Friday, January 23, 2009

I Found a Use For Guantanamo Bay

How things are going!

Don't worry Spidey if you keep working hard then you'll get laid off and never afford the rest of your costume!

Merrill Lynch pays out $4 bn in bonuses covered by TARP funds (Updated 2X)
by Uncle Bob
Thu Jan 22, 2009 at 08:21:37 AM PST
After all the abuses of law, morals and ethics by the Bush administration over the last 8 years, I never thought that my outrage meter could get pegged again. Wrong.
Uncle Bob's diary :: ::
The Financial Times reported that Merrill Lynch accelerated its normal time schedule for awarding bonuses and distributed $ 4 billion dollars on Dec 29, just 3 days before its takeover by Bank of America. At the same time Merrill posted $15 billion in losses for the fourth quarter. The total compensation for Merrill Lynch employees in 2008 was $15 billion.
That’s way more than just an outsized sense of entitlement, that’s flat-out stealing. And the money for this comes from, you guessed it, the US government. The Bank of America was prepared to back out of the deal once the size of the Merrill Lynch loss became apparent. The deal was completed only after guarantees of government money by the US Treasury.
This has got to stop. These are the same people who created the god-forsaken mess in the financial markets and yet are continuing to flaunt their greed and incompetence and literally daring anyone to do anything about it.
Unfortunately, the history of Obama’s economic advisors does not give one a general sense of relief or change that you can believe in. As Professor Willem Buiter of the London School of Economics said yesterday, while commenting on the general trajectory of bailouts in the UK:
This is very much in the US tradition, promoted by the US Treasury, the Fed and the FDIC, of maximising moral hazard for a given amount of immediate crisis fire-fighting. In the incoming Obama administration, both Treasury secretary Tim Geithner and NEC chair Larry Summers have had many years of experience, in the US and all over the globe, throwing good money after bad in pointless bail-out packages. The trio of Ben Bernanke, Geithner and Summers are likely to produce a veritable moral hazard monsoon.
Indeed, today’s report seems to verify that. One can only hope that Obama will set the tone rather than let his advisors do it for him.
Updated: The original post contained an error concerning the amount of total compensation vs the bonus compensation. That's been fixed.
Updated 2X: There has been considerably commentary about the taxation issue around bonuses and I likely stand corrected. My assumption (and I think it's a fair assumption) was that the lion's share of the bonuses were going to trader's and fund managers and that these folks were granted long term capital gains treatment due to the "carried interest" exclusion that works so well for hedge fund managers. Perhaps not. I've removed the offending paragraph so that others may focus on the issue of bonuses being offered, effectively at the same rate as in a profitable year, with a guarantee provided by the government to enable those bonuses for an otherwise bankrupt business.

Oh but it doesn't end there.

Merrill Lynch CEO Spent $1,220,000 On Office Renovation As Company Prepared To Burn
By Ben Popken, 12:29 PM on Thu Jan 22 2009, 20,484 views
Merrill Lynch CEO John Thain spent over $1.22 million to renovate his office in early 2008, just as his firm was getting ready to slash thousands of jobs, cut back on spending and dump businesses. Here's this douchebag's big-ticket tally of personal aggrandizement in the midst of financial crisis:
$800,00 to hire celebrity designer Michael Smith. He's interior-decorating Obama's White House. For $100,000. Mixing in items from Target.$87,000 for a fucking area rug. I think I could buy all of the area rugs in stock at my local IKEA for $87,000, and have enough money left over to buy all my fellow shoppers an all-you-can eat Swedish Meatball feast. Then invest the remainder in high-yield moon-backed derivatives.$87,000 two guest jerkface chairs$44,000 another goddamn area rug$37,000 six chairs for private dining room. Who has a dining room in their office?$35,000 "commode on legs." I'm guessing that's a claw-footed toilet. Bad choice. Those gather dust underneath like nobody's business, let me tell you. Update: Actually it's a chest-of-drawers on legs. Too bad no one told me that before I took a crap in it.$28,000 four stupid curtains$25,000 mahogany pedestal table. I think my brother just found one of those on the curb on garbage day recently.$24,000 "Regency Chairs." These are the kind of chairs that you use to line walls and corners but no one actually sits in and some day they end up in the Met and people are like, wow, that looks like a well-preserved, expensive, uncomfortable chair.$18,000 "George IV Desk." You can find George I desks just as good on eBay, the advances in the later models are mainly cosmetic.$16,000 custom coffee table. Shellacked with the blood of virgin Peruvian tribe-boys.$13,000 chandelier in private dining room. Really fun to swing on.$11,000 fabric for "Roman Shade." That's a euphemism for something dirty, right?$5,000 mirror in private dining room. It's the one from Snow White.$5,000 40 yards of fabric for wall panels. That's actually a pretty good deal. In pesos.$2,700 6 wall sconces. Sconces are for nancies. Real titans of industry use torches.$1,400 "Parchment waste can." Guess they were out of vellum.
Aren't you feeling good now that the government gave Bank of America a big check to buy these guys? It was vital to the national interest to prevent the collapse of the interior decorating industry.

Then they do take a step in the right direction, just a tad too late.

Bank Of America Fires Former Merrill Lynch CEO
By Meg Marco, 12:59 PM on Thu Jan 22 2009, 7,164 views
It seems that Bank of America didn't really appreciate that unexpected $15.4 billion dollar 4th quarter loss by Merrill Lynch — because its former CEO, John Thain has been shown the door.
From Bloomberg:
Thain, who in September negotiated the sale of Merrill with Bank of America CEO Kenneth Lewis, “agreed his situation was not working out and that he should resign,” said Robert Stickler, a Bank of America spokesman, in an e-mail.
Bank of America has been taking a lot of heat for purchasing Merrill Lynch, a deal that forced Bank of America to ask for a "second multibillion dollar investment from the government as it absorbed the mounting losses at the New York-based investment bank," says the AP.
The Wall Street Journal is even speculating that Bank of America and Citigroup may have to be nationalized.
We wonder who'll get his fancy ass office.

Honestly now this man should be tried for treason and hung in the middle of Wall Street as a reminder of what is to come if you take advantage of the American people. And others from ML and Bank of America should be as well. No one can tell me he just secretly snuck all this designer gear in on our dime. If you believe that is the case then you are a fool. I mean sure he was fired but if this is his office then I highly doubt he lives in a one room apartment decorated by the local Goodwill. Take everything he has and put him in the streets like he has with so many others. I could sell off everything I own and still come up short to buy his god damned rug. Seriously people we need public execution for instances just like these. I know he isn't the only one either. Every time a CEO approves a lay off his pay check needs to be examined to see how many of the unneeded employees it could feed. I never went to business school but I learned from some of the greatest men my town has ever known. You must pay your employees and vendors first then comes your paycheck. In some cases, including mine, that leaves very little for you Mr.CEO but that is the responsability that comes with running a company. With great power comes great responsability right? I think I learned that in the fourth grade from Spiderman.

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