Banking

In a previous post, I discussed how the finance industry had gotten out of whack- compensation was not in line with productivity. Look at how hedge funds make money- typically they take 2% annually as a management fee and then they take 20% of profits. If a fund has $1 billion in assets, the managers are taking $20 million per year as a management fee. The fund has to have an annual return of 10% for the managers to make more money off their share of the profits than they make from management fees. In 2008, there were damn few funds of any sort that returned greater than 10%, but the managers still took there 2% management fee.

In the NY Times, Paul Krugman writes about how when baking is "boring", bankers are not paid as well, but the economy is sounder. When we are in an era of superstar bankers, well, DUCK- we are in another gilded age.