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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (71545)	11/22/2007 12:02:56 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

From RudeAwakening--what's yours is mine by Eric J. Fry To put it kindly, Wall Street bonuses possess a distinct upward bias. In fact, Bloomberg notes, "The last time bonuses declined was 2002 when the Standard & Poor's 500 Index fell 23 percent, and Enron Corp. and WorldCom Inc. went bankrupt." But these financial hiccups from 2002 seem relatively tame alongside today's epic credit-market devastation. Tens of billions of dollars are disappearing from the balance sheets of America's largest lending institutions. Tens of billions more might disappear before the bust has run its course. In this context, dispensing tens of billions to millionaire- employees seems imprudent, if not utterly asinine. But then, lest we forget, Wall Street is forever and always about money – both making it and taking it. Let's try to put this year's bonuses in perspective by having some fun with numbers. Just for kicks, let's ask ourselves, "How much is $38 billion?" Well, for starters, it is more money than Wall Street's five largest brokerage firms – combined – earned during the last 12 months. $38 billion is also more than the combined earnings of these five firms during all of 2004 AND 2005. It is more than the annual GDP of Guatemala or Costa Rica. It is seven times more than the annual budget of the National Cancer Institute (NCI), America's principal agency for cancer research. Looking beyond our own shores, $38 billion is three times more money than the entire world spent on humanitarian aid last year. $38 billion is twice the sum necessary to provide basic health care to every child in the world, and three times the sum necessary to provide clean drinking water to every child in the world. $38 billion does pale alongside some annual expenditures, however. It pales alongside the $59 billion the world spends on golf every year, or the $118 billion it spends on wine (I'm guilty). And in particular, $38 billion pales alongside the $794 billion the world spends waging war or preparing to wage war. "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed," President Dwight Eisenhower once remarked. "The world in arms is not spending money alone. It is spending the sweat of its labourers, the genius of its scientists, the hopes of its children...this is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of fire." Admittedly, excessive compensation regimes that bear no legitimate connection to merit are not as costly to humanity as warfare, but these regimes nevertheless impose serious covert costs. They "steal" money from shareholders, cultivate a risk-taking, "lottery" mentality among financial firms and sanitize unbridled avarice as "merit-based pay." Excessive compensation schemes also help to legitimize extreme socio-economic disparities. As such, these schemes work to squander the nation's collective "sweat," "genius," and "hopes"...just like warfare. The stewards of public companies do not deserve mega-million bonuses. Not once, not twice, not ever. They are the EMPLOYEES of public companies that are OWNED by the shareholders. They are not the lords of their domain with the right to tax the productivity of the shareholder/serfs. The era of the overpaid corporate stewards is corrupting and crippling American dynamism. Obviously, most employees within the Wall Street rank and file deserve every cent of their year-end bonuses. But most of those at the top of the ranks do not. So maybe $28 billion would have done the trick, saving $10 billion for – oh, I dunno, boosting shareholder equity against the next moronic credit debacle that America's financial chieftains bring down upon their abused shareholders. There's no denying that greed and money go together – just like Ginger Rogers and Fred Astaire...or maybe more like Bonnie Parker and Clyde Barrow. So we cannot really blame Wall Street for being what it is. But we can avoid dancing on the same stage...or riding into an ambush in the same 1934 Ford V-8, so to speak.

To: RealMuLan who wrote (71545)	11/22/2007 9:06:38 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

How Much Will The Credit Crunch Cost? globaleconomicanalysis.blogspot.com Goldman is putting a $2 T price tag on the credit crunch. Blaming the credit crunch for losses is a poor way of looking at things. The real question is: "How much damage did the Fed do by spawning off the biggest credit boom in history?" Not only is the answer > $2T, the wealthy benefited while the middle class and the poor suffer from the debacle. Mish

To: RealMuLan who wrote (71545)	11/23/2007 2:13:57 AM
From: attila hooper	Respond to of 116555

[quote]Sounds like BC does NOT know much about China. Hot money from the West, although went into China illegally, has done China's economy MORE harm than good! Wonder who are buyers in those million dollar asset in Shanghai and Beijing? So Chinese authority would love to see the hot money going out of China ASAP! [/quote] explain to me, what is illegal in mainland china ? And I would agree that investment in China has done more harm than good to the democracies of the west.