Executives on Wall Street will be sharing $1.6 billion in year-end bonuses after a disastrous year that saw trillions of dollars in personal wealth erased. They’re called retention bonuses - money to keep high powered talent from bolting and joining a competitor. But, given that most every firm on Wall Street has partaken of the government’s generosity, where would they run to? Wall Street asks that the taxpayers put this all in perspective. After all, the bonus pool is down considerably from the $45-60 billion handed out last year, when the geniuses on Wall Street thought the world was their oyster. Yes, they must be suffering terribly. No chartered yachts in the Mediterranean at $100,000 a week, no helicopter skiing in Gstadt, and that 5th or 6th home is just not going to happen this year.

Meanwhile, the national debt foisted on the taxpayer has increased by another 3 or 4 trillion when all is said and done. Let’s be clear who the taxpayer is: It’s not any household earning less than $60,000 annually. It’s not any household earning more than $1.5 million annually. It’s the 15% of the population in between those figures which shoulders 75% of all taxes paid. That small group of taxpayers also includes their dependents - the spouses and children who must cut back, economize and delay. Oh, but they have so much! They should pay their ‘fair share’, after all. In this season of giving, exactly what is ‘fair’? Is it ‘fair’ to take away five times as much from someone who’s bothered to complete their education and worked for years to achieve a good-paying job?

The progressive tax scheme is patently unfair. It penalizes personal ambition and achievement. It destroys personal incentive and self-reliance. It rewards parasitic behavior at the top and the bottom of the socioeconomic scale. Wall Street is a perfect example. The pay scales for middle management and executives is so incredibly lucrative that they gladly give away half to the government. At their pay scales it’s like winning the lottery. But, that’s cold comfort for someone who’s putting in 80 hours a week to take down $200,000 in gross compensation. Losing half of that to the tax man is a bitter pill to swallow. But it’s an everday reality for millions of well-educated, dedicated and professional Americans. And yet, they can’t complain, because they’re ‘rich’, they’re ‘privileged’. Well, they’re being looted and there’s nothing they can do about it. 

These are the same folks who paid off their college loans, got a good job and worked hard at it. They saved up their money to put a deposit on a home and this is where they were going to raise their kids. They have good credit scores, some investments and a nice, big mortgage. They’ve seen their house values deteriorate while their property taxes increase. They’ve had the credit card companies punish them with 33% interest rates for being one day late with a payment. And, they’ve had their income taxes raised at the local, state and federal level. Some have even endured the pleasure of the ATM tax scam. At some point, these people are going to stop trying so hard to get ahead. They’re going to put their feet up and lower their expectations, just like the bottom of the socioeconomic scale. Where will government turn to collect their taxes, Santa?

Wall Street is synonymous with capital formation - raising money from investors worldwide to fund the growth of corporations. Wall Street is also synonymous with finance - raising money from investors worldwide to lend money in the form of bonds to business and government. And, Wall Street is synonymous with securitization - taking capital or lending risks and breaking them up into bits of paper that individuals or institutions can purchase. In all of this, Wall Street itself takes no risk - all of it is borne by investors in one form or another. Wall Street firms make money from the transactions, the creation of the paperwork and the buying and selling of stocks, bonds, commercial paper, derivatives and so one. Wall Street firms make money whether the markets go up or down, whether the dollar is rising or falling, whether the economy is growing or shrinking. The only thing that affects the well-being of Wall Street firms is volume. The money made on a huge volume of transactions is what keeps those billion dollar bonuses going.

Wall Street is all about the transaction. The people running these firms, the people offering Americans investments don’t really care if their customers make any money. It’s all about the transaction. It’s about getting a piece of the action, a little bite out of that stream of cash. It’s how they make their money. That’s why Wall Street is constantly inventing new ‘products’ to sell investors, each one more toxic and risky than the previous one. And in each case, there’s a cut for somebody on Wall Street. Unbelievably, these are the ‘legitimate’ offerings. In addition to these decidedly predatory and parasitic practices there are the out and out frauds who work alongside the ‘legitimate’ broker-dealers, advisers, investment banks, underwriters, analysts, ratings agencies, traders and the rest of the Wall Street apparatus.

Bear Stearns was infamous for its cozy relationships with shady stock promoters, bucket shops and boiler rooms who regularly fleeced small investors. Bear Stearns handled the securities paperwork for these frauds because they weren’t licensed to do so on their own.  Bear Stearns took a healthy fee for its part. The profits from the transactions were so lucrative the firm was willing to take the heat and scrutiny from the SEC and the New York Attorney General’s office. The shady operators would go in and out of business, in and out of jail, but Bear Stearns just kept on handling their paperwork. This kind of mentality permeates Wall Street.

Unfortunately, the various watchdog and governmental agencies that are supposed to oversee Wall Street aren’t doing their respective jobs. Wall Street doesn’t need any more regulation. What’s needed is for those already charged with the responsibility of oversight to actually do their jobs. Bernie Madoff is a prime example. It doesn’t take much of an imagination to speculate that Madoff was able to manipulate, intimidate or buy off individuals within the state, federal and industry regulatory entities that could have spotted this scam many years ago. How someone so visible can conduct a Ponzi scheme of such magnitude for decades is unfathomable. But then, of course, it’s all about the transaction. Was anyone else getting a piece of the action?

Capitalism has finally ground to a halt, undercut and compromised by unbridled greed, self-interest and a willingness to put everything at risk for a fast buck. The “It’s no one’s fault/It’s everyone’s fault” bunch want to paper over (with worthless dollars) the root causes of this calamity and divert attention away from the source of the problem – Congress and Wall Street. Basically, Congress made up stupid rules and Wall Street then gamed those stupid rules. And, faster than you can say “Fannie Mae lobbyist”, they found their collective pants around their collective ankles while the champagne glasses were still in hand.

Predictably, the media cabal and Sen. Obama blame the ‘failed policies of the Bush Administration’, while providing cover for Obama’s ‘housing’ advisor Franklin Raines and VP search committee chair James A. Johnson, both of whom pocketed millions while running Fannie Mae, and who donated generously to the campaigns of both Sen. Chris Dodd and Sen. Obama.

And now, the innocent will be sacrificed to save the net worth of the guilty. The producers will be weighed down with more debt and obligation while their incomes shrink and opportunity evaporates. Parasites, on the other hand, will celebrate. After all, 700 billion doesn’t come down the pike every day.