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Belly-aching On The Bailout

Yes, I find the FT most informative and clarifying in these tempestuous times. Yes, tempestuous times even though the industrials index was up 936 points today. Not, by the way, on the basis of hard fact or new law. But on hope. Maybe the index will be up again tomorrow. Maybe not.

"Bail-out banks face tax burden," reads a dispatch in Monday's Financial Times. Apparently, the bill has provisions to dissuade banking houses from paying exorbitant salaries and bonuses. $500,000 seems to be the limit on which the Feds would allow tax deductions on companies that are beneficiaries of the bail-out. The limit used to be $1 million.

Half a million dollars. Horrors. How can a family live decently on that?

Now, of course, even with the previous $1 million constraint, many executives went home with $5 million and ten...or more. Their paymasters received no deductions from the excess. But, then, it came out of the profits that the banks were calculating. Today, there are no profits, and there won't be for a long time.

Half a million dollars seems a lot to me to earn from a counting house subsidized by the Feds. It isn't as if there will be a shortage of qualified staff to work at this lush sum. So what is the belly-aching about?

Middle class families will have to tighten their belts. The poor have already done that many times. The rich might have to dip into their savings--if they still have them.

Of course, there will be other consequences. Second houses (or third ones) might have to be sold, if they can be sold, and at much lower prices that for which they were insured. Those who skied in Telluride might have to ski in Sugarbush; those who went to Megeve might be forced to go to...well, you get the idea.