Paycheck peek-a-boo
January 25, 2012
The pity party is beginning on Wall Street. Some executives have even had to sell their second homes, The Wall Street Journal reported.
The tens of thousands of workers in the financial sector who have lost their jobs are not mentioned in an article on bonus pay floundering this year. The “me first” and “me only” mentality on Wall Street is still intact. What do Wall Street executives and infants have in common? It turns out, if something is removed from their line of vision, it ceases to exist. On Wall Street, peek-a-boo is a bit more ruthless, but the mechanism of perception is still the same.
There is no evidence yet that big bonus checks are falling on Wall Street as financial firms set aside compensation at a normal ratio for the first three quarters of the year, the Journal reported. Lower profits for the year, however, sneaked up on firms by the fourth quarter, which means the $159 billion the Journal figures was set aside by 34 companies for bonus pay this year will be the lowest since 2008.
At Goldman Sachs Group Inc., bonus checks may shrink anywhere from 50 percent to 60 percent. At Morgan Stanley, pay is expected to drop 30 percent to 40 percent, a source said.
At Goldman, this means bonus checks for about 400 partners could be cut in half. While that sounds Draconian, half means the range will be between $3 million to $6 million, the Journal said.
Prediction: Later this week, look for articles — anywhere, not just in the Journal — that describe how the mega-rich do more than their share of spending and that luxury brands and retailers have a right to make a livin, as well. Cutting a bonus check down to $3 million is a serious matter, these stories will say.
In fact, it is. The bonus check is a serious indicator of how Wall Street’s cornerstone corporations are doing. Banks, after all, are the high rollers that bet on businesses large and small. The problem is they also just play poker in the back room, profiting off of derivative bets and short sells that don’t produce a lick of material wealth for anyone. Buying a tanker of oil on paper and selling it the next day for a profit doesn’t benefit anyone on Main Street, where gasoline prices are jumping.
In international markets Monday, the Shanghai index in China rose 2.89 percent and the Sensex in India fell 0.33 percent.
The S&P/ASX 200 in Australia was flat, off 0.08 percent.
In midmorning trading in Europe, the FTSE 100 index shed 0.42 percent while the DAX 30 in Germany lost 0.6 percent. The CAC 40 in France lost 0.04 percent and the Stoxx Europe 600 fell 0.21 percent.
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