If everybody is rich, it's OK. But if someone else is rich, it's not OK. Let me explain.
One of the points I write in “Party Like It's 1999 – 10 Takeaways From This Recession” is that people have short memories. Back in the first quarter of 2009, there was massive populist outrage over Wall St. bonuses. Who could blame the people, when folks such as Andrew J. Hall collected $100 million despite Citigroup taking tens of billions in assistance from the government and is now 1/3 owned by us.
The Wall Street Journal reported that 2009 Wall Street compensation will breach 2007 levels, and Goldman Sach's average compensation per employee will reach $734,000 vs. “only” $364,000 last year and 12% higher than 2007 peak! WOW! Sign me up! I almost spit out my Honey Nut Cheerios when I read the news. Yet, after scanning over 200 blogs yesterday not one decided to highlight this story. Meanwhile, take a quick search of posts 10 months ago and you can see the outrage that populated the media.
WHERE DID ALL THE ANGER GO?
So what happened to the anger the media displayed at the beginning of the year? A return to a crazy bull market is what happened! Most of us, whether we know it in our bank accounts or not have benefited from the rebound in the stock markets.
Even those who are unemployed should feel optimistic about 2010 because the markets are leading indicators for the economy. Amazing how we no longer care about the eye-popping compensation figures anymore because our own wealth is growing again.
This leads me to a serious question: Why are we so hypocritical to skewer people who make more than us in bad times, and not care when the good times return? Shouldn't we take out our pitchforks and chant ridiculous phrases such as “give us back our tax payer dollars before you buy yourself a Rolex!”?
DEALING WITH ANGER & JEALOUSY
It's human nature to feel jealous of others. But, jealousy always makes people feel more miserable. We need to focus on ourselves and figure out ways to better our own lives instead of whine about others. How do we fight our jealousy? May I suggest doing what my mother told me as a child and think about good karma.
Whenever someone is doing better than you by making more money, getting a promotion sooner, finding the love of their life or scoring with every sexy being on the planet, think about their past karma.
This person you envy must have done fantastic deeds earlier in her life, or even in her previous life if you believe in reincarnation, to deserve what she has now. With this train of thought, you free yourself from jealousy and start focusing on ways you can do good to improve your own karma.
Believe in the goodness of others and you'll start believing in the goodness of yourself.
Readers, is it possible to ever stop comparing ourselves to others? What to do when you start feeling you're falling further behind? You're rich and I'm rich! Everything is great in 2020+.
Related:
It's Harder To Get Rich Investing In Stocks Over Real Estate
Free Wealth Management To Help You Get Rich
Keigu,
Financial Samurai – “Slicing Through Money's Mysteries”
Here’s a great Steve Forbes article that neatly ties everything together:
https://www.forbes.com/global/2009/1019/opinions-steve-forbes-capitalism-true-love-story.html
It’s got:
– Steve Forbes (see other blog post :-) )
– Greed
– Free markets
– Govt intervention
@Larry L
Larry: Texas is not suffering from a housing-led financial crisis, because it is a heavily regulated state. You couldn’t get those fancy loans (40-year balloon interest-only “liar” loans) in Texas, but you could in California.
Texas does not allow it’s citizens to invest though LendingClub (or other peer-to-peer lending) either… I believe the history is that Texas got burned in a housing crisis back in the late 80s / early 90s and hence started strict regulations on the mortgage industry. This is why Texas did not have a huge runup in housing prices, and also suffer the collapse. With heavy regulation Texas is still growing faster than most (all?) the other states in the union.
As for greed: correct you can’t regulate greed away, but you can regulate the mortgage industry so this type of crisis will never happen again.
Communism is a socioeconomic structure and political ideology that promotes the establishment of an egalitarian, classless, stateless society based on common ownership and control of the means of production and property in general.[1][2][3] Karl Marx posited that communism would be the final stage in human society, which would be achieved through a proletarian revolution. “Pure communism” in the Marxian sense refers to a classless, stateless and oppression-free society where decisions on what to produce and what policies to pursue are made democratically, allowing every member of society to participate in the decision-making process in both the political and economic spheres of life.
FS,
Thanks for the response.
Do you sense people are angry because of the ballooning US deficits?
I agree the best situation is when everybody is doing better but shouldn’t this come about by rewarding success vs the gov’t picking winners & losers and then paying for it with future taxpayer obligations? How come there isn’t a large number of people who are fighting this?
By the way, I do agree with the theme of this post. Resentment and jealousy are not productive emotions. And there is no point in getting angry over something in which you have no control over. However I do think people should be standing up to do the right thing and holding our government to account.
Henry Paulson, Bernanke and Greenspan should be held to account and not overlooked. In this case Bernanke should not be renewed and Paulson should be investigated and tried for fraud. Goldman Sachs should be investigated for fraud in front running trades with the high frequency trading. Obama should be held to honoring his campaign promises.
I get a bit frustrated with all the cheerleaders, including the media, who overlook enforcing the principles that should make America stronger.
-Mike
Mike – I’m an optimist, hence I’m optimistic the government has implemented stronger relationships to ensure this debacle never happens again.
I don’t think I did anything wrong, yet I got paid down huge last year, and my property assets have declined in value because of the system. I’m not angry, I’m just focused on trying to learn from the experience and make sure I don’t suffer as much again in the future.
FS
@Financial Samurai
Totally agree. I’m looking at it more like this. The past couple of years, the shareholders of the company didn’t do so well from owning Goldman Sachs.
I bet you the employees did extremely well regardless of the firm’s performance. It seems like profits funneled into the pockets of the Ibankers vs Shareholders.
Hi FS,
You don’t mind paying for the actions of Fraud by means of increased taxes in the future?
When I say fraud, I’m talking about suspending mark to market and putting the toxic assets of select institutions on the balance sheet of the US taxpayer. That and allowing all the small banks to fail (99 and counting in 2009) while supporting the big guys by access to 0.25% reserves which also penalize people who have cash in the bank as their interest rate drops to zero.
When I say fraud I’m talking about the FHA program where people can use the federal tax credit and put less than 3% down and buy houses, today, under the same conditions that created the sub-prime disaster… because the buyers today effectively fit the definition of sub-prime.
So you are basically saying that fraud is OK as long as everybody feels richer. In that case, why doesn’t everybody stop paying taxes and we all can feel pretty good about it.
Except for the people who do pay or who are forced to, I’d imagine they would be pretty upset!
-Mike
Mike – My post really is about dealing with jealousy issues and why people tend to forgive and forget when they themselves are doing well again. It’s when the “rich” are still rich, and we start suffering do we start getting angry. I don’t sense as much anger now.
Fraud is not OK. But who exactly is committing fraud? Is it the CDO sales person to an institution money manager, the money manager, or the actual homebuyer buying more house than he can afford. Is fraud being committed by the appraiser, the mortgage loan officer, or the seller of the home to the homebuyer? What about Greenspan, or the President?
We can try and blame the world and get upset. Or we can try and educate ourselves and do what’s right on our own and for our immediate friends and family.
Feel free to read our Open Letter to Vikram Pandit at Citigroup to get more of a sense of where we’re coming from.
FS
I know goldman sachs employees work hard. And long long hours. And they’re bright.
But do they really deserve such big bonuses. If I were a shareholder, I’d be irate. The company seems to exist for the benefit of employees, and not as much the shareholders (owners of the company).
Ho TraderBots – Interesting sight you got there. Yes, $734,000 is an eye-popping figure, and the WSJ is probably doing a little sensationalist journalism, but even $500,000 is still a lot.
We can only rationally determine what people deserve if we can understand the revenue they bring in. What if they bring in $10 million in revenue for the firm? Is a 5-10% payout egregious? I don’t think so. If they only brought in $2 million for the firm, I’d say yes.
I made $3.3/hr at McDonald’s for a reason when I was in HS. The market determined that wage, and I was probably producing $30/hr in revenue.
Best, FS
@greg I like that attitude Greg about having no one to blame but ourselves, especially in America. Maybe if we lived in Kabul, but not America. There are too many success stories out there that proves anybody with enough desire can make something of themselves and do more, if they want to!
That’s an interesting article. Luck and hard work combined with knowledge will produce results.
To answer the questions… why waste time comparing yourself to someone else? If you want what they have then go out there and earn it. In this country you have no one to blame but yourself if you don’t achieve what you desire.
@BG
Our government has been trying to regulate and control for over 200 years and have proved no more successful than any other government in history. Just look at the impact of Sarbanes/Oxley, what a joke! Collectively our countries companies have spent billions trying to meet these regulations. Was it regulation that caught Bernie or Stanford?
Require transparency, maybe. Regulation too often has unintended consequences.
@Financial Samurai
Which of course brings up one of my fav clips of Milton Friedman on greed.:
https://www.youtube.com/watch?v=RWsx1X8PV_A
Awesome Larry. Thanks for sharing. Now if someone could just teach my how to post this clip up in a post and click the play button like you see on Youtube, I’d appreciate it!
Gen Y, you actually have nice clips on your site all the time. Can you shoot me an e-mail and explain how you do it? Cheers
@Financial Samurai
Hey FS, I’ll be on the lookout. I’ll forward you any articles by bloggers that I come across.
jealousy can be used as motivation. I agree about finding strong performers to model after and using highly successful people as mentors. jealousy just leads to anger which leads to less happiness and sometimes even depression. life’s too short! carpe diem
@BG
Sorry BG, but more regulation absolutely would have NOT prevented the mortgage crisis. Until you can change the inherent greed and desires of people, then you will NEVER prevent bubbles from happening. We’ve had bubbles since the beginning of time! FS
@Larry L, New York
Thanks for highlighting that link. Yikes, POOR KEN LEWIS! I didn’t know he’s being stripped of his salary too.
Donno if you saw an earlier post (https://www.financialsamurai.com/2009/10/01/grab-bag-ken-lewis-from-bank-of-america-is-gone-noooo/) on Ken Lewis, but we think he is actually one of America’s great ironic saviors! If it wasn’t for his empire building ways, thousands of people at Merrill would have gone broke. Instead, they made BIG BUCKS because of him.
Ken went from wanting to rule the world to getting fired and losing his compensation. Unlucky. We need empire builders like him to go crazy and pay people lots more money than they are worth!
Trust me, we need egomaniacs in society.
@BG
It’s interesting you mention Texas and California, two opposite ends of the governing spectrum. Texas is not known for it’s heavy regulation and it’s government believes in free market, though I don’t know their specific laws related to RE and how heavy regulated it is. California on the other hand believe in more social policies like you describe.
Which state had more govt intervention with low income loans and housing?
Which state had a real estate bubble?
Which state has a massive deficit, which has as rainy surplus fund?
At least from my vantage point, you have them reversed and proves my point.
BG – Then you miss out, bc some of the best food in the world are street side stalls in Asia and Mexico!
@Larry L, New York
More regulation absolutely would have prevented the mortgage crisis. Certain states are heavily regulated like Texas and Vermont — no mortgage crisis there. Other states, where “40 year variable-rate balloon” liar-loans that you didn’t even need to make a full principal payment each month were allowed are suffering (California for example).
There was so much utter corruption going on from lenders targeting low income people for subprime loans, appraisers inflating house values, “liar loans”, rating agencies giving “toxic waste” AAA ratings, etc, etc. Regulating (or enforcing existing regulations) on just one single piece of the chain could have prevented the crisis.
I agree that failing institutions should have gone bankrupt, instead they get bailouts and execs get rich. I wouldn’t even call this crony capitalism — much worse — corporations (or more accurately: Executives) get all the reward, while the US taxpayer takes on all the risk. And after everything has settled, nothing has changed.
As for being an “investor”: not anymore. You don’t “invest” in the stock market anymore, you gamble. Companies that are seemingly healthy one quarter are gone the next. Buy and hold is dead until boards start making decisions for the long-term benefit of shareholders, instead of the short-term benefit of executives.
@Financial Samurai: I’d rather take my chances at a “regulated” US restaurant, than an un-regulated restaurant in Mexico.
@BG
“Now it’s time for the financial industry to be heavily regulated to provide safe products. Nobody should be allowed to buy rotted meat, and nobody should be allowed to buy rotted financial “products”/scams.”
BG, what exactly is a safe investment? NO investment is 100% safe, does not exist and never will. FDIC insured CDs also have risk, but they are very very low. The higher the return, usually the higher the risk of default. Do you want the govt to eliminate all risk in investing? If that’s the case then returns will all be poor like CDs.
The industry IS already very much regulated. How’s that working out for us? Do you really think more will help? I’m not saying it should be a completely free and unregulated market, what I’m saying is more regulation will not prevent scams. You as the buyer of any product should be have “buyer beware”.
What specific scams are you referring to? What was illegal with the banks? Please explain…
Madoff? Yes he was a scammer, but if you don’t understand how he was getting the returns don’t invest. In general, financial education is key for the general public. Most people can’t even balance their checkbook let alone figure out if an investment is a good one or not. If you don’t understand, don’t invest. Just like not everyone can’t own a business, not everyone should invest in riskier assets.
Making us more and more into a ‘nanny’ state will not help make people think for themselves.
@BG
As in investor you have the decision if you want to invest in that specific company, if you don’t like their board or executive comp, don’t invest. If not an investor, but a customer don’t purchase their product. You can avoid using BofA and uses other banks.
If everyone voted with their wallet for things like this, amazing things would happen. In most cases people either don’t care or don’t know. If they don’t care then there is your answer.
BG,
The SEC is a joke, it’s not we need MORE regulation, we need to enforce what we have already. More regulation would have NOT prevented the sub prime loan crisis, as a bunch of it was encouraged by the govt themselves! While there were isolated incidents of people doing illegal things, for the most part what they were doing was legal and in most cases ethical. This is why you haven’t seen anyone hauled to jail or put on trail.
Also related to this blog post:
https://online.wsj.com/article/SB125564137421788337.html
Some say they are glad the govt stepped in, I think it’s a slippery slope. While I don’t think he should have gotten paid what he did, what’s a fair salary and why should the govt have a say in this? Isn’t that the board (which should not be influenced) and the shareholders?
IMHO, it was the govt that got Bank of America into this mess the first place with the shotgun wedding of Countrywide and Merrill.
Ideally if it was free market the banks who were weak SHOULD have failed, now we have even BIGGER banks that are now even more too big to fail. How are we better off now?
What we’ve had in at least past 10 years is not capitalism, it’s becoming more and more crony capitalism. Govt intervention IS the problem, not the solution. Free market solutions, while not perfect work and have proven to work. No other system has shown to work in raising the standard of living for people overall.
Look at the bigger picture of what’s happening and you might agree with my statements.
It’s too difficult to NOT feel jealous.
But that is no excuse for us to use it as a way to be petty.
Being optimistic has always been my motto, and seeing the glass half full does wonders for me :)
@The Genius
I prefer the BFG 9000.
You are not arguing that we should disband the Food Safety & Inspection Service (FSIS) or the Department of Health (who do restaurant inspections) are you? We have high quality restaurants and grocery stores because the industry is heavily regulated to provide a safe product.
Now it’s time for the financial industry to be heavily regulated to provide safe products. Nobody should be allowed to buy rotted meat, and nobody should be allowed to buy rotted financial “products”/scams.
BG/The Genius – HAHAH, hilarious. I’m opting for the Samurai 8000 myself!
BG, even though we have these regulatory groups, thousands and thousands of people get sick eating restaurant food all the time. Regulation is no guarantee of perfection. It’s the same in any industry.
Less than 1% of the people who work at financial firms were responsible for selling CDOs and other toxic assets. I’m not looking down upon my Citibank teller and blaming her every time I go. It is what it is.
Regulations get better. Free market is the only way to go! FS
@BG What model number is your pitchfork BG? Mine is the K1000 with silver tips!
For the record I never go back to a restaurant after I get food poisoning. If enough people get food poisoning, the restaurant goes out of business. I don’t try and sue them b/c it’s hard to prove I got poisoning from them, and it’s expensive.
Nobody put a gun to a over levered homebuyer’s head and said buy.
@Financial Samurai
That is like saying: don’t eat food from that restaurant because they only serve poison. Stop talking this “free-market” bulls**t — we should increase regulation and prosecute people who broke the law.
Who from Lehman Brothers, Bear Sterns, Merril Lynch, or any of the other bankrupt or bailed out banks has gone to jail over this “financial crisis”? Answer: ZERO. Apparently TRILLIONS in shareholder wealth can be wiped out without a single crime being committed, amazing.