Sunday, February 22, 2009

Donald Luskin - A Portrait Of Utter Depravity

Just when you thought you had already seen the absolute worst in mendacity, venality and shameless greed that Modern Times have to offer -well, then along comes Donald Luskin to remind us all that the bottomless depths of Man's fallen nature are known only to God.

Brad De Long has long referred to Luskin as "the stupidest man alive", or at least until Luskin's awesome consistency disqualified him from further consideration for the title (only fair to give others a shot), but there is no way in which I could have prepared myself for his bald-faced indignation that the roulette-spinning brokers and Banco-playing bankers who have mortgaged the future of the country should receive anything less than the six million dollar bonuses to which they have become accustomed. Say what you will about the Red Chinese or the Mafia, but at least they have the sound judgment to reward incompetence on this scale with a lead bonus deposited right behind the ear.

In the pomposly titled screed "The Beginning Of The End For Investing" Luskin gibbers

Typically, highly compensated people on Wall Street earn fairly low salaries, but then get large annual bonuses — usually based on performance. Title VII turns that upside down. No more pay for play. It's all about salary now. So if a bank normally pays a superstar trader a nominal salary of $200,000 — and in a home-run year he earns himself a $10 million bonus — the only way to pay him the same total amount is to raise his salary to about $6.6 million. He'd then get that salary even if he did a lousy job in a given year.

And can you imagine the howling from the Congress and the media if we paid huge salaries to these people? There'd really be no choice but to drastically cut back their total compensation.

What superstar traders? The short sellers? Those domestic petroleum speculators sitting on their stock until the price of crude comes roaring back? As hilzoy has pointed out not all that long ago, it certainly wouldn't be the not-so-prescient Mr. Luskin, who continued to blindly march down Main Street beating the boosterism bass drum long after the economy had gone off the proverbial cliff.

Were performance to be rewarded, we would be talking gibbets, guillotines and breaking rocks in the hot sun....not bonuses and bailouts. And I am guessing that this sentiment is shared across the country on a truly bipartisan basis.

P.S. The truly morbid might enjoy (really not the right word) a quick recap of Luskin's delusional and increasingly hysterical prognostications over the months since the collapse of Lehman Bros..

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