That’s true. But the history of Wall Street is a series of booms and busts. After each blowup, the firms that survive temporarily shy away from risky ventures and cut back on leverage. Over time, the markets recover their losses, memories fade, spirits revive, and the action starts up again, until, eventually, it goes too far. The mere fact that Wall Street poses less of an immediate threat to the rest of us doesn’t mean it has permanently mended its ways.
Perhaps the most shocking thing about recent events was not how rapidly the big Wall Street firms got into trouble but how quickly they returned to profitability and lavished big rewards on themselves. Last year, Goldman Sachs paid more than sixteen billion dollars in compensation, and Morgan Stanley paid out more than fourteen billion dollars. Neither came up with any spectacular new investments or produced anything of tangible value, which leads to the question: When it comes to pay, is there something unique about the financial industry?
Thomas Philippon, an economist at N.Y.U.’s Stern School of Business, thinks there is. After studying the large pay differential between financial-sector employees and people in other industries with similar levels of education and experience, he and a colleague, Ariell Reshef of the University of Virginia, concluded that some of it could be explained by growing demand for financial services from technology companies and baby boomers. But Philippon and Reshef determined that up to half of the pay premium was due to something much simpler: people in the financial sector are overpaid. “In most industries, when people are paid too much their firms go bankrupt, and they are no longer paid too much,” he told me. “The exception is when people are paid too much and their firms don’t go broke. That is the finance industry.”
On Wall Street dealing desks, profits and losses are evaluated every afternoon when trading ends, and the firms’ positions are “marked to market”—valued on the basis of the closing prices. A trader can borrow money and place a leveraged bet on a certain market. As long as the market goes up, he will appear to be making a steady profit. But if the market eventually turns against him his capital may be wiped out. “You can create a trading strategy that overnight makes lots of money, and it can take months or years to find out whether it is real money or luck or excessive risk-taking,” Philippon explained. “Sometimes, even then it is hard.” Since traders (and their managers) get evaluated on a quarterly basis, they can be paid handsomely for placing bets that ultimately bankrupt their companies. “In most industries, a good idea is rewarded because the company generates profits and real cash flows,” Philippon said. “In finance, it is often just a trading gain. The closer you get to financial markets the easier it is to book funny profits.”
It all started two years ago when my husband and I were being badgered at every store with the "I want"s from our then four-year-old daughter. We began issuing four dollars spending money every two weeks that she could use to spend on toys or games or gifts.
On her fifth birthday this fall, we upped the allowance to five dollars every two weeks. Then, a bit of news about low personal savings rate in our country hit my news stream and I knew we had to do more than just give our daughter money to spend.
The US personal savings rate of disposable income is currently 5.5%. The percentage savings in 2009 and 2010 are higher than anytime previous in the century, most likely due to uneasiness from the US economic slump. Even the most risk-taking financial advisors suggest aiming to save 10%, something many Americans are not achieving at this time or anytime in the past decade.
To instill the habit of saving, we collected and renamed three piggy banks 'spend', 'save', and 'share'. My daughter is now feeding a minimum of one dollar each to the save and share pigs with her bi-weekly spending money.
Five is a great age to introduce the concept of saving and giving to charity because five year olds are generally enthusiastic about new plans, especially those involving the whole family. Five year olds still get a thrill out of feeding the piggy bank. They love to support charitable causes they enjoy like parks and museums.
Five year old children do not understand the concept of saving at a bank or giving cash money, however. Our daughter cried at the bank when we set up a savings account, saying the bank was "taking her money". We decided to wait on making regular savings deposits and keep bills in a safe spot at home.
Our plan is to help our daughter spend her charity money on something tangible to give away. Giving actual goods to an organization is more specific and memorable than a check or cash donation.
There is still much to teach a young child, including interest, loans, good spending habits, and how to choose a good charity. They all must be taught with intention, as the financial world is complicated even for adults. The spend/save/share concept is a great start for our family, and perhaps yours too.
bench craft company scam
Game of the Week PlayStation 3 <b>News</b> - Page 1 | Eurogamer.net
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Sun TV <b>News</b> application approved - Need to know - Macleans.ca
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Game of the Week PlayStation 3 <b>News</b> - Page 1 | Eurogamer.net
Read our PlayStation 3 news of Game of the Week. ... Gran Turismo 4 vs. Gran Turismo 5 Today 10:56. Gran Turismo 5: Special Stage 720p/1080/3D analysis Today 10:56. Latest News. GT5 update confirmed for Saturday ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
Swords & Soldiers dated for PC PC <b>News</b> - Page 1 | Eurogamer.net
Read our PC news of Swords & Soldiers dated for PC.
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In the upper reaches of Wall Street, talk of another financial crisis is dismissed as alarmism. Last fall, John Mack, to his credit, was one of the first Wall Street C.E.O.s to say publicly that his industry needed stricter regulation. Now that Morgan Stanley and Goldman Sachs, the last two remaining big independent Wall Street firms, have converted to bank holding companies, a legal switch that placed them under the regulatory authority of the Federal Reserve, Mack insists that proper supervision is in place. Fed regulators “have more expertise, and they challenge us,” Mack told me. Since the middle of 2007, Morgan Stanley has raised about twenty billion dollars in new capital and cut in half its leverage ratio—the total value of its assets divided by its capital. In addition, it now holds much more of its assets in forms that can be readily converted to cash. Other firms, including Goldman Sachs, have taken similar measures. “It’s a much safer system now,” Mack insisted. “There’s no question.”
That’s true. But the history of Wall Street is a series of booms and busts. After each blowup, the firms that survive temporarily shy away from risky ventures and cut back on leverage. Over time, the markets recover their losses, memories fade, spirits revive, and the action starts up again, until, eventually, it goes too far. The mere fact that Wall Street poses less of an immediate threat to the rest of us doesn’t mean it has permanently mended its ways.
Perhaps the most shocking thing about recent events was not how rapidly the big Wall Street firms got into trouble but how quickly they returned to profitability and lavished big rewards on themselves. Last year, Goldman Sachs paid more than sixteen billion dollars in compensation, and Morgan Stanley paid out more than fourteen billion dollars. Neither came up with any spectacular new investments or produced anything of tangible value, which leads to the question: When it comes to pay, is there something unique about the financial industry?
Thomas Philippon, an economist at N.Y.U.’s Stern School of Business, thinks there is. After studying the large pay differential between financial-sector employees and people in other industries with similar levels of education and experience, he and a colleague, Ariell Reshef of the University of Virginia, concluded that some of it could be explained by growing demand for financial services from technology companies and baby boomers. But Philippon and Reshef determined that up to half of the pay premium was due to something much simpler: people in the financial sector are overpaid. “In most industries, when people are paid too much their firms go bankrupt, and they are no longer paid too much,” he told me. “The exception is when people are paid too much and their firms don’t go broke. That is the finance industry.”
On Wall Street dealing desks, profits and losses are evaluated every afternoon when trading ends, and the firms’ positions are “marked to market”—valued on the basis of the closing prices. A trader can borrow money and place a leveraged bet on a certain market. As long as the market goes up, he will appear to be making a steady profit. But if the market eventually turns against him his capital may be wiped out. “You can create a trading strategy that overnight makes lots of money, and it can take months or years to find out whether it is real money or luck or excessive risk-taking,” Philippon explained. “Sometimes, even then it is hard.” Since traders (and their managers) get evaluated on a quarterly basis, they can be paid handsomely for placing bets that ultimately bankrupt their companies. “In most industries, a good idea is rewarded because the company generates profits and real cash flows,” Philippon said. “In finance, it is often just a trading gain. The closer you get to financial markets the easier it is to book funny profits.”
It all started two years ago when my husband and I were being badgered at every store with the "I want"s from our then four-year-old daughter. We began issuing four dollars spending money every two weeks that she could use to spend on toys or games or gifts.
On her fifth birthday this fall, we upped the allowance to five dollars every two weeks. Then, a bit of news about low personal savings rate in our country hit my news stream and I knew we had to do more than just give our daughter money to spend.
The US personal savings rate of disposable income is currently 5.5%. The percentage savings in 2009 and 2010 are higher than anytime previous in the century, most likely due to uneasiness from the US economic slump. Even the most risk-taking financial advisors suggest aiming to save 10%, something many Americans are not achieving at this time or anytime in the past decade.
To instill the habit of saving, we collected and renamed three piggy banks 'spend', 'save', and 'share'. My daughter is now feeding a minimum of one dollar each to the save and share pigs with her bi-weekly spending money.
Five is a great age to introduce the concept of saving and giving to charity because five year olds are generally enthusiastic about new plans, especially those involving the whole family. Five year olds still get a thrill out of feeding the piggy bank. They love to support charitable causes they enjoy like parks and museums.
Five year old children do not understand the concept of saving at a bank or giving cash money, however. Our daughter cried at the bank when we set up a savings account, saying the bank was "taking her money". We decided to wait on making regular savings deposits and keep bills in a safe spot at home.
Our plan is to help our daughter spend her charity money on something tangible to give away. Giving actual goods to an organization is more specific and memorable than a check or cash donation.
There is still much to teach a young child, including interest, loans, good spending habits, and how to choose a good charity. They all must be taught with intention, as the financial world is complicated even for adults. The spend/save/share concept is a great start for our family, and perhaps yours too.
bench craft company scam
Game of the Week PlayStation 3 <b>News</b> - Page 1 | Eurogamer.net
Read our PlayStation 3 news of Game of the Week. ... Gran Turismo 4 vs. Gran Turismo 5 Today 10:56. Gran Turismo 5: Special Stage 720p/1080/3D analysis Today 10:56. Latest News. GT5 update confirmed for Saturday ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
Swords & Soldiers dated for PC PC <b>News</b> - Page 1 | Eurogamer.net
Read our PC news of Swords & Soldiers dated for PC.
bench craft company scam
Game of the Week PlayStation 3 <b>News</b> - Page 1 | Eurogamer.net
Read our PlayStation 3 news of Game of the Week. ... Gran Turismo 4 vs. Gran Turismo 5 Today 10:56. Gran Turismo 5: Special Stage 720p/1080/3D analysis Today 10:56. Latest News. GT5 update confirmed for Saturday ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
Swords & Soldiers dated for PC PC <b>News</b> - Page 1 | Eurogamer.net
Read our PC news of Swords & Soldiers dated for PC.
bench craft company scam
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