The State Of Welfare In The USA
Sadhbh Walshe writes for The Guardian:
According to government data, as of September, 31.5 million Americans were using the food stamp programme, up 17% from the previous year. That's 10% of the US population. These are staggering figures.They bring to mind another staggering figure I recently came across that I have been unable to remove from my subconscious. It is $163,987,000 - the salary that Henry Paulson, now secretary of the US Treasury, took home in 2006 for his services as CEO of Goldman Sachs.
Two years later, Goldman Sachs required a massive bail-out from taxpayers.
I'm waiting for one of these people in charge of a company that's now sucking from the rest of us to offer to put some of his money back.
Yes, I believe they call that "The Sound Of Scumbag"...uh, "Silence."
My favorite comment from The Guardian, by bungle666, puts it like this:
Paulson is a rat. I hope he chokes on a pretzel
As for salary, a New York Times story by Louise Story parses the difference between salary and bonuses. The title? "On Wall Street, Bonuses, Not Profits, Were Real." An excerpt:
For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that -- $35 million.The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill's mortgage business.
Mr. Kim's colleagues, not only at his level, but far down the ranks, also pocketed large paychecks. In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.
But Merrill's record earnings in 2006 -- $7.5 billion -- turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.
Unlike the earnings, however, the bonuses have not been reversed.
As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers' money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.
Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street's pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino -- and let them collect their winnings while the roulette wheel was still spinning.
Guardian piece via Norm
Okay... now, do you imagine this guy was paid in cash? Gold? Your gold?
This is "arguing about other people's money" again. If you don't like the job somebody's doing, the best thing you can do is take it from him - not with a flurry of laws, which always have unintended consequences, but by taking the steps to replace him with your own body.
Then tell me what you'd be doing.
Now, of course the numbers are big. Compare them to the amount actually handled.
I've been looking at this a long time. American CEOs are routinely criticized for "excessive earnings". It is often noted that top CEOs in the US make about 140 times what the average of their employees do, and that this is sinful compared to other, "superior" environments like Sweden, where that factor is only 15. Wonder why.
Nobody arguing this issue seems to know what the laws are in the US, and then they have no idea about market communication, or how difficult it is to legislate income.
You have a quarrel, not with the SEC, and not with Paulson or Gates or Ballmer or the Sultanate of Brunei - you have one with yourself.
Compensation of officers in a corporation is set by the shareholders. Not you, not me, not the Feds.
Corporations whose CEOs are cited for "excessive" compensation are generally international traders. This money did not come just from you.
If you start making things up about compensation in the way of laws, you have to remember such things as the "Pet Rock", and the music and software industries. Let's see... copies should be free? The writer has too much money? This is about "market communication" - the ability to sell more of a product an idea by presenting it to a wider audience.
And, lastly, if you passed your high-school economics class, you know that Paulson's big paycheck must move to be worth anything. This guy's not hiding from you. It's in the bank, or hiring artisans to build things.
I worked in a small yard in Miami catering to megayachts, which are quite as much more marvelous from the inside as you might think from the outside; I've seen one stateroom with more than $300K in its furnishings. I got a few minutes here and there with the crews and masters of such yachts. These people don't have money because they spend it - they have it because they know how to get it and keep it.
The bottom line is that money handlers have more money exactly like the car dealer gets to drive what he wants: they are where the commodity is and they understand it. They understand money.
Now, here's something I've noticed I find hilarious. When a group of people gets mad about something, such as waterfront housing, job compensation, gun availability and the like, they never seem to notice that they, themselves, might be needing a waterfront home, job compensation or a gun, and they get legislation to make it more difficult - for them!
Radwaste at December 25, 2008 9:39 AM
Radwaste, what you say is true. Warren Buffett once said that he has money, because money is the tool he works with. That said, he's the opposite extreme, living a very "ordinary" life in most ways.
Nonetheless, the structure of the bonuses can encourage a particular type of thinking. If you know that your profits this year determine your bonus this year, you may well handle that money with a short-term outlook.
What several banks here (Europe) are doing: future bonuses will be paid out over several years, and their actual value will therefore be determined by the performance of the bank for several years after the bonus was awarded.
Whether this will have the desired effect? We'll have to wait and see...
bradley13 at December 25, 2008 11:58 PM
Leave a comment