Sunday, April 6, 2008
The Big Gamblers
Despite the turmoil in the markets, bank failures and write-offs amounting to $120 billion City bonuses will top $12 billion this year.Dozens of bankers at Goldman Sachs, for example, were awarded bonuses of at least $10m each at Christmas, with one lucky trader pocketing more than $20m in cash and shares. The average bonus at Goldman Sachs last year, one of the more extravagant payers, was $600,000. Staff are thought to be dreading the possibility that the average this year will be a mere $400,000 – And , of course , that is all on top of salaries and other emoluments.Professor Stigliz said "Even if they lose their jobs, they walk away with large sums…"Professor Stiglitz, a former chairman of the President’s Council of Economic Advisers, under Bill Clinton explained "…When things turned out well, they walked away with huge bonuses. When things turn out badly – as now – they do not share in the losses…The system was designed to encourage risk taking – but it encouraged excessive risk taking. In effect, it paid them to gamble…It is one thing to gamble with one’s own money – but these bankers were gambling with other people’s money – and with the government backstopping any losses. This is unconscionable."