High pay who pays
The Diary of a Singaporean Mind has a pretty meaty article on the issue of high pay by the bank robbers in America and did a little correlations with the high pay in the Singapore context. I quoted a small extract of his quote: Kenneth Feinberg[Link] is Obama's "pay czar". After the US govt bailed out major banks, Fienberg was appointed to make sure bankers don't go back to their old bad habits of paying themselves tens of millions given the outrage among the general public for the bailout. Yesterday Fienberg appeared on CNBC because Maria Bartiromo was doing a segment on Wells Fargo executives wanting to double their own pay. Because Wells Fargo had already returned the TARP money, Feinberg has no juristriction over them and can't do anything about it - all he could do was give his opinion on the matter. This was what he said. Very often bankers would come to him to authorise fat bonuses or pay hikes saying that the executive is "especially talented" or he might be poached up by a foreign bank. He would ask for proof this "talent" and in every single case he found the person replaceable without loss to the company. It was mostly, in his own words,"spin" - bankers over the years have been very creative at manufacturing justifications for their high salaries even as they were about to cause a lot of economic pain to the rest of the population through their careless lending. Buffett asked why the CEO pay has gone from 50 times the lowest paid worker in the company in the 1950s to 500 then to 5000 times - is the CEO today 100 times more productive today? Not possible. The low down people must never ignore this issue of high pay. It comes from everyone's pocket. The banks are not paying the bankers. It is the ordinary folks. The high pay checks of the banks must come from more profits and this will be squeezed all the way down to the people in the street who thought they have nothing to do with it. But they do. Everything will be more costly, services and goods, to keep the robbers fed. Banks cannot feed the robbers with 1 or 2% interest rates. They must schemed all kinds of toxic instruments to muster enough money to pay themselves. At the worst, they will cook the books, hide the losses until it cannot be hidden anymore. It is so easy to churn the books from loss making to profit making, like Greeece. And oh, most of the major banks were in the same boat. That's how they got busted and needed public fund to write off their debts. The immediate turnaround to profitability in the hundreds of billions is fiction. Something fishy must be going on inside those bank books.