This is a great educational moment in many ways – such as explaining that on WS “bonus” really means “the variable part of compensation that is largely the variable part”….

Reality is biting
the war continues

http://www.redstate.com/gamecock/2009/03/23/cockstradamus-reality-bites-obamalib-dem-agenda/

It’s Frank’s world. We just live in it. [Mark Steyn]

Unfortunately.

In The New York Times, Joe Nocera takes a while to get going, but makes some good points:

This week, the body politic ran off the rails… How is the political reaction to the crisis making it worse? Let us count the ways.

IT IS DESTROYING VALUE During his testimony on Wednesday, Mr. Liddy pointed out that much of the money the government turned over to A.I.G. was a loan, not a gift. The company’s goal, he kept saying, was to pay that money back… In other words, it is in the taxpayers’ best interest to position A.I.G. as a company with many profitable units, worth potentially billions, and one bad unit that needs to be unwound. Which, by the way, is the truth. But as Mr. Ely puts it, “the indiscriminate pounding that A.I.G. is taking is destroying the value of the company.” Potential buyers are wary. Customers are going elsewhere. Employees are looking to leave. Treating all of A.I.G. like Public Enemy No. 1 is a pretty dumb way for a majority shareholder to act when he hopes to sell the company for top dollar…

IT IS DESTABILIZING How can you run a company when the rules keep changing, when you have to worry about being second-guessed by Congress..?

At this point, most Wall Street bankers would rather be attacked by wild dogs than take part. They fear that they’ll do something — make money perhaps? — that will arouse Congressional ire. Or that the rules will change… Not all the employees who face the possibility of having their bonuses taxed out from under them work for the evil financial products division… Taking away their bonuses — after they’ve already put the money in their bank accounts — hardly seems like the right way to motivate them.

Maybe they can’t see it from the shamrock-hued vistas of their “cottages” on the west coast of Ireland, but the political class has done nothing this last week but destroy the wealth of this country.

As President Reagan said, we are a nation that has a government, not the other way round. The nation pays for the government, not the other way round. I pay for Congressman Frank and Senator Dodd, not the other way round. I would appreciate it if they’d take up a less destructive pastime, perhaps joining Senator Kerry in windsurfing off the Irish coast in buttock-hugging yellow Lycra. If you have even a modest asset – a small house, a sluggish savings account or pension provision – these people are making you poorer. Good luck digging yourself out from under.

http://corner.nationalreview.com/post/?q=Nzc2OTdlMGNkZWI5YjRkNzU1YmJjZjJiZGYxZjc3MDY=

But, an employ receives a raise on their base salary for overall performance on their hire date (or maybe in a block with other employees).

(I’m in the IT/Internet/New Media field, and the companies I have worked for offer salaries + benefits (health, life ins., 401k), but no bonus, as in a lump sum payment. Salary raises are awarded once a year, usually, based on performance from a pool of about 3-5%).

And the firms designate a bonus pool to be distributed across the whole firm. What happens is that you sit down with your supervisor in November, and you get awarded a bonus (paid in January) that reflects the performance of the firm as a whole, and of your own performance relative to your direct peers.

The whole idea is to engender an atmosphere of internal competition that can easily become unhealthy, but is definitely part of the way these firms have always worked.

If the government decides that high bonuses are just something they don’t want to see in firms receiving government assistance, then firms will start doing what they’re already doing now: doubling people’s base salaries or more, and setting lower expectations on the bonuses they may receive.

But if you accept that the prospect of receiving much or most of your pay on a schedule that depends on your performance creates a more competitive and thus more productive atmosphere, then what the government is doing will make financial companies less productive.

when could they retire? 55. when did they want to be able to retire? 50.

our system is unsustainable already, and our benefits are fewer and our retirement age higher.

but if we become the next European Socialist State, you can surely expect that the next step will be to increase the benefits further and make the retirement age even lower.

(and, of course, this doesn’t even consider all the life-long benefits, like health care, unemployment pay, etc.)