Preparing Your Tax Returns? Cheer Up!

Robert Reich contrasts the situation on hedge fund managers who are raking it in because of Berancke's largess and the rest of us who are paying the bill. Originally posted April 6, 2009 on from his blog.

Why You Should Work for a Hedge Fund 

Just because I lost a big chunk of my total retirement savings over the last year doesn't mean I should be upset that 25 hedge-fund managers reaped a total of $11.6 billion during the same interval, according to Institutional Investor's Alpha Magazine -- including $2.5 billion for James Simons of Renaissance Technologies and $2 billion for John Paulson. (To be included on the list, you had to take home more than $75 million.)

I do admit to being irked that some of what these guys earn is taxed at a 15 percent rate because the earnings are treated as capital gains, while I'm just about to be walloped by the Internal Revenue Service come April 15.

But what causes me severe heartburn is that these are exactly the sort of investors Tim Geithner is trying to lure in to buy troubled assets from banks, with an extraordinary offer financed by you and me and other taxpayers: If it turns out the troubled assets are worth more than these guys pay for them, they could make a fortune. If if it turns out the assets are worth less, these guys won't lose a thing because we taxpayers will bail them out. Plus, they get to pick only the highest-rated of the big banks' bad assets and can review them carefully before buying.

What a deal. Why can't you and I get in on this bonanza? Because we're too small. The government will designate only about five big investor funds -- run or owned by the richest of the rich -- as potential buyers. Hedge funds fit the bill perfectly.

There's a beautiful symmetry here. The hedge fund managers who raked in billions last year wouldn't have done nearly as well had taxpayers not bailed out Wall Street to begin with. According to John Taylor, a hedge fund manager who tied for ninth on Alpha's list, many funds would have gone belly-up had the government not acted. "Thank god for the government, because if they hadn't intervened, we wouldn'thave had anybody to trade with," he told the Times.

So you and I and other taxpayers have kept these hedge-fund honchos flush enough to be able to reap the bonanza that Geithner now wants to bestow on them for cleaning up the mess they and others on Wall Street made -- a bonanza to be financed by you and me and other taxpayers, who are taking on all the risk.

I read this morning that Larry Summers earned nearly $5.2 million in the last two years working one day a week for D.E. Shaw, one of the largest hedge funds of all. I can't help admire Larry for sacrificing all the money he could be making now had he not chosen to work for the government

What a deal. Why can't you and I get in on this bonanza? Because we're too small. The government will designate only about five big investor funds -- run or owned by the richest of the rich -- as potential buyers. Hedge funds fit the bill perfectly.

There's a beautiful symmetry here. The hedge fund managers who raked in billions last year wouldn't have done nearly as well had taxpayers not bailed out Wall Street to begin with. According to John Taylor, a hedge fund manager who tied for ninth on Alpha's list, many funds would have gone belly-up had the government not acted. "Thank god for the government, because if they hadn't intervened, we wouldn'thave had anybody to trade with," he told the Times.

So you and I and other taxpayers have kept these hedge-fund honchos flush enough to be able to reap the bonanza that Geithner now wants to bestow on them for cleaning up the mess they and others on Wall Street made -- a bonanza to be financed by you and me and other taxpayers, who are taking on all the risk.

I read this morning that Larry Summers earned nearly $5.2 million in the last two years working one day a week for D.E. Shaw, one of the largest hedge funds of all. I can't help admire Larry for sacrificing all the money he could be making now had he not chosen to work for the government.

 

 

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On the bright side, this from buzz-flash.

Immigrant workers score court victories on wages

In a major legal win for immigrant workers, thousands of California construction workers will start receiving checks April 15 to compensate for unpaid wages and other alleged labor violations committed during California's housing boom. The $8.5 million legal settlement benefits nearly 3,100 former and current workers for several companies that built houses in Southern California, the Central Valley, Central Coast and San Francisco East Bay. A few workers initiated the complaint in 2006 after approaching a Spanish-speaking attorney, but lawyers say the case grew into one of the biggest class-action lawsuits in California involving mostly Latino construction laborers, including some who are undocumented.
 
And some worrying news on the AP front. It seems like the major media are once again trying to reinterpret Fair Use.
 

AP to Aggregators: We Will Sue You

The Associated Press board voted Monday to "pursue legal and legislative actions" against aggregators who use content without permission, a new shot across the bow of internet news sites in the war over how little use is "fair use."

carol

Seems to me a much more practical means of dealing with the world of happy linking is to provide an "embed" feature - similar to how YouTube shares its content. The embed would contain a short blurb with a link that leads to the longer version of a story that bloggers etc can use for linking.

 

Hey...maybe there's a money maker in there for ePluribus Media! Any programmers around?

What a great idea! Of course there would be a way to add an embed code for the "teaser" to an AP article ...