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Despite the weak U.S. economy, 2010 could be the second most profitable for New York City's securities industry, and the average bonus may top last year's because so many bankers and brokers have been laid off. Wall Street earned $21.4 billion during the first three quarters of 2010. The prior year's record of $61.4 billion was fueled by the bailout by the U.S. Government. Wall Street paid out $20.3 billion in bonuses on the $61.4 billion in profits. According to New York City Comptroller John Liu, "The astounding recovery of financial firm profitability in 2009 has been followed by a mixed year in 2010, yet total compensation in the industry is expected to be up modestly once year-end bonuses are paid," Meanwhile, Goldman Sachs’ Chief Executive Officer Lloyd C. Blankfein and his top deputies will collect about $111.3 million in stock in January, 2011, in a delayed payoff from 2009 and their record-setting 2007 bonuses, according to a Bloomberg News report. Within a year after the bonuses were approved, Goldman Sachs took $10 billion from the U.S. Treasury, converted to a bank and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs, Bloomberg reported, adding that in 2010 the firm paid $550 million to settle U.S. regulators’ fraud charges related to a mortgage-security the company sold in 2007.

Analysis:
Three points come to mind from this report from MSNBC.  First, the disjunction between Wall Street and Main Street means that any recovery underway in 2010 was not uniform through the U.S. economy. In other words, the "jobless" recovery did not hurt bonuses in the financial sector.  Secondly, the dictum that the fraudulant must inevitably pay is effectively countered by the example of Goldman Sachs.  Blankfein testified before Sen. Levin's Investigations committee that Goldman Sachs had merely been a market-maker even as the bank had traded on its own books to short against the mortgage derivatives even as it was selling them to its clients. In other words, the bank was profiting both ways even as it was contributing to the financial crisis.  After an infusion of government cash, the bank has made off quite well. Lest I be accused of envy, it is the unfairness involved that has inspired this post. Lastly, the positive impact of the bank bailout on the industry (and its bonuses) can be distinguished from the lack of help from the U.S. Government to the millions of homeowners who have lost their homes.  I say "homes" rather than houses to extentuate the point that foreclosure extolls rather severe costs in addition to the financial kind. I distinguish the luxuriating bankers from the plight of the foreclosed in order to point to Barak Obama's priority. His chief economic advisor until the end of 2010, Larry Summers (whose high school economics teacher is one of my mother's cousins), had been involved in obstructing efforts to regulate derivatives in 1998 (Summers was one of Rubin's deputies in Treasury under Clinton at the time).  Furthermore, Tim Geitner, Obama's Treasury Secretary, had been appointed as President of the New York Federal Reserve by a board with the urging of Citibank).  In other words, Obama's leanings toward Wall Street can be understood both from the directionality of the bailout and whom he has appointed. We should not really be surprised that the big banks and their employees whom the banks have not let go came back to vigor so quickly while the general recovery has been jobless.  Those who have, get more, while those who don't have, remain stuck.  The impact on the viability of our republics can not be good. Increasing inequality exascerbated by government policy cannot but render us even more a plutocracy (i.e., rule by the wealthy). To reply that any effort to tamper with this increasing inequality threatens property rights and economic liberty ignores the disparate impact of government policy (e.g., the bank bailout) on the wealthy. Moreover, when economic inequality threatens the viability of representative democracy, that democracy has a right to correct that which threatens it. One might call the policy-driven inequality a systemic risk that cannot be allowed to continue to exist without threatening the viability of the system. To put it plainly, a person does not have the right to riches if they risk the entire system coming down or even being compromised.  An absolute right to property, like an absolutist conception of sovereignty, is simply irresponsible and ultimately selfish. The 2010 bonuses coming out of Wall Street so soon after the crisis of 2008 and the subsequent bailout suggest that the extent of economic inequality in the U.S. is neither an accident nor natural.

FYI: If any of this post is significant enough to be logged in memory and reflected on later, it might be that the bank bonuses occurred during a jobless "recovery." This juxtaposition is in itself indicative of something troubling going on.

Source: http://www.msnbc.msn.com/id/40681578/ns/business-stocks_and_economy/%22%3Ehttp://www.msnbc.msn.com/id/40681578/ns/business-stocks_and_economy/%3C/a%3E%3C/p