Kidz Korner is a new feature here on The Reformed Broker where I explain complex financial issues to kids from the neighborhood in a simple, straightforward way.
Little Timmy Johnson: Gee Mister, I sure do hear a lot on TV about all these bonuses people are getting…am I going to get one?
The Reformed Broker: Did you go to an Ivy League school or spend the last 5 years destroying America with exponential degrees of leverage and unquantifiable amounts of risk?
Timmy: No sir, I’m only 11. I spent the last 5 years eating Fruit Loops and delivering newspapers.
TRB: OK, so you probably won’t be getting a bonus.
Timmy: Aw maaaaaan. What is a bonus anyway?
TRB: A bonus is something extra you get for doing a really great job. Like when your daddy takes you for ice cream for bringing home an A+ on a book report, that’s a bonus.
Timmy: I get it. So these guys everyone is talking about who are gonna get millions of dollars must have done a totally amazing job, right?
TRB: Ummm, no. Actually, they could not have done a worse job. They would have to be really trying their hardest to screw everything up more than they actually did. They literally cracked a hole in the universe with their incompetence and recklessness.
Timmy: Oh. I don’t get it…so why are they getting a bonus at all, then?
TRB: Because they want one. They always get a bonus, no matter what, because they are better than the rest of us, so they deserve it, even when they lose a lot of our money and make other people lose their jobs.
Timmy: But I thought you said that bonuses were for people who did really good things.
TRB: That’s how its supposed to work.
Timmy: So how come the other grown-ups don’t stop them?
TRB: Because the other grown-ups are fat, lazy and stupid. They are too busy trading stocks, sending text messages and suing each other, no one is paying attention or standing up for themselves.
Timmy: That’s messed up. You’re bumming me out, I’m gonna go finish my homework.
TRB: That’s exactly what you should do. Finish your homework and study hard so you can get into a fancy school. Then you can pile up all your degrees, pretend you’re a financial whiz and before you know it, we’ll be giving you bonuses too, no matter how much capital you destroy!
Timmy: That sounds awesome! Thanks, Mister!
TRB: No problemo.