DISQUS

Older_Wiser · 10 months ago

In many ways, "progress" has doomed us to this development. In older times, an artisan could hand produce his or her goods, value the labor and materials put into it, add a small profit and sell it. Likewise with services, like lawyers fees (I can actually remember $30/hr attorneys). You knew these people, or knew of them. They didn't interefere in your life or even presume to, as they were part of the community and there was mutual respect between individuals. Things were smaller in every way, not the huge behemoths we see today whose only motivation is protecting their bottom line, selling you a lot of stuff you don't necessarily need, and marketing in such ways that intrude daily on your anonymous existence.

Now, we have huge corporations which don't even deal with selling to individuals, except on a very, very low level and their main motivation is always increasing the profit, by whatever means. Like the peanut product producer who directed his employees to sweep peanuts off the floor and process them, and took the 5th before Congress. Like the "lions" of Wall St. who developed new products designed to hide the original product through a series of other products, such as CDOs and credit default swaps, ensured to bring in more profits to keep increasing their size, and in the end, their profit margin.

cosanostradamus · 10 months ago

.
Why begrudge these people their millions?

This time next year we'll be roasting them over an open fire. Might as well fatten them up.

Here's the real culprits.
.

PatrioticReader · 10 months ago

The L-Curve of wealth concentration raises many questions. Why does the wealth (which we all help produce) go so disproportionately to the few at the top? Why, in a prosperous economy, is there so much poverty? Why has the lion’s share of the growth in recent economic booms, gone almost exclusively to those in the vertical spike while wages have stagnated?

Politically speaking, the L-Curve raises even more questions. Concentration of wealth produces concentration of power that is fundamentally incompatible with democracy. Why does our government give tax cuts to those on the vertical spike that result in cuts in services
for the rest of us?

The horizontal spike has the votes, but the vertical spike has the
influence! They own the media. Your TV set is their pipeline into your brain! They set the agenda and the terms of debate. Furthermore, by the time you enter the voting booth all the “serious” candidates have been filtered and pre-selected by their ability to raise funds from those on the vertical spike. Those who can’t attract big money are marginalized.

The only way to make the government for the people is to make it of the people and by the people. That means we, the people, must wake up. We must wake up our neighbors! We must learn to talk to each other directly. We must bypass the media culture and rebuild true community. Democracy does not start in the voting booth. It starts by building a movement at the grass roots level that values people over profits.

For more on the L-Curve and its implications, see: www.lcurve.org

Older_Wiser · 10 months ago

This is rather interesting, and a contrast from those who are high earners and those somewhere at the bottom of the income scale, from CNN Money:

One-time payments to those who don't work: For retirees, disabled individuals and others who don't work, the bill provides a one-time $250 payment. Estimated cost: $14.2 billion.

Break for higher income families: The bill includes a one-year provision to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax. The AMT was intended primarily for high-income taxpayers but has in recent years threatened to engulf those lower down the income scale. Estimated cost: $470 billion.

A difference of $455.8 billion! And that $250 will evaporate into thin air very quickly. Not that $150K plus doesn't buy as much as it used to, and perhaps the tax scheme should have been adjusted much earlier, but neither do incomes under $25K.

Of course the taxes of those in Congress making ONLY $174K a year will be impacted, you know, but most of them have additional income anyway. You can bet they'll be working frantically this year to make a permanent change for higher income people.

Do we really believe that giving credits on autos and mortgages are going to help people who are no longer employed, have had incomes reduced, and can't get the banks to loan anyway?

Milli · 10 months ago

I wonder, if I stop paying my mortgage and go into foreclosure will I be rewarded with a free house?

SCLiberal · 10 months ago

I've figured that my "tax cut" spread out over paychecks will just about equal what my health insurance premiums are going to go up. I'll come out about a dollar ahead. I'll try not to spend it all in one place.

Also that $250 for "others who don't work" will not even begin to cover the "doughnut hole" expenses that my aunt is running into with medicare/humana/whatever the hell it is now.

I'm not feeling stimulated but I am hanging in there.

El Flailey · 10 months ago

I dunno. This whole line of discussion has always seemed a bit ignorant to me. I don't know exactly who these people are that are getting the money but it seems like someone should have a basic sense of how a company like Merrill works. It's a retail brokerage firm. There are people spread all over the country that manage investments for individuals and businesses. The neighborhood broker, etc. I have one too, though mine is at Edward Jones, the most squeaky clean investment firm in the country (sidenote: google them, they are absolutely huge though not that many people know them, and they are utterly hyper-conservative with their own money and their client's money) but many people have an investment advisor. You know the standard person who sets up your IRA or college fund, retirement and investment accounts, etc.

These people are paid commission for the most part, it's the majority of their compensation. So they get you to buy $100,000 worth of mutual funds and then they get a split of the fees and "trailers" which are small fractions of a percent each year that you keep your money with them. But that's how they get paid, that's the deal they've had forever, and their compensation is measurable. It's a percentage of the money they make for the firm. Which unlike the trading and investment bank types is just a portion of fees for the service they provide basically.

Two things. One, is it fair for people who did everything they were supposed to, who went out and generated business for the company, to just not get the percentage commission that's been agreed on long in advance? What if you have brokers that advised families to diversify, to keep a good portion of their money out of the stock market last year. Or maybe they advised older couples to move into treasury bonds and safer instruments so they would be able to retire? And they get a fee for this financial service. Should we really not give them the commission they worked out? It strikes me as odd -- the vast majority of Merrill is composed of these retail guys all over the country, not traders in NYC staring at a screen tossing around mortgage securities. Their core business is a retail one. The top guys generate a lot of money by getting people to invest at Merrill and get a commission. What's the rationale for taking it away from them? Because of idiot decisions made in the internal trading division? Obviously not -- I'm sure you don't advocate slashing the salaries of all the receptionists. The other rationale is that they shouldn't get their commission because it's a lot, because they are rich. Well I can agree with that, but how about we do that via the tax code. How about we do something far more simple and profitable like get rid of the insane Bush tax cuts and restore the capital gains tax?

But that's the philosophical point of view. There's a much more practical one. Unlike many of the CEO's and mortgage security traders, who would be hard pressed to find work elsewhere, a good retail broker with strong ties to their clients in a specific town or area is incredibly valuable. People always say "to hell with them, let them find a job elsewhere, there aren't any." Well that may be true for traders and investment bankers. But for retail brokers, if they don't get their commissions they most certainly can walk across the street somewhere else, and here's the thing, a good established one can TAKE THEIR CLIENTS WITH THEM. I know this business (I'm not in it by the way) and a top producing broker will be offered a very generous package to move to another firm and bring their base of clients too. I guarantee that Edward Jones, a very solvent and successful direct competitor, would take a top producer in a heartbeat. All they have to do is move over to a new office and start contacting clients and getting them to rollover their investments. I know this for a fact, I've seen it done before.

So then what happens? Well an average top producing broker, the type that would make $1-2 million a year, is likely to have somewhere around $200-400 million dollars under management for their clients. You figure that a good broker has strong ties to maybe a third to a half of their clients, roughly. People who know them and trust them. The rest probably just invested with Merrill because of the brand name or a nearby office.

But are you seeing the problem? They're selling investments to retail customers, which is still a very large business. There's compensation for that. If they don't get it and they defect to a competitor chances are for each top guy Merrill will lose about $100 million dollars in assets as the customer fills out the "rollover" forms and goes with the broker. And they'll lose next year's revenue too. Merrill is a retail business and they just can't survive if this happens.

A good metaphor would be a car dealership, say. A guy who owns a very successful Ford dealership might make several million dollars a year. Now in that case they don't actually draw a check from Ford, they get it from their customers and then write a check to Ford. So it looks different. But conceptually it's the same. And if the dealerships were wholly owned and the top salesmen were on a commission and bonus structure and getting checks from Ford directly it wouldn't make much difference. And people could say how the hell can Ford be writing million dollar checks to these guys while the company is in trouble and is taking taxpayer money. Well the answer is that the alternative is firing the top people that ARE MAKING FORD MONEY. And you can believe that if they don't get their commissions they can just as easily walk across the street and sell Hondas. Even in a bad market, there are top sales people who generate FAR more money for the company than they cost. Even if they're rewarded with millions.

It's just the nature of a retail business.

Worth noting. Now don't get me wrong, I'm on the same team as everyone here. I think the people who had any decision making power at these firms that made these horrible decisions should just be fired. I don't understand why some of these executives are still employed. I think people in the financial industry are grossly overcompensated most of the time. And I don't think there should be a dime of bonus money for anyone just for the hell of it.

But sales is different. You may not like sales. I hate it, and I don't work in it. But salesmen work on commission. And the top salespeople are INCREDIBLY profitable for their companies. They are so hard to find and retain, and they will leave. And if they are retail brokers when they leave they'll take a hundred million in client investments with them, reducing the balance sheet and making Merrill that much closer to total insolvency.

I'm all for an outcry about compensation, and executive compensation. But I feel like a lot of the discussion here is ignorant. If you have a person who makes the company a LOT more money than it costs to keep them, just slashing their compensation structure so they leave is a revenue-negative decision. That's factual. I want these banks and companies to be responsible, not suicidal.