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TradIsGood
Chalkless climber
the Gunks end of the country
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The ceiling for base pay for Citigroup executives is $1 million.
I dare say that you will find similar caps for all banks (i.e. $1 million or less - do you wonder why?)
Dozens?
Just making it up now instead of cutting and pasting from semi-reliable sources?
BTW Karl, you are right about one thing and demonstrated that in your post - people do not know!
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Mighty Hiker
Social climber
Vancouver, B.C.
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More wit from LEB:
"There ARE ways to live inexpensively, eat inexpensively (and well, too) and recreate inexpensively but people don't want to hear about it." Actually, that's just about all we talk about on SuperTopo, the ideal being living in Camp 4 in the 1970s.
"World War II pulled the country out of the Depression." Most historians and economists agree that the main factor was the leadership shown by Franklin D. Roosevelt, in particular his social and economic programs, aka the New Deal. Much of the US was well out of the Depression by the late 1930s, and pre-war military spending wasn't really a factor until 1940/41. The war stimulated the economy, but many economic indicators had returned to or surpassed their 1929 level by 1940.
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John Moosie
climber
Beautiful California
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WW2 stimulated the economy is what the power elite want you to believe. Mighty hiker has it right. The economy was well on its way to complete recovery without the war.
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Mighty Hiker
Social climber
Vancouver, B.C.
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Perhaps the most disturbing thing about political rhetoric in the U.S. is the white/black, right/wrong tenor it often has, and how it is often based on beliefs rather than facts. Also how values are often used as a superficial measuring stick, in place of policies and issues. And the use of terms such as "liberal", "conservative", "intellectual", etc is rarely related to the facts.
The role of governments in the U.S., measured by percentage of GDP, has been increasing since the canal/railway boom of the 1830s. It got a significant boost with the Civil War, Teddy Roosevelt and Woodrow Wilson, Franklin Roosevelt, then Truman, Eisenhower, Kennedy/Johnson, Nixon, and (especially) Reagan, Bush I, and Bush II. The total percentage of U.S. GDP devoted to all levels of government has been in the 30 - 40% range for decades. A bit more in times of genuine or supposed foreign crisis, or economic crisis, a bit less in times of peace and economic growth. A bit more in wealthy or progressive places, a bit less in others. Which is typical of liberal democracies around the world.
Many other liberal democracies spend a little more on social programs ("socialism" for the needy), and a little less on military and business ("socialism" for the rich), but otherwise there's not a lot of difference. The dependency of the U.S. on exploitation of the resources of 'frontiers', and on petroleum, is a complicating factor, given human effects on the environment. But there is no doubt that the U.S. is a liberal if not a socialist country, based on government control of the economy.
GDP/U.S. citizen has been increasing for over a century, with the exception of the depression of the 1890s, the Great Depression, and much of the time since 1945, with blips 1973 - 82, 1990 - 92, and since 2000. The U.S. is incredibly wealthy in the material sense, despite some recent bone-headed economic policies. Which means it can and should be able to afford to look after all its citizens, most particularly through a sound universal health care system. Experience in other countries has shown it would cost significantly less than what is currently spent.
Social welfare spending in the U.S. is well-established, and ensures a reasonably stable country and middle class - the core of any healthy democracy. Not to mention the bit about being one's brother's/sister's keeper. The attack on the middle class by the current government, purportedly in pursuit of ideological goals, is damning. The core goal of the neo-cons, insofar as there is any, is selfish and destructive - they'd like to somehow destroy the accomplishments of the New Deal, the Great Society, and other social and economic programs. They would clearly stop at nothing in their attempt to destroy the legacy of both Roosevelts - bearing in mind that Teddy was at least as radical as Frank. And are utterly frustrated in that there is neither need to do so, nor popular support for it.
From another perspective, neo-cons and their fellow travellers have been propounding for decades that government is the enemy, and that it needs to be reduced if not eliminated. Given the actual results after 30+ years, it's clear that their real goal is to control and take advantage of government, in the interests of their elite. Their supposedly ideology is nihilistic, their actions selfish.
LEB's blithe attacks on "socialism" are a classic example. In her work in academic institutions and hospitals, she is dependent on government funding and regulation. Both sectors are directly or indirectly dependent on government. skipt, if an academic economist, is in the same position - dependent on government. You're both children of FDR.
Governments, and all large organizations, are inherently somewhat wasteful, inefficient, and not to be trusted. However, the events of the 1920s, and the last 20 years, clearly show that there is an important role for government in regulating the economy, and the excesses of "free" enterprise. Simply put, business can no more be trusted than anyone else, certainly often less than government, and some economic and legal restraints are needed to guard against its excesses. Particularly when business in effect takes over the government, as it has over the last 25 years.
Joseph Kennedy was one of the great Wall Street predators - until appointed by FDR in the 1930s to set the financial policies and institutions that provided stability, until they were eroded over the last decade or more. Anyone who believes that unregulated markets are best is an unmitigated fool, as Adam Smith pungently commented on.
And at least we get to elect, and un-elect governments, and they can't move themselves off shore and out of our control.
I can understand that many in the U.S. are insecure, and long for a simpler U.S. that perhaps never really was. But you can't turn back the clock - there are still Rockwellish places, but not many. The U.S. needs to looks forward rather than back. It also needs to outgrow its exceptionalism - it's a great country, but only one of many, and it's not alway right. Complicated problems usually don't have simple solutions, and more foresight is needed.
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immanti
climber
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John Maynard Keynes also thought that gold was useless, a “barbaric relic of the past”. That’s why he concluded that poverty could be solved by creating more money. And since he knew people tended to resist the idea of government taking their gold, the re-distribution of wealth through inflation was also part of what he proposed.
Understanding the difference between money and wealth, as well as the reasons gold and silver were used consistently for thousands of years isn’t easy, but it’s important.
It’s true, you can’t eat gold. But you can’t eat your clothes or your house, either. You can only eat food and you can only store food for so long.
People tried many different things before the world settled on gold and silver. No decree did that, it was the logical conclusion of a long process. Sea shells, stones, coffee and cocoa beans, salt and other things were used as money at different times in different places.
Why gold and silver?
People gradually found that whatever they decided to use as money should meet certain requirements. It should not rot or go bad. It should be easy to recognize, store and transport. It should be easily divided and combined. It should be uniformly scarce.
If whatever is used as money isn’t scarce, then there will be a lot of that money chasing whatever goods are produced. Goods are wealth, money is just a convenient medium of exchange. If there’s no more production of goods, there’s no more wealth creation. If you only have more money, more money chases the same amount of goods. If within a certain group only one loaf of bread is produced but everybody has a million dollars, the price of bread is going to go up.
Paper money came into existence because governments realized they could force people to accept it as payment through legislation and the use of force. The story of John Law and the mess he created in France by introducing paper money is very interesting. In the US, it was Alexander Hamilton’s brilliant idea to use debt as money, since the colonies had a lot of debt and very little real money.
The introduction on a global scale of paper money early in the XX century probably had a lot to do with the fact that the world was nearing an all-out war and many national governments were anxious to find ways to avoid spending their gold and silver reserves. Spending paper money they could print themselves must have been an irresistible idea. The collusion between national governments and central banks, resulting in the adoption of paper money which people are forced by law to accept, gives national governments the kind of power of which Kings of old could only dream; the power to create money out of thin air.
Predictably, governments tend to abuse that power, so it isn’t surprising that they usually end up flooding the market with money while production remains stagnant or worse. This inevitably leads fiat to become useless as a medium of exchange, since it no longer meets one of the basic requirements of any money; it is no longer scarce.
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Mighty Hiker
Social climber
Vancouver, B.C.
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Thanks, Dario - nice to hear from you!
Agreed - the simplest approach for the new government will be to inflate its way out of the mess, thereby creating another mess which will have to be "cured" by high interest rates. A replay of the 1980s. Though as Bush is now well into lame duck mode, it will be his economic advisors, and Bernanke, who make the key decisions. Hopefully jstan will watch the indicators, given that "core" inflation excludes some key items.
I'm no gold bug, but it may be a time when the value of property and assets is better protected than that of cash.
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immanti
climber
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Thank you Anders. And I think you're right, the "cure" will first be inflationary, possibly hyperinflationary.
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 06:52pm PT
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Some great contributions to this thread. Thank you
Fatty wrote
"Insurance in any form is designed to spread the risks of high costs among the many and the companies hope not too many file claims. In medicine, the procedures/meds have become so good that the many are making too many claims......medicare/insurance will fail. Love my mom and at 83, she will be going in for her fourth cataract surgery in five weeks (problems), how much is that going to cost all of us? "
Sounds like insurance companies are based on a sort of "fractional reserve gambling" where they use your money and count on you not needing it. The scary thing is they have a vested interest in denying your needs. Business is business after all (the eternal excuse for the immoral)
But come on Fatty, This is reality. The old are getting old in numbers. We take care of them or let them screw themselves and die. Your choice? Heaven forbid we increase the tax on the 1000+ Billionaires in this nation. Most of you can't even conceive of how much more than a Million a billion is.
http://healthywealthyboomer.com/wordpress/2008/07/what-does-a-billion-dollars-mean/
Do the right thing fatty. and besides Cataract surgery takes a few minutes with a laser controlled by a computer and technicians could be trained to do it. We have other options.
Lois
"It IS a very dog eat dog world at there and it is sad that such is reality"
Bad Lois! I haven't eaten any dogs and if mankind is to survive we must change the paradigm. You excuse war instead of productive investment because war motivates us and we are aggressive? Shame! That's no excuse, particularly coming from somebody who says personal finance admits no excuse. I won't focus on you here but I believe this much;
We have arrived in a point in our history where it's evolve or die. that's it. We have the technology to extinguish ourselves.
This whole capitalist principle, as illustrated in this thread has led to Money accumulation becoming the sport of the elite where some folks have massive amounts of money and simply claw and destroy for more money for the sheer sport of it, because society gives prestige to it. Not because they need it.
When society rewards and values those who contribute to society, when service becomes the yardstick of respect instead of amassing wealth, then we'll have a healthy society.
All of us hold our souls and figuratively have the option to sell them or respect and nurture them. Selling your soul is a dead end. Think about it as these times play themselves out.
Choose the light (not in the sense of belief, but in your heart)
Peace
Karl
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 07:12pm PT
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TiG wrote
"The ceiling for base pay for Citigroup executives is $1 million. "
Citi are hardly angels.
http://tinyurl.com/6s2ufd
Regarding a court case where Citi was ordered to repay funds
"In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool."
Some information from here
http://www.coopamerica.org/programs/responsibleshopper/company.cfm?id=203
In 2005, the CEO of Citigroup, Charles O. Price, earned $22,994,729 in compensation. In 2006, he raked in $25,975,719 in total compensation according to the Security and Exchange Commission (SEC) and $25,009,052 according to the AFL-CIO's calculations.
 AFL-CIO, 02/17/2007
25 million is dozens of millions although I can't vouch for "the base salary' but let's face it, it all adds up, they structure it to play the books.
Maybe that's Citi, I was mainly thinking of the big investment banks. Know how much Paulsen has pocketed from his previous gig at an investment bank.
"His compensation package, according to reports, was US$37 million in 2005.Henry Paulson in 2006 gave $100 million of his Goldman Sachs since he was the primary stockholder, to his family.
Henry Paulson asked the US govt. for permission to sell $500 million of Goldman Sachs stock because it was illegal for him to have a conflict of interest by having this stock.
This meant that in 2006 Henry Paulson sold $500 million of Goldman Sachs stock and did not pay the $200 million of IRS income taxes."
So the guy who is handling the bailout is a guy who got so stinkin rich from this banking/investment system that he had to sell a half billion in stock, just to avoid a conflict of interest. Let me tell you, those in this thread claiming this financial industry isn't dramatically lucrative should take notice.
So if you're posting saying I'm off base on bank CEO pay, you're blowing steam bro. I've documented a random sampling of wealth right above.
peace
Karl
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TradIsGood
Chalkless climber
the Gunks end of the country
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The big bank CEOs are/were making dozens of millions of dollars a year and that's just salary...
Your words. Emphasis added.
But at least we are getting maybe to the real issue? You just don't like people who make a lot of money?
Seriously, if you do not understand the difference between salary and other forms of compensation, I guess it is not hard to understand why anything but "fractional lending" would not make sense.
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 07:57pm PT
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It takes a pretty condescending and arrogant guy to nitpick a basic premise and act like he has come out vindicated. My main point was those guys make bank. If you claim "the base salary" is only $1 Million but they get stock options already worth huge money, then it's basically salary just cooked differently to look better on paper (as everything banking is)
From
http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=D8VQKM4G2
"NEW YORK (AP) - The chairman, president and chief executive of Genworth Financial Inc. received compensation valued at $11.2 million in fiscal 2007, a 23 percent decrease from the previous year, according to a regulatory filing Thursday.
The Richmond, Va.-based insurance and investment services provider paid Michael D. Fraizer $1.1 million in base salary and a performance-based bonus of $1.4 million.
Fraizer also received stock and option awards valued at about $8.5 million on the days they were granted.
The Richmond, Va.-based insurance and investment services provider paid Michael D. Fraizer $1.1 million in base salary and a performance-based bonus of $1.4 million.
Fraizer also received stock and option awards valued at about $8.5 million on the days they were granted."
So Glenworth isn't even a major player and their CEO stock options are worth 8+ million the DAY HE GETS THEM. So it's not performance based.
Come on dude. what's your point? You have provided no documentation to prove any of your points (nor that you've made many since all you do is mock)
AIG, remember the government just bailed them out for 85 BILLION dollars? Just a month or two ago this is the CEO compensation package they offered:
from
http://tinyurl.com/484x36
" American International Group Inc. (NYSE: AIG) said that it will pay new chief executive Robert Willumstad a base salary of $1 million, and also set lucrative annual bonus and incentive pay targets.
Willumstad, a former Citigroup Inc. (NYSE: C) executive, who had already been chairman of the insurer, took over as CEO after AIG posted two consecutive quarters of record losses on subprime mortgage investments.
AIG said Willumstad's target annual cash bonus was set at $8 million, and his target for annual long-term incentive pay was set at $13 million. The company said for 2008, Willumstad's minimum annual cash bonus will be $4 million, which will be deferred until he is no longer employed by AIG.
Willumstad is also to receive a one-time $24.5 million restricted stock award, to vest over four years, among other benefits."
They sign over big bucks to the guy as they are already nose deep in failure and now perhaps the taxpayers will be making good on his contact. For what? I think he ought to pick up trash for the rest of his contract. Just so he doesn't get free money.
I am against a system where folks are positioned to make huge unreasonable sums while the society is drained, looted and exploited and, to add insult to injury, expected to rescue the criminals when they get in too deep when it was obvious they were doing so.
Peace
Karl
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 08:05pm PT
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Here's another sweet little bit of Citibank history
From the citi link above
"In May 2004 Citigroup agreed to pay $2.65 billion to investors in WorldCom Inc. who had accused it of participating in financial fraud. The shareholders filed a lawsuit in October 2002 charging that Citigroup officials "averted their eyes" to WorldCom's financial frauds in order to protect $679 million in loans to Worldcom's ex-CEO, Bernard Ebbers. In making the settlement, Citigroup admitted to no wrongdoing."
2.65 Billion! Of course they did no wrong
Peace
Karl
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 08:25pm PT
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Yeah, did anybody read Bachar's credit default swap link at
http://tinyurl.com/4j9q7o
"And indeed, the volume of CDS has exploded with nuclear force, nearly doubling every year since 2001 to reach a recent peak of $62 trillion at the end of 2007, before receding to $54.6 trillion as of June 30, according to ISDA.
Take that gargantuan number with a grain of salt. It refers to the face value of all outstanding contracts. But many players in the market hold offsetting positions. So if, in theory, every entity that owns CDS had to settle its contracts tomorrow and "netted" all its positions against each other, a much smaller amount of money would change hands. But even a tiny fraction of that $54.6 trillion would still be a daunting sum.
***
ONE REASON THE MARKET TOOK OFF is that you don't have to own a bond to buy a CDS on it - anyone can place a bet on whether a bond will fail. Indeed the majority of CDS now consists of bets on other people's debt. That's why it's possible for the market to be so big: The $54.6 trillion in CDS contracts completely dwarfs total corporate debt, which the Securities Industry and Financial Markets Association puts at $6.2 trillion, and the $10 trillion it counts in all forms of asset-backed debt."
Doesn't the current package have the option to bail out the hedge funds as well, who purely speculated on mortgages that they sometimes never even held? This isn't just about a bunch of poor greedy people getting subprime mortgages, some folks wrote CDS they couldn't pay for against assets they didn't have anything to do with.
Peace
Karl
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happiegrrrl
Trad climber
New York, NY
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"War Economy" - The US contracts handed out to Haliburton, Blackwater and other select entities has been more vast than people can imagine. That money hasn't gone into "the economy." It's been given to a select few, who reap the windfalls and pay out pittances in overhead.
Our country has been plundered. It's plain as day to some of us.
Marshal Law will be declared soon. My ETA was 10/8....Yikes, That's next Wednesday! I will breathe a sigh of relief for being wrong, and will look forward to being laughed at. I hope I am wrong.
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TradIsGood
Chalkless climber
the Gunks end of the country
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Stock options - yeah those will probably be worthless - yikes have you seen what happened to the financial stocks this year.
Nitpick. Your words were "just salary"!
wc - Banks did not ask for bailout. Point me to one bank that asked for that...
BTW. wc. I put up a thread since it seemed like you might actually want to know how banks work. I think it is on page 2 or 3 now...
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 09:20pm PT
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TIG dissembling
"wc - Banks did not ask for bailout. Point me to one bank that asked for that..."
Commercial banks get automatically seized by the government don't they? Are you making a distinction between investment banks and commerical banks. Notice Rudy Gulliani's law firm is pitching themselves as go-to guys to help firms cash in on bailout money!
Peace
Karl
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 09:31pm PT
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Nitpick?
Later you wrote
"Just a little bit has changed in the last 48 years. For example, the Fed screwed up horribly trying to control money supply in the 80's. "
Like they weren't creating a housing bubble with low interest rates in the 2000s?
Earlier in the thread, you wrote
"Banks do not lend money they don't have either. "
Devil's in the details eh?
TIG wrote about Fatty
"Maybe his family owns a bank. Maybe not.
A couple things he has posted makes it pretty clear that he has no management role in a bank. "
Fatty, you gonna take that from him!
Who is the money man? Fatty or TIG. Let's decide with a monster truck pull!
Peace
Karl
Edit. Info from another thread. Of the top 100 economies in the world, whether nations or corporations, Citigroup is #57 at 82,005,000,000. Ahead of pakistan, chile, malaysia and other nations.
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WBraun
climber
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Citigroup is #57 at 82,005,000,000.
Why didn't Citigroup just lend the bailout their $700 billion?
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Karl Baba
Trad climber
Yosemite, Ca
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Topic Author's Reply - Oct 5, 2008 - 09:50pm PT
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"Why didn't Citigroup just lend the bailout their $700 billion? "
They did try to buy Wachovia's banking division for a couple billion and are fighting Wachovia's total acquisition in court.
Ironically, all without federal funds. Why not just let these guys consolidate which they are going to do anyway?
Not that that's a good thing but that's what happened after the S&L crisis. 8000 less institutions today than in that day
Peace
karl
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happiegrrrl
Trad climber
New York, NY
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...the Bailout is like when the robber makes you count to 100 before moving, to give them an advance in the getaway.
The US coffers were emptied through the war contracts, and now they are using the "Countdown to 700 Billion" to keep people focused "over here" while they sneak off "thataway."
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