Wall Street Bonuses Good News for Everyone
by StockJockey
Wednesday, January 18, 2006 - 8:16 am
In a refreshing change from the typical jealous whinings about how much money Wall Streeters are raking in this year, Bloomberg columnist David Pauly takes a more positive view of the bonuses, focusing on that Econ 101 concept: The Multiplier Effect. Noting that each new job on Wall Street creates three more jobs in the city and suburbs, Healy writes:
Investment bankers and currency traders with bolstered bank accounts won’t hesitate to spend $2 million or $3 million for a New York apartment, enriching the sellers. Those deals also will provide real estate saleswomen with nifty commissions, and many will immediately go to Saks Fifth Avenue and splurge on a new wardrobe. Saks may even be able to hire a few new sales people. Newly endowed stock-and-bond salesmen will also be inclined to be more generous when they tip their doormen and their cab drivers or when they get calls from charities.
Bonuses Reverberate in New York [Bloomberg]
Comments:
"Multiplier effect”? Don’t they teach you bankers economics any more?
Say Goldman collects $1 million less in fees from Ford (impoverishing some poor MD, his real estate broker, etc.). That leaves Ford $1 million richer, which presumably goes into their bonus pool. That money filters down to their SUV Division VP, who can afford a bigger house in Dearborn. That enriches some the seller, who decides to move to NYC and buy a nice $3m apartment in Central Park…
Posted by econ guy on 12/31/1969 at 03:00 PM
Ummmm, so now I can get a job at Saks? Or maybe I should start driving a cab. Clearly, everyone benefits…
Posted by on 12/31/1969 at 03:00 PM
Page 1 of 1 pages
<< Back to main
