Several months ago the news media reported that GM Financial Services petitioned King Barack's Pay Czar for the authority to pay their 25 top employees an average of $3 million this year. Bank of America proposed a $7 million average for its top guys, and Citicorp wanted an average of $10 million. It was also reported that it took less than a year after receiving government bailout funds for Goldman Sachs to hike the average base salary for its employees back up to over $600,000 annually. That wasn't for the top 25, that was the average for all employees, before any bonuses. Welcome to the Twilight Zone.
Most people probably know that the only thing these privileged folks really have to pay for are their homes. Automobiles, travel, entertainment, club memberships, expensive food and drinks are typically covered by their companies (i.e., shareholders) as business expenses. Obviously, those who played the highly lucrative but high risk games that resulted in the biggest loss of jobs in 70 years, foreclosures on thousands of homes and the meltdown of the value of personal savings and pension funds are not having to suffer too much.
The big financial institutions say they need to pay mega-million dollar compensation packages to their executives to attract and keep talent. But can any of them explain what these executives do, what they accomplish and what talents they have that require the outrageous compensation packages? Not rationally. And what kind of product do these people produce that benefits society? None. In fact, the products they play their games with eventually lead to economic disaster. We have already seen it happen once. Basically, in the financial services industry, these overpaid bloodsuckers are those who kissed the most butts, flung the most bullshit or took the most risks with other peoples money to reach the top of the pyramid. That kind of talent America cannot afford at any price.
Now we read in the first month of 2010 that banks have already re-engaged in lending to hedge funds and private equity firms back to levels not seen since prior to the financial market collapse, with leverage ratios of the borrowers again expanding to imprudent percentages. Meanwhile, the banks are ignoring the borrowing needs of American businesses that produce real goods and services that generate economic growth. If that doesn't make you throw up, then you must be employed by Goldman Sachs.
To reiterate, the bailed out banks are supposed to be making loans to commercial and industrial enterprises to get the economy moving again. Instead they are providing money to the same jerks to do the same shit that caused the meltdown in the first place. And all these moneychangers do with the money is use the borrowed money to buy derivatives (artificial pieces of paper) based on government and agency debt, including packages of underwater mortgage backed securities, to magnify the returns on their miniscule amount of invested money. The government continues to issue the massive amounts of new debt because it needs the money to pay for its unprecedented spending spree. The banks and big money managers are accomodating them because they know they will be rescued by the federal government (i.e., taxpayers) if the loans go bad, and because their regulatory overseers encourage them to. That is the result of the newly established precedent of bailouts.
The financial system is supposed to exist to facilitate the efficient functioning of economic activity - trade, commerce, industrial production, innovation and the provision of valuable services. The financial system in America today does not do that. Right now it is an exclusive, closed game played by greedy, mega-rich financial industry larcenists and associated federal regulatory co-conspirators creating more wealth for themselves while ignoring and restraining the productive sectors that are the foundation of real economic activity.
Economists tell us an economic recovery is underway. I suppose it is if you work in the financial or government sector, where most of the economists are employed. But so far it appears the mega-wealthy get wealthier and public employees do just fine while the real economy remains in the toilet bowl. It makes you wonder if everyone in Washington and on Wall Street is a crook. The truth is they are stealing from taxpaying Americans, and they belong in jail. In capitalism there is no such thing as bailouts, 'too big to fail' or government directed allocation of capital. Consequently, America is no longer a capitalist country that benefits all. America has now become a kleptocracy that benefits a privileged few.
