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.