Wall street is doing well

[blueash]

Nicholas Kristof has this little interesting piece of economic information in his op-ed. I think it is staggering.

The Wall Street bonus pool in 2014 was roughly twice the total annual earnings of all Americans working full time at the federal minimum wage.

You read that right: Just the annual bonuses for just the sliver of Americans who work just in finance just in New York City dwarfed the combined year-round earnings of all Americans earning the federal minimum wage.


Full article is here:
http://www.nytimes.com/2015/05/03/opinion/sunday/nicholas-kristof-inequality-is-a-choice.html

[Polar Bear]

These sorts of comparisons have long worn thin for me.

"Inequality" is a fact of life. It's existed forever and will continue to exist forever. I think we should continue efforts to get everybody involved in our economic system. And of course we should have reasonable programs to help those who have a true need and are unable to help themselves. But even if there were 0% unemployment, there will never be...nor should there be...an absolute lack of any financial "inequalities".

Statistics can always be presented that will make things appear unfair. Take them for what they are worth...usually very little.

[Villager Joyce]

How about comparing the same category (those earning minimum wage as set by the Federal government) against movie or television stars and professional athletes. Then what do you do with that information?

[sunnyatlast]

How about comparing the same category (those earning minimum wage as set by the Federal government) against movie or television stars and professional athletes. Then what do you do with that information?

Agree.

[sunnyatlast]

Top 100 Athletes and Celebrities Lists 2014:

The World's Highest-Paid Athletes 2014: Behind The Numbers - Forbes (http://www.forbes.com/sites/kurtbadenhausen/2014/06/11/the-worlds-highest-paid-athletes-2014-behind-the-numbers/)

Beyoncé Knowles Tops The FORBES Celebrity 100 List - Forbes (http://www.forbes.com/sites/dorothypomerantz/2014/06/30/beyonce-knowles-tops-the-forbes-celebrity-100-list/)

[Villager Joyce]

Top 100 Athletes and Celebrities Lists 2014:

The World's Highest-Paid Athletes 2014: Behind The Numbers - Forbes (http://www.forbes.com/sites/kurtbadenhausen/2014/06/11/the-worlds-highest-paid-athletes-2014-behind-the-numbers/)

Beyoncé Knowles Tops The FORBES Celebrity 100 List - Forbes (http://www.forbes.com/sites/dorothypomerantz/2014/06/30/beyonce-knowles-tops-the-forbes-celebrity-100-list/)

Thanks for providing these links.

[Buffalo Jim]

Those huge Wall Street Salaries and Bonuses are at " Investment Banking Firms " not Commercial Banks such as Chase , Citi , Bank of America .
Investment Bankers are the " Realtors " of businesses . They take companies from Private Companies to Publicly Traded Companies .
When two Piublic Companies wish to merge or when one Public Company wishes to outright purchase another each side must hire an Investment Banking Firm to opine on the structure of the proposed deal to represent the interests of the shareholders . Much more complicated and involved than you might think .
These firms only hire the best and the brightest from the best Undergrad and MBA schools in the US . The major work is done by these young employees who literally work 16 hours a day and often 7 days per week . It is an " up or out " dog eat dog work environment . Very very few last long enough to make Partner which is where the huge bonuses are handed out . The large majority of the young workforce last only 2 to 3 years max .Then they are replaced by brand new degreed eager beavers .
These are not the banks that deal with the general public . However a few of the major money-center commercial banks do have an Investment Banking Division but it is a far cry from the activities of the Commercial Banking activities and salary / compensation structure .

[sunnyatlast]

Those huge Wall Street Salaries and Bonuses are at " Investment Banking Firms " not Commercial Banks such as Chase , Citi , Bank of America .
Investment Bankers are the " Realtors " of businesses . They take companies from Private Companies to Publicly Traded Companies .
When two Piublic Companies wish to merge or when one Public Company wishes to outright purchase another each side must hire an Investment Banking Firm to opine on the structure of the proposed deal to represent the interests of the shareholders . Much more complicated and involved than you might think .
These firms only hire the best and the brightest from the best Undergrad and MBA schools in the US . The major work is done by these young employees who literally work 16 hours a day and often 7 days per week . It is an " up or out " dog eat dog work environment . Very very few last long enough to make Partner which is where the huge bonuses are handed out . The large majority of the young workforce last only 2 to 3 years max .Then they are replaced by brand new degreed eager beavers .
These are not the banks that deal with the general public . However a few of the major money-center commercial banks do have an Investment Banking Division but it is a far cry from the activities of the Commercial Banking activities and salary / compensation structure .

They can HAVE it.

[blueash]

Those huge Wall Street Salaries and Bonuses are at " Investment Banking Firms " not Commercial Banks such as Chase , Citi , Bank of America .
Investment Bankers are the " Realtors " of businesses . They take companies from Private Companies to Publicly Traded Companies .
When two Piublic Companies wish to merge or when one Public Company wishes to outright purchase another each side must hire an Investment Banking Firm to opine on the structure of the proposed deal to represent the interests of the shareholders . Much more complicated and involved than you might think .
These firms only hire the best and the brightest from the best Undergrad and MBA schools in the US . The major work is done by these young employees who literally work 16 hours a day and often 7 days per week . It is an " up or out " dog eat dog work environment . Very very few last long enough to make Partner which is where the huge bonuses are handed out . The large majority of the young workforce last only 2 to 3 years max .Then they are replaced by brand new degreed eager beavers .
These are not the banks that deal with the general public . However a few of the major money-center commercial banks do have an Investment Banking Division but it is a far cry from the activities of the Commercial Banking activities and salary / compensation structure .

Did you deduce the job description from some information source? If you dig down through the reports from the New York State Comptroller you will find that the persons included totaled nearly 170,000 employees of many kinds of firms. If you don't think Chase et al are not heavily into these activities you are naïve. They are sector 523 workers and you have that industry sector to thank for the packaging of subprime loans that crashed the economy.

Industries in the Securities, Commodity Contracts, and Other Financial Investments and Related Activities subsector group establishments that are primarily engaged in one of the following: (1) underwriting securities issues and/or making markets for securities and commodities; (2) acting as agents (i.e., brokers) between buyers and sellers of securities and commodities; (3) providing securities and commodity exchange services; and (4) providing other services, such as managing portfolios of assets; providing investment advice; and trust, fiduciary, and custody services.

[Buffalo Jim]

Dr. I worked in the industry for 35 years . The " Wall Street " bonuses which the popular and business press reports on each year are for the handful of major Investment Banking firms .
My comments were about the reality of life working in THAT particular industry . Your data takes a broad look at the entire investment industry . Big difference.

[manaboutown]

The subprime loans were pushed on the lenders by politicians. Obama pushed banks to give subprime loans to Chicago blacks | The Daily Caller (http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/)

http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html

[blueash]

The subprime loans were pushed on the lenders by politicians. Obama pushed banks to give subprime loans to Chicago blacks | The Daily Caller (http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/)



snopes.com: Obama Required Banks to Lend Money to Poor People (http://www.snopes.com/politics/obama/loans.asp)
that lawsuit was to stop redlining and had nothing to do with subprime lending, just having banks lending to poor blacks in the identical manner as to poor whites. And Obama was hardly involved in the case. Read the snopes link.

I agree with you that politicians and their appointees had a large roll in establishing the rules that allowed the investment banks to crush the economy. And it all began with removing regulations and controls on the banks, deregulation. Banks make money, banks give money to politicians, banks get laws changed, banks make more money. Do I have that right? And who are those high power bankers today, why those people mentioned above who got bonuses so big they dwarf the total income of all minimum wage workers nationwide.

[Chi-Town]

The rule of thumb is to Snopes anything from the Daily Caller. [emoji6]

[Villager Joyce]

Blueash, So we are back to your first post so I will go back to my first post. What are we supposed to do with this knowledge? What was your reason to bring this to our attention?

[outlaw]

Did you deduce the job description from some information source? If you dig down through the reports from the New York State Comptroller you will find that the persons included totaled nearly 170,000 employees of many kinds of firms. If you don't think Chase et al are not heavily into these activities you are naïve. They are sector 523 workers and you have that industry sector to thank for the packaging of subprime loans that crashed the economy.

Industries in the Securities, Commodity Contracts, and Other Financial Investments and Related Activities subsector group establishments that are primarily engaged in one of the following: (1) underwriting securities issues and/or making markets for securities and commodities; (2) acting as agents (i.e., brokers) between buyers and sellers of securities and commodities; (3) providing securities and commodity exchange services; and (4) providing other services, such as managing portfolios of assets; providing investment advice; and trust, fiduciary, and custody services.

The subprime loans that crashed the economy were the result of our know-it-all government that coerced, through regulation and quotas, all banks to make these risky, stupid loans to people who could never pay them back. And now, the government is pushing this same policy on the banks, again.

[tuccillo]

That coupled with the ability to package and sell off the loans to other institutions who didn't understand the risk.

The subprime loans that crashed the economy were the result of our know-it-all government that coerced, through regulation and quotas, all banks to make these risky, stupid loans to people who could never pay them back. And now, the government is pushing this same policy on the banks, again.

[Buffalo Jim]

At the risk of once again being called out and having my knowledge and experience impugned , for those who may be interested in all that took place I offer the following :

For about 15 years I was a senior member of my bank`s " CRA Committee ".
CRA is short for " The Community Reinvestment Act ".

My day to day responsibilities included all Compliance for the Commercial Banking Division which provided about 65% of the bank's income . Previously my responsibilities included Regulatory Compliance for the Consumer Division [ branch system ] which we called " The Retail Division " . Compliance was 20% of my areas of responsibility .

The CRA Regulations are deep and complex . When a new regulatory act is promulgated the expectations are most often complex , sometimes contardictory and often vague with respect to what the Regulatory Auditors will expect . It usually takes about 5 years of experience and audits in order for the acceptable practice vs the lengthy and complex published regulations to be fully understood by both the institution and its Regulators .

Usually the language is hundreds of pages in length and more often than not leaves the managers responsible for adherence effectively scratching their collective heads .

As I recall there were four levels of " Grades " which the Regulators could assign to a completed Regulatory CRA Audit . A Level 3 was considered passing however our Chairman and Audit Committee of the Board ordered that we achieve a score of 4.0 each and every year .

Again as I recall larger banks went thru a CRA Audit annually and smaller banks every other year .
Also each year the standards were tightened as both the Regulators and the institutions became more ' expert ' at understanding the expectations and spirit of the Act . IE what got you a 4.0 in one year would not get you a 4.0 the next .

When the final Audit report of the CRA Regulators was developed and delivered the chief Regulator on the Audit would meet with the bank`s Chief Auditor and also with the Chairman and the Chair of the Board`s Audit Committee . Following that they would meet with the bank's CRA Committee to review their findings in detail .

Even if the institution was being graded out as a 4.0 there were always a number of observations both positive and negative or mere suggestions which the Regulator would share with the bank . These are called " Leave Items " meaning in effect " we observed these issues but did not find them compelling enough to put them into our final report .

In effect, what they were communicating was that we needed to focus on these issues and improve on them because they will be closely scrutinized during the next CRA Audit .

The failure of a bank to earn a 4.0 on their CRA Audit could impede or even prevent their being able to expand their operations by say opening new branches or entering into a merger or acquisition .

However achieving a score of 4.0 guaranteed that any application for a new branch or an acquisition / merger could not be held up due to the efforts of groups such as ACORN who routinely filed protests for any such application anywhere by any institution .

CRA was but only 1 type of Regulatory Audit . There are several which focus on different areas of the business .
But hey what do I know . Let the scorging commence !

[jblum315]

The rich get richer and the poor get poorer.
Truer words never spoken

[Villages PL]

There were 268 new billionaires worldwide. The U.S. led the way with 50 and China came in second with 37. Germany 26 and Brazil 23.

Search: A millionaire on nearly every block in U.S.

A recent study indicated that the number of U.S. millionaires grew by 18 percent in 2014. There are now roughly 7.1 million millionaire-households. That means one millionaire household for every 16 households.

Upward mobility is alive and well.

[dewilson58]

Wall Street did well..............So did I.

:a040:

[Tennisnut]

There were 268 new billionaires worldwide. The U.S. led the way with 50 and China came in second with 37. Germany 26 and Brazil 23.

Search: A millionaire on nearly every block in U.S.

A recent study indicated that the number of U.S. millionaires grew by 18 percent in 2014. There are now roughly 7.1 million millionaire-households. That means one millionaire household for every 16 households.

Upward mobility is alive and well.

It really has been a good six years, hasn't it?

[sunnyatlast]

It really boils down to where you want the gap between the richest echelon and the poorest echelon to sit when you narrow it. If you bring down the top incomes but don't invest in ways of bringing the poorest incomes UP, you really have no improvement:

(Can we just enjoy this together as an illustration and a couple of good chuckles from both sides?)

https://www.youtube.com/watch?v=pdR7WW3XR9c

[manaboutown]

At the risk of once again being called out and having my knowledge and experience impugned , for those who may be interested in all that took place I offer the following :

For about 15 years I was a senior member of my bank`s " CRA Committee ".
CRA is short for " The Community Reinvestment Act ".

My day to day responsibilities included all Compliance for the Commercial Banking Division which provided about 65% of the bank's income . Previously my responsibilities included Regulatory Compliance for the Consumer Division [ branch system ] which we called " The Retail Division " . Compliance was 20% of my areas of responsibility .

The CRA Regulations are deep and complex . When a new regulatory act is promulgated the expectations are most often complex , sometimes contardictory and often vague with respect to what the Regulatory Auditors will expect . It usually takes about 5 years of experience and audits in order for the acceptable practice vs the lengthy and complex published regulations to be fully understood by both the institution and its Regulators .

Usually the language is hundreds of pages in length and more often than not leaves the managers responsible for adherence effectively scratching their collective heads .

As I recall there were four levels of " Grades " which the Regulators could assign to a completed Regulatory CRA Audit . A Level 3 was considered passing however our Chairman and Audit Committee of the Board ordered that we achieve a score of 4.0 each and every year .

Again as I recall larger banks went thru a CRA Audit annually and smaller banks every other year .
Also each year the standards were tightened as both the Regulators and the institutions became more ' expert ' at understanding the expectations and spirit of the Act . IE what got you a 4.0 in one year would not get you a 4.0 the next .

When the final Audit report of the CRA Regulators was developed and delivered the chief Regulator on the Audit would meet with the bank`s Chief Auditor and also with the Chairman and the Chair of the Board`s Audit Committee . Following that they would meet with the bank's CRA Committee to review their findings in detail .

Even if the institution was being graded out as a 4.0 there were always a number of observations both positive and negative or mere suggestions which the Regulator would share with the bank . These are called " Leave Items " meaning in effect " we observed these issues but did not find them compelling enough to put them into our final report .

In effect, what they were communicating was that we needed to focus on these issues and improve on them because they will be closely scrutinized during the next CRA Audit .

The failure of a bank to earn a 4.0 on their CRA Audit could impede or even prevent their being able to expand their operations by say opening new branches or entering into a merger or acquisition .

However achieving a score of 4.0 guaranteed that any application for a new branch or an acquisition / merger could not be held up due to the efforts of groups such as ACORN who routinely filed protests for any such application anywhere by any institution .

CRA was but only 1 type of Regulatory Audit . There are several which focus on different areas of the business .
But hey what do I know . Let the scorging commence !

What a nightmare!

[Villages PL]

It really has been a good six years, hasn't it?

Well, it's not that simple. In the first years after the housing and stock market crash, things felt pretty bad. My net worth was just about cut in half. Then it took an agonizingly long time to gain it back. I had to reevaluate my holdings and make some investment changes.

After I regained my losses, I went on to double what I had before the crash. That's the story of a retired investor.

However, for those who depended on their jobs and were let go after the crash, it was a much different story. A good friend of mine was about 62 at the time of the crash and not ready to retire. She had no choice because her job was considered non-essential. She was never able to find employment again. Her son, about 29 at the time, has just stared working again. And I'm sure there are a lot of people with stories like that. There are always winners and losers in life. During my lifetime I had my share of bad luck in trying to make it economically.

[justjim]

The subprime loans were pushed on the lenders by politicians. Obama pushed banks to give subprime loans to Chicago blacks | The Daily Caller (http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/)

Bill Clinton - 25 People to Blame for the Financial Crisis - TIME (http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html)

This really had nothing to do with the economic crisis---not saying it was good or bad---just not relevant to the economic crisis.

[Polar Bear]

The subprime loans were pushed on the lenders by politicians. Obama pushed banks to give subprime loans to Chicago blacks | The Daily Caller (http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/)

http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html


This really had nothing to do with the economic crisis---not saying it was good or bad---just not relevant to the economic crisis.

The failure of a large number of mortgage loans had a great deal to do with the economic crisis.

[Paper1]

Well, it's not that simple. In the first years after the housing and stock market crash, things felt pretty bad. My net worth was just about cut in half. Then it took an agonizingly long time to gain it back. I had to reevaluate my holdings and make some investment changes.

After I regained my losses, I went on to double what I had before the crash. That's the story of a retired investor.

However, for those who depended on their jobs and were let go after the crash, it was a much different story. A good friend of mine was about 62 at the time of the crash and not ready to retire. She had no choice because her job was considered non-essential. She was never able to find employment again. Her son, about 29 at the time, has just stared working again. And I'm sure there are a lot of people with stories like that. There are always winners and losers in life. During my lifetime I had my share of bad luck in trying to make it economically.
I think your personnal story does shed light on what our economy is doing now. There is much more "unearned income" than earned in USA today. People that are working 40 hours and getting a check are not generating any wealth for themselves. I don't believe we can track that way much longer. We don't make anything therefore are losing jobs. Many of us here in Villages I'm sure have experiences that mirror yours.

[tcxr750]

My thoughts on the wealth transfer. Executive pay vs. worker...2013 400 to 1, 2000 120 to 1, 1980 42 to 1, 1950 20 to 1. I imagine being an Executive your instinct would be to improve your financial position through whatever means available. Downsizing, M and A, Rightsizing, Outsourcing work to China. Keep the shareholders happy.
Just the outsourcing to China alone has transformed a virtual third world country in 60 years to a global powerhouse. That's another consequence of wealth transfer.

Sub Prime Loans. I believe that started under the President before Obama's administration. Investors were hungry for insured CMO's with good returns. Once the high risk borrows defaulted, companies like AIG ,that insured the losses couldn't cover the losses ergo...the Great Recession.

[Walt.]

With all this talk about wealth transfer...
I have yet to hear anyone, anywhere, refer to that line in the State of the Union message that went... "let's close the loophole that leads to inequality by allowing the top one percent to avoid paying taxes on their accumulated wealth.."

[sunnyatlast]

My thoughts on the wealth transfer. Executive pay vs. worker...2013 400 to 1, 2000 120 to 1, 1980 42 to 1, 1950 20 to 1. I imagine being an Executive your instinct would be to improve your financial position through whatever means available. Downsizing, M and A, Rightsizing, Outsourcing work to China. Keep the shareholders happy.
Just the outsourcing to China alone has transformed a virtual third world country in 60 years to a global powerhouse. That's another consequence of wealth transfer.

Sub Prime Loans. I believe that started under the President before Obama's administration. Investors were hungry for insured CMO's with good returns. Once the high risk borrows defaulted, companies like AIG ,that insured the losses couldn't cover the losses ergo...the Great Recession.

If you're going to blame the current wealth maldistribution on the prior presidency, just how do you explain these donors' excessive wealth and their funding of the current administration's campaigns?

The World's Most Powerful Celebrities' Earnings


#1 Beyonce Knowles 33 $115 M Musicians
#2 LeBron James 30 $72 M Athletes
#3 Dr. Dre 50 $620 M Musicians
#4 Oprah Winfrey 61 $82 M Personalities
#5 Ellen DeGeneres 57 $70 M Personalities
#6 Jay-Z 45 $60 M Musicians
#7 Floyd Mayweather 38 $105 M Athletes
#8 Rihanna 27 $48 M Musicians
#9 Katy Perry 30 $40 M Musicians
#10 Robert Downey Jr 50 $75 M Actors
#11 Steven Spielberg 68 $100 M Directors/Producers
#12 Jennifer Lawrence 24 $34 M Actresses
#13 Bon Jovi - $82 M Musicians
#13 Bruno Mars 29 $60 M Musicians
#15 Kobe Bryant 36 $62 M Athletes
#16 Roger Federer 33 $55 M Athletes
#17 Miley Cyrus 21 $36 M Musicians
#18 Taylor Swift 25 $64 M Musicians
#19 Lady Gaga 29 $33 M Musicians
#20 Kanye West 37 $30 M Musicians
#21 Calvin Harris 31 $66 M Musicians
#21 Tiger Woods 39 $61 M Athletes
#23 Dwayne Johnson 43 $52 M Actors
#24 Rafael Nadal 28 $45 M Athletes
#25 Bruce Springsteen 65 $81 M Musicians
#26 The Eagles - $100 M Musicians
#26 Justin Timberlake 34 $57 M Musicians
#28 One Direction - $75 M Musicians
#29 Paul McCartney 72 $71 M Musicians
#30 Cristiano Ronaldo 30 $80 M Athletes
#31 Sean "Diddy" Combs 45 $60 M Musicians
#31 Ryan Seacrest 40 $65 M Personalities
#33 Justin Bieber 21 $80 M Musicians
#33 Kevin Durant 26 $32 M Athletes
#33 Jennifer Lopez 45 $37 M Musicians
#36 Sandra Bullock 50 $51 M Actresses
#37 James Patterson 68 $90 M Authors
#38 Pharrell Williams 42 $22 M Musicians

The World's Most Powerful Celebrities List - Forbes (http://www.forbes.com/celebrities/list/#tab:overall)

[Villages PL]

My thoughts on the wealth transfer. Executive pay vs. worker...2013 400 to 1, 2000 120 to 1, 1980 42 to 1, 1950 20 to 1. I imagine being an Executive your instinct would be to improve your financial position through whatever means available. Downsizing, M and A, Rightsizing, Outsourcing work to China. Keep the shareholders happy.
Just the outsourcing to China alone has transformed a virtual third world country in 60 years to a global powerhouse. That's another consequence of wealth transfer.

Sub Prime Loans. I believe that started under the President before Obama's administration. Investors were hungry for insured CMO's with good returns. Once the high risk borrows defaulted, companies like AIG ,that insured the losses couldn't cover the losses ergo...the Great Recession.

Outsourcing work to China has kept the cost of household products very low for a long time which has a benefit to low wage workers who are buyers of these products. Same for clothing etc. made by other third world countries.

Higher wages = higher prices for goods and services. When you add everything up like rent, food, clothing, transportation and entertainment, what would be left of a higher wage?

[Paper1]

Outsourcing work to China has kept the cost of household products very low for a long time which has a benefit to low wage workers who are buyers of these products. Same for clothing etc. made by other third world countries.

Higher wages = higher prices for goods and services. When you add everything up like rent, food, clothing, transportation and entertainment, what would be left of a higher wage?
I disagree with that. I think the transfer of our manufacturing to Asia has more to do with increasing profit margin than keeping prices down. Unearned and barely earned income is what US capitalism has become. My own home state has LL Bean. They have made an obsene amount of profit by switching to almost all imported goods. They do employed call center employees and retail help but not much manufacturing. Apple is worse. Wall street darling but made in China. Remember Henry Ford's idea of making a car for the masses. Iphone 6s and I-watch are not aimed at the masses.

[tcxr750]

I'm not blaming wealth transfer on the last President. My quote implies that wealth transfer as we know it started in the 50's. Notice the change in ratio of executive to worker pay. With research you will see that in the 50's personal income tax rates ranged from 20%-90%. The implication is that some force in the U.S. economy caused a shift in the demographic that holds the wealth. We need an economics professor to explain that.