There’s an interesting story in the New York Times today about the coming bonuses that rescued banks will begin doling out to its employees. Setting aside the furor over whether it’s the right thing to do, I want to look at what happens after the money is awarded.

The article suggests that those who get the bonuses will indeed accept them. However it will be a quiet affair, not a flashy, borderline show-off event. Purchases made with bank bonus money are treated with secrecy, as one New York Times reporter found:

In the Hamptons, where real estate agents court bankers looking for summer homes, the sales are also expected to be a boon for contractors, movers and groundskeepers. “A community like the Hamptons depends on house trades,” said Diane Saatchi, an agent with Saunders and Associates who just sold a home to a banker for $4.9 million. “Don’t ask to talk to him about it, because he won’t,” Ms. Saatchi said of the buyer, deflecting a reporter. “They don’t want anyone to know they are buying.” That includes the banker’s extended family, she explained, because he is worried they will ask him for money.

A by-product of the global recession has been how people feel about wealth. More specifically, how people feel about individuals who have great wealth.

Instead of being seen as the fruits of hard work and business savvy, it’s instead being seen as a sign of extreme greed and selfishness. It’s too early to tell if this will be a short-term side effect, or if the public psyche has been forever altered by it.

The torrent of populist rage against bankers enriching themselves in the midst of a global recession has had an impact inside the banks, according to the article:

“Bankers are being told by their bosses to be careful,” said Janet Hanson, who was an executive at Goldman Sachs for 14 years and is a founding member of 85 Broads, a professional women’s networking organization. “I mean, how does it look if you got a $1 million bonus from Goldman Sachs and you are sporting around in a new Audi TT? People will hate you.” (To deflect criticism, Goldman announced last week it would pay its top 30 executives in stock only.)

As the global economy continues to recover, it will be very interesting to see what the longer term affects that the recession will have on people’s perception of wealth.

Was the rage and, at comes, contempt, because others around were suffering? Or is it the build-up of years of frustration? If it’s the latter, then perhaps we will see this phenomenon continue, long after the economy has fully recovered.

Interesting story in the New York Times this week about working at Christie’s in New York. While the auction house has reduced employee perks and will have to lay off some staff due to the downturn, many of the (mostly) women who work there have felt almost vindicated as they keep the jobs they love while their friends lose much higher paying (but less satisfying) finance jobs.

How much money does it take to be happy? It’s a question that has been on the minds of many in recent weeks and months. Those bankers and financiers who have lost their jobs will almost certainly need to curtail spending and may find that their standard of living has dropped. But people used to a ‘normal’ or even ‘poor’ standard of living, who are happy with what they have, might not see much of a difference in how they’re living.

As I’ve said before, luxury depends on how one interprets what luxury is, and knowing what makes one happy is a true luxury. The things or experiences that give a Theta or Lambda pleasure may still be expensive, but if you know what it takes to make you happy, less time and energy need to be focused on other, less important things.

John Donne once said that no man is an island, but newly released findings from U.S.-based Coldwell Banker suggest that man still wants to buy himself a piece of one as the ultimate luxury home site.

More than 300 rich households in the U.S. were interviewed for the poll.  To be classified as such, they must own a home worth in excess of $1 million dollars and have an equal amount of liquid assets to invest.

27% responded that their dream home would be located on an island while another 22% preferred a more rustic setting and only 18% selected a suburban or foreign location.

Interesting that many of these choices seem to reflect a desire to escape — or at least get away — rather than become more connected.

Brioni, Rolls-Royce and Stella McCartney are among the luxury brands pondering or already operating stores in India, where spending on luxury goods is expected to grow from $4 billion this year to $30 billion by 2015. India now has 54 dollar billionaires, gaining 19 in the past year. Of course these and other luxury companies are seizing a growing opportunity, but should the major disparity of wealth in India (three quarters of Indians survive on 50 cents a day) give us pause? As we’ve seen before on Janus Thinking, acting in a socially responsible manner can help luxury companies grow their markets. Those companies going in to India would be wise to understand the full impact of their entry.

[Photo by Ooodit]

This week yet another report suggests that wealthy people spend a lot of time online and that it is more important than ever for those catering to the wealthy to be aware of their online reputation.

In their new survey “Leveraging the Internet Habits of the Wealthy,” the Luxury Institute found that 84% of consumers earning more than $150,000 visit sites where customers write reviews or rate products and services. Some respondents said:

-”It’s so much more important and informative reading about the experiences of product users rather than reading the advertising hype.”
-”I like to see what problems others may have encountered before I purchase.  Also, customer service level is sometimes addressed and this is very important to me.”
-”Ratings and reviews are quick way to eliminate bad choices.”

The Luxury Institute found that 61% of wealthy consumers use the online forums provided on web retailer websites (such as Amazon.com and Circuit City), and half are willing to pay for access to the Consumer Reports website, which provides the oranization’s professional ratings and reviews.

Of course the announcement of this survey that I read failed to mention relevant things like the sample size, composition of the sample, and the margin of error. Still, these findings do agree with other phenomena we’ve seen on Janus Thinking recently.

The Luxury Institute CEO Milton Pedraza sums it up:

“Across the luxury spectrum, nimble luxury firms understand that the world has just become transparent and there is nowhere to hide. In a web-connected world the flutter of a butterfly’s wings in Shanghai can generate a massive hurricane in New York. If you have rigid customer processes, such as onerous return policies, confusing fees, conflicted endorsements, etc., fix them now, and favor the customer. If you are not socially responsible, bet that consumers will gang up on you online. If you make a mistake, admit it, apologize, fix it immediately, and overcompensate the aggrieved parties — no excuses, no exceptions. Your luxury brand reputation is at stake, and it can be severely damaged in a nanosecond.”

How lumbering luxury giants will get on in this new world remains to be seen.