Giuliani: Wall St bonuses help economy

[Mvic]

Quote from AAA30:

How many billions did NY firms pay out last year? And you do not think it will have an effect the local economy?

Now I don't think that bonuses are appropriate when the company is losing billions, but there’s still allot of earners in these banks that would walk if they did not receive their year end. Eliminating bonuses will have the same affect as the good bank/bad bank as the entire "Valuable employees" base moves to firms with no government imposed compensation limits. Not every one working at Citi was manufacturing MBS’s
.

Are you a communist by any chance? Reason I ask is that capitalism advocates efficient allocation of resources. This means that firms that can't make it without government support don't get to keep the best human capital, they lose it to more efficient and competent firms.

 

[Banff01]

Another pearl from Giuliani. Way to go, Rudy! Go fix the economy with big fat wallstreet bonuses...
Gotta say it's one of the funniest and stupidest things I have heard from a politician!

 

[nutmeg]

"If you somehow take that bonus out of the economy, it really will create unemployment," he said on CNN's "American Morning." "It means less spending in restaurants, less spending in department stores, so everything has an impact."
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Suppose we can agee on this statement.

No bonus creates unemployment.

What is a gov't to do?

The gov't money can filter down through private enterprise or the gov't money can be used to create jobs.

 

[AAA30]

Since my comments got some negative remarks let me clarify.

First, I am not a communist. Second, yes I have no problem with people receiving bonuses when it is based on their individual performance. This does not mean I think that the CEO's or MD of loss making departments should. Of course a portion of the bonuses should be related to the profitability of the firm as a whole but in order to retain the best staff you need to reward them for a job well done. And no, I am not saying that tax dollars should go to a banker’s bonus but part of the profit he/she generated should if they surpassed some level of performance.

I think the best bonus that I heard of this year was a bank that paid out the bonus with the distressed securities that they had on the books. I think it was HSBC but I am not sure.

When it come to some of these banks as a whole I think the best possible solution might be to have them eat there lunch and let the strong banks left standing pick up the pieces or in other word let the creative destruction process complete so we can move on.