Today was just a weird day as we sold off, but marginally compared to elsewhere. Parts of Asia and Europe, as well as Latin America, saw their equity markets hit hard over fears of a pandemic swine flu outbreak. Many traders feel this is a notion that will pass as a footnote rather than as a catastrophe, and this was a very light day for data. Sheila Bair at FDIC did manage to call the bank liquidity crisis over.

Here are today's unofficial closing bell levels:

Dow 8,025.00 -51.29 (-0.64%)
S&P 500 857.51 -8.72 (-1.01%)
Nasdaq 1,679.41 -14.88 (-0.88%)

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In Gone with the Wind, Rhett Butler wryly notes that there is "just as much money to be made out of the wreckage of a civilization as from the upbuilding of one." Having observed the near-Roman excesses of New York's money men over the past couple of years, I might go even further and argue that the end of a civilization tends to be even more outrageously profligate than its beginning. After all, it's hard to imagine stern, conservative men like J.P. Morgan and Andrew Mellon giving in to the incredible excesses of the latest round of would-be magnates.

While tales like Stephen Schwarzman's million dollar birthday and Dick Fuld's five homes tend to capture the public's attention, these outrageous expenditures are only the tip of the iceberg. From $175 hamburgers at the Wall Street Burger Shoppe to John Thain's $1.22 million office redecoration, it has become increasingly clear that New York's financial workers have spent the last few years living in a completely alien world. What's more, they are either unable or unwilling to adapt to the changing realities of America's economy.

Well that didn't take long: Former Merrill Lynch CEO John Thain has received a subpoena from New York Attorney General Andrew Cuomo. The subpoena is part of an investigation into the billions of dollars in bonuses that Merrill paid last year just before it was taken over by Bank of America (NYSE: BAC). Cuomo called the decision to fast track the bonus payments "troubling."

In a statement, Cuomo's office said, "With that in mind, I am also pleased to announce that our ongoing inquiry into executive compensation practices at TARP funded institutions, including this matter, will be conducted cooperatively and in coordination with the TARP Special Inspector General Neil Barofsky." Bank of America Chief Administrative Officer J. Steele Alphin was also subpoenaed.

An era of greed that began with the election of Ronald Reagan has come to an abrupt end. That means that the seething emotions of greed and envy that come along with bonus time at investment banks will have fewer dollars attached to them. And talent will flow to government and academia rather than Wall Street. This could be good for the U.S.

Some of those masters of the universe in the investment banking industry have seen the value of their stock tumble (and many of them are going without bonuses this year). Here are some of the "casualties":

I am reaching the limits of my ability to stand more waste of our money. Today, I learned that Citigroup (NYSE: C) is taking delivery of a $50 million corporate jet from French manufacturer, Dassault. (For that kind of money, it could have at least bought from an American manufacturer).

I know the U.S. invested $45 billion worth of taxpayer money with no strings attached -- but is it really possible that Citi does not get that buying a corporate jet with that money is blazingly stupid?

There is some irony on this front. This evening Maria Bartiromo conducted an interview with John Thain who was deposed last week for various sins. Bartiromo was in Davos, but Thain was not -- although one of his sins was that he had accepted an invitation to attend Davos. But back in 2007 -- almost exactly two years ago -- it was Bartiromo who got in some hot water for taking Citi's corporate jet with then Citi-executive Todd Thomson.

Leave it to some aspiring comedian to come up with the "official" blog of accused fraudster Bernard Madoff.

That's right someone writing under the pen name "Not the Devil" offers readers Madoff's "opinions" on the a variety of issues and Wall Street personalities. The results can be amusing, particularly if you did not lose money in Madoff's immense Ponzi scheme.

The blog takes aim at the media's fascination with Madoff. "To whoever it was that managed to get yourself a bi-line in today's Sunday business section: You need to get more credible people to comment; a former FBI agent portrays me as a 'psychopath," the fake Madoff argues.

Former Merrill Lynch CEO John Thain has resigned from his post at Bank of America (NYSE: BAC), not long after the consummation of a merger that threatens that company's very survival.

"Ken Lewis flew to New York today to talk to John" and "they mutually agreed that his situation was not working and he resigned," Bank of America spokesman Robert Stickler told The New York Times.

Ken Lewis was upset with Mr. Thain partly because the merger was a disaster and partly because he realized that Thain did not have a strong grasp of the company's operations. Worse, Thain had made earlier than planned bonus payments to Merrill Lynch employees shortly before the deal was done.

And all of this came before the news of Thain's wasteful spending on interior decor was made public.

There is one silver lining though. Bank of America's spokesman was honest enough to say that "things were not working out" instead of hiding behind the usual "He resigned to spend more time with his family and charitable endeavors."

Score one for transparency.

The Daily Beast (where I also write a column) columnist and CNBC reporter Charlie Gasparino reports that Merrill Lynch CEO John Thain spent $1.22 million to redecorate his office last year while the company slashed jobs and fought for its survival.

Citing documents obtained by the site, Gasparino reports that the company spent $800,000 "to hire famed celebrity designer Michael Smith, who is currently redesigning the White House for the Obama family for just $100,000."

I was going to make a reference to former Tyco CEO Dennis Kozlowski and the $6,000 shower curtain, but one of Gasparino's sources beat me to it. Thain's version of an emperor's office includes:

• Area Rug: $87,784
• Pair of chairs: $28,091
• Pendant Light Fixture: $19,751

Now, $1.22 million is not a material amount of money given the scope of Merrill's problems, but it is indicative of how out of touch and arrogant John Thain was and presumably is. The fact he spent $230,000 in one year on a single driver will also do little to muster political support for additional bailout initiatives, and gives a huge amount of ammunition to the "Tell Wall Street to go to hell" crowd.

Not a good move, Mr. Thain, not a good move. If he has any class he'll offer to reimburse the company for those expenses, but I doubt that he will. Even if he does, it's too late.

I'm not sure when it happened, but I think that I've slipped into a Charles Dickens novel.

I got my first clue that something was up back in September, when Lehman Brothers filed for bankruptcy. Amid scandals over bailouts and backroom deals, congressional testimony and AIG retreats, one figure quickly emerged from the mass of bloated plutocrats and greedy execs clamoring for bonuses. Everything about Dick Fuld, from his cartoonishly aggressive management style, to his whining over Congress' refusal to bail out Lehman, to his striking resemblance to Rocky and Bullwinkle's Fearless Leader, made him the perfect poster boy for corporate greed. As more details leaked out, including the story about Fuld being pummeled by one of his employees, much was made of his name. In the public mind and this writer's heart, Richard Fuld was permanently transformed into a complete Dick. All in all, I was hardly surprised to see Lehman fold.

Another clue came when the story leaked out that Merrill Lynch CEO John Thain tried to collect a $10 million bonus. The fact that this bonus was, supposedly, based on Thain's performance in a year when Merrill lost billions of dollars made Thain's chutzpah almost legendary. My wife, who has had dealings with Thain in the past, noted that this aristocratic sense of entitlement permeated every single one of their interactions. I, on the other hand, couldn't help but remember the words of the witches in Macbeth, who hail the Scotsman as Thane of Cawdor, Thane of Glamis, and King hereafter. There seemed to be something ironic about an ambitious, clawing Thain who so clearly felt himself deserving of the spoils of war.

There have since been others. For example, when I first heard of Bernie Madoff, I thought nothing of his last name. However, when I learned that the proper pronunciation isn't "MAD-off" but rather "MADE-off," I couldn't help but laugh. For somebody who "made off" with billions of dollars, Bernie has a name that would put Dickens to shame. Following him, of course, there's been Joseph Forte, the Ponzi schemer who put on a "strong" front, but couldn't hide the fact that making money wasn't his forte. Frankly, punning off these guys is so easy that it's almost embarrassing.

As the sordid tale of Bernard Madoff continues to unspool, it has become increasingly clear that somebody -- in fact, a lot of somebodies -- were asleep at the switch. Beyond the standard warning signs, like Madoff's incredible secrecy, his surprisingly consistent rate of return, and the clubby nature of his selling staff, there were far more obvious portents. For example, Madoff's chief compliance officer was his brother Peter, and one of the compliance attorneys was his niece. For that matter, the fact that Harry Markopolos, a Boston accountant, has been urging the SEC to investigate Madoff for the last nine years should have been a hint. The same, of course, goes for the 2006 SEC investigation that found violations, but didn't feel obliged to take any substantive action.

As the SEC attempts to assign blame in finest Three Stooges form, it's worth noting that this is hardly the first time that a lack of serious governmental regulation has reared its ugly head this year. At the moment, mobs are currently clamoring for Dick Fuld's head, with a healthy side order of Hank Greenberg, John Thain, John Mack, Lloyd Blankfein, Jimmy Cain, and pretty much everyone who works in New York's financial district. The general perspective seems to be that these men engaged in business practices that ran the gamut from risky to actionable and now should be forced to pay for the economy that they have ruined.

At their base level, Ponzi schemes are incredibly simple: the schemer promises a consistent, impressive return on an investment, which he funds by soliciting new investors and using their money to pay off earlier investors. If the schemer can successfully project an air of reliability, he can often convince his investors to keep their principal in the fund, which means that he only has to pay dividends, improving his profit margin and extending the longevity of his scam.

Any intelligent person recognizes that a Ponzi scheme is, essentially, suicidal. Even in a consistently strong market, there will come a day when people will withdraw from the fund, investigators will shut it down, or the financial house of cards will fall apart. The best that a Ponzi schemer can hope for is that he will die before he is caught or will somehow be able to pull out all funds and make a run for it. In the case of Bernard Madoff, it's pretty clear that he was counting on the former. While this didn't work out, one could make a strong argument that Madoff's life currently isn't worth a plugged nickel: even if he somehow survives the next few months without suffering a massive coronary, chances are that a former investor or fellow inmate (or both!) will soon introduce him to the business end of a shank.

The vacation that greed took to make way for austerity on Wall Street compensation ended prematurely. Merrill Lynch (NYSE: MER) CEO John Thain wants a $10 million bonus and he wants it now.

Merrill's board is likely to give Thain nothing. According to The Wall Street Journal, "The difference of opinion between Mr. Thain and directors who hired him just a year ago is part of the bigger debate about compensation practices at Wall Street firms."

To characterize Thain's request as a simple matter of excessive pay making a return to Wall Street would be an oversimplification. The Merrill CEO has been on the job for a year. He was brought into a situation which was nearly untenable. The company was faced with mounting losses because of decisions made by earlier management. He may have saved the firm by selling it to Bank of America (NYSE: BAC). It is hard to compare that with other financial chiefs who have done little or nothing for their firms beyond letting their share prices fall and forcing government bailouts.

Merrill Lynch & Co. (NYSE: MER) is planning to cut year-end bonuses in half in a show of fiscal discipline.

Why stop there?

Shares of the New York-based company are down more than 78% this year. Keep in mind that Bank of America Corp. (NYSE: BAC) agreed to buy the once-venerable firm for $50 billion, a deal which is still making its way through the regulatory process. Did I mention that Merrill and Bank of America got a combined $25 billion from the Treasury Department and that Merrill may lose $13.3 billion this year, based on the average estimate of nine analysts surveyed by Bloomberg? That's more than double from a year earlier.

What in that sorry performance merits a reward of any sort? Wall Street needs to ween itself from the notion that everyone deserves a bonus, regardless of the macroeconomic environment. Top executives at Goldman Sachs Group Inc. (NYSE: GS) and UBS AG (NYSE: UBS) are refusing bonuses. Heck, so are the heads of the tone-deaf auto industry.

Merrill has already been very generous with its employees. Chief Executive John Thain got a $15 million sign-on bonus when he joined the company with the expectations that he would fix the mess created by Stan O'Neal. Given the turn of events, maybe he should give some of that money back. In 2007, the company paid out $15.9 billion, about $248,000 per employee.

It's been almost a year since December 12, 2007, when Vikram Pandit took over as CEO of Citigroup (NYSE: C). His performance has been outstanding -- and not in a good way. During the last four quarters, Citi lost $20 billion. Sure Pandit has plans to fire 52,000 people and he's raised at least $45 billion from the U.S., along with guarantees on $277 billion worth of Citi's bad assets. But he botched the acquisition of Wachovia (NYSE: WB). And Citi stock has fallen 81% wiping out $138 billion in stock market value.

By contrast, John Thain, who took over as CEO from the Bank of America (NYSE: BAC) subsidiary Merrill Lynch, was far more agile as things cratered around him. Arguably, Thain had an even worse hand than Pandit when he took over Merrill Lynch because his predecessor had loaded it up with mortgage-backed securities at precisely the wrong time. But Thain could see Merrill's stock plummetting as it got trapped in a short play. And he salvaged shareholders' investment by selling to Bank of America.

Now CNBC's Charlie Gasparino reports that Pandit has about half a mistake more to make before he's out of a job. But this is not a problem for Citi shareholders as long as its board can convince Thain to leave Bank of America where he has taken on a sub-CEO role so he can get back into the big saddle at Citi. Count me among those shareholders who would be happy to see Pandit exit stage right as Thain enters.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup stock and has no financial interest in the other securities mentioned.

The New York Times reports that underneath the failure of Lehman Brothers Holdings Inc. (NYSE: LEH) was a desire by its CEO to get more money for his company than the Korean Development Bank was willing to pay. The reason Richard Fuld wanted more was that he was in a state of denial about reality. And that's a common problem facing successful people all over -- one I call confirmation bias -- in which a decision-maker ignores information that is not consistent with his or her world view.

And that is the beauty of a system of free markets in which there is complete transparency of costs and benefits and participants win and lose on the merits of their strategies. Until this weekend, the government had been operating under a scheme of private profits and nationalized losses. In other words, the taxpayer footed the bill for those multi-million compensation packages for the executives who generated the losses.

But with the government's decision to let the private sector live with the consequences of its bad decisions, we are getting closer to a free market system. Such a system would create powerful incentives for a vigilant attitude towards rapidly changing reality by managers -- such as John Thain -- who could see that Merrill Lynch & Co.. (NYSE: MER) would follow in Lehman's footsteps absent a deal. And if we had a system that solved the five flaws in our financial architecture, we could truly benefit from a system of free markets in the future.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.