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DiabloViejo
02-17-2012, 08:54 AM
The End of Wall Street As They Knew It
After surprisingly successful financial reform, public vilification, and politics that have turned against them, the Masters of the Universe are masters no longer.
New York Magazine
By Gabriel Sherman Published Feb 5, 2012

NY MAG (http://nymag.com/news/features/wall-street-2012-2/)

On Wall Street, bonus season is a sacred ritual. It is the annual rite where net worth and self-worth get elegantly reduced to a single number. During the 25-year boom that abruptly ended in 2008, the only principle that really mattered come bonus time was how you ranked against the guys to your right and left. The system was governed by a kind of atavistic justice: You eat what you kill. From the outside, the seven- and eight-figure payouts that star bankers earned could seem obscene, immoral even. But on the inside, the outlandish compensation reflected a strict, almost moral logic. “Wall Street is a meritocracy, for the most part,” as a senior Citigroup executive put it to me recently. “If someone has a bonus, it’s because they created value for their institution.” The sanctity of the bonus was built on the idea that Wall Street pay was simply the natural order of capitalism.

And so, among the many dislocations Wall Street has suffered since 2008, none may have been more destabilizing than the headlines that flashed across Bloomberg terminals on the afternoon of January 17, when news leaked that Morgan Stanley would cap cash bonuses at just $125,000. A week later, Bank of America announced that it would be cutting the cash portion of its bonuses by 75 percent, giving the rest in stock. All across Wall Street, compensation is crashing. Goldman Sachs, coming off a lackluster fourth quarter, slashed compensation by 21 percent.

Banks have always had occasional bad years, but the sense on Wall Street is that this bad year is different. Over the past several weeks, I have had wide-ranging conversations with more than two dozen senior Wall Street executives, traders, bankers, hedge-fund managers, and private-equity investors. And what emerged is a picture of an industry afflicted by a crisis it would not be flip to call existential.

The crash four years ago was shocking enough to the financial class. But what is happening on Wall Street now is even more terrifying. No doubt the economy itself—the crisis in Europe, the effects of the tsunami in Japan, America’s sputtering recovery—has played a large part in the financial industry’s struggles. But even the most stubborn economies improve eventually. The bigger issues are structural. The Dodd-Frank financial-*reform act, much maligned, has already begun to change the shape of the financial system—even before a number of its major provisions are proposed to go into full effect this coming July. Banks are working hard to interpret Dodd-Frank’s provisions in a way most favorable to them—and repealing Dodd-Frank is a key piece of Mitt Romney’s campaign platform.

To comply with the looming regulations, banks have begun stripping themselves of the pistons that powered their profits: leverage and proprietary trading. In the wake of the crash, Morgan Stanley and Goldman Sachs converted to bank holding companies to tap the “discount window,” the Fed’s pipeline of cheap funds that gave the banks an emergency source of liquidity. That move seemed smart then, but the stricter standards required of banks have now left them boxed in.

With all the major banks unable to wager their own funds on big bets, there’s a growing sense that the money that was being made during the Bush boom won’t be back. “The government has strangled the financial system,” banking analyst Dick Bove told me recently. “We’ve basically castrated these companies. They can’t borrow as much as they used to borrow.”

Of course, described a little less colorfully, reducing the risk in the system at a cost of a certain amount of the banks’ profits was precisely what the government was striving for. All this has meant that Wall Street’s traders have found themselves on the wrong end of the market—a predicament that many of them have never seen before. Before the crash, when compensation slid, the banks risked seeing their top talent run for the doors to rival firms or hedge funds. Now, with a glut of hedge funds and an industrywide belt-tightening, bank chiefs are calling their star traders’ bluffs. “If you’re really unhappy, just leave,” Morgan Stanley CEO James Gorman bluntly told Bloomberg TV a few days after his bank announced its meager bonus numbers.

For New York’s bankers and traders, the new math suddenly reordered their assumptions about their place in a post-crash city. “After tax, that’s like, what, $75,000?” an investment banker at a rival firm said as he contemplated Morgan Stanley’s decision. He ran the numbers, modeling the implications. “I’m not married and I take the subway and I watch what I spend very carefully. But my girlfriend likes to eat good food. It all adds up really quick. A taxi here, another taxi there. I just bought an apartment, so now I have a big old mortgage bill.”

Read the rest here:
NY MAG (http://nymag.com/news/features/wall-street-2012-2/)

eg8r
02-17-2012, 09:00 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The End of Wall Street As They Knew It
After surprisingly successful financial reform, public vilification, and politics that have turned against them, the Masters of the Universe are masters no longer.
</div></div>LOL, yet qtip tells us that they are getting even richer than they ever were before.

eg8r

DiabloViejo
02-17-2012, 09:23 AM
For those who say that the Occupy movement has had no lasting effect or influence, this is from the article:

<span style="color: #FF0000">"Since the crash, and <u>especially since the occupation of Zuccotti Park last September (which does appear to have rattled a lot of nerves)</u>, there has been a growing recognition on Wall Street that the system that had provided those million-dollar bonuses was built on a highly unstable foundation." </span>

Soflasnapper
02-17-2012, 10:51 AM
Couldn't happen to a nicer bunch of people! /forums/images/%%GRAEMLIN_URL%%/laugh.gif

People will resist this, even after hearing of it, since it is the gospel that Obama is a wholly bought-and-paid-for shill for the Wall Street banksters, and would never hurt their bottom line. Apparently, he, and/or really the Democratic-majority Congress, took measures that did exactly that.

Just as people refuse to remember that welfare was reformed in '96, and its replacement TANF is just that, T (for temporary, as in a 5-year lifetime cap).

These are too good as faux issues to mention the current truth around them.

eg8r
02-17-2012, 11:37 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">For those who say that the Occupy movement has had no lasting effect or influence, this is from the article:
</div></div>I say we wait to see who wins the presidential election. We already know Obama bent over backwards for Wall St and collected every single record setting penny Wall St was willing to give him. The Occupiers just ate it up and loved every minute of it.

eg8r

eg8r
02-17-2012, 11:38 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">People will resist this, even after hearing of it, since it is the gospel that Obama is a wholly bought-and-paid-for shill for the Wall Street banksters, and would never hurt their bottom line. Apparently, he, and/or really the Democratic-majority Congress, took measures that did exactly that.
</div></div>Why do you keep calling qtip a liar?

eg8r

Soflasnapper
02-17-2012, 02:07 PM
Heh! /forums/images/%%GRAEMLIN_URL%%/crazy.gif

I'm curious: is that an Orwellian, or Alinskyite, rhetorical technique? Or your unique blend of the two?

I have no idea to what you refer.

It's true, as liberals and particularly Democrats tend to form circular firing squads, going from one extreme of support to another extreme of absolute condemnation and disgust, many Dems and liberals have said the financial reforms did not go nearly far enough, and tended to protect, rather than rein in, the WS firms.

However, here's the proof in the pudding-- hitting them in the BONUSES, after hitting them in the PROFIT MARGIN, after hitting them in the prevention of various high-risk investment techniques-- which would support the notion that these regulations have indeed had teeth.

And obviously, WS thinks so too, as the Republicans pledge to repeal these same reforms that have hemmed in Wall Street companies. Not because Wall Street likes them and wants them kept in place, because they are so helpful to them, but because Wall Street wants the NEXT administration to undo them, as they find them restrictive.

cushioncrawler
02-17-2012, 03:35 PM
There will allways be lots of selfish prix that are parasites and do nothing worthwhile.
mac.

eg8r
02-17-2012, 03:44 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">I have no idea to what you refer.
</div></div>Is this you playing dumb or ignorant? Or your unique blend of the two?

qtip has been telling us that Wall St is richer now than ever before and they continue to get richer. You on the other hand are now telling us that Obama has put in measures to stop it. When are these measures going to take place? 2020?

eg8r

Soflasnapper
02-17-2012, 05:25 PM
People may disagree, without either side lying, necessarily. Opinions vary, as a rule of thumb. I try to use the accusation of 'liar!' very sparingly, if at all. Lying requires KNOWING what you say if false, and saying it anyway. Being mistaken is not lying. I don't usually think I can know to what degree a mistake is known to be false by someone, and therefore, a lie from them.

So, preliminaries over, have I contradicted what Q's said, even if I have not said he's lying? I don't really know. Both positions could be true at the same time.

That is, the too big too fail might be bigger than ever (more assets under management), and still be restrained from the higher risk, higher return investment strategies that yield large profits when they work (but large losses when they do not work).

By these reports in question, some poor bankers or stock brokers have to settle for (after tax) bonuses amounting to $75,000. Which doesn't sound bad to those of us who don't work on the Street, but might be 1/10th or 1/100th of what they are used to getting.

If these reports are correct, the bite has already been put on these guys' business model, and they are crying a river.

Likely far more needs to be done still, but there is this result, which is something, not nothing.

Qtec
02-18-2012, 04:14 AM
Wall Street’s resurgent prosperity frustrates its claims, and Obama’s (http://www.washingtonpost.com/business/economy/wall-streets-resurgent-prosperity-frustrates-its-claims-and-obamas/2011/10/25/gIQAKPIosM_story.html)

November 6 2011 <div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">President Obama has called people who work on Wall Street “fat-cat bankers,” and his reelection campaign has sought to harness public frustration with Wall Street. Financial executives retort that the president’s pursuit of financial regulations is punitive and that new rules may be “holding us back.”

But both sides face an inconvenient fact: During Obama’s tenure, Wall Street has roared back, even as the broader economy has struggled.


The largest banks are larger than they were when Obama took office and are nearing the level of profits they were making before the depths of the financial crisis in 2008, according to government data.

Wall Street firms — independent companies and the securities-trading arms of banks — are doing even better. They earned more in the first 21 / 2 years of the Obama administration than they did during the eight years of the George W. Bush administration, industry data show </div></div>

So why are profits down<u> now</u>?


<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">(Newser) – The 1% never had it so rough—well, at least not since the economic crisis was at its worst. Thanks to a terrible year for the stock markets, Wall Street pay is down big-time. The Wall Street Journal reviewed 34 publicly traded financial firms and calculated their total compensation to be $159 billion for 2011, the smallest amount since 2008.<span style='font-size: 14pt'> Actually, <u>pay was on track to hit a record high</u> for the first three quarters of 2011 at those companies, <u>but a miserable end of the year wiped out much of that,</u> according to the Journal's survey.</span> </div></div>


link (http://www.newser.com/story/137087/bear-market-slashes-wall-street-bonuses.html)

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">At Goldman Sachs, the average employee compensation will likely fall 10.7% to $385,000; for its 400 partners, pay could be cut in half compared to 2010. At Morgan Stanley, bonuses for investment bankers could fall as much as 40%. <u>And with new regulations reining in risk taking,</u> industry experts say the party is over for Wall Street. “It’s likely 2011 will be the worst year for revenue growth for the banks since 1938, and so far 2012 isn’t feeling much better,” one analyst told the New York Times. “The industry simply grew too fast over the past two decades and now it’s downshifting. This process will take time, but the hit to revenue is happening now.” On the other hand, many Wall Street employees are getting more bonuses in the form of company stocks, and with markets down now, those stocks could turn into a major windfall should the markets rebound. </div></div>


Q

LWW
02-18-2012, 07:16 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: eg8r</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The End of Wall Street As They Knew It
After surprisingly successful financial reform, public vilification, and politics that have turned against them, the Masters of the Universe are masters no longer.
</div></div>LOL, yet qtip tells us that they are getting even richer than they ever were before.

eg8r </div></div>

In his defense, he is only repeating what he has been told his "OPINION" is for that day.

eg8r
02-19-2012, 08:08 PM
So now qtip changes his mind and Wall St is tanking. /forums/images/%%GRAEMLIN_URL%%/smile.gif You are giving Kerry a run for his money. /forums/images/%%GRAEMLIN_URL%%/smile.gif

eg8r

Soflasnapper
02-19-2012, 10:00 PM
<span style='font-size: 14pt'>Actually, pay was on track to hit a record high for the first three quarters of 2011 at those companies, but a miserable end of the year wiped out much of that, according to the Journal's survey.</span>

Do you disagree with the Wall Street Journal's reporting, as cited above?

What's so hard to understand? They were on track for 9 months for a record, and then tanked revenues and profits so bad in the final 3 months that it erased the first 3 quarters record performance.

According to Rupert Murdoch's paper's reporting.

SO, people who were aware during last year that Wall Street was booming in profit levels were not wrong, but if they presumed that was the final result for the year as a whole, they weren't keeping up to date.

Things change in life. Statements that were true not so long ago (Herman Cain leads the Republican field! Rick Perry leads the Republican field!) are no longer true, and yet, WERE true when stated.

Remember what Emerson said about a foolish consistency being the hobgoblin of small minds [...].

Qtec
02-20-2012, 01:02 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">What's so hard to understand? </div></div>

eg0r has proved time and time again that he is impervious to facts or logic. Once he 'believes' something, that's that. This thread is just another example.

Thanks for trying though. /forums/images/%%GRAEMLIN_URL%%/cool.gif /forums/images/%%GRAEMLIN_URL%%/grin.gif

Q

LWW
02-20-2012, 06:12 AM
That was precious.

Qtec
02-20-2012, 06:32 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">That was precious. </div></div>

Thanks. Glad to see you are eventually seeing the light.

Q

LWW
02-20-2012, 06:34 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">That was precious. </div></div>

Thanks. Glad to see you are eventually seeing the light.

Q </div></div>

You have shone me the light that illuminates what you are for years.

eg8r
02-20-2012, 09:29 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Do you disagree with the Wall Street Journal's reporting, as cited above?
</div></div>Nope. LOL, I find it funny to see you guys flap back and forth in the wind.

eg8r