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More news in the Rich-get-Richer series…
Location: Blogs Russ Henke |
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| Posted by: Russ Henke |
11/21/2007 7:34 AM |
On November 19, 2007 from Bloomberg News comes word that shareholders in the securities industry are having their worst year since 2002, losing $74 billion of equity. But it appears that won't prevent Wall Street from paying record bonuses for 2007, totaling almost $38 billion. That's billion with a "b", folks!
This is the latest example of the unceasing trend of the last seven years where the rich-get-richer and the “middle class and poor” get poorer. Many other examples of this trend have been cited in this blog space in the last eight months.
Meanwhile, almost all US homeowners (except the rich) are losing equity value in their homes, and oil marches toward $100 per barrel.
The 2007 Wall Street bonus money, split among ~186,000 workers at the five largest securities firms, equates to an average of $201,500 per person. By the way, these same five US securities firms paid $36 billion to employees last year.
The bigger 2007 bonus pool derives from a record $9 billion of fees for arranging acquisitions and $5 billion for underwriting initial public offerings and sales of junk bonds. Record fees help explain why 2007 will prove to be the industry's second-most profitable, even after the subprime mortgage market collapse led to huge losses at Merrill and Bear Stearns.
By way of comparison, Bloomberg News reported that the industry's 2007 bonuses are larger than the gross domestic products of Sri Lanka, Lebanon or Bulgaria. The average $201,500 bonus is more than four times the $48,201 median household income in the US last year, according to US Census Bureau statistics.
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