{"id":183090,"date":"2015-03-16T20:21:00","date_gmt":"2015-03-17T01:21:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2015\/03\/16\/this-is-not-capitalism-it-is-parasitism\/"},"modified":"2015-03-16T20:21:00","modified_gmt":"2015-03-17T01:21:00","slug":"this-is-not-capitalism-it-is-parasitism","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2015\/03\/16\/this-is-not-capitalism-it-is-parasitism\/","title":{"rendered":"This is not Capitalism, it is Parasitism"},"content":{"rendered":"

Digby quite clearly demonstrates that remuneration for Wall Street finance types are not an artifact of any capitalist imperative, but instead are out and out looting<\/a>:<\/p>\n

With all the changes that have taken place on Wall Street since the financial crisis hit \u2013 the mergers, the new regulations and the lawsuits that continue to take a toll on banks\u2019 bottom lines, not to mention the Federal Reserve\u2019s demands that they continue to prove their health via regular \u201cstress tests\u201d<\/a> \u2013 one thing remains unaltered. <\/p>\n

It\u2019s the ritual of the annual bonus check handed out to those lucky folks who have survived the job cuts and who continue to endure the Hobbesian life \u2013 nasty, brutish and short \u2013 on trading desks and in investment banking groups across Wall Street. <\/p>\n

Given the banking industry\u2019s reputation for ruthlessness and its emphasis on the \u201cbuyer beware\u201d philosophy, you might expect a difficult environment to be reflected in the size of those bonuses. <\/p>\n

Well, not so fast<\/a>. This is Wall Street, after all. <\/p>\n

True, Wall Street\u2019s profits aren\u2019t what they used to be. Pretax profits fell 4.2%<\/a> in 2014 to $16 billion, according to New York\u2019s office of the state comptroller. If you think that sounds like a relatively modest decline, consider that 2014 profits were 33% below 2012 levels, and a whopping 74% below 2009, when Wall Street posted record results as markets zoomed back to life after the crisis and banks profited from ultra-low asset values and interest rates.<\/span>

But, reflecting the new clout of banks and bankers, bonus payments didn\u2019t dip in response to this decline. Instead, they rose. In fact, it\u2019s the second year in a row that a decline in profitability has been accompanied by a gain in the size of bonus checks. In 2013, to be sure, the contrast was more marked: a 30.1% decline in profitability, and a 15% increase in bonus payments<\/a>. This year\u2019s gains are more modest: the New York State comptroller, Thomas DiNapoli, announced the average bonus would edge up only 2%. <\/p>\n

Of course, here\u2019s where the fun and games start on Wall Street. Bonuses don\u2019t come out of a bank\u2019s profits, but out of its revenues. It\u2019s only folks like you and I \u2013 and, one would hope, at least some of the investors \u2013 who might want to take a look at these numbers and tie them to profits. Because what good is it rewarding employees for bringing revenue through the door if it isn\u2019t profitable revenue? <\/p>\n

This year, bonus payouts will amount to a whopping 170% of the profits<\/a> reported by New York stock exchange member firms \u2013 profits that continue to be eroded by legal settlements and regulatory expenses. Back in 2009, that figure was slightly more than 36% of profits, and it has crept steadily higher.<\/span><\/p><\/blockquote>\n

The people working on Wall Street think that they are Galtian superman sitting astride the economy.<\/p>\n

They are not.  They are parasites, sucking the marrow from our economy.<\/p>\n

In the words of Ayn Rand, these would be moochers and looters, not producers.<\/p>\n

H\/t to Tom Sullivan at Hullabaloo<\/a>, whose post you should read if you are a Chronicles of Riddick<\/i> fan.<\/p>\n","protected":false},"excerpt":{"rendered":"

Digby quite clearly demonstrates that remuneration for Wall Street finance types are not an artifact of any capitalist imperative, but instead are out and out looting: With all the changes that have taken place on Wall Street since the financial crisis hit \u2013 the mergers, the new regulations and the lawsuits that continue to take …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,975,969,1004,1003],"tags":[],"class_list":["post-183090","post","type-post","status-publish","format-standard","hentry","category-corruption","category-employment","category-evil","category-finance","category-philosophy"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/183090"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=183090"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/183090\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=183090"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=183090"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=183090"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}