Bonuses

Eric Fry at the Daily Reckoning writes an article featuring the chart below that begins as follows.

"Say it ain’t so! The Dow Jones Industrial Average has slipped into the red for the day, year, decade and century…all in one day!"

He goes on in his article with an analysis of Goldman Sachs profits and bonuses some of which you can read below.

The entire article is well worth the time spent on it.

“But it is true. Thanks to tens of billions of dollars of year-end bonuses, the laborers of five major Wall Street firms will receive twice the remuneration of the ‘capitalists’ who own these firms – i.e. the shareholders. In other words, employee compensation at Goldman Sachs, Merrill Lynch, Bear Stearns, Lehman Bros. and Morgan Stanley totaled $60 billion in 2006 – double the year’s earnings of the five firms. Almost half of this compensation arrives in the form of year-end bonuses…and the largest bonuses arrive in the bank accounts of a few privileged employees. So let’s call this process, ‘Marxism with a twist.’

“As fans of Das Kapital might recall, Marx argued that ‘capitalists’ deserve no ‘surplus value’ from their investments because the capitalists contribute no labor to the production process. Since labor, alone, contributes value to production, Marx asserted, the laborers deserve the profits of the enterprise. Wall Street’s major brokerage firms seem to agree.