The wage-gap continues.
Hedge fund managers, those masters of a secretive, sometimes volatile financial universe, are making money on a scale that once seemed unimaginable, even in Wall Street’s rarefied realms.
One manager, John Paulson, made $3.7 billion last year. He reaped that bounty, probably the richest in Wall Street history, by betting against certain mortgages and complex financial products that held them.
Mr. Paulson, the founder of Paulson & Company, was not the only big winner. The hedge fund managers James H. Simons and George Soros each earned almost $3 billion last year, according to an annual ranking of top hedge fund earners by Institutional Investor’s Alpha magazine, which comes out Wednesday.
Hedge fund managers have redefined notions of wealth in recent years. And the richest among them are redefining those notions once again.
Their unprecedented and growing affluence underscores the gaping inequality between the millions of Americans facing stagnating wages and rising home foreclosures and an agile financial elite that seems to thrive in good times and bad. Such profits may also prompt more calls for regulation of the industry.
God forbid regulation comes about — the growing uber-rich want a society that is dependent on slave labor, and we’re the slaves. Take a look at the wage difference:
The richest hedge fund managers keep getting richer — fast. To make it into the top 25 of Alpha’s list, the industry standard for hedge fund pay, a manager needed to earn at least $360 million last year, more than 18 times the amount in 2002. The median American family, by contrast, earned $60,500 last year.
While this isn’t illegal, there is something very distasteful about profiting from the excesses that lead to the mortgage crisis.
Some, like Mr. Paulson, profited handsomely from the turmoil in the mortgage market ripping through the economy.
It seems to me that “free market” is free for some, and has seriously disadvantaged the many. And note that near the end of the article, it is pointed out that the last time there was such a huge unequal wealth distribution was in 1928.
Since 1913, the United States witnessed only one other year of such unequal wealth distribution — 1928, the year before the stock market crashed, according to Jared Bernstein, a senior fellow at the Economic Policy Institute in Washington. Such inequality is likely to impede an economic recovery, he said.
Something to think about.
[...] and make changes so it does not happen again. Then again, you would think that we would have learned our lesson back in 1929. Or so you would [...]
You make some good points, but perhaps are unaware that the banks are the only industry which effectively allow them NOT to put money where their mouth is.
Politics aside, Ron Paul has been speaking common sense, along similar lines to your article here. The difference is he discovered the ’smoke and mirrors’ trick in the 50’s and 60’s – and has been trying to educate the Congress and the People ever since!
Basically a bank takes in $100 dollars of gold, then lends out…$900 to customers and records $1,000 on it’s books – as assets. Yet they still only have the original $100 deposit in the vault!
If that were a warehouse with 100 house bricks, you still have a hundred, regardless of how many promises you make. If you promise things you don’t have, outside of banking, that is called fraud.
HSBC are in most countries in the world, just not Japan.
Right now there is a problem and the response should not be to dilute an already weak currency by issuing more notes. The notes should be coming back in – but not at the rate of the 1930’s – which caused the depression.
We do have a bubble at present, but the data isn’t available directly anymore.
Is this summer bubble just a result of inexperienced staff handling the ship?
Back in 1928 (and before that in 1907) a similar thing occurred. Big dive in the banking sector, followed by big buy ups and a seeming rise.
This year is in danger of the same thing happening. Don’t let the Olympics distract you, the price of oil will rise before the year end.
This is despite political veribage from the politicians and quangos that make up the central banks.
Theoretically if Fannie and Freddie do go under, the ‘posession is nine tenths of the law’ rule would apply to around half of all US mortgage holders…
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