Let Them Eat Cake: Wall Street Bonus Withdrawal Means Trading Aspen for Coupons

From Bloomberg:

Facing a slump in revenue from investment banking and trading, Wall Street firms have trimmed 2011 discretionary pay. At Goldman Sachs Group Inc. (GS) and Barclays Capital, the cuts were at least 25 percent. Morgan Stanley (MS) capped cash bonuses at $125,000, and Deutsche Bank AG (DBK) increased the percentage of deferred pay.
Wall Street’s cash bonus pool fell by 14 percent last year to $19.7 billion, the lowest since 2008, according to projections by New York state Comptroller Thomas DiNapoli.

“It’s a disaster,” said Ilana Weinstein, chief executive officer of New York-based search firm IDW Group LLC. “The entire construct of compensation has changed.”
Most people can only dream of Wall Street’s shrinking paychecks. Median household income in 2010 was $49,445, according to the U.S. Census Bureau, lower than the previous year and less than 1 percent of Goldman Sachs CEO Lloyd Blankfein’s $7 million restricted-stock bonus for 2011. The percentage of Americans living in poverty climbed to 15.1 percent, the highest in almost two decades.

House of Mirth

Comfortable New Yorkers assessing their discomforts is at least as old as Edith Wharton’s 1905 novel “The House of Mirth,” whose heroine Lily Bart said “the only way not to think about money is to have a great deal of it.”
Wall Street headhunter Daniel Arbeeny said his “income has gone down tremendously.” On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.

“They have a circular that they leave in front of the buildings in our neighborhood,” said Arbeeny, 49, who lives in nearby Cobble Hill, namesake for a line of pebbled-leather Kate Spade handbags. “We sit there, and I look through all of them to find out where it’s worth going.”

Executive-search veterans who work with hedge funds and banks make about $500,000 in good years, said Arbeeny, managing principal at New York-based CMF Partners LLC, declining to discuss specifics about his own income. He said he no longer goes on annual ski trips to Whistler (WB), Tahoe or Aspen.
He reads other supermarket circulars to find good prices for his favorite cereal, Wheat Chex.

“Wow, did I waste a lot of money,” Arbeeny said.
Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don’t save.

“When their means are cut, they’re stuck,” said Scheiner, whose New York-based hedge fund, Lane Gate Partners LLC, was down about 15 percent last year. “Not so much an issue for me and my wife because we’ve always saved.”
Scheiner said he spends about $500 a month to park one of his two Audis in a garage and at least $7,500 a year each for memberships at the Trump National Golf Club in Westchester and a gun club in upstate New York. A labradoodle named Zelda and a rescued bichon frise, Duke, cost $17,000 a year, including food, health care, boarding and a daily dog-walker who charges $17 each per outing, he said.

‘Crushing Setback’

Still, he sold two motorcycles he didn’t use and called his Porsche 911 Carrera 4S Cabriolet “the Volkswagen of supercars.” He and his wife have given more than $100,000 to a nonprofit she founded that promotes employment for people with Asperger syndrome, he said.

Scheiner pays $30,000 a year to be part of a New York-based peer-learning group for investors called Tiger 21. Founder Michael Sonnenfeldt said members, most with a net worth of at least $10 million, have been forced to “re-examine lots of assumptions about how grand their life would be.”

While they aren’t asking for sympathy, “at their level, in a different way but in the same way, the rug got pulled out,” said Sonnenfeldt, 56. “For many people of wealth, they’ve had a crushing setback as well.”

He described a feeling of “malaise” and a “paralysis that does not allow one to believe that generally things are going to get better,” listing geopolitical hot spots such as Iran and low interest rates that have been “artificially manipulated” by the Federal Reserve.

Poly Prep

The malaise is shared by Schiff, the New York-based marketing director for Euro Pacific Capital, where his brother is CEO. His family rents the lower duplex of a brownstone in Cobble Hill, where his two children share a room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep Country Day School in Brooklyn. His son, 7, will apply in a few years.

“I can’t imagine what I’m going to do,” Schiff said. “I’m crammed into 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”
He wants 1,800 square feet -- “a room for each kid, three bedrooms, maybe four,” he said. “Imagine four bedrooms. You have the luxury of a guest room, how crazy is that?”

The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions. The closing costs, renovation and down payment on one of the $1.5 million 17-foot-wide row houses nearby, what he called “the low rung on the brownstone ladder,” would consume “every dime” of the family’s savings, he said.

“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”

http://www.bloomberg.com/news/2012-02-29/wall-street-bonus-withdrawal-means-trading-aspen-for-cheap-chex.html#disqus_thread

Now some of the comments show how pissed off the average person is getting. Take a look:

Surviving the crash
This cannot be serious. These are the people who broke the US Economy and now that they are finally getting bit by that rabid dog, they have the audacity to WHINE about never expecting to earn LESS than $500 K? Try having three science degrees and an MBA and not being able to find a job because these very people championed outsourcing. Try having to live off $22K and hope you don't have to apply for SNAP this year because gas is going to hit $5. The real indicator here is that somehow ‘poor’ people just don’t understand the more important stresses the wealthy suffer when their income is slashed. We understand, and frankly we applaud and look forward to a day when YOUR wages are deemed too expensive and your position will be actively outsourced to someone in a third world country who will work for food. Spoiled is as spoiled does. Remember, the global Plutonomy doesn’t owe you a thing

AND

Guest
Burn in the fires of hell.

Jimfaul
I am all for class warfare. This guys are so out of touch

Jim

Someone reading this who can't afford the nice car and home will merely shake their head in disgust at the inanity of the complaints put forth by these rich people.
Someone reading this who can't afford the MRI scan for their sick child is likely to ready the pitchforks and torches.
The inequalities of the 1920's led to the Red Scares of the 1930's. Every action has an equal and opposite reaction.

Wrestler Yoo
“... We do all our dishes by hand.” ...like goddamn animals.

Keith Tyler

The more times I read this the more angry it makes me. These people... there is no place for these people in a cohesive society. Their existence completely tears at the fabric of civilised society. And their stupidity... god, their sheer, utter, complete stupidity and ignorance... belies just how BS it is that they ever got paid even as much as they do now... they are not intelligent people, they are spoiled brats, with silver spoon jobs. There is no way in my mind a person could be remotely intelligent and not be able to comprehend the solution to "I can't afford to put my daughter in a top-tier private school." It is clearly not brains that puts them in the jobs they have and gives them the salaries they have. It is something much less meritorious.

Frankly I say cut their pay even more. Let them have to live in 1,000 square feet and drive a Honda. That's still about 2 times better off than the average American.

Barf. It's one thing to be 10+ times wealthier than 150 million other people in this country, it's another to complain about it not being enough to live on. They can go to hell. After all, that is the mantra towards the rest of America, and the world, that they have lived -- and continue to live -- by

Therondor

I work as an industrial maintenance mec and machine assembler i work between 42 and 60 hours a week if i can get part time work at a local marina and i made $56,000 last year and these peole are stressed. comunism is looking less and less wrong right now, if these people were worth thier pay the us would still be on top and all of the americans that wanted jobs could have them

and

salvage salvage
Eat the rich? This lot would leave such a foul taste I wouldn't recommend it, just straight up French Revolution style social reordering.

To the whiny bitche fretting about having to pull his equally foul (I'm sure) spawn from private school? Quantum science hasn't developed a violin small enough.





It's not the article that compelled me to post this but the comments. I'm seeing more use of "fighting" words in comments lately as people are starting to get squeezed by flat incomes but higher costs. The Fed has found itself in a bind as the markets clamor for QE but crude oil is too high for comfort. Brent crude recently traded as high as $125 per barrel and even made a record when priced in Euros. Go ahead Bernank, go ahead and prime the pump and when US gasoline soars above $5.00 things will start getting interesting here in the grand ol USSA.