Academia, a test case for banking sector.

So, having established that Obama is NOT truly beholden to the financiers, what may happen to settle the financial world and straighten the economy.

No, really, he is not: no more than he is beholden to, say UC or Harvard.
I mean it is not like his administration is stuffed with academics from those venerable institutions... er, well, you know what I mean.

But, clearly, with his #1 contributor, UC, having been sorted, we now have a guide for what we may do about the financiers.

We furlough the banksters!
Brilliant!

Seriously.
Note that in academia, the furloughs increase as you go up the payscale.
So, we're talking at least 20% furloughs, at least for the ordinary traders and middle managers; maybe 40% furloughs for fund managers, bond traders and derivative makers.
60-100% for the Bank Manager and CxO level, clearly.

This works, cut banks employees to 4 days a week, until the industry recovers, limit trading to 3 days a week, and the senior people can continue to come in 1-2 days a week, mostly, and keep playing golf or hanging out in the Hamptons the rest of the week.
Then you pro-rate their salary, all of it, including options and bonuses.
It is like a win-win situation.

So, what will the savings be, and how will this help?

Well, by far the largest cost to the financial sector has to be labour costs, I mean it is not like these guys actually make anything, so they don't need any raw material input other than a bit of paper and maybe some office space.

Well, financial sector employment seems to be about 8 million according to stats I've seen. Now much of that is tellers making something of the order of median US income, which soaks up maybe $300 billion of sector gross income.
I don't even know if it worth furloughing to save the measly $60 billion.

Now, the financial sector share of GDP peaked at almost 10%, so, just to keep things in round numbers, lets say it was about $1.3 trillion, so that leaves a cool $trillion for the high end of the sector.
You might say a mean of $1 miilion per year is a bit high, but remember also that there are a fair number of of folks earning over $100 milllion - can't rely on means when distributons are highly skewed, eh.

Note there are about 150 million people in the US labour force, so the financial sector share of employment is about 5% - so mean per capita income in the sector has to be high, and it ain't going to your local bank teller.

So, I can't be bothered to model just how skewed the upper 12% of the financial sector income distribution is, so I'll pretend I'm working in finance and just wing it.
We gotta be talking at least $400 billion per year here if we furlough the upper management.

How can we do that?
Welll, the US pretty much owns the whole sector now, informally, so just send a czar down and do some adjustments.

We could do stuff with that savings: fund the armed forces, pay interest to the chinese central bank, reduce the deficit to Clinton levels, give every one $1-2k stimulus check to buy more plastic crap.
The possibilities are endless.

But, most of all, we should do it because it is the right thing to do.