What’s Missing From the Bankster “Bonus” Picture

Just sat down to enjoy my coffee—a little late this morning after a very pleasant, but long day with family yesterday, but I figure I’ll say more about that at some point, preferably with pictures as well—and made the misnake of perusing the Reuters headlines. So ... I’m gonna vent a little so that the chocolates I’ll be starting in just a few minutes don’t have a bitter taste to them.

As usual, I knew I was in trouble from just the headline: Wall Street bonus picture goes from bad to worse, but Noooooooo, I couldn’t keep from clicking on the link. The first few paragraphs of the article, emphasis mine:

With each passing day, the forecast for Wall Street bonuses only grows worse.

In less than two weeks, Morgan Stanley and Goldman Sachs will tell their bankers and traders how much they will receive in annual bonuses for one of the worst years ever for the securities industry. Bonuses represent the bulk of a Wall Streeter's compensation and in a good year could reach anywhere from $500,000 to several million dollars for a top producer.

Yet executives face a backlash against lavish pay after world governments put trillions of taxpayer dollars at risk to keep banks from failing. That pressure, combined with evidence that losses are continuing to mount and that revenue is falling hard, is expected to shrink payouts.

"It's a very tough year. People who still have jobs have to reset their expectations," said Eric Moskowitz, a compensation consultant at Wall Street recruiting firm The Options Group.

Compensation experts a month ago estimated that the biggest investment banking companies would slash annual bonuses by 50 percent, on average, and by more in businesses gutted by the breakdown in global markets.

Conditions have only grown worse in recent weeks. Fourth-quarter results are expected to be abysmal, while the layoffs keep piling up. Banks and insurers have announced about 200,000 job cuts since banks began experiencing problems with mortgages and other credit last year.

And a bit deeper in:

Rose Marie Orens, a compensation consultant at Mercer, said boards of directors have been tougher on pay this year, mindful of industrywide layoffs and a congressional spotlight on Wall Street greed.

"Everyone at the banks are really wrestling with what to do. To some degree, they're still focused on the upper levels of the house," Orens said. "But it's literally a day-by-day situation, but the numbers aren't getting any better."

I honestly do not know where to start with this kind of mess. Shouldn’t this not even be a discussion any longer? I mean, when nearly an entire business sector goes up like sodium in water, in what kind of bizarro world does the “bonus picture” even fucking exist any more?? I’d really like to see the execs try to look themselves square in the eye in a mirror and say, without sarcasm or anything besides earnestness, “I have earned a bonus this year.”

The fact that the matter of bankster bonuses is still under consideration demonstrates how completely removed from reality Wall Street has become. I understand full well the nature of this kind of payment structure: it’s a common enough scenario in many businesses. A base level of pay is set, usually on the low end of the continuum for the work; and various goals are set, with specific bonuses earned for meeting each one. The idea is to create an incentive to work harder, in order to earn the bonus(es). That’s how Lobo’s current work is structured. And, since precious metals, mining, and energy—and their stocks—have cratered to some degree too, so has the bonus pay. Not because the quality of his work has diminished—just because the economic climate has chilled enough that the bonus–triggering goals haven’t been met throughout the entire office. No bonus for anyone. Oh, the humanity! Except ... because he’s still fairly frugal and has avoided re-entering the debt trap, our basic standard of living hasn’t changed at all. And no, that doesn’t mean we’re subsisting on Ramen.

Methinkest some of the words I used above have passed out of the bankster lexicon, though; the ride up while the bubbles were inflating probably made it seem like anything one did would generate returns. Thus work may have become passé ... something only the rubes out in flyover country bothered with. Earning something seems similarly an antiquated notion in banksters’ eyes: why, merely being an executive means a bonus is de rigueur. How can any right–thinking person believe elsewise?

Some of the cynics in the audience might observe that this is emblematic of the American culture at large these days; but I disagree with that assessment. While some number of Americans might have looked on in envy during the heady days, I think most believed that the banksters were actually doing something to earn those cash bonuses and other perks. Now that the con has been revealed—now that we know what they were really doing was pulling off a wholesale fleecing of Main Street (the homebuyers and investors, as well as local governments, pension funds, 401ks, and insurance companies who believed the lies about investing in risky mortgages repackaged into paper that was purported to be “AAA”, or “safe as houses”, as the saying used to go)—most Americans object to the fraudsters continuing to profit from it. Even more so when it’s taxbux ripped from our wallets and purses that will become their bonus pay.

Similarly, I wonder to what degree the widening rift between the “haves” and “have-nots” would be more accurately cast as a disparity between the “earners” and “moochers”, to borrow Ayn Rand’s term. Those individuals who create things of real value—goods and services—may be increasingly in the have-not category ... not because their products aren’t good or worthwhile or any such thing, but simply because government and corporate interests are so thoroughly intertwined that it is practically impossible for a small business to successfully compete. Large corporations mooch via protectionist regulations and licensing requirements, via lawsuits, patents, and other tactics that keep their interests largely protected from competition; and government agencies and workers, like the banksters, siphon a huge amount of capital from our markets via their makework.

There’s only so much dead weight a market can bear. It appears that the USSA is close to the tipping point, and however disparaging one might be about Boobus americanus, many recognize that to some degree. The ongoing outcry against bankster bonuses is just one sign ... and I, for one, hope that from it the case can be successfully made that much of the gov sector is just as worthless. I mean, seriously: how is a federally-orchestrated housing bailout going to help anyone but the connected and the bureaucrats? Steal $X from the people; then set up a complicated maze of rules and requirements for trying to reclaim part of that; pay all the overhead costs of administering the “charitable” program; and return $X-Z to the taxpayers. I don’t think it’s a statistical outlier that that formula has never worked.

Okay, off to the chocolates I go ... and I’ll do my best to keep the bourbon flowing into the mint julep ganache rather than my tummy. That ain’t gonna be easy, though.