On Wall Street: Much Weeping and Gnashing of Teeth, as Wall Street Bonuses are Jeopardized by the Credit Crunch Correction...

I read an article in Bloomberg this morning that says it all about the pain America is feeling from the sub-prime meltdown, and why the Fed MUST do something (like slash rates) quickly to relieve the stress: “Bonuses on Wall Street Threatened by Credit Crunch”!

Putting aside for a moment the estimated two-million U.S. Americans who are likely to have their homes foreclosed upon this year – the really tragic consequences are the Wall Street Investment bankers who may no longer be able to afford a summer house in the Hampton’s!

According to Bloomberg, Wall Street bonuses “ probably will decline as much as 5 percent from 2006, according to Options Group”, that’s after a dramatic buyout fueled increase of 20% last year – which still sounds like a whole lot better deal than the average American worker is getting – with wages stagnant in recent years.

Even the CEO of Goldman Sachs may have to take a pay-cut this year, from the $50 million bonus he earned last year in guiding one of the street’s top firms. In fact, “Last year, the five biggest U.S. securities firms paid about $36.5 billion in bonuses, up 32 percent from a year earlier,”according to the article. Also, total bonus compensation on Wall Street surged “19 percent in 2004, and 18 percent in 2005.” So, one would hope that some of these “Masters of the Universe” tucked some of that booty away for a rainy day!

Meanwhile on Main Street, the July jobs report showed fewer jobs added than economists forecast, while the unemployment rate rose.  Average hourly earnings rose six-cents – or three-tenths of a percent in July – a slight slowdown from increases of 0.4% in each of the last two months.

Oh, and the number of U.S. homes facing foreclosure nearly doubled last month – on the way to an estimated 2 million loan defaults. But hey, as long as beachfront properties in the Hampton’s hold their value, Wall Street should somehow muddle through.