Saturday, August 21, 2010

The benefits of government assistance...

Wall Street Journal has a fabulous story today about the success of one particular government entitlement program - the bailout of the banks. While unemployment remains high in America, while those on Social Security are likely to see cuts in their entitlement program in the near future, while our federal, state and local governments are seriously in debt, our financial sector gleams brightly as a vision of success.

According to the WSJ story, the average monthly salary in 2009 in finance and insurance is nearly $12,000.

A month.

Up 23% from a year earlier.

More than double the average in NYC.

And that's just the wages paid to the new hires.

Imagine the possibilities for growth in this sector!!!

Especially when you can sell an instrument to one party and sell insurance (or take out insurance for yourself) that allows one to profit when the instrument you created blows up after you sell it off.

(As long as you disclose the names of the people who purchase the insurance!)

Also according to the story, we've seen a great divide grow in recent years between the salaries of bankers compared to the salaries of everyone else:

"Back in the 1970s, bankers’ salaries didn’t differ much from those of other folks. Amid the deregulation and financial innovation that followed, though, they began to break away from the pack. As of 2006, wages in finance were about 72% higher than the average for all professions, according to economists Ariell Reshef of the University of Virginia and Thomas Philippon of New York University

The bailout that was supposed to help the general economy start purring again has failed in that regard. But the engine that drove us off the cliff – the financial sector – the sector that got bailed out and bonused – is humming strongly now.

Don't let ANYONE tell you that government assistance doesn't work. Just look at our bankers. After requiring billions and billions of dollars in in federal assistance, they've managed to secure top wages during one of the worst recessions our country has experienced. What's been a terrible crisis for much of the country has been a bounty of riches for Wall Street. But that's what happens when failed bankers get the full backing support of the US government. They win. We lose. Or at least that's how it's looking today.

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