Ward on Words

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 insur...

Bank of America has posted its third consecutive quarterly loss. Apparently, the double whammy of paying back TARP and defaults on consumer loans has packed quite a punch to the firm's bottom line. From Bloomberg : "'Economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth,' [Bank CEO Brian] Moynihan said in a statement. 'We are encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer business.'" Specks of sun are breaking through, perhaps, but clouds of high unemployment and sluggish consumer spending remain heavy and dark everywhere you look. Given the gloom surrounding the current economic outlook for consumers outside of Wall Street, why would BoA consider taking the hit now to repay TARP? Wasn't TARP designed to help struggling, massive banks recapitalize? More from Bloomberg: ...

…Cannot stand. Thus spoke Abraham Lincoln in an address to Illinois Republicans that he gave in 1858, two years prior to his assumption to the presidency. In his mind, the nation could no longer live half-slave, half-free. Shortly after Lincoln became president, the Civil War began, a terrible and bloody war waged to determine whether we’d live all slave or all free. We know the outcome of that war. Slavery ended with the Emancipation Proclamation. Today, this American house is again extremely divided... between the over-leveraged and the over-compensated. On the one hand, much of our house exists in chaos. Highest unemployment in decades (a rate that doesn't even include those who've given up the search for a job.) Hundreds of thousands of jobs lost each month. Consumer side of the financial system in a shambles. Still loaded with toxic assets. Still crumbling from the weight of consumer loans that consumers can no longer afford. Because as we’ve seen this y...

In the year since the crash, Goldman Sachs has been very busy, as you would expect of the financial giant. The company has paid back its TARP loan (with interest!) and, after some haggling , paid the full amount the fed wanted for its warrants (good citizenship!) And it's been very clear that it never needed the $12 bil that it got from AIG via the feds. Apparently, according to Gary Cohn, Goldman president, Goldman didn't need any of the extraordinary financial interventions it received in the last year. He's quoted in a NY Times story last August: "'We did not have a near-death experience,' said Gary D. Cohn, Goldman’s president. The government saved the financial industry as a whole, but it did not save Goldman Sachs, he said." And Goldman has also stated publicly that it has not changed the way it does business, and in fact, has profited hugely by the current business climate , the climate that seems quite chilly and foreboding to so man...

We live in a world where people in the financial community have turned “bonus” into a debacle – who insist that there’s no reason to work at a place if you can’t make astronomical sums of money, who quit when large bonuses are not paid out to them by a bankrupt company. (Click here for a glimpse into that world...) I am a mother of three small children, and what has been hardest for me, with regard to the collapse of our economy, is reconciling the lessons I teach my children with the situation we have today. I teach my children to share, to help others, to work with others and to become stewards of our community. I see that to succeed in America today, these lessons are fraught with contradiction. Sharing is out of the question. Greed is inevitable. Bonuses are structured so that performance is irrelevant. Really smart people use their intelligence to wrest the most money for themselves. Money is the end, not the means to an end, of our labor in this life. I sound naiv...

I read this in a story that appeared in yesterday's Wall Street Journal: "Goldman Sachs posted a $1.7 billion profit today — and with it, Goldman set aside $4.7 billion for salaries and bonuses." As with most of what happens on Wall Street, I find myself bewildered by the math involved here. I'm just not clear on how $1.7 million in profit is transformed into $4.7 billion for salaries and bonuses. Apparently, the $4.7 billion number is 50 percent of their revenues for the quarter. Good deal for the executives at Goldman. Still not clear what the return on the taxpayers' investment will turn out to be.

Not long ago, I wrangled a bunch of parents to volunteer for the school's annual carnival. A lot of work, but it's a volunteer position that gives me the chance to talk with people I'd otherwise never get to meet. One of the moms who helped out is a flight attendant at American Airlines. During some down time at the carnival, she shared her frustration about the great divide between executive compensation and the pay scale for the rest of the people who work for American. She had no problem with executives earning significantly more than other employees - her problem was that the executives who negotiated hard for union concessions in a number of areas - including compensation - then turned around and paid themselves an enormous bonus. The flight attendant was outraged that leaders who asked for shared sacrifice apparently felt entitled to remove themselves from the opportunity to sacrifice with the rest of the company. According to this story in the Washington P...

Rick Wagoner, newly retired CEO of General Motors, is driving away from his career with a $20 million retirement package. That's what's being reported in the MSM (see here for one of the stories.) Wagoner had been CEO at GM since 2000 - so had nearly a decade to make an imprint on the company. Prior to that, he had been COO and CFO for the company - meaning he spent at least 15 years in the C-suite at GM. His company exists today thanks only to the largess of the American taxpayer. And thanks to the brilliant retirement package he negotiated sometime ago, Wagoner will never again have to work a day in his life – nor will his children. His time at GM was spent building up massive generational wealth that the autoworkers who worked for him cannot even fathom. (It's funny when Detroit talks about the expense of building cars, they never factor the enormous compensation package of the CEO into the equation.) The employees built cars - the CEO built wealth - for ...

"Straddling the top of the world, one foot in China and the other in Nepal, I cleared the ice from my oxygen mask, hunched a shoulder against the wind, and stared absently down at the vastness of Tibet. I understood on some dim, detached level that the sweep of earth beneath my feet was a spectacular sight. I'd been fantasizing about this moment, and the release of emotion that would accompany it, for many months. But now that I was finally here, actually standing on the summit of Mount Everest, I just couldn't summon the energy to care." Thus begins Jonathon Krakauer's best seller, Into Thin Air . The thrill of achieving a lifetime goal - to stand on the rooftop of the world – is dramatically diminished by the overwhelming fatigue and lack of oxygen one finds at such a height. Sometimes I think that Washington, D.C. is like Everest. People arrive there and soon find themselves disoriented, out of touch, talking the nonsense that comes from the oxygen depr...