Posts filed under “Wages & Income”

A Long Look at Banker Compensation

Today’s NYT magazine has a long, well done interesting piece on Kenneth Feinberg, the government’s special master for executive compensation, titled What’s a Bailed-Out Banker Really Worth?.

Anytime I read a discussion on compensation, bonuses, and bailouts, I am astonished as to how much of the general discontent over these issues traces back to the original bailout.

The no strings attached giveaways, the refusal hold people accountable, the paniced over-reaction by Treasury and Fed chairs. All these factors led to the present situation.

Regardless, pour a tall cup of coffee and see Steve Brill’s take on this . . .

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Source:
What’s a Bailed-Out Banker Really Worth?
STEVEN BRILL
NYT, December 29, 2009
http://www.nytimes.com/2010/01/03/magazine/03Compensation-t.html

Category: Bailouts, Corporate Management, Wages & Income

Elizabeth Warren: The Coming Collapse of the Middle Class:

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America’s credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

2007:

The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net – UCTV – University of California Television.

Category: Economy, Employment, Video, Wages & Income

The Vilification of Goldman Sachs’ Pay Practices

Mike Santoli has an interesting perspective on the furious reactions to Goldie’s bonuses in this week’s Barron’s: “Absent in the rage against people earning impressive pay after their firms got public help is the key question: Do we want the firms that received aid to continue operating as autonomous, profit-seeking businesses, or as quasi-utilities operating…Read More

Category: Bailouts, Corporate Management, Wages & Income

Much Ado About Nothing $23B: Goldman Sachs Bonus

Its time for the quarterly hand-wringing amongst the populace regarding the over-sized bonuses at Goldman Sachs. This Q, its a mere $23B.

The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector — but bonuses are not one of them. [BR: Or, at least not the most important thing to be enraged over]

We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is.  You can complain about it, but it is all but pointless. Feel free to pursue a millionaire’s tax of 1% (or 10%) on everyone who earns more than $1m — a super top tier — to pay for health care reform or whatever you want. (Best of luck with that!)

Every few years, we lament overpaid athletes, musicians, movie stars. Bruce Springsteen is going to make $100 million+ this year on tour. While you can complain about it, ask yourself how many people can fill 50,000 seat arenas 200 night a year at $100 a pop. Lebron James, Peyton Manning, and others justify their salaries by generating massive revenue and profits for their employers.

So too it is with Goldman Sachs and others.

The traders who throw off the most profits, the bankers that generate the most lucrative deals are worth tens of millions to their “team owners.” That is how it is, and it is unlikely to ever change.

What should you be upset about?

• Paying people in year one for risks that last years or decades;

• The “privatized gains, socialized losses” of the current system;

• Dramatically reduced competition in the Banking sector;

• The idea that “Too Big To Fail” is now an official policy of the United States;

• The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;

• Bank lobbyists preventing any sort of credible regulation from passing;

• Goldman Sachs wresting $19 billion from AIG;

• The absurd and poorly thought out $750 billion TARP plan;

• The suspension of mark-to-market allowing banks to hide losses and not accurately disclose their bad assets;

• The outsized influence Banks have on Congress and Goldman Sachs has within the Executive branch.

There are plenty of things to be upset about these days. Top performers earning huge paydays at the biggest firms is not one of them . . .

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Previously:
Looking at Wall Street Pay (August 1st, 2009)

http://www.ritholtz.com/blog/2009/08/looking-at-wall-street-pay/

Why Financial Reform Died: “Banks Run Congress” (October 12th, 2009)

http://www.ritholtz.com/blog/2009/10/why-financial-reform-died-banks-run-congress/

What’s Wrong With Billionaire Fund Managers? (April 16th, 2008)

http://www.ritholtz.com/blog/2008/04/whats-wrong-with-billionaire-fund-managers/

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Category: Bailouts, 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….Read More

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.

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Category: Data Analysis, Wages & Income