Wall Street Bonus Payments
It would seem that a 70% drop in stock value, combined with 5 quarters in a row of straight losses is not a good enough reason to stop bonus payments of nearly $7 billion, most of which will go to the decision-making end of the company. Bloomberg is reporting that Merrill Lynch & Co have set aside $6.7 billion in taxpayer’s money for bonuses this year. I say “taxpayer’s money,” but it is rather hard to determine where this money is coming from.
Combined with bonuses from other more profitable banks, Bloomberg estimates that around $20 billion in total will be paid out as bonuses in Wall street this year. One can certainly understand the profitable companies making payments of this size, but the loss-makers? Even Lehman Brothers is apparently preparing to make size-able bonus payments.
The real question is – will this be enough to re-start the sluggish NYC luxury property market?
Unlikely is the obvious answer. With share prices still in freefall around the world, and it becoming clear that the problem is deeper rooted than just a case of “lack of confidence,” throwing 20 billion dollars at the top of the banking tree is more likely to push the price of gold up than the price of luxury condos in Manhattan.
Michael Mandel at Business week made an interesting point in an article today, pointing out that the real problem, is not simply loss of confidence, but lack of sound business practices in the first place. I agree with him, something had to give. The current crisis is unpleasant, but the sooner the governments look at the real problem and stop pretending that printing more money is the answer, the sooner we can look at rebuilding the economy in a more sustainable fashion. This may mean a little pain in the short term, but hopefully we can come back stronger in the long run. One of my credos is to try to never make the same mistake twice, and that appears to be what our governments are doing.
{ 1 trackback }