Green With Envy About Goldman Bonuses Last Year? Just Wait Til This Year

The wealthiest micro-economy in the world, Goldman Sachs, appears poised to post another record year -- after taking the rest of Wall Street to the cleaners in Q3.

Remember the billions that Morgan Stanley, Merrill Lynch, and Citigroup lost on bad mortgage bets last quarter? The billions that sent two of the three firms' CEOs scurrying into "retirement?" Well, it appears the clever Goldman Sachs was on the other side of the trades.

Bonuses across Wall Street in 2007 will still be stupendous by any real-world standards, of course, but this time the rest of the world will have some company as they gawk at Goldman's mountains of bonus money -- namely, the rest of Wall Street. Last year's Goldman bonus pool was a staggering $623,000 per employee, but at least last year a lot of other folks were also doing okay. This year, most of those other folks are tumbling toward a recession.

Even in last year's balmy economic climate, the Goldman bonuses sparked widespread shock and outrage, as the common psycho-economic phenomenon known as "spiteful egalitarianism" kicked in. And so did a New York Times column of mine pointing out that, whether or not you think the Goldman bonuses are fair in some cosmic sense (of course they aren't), Goldman's employees had at least earned the revenue and profits to pay for them.

That will be doubly true this year -- a year in which, once again, Goldman Sachs has made the rest of Wall Street look like a bunch of chumps. So as you prepare to worry about how your own job, income, and house will fare in a recession, get ready to turn green with envy and outrage again.

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Comments

[oldfritz]

09:46 AM on 11/21/2007

Irrespective of the financial performance of any particular firm let us not forget that we owe it to the investment bankers that we have a subprime mortgage crisis in the first place. Anyone who extends a 100%-mortgage to a mid- to low income earner, with a short interest adjustment period at the bottom of an interest rate cycle, an alltime low in decades, is not a banker but an idiot. Anyone who securitzes such mortgages and onsells them to the international capital markets, where they got bundled in SIV's, or conduits,and subsequently short-funded, is not any better, no matter what ivy-league doctorate he may hold. In 1980 there was a joke in US-banks: what does MBA stand for? Its Mexico, Brasil and Argentina, countries to which many banks were overexposed and hit in the 1982 Latin American debt crisis. The beginning of boom-and-bust banking.

[Novista]

10:08 PM on 11/19/2007

Shorting their own toxic product sounds like a devilishly clever business model ...

[worldtraveller]

07:26 PM on 11/19/2007

If you ever traded against them you would know, they are simply the sharpest tool in the shed. My bet, they were long, saw it coming (any idiot not defending a position could) and then they not only went flat but reversed and got short. Honestly as much as I HATE this admin I doubt they needed to do anything to help Goldman, they were just paying attention as they always do.

[BRUMALIA]

05:03 PM on 11/19/2007

Gaudy and stupendous bonuses! Only in America!How interesting,especially in a recession.

[DickTater]

02:51 PM on 11/19/2007

aren't goldman sachs the largest supporter of LeChimp and TheCHeney? Dollar amount, I mean? Not to mention the revolving door between the WH, TOp Gubberment Positions, and Goldman Sachs.

[oldpotsmuggler]

12:23 PM on 11/19/2007

As one of the few people around bright enough to understand what "Goldman Sachs was on the other side of the trades" means, I wish you had clarified that at least a bit. Did they just not hold the bad paper, or were they actually able to make profit from the same market move that everyone else got bit on? What do they have going for them to put them in the position to be able to bet right at exactly the moment that the rest of the market goes the other way? Are they, in fact, infallible?