Ward on Words

I have previously expressed my puzzlement at Tim Geithner's desire to create a market for toxicity by using tax dollars to snap up the toxic assets clogging the pipes over on Wall Street. Of course, he'll give "the market" the chance to buy these "assets" too, but if there are losses to take, it looks like, under his plan, the taxpayers will take the biggest hit. The guys over at Baseline Scenario are promoting a better use of these funds - let's use these toxic assets to fund the bonuses of the Wall Street executives who worked so hard to accumulate them. I like this idea. I like it very much. The guys on Wall Street worked very hard - and earned so very much - as they accumulated these poisonous assets on their books. Let that work pay off - use those funds to pay their bonuses - not taxpayer dollars from the feds. The good news - I'll bet there'd be no regulatory strings attached to those bonuses.... The Baseline Scenario folks a...

"Greed Is Good" is the headline of a story in yesterday's Wall Street Journal , reminding me, of course, of Oliver Stone's wildly successful movie about the biz, Wall Street . "Greed is good," says Gordon Gecko at one point in the movie, but in true Hollywood style, the greedy guy gets sent to jail. In reality, the greedy gents on Wall Street pay themselves bonuses out of federal bailout funds. Roy Smith, a former partner at Goldman Sachs, is the author of the WSJ article. In it, he argues that "bonuses are an important and necessary part of the fast-moving, high-pressure industry, and its employees flourish with strong performance incentives." How I wish bonuses had provided adequate incentive for sustainable profit on Wall Street! And how I wish that these banks had flourished along with the employees! Perhaps if bonuses had been tied to performance, we wouldn't be in such a mess today. I love how when the Wall Street insiders sp...

Came across this interesting nugget of info in the January '09 edition of Bloomberg Markets magazine, courtesy of columnist Jonathan Weil: Here's all you need to know to see who lost and who benefitted most at the Five Families of Wall Street, otherwise known as Bear Sterns Cos., Lehman Brothers, Merril Lynch, Goldman and Morgan Stanley. From the start of their 2004 fiscal year through October 20, the big stand-alone investment banks lost about $83 billion of stock market value. During the same period, they reported about $239 billion of employee compensation expense. So for every dollar of shareholder value destroyed, the employees got paid almost three. Interesting that compensation on Wall Street seems in recent years to be completely divorced from actual performance.