OT: economics -- TARP results

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F. George McDuffee 18 years ago

OT: First results of The Brokers and Bankers Emergency Relief Act of 2008 seen. Note this was *NOT* reported in an the American media.

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Wall Street banks in $70bn staff payout Pay and bonus deals equivalent to 10% of US government bail-out package Comments (219)

Simon Bowers * The Guardian, * Saturday October 18 2008

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.

Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government's cash has been poured in on the condition that excessive executive pay would be curbed.

Pay plans for bankers have been disclosed in recent corporate statements. Pressure on the US firms to review preparations for annual bonuses increased yesterday when Germany's Deutsche Bank said many of its leading traders would join Josef Ackermann, its chief executive, in waiving millions of euros in annual payouts.

The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell

6.4% and Lehman Brothers has collapsed.

==>At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

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David Harmon 18 years ago

On Sat, 18 Oct 2008 17:14:52 -0500 in rec.crafts.metalworking, F. George McDuffee wrote,

Please do not post off-topic articles.

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Toolpost 18 years ago

As a small CNC shop owner and taxpayer, I appreciate George's posts of this nature. We need to be aware of how our money is being used, and when it's used like this (if true, it should be criminal), we need to express our outrage to our leaders.

If this is true, we're being stolen from in an almost unimaginable scale....

Toolpost

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F. George McDuffee 18 years ago

--------------------------- Thanks for the positive feedback.

As a small business owner/operator you are exactly the person I am posting these OT items for.

First as an internal consultant [SPC, CEDAC, and SMED] and then academic (now retired), I was continually baffled by the lack of significant positive effects from the introduction of new techniques and methodologies in companies ranging in scale from the very small to divisions of Fortune 500.

On the academic side, it was (and is) depressing to see the continual slide in inflation adjusted disposable individual and family incomes, in spite of ever increasing investments in education.

While there are many legitimate criticisms of "education," the fact stands that our citizens are now better educated than ever, and higher percentages of our citizens are now high school and college graduates, and possess more advanced degrees than ever before, yet their incomes and competitiveness seems to continue to fall.

After considerable research and digging, it appears that most of the current socio-economic problems are *NOT* the result of "internal factors" but rather systemic changes over which individuals have little to no control, and companies have control only in the sense that they can relocate to other areas (countries).

To be sure, overtly negative behaviors such as excessive alcohol/drug use, indiscriminate child bearing, management "over reach" such as drawing excessive compensation, and not reinvesting in the companies are factors, but even the most prudent and frugal are now being "blind sided."

The many current socio-economic problems do not appear to be the result of some nefarious plot, but rather the sum of thousands of governmental policy decisions (which seemed like a good idea at the time) taken over the last two generations, with "unintended consequences," most of which have never been re-examined or re-evaluated, many of which are synergistic [multiplicative, rather than additive] in their effects.

This is particularly true of current tax policy, which for example, values a dollar made by speculation [capital gains] as more than a dollar made by adding value to a real product, or enhancing a real service. (Compare the tax rates!)

Other examples are the actual subsidization of the relocation of "valued added" activities/services from the United States, to targeted foreign countries, for example the move of most commercial rose growing from the US to Columbia as part of the "war on drugs."

Good luck with your shop, and keep up the good work, making real things for real money with real people [and paying real taxes].

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

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