These suckers will stop us going down

US Congress bailed out banks with taxpayer dollars because it was believed without an injection of serious money, they would run out of cash and a recession would be inevitable.  George W Bush even warned, as he begged Congress for the money to save the American economy, “this sucker could go down.”  Which is of course ironic, when his administration was blamed by economists such as Joseph Stiglitz for creating the very climate necessary – extreme deregulation – for the crisis to occur. 

In fact, the irony of the “free” market requiring taxpayer dollars in order to avoid being crushed by it’s “invisible hand” continues to stun those of us who do not believe capitalism works very well for very many people.

But wait, there’s more.  Not content with being given a lifeline by American taxpayers, it turns out some banks are using the money not to safeguard the loans of businesses and ordinary people – which is how it was sold to said taxpayers – but to buy more banks.  Because banks which haven’t been able to manage their finances without assistance are exactly who we want having more control of the economy, right?

And Congress attempts to curb top executives salaries – like Lehman Brothers CEO Dick Fuld with $480 million in pay this decade – apparently may not be acceptable to Wall Street because it might stop firms being able to keep top talent.

The hedge funds and the private-equity firms will go after some of the other talent that doesn’t fall under these restrictions,” says Irving S. Becker, head of the executive compensation practice at Hay Group, a management consultancy.  Mr. Becker also predicted that the limits on golden parachutes will push financial firms to give some new executives bigger cash deals with higher salaries and guaranteed bonuses.

Not only is the attempt by Congress to say some pay packets are quite simply, excessive, challenged because it interferes with “the market”, but a survey of US financial professionals has found that many expect better bonuses than last year.  The survey – with 1400 responses – came after the Lehman bankruptcy and $700 million taxpayer bailout.

Some companies have already signaled they are scaling back, with Deutsche Bank AG saying earlier this month its top executives would forgo bonuses for 2008.
But more than a third of the respondents expect a single-digit percentage increase, outnumbering those who predict their bonuses will shrink, according to the survey obtained exclusively by Reuters.

Meanwhile, one in 10 said they expect this year’s bonus will be at least 33 percent higher than last year’s.

Wall Streeters are paid mostly in bonuses, like glorified salespeople, rather than salaries.  But even so, it seems like despite having public money holding them up, it’s business as usual for the free marketeers.

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One thought on “These suckers will stop us going down

  1. Pingback: George Bush On Best Political Blogs » These suckers will stop us going down

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