But it’s not magic, for magic is an illusion, and this gravity defying phenomenon of perpetual levitation happens to be real. What is this “it” that keeps floating up, up, up? The annual bonuses paid to Wall Street’s top bankers.
By the laws of economics, if not physics, those bonuses should fall to earth this year, because the bankers have performed poorly. Trading is down, profits are flat (despite being given trillions of dollars in almost-interest-free money through the back door of the Federal Reserve), firms are handing out pink slips to lower-level employees, and the blatant greed of bank honchos have ruined the public reputations of their financial outfits.
Who cares, shriek the big-shots, we make our own laws — it’s bonus time, baby, so grab all you can! Sure enough, the CEOs of Goldman Sachs, Citigroup, JPMorgan Chase and others have set aside billions of dollars to flood their executive suites with bonus cash at the end of this year — money that rightfully should go to shareholders.
Their claim is: “We deserve it, for we took low pay during the crash of 2008-2009.” For example, Lloyd Blankfein, Goldman Sachs’ boss, was paid a mere $9 million last year, so now he wants that “sacrifice” made up to him.
Lest you worry that poor Lloyd’s family had to resort to food stamps to make ends meet with that tough $9 million year, note that he had a bit of a cushion, having pocketed a record Wall Street payday of $68 million in 2007 — even as the financial condition of his bank was crumbling.
One banker-pay analyst says he had assumed that bonuses would go down this year. But, he said, “I underestimated the industry’s resiliency.” By “resiliency,” I assume he was referring to the industry’s incurable greed.
While Wall Street bonuses to top bankers keep going up, up, up, guess what keeps going down, down, down? Hint: A recent New York Times headline used the word “soft” to describe it. Give up? It’s our economy. Of course, the wordsmith that used the term “soft” to describe today’s economy clearly doesn’t live on our planet. Soft implies cushions and comfort, while the economic reality that most Americans are experiencing is one of unrelenting hard times.
Indeed, the content of the Times’ article defied its own headline, revealing that national economic growth this summer was pathetically weak. Tens of millions of people remain unemployed or underemployed, with millions of them having been mired in joblessness for nearly two years. Even those with jobs have seen their hours cut or wages slashed, so the nation’s income growth was an abysmal 0.5 percent during July, August and September — and practically all of that went to the richest Americans, who enjoyed a nice uptick in their stock portfolios.
The way out of this, say the contented flock of economic gurus roosting on their lofty theoretical perches, is for consumers to spend more. Yoo-hoo, wise ones: spend what? The Times conceded that, with incomes of the masses plummeting, consumer demand remains “flaccid” (yet another word for soft). As noted by James K. Galbraith, a down-to-earth economist grounded in reality, “The problematic factor is that consumers remain fundamentally insolvent.”
Still, reaching for a silver lining in a dark and stormy cloud, the Times noted that American families are at least shedding some of their consumer debt. Good! Except that much of this is the result of millions of hard-hit families having to default on their credit card bills, student loans, mortgages and other debts they can no longer pay.
The only thing “soft” in today’s economy are the heads of economists who keep blaming consumers, rather than fingering the big bankers and corporate CEOs who continue to knock down America’s wages, the middle class ... and America itself.
Jim Hightower is a national radio commentator, columnist and author.