Tuesday, 16 October 2012
Trading helps Goldman return to profit
The compensation topic is essential. Not only for investment banks, but for all big corporations. Including for instance Starbucks, who sells a cup of "robo-worker-drug-of-choice" for $4 (no excise included!) but pays no tax in the UK. Or yahoo! paying a hapless yet very lucky manager up to $60m just for joining, making a mockery of the shareholders' crowd.
Compensation is important because it is just removed from reality and common sense in a relative way, and it is completely unrelated to performance in absolute terms.
The massive profits of the financial institutions (before, during and after the crisis they induced) are normal, given the regulators' attitude to the sector.
Reagan/Thatcher's light touch gave birth to a global lobby force too powerful to overcome.
So I don't even know why titles like "Trading helps Goldman return to profit" make the headlines. I had absolutely no doubt that Goldman will do very well thank you. The probability that Goldman makes a loss with Washington revolving doors system is close to zero.