Friday, January 18, 2008

WashPost: Wall Street Steals Billions from Shareholders

Also posted at Daily Kos

OK, so the Washington Post article today doesn't stay "steal." The headline reads Dire Year on Wall Street Yields Gigantic Bonuses. And how big were these bonuses? Reportedly larger than the GNP of of Sri Lanka, Lebanon or Bulgaria, or more precisely, $39 billion dollars in year-end bonuses for the top five Wall Street firms. Meanwhile, shareholders in three of these five firms lost $80 billion dollars.

Now I know that economics is supposed to be the "dismal science," but who knew how dismal? The shareholders of these companies may want to pause and consider the math. The money out of shareholder pockets, much of which comes from institutional investments by union funds, IRA mutual funds, state retirement agencies, etc., goes directly into the pockets of a handful of the super-rich. Meanwhile these same firms plan to ax "at least 4,900 jobs as losses mount from the collapse of the subprime mortgage market."

Ah, this is capitalism.

Of course, Wall Street understands:

Goldman Sachs Group, Morgan Stanley, Merrill Lynch, Lehman Brothers Holdings and Bear Stearns together paid $65.6 billion in compensation and benefits last year to their 186,000 employees. Year-end bonuses usually account for 60 percent of the total, meaning bonuses exceeded the $36 billion distributed in 2006 when the industry reported all-time high profits....

"To many people, it will be shocking and questionable," said Jeanne Branthover, managing director of Boyden Global Executive Search. "People in New York in the world of investment banking will understand it. It's critical that pay is still there or you're going to lose really good people."

Something doesn't add up, and it's this: A small group of individuals have appropriated the massive wealth produced by a vastly larger number of individuals. So some people will wind up on the street, and lose their homes, and have their lives seriously disrupted or destroyed, all because another, much smaller bunch of people might walk off their jobs if they don't receive millions of dollars, even tens of millions, in extra money each year.

Call it government by extortion, an economy run on massive theft and fraud.

The candidates for president -- almost all millionaires themselves -- might raise enough outrage to summon up a soundbite on this. But don't hold your breath.

We need real change in this country. But it won't come until the American people rise up and demand it.

How hard will the bankers and corporations have to squeeze? How many lives will be destroyed before the irrationality of allowing such giant discrepancies in wealth will be recognized for the intolerable evil it is?

This story suddenly elicited an old tune in my head, Woody Guthrie's old ballad about "Pretty Boy Floyd":

Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

And as through your life you travel,
Yes, as through your life you roam,
You won't never see an outlaw
Drive a family from their home.

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