[Vision2020] One Part of the System that is Broken

[Art Deco]

Oh, the poor babies!  I never realized the amount they suffer, especially
with a $32,000 a tear bill for a private school.  Oh, the injustice of it
all.

w.

On Thu, Mar 1, 2012 at 2:09 PM, Ron Force <rforce2003 at yahoo.com> wrote:

> They're really suffering. From David Frumm:
>
> Mac Abelson reports<http://www.bloomberg.com/news/2012-02-29/wall-street-bonus-withdrawal-means-trading-aspen-for-cheap-chex.html>in
> *Bloomberg* on what happens when people working on Wall St. get smaller
> bonuses. It turns out that some of America's wealthiest are having trouble
> adjusting to life with a smaller six-figure income:
>  The smaller bonus checks that hit accounts across the financial-services
> industry this month are making it difficult to maintain the lifestyles that
> Wall Street workers expect, according to interviews with bankers and their
> accountants, therapists, advisers and headhunters.
>  “People who don’t have money don’t understand the stress,” said Alan
> Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York
> who specializes in financial planning for the wealthy. “Could you imagine
> what it’s like to say I got three kids in private school, I have to think
> about pulling them out? How do you do that?”
> …
>  Richard Scheiner, 58, a real-estate investor and hedge-fund manager,
> said most people on Wall Street don’t save.
>  “When their means are cut, they’re stuck,” said Scheiner, whose New
> York-based hedge fund, Lane Gate Partners LLC, was down about 15 percent
> last year. “Not so much an issue for me and my wife because we’ve always
> saved.”
>  Scheiner said he spends about $500 a month to park one of his two Audis
> in a garage and at least $7,500 a year each for memberships at the Trump
> National Golf Club in Westchester and a gun club in upstate New York. A
> labradoodle named Zelda and a rescued bichon frise, Duke, cost $17,000 a
> year, including food, health care, boarding and a daily dog-walker who
> charges $17 each per outing, he said.
>  Still, he sold two motorcycles he didn’t use and called his Porsche 911
> Carrera 4S Cabriolet “the Volkswagen of supercars.” He and his wife have
> given more than $100,000 to a nonprofit she founded that promotes
> employment for people with Asperger syndrome, he said.
> Scheiner pays $30,000 a year to be part of a New York-based peer-learning
> group for investors called Tiger 21. Founder Michael Sonnenfeldt said
> members, most with a net worth of at least $10 million, have been forced to
> “reexamine lots of assumptions about how grand their life would be.”
> While they aren’t asking for sympathy, “at their level, in a different way
> but in the same way, the rug got pulled out,” said Sonnenfeldt, 56. “For
> many people of wealth, they’ve had a crushing setback as well.”
> …
>  The malaise is shared by Schiff, the New York-based marketing director
> for Euro Pacific Capital, where his brother is CEO. His family rents the
> lower duplex of a brownstone in Cobble Hill, where his two children share a
> room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep
> Country Day School in Brooklyn. His son, 7, will apply in a few years.
> “I can’t imagine what I’m going to do,” Schiff said. “I’m crammed into
> 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”
> He wants 1,800 square feet -- “a room for each kid, three bedrooms, maybe
> four,” he said. “Imagine four bedrooms. You have the luxury of a guest
> room, how crazy is that?”
>
>
>   ------------------------------
> *From:* Art Deco <art.deco.studios at gmail.com>
> *To:* vision2020 at moscow.com
> *Sent:* Thursday, March 1, 2012 9:39 AM
> *Subject:* [Vision2020] One Part of the System that is Broken
>
>
> February 29, 2012, 8:48 am Bonuses Dip on Wall St., but Far Less Than
> EarningsBy KEVIN ROOSE <http://dealbook.nytimes.com/author/kevin-roose/>
> Brendan McDermid/ReutersThomas P. DiNapoli, the comptroller of the State
> of New York.
> *9:07 p.m. | Updated *
> It is apparently going to take more than shrinking bank profits to put a
> big dent in Wall Street bonuses.
> *The total payout to security industry workers in New York is forecast to
> drop only 14 percent during this bonus season, according to a report
> issued on Wednesday<http://www.osc.state.ny.us/press/releases/feb12/022912.htm>by the state comptroller, Thomas
> P. DiNapoli<http://topics.nytimes.com/top/reference/timestopics/people/d/thomas_p_dinapoli/index.html?inline=nyt-per>.
> By comparison, profits last year plunged 51 percent.*
> “The securities industry, which is a critical component of the economies
> of New York City and New York State, faces continued challenges as it works
> through the fallout from the financial crisis and adjusts to regulatory
> reforms,” Mr. DiNapoli said in a statement.
> Hurt by the European debt crisis, a sluggish economic environment at home
> and the introduction of new regulations that have threatened
> once-profitable business lines, the nation’s largest banks had a weak 2011. Goldman
> Sachs<http://dealbook.on.nytimes.com/public/overview?symbol=GS&inline=nyt-org>reported that profit dropped 67 percent from 2010. Morgan
> Stanley<http://dealbook.on.nytimes.com/public/overview?symbol=MS&inline=nyt-org>’s
> earnings fell more than 40 percent.
> In all, securities firms in New York made an estimated $13.5 billion in
> 2011, down sharply from $27.6 billion in 2010, according to the
> comptroller’s estimates. It is the second consecutive year that Wall
> Street’s profit fell by more than half.
> “The financial industry is in the midst of structural change,” said Ronnie
> Lowenstein, the director of the New York City Independent Budget Office<http://topics.nytimes.com/top/reference/timestopics/organizations/i/independent_budget_office/index.html?inline=nyt-org>.
> “It’s not just the boom and bust cycle we’ve seen in the past.”
> Despite the difficult environment, New York firms paid roughly $20 billion
> in year-end cash compensation to their employees. The average bonus was
> $121,150, down just 13 percent from the year before as the head count
> shrank. In 2006, the year before the financial crisis, the average
> investment bank employee took home a bonus of $191,360.
> But the comptroller’s estimates do not include noncash compensation given
> for last year and so may not give the full picture given that many banks
> dole out a larger portion of their annual payouts in stock.
> Still, a dip in year-end cash compensation is cause for concern for New
> York government officials. Before the financial crisis, Wall Street
> accounted for 20 percent of the state’s tax revenue. Last year, that tally
> was 14 percent. For New York City, the share dropped to 7 percent of tax
> revenue from 13 percent over the same period.
> “The city budget is dependent on a very small group of people — the 1
> percent, if you will,” said Nicole Gelinas, a senior fellow at the
> Manhattan Institute. “If the 1 percent isn’t doing well, the city’s not
> doing well.”
> Not only is it local and state governments that are feeling the pinch of
> lower Wall Street pay. High-end restaurants, luxury goods stores and the
> real estate market in New York stand to suffer as well. Mr. DiNapoli
> estimates that every job lost in the securities industry in New York costs
> two city jobs in other industries.
> For the Wall Street firms themselves, compensation has presented a
> quandary. It is their biggest cost and banks have been cutting thousands of
> jobs amid the worst year for banks since the financial crisis. Yet at the
> same time, keeping pay relatively stable is critical to retaining and
> rewarding employees.
> Jamie Dimon<http://topics.nytimes.com/top/reference/timestopics/people/d/james_dimon/index.html?inline=nyt-per>,
> the chief executive of JPMorgan Chase<http://dealbook.on.nytimes.com/public/overview?symbol=JPM&inline=nyt-org>,
> said at an investor conference on Tuesday that even in tough times, he
> would not pay his employees less than the going rate.
> “We are going to pay competitively,” Mr. Dimon told a roomful of analysts
> and investors at the conference. “We need top talent. You cannot run these
> businesses with second-rate talent.”
> Wall Street continues to be a lightning rod for politicians and critics
> who contend that the industry’s pay packages are too high. In 2010, the
> average pay, including bonuses, in the securities industry in New York City
> hit $361,180. (Figures are not yet available for 2011.) At that level, Wall
> Street paychecks are 5.5 times higher than those in the rest of the private
> sector.
> Banks are wrestling with ways to trim the tab, including paying more stock
> and less cash. At Morgan Stanley, for instance, cash bonuses were capped at
> $125,000 — a small fortune to many Americans, but a pittance for investment
> bankers and traders used to seven-figure payouts.
> Some top executives at the bank, including James P. Gorman, the chief
> executive, deferred the entire cash portion of their bonuses.
> “It’s a pickle,” said Alan Johnson, a compensation consultant who advises
> big banks on their pay plans. “Paying employees and giving attention to the
> external constituents, be they politicians or regulators, is a very
> delicate balance.”
> As Wall Street struggles to adapt to leaner times, government officials
> are asking themselves what it means if the industry never returns to its
> heights before the crisis.
> “Local and state politicians see this as a cycle we’ve seen a million
> times,” Ms. Gelinas of the Manhattan Institute said.
> “They’re kind of conditioned to kick the can down the road, because down
> the road, Wall Street comes and rescues them. The problem is, they’re not
> looking at the structural change,” she said.
> In an interview on Wednesday, Mr. DiNapoli said that while he believed
> that “the ups and downs and the cycles are always there” on Wall Street, he
> and other state officials had been forced to prepare for the possibility
> that securities firms might never be able to hoist up the local and
> regional tax base.
> “This could be the new normal,” he said.
> --
> Art Deco (Wayne A. Fox)
> art.deco.studios at gmail.com
>
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-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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