Archive for 2010

How Is Your (Financial) Luck Holding Out?

December 24th, 2010

Could you handle a major (financial) hit at this stage of your life?
We met this couple, Ron and Doreen, many years ago and became good friends. He was, and still is, a ‘small time’ lawyer, dealing mainly with property transactions and drawing wills for people. She is a teacher. They live in an old house which they have renovated twice in the time of our friendship. Solid, honest, hardworking, middle-class, salt of the earth types.

Friends
We visit each other from time to time and lately have taken to eating out at restaurants to spare the wives from slaving away to prepare dinners. The conversation is always lively and we enjoy each other’s company. He doesn’t talk about his work and neither do I, but there is talk about children and grandchildren and their progress. They have a very bright daughter who studied economics at the university and then drifted into the investment banking business.

Jane the daughter
Her rise was spectacular. From student to intern to consultant to hedge fund manager, there seemed to be no stopping her. Her parents never spoke about her in great detail but when we asked how she was getting on their eyes lit up and they became excited, “Jane is doing exceptionally well,” we heard time and gain. On Doreen’s 50th birthday the phone rang and Jane suggested that Doreen may like to go outside and look in the driveway. There was a brand-new blue Toyota tied up in a pink ribbon standing there, a birthday gift from Jane. A year later Ron found a gray Mazda tied in a yellow ribbon for himself.

Jane gets married
When Jane was in her early 30 she married the editor of a financial newspaper. We were at the wedding. It was the talk of town and made the social page of the morning paper. The wedding was an expensive one, at the priciest venue, the top caterers, the leading band, and apparently Jane funded the whole affair.

Jane has babies
The couple rented a house in a young and trendy part of a yuppie suburb and Jane proceeded to produce 3 children in quick succession. I assumed she was in a hurry to get back into the bank and get the cash flow going again.

Husband
Jane’s husband continued to work at his paper and I only read great things about him. I was pleased for our friends who were now reaping great pleasure from their daughter and their grandchildren. They didn’t like Jane’s husband, “he seems like a fake.”

We hear the news
The news was one sentence long. “Jane’s husband has cleaned out her bank account and she has thrown him out.” Seems the guy was gambling.

Our friends
The latest news in this sorry tale is talk that Ron and Doreen are thinking of selling their house and moving into a cheap retirement home. “Jane needs money desperately and just cannot get going financially while this case and divorce is going on.

A blow
What a blow! And coinciding almost exactly with their plans for a happy and well-deserved retirement. I wonder how they will cope with this stroke of very bad luck? I know I couldn’t.

Posted in Economy, Employment, Finance, Money | No Comments »

3 Billion Dollars: Now that’s what I Call a Lottery Prize

December 23rd, 2010

Spain’s lottery hands out $3 Billion to thousands of winners
Spain is currently suffering an excruciating financial recession, so the beloved Christmas lottery which sprinkled $3 billion in holiday cheer was welcomed wildly across the country on Wednesday. Facing 20% unemployment the lottery prizes brought happiness to many struggling to make mortgage payments and pay bills, or those seeking jobs.

The government-run lottery
This lottery is billed as the world’s richest and has no single jackpot but operates a complex share-the-wealth system in which thousands of five-digit numbers from 00000 to 84999 win something. It is known as “El Gordo”, The Fat One, and dates back to 1812. Tax-free winnings range from the face value of a $26 ticket, meaning you get your money back, to a top prize of $394,650.

Christmas season
The sweepstakes, which goes on for three hours, informally ushers in the Christmas season. Many Spaniards spend the day glued to TV sets, radios and computers, waiting to see if they are among the lucky. People often team up to buy shares of tickets sold by bars, sports clubs and business offices. One bar in Palleja, a town near Barcelona, sold 600 of the top-prize tickets, the top-fetching number was 79250, worth a cool $237 million. Its owner, Jose Antonio Maldonado, was ecstatic over being able to help people in need during hard times. He sprayed a bottle of sparkling white wine in the air as a jubilant crowd roared. “I know a lot of people who are drowning in the economic crisis and who bought a ticket in my bar. I feel like Robin Hood,” he said. “In my entire life I have never cried as much as I did this morning.”

The medium
In Alcorcon, a town outside Madrid, lottery office manager Augustin Rubia said he had hired a medium to cast a magic spell over his outlet, and set up altars outside with religious statues, candles and tarot cards, and it worked: he sold 10 top-prize tickets to the tune of $3.5 million. “The idea was to lure positive energy,” Rubia told reporters, adding that all the winners are working-class people.

Picking the numbers
Children from a Madrid school pick small wooden balls bearing the winning numbers and prizes out of two giant golden tumblers, and sing them out in a time-honored tune known to every Spaniard. To complicate things further and ensure the money trickles down as much as possible, each number appears on 1,950 $25 coupons.

Ticket no 79250
This year, tickets bearing the number 79250 were sold in the Madrid and Barcelona areas, Alicante in the east and other cities from the Basque region in the north to Tenerife in the Canary Islands. The most commonly won amount for a $25 coupon is $130.

Superstitious
Spaniards are traditionally superstitious about picking their lottery numbers, and this year was no exception. The number 11710 sold out in just two hours. The number was symbolic of Spain’s World Cup triumph in South Africa on July 11, 2010.

Posted in Economy, Finance, Money | No Comments »

Just a Moment While I Wipe Away My Tears

December 22nd, 2010

Why do I get so emotional when I read about bankers?
This is the headline that brought on my flood of tears: “World bankers brace for 7 percent drop in bonuses: Reuters poll.” I just cannot understand why anyone would like to be in the banking business.

Bankers, brace yourselves
Wherever you are on this planet, if you are a banker you should brace yourself for a reduction of about 7 percent in your annual bonus. Your increased salaries will only partially cushion the hit. This is according to a Reuters/IFR global poll. Some finance industry professionals are expecting drops as steep as 30 percent after weak trading results that are depressing bank profits and shrinking the bonus pool, according to the poll of more than 25 professionals.

They have been told
Although most banks have not yet informed staff of their actual bonuses for 2010, the dismal expectations reflect the fact that generally bankers, traders, and salespeople have been told to be ready for a low payout. A London-based investment banking analyst said, “You would have to live in cuckoo-land to expect bonuses to be up on last year. Even if you’re a star performer you’re going to be down.” This is a sharp turnaround from last year, when Wall Street bonuses jumped 17 percent on average, according to a report by New York State’s comptroller.

Salaries
Bonuses may not be strong, but bankers are receiving higher salaries, which reduces the hit to total income. Many banks have boosted salaries this year on the theory that concentrating compensation into sky-high year-end bonuses encourages reckless risk-taking. Some salaries have doubled, according to compensation consultants. Even so, bonuses still typically account for about 80 percent of top-level employees’ compensation, said Joe Sorrentino, compensation consultant at Steven Hall & Partners in New York.

My bonus
I work on a different basis. I do not expect an end-of-the-year bonus; I expect to be compensated well every month. A few years ago everyone in the company received staggering bonuses. I locked mine in the bank is some savings plan and many months later my wife and I took a great trip to Venice in Italy. I wandered up and down the canals feeling very grateful for the large bonus that allowed us to take this holiday. Last year there was no bonus at all, in fact the word was never mentioned. This year, the next few weeks will see, but there is a strong feeling among the staff that there will be no bonus again.

The bankers
The bankers are clearly a different breed. They seem to feel that they have a right to a bonus, as though it is written into their employment contract. It may well be. Bankers’ bonuses became a hot-button issue worldwide after governments provided trillions of dollars to bail out banks during the financial crisis in 2008. They are now a common talking point among everyone as though they are now public domain. “So tell me, how much did your bank manager collect on his bonus?”

Posted in Employment, Finance, Personal / Internet | No Comments »

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