Christmas on Wall Street

Ho! Ho! I feel like a ho! While many Streeters are compensated on a commission or performance basis – salaries are not the real candy jar – well let’s just say if this is free market capitalism, we need to find another word to apply to what I am about to describe.

Today’s thedeal.com reported: “A Bloomberg report said that Wall Street's banks still have roughly $20 billion set aside to pay bonuses for 2008. Last year, when the situation was far less grim, Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. paid out a record $39 billion.

”A brief run-down of the allocations banks have set aside for bonuses:

• Merrill Lynch: $6.7 billion - posted losses for five consecutive quarters
• Goldman Sachs: $6.85 billion - still profitable, the bank slashed the bonus size by 32%
• Morgan Stanley: $6.44 billion - also profitable, bonuses here will decline 20%
• Lehman Brothers: $2.5 billion - the bank walled off the money for its U.S. unit before filing for Chapter 11”

How does reading that make you feel? The bailout focuses on CEOs, but in Wall Street firms, traders and investment bankers often out-earn their CEOs, so the net needs to be wider. Gee, I’d sure hate to lower these guys’ taxes, wouldn't you? That spare Aston Martin might not be a wise purchase this year. Remember, these are the folks who created the derivative market and profited wildly from it. They caused the problem and then made more money “shorting” the market (betting on the fall).

Okay, we know the mood in Washington is going to clamp down on this practice, and when it comes down to pulling the trigger, there will be some reductions. But with fewer financial players in the market, when the world begins to restore, there will be the same or more money spread around to fewer remaining players! Does a body good to know that. You think they see any “patriotism” in paying a bit more to the government? Yeah.

Fact is that with so-caller “higher taxes” in the U.S. that some people are complaining about, in the meltdown, hedge funds withdrew their money by the ton from other countries (with vastly lower taxes) and pulled it back into the United States . Foreign markets experienced greater currency declines that both the U.S. and Japan . And these rich folks are most certainly not relocating overseas or taking the underlying jobs with them. In fact the worst jobless rates happen to be in nations with low taxes or that have a bad habit of not collecting them. Remember, it’s not the taxes you pay, it’s what you can buy with the dollar left after all the taxes are deducted.

So when you read these numbers, and look at the lower end of the housing market and the lay-off notices, how do you really feel about taxing the folks making all that extra dough off the misery they caused?

I’m Peter Dekom, and I approve this message.