Ben Was Here

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Excuse Me If I Don’t Cry For Your Loss

Vanity Fair has posted a piece, from their January 2009 issue, recounting the plight of the (former) hedge fund managers and other super-wealthy in the wake of the recent market downturn. These poor folks have had to cut back on trips to the carribean and buy less antiques from Christie’s and Sotheby’s. I sure feel sorry for these people.

Most interesting to me is the conversation with a former Lehman Bros. employee, who explains the lifestyle of many bankers. The unnamed man tells of a $5 million yearly salary, half of which is in Lehman stock. After an employee discount, the banker would get $3.25 million in stock, plus $2.5 million in cash, which, after taxes, would amount to $1.25 million. Because this enormous sum is not enough to live on, they would borrow against the speculated appreciated value of the stock, with a $5 million loan. Now that the stock is worth nothing these poor souls owe lots of money. The banker says ,

“For five years, he made two and a half million dollars a year in cash. So that’s twelve and a half million dollars. But of course he’s had to pay more or less 50 percent in taxes, so divide that and he’s got six and a quarter million. He’s probably spent that money over those five years—$1 million a year, it’s not so hard to do, right? So he has nothing—and he has to repay that $5 million loan.”

I’m going to requote part of that,

“He’s probably spent that money over those five years—$1 million a year, it’s not so hard to do, right?”

If someone gave me $1 million right now, I could live for the rest of my life (with modest interest) with no additional income. And that life would be at a level that I have never previously been able to afford.

Another quote from the article:

Philip K. Howard, a New York lawyer and social critic whose new book is Life Without Lawyers, sees a sea change which was overdue. Every 30 years or so, he notes, the country has to redefine its social values. We’ve just reached the next time. “So this end of the new gilded era—it’s like a bucket that spilled, and finally the money spilled out, and we were left with a culture whose sense of purpose and responsibility were lacking. And now there’s a real need for people, and society as a whole, to rethink and re-structure their values.”

I hope Mr. Howard is right, and we are going to reevaluate our culture, its excesses and who we look up to. I would like to see a future where our political and commercial leaders put the good of the country and all its inhabitants over their short-term monetary gains, a future where we exalt the actions of good samaritans rather than leer at the stupidity of Paris Hilton and the like, a future where we don’t reward stupidity in business or politics.

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