Goldman/Morgan/Merrill Record Breaking Christmas Bonuses

Just like in previous years, major stock brokerage firms like Goldman Sachs, Morgan Stanley and Merrill Lynch are preparing to give out their annual bonus checks which are the envy of regular employees around the world. Last year these large firms gave out Christmas bonuses in excess of $36 billion and this year that total will most likely be surpassed. Unlike previous winning years, 2007 has been a less than spectacular year for major brokerage companies because of the credit crunch which has lead to huge losses in the sub-prime lending market. So why are this years bonuses not being cut because of a poor preforming year? Put simple, in the brokerage industry the annual bonus check is expected so much that if a firm does not step up to the plate and deliver at Christmas time, then most of their top talent will go elsewhere in search of greener pastures.

From the CEO on down the the lowest level, the annual Christmas bonus at major stock brokerage firms on Wall Street has been an annual perk for so long that if these companies do not come through with ever increasing Christmas bonuses, they could be placed in a terrible position at the start of the next year as thousands of their best and brightest talent walk out the door and go somewhere else. While capitalism is the best way to grow an economy, in it's purest form it turns into total greed which often times leads to problems for firms like Goldman Sachs, Morgan Stanley and Merrill Lynch in market down years like this one. For decades I have marveled at the shear size of many of the Christmas bonus checks given out especially by Goldman Sachs to their employees.

While some major companies have stopped the practice of giving out Christmas bonus checks, Wall Street has moved straight ahead with the practice and in most years some of these brokerage companies give out bonus checks in excess of the annual salary that many other hard working Americans earn all year. As I marvel at the good fortune of employees at major stock brokerage firms on Wall Street, people with a different point of view will take the example of these huge bonus checks and try to paint capitalism with a broad brush of unfairness. The truth is that there is nothing fair about capitalism and that is how it should be. However, when large companies continue to pay out record bonuses during a down year, they are risking their own solvency in future years and they could end up worse off than just losing some top performers in the years to come.

Read more about Investments:

Stan O'Neal's 'Golden Parachute' Worth $160 Million
Merrill Lynch CEO Stan O'Neal Out?
Fed Cuts Rates To Steady Housing Market
Stock Market Declines - October Worries Investors
Follow The Money - The Rich Know When To Get Out Of Investments