Government Orders Pay Cuts For Bailed-Out Firms

The huge salaries and bonuses paid to executives of banks and other firms that received government bailout funds have been the subject of a lot of taxpayer rage. The Obama administration listened, and will order pay cuts.

Affected companies are Citigroup, Bank of America, AIG, GM, and Chrysler. Executives from the latter two companies’ financing arms are also included.

The program will lead to pay cuts of up to fifty percent for each firm’s top twenty-five earners.

The plan will hit executives at some companies harder than others. At the financial products division of A.I.G., the locus of problems that plagued the insurer and forced its rescue with more than $180 billion in taxpayer assistance, no top executive will receive more than $200,000 in total compensation, and officials in that unit will not receive any other compensation, like stocks or stock options. Some bonuses previously promised will be paid in the coming year, and it is not clear how much of those will be awarded.

But at other companies, the cuts may mean less. Many executives at Bank of America and Citigroup are expected to reap multimillion-dollar pay packages.

For executives at all seven companies, new restraints will also be imposed on perks. Any executive seeking more than $25,000 in special perks – like country club memberships, private planes, limousines or company-issued cars – will have to apply to the government for permission.

Yes, a Washington bureaucrat will be rationing executive limousines. The horror!


U.S. to Order Pay Cuts at Firms That Got Most Aid
[NY Times]

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(Photo: suburbandollar / CC BY 2.0)

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  1. Ouze says:

    /shrug

    you don’t like the strings, don’t run your giant company into the ground and then cry to the taxpayer

    • nbs2 says:

      @Ouze: Are we going to put these same limits on the perks and money that Congress and the administration receive? They’ve run their “business” into the ground as well, and are crying to the taxpayer.

  2. fs2k2isfun says:

    Wrong, wrong, wrong. While the government shouldn’t have bailed out any business in the first place, allowing the pay czar to dictate pay at these companies sets a scary precedent. I believe in an America where what one can earn is only limited by one’s potential. Executive pay is a matter for the board of directors, not an unelected, unaccountable government bureaucrat.

    I understand people are upset about their salaries, but two wrongs does not make a right.

    • diasdiem says:

      @fs2k2isfun: The government put money into them to keep them from going under. Their paychecks are being paid for the government. They work for the government. End of story. Until they pay it back.

    • prag says:

      @fs2k2isfun:

      At least the govt is coming down on the side of taxpayers instead of corporate interests for a change. Too F-ing bad. “Capitalism in America” needs a nice bitch-slapping.

    • Christovir says:

      @fs2k2isfun: You take government money, you live by their conditions. There is no injustice, no creep of illegitimate control, and no assault on freedom here. The taxpayer is the boss now, and the boss can set a few rules (which are, let’s be honest here, pretty trivial in the scheme of things).

      • fs2k2isfun says:

        @Christovir: I disagree. Until they are a government sponsored entity (i.e. Amtrak), the government shouldn’t have the right or ability to stipulate pay. These companies are mostly, if not entirely, publicly held and if the government wants to exercise control, it should use its stock holdings to put people on the board of directors. As a BofA stock holder, I have the right to vote at shareholder meetings. The government is also a shareholder and they should excercise control this way, instead of a lone czar calling the shots.

        Since the board sets top executive pay (in addition to hiring and firing at that level), they are the only ones who should have the ability to set pay, not an unelected government official.

        • rellog321 says:

          @fs2k2isfun: People just like this are the first to scream that welfare recipients should have limits and regulations, but neglect corporations. I whole-heartedly disagree, and say BOTH people and corps need to be regulated if accepting government monies…

    • G.O.B.: Come on! says:

      @fs2k2isfun: “Executive pay is a matter for the board of directors, not an unelected, unaccountable government bureaucrat[s].”

      LOL.

      1. How hard have executive boards fucked up recently?
      2. How many members of those same boards have been shit-canned? It’s always the CEO falling on the sword.

    • bjcolby15 says:

      @fs2k2isfun: I concur to a point.

      Yes, if you’re the scientist who discovers the cure for cancer, you deserve to be compensated very well for your time and effort. If you put in extra hours at your job, you deserve to be promoted.

      The problem lies when people work their behinds off versus those who manipulate the markets for their own gain. If the government didn’t bail out these businesses, it would have led to monumental panic on Wall Street. On the other hand, it’s time for the bailed out to repay all the money they’ve taken.

      The fair thing to do would be for the banks to absolve every single scrap of debt that people have. Yes, forgiving our debt completely would be much better than having us assault their ivory towers with pitchforks and torches. All of that TARP money to forgive all debts – large, small, and otherwise – would have made the banks heroes, not the subject of Rolling Stone exposes and the butts of late night comedians.

      We don’t have heroes here – at least not yet. What we have is a symbiotic alliance between the government and certain sectors of Wall Street who follow the Gordon Gekko bible. Yup, hiking those interest rates to 29.99%, hiking oil prices, and sugarcoating bad reports so you give out what you want the public to hear is a sure sign you’re only in it for the next profit that flash-trades on the screen.

      While I agree a government bureaucrat should have no business determining salaries, the entities we’re dealing with appear to have no shame in gaming the market for their own advantage, and their feeling they’re entitled to the multimillion dollar salaries and profits for doing nothing but cornering the freakin’ market!

      Reduce the exorbitant salaries and bonuses that these banksters have been taking for granted, and you will reduce the incentive to cheat your customers and corrupt yourself. On the other hand, the government should step in only as a last resort – when all other avenues have failed. So yes, the determination of salary and bonuses should go to the board of directors and shareholders, but if those directors and shareholders are equally corrupt, then the government should not only step in, it should shut them down immediately.

      The government would have to sever its symbiotic relationship with the banks, who give both parties tons of campaign cash in exchange for protection against failing, but that’s a very small price to pay.

    • Wireless Joe says:

      @fs2k2isfun: As the government owns 80% of AIG and a significant percentage of the other companies, they’re well within their rights to decide payroll issues. Compaines who’ve paid their money back aren’t affected. When AIG is 100% self-sufficient, they can go back to running themselves into the ground.

      • fs2k2isfun says:

        @Wireless Joe: If that is the case, then they have the right to appoint people to the board. Do that, then let the board decide how much to pay people.

        • Falcon5768 says:

          @ferris209: These companies controlled WAY too much to not be bailed out.

          Just AIG going under would have cost millions of Americans jobs that would not have easily been replaced. Same with GM.

          People really need to stop thinking we live in a free market society, because the US has NEVER been a free market, contrary to popular belief.

        • H3ion says:

          @fs2k2isfun: By your thinking, the government is the largest single stockholder and should have the right to appoint at least a majority if not all of the board. From that perch, they could decide compensation and also decide the business direction of the company. I have no objection to limits on executive salaries while the government loans remain unpaid, but I don’t think I’d want the government actually running these companies.

        • MentallyRetired says:

          @fs2k2isfun: Increasingly the executives are on the board of directors and there is no check or balance. There needs to be a disincentive to not paying the government back. This is it and it seems fair to me.

          If they want to be rewarded with large paychecks and bonuses for taking careless risks in the good times, that’s fine, but when those careless risks cause your company to fail and you are lucky enough to keep your job, you shouldn’t continue to be rewarded for taking careless risks. If they did then we would be guaranteeing that the surest way to earn a lot of money would be to take careless risks so why would they ever stop?

    • BrazDane says:

      @fs2k2isfun: Yeah, you go on and advocate that. Would you by any chance be one of those missing out on a big chunk of money???

      There’s nothing scary about the government wanting a little financial restrain in return for bailing the companies out. These people getting the bonuses already reaped huge benefits during the boom, knowing it couldn’t last in the long run. So they should be happy they are still in their jobs, instead of in the unemployment line because the government let them go bankrupt.

      And if they don’t like it, why not just turn to the competition – find another company who will hire them and pay ridiculous bonuses – it’s a free country. Isn’t that what you guys always argue?

    • thisistobehelpful says:

      @fs2k2isfun: So anyone born with severe physical and mental handicaps is on their own right? I mean if they have to earn their way that’s pretty much it for them isn’t it. Work and potential have very little to do with earnings any more. These companies basically gambled with their customers’ money on shoddy investments (including other bad customers) and lost huge. If we’re going by potential that’s a negative result and should result in individuals giving paychecks back.

      The government shouldn’t have bailed them out but they did so yes they do have to play by the new rules.

      • TuxthePenguin says:

        Here’s the problem with limiting executive compensation… how’s that CFO search going at GM? They’re offering a $1 million dollar salary and can’t find anyone…

        [www.abcnews.go.com]

        • SonicPhoenix says:

          @TuxthePenguin:
          FTA you linked – “A spokesman for GM would not comment on whether the CFO search specifically was being hindered by the pay restrictions.”

          Also, if they can’t find a qualified candidate for $1mil a year, they’re doing something wrong.

        • Anonymously says:

          @TuxthePenguin: That’s correlation, not causation. You could just as easily say that it’s because no qualified CFOs exist, or that none want to work for a bailed out automaker regardless of salary.

    • flugennock says:

      @fs2k2isfun:

      P’hah. Teabagger!

    • Naame says:

      @fs2k2isfun: Gee…I wonder how much their salaries would have been had they not received any of those tax dollars. Hmmm…still sounds like they are getting the better end of this deal.

      Come to think of it…I wonder how much my salary would be if I lost billions of dollars for the company that I work for? Oh that’s right…it would be FUCKING ZERO!

      Clearly, I am in the wrong industry.

  3. Verucalise (Est.February2008) says:

    Boo Frickity Hoo…. Cry me a river.

    I’m Verucalise, and I approve this message.

  4. AngryK9 says:

    Cool.

    Or you could not cut their wages, and make them give the difference to me so that I can bail myself out. :D

  5. diasdiem says:

    Good. F**k ‘em, man. F**k ‘em til they bleed.

  6. ferris209 says:

    The government never should have bailed the companies out in the first place.

    • ARP says:

      @ferris209: Disagree, having a systemic failure of AIG and multiple banks would have sent the entire economy into a deep freeze that would have taken years to remotely thaw.

      • doctor_cos wants you to remain calm says:

        @ARP: As opposed to bailing them out, prolonging the agony.
        You can’t honestly think this economy is working.

    • Naame says:

      @ferris209: The government didn’t want to bail them out. The decision they made was based on what they believed would negatively impact America the least and they were right. It’s possible that how the details were hammered out could have been improved here and there, but generally they made the right decision amongst and array of available options. All of which, were not favorable. Sometimes, people of great responsibility are forced to choose the lesser of many evils. No one likes to do it, but someone has to do it.

  7. oldtaku says:

    The financial sector hasn’t been anything like capitalism for decades (it’s the unholy alliance of business and government dedicated to screwing everyone, worst of all possible choices), so it doesn’t bother me in the slightest if it’s regulated and penalized right into the ground.

    But it can’t last – the execs work out a way to pay off enough govt. employees with tax or loophole money till they get their kickbacks one way or another. Like they always do.

  8. Esquire99 says:

    Well, the Govt. may have shot itself in the foot here. The traders and other employees who actually generate revenue for theses firms will now be poached by Goldman, JPMorgan, Lazard, etc. where they can earn significantly more money. With those people gone, the firms’ ability to repay the Govt. loans will be impaired.

    Seems like this was merely a shortsighted effort to appease the populous.

    • Wireless Joe says:

      @Esquire99:

      You mean poached by companies that were able to remain (relatively) stable through the crisis by not making (as many) bad decisions? I say if they can find anyone who’s good enough to jump ship from the failed enterprises and not run the company into the ground, let ‘em poach and leave the dregs back at the failed companies to finish the job after they’ve paid back their bailout.

      • Esquire99 says:

        @Wireless Joe:
        I agree with you generally, but the chances of the bailout actually being paid back decreases significantly if they lose the employees that don’t suck.

        It’s just as dumb as the Govt. forcing CitiBank to sell Phibro. The company generated ~$600mil/year in profits for Citi. They sold it for $250mil just so that they didn’t have to pay the top bad-ass trader there his $100mil and have the govt. and the pitch-fork carrying mob get angry.

        • bmorg003 says:

          @Esquire99: I’ll sell you a some ocean front property in Arizona real cheap if you think we are going to ever see a significant amount of that money repaid. According to the inspector general, we’ve only seen 73 of the 450 billion repaid so far of just TARP money, not counting other instances where the government has put the tax-payer on the line. Even in his own words, he’s saying it’s unrealistic to think it will all be paid back (source: [www.zerohedge.com]), and when you factor in that they’ve admitted in the past that they don’t even know or can’t account for where much of the money has gone, you’d have to be the most gullible person in the world to think we’ll see much, if any significant portion, of that money back. So in effect, these executives came to the government with their hands out saying “Bail us out, or we’ll take the system down” and the Government blinked. The limitations on pay are a targeted way to try to get the money back through other means (a broader capital gains tax increase would work, but would not be “targeted”). Now these guys are borrowing money from Bernake’s printing press as fast as he can print it at 0% interest (really how hard is it to make money when you can get it at 0%), and the economy is in as much trouble (or possibly more danger than it was before), and they are complaining that we are trying to limit their salary after they’ve run their companies into the ground. It’s about time we stopped rewarding failure, both in Wall Street and in Washington.

        • Trai_Dep says:

          @Esquire99: PhiBro – and all hedge funds – are a great deal for the principals, and a lousy one for the equity stakeholders. While they may have “made” x amount/year, typically half or more goes to its “talent”, with stockholders left holding the bag.
          Check the stocks of the major hedge funds that have gone public, and you’ll see a bloodbath for the investors and guaranteed billions (literally) for the partners.

          Citi in this case was smart, since in this capacity, they’d be in the same boat as the equity holders. Left holding the bag. Thus, taxpayers left holding the bag, since we’re floating Citi.

  9. badgeman46 says:

    I’m sure you people would have no problem with the government deciding how much you make. I mean, come on, Free-Lance internet writer? 18K tops. Not a penny more. Marketing? You should be capped at 35K. The only person that should make 100K is Dear Leader himself. The big problem I have is that it wan’t really a bailout! Meaning free-money, like has been done with Amtrak since its inception. TARP was a loan! Those companies aren’t going to be able to repay those loans when everyone has gone to find better paying jobs!

    • Esquire99 says:

      @badgeman46:
      I agree. People seem to think this money was simply gifted to the govt. In reality, the money was loaned to these companies with the intent that it be repaid.

      • karmaghost says:

        @Esquire99: These executives are not thinking about paying back the gov’t at this point. They’re thinking “god-fucking-damn! the shit has hit the fan! i best get the most money out of this bail-out as i can before things get worse! especially since there were no terms in the loan that said we couldn’t give ourselves huge-ass bonuses for no reason! suckerrrrrrrrrs!”

    • ARP says:

      @badgeman46: Except they’re only imposing those restrictions on top executives at bailed out firms. I don’t see the risk of scope creep here. Then again, you don’t use GPS systems and refuse to take vaccines,now that Beck has told you the government is out to get you. Funny, he didn’t seem so concerned when they were actually doing Big Brother stuff, like listening to your phone calls without warrants, holding people without charges, etc.

    • Trai_Dep says:

      @badgeman46: The moment that taxpayers shovel $700 billion to blog writers we can talk.
      We can also demand that snacks AND an open bar is given for the next Consumerist Meet-up. And Perfect Oatmeal for ALL!

  10. MrMan09 says:

    We the people (government) are now the majority shareholder in each of these companies. We are not amused with the shenanigans that have been going on unchecked for far to long.

    If they do not want us to stop the rewarding of the idiots who caused all of this mess, then buy us out. Pay us back all of the bailout and throw in 29.99% interest like your hitting your customers with. Oh and when you find yourself in trouble again… choke on it.

    • Esquire99 says:

      @MrMan09:
      Shareholders, even majority ones, don’t have the power the Govt. is taking. The only power shareholders really have, even majority ones, is the power to vote for the Board of Directors.

      Taking that same argument further, “We the people” are not shareholders in these companies, the entity that is the US Government is. We are essentially shareholders in the US Govt., with the sole ability to elect Representatives and the President.

  11. desterion says:

    so his approval ratings plummet, then finally he decides to do something good? He didn’t listen, he was forced

    • MostlyHarmless says:

      @desterion: his approval ratings rose by 6% last month. So, no, you have no idea what you are talking about.

      Though I do agree on the point that what he did was good.

      • desterion says:

        @MostlyHarmless: [www.realclearpolitics.com]

        where do you see a rise of 6% ? His approval has been pretty steady at about 52-53% since July. He’s getting desperate, so he’s trying to throw a bone and pick a strawman to take the heat off himself. It’s not about people getting paid too much, it’s about him trying to look good. Why doesn’t he go after somebody else that gets paid too much, like professional athletes? Why doesn’t he go after speculators that hurt the economy? Because that doesn’t look good, and they fight back.

        Even this, is just a token movement. It’l take companies all of 2 seconds to figure out a way to get the money to their executives. So while it may look good and generate headlines to make people think he’s doing something, in actuality it’s not going to have much of an effect. You’re naive if you think they won’t find a way to get their money. Unless you include in the income limits the members of congress who greatly profit from being elected as well as the president ( Obama made 7 million over the last 2 years) you’re never going to get anywhere. By all the bribes and campaign donations they get, all they ensure is that only the companies that don’t pay their dues enough get punished. Even with their “pay cuts”, the NYT article states they’l still be able to get multi-million dollar pay packages. The article itself pretty much says that it’s not going to really do anything except give some people warm fuzzies. The steps to truly have any kind of reform will never happen with our current government so deeply rooted in corruption.

        • DollaValueLIFO says:

          @desterion:

          “Why doesn’t he go after somebody else that gets paid too much, like professional athletes? Why doesn’t he go after speculators that hurt the economy? Because that doesn’t look good, and they fight back.”

          Point 1: Stop bitching about athletes, it is the most tired populist meme. They get paid that much because they’re actually worth that much to the owner that pays them. I know you’re a Cubs fan, so it explains alot, but sheesh.

          Point 2: So in one breath you say “who cares if he goes after the crummy execs” then follow it up with “why not go after the speculators…”. Dude, they’re one and the same. But you’re a Cubs fan, so it explains alot.

    • Aquasol says:

      @desterion: Even if that were the case, as least he did something good. -w-

  12. 2 replies says:

    Won’t forcing departmental pay-cuts just artificially inflate the revenue(and/or profits) of that particular department making them look EXTRA GOOD?
    And wouldn’t this artificial increase in revenue just eventually result in bigger bonuses, the following quarter, for those whom the pay-cuts were meant to punish?

    How about instead of pay-cuts, the government take the money that was cut and return it to the populous the company hurt. Stimulate the economy the company helped hurt.

    • DollaValueLIFO says:

      @2 replies by: No. Revenues won’t increase, profits might – but you assume there are profits in the first place. Most bonuses have nothing to do with profit (dividends and shareholder bonuses will), they’re tied to revenue generation.

  13. 2 replies says:

    @AngryK9:
    Seriously, not a bad idea, (if by ‘me’ you mean the populous that the company failed/hurt).

  14. Difdi says:

    On the one hand, I don’t have a huge amount of sympathy for people who run a company into the ground, then expect to be paid top dollar for their “service” plus bonuses. On the other hand, they do have a contract.

    While the government is perfectly free to set whatever (legal) terms they like on bailouts, there’s a couple precedents here I am very wary of.

    First, the way the government is changing the deal after the fact. When the government does it to an executive, we cheer. When a company does it to John Q. Public, we boo. But ultimately, rewriting contract terms after the contract is signed is the same thing in both cases.

    Second, the concept of Maximum Wage. Do we really want a legal precedent set, for whatever reason, that allows the government to tell someone they’re making too much money? Wouldn’t it suck to work for years, finally get to an hourly or salaried level you can live comfortably on…and then the government cuts your pay? They say now that it’s just for the top executives with absurdly high pay…but the equal protection clause would make it applicable to *anyone*. We’ve seen in the past that lobbyists can goad congress-critters into some pretty anti-constituency acts. If the law exists to limit how much someone can make, can you see some of the more consumer-abusive companies NOT trying to lobby for a Maximum Wage to go with the Minimum Wage?

    Perhaps, if it were pitched to congress as the “only” way to keep these too-big-to-fail companies from failing, is to cap all wages, not just executive wages?

  15. Foneguy says:

    Nothing to see here…. The big company execs will just defer their outrageously huge bonuses until after the loans are paid off. Then they will award themselves an even larger bonus because they were able to pull the company from the jaws of bankruptcy and claim victory over the economy. This is corporate America business as usual. The government should have restructured the companies in their entirety, to eliminate this type of outlandish compensation. A few million, fine, tens and hundreds of millions, while average joe workers earn 30K tops, something is very very wrong. I am all for free enterprise, but at what point is enough enough? Greed, it’s just pure greed. It is not just corporate America. Career politicians, and pro athletes, I am talking to you as well!

  16. Snarkysnake says:

    A couple of points here:

    1) Since the government essentially owns these companies ,the employees really are among the highest paid in their peer group – Other government employees. I can guarantee you that they make a hell of a lot more than the schlubs working at OSHA. Or the US First Division ,now hoping for their own golden parachute out of combat.

    2) If money is the only thing that motivates these people and they want to move on ,fine. It’s good for the system. Since they are parachuting out of companies “too big to fail”,they presumably will land at companies that have to really make money without we the taxpayers having their back. That means real pay for performance at these other firms instead of making millions win or lose at the TBTF companies.

    Too big to fail MUST end. We will have more and more of these bubbles/deflation until it does.

  17. doctor_cos wants you to remain calm says:

    Stop the TBTF bullshit. If these companies had been allowed to fail, there would have been smarter people (than those that had been running them) swooping in and buying up the pieces THAT WORKED. There wouldn’t have been this catastrophic collapse that the “news” media keep waving in our faces.

    • tailstoo says:

      @doctor_cos: I think you’re right – when there is a chance to make money, someone will figure it out. And these overpayed ass hats wouldn’t have to worry about their salary being cut because they would be out of a job already.

      • DollaValueLIFO says:

        @tailstoo: But you miss the point of TBTF – failures at that level would have been dominoes, one after the other. We’d have seen a drop in the DJIA and the NASDAQ to rival 1987. Confidence would be at an all time low, and those firms would respond by cutting all ties to their employee’s. No pay, no severance, nada.

  18. RStui says:

    I wasn’t down with the bailout, and I wasn’t down with a lot of the things these companies were doing, but I am hesitant to approve wholeheartedly of the Gov’t coming into private industry (even one it has SIGNIFICANT investment in) and regulating pay and benefits.

    Mainly because: What legal right do they have to do this? What legality are they depending on to justify this interference?

    I’m just as hungry for blood as any other middle class working American, when I see these people with their ridiculous bonuses and their expensive offices and their tanking businesses…but at the same time, I don’t want this to set precedence for the Gov’t to be able to come into a private business and start arbitrarily determining pay cuts.

  19. DragonThermo says:

    This is why the “public option” is EVIL. Once you give up your independence and start taking government money, it makes you their slave.

    The executives should have known that letting a guy who is in charge of guys with guns and tanks and unlimited number of lawyers have a controlling interest in their company, that bad things are going to happen down the road.

    I do agree, however, that if these companies can afford huge salaries and bonuses and perks for executives, they don’t really need the “public option”. And if they really do need the “public option”, they can’t afford the huge salaries, bonuses, and perks anyway.

    These companies are made of fail and should have been allowed to do so.

  20. flugennock says:

    Pay cuts? Is that all?

    How about the stocks? Public stoning? Imprisonment? Execution?

    Perhaps if we let all the prisoners out of Guantanamo who’ve been detained for nearly a decade without being charged with anything, we’d have room to lock up all the CEOs and throw away the key. Then you might be getting somewhere.

  21. tailstoo says:

    What I do want to understand is the reason for the cuts. If it’s punishment, then that’s just stupid because GS will go and take the best people and lavish them with cash.

    If this is more of an overall problem with how they are compensated, then the whole industry should be forced to follow suit.

    Really, pay in the financial sector has gotten out of control – and consumers are the ones who have been paying for it. All of the costs are passed on to us in the form of higher prices. What if the $12 billion dollars Goldman is holding for bonuses was reduced to something like 2 billion, and $10 billion was cut out of fees? It’s not like the bankers couldn’t survive on the hundreds of thousands they make in base pay, the whole economy could get a boost when there is more money for job growth and production.

    But no, the banks know they can keep taking more and more, and really, what’s to stop them until the economy is dead?

  22. Hello_Newman says:

    I love the question that came up on CNN the other day. What if they lose all their best people to another company not subject to the pay cuts? Even having a job is a trick, and how are they going to go to another bank with this disaster on their resume’ and be taken seriously? They’re lucky they haven’t been fired by now for causing this disaster. The “best” people there don’t have a lot of options to apply anywhere else with this on their track record…

  23. zzxx says:

    Mixed View Here……

    These are the people that screwed everything up. They should pay.

    I make around 165K and I live very well. They should survive on a million each.

    It is very important that we have a ‘rock star’ class. They employ many many people. If you take all of the people who buy Lamborghini, Aston Martin, and Rolls Royce and turn them into Ford buyers Ford will see about 5,000 new sales per year and not hire any employees. Then the workers who sell and service these exotic car makes will be out of a job. These workers are the middle class. What I am saying is that many middle class people are employed by the ‘rock star’ class and we have to keep that class from dwindling.

    Consider private jets….Many middle class people manufacture them, fix them, work at airports, and are paid to fly them for a rock star. Turn the rock star class one step down into the big shot class and they will fly commercial planes (maybe first class) and drive Mercedes. Many people will be out of work. Mercedes and the commercial airlines will not notice the former rock stars that they get as customers.

    However, you will see more foreclosures because the manager at, say, Manhattan Motor Cars no longer has a job or a jet pilot no longer has work.

    This is a tough call.

    The fix is to make rock stars out of inventors and manufacturers, kinda like Henry Ford and Bill Gates. We should have most everything invented here and make things here and sell it to the world.