Notes from a Collapsing Empire (1)

By Mike Marsh


Sometimes the news is so surreal, all you can do is shake your head in wonder.


Just 11 short months ago, employees at Goldman Sachs, the premier investment bank and a leader in developing the CDO and derivatives swap system responsible for getting us into our current financial cesspool, received their 2007 bonuses. The employees collectively received $18 billion dollars, to be shared among a little under 30,000 employees. This means on average each employee received $600,000. This is not a math error or a typo. Six-hundred-thousand-dollars. Each.


The employees achieved this bonus by pretending to earn $11 billion or so through various schemes to offload bad debts from their balance sheet and otherwise pull the wool over their long-suffering shareholders. Don’t be too quick to anger, though, because while this may seem like a lot to you and me, they had cause for chagrin, as it was about $40,000 less than they received 2006.


So after the worst year since Noah and flood, and a $10 billion injection of taxpayer money to keep their wheels of commerce ticking, what chance do the poor overworked toilers at Goldman have for a bonus this year? Well, pretty good actually, if you can believe it. The top 7 executives have said they will forego their much deserved bonuses, to the grateful applause of the financial media. This will hurt. For the top three guys, this will mean a collective pay cut of $200 million or so, poor fellows.


But for the rest of the company who are fortunate to be out of the public eye, it’s still party time. November is traditionally bonus season, and the Goldman elves are busy putting the finishing touches on their annual gifts. The company is reported to have set aside more than $7 billion in bonus money. The company has 443 “partners”, whatever that means in the context of a supposedly public corporation, and each of these stalwarts will receive a $5 million bonus. I heard one person quoted as saying something to the effect that bonuses would have been down 70% this, but now that Goldman has received their taxpayer-funded bailout money, they will only be reduced by 30%. This is good. This is the free market at work. This is the American way. For this, we should give thanks. If we still believe in the trickle down theory of economic growth.


Sometimes the news is so surreal, all you can do is shake your head in wonder.