Imagine a new president’s first day on the job. Does he or she, after learning the nuclear launch protocols, find out what really happened in the JFK assassination? That alien bodies and a spaceship are sitting in an Area 51 warehouse? Alas, the reality is more banal and frightening. The new chief executive learns that his or her real bosses are Wall Street and the big banks.
That’s worth pondering as compensation and benefits at publicly traded Wall Street banks and securities firms reached a record of $135 billion last year. This, according to an analysis by The Wall Street Journal that came out today, less than a week after the release of the Financial Crisis Inquiry Commission’s report on the causes of the panic and Great Recession. As many working Americans ask, “what are benefits?” and millions have lost jobs because of the crash, remember that Wall Street, big banks and their captive regulators were most to blame.
Our near-death economic experience just a little more than two years ago led to few significant reforms. The too-big-to-fail banks are bigger than ever. Derivatives, securitization of thin air and incentives, including sky-high compensation, for excessive risk? Still in place. Moral hazard? Added — now even the most irresponsible of the playerz know the government (that’s us, most of whom have seen out pay stagnate or fall) will bail them out. More “regulatory” powers have been given to the regulator that failed the worst in stopping this “avoidable” crash, the Federal Reserve.
They got away with it.
The result: Another financial panic is inevitable. (One analyst pegs 2015, if we make it past the Mayan end times). And because the “financial services” sector is ever more concerned with casino trading and pushing mergers, it’s not surprising that real productive enterprises and real productive jobs have been struggling in America.
From Davos, Jamie Dimon, chief executive of JPMorgan Chase, struck an aggrieved tone. “This constant refrain — bankers, bankers, bankers,” he said, sensing that his profession was being unfairly bashed. “We try to do the best we can every day.”
Jamie, you won. Don’t be a sore winner.
Tweet of the week: “So Bing is accused of monetizing public content belonging to someone else. Isn’t that the Google business model? #apparentlylegal” (from @palafo)
Today’s Econ Haiku:
So pharaoh trembled.
And the kingdom of the West?
Clueless as always