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I guess the banks couldn't have kept things low-key for another year. Goldman posting huge profits and throwing record dollars into the 2009 bonus pool is causing a shitstorm, and we can expect a media frenzy to ensure that the natives continue to be restless.
Remember back in February, when AIG was about to pay out contractually-obligated retention bonuses to key personnel? Do you remember the bus tours that were organized to take the peasants to the homes of AIG officers? I have a feeling that's going to look mellow compared to the backlash that this bonus season will cause.
When people realize that the very money that was given to save the banks is being paid out in bonuses (of course it's not true, but the simplistic nature of a 15-second sound bite will make it so), the American public is going to go apeshit.
And you can count on the media to remind the American public on a daily basis about how much money Wall Street makes and how screwed Joe Six-Pack is.
Amid all this class warfare, a few faults have to be acknowledged on the part of the Street. Moore is correct in saying that, a year out from the meltdown, there still hasn't been a single new regulation to ensure the crisis never happens again. In fact, there hasn't even been a return to the common sense regulations that worked for decades but were repealed over the last two administrations (Bush & Clinton, not Obama).
The fact that the banks are spending so much money to lobby for the status quo is only aggravating the problem. The whole world knows Wall Street owns Washington, but do they have to rub our faces in it? Whatever happened to accepting a 7 or 8-figure bonus with a little discretion and humility?
Ironically, I was speaking to my father about this exact topic just yesterday. People are going to go nuts when bonuses are announced, especially as unemployment continues to rise higher and higher. Joe Six-Pack has no real concept of how things work on Wall Street or the amount of hours bankers put in and although the amount of money that an analyst makes coming out of undergrad seems to be high or even a bit excessive...if the public could step back and see the hell that they endure and the sheer amount of hours they spend in the office they would realize they aren't raping the system, that they are making about 3 times as much as a 'normal' person, but also working 3 times the hours.
Edmundo, while Moore may be correct in pointing out that there has not been any new regulations passed to ensure a similar crisis is averted in the future I have this stinging feeling his idea of regulation has to do with capping pay of Wall Streeters, not passing laws to prevent the actions that caused the meltdown (probably because he feels the WS greed is the reason the meltdown occured).
Additionally, although Wall Street has owned Washington in the past it will be interesting to see how things will pan out going forward now that Washington has such a large stake in WS, literally.
Regards
Totally agreed. I'd like to see these people retire on a 3 percent return, because if Wall Street gets capped, that's exactly what they're going to get. I'm not saying that the only reason people work on Wall Street is to make money, but let's be honest here nobody's going to work 90 hour weeks for $60K without a bonus. I'd also like to see a fund manager take on Michael Moore in an open debate. I guarantee the fat man gets pummeled.
Carpe diem
Michael Moore is a complete sensationalist... does he realize if capitalism hadn't existed he wouldn't be able to make millions off of his petty documentaries. Obviously banks are at fault for the crisis, but so are the homeowners, regulators, and rating agencies. There is no single target, even though its easier to point a finger at the rich than it is to point to the poor. Lets be honest here, most of the lower class in this country don't genuinely care about economic prosperity and progress, they care about what the government is going to hand out to them. I'm not claiming that wall street isn't at fault at all, because it obviously paid a part, but this sensationalism is so bad for our country and our economy. It gets nothing done except cause bitter rivalries and push the common man for revolution verses evolutionary, intelligent and well thoughout change. Michael Moore is essentially a little kid who goes after everything and everyone he can never belong to. Does he have any experience as an economist, an investor on wall street, or a banker? Not in the slightest, yet he has some how figured everything out in one documentary that it has caused our economy over 300 years to figure out and perfect. Not at all saying that there doesn't need to be changes to compensation, but the last fucking person we need to hear this from is this fat, insecure poor excuse for a human being. His ignorance of everything he talks about is so astounding, i'm surprised his documentaries get into theatres, yet it isn't that surprising considering how many ignorant, lazy fucking people there are in this country looking for a hand out. Yeah, instead of having regulators and people from industry coming together to solve this, we should rely on this fat fuck who knows absolutely nothing about wall street and the way it operates.
I like Michael Moore's intentions of trying to fight for the average american but even after all the work he's done for his documentary (which i haven't seen), I can't help but think that he doesn't really understand this financial crisis. I think that it is easier to blame rich people. There are are so many more outlets he can focus his energy toward (Moody's, Greenspan, Pelozi and the rest of congress)
I think Michael Moore gets the crisis (or most of it). But he's always been the guy who enjoys sensationalism and rhetoric.
Somebody should ask him that if he were, lets say, the president, what would he do? I suspect that he wont have a good answer.
Oh, I am certain he would know what to do as president...in fact, it would be the same thing Obama regurgitated during his campaigns, "hope" "change" and any other catchphrase the aforementioned members of our welfare nation want to hear. But just as people are starting to figure out, his campaign promises were simply lies and this guy is ignorant, much like Michael Moore. It's hard for people to make changes because that often means hearing the truth and the sad fact is, the majority of the poor(er) people of this nation don't want to better themselves through education and hard work, they only care to "better themselves" if it comes in the guise of stimulus checks or various other government/taxpayer handouts.
I'm simply quite sick and tired of hearing about how crappy our country is, about how fundamentally flawed our capitalistic economy is. There are many other countries in this world that operate under some of the "better" socialistic views which some of these celebrities and politicians (I use the term loosely) praise. I hear the likes of Bill Maher who seems to hate this country and our capitalistic ideals but I haven't had the luxury of witnessing him packing his bags and applying for Chinese citizenship. What gives?
Now, I realize that MM is nothing more than an entrepreneur who uses his sensationalistic speech to pad his backside (both wallet and ass) but can't he find a more constructive way to do so? His rhetoric is pure garbage and is soaked up by the uneducated/ignorant masses and he continues to chip away at the foundation and structure of the world's greatest and most free country which, by the way, has given him everything he has to include his wealth and his freedom of speech. Good luck to America.
Regards
well said cphbravo
cphbravo you nailed it, sad but true!
I see here that the only significant explanation in defence for bonuses is that banks need to pay bankers a lot to keep them.
I say that's bullshit. The financial landscape has changed. And due to the greedy, arrogant and elitist nature of bankers.
Wall street should pay analsts (for example) 60k + and ~15-20% bonus. If analysts dont like that, then they can quit! I am sure there are plenty of people out there willing to take the job and give it a go. And if no one is willing to work 100+ hours for that money, then the employeeing banks should re adjust and change the work culture. Employee more people to tackle the workload, pay them less.
Whilst you argue effectively that the (main) reason for paying bonuses is to keep banking employees in banks, it's almost surely not the case that you could get someone to work 100 hours per week for 60k + 12k bonus--not someone you would want to do the job in any case.
What you're talking about doing (that is, increasing the number of employees whilst decreasing the compensation per worker) is only even remotely effective at an analyst/associate level. At the base, you start to dilute the quality of analysts and associates you bring into the business. That doesn't make much of a difference at the bottom, because most people can do the work of an M&A junior (I used to be one at Lazard). It doesn't take a genius to do the sorts of tasks you get assigned as an analyst, and it doesn't take one to check those tasks (associate work). But when people talk about "bankers' bonuses," they aren't talking about analysts and associates. They're talking about seniors (VP/D/MD). And at a senior level, it does make a difference who does the job. You're no longer readily replaceable, and you DO NOT need as many deal-makers. Your reasoning works fine for technicians, not engineers.
You're talking specifically about M&A, because as a trader, I don't work nearly those sorts of hours. And it makes an even bigger difference if you're 'good' at your job. I want the best working on my desk. Seeing as we only take (maybe) one kid per year onto my desk, I want a good one. I don't want the sort of state-school-educated, willing-to-work-for-cack-because-they-have-no-alternatives kid. I want the kid who could have gone to do something else, and I don't mind paying for it. More importantly, neither does my desk head.
So, if banks start paying analysts 60k per year with poo for bonuses, we'll pay more, and we'll get better analysts. We'll pay more for associates, and get the best associates. And because those people can't go somewhere else to make more money, they will stay (en masse), and we'll have the best VPs/EDs/MDs. And do you know who we'll be? Who has followed that model since the early 80's? Goldman Sachs.
brotherbear thanks for the insight, cphbravo96 you are just so naive
Spoken like a true underachiever. This is the same argument I have heard from a countless number of ignorant people in response to CEO compensation. "Just pay them less, someone would be willing to do the job and probably just as good." Whatever. That is the biggest pile of crap I have ever heard. People only look at the advantages of being a CEO (or banker)..."look at the HUGE bonuses, anyone would be willing to do that job." Obviously not, considering there are a massive amount of other occupations. People like to focus on the executive flying on a private jet but don't think about where he is flying to late on a Tuesday night where he will be away from his wife and kids for any given amount of time. They want to focus on the pay they receive and want to ignore the phone calls and emails they are required to respond to Saturday morning while attending their sons soccer games.
Stop being so critical and start being realistic. The fact of the matter is, most people in life have the opportunity to be a banker or CEO or whatever, but they choose not to put in the time and/or effort to achieve the success (or they don't view that title as success). Most people in life only want to be able to pay their bills and eat out a couple times a week and don't care to work harder to achieve more...the opportunity cost for them is far too great. I have held many part-time jobs where I hear people all the time..."Sorry, I can't help you, I already clocked-out" regardless of whether it was going to take 2 minutes or 10 minutes or "What do you mean I can't start cleaning up early? I'm not staying here late." Seriously, in theory, if you start cleaning-up/closing-up 5 minutes early...you are only going to be able to leave 5 MINUTES EARLY!!
zxcvb, you are simply delusional, nothing more to it. Maybe some bankers can speak to this next statement from personal experience but its my understanding that having more analyst/associates would not be a viable solution to 'excessive hours' that bankers work. The fact is the hours required for a single pitch/deal is substantial and always requires (from time-to-time) extremely late hours and switching between different bankers because the first on reached his 40 hours for the week would probably be detrimental to the bank's operations because of the lack of exposure the second banker has to the deal at that point. Any confirmation or opinions on that?
Regards
If Michael Moore is so fucking angry and disgusted with people getting paid so well while there are so many people suffering, why doesn't he donate the proceeds from all his films to the UAW? According to this fat fucktard, no one should be making money while someone else is not. A home forecloses every 7.5 seconds, maybe if these fat in-bred half-wits didn't buy shit they couldn't afford they wouldn't be foreclosing on their homes.
I'm not saying Wall Street deserves this compensation. I'm just refuting this fat slob screaming from rooftops that people are foreclosing on their homes and are losing their jobs, therefore no one else deserves to make money.
I like to slap this fat pig in the face with a slab of bacon, but he'd probably take a bite out of it before it even made impact with his rack of lamb cheek.
While I think it is absurd that total bonus pay out has actually gone up, if you take this year and last years bonus payout and compare it to 2007/2006 payout, I'm pretty sure you'll find that its substantially less. One of the reasons bonuses are up this year is because people got paid absolutely jack shit last year, and if that happens again this year, all those people are moving to fucking Switzerland and taking their deals, clients, and prop strategies with them.
zxcvb, I don't have the strength to battle the onslaught of ignorance in both threads so please refer to your previous lashing here:
http://www.wallstreetoasis.com/forums/blankfein-attempts-to-subdue-bonu…
Also, in reference to zxcvb's benign comments...what ever happen to the throwing feces option that was being talked about a short while back? Originally I was a bit skeptical but I now see the need.
As for Marcus, I echo your sentiments. I was tempted to refer to MM as 'worthless' but it just wouldn't seem accurate given the term could imply some sort of neutrality when, in fact, he is more of a detriment to our society and has a net negative impact.
Regards
Simple economics: compensation is a function of elasticity of supply (supply/demand)
If people are mad about bankers pay, let's examine pays received by celebs or models. Do they "deserve" their millions for their seemingly easy jobs? Who are we to say and who can really define what the word "deserve" mean anyway? It's determined by the market forces, that's it.
Just like high-paid doctors, lawyers, CEOs and celebrities, bankers are paid highly because they possess a certain mix of skills that are not easily supplied by the market. Lower their pay, and you will just see these people leave, and the quality of labor willing to supply their manpower at the new lower rate will be also proportionally lower. Maybe Moore needs to take up ECON101? He needs to understand that he's making money for the same reason... Or, maybe he fully understand this concept, and is using it by supplying the market with the rare mix of ignorance and sensationalist approach to make money.
Simple economics: compensation is a function of elasticity of supply (supply/demand)
If people are mad about bankers pay, let's examine pays received by celebs or models. Do they "deserve" their millions for their seemingly easy jobs? Who are we to say and who can really define what the word "deserve" mean anyway? It's determined by the market forces, that's it.
Just like high-paid doctors, lawyers, CEOs and celebrities, bankers are paid highly because they possess a certain mix of skills that are not easily supplied by the market. Lower their pay, and you will just see these people leave, and the quality of labor willing to supply their manpower at the new lower rate will be also proportionally lower. Maybe Moore needs to take up ECON101? He needs to understand that he's making money for the same reason... Or, maybe he fully understand this concept, and is using it by supplying the market with the rare mix of ignorance and sensationalist approach to make money.
Simple economics: compensation is a function of elasticity of supply (supply/demand)
If people are mad about bankers pay, let's examine pays received by celebs or models. Do they "deserve" their millions for their seemingly easy jobs? Who are we to say and who can really define what the word "deserve" mean anyway? It's determined by the market forces, that's it.
Just like high-paid doctors, lawyers, CEOs and celebrities, bankers are paid highly because they possess a certain mix of skills that are not easily supplied by the market. Lower their pay, and you will just see these people leave, and the quality of labor willing to supply their manpower at the new lower rate will be also proportionally lower. Maybe Moore needs to take up ECON101? He needs to understand that he's making money for the same reason... Or, maybe he fully understand this concept, and is using it by supplying the market with the rare mix of ignorance and sensationalist approach to make money.
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