? The answer to the  above question is obviously a a function of both hourly wages and S&P prices. Note that in the early 1980s, you could by the SPX with under 20 hours of labor — Stocks were cheap then. In the late 1990s, it…Read More

Category: Markets, Valuation, Wages & Income

Personal Savings Rate

Improved savings rate? Not exactly. Mark Warywoda of Addenda-Capital.com up in Canada offers up some thoughts on why we should not read too much into the recent improvement in Savings Rates: “So far, all we have had is a two-quarter bump up in personal savings rates — that is trivial related to the outstanding debt…Read More

Category: Consumer Spending, Wages & Income

Weak Consumers, Creditless Firms Impacts Recovery

Two interesting front page articles this morning expand on several of our favorite themes. The first, the NYT’s A Reluctance to Spend May Be a Legacy of the Recession, treads over some well worn ground with anecdotes and data.  The anecdotal stuff is the usual mix of sad tales, and psychology, some signs of improvement…Read More

Category: Economy, Employment, Wages & Income

Securtizing Goldman’s Bonuses

Zero Hedge has this hilarious offering memorandum of GS’ bonus pool this year: > click for larger, readable version

Category: Bailouts, Humor, Wages & Income

Income Falls 1.3%, But . . .

Don’t get too bent out of shape over the bigger than expected drop in income in June.

It was the biggest drop in 4 years, but it came on top of the big May stimulus, which helped income surge 1.3%.

Back out govvie largesse, and the 2 months net out to more or less flat  . . .

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NOTE:  Market Talk adds that personal income is down $453B since June 2008.

Read More

Category: Data Analysis, Wages & Income

Record Bonuses At Bailed-Out Banks

Category: Bailouts, Video, Wages & Income

Regulation & Finance Sector Pay

Nice couple of charts that show correlation between what occurred when financial markets were deregulated and the outsized compensation packages that subsequently followed. The book does a nice job showing how one led to the other — that there was both Correlation and Causation. > chart via NYU ~~~ Here is a similar chart, with…Read More

Category: Bailout Nation, Bailouts, Regulation, Wages & Income

NFP Data Dissection

Source: BLS > So much for the green shoots: Let’s take a closer look at the 467,000 job losses in June: • Recession Job Losses = 6.5 million since December 2007; • Total number of unemployed persons (14.7 million); from the start of the recession, the number of unemployed persons has increased by 7.2 million;…Read More

Category: Data Analysis, Employment, Wages & Income

Explaining Non Farm Payroll & Analysis

Its tine for everyone’s favorite monthly data point, Non-Farm Payrolls. For those of you who are relatively new to the site, here is a brief description of how our analysis has evolved over time. • Weak Jobs Recovery: Following the 2001 Recession, the economic recovery, from a jobs perspective, was rather weak. Indeed, from 2002-07,…Read More

Category: Data Analysis, Employment, Wages & Income