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You Try to Live on 500K in This Town

You aren't smarter than the market. It really is that simple.

This article in the New York Times, You Try to Live on 500K in This Town , makes it easy to make fun of the perils of having to live on only the $500,000 Obama is suggesting be the limit for executives of failing banks who take federal dollars. But there is really something far more disturbing in the discussion as it takes place throughout the newspaper. It becomes apparent that there is the sense that even if you have lost trillion's of dollars of other people's money, you are still entitled to live an extravagant lifestyle.

Having left thousands of people losing their homes, jobs and feeding themselves at food banks, these people genuinely don't see why they would ever have to suffer the same fate. In 1929, wall street losers jumped out of windows. They understood that there was nothing to insulate them from their fate. Today's financiers have no such belief. And with good reason.

One of the reason the Obama administration is being cautious about limits on executive compensation is fear that the bank executives will simply refuse to have their banks participate if their personal compensation is too severely limited. And realistically, there is no one in the bank who has the ability to force them to participate, even if it is in their institution's best interest. In short, the banks are run for the benefit of their leadership.

Of course, you might also wonder to what extent some of the people in the finance industry who populate the new administration are concerned about their own future salaries. After all, the last thing you want to do is initiate a deflation in executive salaries. It will come back to bite your own compensation in a few years when you go to cash in on your Washington experience.

Perhaps Nader was right - there really is no difference between the Democrats and the Republicans. America now has an aristocracy that moves easily between Washington and New York depending on who is in power, but always preserving their own class privileges.