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If Wall Street executives are truly overpaid for the profit they produce, you don't have to complain -- you can just profit from it! Simply short Goldman Sachs

If Wall Street executives are truly overpaid for the profit they produce, you don't have to complain -- you can just profit from it! Simply short Goldman Sachs (which pays its employees far more than anyone else) and buy shares of a smaller bank. That way, instead of feeling like the world is unjust, you can feel like there are popular misconceptions which you can simultaneously profit from (when Goldman's price drops because it's overpaying employees) and alleviate (Goldman drops when you short it; the bank whose shares you buy goes up). And of course, you get a boost to your argument. It's going to sound less like "I resent people who can make more money than me," and more like "I think there's an economic inefficiency here -- and I'm prepared to stake money on whether or not I'm right."

taw 17y ago
Your argument doesn't work, as they're subsidized by taxpayers in many ways (it was true long before the bailouts). They can be as inefficient as they want without making their companies' shares collapse.
bokonist 17y ago
The problem is that Wall St. makes money by taking big risks and passing the losses on to the taxpayers. What would Goldman's profits be without the TARP bailout and the AIG bailout? I suspect Goldman would not have survived. Of course, the solution is not to regulate pay, but to allow the big banks to fail ( I think the whole too big to fail argument is a lot of hooey, there a lot of ways to allow a bank to fail without causing contagious destruction).
- byrneseyeview 17y ago
  At that point, you should be complaining about the bailout money (which you've identified as the actual problem), not the bonuses (which you now seem to be claiming are a result of the problem). Arguing against bonuses due to TARP amounts to saying "The mortgage bubble -- propelled by massive government intervention -- has popped. The bailout, another massive government intervention, has had disastrous consequences. The obvious solution is more massive government intervention." At some point, it has to stop. So I agree -- let the banks fail.
  - rdtsc 17y ago
    Most people seem to regard corporations as moral entities. These companies screwed up. We bailed them out. We expect them to lower their heads in shame, tighten up their belts, ask forgiveness, and promise to not do it again. When they don't act according to our "moral" expectations, we turn everything into a public spectacle, articles start pouring in, blogs are on fire with outrage etc etc.. The problem is that we screwed up at the first step -- companies are not moral entities. They like to present themselves as such (ex. Google's "Do no evil, except when you have to turn in a couple of Chinese dissents over to their government to be imprisoned for life...")
- frig 17y ago
  You may enjoy this article as it offers an interesting generalization of your thesis: http://www.atimes.com/atimes/Global_Economy/JK25Dj06.html http://www.atimes.com/atimes/Global_Economy/JK25Dj06.html

taw 17y ago

Your argument doesn't work, as they're subsidized by taxpayers in many ways (it was true long before the bailouts). They can be as inefficient as they want without making their companies' shares collapse.

bokonist 17y ago

The problem is that Wall St. makes money by taking big risks and passing the losses on to the taxpayers. What would Goldman's profits be without the TARP bailout and the AIG bailout? I suspect Goldman would not have survived. Of course, the solution is not to regulate pay, but to allow the big banks to fail ( I think the whole too big to fail argument is a lot of hooey, there a lot of ways to allow a bank to fail without causing contagious destruction).

byrneseyeview 17y ago
At that point, you should be complaining about the bailout money (which you've identified as the actual problem), not the bonuses (which you now seem to be claiming are a result of the problem). Arguing against bonuses due to TARP amounts to saying "The mortgage bubble -- propelled by massive government intervention -- has popped. The bailout, another massive government intervention, has had disastrous consequences. The obvious solution is more massive government intervention." At some point, it has to stop. So I agree -- let the banks fail.
- rdtsc 17y ago
  Most people seem to regard corporations as moral entities. These companies screwed up. We bailed them out. We expect them to lower their heads in shame, tighten up their belts, ask forgiveness, and promise to not do it again. When they don't act according to our "moral" expectations, we turn everything into a public spectacle, articles start pouring in, blogs are on fire with outrage etc etc.. The problem is that we screwed up at the first step -- companies are not moral entities. They like to present themselves as such (ex. Google's "Do no evil, except when you have to turn in a couple of Chinese dissents over to their government to be imprisoned for life...")
frig 17y ago
You may enjoy this article as it offers an interesting generalization of your thesis: http://www.atimes.com/atimes/Global_Economy/JK25Dj06.html http://www.atimes.com/atimes/Global_Economy/JK25Dj06.html