Christmas is when the money tree explodes in Manhattan.
Twenty-nine year old Bonus Babies are scurrying to their brokers to find two-bedroom, 1200 square ft. "starter" apartments with their $5 million bonuses.
Secretaries, a few years out of Katherine Gibbs, are getting $200,000 to $300,000 from their bosses.
Hey, what does it matter? If you are a senior partner with a $25 million bonus check, and you are asking your office-wife to fill out the deposit slip. .... Wouldn't it seem kind of chintzy not to toss a couple of hundred-grand chips her way... One percent?
Yesterday Morgan Stanley gave its chief $40 million for 2006. Bear Stearns and Merrill Lynch are slated to fork up similar booty for their honchos.
They are just playing catch-up with Goldman Sachs which is giving bonuses of more than $100 million to several of its top traders -- out of a record $16 billion total bonus pot announced earlier this week. This figure averages out to $622,000 for every one of their 26,400 employees including: messengers, clerks, junior accountants, secretaries, copy people and maintenance men.
But monies are not distributed evenly, ... of course.
24 year-old associates, a year out of school, will get a paltry $250 -$350 thousand. But if they hang on a bit, they will be up to a million or two,,, in five years.
One story has it that when a shoeshine "boy" retired at one of the big investment banking firms, the partners chipped in to give him a million dollar retirement bonus.
How the Goldman payout shakes out:
$50-100 million goes to a score of big traders, who bet on futures, mainly money, oil and gas. They earn 10% of what they make for the bank.
$25-50 million is what 20-30 senior partners and bond and derivative traders get.
$5-20 million is what 300 other partners and other company executives get.
But even the take of the top investment bankers seems paltry when compared to the loot that many hedge fund managers rake in.
In 2005 a couple of hedge fund managers took home more than a billion dollars in pay, while the average hedge fund manager (on the Institutional Investor Magazine's list of 25) earned $130 million.
If you throw in the hedge fund mangers, the top law firms, and the financial consultants, ... all in all, Christmas should add a $100 billion bonus bonanza to the local economy.
And all the courtiers to the rich are dancing in the aisles. The real estate brokers are especially ga ga at the prospect of pumping up the wilting housing bubble in the Hamptons and Manhattan. If half the bonus monies goes into real estate, that's a cool three billion in fees for brokers.
All over town the newly minted millionaires are already laying out their plastic cards on the come: fast cars, big apartments, paintings and sculpture, beachfront Hampton getaways, and sparkling diamonds as big as the Ritz.
It's all very gauche and nouveau riche.
There is a new residential building proposed for Lower Manhattan by Santiago Calatrava where the average apartment will cost $35 million.
The repercussions of this financial Tsunami will be felt as far away as Aspen and Cabo San Lucas.
Then there is always the doom and gloom crowd. And most of the rest of us are seething with jealousy. It is not fair .... of course.
"They are parasites. These people don't make anything.. It's all out of the realm of ordinary lives."
I once asked a gold trader what redeeming value his job provided to society as a whole. He replied that he made markets, which allowed for efficiencies and generalized wealth, undreamed of in times past. Monies flow to where it can best be used, maximized.... and as prices fall dramatically, the wealth created is enormous.
We live in a Winner Take All Economy. A Gilded Age of conspicuous consumption.
How can we justify such enormous payouts when millions are losing their jobs in the industrial belt, when 40 million Americans can't afford health insurance?
There is no justification.
It just is. You can't stop the future. Globalization is here to stay. The human costs of change --- lost jobs, disrupted broken lives --- are enormous and must be alleviated, but if we outlaw or tax these moneymakers out of existence, they will move out of town, just like the shoe makers moved out of New England to Brazil, so many decades ago.
London, Toronto, Hong Kong, Shanghai, Bombay and Greenwich would love to gobble up our financial services industry. They are already nibbling away pieces of it and are waiting in the wings like vultures ready to pounce. Because of stringent regulations and taxes, most of the larger IPOs have been offered overseas in the last couple of years. Also, the top $100 million bonus earners at Goldman work in Hong Kong and London.
Once New York was a great port and factory town. We imported raw materials, made things and sold and shipped them to the rest of the world. That New York of old does not exist any more.
The dustbins of history are littered with once successful economies and nations that that were unable, or unwilling, to adapt. New York is now a machine that thrives because a small nucleus of highly skilled professionals live by creating, processing or exchanging ideas.
Manhattan is a company town. The 280,000 workers in the financial industry collect half of all wages paid, even though they only hold one out of every six jobs in the borough.
The average weekly pay for finance jobs in Manhattan was about $8,300 in the first quarter of 2006. --- an average of five times what other 1.5 million Manhattan workers earn
Ordinary people have to rely on trickle-down economics: waitresses, artists, museums, publishers, the theatre, universities and other businesses. Charities, foundations, the Democratic Party and even opinion outlets like the Nation Magazine or the Huffington Post are all supported by a critical mass of the Money People.
From the year-end bonus pot, the City is expected to collect a small payout of about $500 million in extra taxes which will support:
18,317 Emergency Medical Technicians.
383 Subway Cars
10,980 Public School Teachers.
The State will gain $1.1 billion in tax revenues from the bonuses and much of these monies will be going to the distressed industrial regions upstate. The checks will be coming in January.
The questions the Bonus Babies now have to face are:
Is it enough? Who is making more?
Will it bring me happiness?
WHENEVER Richard Cory went down town,
We people on the pavement looked at him:
He was a gentleman from sole to crown,
Clean favored, and imperially slim.
And he was always quietly arrayed,
And he was always human when he talked;
But still he fluttered pulses when he said,
"Good-morning," and he glittered when he walked.
And he was rich--yes, richer than a king--
And admirably schooled in every grace:
In fine, we thought that he was everything
To make us wish that we were in his place.
So on we worked, and waited for the light,
And went without the meat, and cursed the bread;
And Richard Cory, one calm summer night,
Went home and put a bullet through his head.
Edwin Arlington Robinson (1869-1935). Collected Poems. 1921.