As a change of pace from serious ‘market related’ news, charts etc, I want to post something on other serious capitalism related issue of the time – Wall Street bonuses. I am sure this topic will touch a nerve across all political beliefs.
Wall Street executives paid themselves 18.4 billion in bonuses in 2008. Nobody cared how much they paid themselves as long as they got the money from their coffers. This time it happened at the same time they were begging the tax payers to bail them out with hundreds of billions of dollars. President Obama weighed in. “That is the height of irresponsibility. It is shameful.” Some say it is Obama’s rare but organic anger and some say it is a ‘calculated’ expression of outrage by the President.
I am not a big fan of India’s Economic Times. But there is a good article in this rag on this subject: For CEOs, thirst for bonuses may be in their DNA. Excerpts:
“People don’t become head of Merrill Lynch without having a certain sense of self-importance. Once they arrive at that position, they have all kinds of toadies tell them what geniuses they are, then of course they begin to feel their lifelong feelings of self-importance have been confirmed,” said Charles Goodstein, a psychoanalyst and professor at New York University School of Medicine.
More than this article, I like the way another blogger drew a parallel between this monomaniacal bunch with another set of goons we know. The politicians. Excerpts from Jesse’s article: Are we ready for market capitalism?
Defenders of executive perks say generous compensation is needed to retain talent. (Generous, not extravagant. There is a direct proportion between the emptiness of the suit and the extravagance of the trappings. There are only a few Steve Jobs; most of the others are verbally adept, highly cunning, political animals. For the most part it is the myth of the “Great Man.” A surprisingly large number of them are frauds. The problem is the system does not manage them, eliminate them. It pays for the office, not for the performance. – Jesse)
…
“While Wall Street melted down, top executives believed that, unlike the rest of the country, they still deserved huge bonuses,” Cuomo said. (And Congress took increasing pay raises, and a private pension system, and superior healthcare, while the median wage stagnated and the middle class dwindled – Jesse)
What say you? Have a ball!
It was the “height of irresponsibility” for government to simply hand over cash and not foresee this was going to happen in the first place.
Biden was reported as saying that “I’d like to throw these guys in the brig. I do know what they are thinking, and they are thinking of the same old thing that got us here: Greed. They are thinking: ‘Take care of me.’ ” Why do politicians continue to think they can engage in enormous wealth transfers without incentivizing these kind of inefficiencies? As I see the situation, politicians are quite as megalomaniacal in thinking their “benevolent” meddling in the marketplace can overcome human nature’s rational self-interest. This is the same megalomania which allows them to think that they, god-like, can create wealth out of thin air, in “stimunlus” packages, which, like the bailouts, simply amount to enormous transfers of wealth from productive sectors to nonproductive ones.
clearly some very new and very innovative legislation needs to be crafted that alters the social contract like we have never seen before – which would of course take aim at those who have so comfortably feathered the nests of many a legislator for so long – which then makes the likelihood of this form of measure highly improbable, so the politicians will instead resort to the time honoured technique of banging the cutlery and plates so to appear as frustrated as the rest of us…. or…. we burn a few examples of this perverse and really quite inhuman profligate excess and greed at the stake… yes, a return to the vigilante mob and justice in the street… if only the mob could catch these gangsters as the fly above everyones’ clutches in their corporate jets…ahemmm… back to the drawing board as the news headlines drone away in the background… and… oh wait… another new sound bite by from our illustrious hero….
Agreed in full.
“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.” — Thomas Jefferson
I’d also like to add that the bailout is unconstitutional, and therefore illegal (if that even matters to anyone anymore). Of course, this also applies to the vast majority of federal spending today.
What Congress is authorized to spend tax revenue on is enumerated quite clearly in Article 1, Section 8 of the Constitution. Although I don’t necessarily think we should be bound by the “intentions of the Framers”, I also think the words in the document that grants our government its authority to exist in the first place should mean something. Some of the Framers’ writings may be helpful in getting at that meaning:
“Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.” — Thomas Jefferson.
“With respect to the two words ‘general welfare,’ I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.” –James Madison
This is only to point out that the bailout is no more “legal” than your suggested response to any further bailout-enabled greed/excess. What’s the difference? They got the guns, friend.
Can our elected officials bite off the hand that feeds them? This is a major battle that is being waged. I bet the lobbyists are going nuts now. Pork belly promises that were trying to be slid in this last bill will be cut out. That means promises made on massive campaign contributions won’t get met. These “investments” in their congress person will not yield anything anytime soon if ever. That combined witht the downturn will change the face of politics and level the playing field for the smaller less well funded persons to get elected. Mohan, you want a sort play? I’d be willing to bet that HAL is toast with Cheney/Bush gone. They will attack waste and waste drives a majority of HAL’s profits. This battle will be very interesting. I would assume that over the next 4 years a lot of the old timers will be voted out and we’ll have a cleaner, less special interest driven government than we’ve ever seen in our time. For a while at least – greed will always win out.
I wish I could share your optimism. Unfortunately, each new regime for decades has promised “cleaner, less special interest-driven government.” I don’t think it’s going to happen until Congress is held to the original meaning of its constitutional spending power. As it stands, without all the promises of (unconstitutional) pork and special interest spending, it is very difficult for “honest”, “clean” politicians to raise enough campaign cash to compete against the slimy ones. A paradigm shift in the way Congress’s spending power is interpreted needs to occur. Perhaps this is the kind of “battle” you were referring to.
HAL is already in my cross-hairs. Also, SLB is acting very weak. It could drop some 10 points in a hurry.