Come back of bonuses

Bonuses in the finance sector more specifically, Goldman Sachs Group Inc. (GS) and JP Morgan Chase & Co.'s (JPM) are to soar above the bonuses of last year. They might even be comparable to the hay-day bonuses of 2007 with some admirable performance on the part of financial industry employees. The year is only three quarters done and things are looking on the up and up for these companies. I feel that the hard time the industry has been facing has inspired people to work harder. It seems as though great things come out of challenging situations.

Bonuses have been a hot topic especially since the government takeover of the financial and insurance industry, the car manufacturing industry, and the mortgage industry. Sorry I got a little of topic but its true. There has been more scrutiny over bonuses and compensation plans especially when it comes to the tax payer’s money. In tough times things have a way of working out to benefit everyone.

What comes to mind when I think of the issues facing the financial industry and what it took to recover from those pessimistic situations, I think of the ever present “Invisible hand” that brings peoples self interest into play among other things. The competitive nature of people and markets to survive helps those companies endure. The ability for supply and demand to cause equilibrium though their can be many swings you can see where I’m going with this. Things tend to fix themselves and even in the face of scrutiny they find a way to improve all the individuals’ interests in self preservation.

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1 comment:

Dr. Tufte said...

-1 on Brooklyn for a grammatical error.

This issue isn't hard.

If the government gives money out to firms in a "bailout", then it has the right to attach strings, including those about bonuses and executive pay.

But ... just because they bailed them out doesn't mean they can assert the right to add strings at a later date. That's morally wrong, and should not be held to be legal.