Lunatic Fringe

 

Suppose you have a trading firm with two employees. Say you typically cover their losses out of pocket, and pay them a modest salary and a 20% bonus of their profits. One guy earns $10 million, the other loses $20 million. You are now out $10 million. Unfortunately for the guy who you owe a bonus, you have no money on hand. You go hat in hand to Congress and cry "systemic risk". Should the government then give you that $2 million so you can go pay him? CNBC would suggest yes, and it’s an affront to Capitalism to even think otherwise. I truly beg to differ.

Unfortunately for the guy with the good year, his paycheck is necessarily tied into the overall profitability of the firm that backs him. That’s how it works. I knew a guy who made a fortune on the day of the Crash in ’87 and got rewarded by losing his job as the firm that he worked for went broke.

OK, this is all off topic here. And I appreciate the irony that after I made some twitter-y wisecracks (in 140 characters or less) about CNBC wasting countless time talking about Thain and BAC and commodes and limo drivers and what not, I’m going to waste time with a post on it.

CNBC truly does not get it. Most of them, not all of them, Charlie Gasparino and Mark Haines do get it, can’t think of others off-hand though.

We carped about privatizing gains when they were good and socializing the losses via TARP. Fine. I would like the ability to claw back, but not going to hold my breath on that one.

But CNBC essentially advocates we keep privatizing gains and socializing losses. Even within the same firm. 

I do not want one dime of the money I paid in taxes going to Merrill bonuses, or anyone’s bonuses. Ostensibly we face systemic risk and have to throw all this money at them. RIGHT NOW! Why should one penny of that possibly go to bonuses? I have sympathy on a personal level if there’s someone there who actually made money for the firm last year. But this salary/bonus system has a drawback from their standpoint. There has to be money to pay the bonus pool. There is no money in house,  apparently. Except ours. There is no justification for them to have a hat in one hand and a bonus pool in another. None whatsoever. What exactly is the social need to keep an employee at Merrill? Where is he going if we don’t keep him?

And why in the world can’t a CEO fly commercial? CNBC would have us believe he can’t be bothered to waste his time when he could be Working for All of Us. Even though he’s working for himself.

First off, last I checked, you can actually get work done on ostensibly "down" time. There’s this new invention called a Blackberry, and another one called a laptop, and another one called wifi and another one called a cell phone.

If they want to buy planes and limos and apartments and golf memberships and stadium suites with shareholder money, well, that’s the shareholder’s problem. If they want to do it on government money, then it’s our problem. I don’t want to pay for it and subsidize all this.

Which leads to the bigger argument, why be in this position to begin with? We have the absolute dumbest possible solution here. If we throw them money, of course we want a say in wtf they do with it. And resent when they take a check and then go spend it on commodes and airplanes and drivers. The idea of nationalizing all them is obviously repulsive and doomed to fail too, but is it worse than this?

CNBC has apparently made it their institutional agenda to perpetuate the entitlement system here. Just shift the bill from the shareholder to the Treasury. I have a serious problem with it.