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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: afrayem onigwecher who wrote (10623)	10/27/2002 4:03:43 PM
From: StockDung	Read Replies (1) \| Respond to of 19428

The days of the robber barons are back, indeed Don Bauder October 27, 2002 Do you need proof that we have returned to the days of the robber barons? In the middle of last month, President Bush considered sharply trimming a spending increase for the sorely understaffed Securities and Exchange Commission? Thank goodness, a rise of protest from the masses forced him to back down. But still, he hasn't suggested what is really necessary: a tripling or quadrupling of the SEC budget. You can bet scaling-back pressure will return: The SEC has been deliberately kept anemic and underfed by the Wall Street/corporate nexus and its super-wealthy leaders who not only control a huge percentage of the nation's wealth and income, but also control its politicians through campaign largesse. If that reminds you of the Gilded Age, the age of the robber barons, it should: Back then, a small handful of the super-wealthy ran everything. Bush's timing this time was pathetically inept. It is simply astounding that in the tsunami of corporate scandals these days, any president would dare try to emasculate the one agency that can try, however ineffectively, to contain the runaway greed. But Bush did it. In midyear, Congress agreed to raise the SEC's budget 77 percent. That would bring the budget to an inadequate $776 million. Then in mid-October, Bush decided the SEC budget should be carved back to $568 million. That would have been pathetically inadequate in the current scam-riddled environment. Although they deal with securities issues – the most complex area of the law – SEC lawyers are underpaid compared with lawyers from other agencies. Also, there are far too few lawyers and accountants at the agency. After all, their job is to penetrate fraud that is deliberately obfuscated by private-sector lawyers who are paid $500 an hour to make impenetrable haze out of very obvious fraud. It's the SEC's job to cut through that artificially concocted haze and unearth the fraud. That's also the job of securities analysts, but they are paid to look the other way. We journalists are supposed to do it, too, but too many of us are too lazy or ill-equipped or ill-disposed to slice through the legal Latin. The SEC funding issue has degenerated into a mudslinging contest between Republicans, who initiated the call for a lower budget, and Democrats. But we have to see this in a much broader context. For that, I recommend an article in the Sunday New York Times Magazine of Oct. 20, titled, "For Richer: How the permissive capitalism of the boom destroyed American equality." It was written by Princeton economist Paul Krugman, a Times columnist. In it, Krugman hits some themes that have been expressed in this column – for example, the disgrace that income distribution has regressed to the have/have not days of the plutocrats of a century ago. Quoting Fortune magazine, Krugman points out that 30 years ago, the chief executive officers of the top 100 companies made 39 times the pay of the average workers. By 1999, the top-100 CEOs made a staggering 1,000 times what the average working stiffs made. How have CEOs come to rake in such obscene sums? "It's not the invisible hand of the market that leads to those monumental executive incomes; it's the invisible handshake in the boardroom," Krugman says. It's high-level cronyism. And remember just four years ago, the United States was berating Asian nations for their cronyism. Krugman refers to one study showing that in 1998, the 13,000 richest families in the United States had almost as much income as the 20 million poorest households. This intolerable and economically deleterious income inequality evolved because the culture was changing, Krugman says. In earlier decades, there were social norms – as well as enforced laws – that held down runaway greed. But in the 1980s and 1990s, we developed a new ethos: "anything goes." Philosophers rationalized it; business school professors taught it. Now, we are beginning to see the fruits of "anything goes": offshore shenanigans (hundreds of billion dollars of it); swap deals; pro forma accounting; out-of-control stock options; rigged initial public offerings, ad nauseam. Now comes the punch line, which relates to the move that Bush tried with the SEC. Says Krugman, "As the rich get richer, they can buy a lot besides goods and services. Money buys political influence." Increasingly, this small percentage of super-wealthy support the politicians of both parties – and get what they want. But what they deserve – and what their lackey politicians deserve – is public wrath. -------------------------------------------------------------------------------- Don Bauder: (619) 293-1523; don.bauder@uniontrib.com

To: afrayem onigwecher who wrote (10623)	10/27/2002 8:48:21 PM
From: StockDung	Read Replies (1) \| Respond to of 19428

Securities Firms Ready Staff for Year of the `Zero Bonus' By Christine Harper New York, Oct. 28 (Bloomberg) -- Goldman Sachs Group Inc., Morgan Stanley and other investment banks are planning to cut bonuses by as much as 50 percent this year and eliminate them altogether for many employees, bankers and headhunters said. Global mergers dropped by almost a third in the first 10 months of 2002, and share sales are down 10 percent. That has reduced securities firms' revenue, forcing them to trim costs by taking compensation to levels last seen in the mid-1990s. Managing directors, the most senior investment bankers, may get $250,000 to $350,000 in bonuses, down from $1.5 million to $1.75 million at the peak of the market in 2000, headhunters said. That's on top of base pay of about $200,000. ``The very top people can still earn exceptional amounts of money, but the other end of the scale will be zero'' bonuses, said Stephen Kendall, head of European equities at Bank of America in London. ``The differentiation will be huge.'' Vice presidents, who rank below managing directors, may see their premiums fall to about $150,000, from as much as $1 million in 2000, headhunters said. Their salaries average about $120,000 to $150,000. Associates, bankers who are typically recent graduates from business school, will be lucky to get $40,000 bonuses, on top of base pay of $55,000 to $85,000. ``We have lowered compensation to go back to pre-boom levels,'' John Mack, head of Credit Suisse First Boston, said at a conference this month. The firm is looking at ``the way we travel, the way we entertain'' and other areas to reduce costs, said Mack, who has announced 6,550 job cuts since he took over the firm in July 2001. Slump in Mergers Bonuses in some areas of investment banking, such as mergers and acquisitions, will be at the lowest level since 1995, said Rupert Channing, head of the U.K. financial services practice at Heidrick & Struggles International Inc., a recruitment company. There have been more than 14,800 corporate acquisitions worth $919 billion in the first 10 months of this year, compared with about 20,600 valued at $2.6 trillion in the same period of 2000, a record year for mergers, according to Bloomberg data. Goldman Sachs, the No. 1 takeover adviser, has worked on 153 transactions worth about $200 billion so far this year. That's down from more than 300 takeovers worth $760 billion in the same period in 2000, the Bloomberg figures show. In the first nine months of this year, Goldman's investment-banking revenue from financial advisory work fell 29 percent from a year earlier. Credit Suisse First Boston, Morgan Stanley, J.P. Morgan Chase & Co., and Lehman Brothers Holdings Inc. are among the investment- banking firms that reported a drop in third-quarter profit. Bloomberg's Wall Street Index of securities firms has declined 22 percent this year as earnings and revenue sank. Job Cuts Compensation and benefits at investment banks are usually about half of revenue. Morgan Stanley, Goldman Sachs and Lehman are typically the first to pay premiums. Citigroup Inc.'s Salomon Smith Barney investment bank and Credit Suisse First Boston pay as late as March. Securities firms have cut 61,000 U.S. jobs, or 8 percent of the total, in the 16 months since a May 2001 peak, data from the U.S. Bureau of Labor Statistics show. U.K. financial services companies will have eliminated 20,900 jobs by the end of the year, or 6 percent of the workforce since 2000, according to the Centre for Economics & Business Research. ``It's very hard to ask for a big bonus when there are dead bodies in the cube next door,'' said Mike Vogelzang, president and chief investment officer of Boston Advisors, which manages assets worth about $2 billion, including Goldman Sachs shares. ``Nobody's expectations are very high.'' The decline in bankers' pay has had a ripple effect on other parts of the economy, such as the housing market. Notting Hill Homes New York apartment sales declined 18 percent in the third quarter because of shrinking demand from Wall Street executives, according to appraiser Miller Samuel Inc. In September, sales of homes worth 1 million pounds ($1.6 million) or more in London neighborhoods such as Chelsea and Notting Hill fell 15 percent from last year, said David Moulton, who helps find homes for rich clients at estate agent Knight Frank. He expects purchases driven by bonuses to plunge 40 percent in the first quarter. Although banking executives have made it clear to staff that pay will be reduced, final decisions haven't been made. Bonuses this year may include more stock, or options, rather than cash, headhunters and bankers have said. Citigroup's European chairman, Win Bischoff, said last month that banks will trim both jobs and pay. CSFB's investment-banking chief, Adebayo Ogunlesi, told bankers to rip up employment contracts that guaranteed bonuses. No Bonus ``Historically, if you got a zero bonus, that was as big a message as you'll ever get to leave,'' said Andrew Lowenthal, global head of the financial services practice at Egon Zehnder International, a recruitment firm. ``This year, people will say I'd rather get a zero bonus and have a job, because there's nowhere else to go.'' Bankers at firms including Goldman Sachs, Morgan Stanley, Merrill Lynch & Co., UBS Warburg and Salomon Smith Barney declined to discuss what they expected for their own bonuses. Banks can't always get away with reducing pay. Earlier this year, HSBC Holdings Plc lost about 150 people from its U.K. securities unit after eliminating bonuses. Firms such as Merrill Lynch and Goldman Sachs, whose business depends on investment bankers, have to be more cautious. ``We want to pay fairly -- and we will,'' Tom Patrick, chief financial officer of Merrill Lynch, said in an interview. ``Our goal is to keep people's expectations in line with what we can afford.'' Goldman's Earnings Rise People that trade and sell bonds will probably fare better than equities and mergers bankers, because their business hasn't declined as much. In the third quarter, Goldman Sachs's earnings rose for the first time in eight quarters, helped by revenue from trading fixed-income derivatives, investment-grade bonds, mortgages and currencies. ``We expect M&A and equity-related bonuses to see the steepest falls,'' said James Hogarth, managing director at Hogarth Davies Lloyd, a financial services recruitment firm. ``You're not going to limit payment to a couple of million dollars for a star proprietary trader who makes you $75 million.'' Even without a bonus, managing directors at investment banks make about five times the average annual salary in the U.S. and U.K. The total compensation of an associate straight out of business school is about three times average pay. ``We're going back to the days of bonuses being related to performance,'' said Bank of America's Kendall. In the last five years ``it was like a God-given right that when you came into this industry you would get a bonus.''