Summed up in a few simple statistics..
- In 2008, salaries of the top 10 banks reached $75 billion (up from $31 billion in 1999), while cash dividends to shareholders were only $17.5 billion. Management took 4.3 times more than shareholders at a time when shareholders were injecting capital and government was guaranteeing deposits. He pointed to the critical principal-agent fiduciary problem. Essentially, financial sector losses will be paid for by future taxation (large fiscal debt) or inflation. To this I add that the US Treasury “stress tests” led to an injection of roughly $67 billion in 2009. This year alone, the committed bonuses are more than $75 billion.
And distressingly little is done to address this. How did we get here? We’ve featured the Simon Johnson The Quiet Coup before, but it still remains in a class of it’s own. If you wonder, Simon Johnson is not just any kind of conspiracy theorist. He used to be chief economist of the IMF..