Wall Street bonuses were $21.5B this year which made many real estate brokers happy over the past two months. There were many critics of the housing market who said that the bonus money would not go into real estate since Wall Street is comprised of savy financial types who know where to invest their money.

I think the problem with this sort of thinking is the lack of understanding as to how much money the bonus income really was. Its a lot.

This post was inspired by my fav Wall Street blog Under The Counter which refers to the story Wall Street bonuses dwarf some countries’ economies [Baltimore Sun].

“But, seriously, something’s wrong with this picture. According to the CIA’s ranking of gross domestic products (purchasing power parity) around the world, $21.5 billion is more money than the GDP of each of two-thirds of the world’s countries. The 2005 bonus amount distributed among 172,000 people was exactly the same as the 2004 GDP of Afghanistan, population 30 million.”

“U. S. GDP for 2005 was $12.37 trillion. In such an economy, the $21.5 billion Wall Street handed out in bonuses seems like a drop in the bucket. But it means that in 2005, Wall Street handed out more in bonuses than the U.S. government distributed worldwide in development aid, except in the countries we’ve invaded.”

This was a fun fact…

According to the New York comptroller’s office, the year-end Wall Street bonuses for 1986 averaged only $13,950 that year.

It was $125,000 in 2005.


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