The Goldman bonuses are perhaps the biggest example of what people mean by "moral hazard." That is, the problems created when governments step in and rescue companies, even companies deemed critical to the economic health of the country.
The problem with Goldman is, there's no longer any downside for the bankers making these obscene bonuses. The company is now "too big to fail," so there's no real risk involved: the traders at Goldman know that taxpayers will step in to support the company if it gets in too much trouble. Thus, traders at Goldman are now able to take insane amounts of risk with what amounts to other people's money - our taxpayer money - but taxpayer's get none of the upside of that risk, only the Goldman traders do.
In essence, then, the bailout has created the biggest sucking sound the world has ever heard: the sound of about a hundred fortunate few sucking the remaining lifeblood out of the world economy.
We knew moral hazard would be an issue when we went into the bailout. And certainly, all the bank regulation in the world, and all the limits on executive pay, ain't going to do a thing to stop the sucking from Goldman, which has already given the TARP money back and thus has escaped any regulation or pay cap talk - and even if they hadn't are so entrenched in the government that they'd find another way to make off with our cash.
Certainly, no good capitalist wants to get into sweeping regulations about pay....and passing a law to tax Goldman Sachs specifically will just create the biggest loophole ever known, when Goldman - which has all the ins in the government it needs to avoid such a fate anyway - simply renames itself. So there seems like there's no good solution, right?
But there is. The solution - which is so obvious, I'm surprised I haven't seen anyone else suggesting it - is to raise the top tax rates. At least for people making obscene money in the heart of the recession - let's say, anyone making $1M a year or more. Call it a "windfall tax" and raise the rate to 55%. After all, isn't that the least that the rich bastards can do for our depleted country? That would recapture some of the oomph from Goldman, as well as anyone else making out in our depressed environment (no doubt due to the largess of the government in the first place).
The solution is so obvious, the fact that no one in the Obama administration has suggested it makes me wonder: just how different is this administration from Bush's anyway? On the issue of Goldman managing the economy, it seems: not much.