Which is the Bigger Threat: Terrorism or Wall Street Bonuses?

[girl gone mad]

Which is the Bigger Threat: Terrorism or Wall Street Bonuses?
Wallace C. Turbeville, http://www.newdeal20.org/2010/07/26/which-is-the-bigger-threat-terrorism-or-wall-street-bonuses-15721/">new deal 2.0

Which is a greater threat to the nation — terrorism or the relentless decline of middle income families? Unless we abandon our core values out of unwarranted fear, terror cannot fundamentally change our way of life. The number of people affected by growing income disparity is vast. When I was a student, income disparity was indicative of an underdeveloped and unstable society.

The government appropriately devotes enormous resources to protect our lives and property from terrorism. It is unthinkable that a leader would display any weakness opposing this threat. Politicians have stiff backbones when it comes to terrorism.

In contrast, the government is timid and half-hearted in its approach to the system which perversely rewards a few Wall Street traders with billions of dollars of bonuses, yet allows the foundation to decay.

(snip)

Over the last fifteen years, the financial sector’s percentage of GDP has increased dramatically. At the same time, the median family income stagnated and then declined. I do not believe that this is a coincidence.

http://www.newdeal20.org/2010/07/26/which-is-the-bigger-threat-terrorism-or-wall-street-bonuses-15721/">more...

[sakabatou]

1. Wall Street

[The Magistrate]

2. The Latter, Ma'am, Pose A Greater Threat To Our People And Country

[dd2003]

4. as an investment banker

I disagree....Many here on DU hate wall street, but I feel many do not know what all of wall street is. I work in M & A at a boutique and we mostly work on mergers, acquisitions, and ipos. We are not doing work that is harming America. However, i will agree that hedge funds cause alot of problems and so do alot of trading desks that sell derivatives. (If anyone has questions on what a mortgage backed security, credit default swap, or other awful things ruining America feel free to ask so I can explain). Many also hate wall street because of high bonuses. This is often because of the high price of the deals that occur. It is also because the average week for an investment banker is about 90-110 hours of work. With all the work done bonuses ensue. However, the biggest threat to America is lobbyists and politicians. They control wall street, not the other way around. I do agree also that teachers need to be paid more and are underappreciated. It would be great if we could end these damn wars and send the money to teachers and schools

[girl gone mad]

6. The author of this article worked on Wall Street for many, many years.

[The Magistrate]

11. No One Cares About Your Alibis, Sir

An economy in which nearly half the profit comes from lending money in one form or another is not a functioning system, but a swindle pure and simple. The profit taken ruins productive enterprise, and beggars the working populace. The compensation received for this destructive behavior is offensive on its face, like the mansion of a drug lord, and is an incentive to do further harm. The rest of this is laughable: Wall Street hires the lobbyists, and if politicians, desiring above all popularitty as the species does, were in control of Wall Street, most people in your claimed profession would be under lock and key at Marion and Leavenworth. That is, after all, what the people want....

[dd2003]

15. Disagree sir

The people who control lending and decide on how much is done are in operations and private lending. Hardly the wall street titles. Wall street titles are people in i banking, private equity, hedge funds, sales and trading. Now I already said that hedge funds should be outlawed because of their destructive nature. Trading is dangerous and needs more regulation. Most traders want this to because it would be easier and more structured. However, not all people want this like you say and the politicians control everything, not wall street. Alan Greyson is the only responsible politician out there. Plain and simple. Furthermore, why do you hate people making money? Most people in finance that you claim are making "drug money" make about $18 an hour. So when I am doing a model to do a leveraged buy out of a company, thats harmful? No it is not. Private equity is great for the community as it provides funding for many adventures and small businesses. It is also a wall street job and pays well too but is not looking to take advantage of the small person but help them.

[The Magistrate]

16. Saying 'Why Do You hate People Making Money?' Is Rather A Tell, Sir

That is a right ideologue's line; no one else would employ it.

People on the left do not 'hate people making money'; people on the left want more people to have a greater share of the money that is made; people on the left do not want the money that is made to concentrate in fewer and fewer hands, farther and farther away from the people whose labor actually makes the value that money represents.

You are going to have to keep your lines straight on the subject of compensation, as well, Sir. First, you claim the grotesque scale of bonuses paid is justified because the people who earn them work hard, putting in ninety to a hundred hour weeks. Welcome to the wonderful world of struggling parents holding down two poorly paying jobs: many millions of people work such hours, and somehow do not recieve million dollar checks in exchange. Second, you claim that the work does not really pay very well, that most investment bankers such as you claim to be make less than twenty dollars an hour. On the figures you give, assuming hundred hour weeks, and that you refer to net after with-holding, investment bankers take home perhaps ninety thousand a year. Union electricians can manage that in a busy year, and with shorter hours, too; perhaps you would want to seek some new field of employment?

Leveraged buy-outs generally saddle a business with a burden of interest to be paid on top of the need for profit on costs and capital invested. The extra margin is generally sweated out of the workers, by lower salaries or benefits, or speed-ups, or lay-offs, often combined with higher prices, whether in dollar amounts or lower quality in the product. This benefits no one but the usurer who receives the interest. 'Private equity' firms do not even have the fig-leaf of being able to claim that a broad base of share-holders enjoys the benefit of any profits made. Given the degree to which ownership of stock is concentrated, of course, that fig-leaf is a gauzy transperancy one can see the nipple through very clearly, but it is something at least to maintain the fiction of an excuse when one behaves badly and knows it.

An economy in which the leading source of profit is interest is wholly dysfunctional.

A society in which wealth is concentrated to a degree which ours is rapidly approaching cannot continue as a democracy, but must revert to classic forms of authoritarian rule.

[dd2003]

18. Yes and No

You are correct in predicting about 90k a year in salary. Bonuses are then given out because of the fees of the deals are so large. The fees are charged by companies to other companies and are paid by these other companies. Workers are then compensated from this so the labor you talk of is actually receiving the money. Furthermore, people on the left do hate people make money. Not all, and not even most, but there are people that do, i have read it rite here on the site as I have been actively reading since 2007. The arguement of parents with 2 jobs is sad, but true. It would be great if they earned more to help support their famalies. Completely agree. Unfortunately this is not the case. The best way to make money is to be around money. Many do not have this opportunity and many would fight to get that chance. I wish all struggling parents out there the best in their lives. Would have been great to get a public option passed for them. Now on to lbo's. I disagree with your assessment as many times pe firms are the ones paying so that the company is not being screwed over by lower salaries, lay offs, etc. Lbo's often give company chances to grow too and hire new employees! I understand their is anger. I am not in the wealthy class, I am not in the ruling class. All I am saying is that not all of wall street is bad and that many of us in wall streeth are very liberal and supporters of liberal causes all though that may be a suprise to many. I enjoy this discussion here, I think its healthy and informative.

[bemildred]

19. Wall Street is very like a casino in Las Vegas, Sir.

It is, on the one hand, an honest enough job for the dealers and other people who work there; and on the second hand a business that supplies something for which there is great demand; and finally for the people that own them it is a profitable racket.

To oppose Wall Street and the big investment banks as they are today in this country and elsewhere is not the same thing as opposing capital accumulation or investment or the trading in equities as such, it is to oppose the turning of those important economic tools into a racket.

[jtuck004]

14. I try not to paint with too broad a brush,

(though I fail at that sometimes) so I do understand your position. And for those that want to dig into it, the hedge funds were the primary mover in this bubble\crash, along with foreign investmentments they facilitated, and the administrations who didn't simply fail to regulate, but encouraged and changed laws which helped them grow to the size that hurt the country quite badly - they all "conspired" to put us on a path which may actually spell the end of what we are used to. But the people voted them in, and live with the results while driving around in their mini-vans, so there is a lot of responsiblity to go around...

A lot of people work 90 hours a week without bonuses - the private garbage guy I used to know did that, and the diseases he prevents save a lot more than any IPO will ever bring in. The newspaper guy works a lot of hours too - his delivery work is a second 30+ hours a week on top of his regular job. Not much in the way of bonuses there, either.

I had a brief stint in the market. Started in 1987 - that might give you a clue as to how my career went ;) A penny broker gave me a job, and when I couldn't stand the laws being broken around me I went to a bond house. Shortly after I left one of the principals went to prison. I decided that computers were a better fit for me.

And while I know there are people who do some good in the financial world, I do think the whole culture of the industry contributed heavily to the ability of the hedge funds to tear us up like they did. Just because people are greedy doesn't mean that it's moral to take advantage of their stupidity. Goldman has spent millions lobbying their friends in the government, and we have at least half a dozen ex-Goldman execs in the Treasury and other places (on temporary assignment - perhaps?). The lack of morals shown not only by various individuals both in and out of the government allowing this charade is astounding. I do agree that some lobbyists and some politicians are opponents not to be trusted, but they couldn't do their evil deeds without payment, which brings "Wall Street" (and others) back in the picture.

There are people on this board that may say they don't like it, but public employees and others have all been pretty happy taking those returns on stock up until the past couple of years, and there are a few traders as well, so not all of the investment world is bad - there are excesses everywhere. It's just an industry that seems to accomodate the worst of capitalism more than most.

thanks for your comment - that was brave...

[Newest Reality]

3. We are in a class war.

The censorship of that fact and the deafening silence about it is what stands out most.

Now, I don't mean that we, the common folk, declared such a war, but then, the military conflicts we are in are not officially declared as wars, either. This war is similar in that respect and it is more like a surreptitious occupation where the recipients are largely unaware of the operations at hand.

To watch it being won without the knowledge or consent of the occupied is disheartening. I mean, it may not even be recorded historically as a victory by the elite. Well, who knows, they may document this later on as a way to gloat. The losers can simply be portrayed in a way that makes the act seem justified in retrospect.

[jtuck004]

5. I think your analogy stands without apology

Most "common folk" have war visited upon them without their consent. And it may continue whether they fight or not.

And you are right, it is disheartening. We need more songs, and singers.

[Sherman A1]

9. Agreed & Well Said

You have hit the nail on the head. :toast:

[jtuck004]

7. Roubini suggested in Crisis Economics

that they move to a system of bonus/malus - average the returns over 3 years and pay bonuses based on the losses they will take in that time, as opposed to now when they just get bonuses for good returns and taxpayer money for bad.

If we had let those institutions - mostly hedge funds run by 20-30 yo quants with no soul, from what I can tell - go belly up instead of underwriting their recklessness, it would have taken down many others and there would have been tremors throughout the world. And the people that would have been hurt the worst would most likely have been the wealthy. The outcome would have been out in the open, not hidden in the secret books of the Fed, there would have been less debt for everyone as we settled everything out. The people who were rewarded for bad practice would have paid a price, along with the people who funded their activities and failed to regulate or manage them. Their successors would have had to think twice before they pursued that course of action again. There would have been more regulation, both from inside their own company and from the government. The dollar would have still had some value, maybe have been even stronger. Instead what we have is a situation of slow death of the dollar and our economy, millions of people unemployed and homeless, and the hedge funds reporting a 600% profit in 2010 in the complex derivatives. This isn't over, folks.

We are left with a moral hazard much greater than any problem of liquidity or solvency. These people know they have the keys to the kingdom, and they no longer have to be afraid to take any risk available, because the taxpayer will work till the day they die, even let their social security and medicare be cut, just to cover their bets.

Hedging does have it's purposes, but these particular folks, and their unrestrained "business" model, are just bad cess for this country. They bring a bad smell and disgrace to us, and Bernenke, Geithner, and Obama should be ashamed of the policy of letting them continue.

They have hurt a lot of people, and unless they are stopped, they are likely to do it again.

[Loudmxr]

8. Fear is the enemy. Because fear is the weapon that is used to oppress us.

[Sherman A1]

10. Wall Street

without any doubt. We are in a new "Gilded Age" of Robber Barons and an underclass (that would be the rest of us).

[SergeStorms]

12. Greed is ruining this country..........

it's ruining the world, and there is no institution which defines and glorifies greed more than Wall Street. To the 'Gordon Geckos' of the world it's their shrine, their church. Greed truly is a religion, and Wall Street - and those who feed the greed furnaces therein - are it's biggest acolytes. This country will be defeated from within by the economic terrorists on Wall Street, who have no consciences and no moral compass. The almighty dollar reigns supreme, and America is crumbling because of it.

[stray cat]

13. To those killed on 9-11 and their families - do you think it's wall street?

If you are on the wrong side of the statistics. It's small consolation if your the murder victim . Wall street can be regulated if the political will is there - try telling murderers to not murder people

[The Magistrate]

17. You Know, Sir, Actually

If you were to trouble to sort through all the myriad manners of death on the job and consequences of bankruptcy and poverty resulting directly from the extraction of money into the pockets of plutocrats and their agents, you would find the yearly total greatly exceeds the casualties inflicted once by a pip-squeak band of religious fundamentalists. Al Queda cannot in its wildest dreams manage more harm to us then we have managed to inflict on ourselves over the last decade of fnancial shenanigans....