People are sick and tired of playing poor, so it’s time to start spending again – although nobody wants to talk about it.
A correspondent in New York sends me a report from the New York Times about the current ‘spectacular bonus season’ in America which has seen Morgan Stanley putting aside $14.4 billion in salaries and bonuses with Goldman Sachs announcing a day later that it was paying its bankers an average of $498,000 per ’employee’ – which presumably includes the trainees and the receptionists (these are invariably black or Asian, ditto with top law firms and Hollywood talent agencies).
As a result wives are getting ready to open their husband’s wallets and start spending again in a bout of what is being called ‘frugal fatigue’. People are sick and tired of playing poor, so it’s time to start spending again – although nobody wants to talk about it.
Top of the banker wish list, it seems, is a ‘vacation home’, preferably one that the owners are being forced to sell (“It’s a good time to buy”). The Times reporter was told by a Hamptons real estate agent called Diane Saatchi (they are always called ‘Diane’) that she had recently sold a house to a banker for $4.9 million who signed the deal in secret and was not even going to tell his extended family about it because he thinks they might start asking him for money.
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The knock on-effect of this new largesse is that the bonus season will have a domino effect – so the HNW ‘facilitators’ movers, pool cleaners, luxury car dealers, and groundskeepers will doubtless have a better year than last.
But what is curiously lacking from the Times list of beneficiaries from the new economic mood – and the rising salaries – is any mention of troupes of writers, publishers or editors being seen shopping for a new second holiday home in the Hamptons; indeed, I wouldn’t be surprised if many of the distressed sales that the bankers are taking advantage of are actually homes belonging to ‘mid-list’ writers, as they are known.
You do not want to be a ‘mid-list’ writer. They are currently being culled from their publishers fiction lists more ruthlessly than harp seals in Canada. An established novelist with five or six novels behind him who used to get £100,000 per book deal is now lucky to be getting £30,000 – and that’s for probably a couple of years work. Many well known novelists are now being humiliatingly forced to take £10,000 advances (about the price of a decent banker’s client dinner at Cipriani’s) or not get published at all.
Journalism is little better. Budgets at The Telegraph are now so low that the pages are actually subbed in Australia where they farm out the work at £25 per page. Whilst the salaries and bonuses of the financial classes have seen their salaries rising faster than a Blake’s chocolate souffle, in the media world – in particular journalists and editors – salaries have gone down in real terms by about 40% in the last ten years. Most paparazzi earn more than a top newspaper editor these days.
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In the end the problem is that the majority who succeed in banking and finance, like Hollywood – do so by failing upwards. The real problem with the financial world is that a banker’s success is defined by the size of his bonus and how much he gets paid. This is one reason why Goldman Sachs in the UK (where ‘superstar’ bonuses have been capped this year at £1 million) have got around the new government tax loop-hole which was meant to curb bankers bonuses by simply paying their top bankers more – and swallowing the tax bill themselves.
In the media world, or in book publishing, ‘success’ is thankfully more difficult to quantify. Its certainly not about the size of the your Primrose Hill flat or your advance; nor is it the number of awards you are nominated for or even the thickness of the manila cuttings folder stuffed with glowing reviews.
The good news, however, is that many of the best books have been written out of financial necessity, after the money has run out. Balzac used an assumed name at his house in Paris to avoid his creditors (he wrote at a small wooden desk which you can see today at the Balzac Museum). Samuel Johnson wrote Rasselas in a week to pay for his mother’s funeral.
Not having the money to splurge on a new Audi TT is probably good for art. I have never heard the word bonus mentioned once in twenty years of working in the media. Nor do I have any estate agent called ‘Diane’ on my speed-dial. I remember once interviewing Tom Wolfe at his Upper East side apartment and I asked him why it took him seven years to write A Man in Full, his follow-up novel to Bonfire which he was paid a $7 million advance for.
‘Oh, I can’t write if I have any money in my bank account,’ Wolfe replied. I wonder if the bankers would perform any better if the same rule applied.
