[Marxism] Economics as a weak point

Les Schaffer schaffer at optonline.net
Tue Nov 8 07:36:48 MST 2005

rrubinelli wrote:

>First, finance, speculation,
>interest etc have a lot to do, not with creating surplus, but with
>apportioning surplus among the capitalists

nice post from rrubinelli.....

from today's paper of capitalist record, below.

les schaffer


Optimism on Wall Street Over Size of Bonuses

Published: November 8, 2005

After several years of being outshone by star traders, investment 
bankers stand to reap some of the biggest gains in Wall Street bonuses 
this year.

Bonus season on Wall Street is quickly approaching, the time of the year 
when investment banks determine how big their year-end bonus pools will 
be and how they will be divided.

Economically, the year-end bonus makes up most of a Wall Street 
professional's compensation. Socially, the bonus - and the real estate, 
art and NetJets shares purchased with it - determines who will be the 
year's Masters of the Universe. This season, despite a lackluster stock 
market, bonuses are forecast to be strong for a third consecutive year.

According to a new compensation survey to be released today, the biggest 
percentage winners for 2005 are expected to be investment bankers who 
focus on mergers and acquisitions; prime brokers, the professionals who 
manage a bank's relationship with hedge funds; and proprietary traders, 
the traders who use their firm's money to bet on the direction of 
certain market trends.


Year-end bonuses for prime brokers, who have been buoyed by the boom in 
hedge funds, are expected to rise 20 percent, according to the survey.


The big winners could be traders involved in commodities and energy, in 
particular, proprietary traders who deal in those two high-octane growth 
areas. They could receive pay increases of 40 percent to 50 percent, 
with some walking away with $15 million to $20 million each, according 
to one investment banking executive who is prohibited by his firm from 
commenting on compensation issues.


Those executives charged with divvying up the bonus pool face an 
interesting quandary. The third quarter, traditionally Wall Street's 
weakest, was among the best quarters ever at many firms. Merrill Lynch 
reported a record $1.4 billion in net earnings, up 49 percent from a 
year ago, while Lehman Brothers earned $879 million, up 74 percent from 
a year ago.


Still, a number of factors have blessed Wall Street this year. There has 
been a frenzy of mergers, spurring financing for all those deals. More 
than $2.1 trillion worth of global mergers and acquisitions have been 
announced so far this year, compared with $1.6 trillion for 2004, 
according to Merrill Lynch.

The rise in the number of hedge funds and the amount of money they 
manage means that Wall Street firms have more consumers of equity and 
credit derivatives and more customers for financing, as hedge funds 
typically borrow to leverage their trades.

And while rising interest rates may slow corporate financing and 
challenge fixed-income traders, they offer opportunities to hedge 
against that rise through credit derivatives.

For Goldman Sachs, Lehman Brothers, Bear Stearns and Morgan Stanley 
"compensation should be a record at $32 billion in 2005 versus $24.7 
billion in 2000," said Guy Moszkowski, a securities industry analyst at 
Merrill Lynch.

He said that "2000 was what people thought of as the high-watermark 
year, but we've surpassed that in terms of revenue and compensation."

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