Goldman Sachs is planning to pay each of its 31,700 employees $717,000 for this year according to the WSJ today. If you exclude temps and consultants, the figure goes up to $775,000.
Nice work if you can get it? Or has a major market dislocation taken place?
Now my friend WillaWonka has posted that labor is always worth more than the wages paid. If he’s right, what exactly is it that the Goldman employees do that is worth so much? He would say, they are entitled to even more?
But what I can’t figure out is, if GS has that kind of earning power in a recession year, why in the hell did they need TARP funds in the first place? And don’t forget, the bail out of AIG also benefited GS substantially bc they were a major AIG counterparty. So GS twice benefited from the bailout.
Yes, they have paid TARP funds back with interest but as far as I know they paid the US no insurance premium for essentially insuring its contracts with AIG.
And to add insult to injury, GS is not passing hardly any of its good fortune on to shareholders. They are paying $717,000 this year to the cleaning lady, but shareholders get a miserly .$35 share dividend. [Okay in the interests of full disclosure I will state I am not a GS employee so I’m not getting the $717,000, but I am a shareholder who is getting the miserly 35 cents for shares I paid an average $145 a share].
I’m going to whine about this all day.
BUT ME!!!!!!!!!!!!!!!!!!
-- Modified on 11/20/2009 9:04:19 AM
would be nice...but it would be hard to look in the mirror every morning...at least for me.
their receipt of government benefits but Goldman Sachs is not Accudyne (the Wisconsin manufacturer of landmines) or even Philip Morris. They make a substantial portion of their profits from trading just like everyone else on Wall Street, they just do it better.
And investment banking is an honorable profession. Your posts today have gone from being worthy of argument to ...what?
Investment banking is an honorable profession? I think we're going to have to agree to disagree on that one.
''would be nice...but it would be hard to look in the mirror every morning...at least for me.''
That sounds like a principle to me, AND THAT'S A VERY CONSERVATIVE THING.. I knew I liked you for a reason 
....
I'd LOVE to fuck to world for 700 bill, but......I could make more if I didnt make a dea,l to sell my soul, and theirs..AND CHARGE ALL THEM MUTHA FUGGERS SEPARATELY, ya know ?? LMAO .. But I couldn't do that either ...and I dont understand the greed, I cant begin to comprehend it..Of those that do, guess I need to open my mind up even more, huh? lol
but it should be up to the shareholders to drop GS like a hot pile of shit in response to management basic screwing of the shareholders.
Only if a company like GS is punished by the market will they change their behavior, similar to voters "throwing the bums out" in politics. I am a realist however and as such I know this is doubtful to happen anytime soon, just like the two party political system, management is too solidly entrenched for any meaningful changes to be likely.
You obviously have issues with GS, and I am sure there are other public companies that are more inline with your views.
First, they didn't want TARP, but it was forced on both the good banks and the bad banks by Paulson, and reaffirmed by Geithner. They paid back TARP on the first day Treasury said it was OK. As a result, the Treasury realized a healthy return, approx 22% return for an investment held less than a year. Think about it, the government made money, the ultimate oxymoron. Did GS get a sweet deal on AIG, they sure did. Let's just say they are better at negotiations than the Treasury.
There are a lot of companies that pay little or no dividends. Go play in the hi-tech space for awhile. Most don't pay dividends, or pay very little. Ask how Microsoft shareholders felt for years while they piled up $50B in cash. I view GS almost like hi-tech as growth companies, hence I invest primarily in them for the stock appreciation, not some paltry dividend, which I might add is actually $1.40 a share, or 0.80% dividend yield. Again, if you don't like move on.
Now, it sounds like you like to invest. Did you hear about the latest tax being proposed by Pelosi? It's a stock transaction tax. On surface it looks minor at 0.25%. But if you were an active individual trader with a brokerage account of say $100K, and you day traded, you could actually trade well over $2M in one year with 200 or 300 trades. You are taxed on the $2M, which equates to $5K a year. What a great way to punish retail investors, as well as institutional investors. And that tax to institutional investors is going to be absorbed by everyone who holds a 401K, IRA, Roth IRA, whatever. It absolutely boggles the mind what these frigging assholes in Congress think about.
-- Modified on 11/20/2009 9:47:17 AM
I can speak from personal experience that making $2M in trades on a margin account with $100K in it is a very low number for an active trader.
I have not traded actively for a few years as I no longer have the time, but it was routine for me to make $10M in trades in a single month off a a margin account with only a few hundred grand in it. You do the math on how much would be due in taxes for someone actively trading "real" money and the amount would be staggering.
quarterly dividend but since I was comparing the dividend to the yearly salary I should have used the full year dividend.
If GS did not want the TARP money - and I have read that as well - why did the government require them to take it? I have never read a cogent explanation of why good banks as well as bad were required to take these funds. Moreover, this stated rationale is inconsistent with the "stress test" that government examiners applied to GS before it could pay back the TARp funds.
I have to conclude from this that the government did believe GS needed the capital and indeed following the Lehman collapse their stock did sink to $80 a share and at that point I stopped looking.
as anything else, including true earnings, true asset values or anything else that you would use to measure a companies true value.
Confindence in the markets is a huge factor in our economic system. Just like in politics the pendulum usually swings too far in both directions, but ultimately falls back to the middle eventually. Of course once it falls back to where it truly belongs, one factor or another will begin to push it again.
but to my recollection, Paulson wanted to shock the system, and to encourage banks to loan. There were a number of banks, or bank holding companies, that didn't need the money, i.e. GS, Northern Trust, JP Morgan, but they got a very cheap source of capital without any real conditions, other than please loan it out to individuals and businesses.
A couple of months later, a few of the good banks are having parties in Las Vegas and other places, and paying ridiculous bonuses. Out comes the pitchforks and populist rhetoric, including legislation on capping compensation. It didn't matter if you were a good bank or bad bank. It didn't matter that you really didn't need TARP. All that mattered, if you were the CEO of a good bank, was to pay back the TARP as fast as possible.
Now to the Treasury's credit, they did negotiate very favorable terms including stock warrants. Eventually BAC, C, and others, maybe even AIG, will pay it all back, and the govt is going to get a really good rate of return. Wish I could say the same for GM and Chrysler, but doubt we will ever see that money again.
I think it's a little strong to say that Paulson forced GS to do anything. Paulson was GS former CEO for Christ's sake.
I think Pelosi's onto a good idea with taxing stock trades. We need to start putting our intellectual capital back into a sector of the economy that actually produces value. The simplier thing would be to just raise capital gains taxes, I imagine it would be less paper work.
Interesting post marikod. Let me begin by saying that I know macroeconomics fairly well, but investment is a separate field altogether. Some people don't understand the distinction. I just wanted to get that out there.
Part of the reason why Goldman is making the money they do is because they have consolidated against their competition (yes, a major market dislocation has taken place). This is an indication to me of why Goldman doesn't need to merged with other companies, but rather why they should be broken up. Too big to fail is too big to exist IMHO.
Goldman can pay their employees this kind of money because they're making so much profit (in the billions I believe). All this while creating zero value. I don't think companies like Goldman should exist at all, but hey, I'm opposed to markets entirely.
If Goldman was a non-profit organization, but was performing the same (which wouldn't happen, but let's set that aside for right now) then Goldman's employees would be seeing far more in bonuses. Of course, they also wouldn't have shareholders to worry about paying a dividend to. And no, I don't think the work they do is worth what they're being paid given that GS produces no value.
Markets are a wealth redistribution program. Goldman are the kings of high tech purse snatching. It boggles my mind that what they do is legal.
Without companies like GS, where would companies go to finance their activities. Without investment banks there would be no major companies because there would be no access to the billions of dollars to create a GM or any other major company for that matter.
Let's suppose a WW was able to magically whisk away every investment bank out of existance, where would startup companies or companies looking to expand go for capital? The only remaining source for capital would be Government. If that is what you want, why don't you just go on record adimitting to being a communist/socialist, because those are the only remaining alternatives.
From your posts on the subject it is very easy to see that you don't have any real experience in business or finance. It's very easy to criticize the existing system and theorize ways to make everything better. At least Charlie came right out and adimitted to being a communist, why don't you do the same?
...and wiggled on your face.
No, I am not a communist. I'm more of what you might call a Mutualist. Back in the days of the First Internationale, the communists were on the opposing team, not that you'd ever know that.
Without companies like GS there wouldn't be other companies? That sounds just dandy to me! Where would companies go to raise capital? You can get a business loan from a non-profit cooperative quite easily. They're called credit unions, look it up. A company can also raise money by issuing corporate bonds or becoming a publicly traded entity.
I would prefer that no business use gov't for much of anything, but there is the Small Business Administration to give them advice and to help out. Start up companies are not getting their capital from Goldman. Enough said.
I am willing to bet you have never run a business, nor do you have any idea the difference between commercial banks and investment banks.
To start up a small company requiring a few million dollars a non-profit cooperative would work just fine, but to start up a manufacturing company or communications company of any size whatsoever requires hundreds of millions at the least and in many cases billions of dollars in capital which is beyond the ability of a non-profit cooperative or even almost all commercial banks to handle.
Yes you can write a bond issue or go public, but who is going to underwrite it? Certainly not a commercial bank or coop. This is the area that investment banks are designed for, and they are an absolute neccessity for our economic system to function.
Keep in mind that we are in a world wide economy and our US companies are competing against companies that are either state run or highly subsidized by nation states. The resources of a nation and the lopsided rules favoring nation states inre to private enterprise are so disparate as to not even be comparable.
Enough said my ass. We are not talking about start up companies of a few million, in the world economy only a nation state or an investment bank, or several acting together can effectively fund any company that is going to be competive internationally.
You are so right. WW really doesn't have a clue. Although I don't have a thorough knowledge of how GS, JPM. MS and others operate in the capital markets, I do understand the next level down, which is the venture capital market. WW talks incessantly about how difficult it is to start a business. Granted it's not easy and fraught with failures, but one only has to look at hi-tech, bio-tech and other emerging markets and see how capital, whether it's from GS, or from a venture firm like Kleiner Perkins that help with initial seed money, operating capital, management, and eventually IPO. Can you even imagine Larry Page and Sergey Brin, founders of Google, asking for capital at the local credit union. WW talks about the need for a non-profit approach. Well if it makes him happy, maybe he needs to review how leading universities like Stanford team with Venture Capital firms to help incubate these small companies, which again many fail. But then again, WW is focused on growing the small business segment of dry cleaners, yogurt shops and the local Quiznos.
but my own business has kept me a little busy traveling as of late.
I am glad there are a few people like yourself that post here who actually understand business at a level past the local drycleaners. lol
What most people who have never gotten past the "corner store" mentality don't realize is how easy it is to outgrow a commercial bank or credit union. I can imagine going to my local bank and telling them I need help in selling $60,000,000 in corporate debentures to facillitate an expansion. lol
I guess a non-profit approach works if you plan on launching a non-profit business, but I can imagine the uproar from the WW's of the world the first time their payroll check bounces. lmfao
Isn't it funny how guys like WW compain, while people like us create their very livelihoods. Without people with the balls to start businesses, there would be no jobs for whiners like WW to compain about, Yet the minute we start to make he few bucks, they want cut in for "their fair share".
Whiners like WW wouldn't last for a minute in the oilfields that my guys work in. The people that work for me, work their asses off, and I treat them accordingly by making sure the company is solid and that they get a fair days pay for a fair days work and that their paychecks will never bounce.
Ga, most people give up the Ayn Rand nonsense when they graduate from college. No for profit institution creates the livelihoods for anyone, no more than leeches will keep a human being alive. Everyone would be FAR better off if every single for-profit business went away tomorrow. There isn't a single problem in this world that wasn't caused or made significantly worse by businessmen. That's the reality.
The fact is that the number of non-profit co-ops are growing, and the reason is because they're more successful. It has resulted in workers being paid far more, and in several different industries productivity is up as much as 40%. And wonder oh wonders, the workers are HAPPY doing their jobs.
You can criticize the corner store mentality all you like, but the reality is that the greater the number of small stores, the greater economic diversity you have. It results in an economy with less built in risk, and is more resiliant to downturns. The larger any institution becomes (business included) the less liberty you have.
As Ray Anderson (the CEO of Interface) once put it, there must come a time where what you do is illegal. And that, sir, is a matter of life and death.
But none of that changes the fact that you don't have a fucking clue to how business works. If you want to live in fantasy land, that's your choice. Just don't expect the rest of us to buy into your feeble minded bullshit.
It's ironic that while you praise the small business model, you and yours are doing everything they can to tax and regulate them out of existence.
At least Charlie the commie was entertaining at times and did actually have some type of grasp on economics. He was guilty of taking two and two and coming up with twelve, but on occassion he would slip up and show he had actually conducted business in his lifetime. You on the other hand..... oh never mind.
Like I mentioned in a previous thread, I help out from time to time at a small business (4 employees total). It's really not that hard to grasp.
Yes, I praise the small business model, and I have repeatedly said that the more we do for small business, the better off this economy will be. I don't support anyone who wants to harm small businesses. Don't be so presumptuous.
St. I suggest you take a look at where most of the initial seed money for high tech industry comes from. It's not GS. It's the Pentagon. Just ask anyone at MIT about that.
at 4:15PM. I just think you either make this shit up, or you don't read and comprehend previous posts. I mentioned Kleiner Perkins. Do you know who they are? How about Sequoia Capital? Trust me, they are the examples of investment engines for start-up companies, not the Pentagon. Oh just fuck it! I can't read your shit anymore. Ditto what GaG said. And yeah, I kinda miss Charlie too. You are a poor version of a Charlie knock-off.
I didn't say that there's no such thing as investment banks that seed start ups. However, if you think Kleiner Perkins funded the seed money that created the internet, then you'd be wrong. That's like saying Pfizer puts up the majority of the money for new drugs while ignoring the existence of the NIH.
1) The difference between commercial banks and investment banks is growing ever more slight since the repeal of Glass–Steagall and banking consolidation.
2) If you're starting up a company with a billion dollar overhead, then you're not starting up a small company. Were we not talking about small businesses?
3) We only deal with a world wide economy because we have a screwed up trade policy. It's optional, and we can reverse that at any time, to our benefit I might add.
The difference between commercial banks and investment banks is huge. Just try and do anything remotely related to investment banking with a commercial bank, even a large one and you will find out immediately. Size has nothing to do with it. Try going to B of A for your investment banking needs. Oh I forgot, you don't have any. I do, and I can tell you from experience, there are still huge differences between commercial and investment banks.
Who the fuck said anything about "small" business? I certainly didn't and after reviewing every post I can't see where you did either.
We deal in a world wide economy because to not do so would be the end of the US as we know it. Are you fucking Amish or something? Technology has created a world wide economy whether you or anyone else likes it or not. No any one country is completely self sufficient in the 21st century, not even us.
I've been discussing small businesses on this board all day. How did you miss it?
Actually, I put some money down on some mutual funds at a commercial bank a few years ago.
We're not self sufficient solely because of our trade policy. Technology has zip to do with it. I'm not saying we should cut off imports, but I am saying we should at least make our own security infrastructure. Or would you prefer us to outsource military gadgets to China?
Wow you bought some mutual fund shares at a commercial bank a few years ago. I guess I should apologize, buying a few shares of a mutual fund obviously makes you an expert on the subject. Please accept my apologies, but please do it while showing me where you differentiated between business and "small business" in our earlier conversations of today.
and nowhere did I see you differentiate between business and small business.
Are you really this stupid, or are you trying to be like Jocko, an asshole pretending to be an idiot?
why not a non-profit GSE? Hell, if they can handle 4 trillion in mortgage credit, why couldn't a GSE be set up to provide the credit for large businesses?
-- Modified on 11/20/2009 10:56:48 PM
...is the shareholder's rights movement. It's a little UTR still, but it's growing. There are movements to make corporate executive decision making more accountable to shareholders, including the approval of bonuses, executive salary, and the like. I think that's a step in the right direction.
in reality shareholders have little or no power to control compensation decisions by public corporations, unless they control the board and can fire the officers making the decisions.
And that basically is Warren Buffet. Even the mutual funds that own huge hunks of GS do not have that clout. And, of course, we do not want to fire the GS officers anyway bc they are the smartest guys on the street and are a key reason GS makes so much money they can pay the cleaning lady $717,000 per year.
That's why my solution is to whine about it.
Actually your original post is timely. GS is starting to get a lot heat from the big institutional players about their bonuses, as well as dividends. A couple of guests on CNBC today even mentioned that GS might substantially increase their dividend payment with an announcement this quarter. I would never tell you to buy, hold or sell, but this could be a catalyst to help drive the stock higher. It will make your cost basis of $145 look really good.
Hey, I wish I was either smart, or had big cajones, and bought GS when it was in the $70s.
(Dick Bove) was also the guy I relied on when the large banks first started sinking - he said it was a "once in a lifetime opportunity" to buy Bank of America, Citigroup, and Morgan Stanley.
And he may be right - my lifetime may be over before the Bank of Amercia stock I bought in reliance on him gets back to 22 so I can escape.
sloppy seconds after GS bent Obama over and fucked him in the poop chute.