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Foamy bonuses fed our budgets - what now?

by: simonstl

Fri Dec 19, 2008 at 17:00:28 PM EST

The Times takes a look at the immense bonuses paid out by the financial industry over the last few years. Reading it, I kept hearing echoes of past news stories about how Wall Street bonuses were a key component of New York State's fiscal health.

Now I'm looking at what were bonuses based on short-term profits with long-term losses, and wondering if, you know, maybe we've had a similar story in New York State's budget games for a long long while.

I said yesterday that I didn't think Paterson's budget really got to the heart of matters, because I don't think he can today. I'm thinking today that we're in for a wild ride, one that may force even our legislature to change the way New York State operates. Not just cutbacks, but restructuring.

It's at least vaguely possible that some long-term good will come out of that, though my short-term forecast is mostly for harm.

simonstl :: Foamy bonuses fed our budgets - what now?

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Foamy bonuses fed our budgets - what now? | 4 comments

Reality (0.00 / 0)

You're right: reform could never have been based on financial fantasy. There's a reason why we all felt we were banging our heads against a brick wall: because there WAS something in the way of reform... the fantasy wealth.

Maybe now we'll get somewhere. Even if it's not a good place at first.

I'm expecting the "NYC Should Secede and Become 51st State" cries to ramp up any time now... as Wall Street opens up its actual coin purse and the moths fly out.

by: NYCO @ Fri Dec 19, 2008 at 22:45:42 PM UTC

by: you @ soon

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forgot to add (0.00 / 0)

I'm expecting the "NYC Should Secede and Become 51st State" cries to ramp up any time now... as Wall Street opens up its actual coin purse and the moths fly out.

(That's the "restructuring" part.)

by: NYCO @ Fri Dec 19, 2008 at 22:50:40 PM UTC

[ Parent ]

Dilemma (0.00 / 0)

Liberals/Progressives/Leftists/whatever want to tax corporate profits, the uber-rich, Capital Gains, executive bonuses, etc.

In bad times, rich people and companies lose money, and don't earn profits, big compensation packages, capital gains, bonuses, etc, and just live off of accumulated wealth.

When a company loses $3, they pay no income tax. When an executive misses his compensation levels and gets paid 300k instead of 5 million bucks, we get 1/15th the taxes. When a stock option isn't worth its strike price because the stock tanked, the taxes never get paid on it.

The problem with changing this is that any other system of taxation will take more from the poor. If you have a suggestion that doesn't please share, but I'm at a loss.

by: Amherst Guy @ Fri Dec 19, 2008 at 23:47:20 PM UTC

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You forgot.... (0.00 / 0)

"When Maddoff runs off with people's money, they take a tax loss and pay significantly less revenue into the tax kitty than they otherwise would have done."

I'm not at all sure that it makes sense for a capitalist society to have uninsured deposits in hedge funds (or quasi-hedge funds) be legit deductions from tax liabilities. I seriously don't think we can afford to underwrite risks like that. So, I'm up for changing that-- moderate-income people usually have no trouble keeping their savings under the insured maximum amount.

by: robinia @ Sun Dec 21, 2008 at 23:05:10 PM UTC

[ Parent ]