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To my dear American friends:
If you are not yet screaming, hysterically angry at what’s going on within the US financial system please read the following articles at [ http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking ] and let me know if this changes your mind in any way:
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Financial workers at Wall Street’s top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year – despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.
Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government’s cash has been poured in on the condition that excessive executive pay would be curbed.
Pay plans for bankers have been disclosed in recent corporate statements. Pressure on the US firms to review preparations for annual bonuses increased yesterday when Germany’s Deutsche Bank said many of its leading traders would join Josef Ackermann, its chief executive, in waiving millions of euros in annual payouts.
The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.
At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.
In the first nine months of the year Citigroup, which employs thousands of staff in the UK, accrued $25.9bn for salaries and bonuses, an increase on the previous year of 4%. Earlier this week the bank accepted a $25bn investment by the US government as part of its bail-out plan.
At Goldman Sachs the figure was $11.4bn, Morgan Stanley $10.73bn, JP Morgan $6.53bn and Merrill Lynch $11.7bn. At Merrill, which was on the point of going bust last month before being taken over by Bank of America, the total accrued in the last quarter grew 76% to $3.49bn. At Morgan Stanley, the amount put aside for staff compensation also grew in the last quarter to the end of August by 3% to $3.7bn.
Days before it collapsed into bankruptcy protection a month ago Lehman Brothers revealed $6.12bn of staff pay plans in its corporate filings. These payouts, the bank insisted, were justified despite net revenue collapsing from $14.9bn to a net outgoing of $64m.
None of the banks the Guardian contacted wished to comment on the record about their pay plans. But behind the scenes, one source said: “For a normal person the salaries are very high and the bonuses seem even higher. But in this world you get a top bonus for top performance, a medium bonus for mediocre performance and a much smaller bonus if you don’t do so well.”
Many critics of investment banks have questioned why firms continue to siphon off billions of dollars of bank earnings into bonus pools rather than using the funds to shore up the capital position of the crisis-stricken institutions. One source said: “That’s a fair question – and it may well be that by the end of the year the banks start review the situation.”
Much of the anger about investment banking bonuses has focused on boardroom executives such as former Lehman boss Dick Fuld, who was paid $485m in salary, bonuses and options between 2000 and 2007.
Last year Merrill Lynch’s chairman Stan O’Neal retired after announcing losses of $8bn, taking a final pay deal worth $161m. Citigroup boss Chuck Prince left last year with a $38m in bonuses, shares and options after multibillion-dollar write-downs. In Britain, Bob Diamond, Barclays president, is one of the few investment bankers whose pay is public. Last year he received a salary of £250,000, but his total pay, including bonuses, reached £36m.
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Scott Oliver – Founder
WeLoveCostaRica.comYes, this makes me sick to my stomach. The crooks who approved this bail-out and the crooks who are receiving this largesse should be imprisoned and stripped of their wealth that doesn’t even belong to them but to the poor blokes they stole it from. At least the only good thing about the Enron scandal — same sh** different company — is that Ken Lay croaked (good riddance!), so we have one less crook, schemer, and thief in our midst. Thankfully, I’ve only lost equity in my house, but that’s approacing 6 figures, so I’m not too happy about that, but at least I didn’t lose $140,000 in one day as my neighbor did! if that had happened to me, I’d be making headlines! Why aren’t the Americans screaming blood murder instead of just sitting around and complaining and doing nothing except letting Wall Street rob them of all they have? Thankfully, I have another country to live in, but boy do I feel sorry for the people who are stuck in this mess with no way out. Maybe that was the whole idea, eh? And yes, we have Congress to blame for this mess.
Scott:
Calm down and take a “chill pill” we are being Socialised, just like Hugo Chavez said “Bush is sitting next to me on my LEFT side.
And; Scott look at what is happening in Nottingham, England. The meltdown has reached London, England. Houses that were appraised and sold for $1,500,000.000 are now $700,00.00, half the price and DO NOT even think about London where 2 year ago they where selling 1 square foot of homes for $5,000 and that is a flat close to Trafalgar Area.
I love Wall Steet.
Warren
Real estate prices in the UK are FAR more insane than the US… According to the Economist magazine from 1997 – 2008 house prices in UK appreciated by 179% in comparison with the USA of only 86%
A few other countries during that time had even more excessive moves – South Africa 398%, Australia 173%, Spain 194% and Ireland 210%
Scott Oliver – Founder
WeLoveCostaRica.comUS is still not as expensive as the prices in Costa Rica. Whats CRs percentage escalation? Whatever the agent makes up?
Nobody can or will ever give you a straight answer in Costa Rica. We will be renting for the rest of our lives in CR. Cheaper by far, becaus.e there is no return on investment at the current prices in CR. The days of people buying what they cant afford
are over for the forseeable future. US lost most of its increase over the last few
years. Doesnt it make sense in a world economy that other areas will follow the same pattern?Steve
stevebartle
You mean like “no return on investment” when I sold my own home (which you can see at [ https://www.welovecostarica.com/public/1682.cfm ] in August 2008 for 30% more than I paid for it in May 2007?
Would that be a good example?
This thread is NOT about Costa Rica real estate, it’s about the global financial crisis and the OUTRAGEOUS way that Wall Street is giving all of us the finger!
Scott Oliver – Founder
WeLoveCostRica.comStill off topic (excuse me).
“Would that be a good example?”
I dont know…..
“Converse Accident or hasty generalization is the fallacy of drawing a general conclusion based on one or several atypical instances.”
Something like 90% of the wealth of the U.S. is and has been in the hands of 1% of the U.S. population. It has always been thus with some minor variations in the percentages. Why are we just now thinking about complaining? Those with the wealth and power have always been able to fool the workers into believing the fantasy of the American dream and to condemn democratic socialism such as exists in Europe as evil. Americans have always stupidly believed in the fantasy….and they got the government and the shaft they deserved.
I don’t know sprite, I find it hard to fault US citizens for dreaming, I lay the majority of the blame at the doorsteps of that 1%. The media and education system has created and shaped the mentalities of 99% of the population. How can someone think differently/critically/rationally if there source of information comes from the mechanisms that drive policy? Well you can but you have to go “outside” the box and educate yourself with a diverse and balanced diet of information from various sources. That is one of the the beauties of the US you can go outside the box and think freely and learn without prejudice, but most don’t. It’s like when you read a study of a pharmaceutical product or cell phones stating everything is hunky dory, then in the fine print you read the study was funded by Merck or Nokia? Even on this site if you dare make remarks critical of the US you can be called an America hater, so I do find it hard to blame the citizenry he/they are products/victims of the system, People are more concerned about illegal Mexicans than the fleecing of the American public by there government and that very elite 1%. It’s a bit ironic because it’s the wealthy and to some extent US small/medium business owners that really need the illegals to provide cheap/efficient labor to maximize there profits(like slavery in the past). But they use it as a political distraction to rile up the masses.
One of my primary reasons for making the decision to move to Costa Rica is defined clearly in this thread.
Here are a few great Google searches I found along the way:
The Zeitgeist Addendum
The Zeitgeist Movie
The Zeitgeist Movement
Ron Paul
The Northwood Papers
The man who predicted 9/11
Engineers for 911 truth
The Gulf Of Tonkin
The Federal Reserve
The Council On Foreign Relations
Prescott Bush (Grandfather of George)
WTC 7
Thermite
Luis McFadden and the Federal Reserve
John F. Kennedy and the Federal Reserve“None are more hopelessly enslaved than those who falsely believe they are free.”
– Goethe
I know lots of people who are coming right down behind me for very similar reasons. I wonder how many people will be coming to Costa Rica over the next few years… I happen to believe that Costa Rica’s sovereignty is the crown jewel of the Americas. I can’t imagine commercial jet liners diving at the San Jose Public Library nor Anthrax attacks on politicians. I don’t mind potholes and a “tomorrow” attitude.
What we’re looking for won’t happen until EVERYBODY lays their swords down. Costa Rica is a shining example to the world on how it really does induce peace. This is in obvious sharp contrast to the neocons theology which promotes the concept that societies will deteriorate unless an enemy figure exists or is created by it’s government.
The “war” on drugs… The “war” on terror…
Here is a quote from David Rockefeller of The Council On Foreign Relations:
“We are grateful to the Washington Post, The New York Times, Time
Magazine and other great publications whose directors have attended
our meetings and respected their promises of discretion for almost
forty years.”“It would have been impossible for us to develop our plan for the world
if we had been subjected to the lights of publicity during those years.
But, the world is now more sophisticated and prepared to march towards a
world government. The supranational sovereignty of an intellectual elite
and world bankers is surely preferable to the national
auto-determination practiced in past centuries.”Edited on Oct 19, 2008 06:38
Edited on Oct 19, 2008 06:40
Edited on Oct 19, 2008 06:45
Hey Scott… Don’t mean to ruin your morning… but here’s some more good news. As most of us already knew… the problems out there WILL find their way to CR… the big difference is that the folks in CR are a hardy self reliant type that will ride out the storm in much better shape then folk in the US!
From the Tico Times…
Bad Economic Weather Moving In
Experts predict a recession here; signs of slowing already evidentBy Elizabeth Goodwin
Tico Times Staff | editorial@ticotimes.netThe financial crisis sweeping the globe is creeping up on Costa Rica, with a dip in foreign investment leading a pack of problems prompting some of the country’s economists to predict a recession.
While Costa Rica’s banking system is relatively isolated from the ailing banks in the United States and Europe, the general lack of liquidity in the global markets means the country is seeing less direct foreign investment.
Costa Rica’s banks, reluctant to loan, are holding on to their dollars and granting less credit, at higher rates. This means business customers will have trouble restocking their stores, and other clients will struggle in repaying their loans, leading to a slowdown in commerce.
“There is going to be less money (for consumers) to spend and lower production and lower employment,” said Luis Mesalles, a former board member of the Central Bank and general manager of La Yema Dorada, a food manufacturer. “This is going to come, and people need to be prepared.”
A Balancing Act
Unlike in other Latin American countries, where a recent but now-halted comm odity export boom allowed central banks to store up cash, Costa Rica has been running a trade imbalance for decades. In August, the trade deficit was nearly $3.9 billion (TT, Sept 26).
“A financial crisis is potentially more damaging for a Central American country than any other in Latin America,” said Mauricio Cárdenas, a senior fellow at the Brookings Institution think tank in Washington, D.C., and the former minister of economic development in Colombia. “In Central America, countries are running a (trade) deficit, which means that they have to access markets to finance that deficit. If the markets somehow get more illiquid, then this country will be in a situation where they eventually will have to use their reserves.”
Costa Rica’s Central Bank has about $3.77 billion in reserves, the lowest in nearly a year. It’s been spending rapidly in the past few months to keep the colón-to-dollar ratio within the boundaries it set in 2006, as the trade deficit puts pressure on the colón’s value.
“Construction investment has already started to shrink in some sectors last month, whic h implies that we don’t have all these dollars that we used to finance our deficit anymore,” said Eric Vargas, strategy director at the financial advising firm Aldesa. “We’re in a recession. It’s already started or it’s about to start.”
The economy is definitely slowing. In 2007, Costa Rica’s gross domestic product grew by 7.3 percent. The International Monetary Fund predicts it to grow about 4 percent this year, and only 3.5 percent in 2009. Isaac Castro, chief economist at the finance company Interbolsa, said GDP growth could drop below 2 percent if the economic situation in the United States, Costa Rica’s largest export destination, worsens.
The delay of several major tourism projects, like the $800 million Cacique complex on the Pacific Coast, has economists worried about the decline of foreign investment, especially in the real estate and tourism sectors.
Bye-Bye, Credit
But it’s not just big international projects that are unable to raise funds. Small- and medium-sized businesses in Costa Rica also are feeling the credit crunch.
Anselmo Sánchez, the president of the Association for Small and Medium Businesses (ASOPYMES), said businesses that rely on imported goods, like clothing stores, are the first to feel the pain of tightened credit.
“It’s going to affect small businesses really strongly,” Sánchez said. “The projects that they aren’t giving credit to aren’t going to go through.”
Vargas said the decrease in liquidity won’t be as “violent” as it is in the U.S. and Europe.
“But our impression is that the financial system is facing a big restriction of banks’ ability to give credit.”
To restore movement in the credit markets, Castro said, the Central Bank should inject some capital into banks, even at the risk of worsening inflation, which is predicted to be at 14 percent for the year. Banks are required to keep 15 percent of their deposits with the Central Bank, and Castro thinks that number should be lowered, so that more currency can begin moving around.
“This would have an impact on inflation, but we think that the danger right now isn’t so much inflation as businesses not being able to finance their normal operations,” Castro said. Banks are holding on to their money so that customers do not lose confidence and demand their savings back.
“The banks are keeping their money to be safer, even though it has heavy consequences on their profits, but that’s better than having people forming a line outside to take out their money,” said Danilo Montero, general manager of Interbolsa. “It would be great if we had a Central Bank that was more in the game.”
Bank Deposits Secure
Despite the slow-moving credit, there is no reason – at least not yet – to fear defaults in Costa Rican Banks.
State-owned banks, like Banco de Costa Rica, Banco Nacional and Bancrédito guarantee their deposits without limit 100 percent. Private banks have a common reserve with the Costa Rican Bank Association, though its executive director, Maria Isabel Cortés, would not disclose the amount of money in that fund.
“There are some banks that invest abroad but mostly in foreign treasuries, so the impact (of the financial crisis) would be less strong,” Vargas said. “You can’t say it’s totally safe. They’re more isolated but still vulnerable.”
The Costa Rican banking system is also much less developed than that in the U.S. and doesn’t deal in the exotic financial instruments that sparked the crisis there, according to economists.
Cortés said the banks are safe.
“There are no important risks that could generate any worries about the Costa Rican financial system,” she told The Tico Times. “The banks will not feel, directly, the U.S. crisis. However, lines of credit that local banks have with U.S. banks could shrink.”
Cortés recommends caution before investing or taking on debt.
“In case of a profound crisis, public banks have support,” University of Costa Rica Professor Rudolph Lucka said. Public banks tend to have less invested abroad, he added, but also have lower interest rates than private ones.
“I think for the moment that we don’t have to worry about the money we have in the banks right now,” said former Central Bank President Eduardo Lizano said. But, he cautioned, “Keep an eye out, or even better, two eyes out.”
The Central Bank recently switched most of their reserves invested in North America to U.S. Treasury bonds, a safer investment, and raised their safety standards for investment in general, according to Héctor Ávila, the bank’s director of assets and liability.
Silver Linings
Two bright spots on the horizon are lower gas prices and an upcoming loan from the Inter-American Development Bank (IADB).
Gas prices dipped under $70 a barrel Thursday, a 52-week low, which could significantly help Costa Rica’s trade imbalance and inflation, said Eduardo Lora, the chief economist in the IADB’s research department.
A loan of $9.3 billion from the IADB and two other organizations will be divvied up among Latin American countries – no more than $500 million per country – for infrastructure and to help restore credit lines. Costa Rica’s Legislative Assembly would have to approve the loan. The funds would most likely go to infrastructure projects.
A large infrastructure project would provide jobs, and better infrastructure might attract more foreign investment – both of which would be welcome relief if the economy contracts as severely as the experts are predicting.
a
That’s funny Lotus, I haven’t seen nor heard one politician mention illegal immigration while all this financial mess is going on. And really to compare illegal alien problem to past slavery. Are they even morally equivilant?
Should we be screaming, hysterically angry with Wall Street and the greedy denizens who feed there? I have lost money and would love to blame someone for that but it’s happened before, it will happen again and given the likelihood that the root causes of this debacle won’t even be acknowledged let alone changed, I am not going to allow myself to be caught up in fruitless finger pointing.
Some communist phraseology is just too tempting not to be used at this time. “Running lapdogs of capitalism” springs to mind. These lapdogs with humongous salaries and bonuses are simply being consistent with the principles of capitalism, get as much as you can as quickly as you can. And they certainly aren’t the only canines running in this pack. How about the professional sports players with their multi-year, multi-million dollar contracts? How about lawyers who have managed to somehow warp the system in such a way as to make everything revolve around the issue of liability and make millions along the way?
Looking for fall guys in a system that rears them, socializes them, educates them and then rewards them for doing what they do well strikes me as being bipolar at best.
If we have just gotten religion and think that the behaviour of these apparently newly discovered debauchees requires extreme measures, then by all means, off with their heads! And then regulate the hell out of everything. If it was a building we were talking about, it would be like taking a place that was totally rotten and covered with mold and mildew, using some really toxic but effective cleaning products to get rid of the mold, slapping up some new wallboard and paint and then declaring the problem solved. Meanwhile, the rot continues.
President Sarkozy is calling for a reformed capitalism in recognition of the fact that the system has brought us, in the developed world and some nations in the developing world at least, higher living standards. These living standards are nothing to be sneezed at but there are tradeoffs or as economists call them, externalities. The Mother of all externalities, but by no means the only one, is the ruination of nature by the relentless pursuit of possessions which powers the capitalist economy.
Reforming capitalism is all very well and good, but it begs the question whether it’s just rearranging the deck chairs on the Titanic.
I especially like your “off with their heads” comment and can only hope we will hear a lot more of those this coming week in the US press…
Having worked on Wall Street for over a decade and seen the rotting financial Big Apple from the inside, I have had always had this fantasy that there will be some event that will – once and for all – prove conclusively to the ‘little people’ who may not be quite as sophisticated and well read as the people we have in our Discussion Forum that the powers that be who always claim they are doing something for our benefit are NEVER doing what they say they are doing, and certainly not for the benefit of the ‘people.’
It really is time for the American people to take back their country.
It really is time for the British people to take back their country.
And if this global financial crisis caused by these greedy, arrogant bastards on Wall Street isn’t that catalystic event that wakes people up then there’s really no hope…
But I have a funny feeling that this topic as detailed in the Guardian newspaper – on a Saturday when far fewer people read the newspaper – will probably not even get a mention in the US press. Vamos a ver en la mañana!
Scott Oliver – Founder
WeLoveCostaRica.comMy house in Colorado is worth 3 times what we paid for it 10 years ago.
Right now it is rented, and we make 800.00 month for doing nothing. The US economy WILL
recover and if it doesnt, we will take everyone else down with us. The government is corrupt everywhere including CR. The only people in CR that say everything down there
is OK, is the real estate people. Who do you believe? Do not buy anything ,RENT RENT RENT!!!! Sounds like you reeled in another suckerfish on your house Scott.
Not all Americans are as dumb as people think. 44 and retired wife 40 and retired,
just because they will give you the money dont mean you can make the payment.
Common sense will get you everywhere? These Wall Street fat cats scumbags that take these salaries should be shot on site. Then we can take their salaries and party.Steve
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