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The people who run the 25 top-performing hedge funds had to live on a mere $464 million average income last year, according to Alpha Magazine. That was down from the average $892 million they made in 2007. Could you take such a dent in your income? Could you live on only $464 million a year? That's important, because your money, as a taxpayer, will be supporting these people this year. Treasury Secretary Geithner has set up a plan whereby investors -- hedge funds and private equity groups in particular -- will put up almost no money and be able to buy banks' toxic assets with subsidies of more than 90 percent of taxpayers' money. It's a no risk, all gain proposition. Is it any wonder these Wall Streeters do so well, even as they drive the global financial system to the brink through greed and stupidity? Four hedge fund managers brought home more than a billion dollars last year, according to the magazine: James Simons ($2.5 billion); John Paulson ($2 billion); John Arnold ($1.5 billion), and George Soros ($1.1 billion). The next best-paid seven brought home between $250 million and $780 million each.

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Don Bauder March 25, 2009 @ 3:26 p.m.

ADD: When Geithner's plan was announced, Wall Streeters groused that President Obama had been complaining about Wall Street pay. And AIG executives were being punished. So Geithner capitulated to the blackmail, and declared that anybody participating would not have their pay scrutinized. So rest assured that those making $464 million a year, or over a billion, won't have that long-nosed government looking over their shoulders. It appears that any high-paid Wall Streeter could join the program -- after all, it's free money -- and keep their multi-million dollar pay packages. Best, Don Bauder


SDXpat March 25, 2009 @ 4:27 p.m.

Since I can't think of anyone whose opinion on matters of finance and the economy I agree with and trust more than yours, I've got to ask~

I was reading some of your earlier blog responses last night and came upon a prediction that you thought we should be seeing signs of a recovery to this incredible mess in (I think it was), the fourth quarter of "this" year. I've got to ask ~ what in the world do you see spurring this recovery?

As you said in your February 25 City Lights column (Help Obama. Borrow. Buy.), the banks don't want to lend and, more importantly, consumers don't want to borrow. They're in up to their eyeballs and know it. With unemployment on the rise, wages stagnant or dropping, and we haven't even seen the coming wave of credit card defaults, what in the world is going to pull us out of this tail spin? Those "big brains" in Treasury, the Fed, etal.?

Unlike what Obama claims, I see efforts to re-inflate the housing and real estate bubble again at a grass-roots level. How the hell else are they going to con people into the borrow/spend/be-a-big-shot mode without conning them into believing their worth is greater than it is?

Will appreciate your insight ... TNX


Don Bauder March 25, 2009 @ 5:08 p.m.

Response to post #2: I think the recession will last all this year. There will be signs of a faux recovery late in the year. After all, the government can't throw that much money at the economy without something happening. The Fed is buying up bonds to knock long term rates lower. That can't help but stimulate some homebuying and some business investment. (Short rates are already effectively zero.) The problem is that all the money thrown at the economy is not manufactured without pains down the road -- probably inflation. Best, Don Bauder


SDXpat March 25, 2009 @ 6:54 p.m.

Thanks Don. We're still on the same page then. Yeah, I agree with the "faux" recovery and the very real prospect of inflation "gone wild".

Cash was king for a while when you could safely tuck it away in a CD and make 4.5 to 5.5 percent on it. But I'll be damned if we're going to lend the slime-ball banks our money for 1 to 1.5%.

We've set aside enough cash to backstop ourselves when cash-flow is a little more ebb than flow, but have used the rest to cash out and rehab some very nice single family rentals that will return a whole lot more than we'll get from any bank or, God forbid, market investment. The strategy is de-leverage, generate cash-flow to meet or exceed the monthly household nut --then five to ten years down the line, figure out what's next.

Livin' large (or La Vida Loca) has never been our style, so our spending is pretty consistently on what will eventually gain in value, rather than immediately lose value. We're way past that stage of life where ya spend more than ya have to keep up appearances.

At the moment we're doin' our thing for the economy. You should see our Home Depot bills -- but they're paid in full every month. And we're doin' all our own work. That's the trick. There are still a whole lot of people out there being told now's the time to "borrow" and buy as an investment. I'd so advise against that. If you can cash out and hold, that's cool. If you can't just hold on to what you've got and ride it out.

Sheesh -- why do we have to work so hard at this survival game? We're workin' off self-generated retirement income. This is all we've got so we've got to be smart and careful with it.

What I'd like to know is "where's MY billion dollar bonus"? Don't they get that if they break us, they're killin' the golden goose? That puzzles me. Ford got it like so right -- he wasn't a great humanitarian, just an astute businessman. If he didn't pay his people, who was going to buy his cars? I'm sure some think well now that we're a 'global' economy, we U.S. workers and consumers ain't no big whoop. Wrong-o!! Look at the rest of the entire world when we tank. They "all" go with us -- even the Saudis. Even Dubai is having to borrow money from Abu Dahbi (sp.?).

Anyway, this is way too long for a blog, but once I get started it's hard to stop. Thanks again. You do a great job as do your fellow bloggers.


SurfPuppy619 March 25, 2009 @ 7:08 p.m.

What I'd like to know is "where's MY billion dollar bonus"?

LOL.... me too!

I cannot wait until JW or JF or some other City employee jumps in here and claim their Cadillac pensions are fair and just and then point to this thread and claim that if hedgefund managers are getting $464 million in bounus pay the city employees deserve their 100K pensions.


Don Bauder March 25, 2009 @ 10:17 p.m.

Response to post #4: You are correct: deleveraging is important for everyone. The government wants you to go back into debt and overconsume. Don't listen! Pare back those debts and scale back tghe lifestyle. You are right to scream about the multi-billion dollar bailouts. The people who got us in trouble are the ones being rewarded. The public doesn't quite perceive this yet. Pass the word on. We need more populism. Best, Don Bauder


Don Bauder March 25, 2009 @ 10:20 p.m.

Response to post #5: You will need a billion dollar bonus if you are going to run for mayor. You will no doubt be running against an establishment figure who is in the pockets of the development industry like the current mayor. He or she will have endless sources of dirty money. Best, don Bauder


Fred Williams March 26, 2009 @ 7 a.m.

SDXpat is one smart cookie. I couldn't agree more.


Don Bauder March 26, 2009 @ 9:50 a.m.

Response to post #8: SDXPat's lifestyle and economic strategy should be a model for everybody. Best, Don Bauder


Don Bauder March 26, 2009 @ 9:52 a.m.

Response to post #9: I have been asked that question for more than 25 years. The answer is easy: 1. I do not live in the City of San Diego; 2. I am a terrible politician. I say what I believe. So the answer is No. Best, Don Bauder


SDXpat March 26, 2009 @ 5:01 p.m.

Hey guys ~ thanks for the good words. Means a lot to me comin' from all of you. Now that I've overcome being shy about entering in, hope to be back as a more frequent visitor. You're the best!!


Don Bauder March 26, 2009 @ 9:37 p.m.

Response to post #12: We welcome your straight thinking. I hope you are not thin-skinned. Sometimes the rhetoric gets acrid. Best, Don Bauder


SurfPuppy619 March 26, 2009 @ 10:08 p.m.

I hope you are not thin-skinned.

LOL... you do need to brush off the personal attacks as just partisan rhetoric.


Don Bauder March 27, 2009 @ 7:52 a.m.

Response to post #15: You are certainly not thin-skinned, SurfPuppy. Best, Don Bauder


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