It’s a brisk Wednesday morning in the windy caverns of Wall Street and Sarah Clark’s toes are cold.

For Those With a Few Million to Spend Dressed in a purple flight attendant outfit, Ms. Clark, a 26-year-old model, is trying to entice recent bonus recipients at Goldman Sachs into using a charter plane service, handing out $1,000 discount coupons to people in front of the investment bank’s Broad Street headquarters.

“Where am I going?” asks one man, heading toward the Goldman building. “It’s your own private jet,” says Ms. Clark with a smile. “You can go wherever you like.”

For Wall Street’s elite, the sky may well be the limit.

In recent weeks, immense riches have been rained upon the top bankers and traders. After a year of record profits, investment houses like Goldman Sachs, Lehman Brothers and Morgan Stanley are awarding bonuses as high as $60 million. And a select group of hedge fund managers and private equity executives may be taking home even more.

That is serious money. And the serious luxury goods markets are feeling the impact.

Miller Motorcars, in Greenwich, Conn., is fielding more requests for the $250,000 Ferrari 599 GTB Fiorano than it can possibly fill. One real estate broker laments a dearth of listings for two clients trying to spend $20 million on Manhattan properties. Financiers already comfortably settled in multimillion-dollar apartments and town houses are buying $5 million apartments for their children. Vacation homes, usually bought and sold in the spring, are now hot this winter, including ones in private resorts like the Yellowstone Club in Montana near Yellowstone National Park.

“Last year, everybody bought Ducatis,” said one investment banker, referring to the Italian motorcycle. “This year it’s vacations. I’m on my way to St. Barts,” he said, en route to the airport. Like most bankers, he spoke on the condition that he not be identified, because he was not authorized to talk to a reporter by his company.

The 2006 bonus gold rush has re-energized some luxury markets. The Manhattan real estate market, for example, had softened; sales of apartments fell 17 percent in the third quarter this year compared with a year ago, according to the Corcoran Group.

Then came bonus day. Last week, Michele Kleier, president of Gumley Haft Kleier, received a call from a hedge fund manager in his late 30s. He had spent $6 million on an apartment two years ago and, with his bonus, wanted to upgrade. His new price range? “Not more than $20 million.”

Ed Petrie, a broker at Sotheby’s in East Hampton, N.Y., is now fielding two bids for $8 million to $10 million properties in exclusive Georgica Pond — properties that have been on the market since the spring. “The fall was relatively slow and then suddenly, with news on bonuses, there has been quite a bit of activity,” he said.

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THIS QUOTE, attributed to President Herbert Hoover’s 1928 election campaign, epitomizes the mass psychology characteristic of the Roaring ’20s. In a country that had long enjoyed a remarkable period of prosperity, it was felt that the trajectory of the boom’s trend would eventually lead to an eradication of poverty.

The Industrial Revolution brought about a tremendous increase in productive capacity and living standards beginning with its origins in the mid-19th century. But the advent of consumer installment credit in the Roaring ’20s was the mechanism that shifted business into overdrive. Entrepreneurs all along the chain of production, from commodities to retail, geared up for demand that, in hindsight, was short-lived.A credit-fueled bubble that affected nearly every corner of the economy — encompassing everything from consumer credit, to business loans, to margin debt at stock brokerages — crested the following summer. Alas, historians have thoroughly documented what happened when this euphoria morphed into panic.

With the onset of the Great Depression, priorities for many gradually shifted from return on capital, to return OF capital, to concern that modern industrialized society was unraveling at its seams.

The Consequences of a Credit Bubble

As the panic that engulfed Wall Street spread to the banking community, pain that was previously only felt by those involved in the speculative stock market quickly consumed the business community. Consumers reined in spending, so business owners rationally cut expansion plans and investments in inventory.

Bankers comprised the heart of the capital allocation function of the time period; in the modern global economy, it’s quite another story, as the business of providing credit has shifted toward such institutions as hedge funds, private equity, and government-sponsored enterprises like Fannie Mae. Also taking share from bankers has been the secondary market for credit derivatives, including mortgage-backed securities, collateralized debt obligations, and collateralized loan obligations.

Take the example of mortgage-backed securities: pools of mortgages of similar size, credit risk profile, and loan-to-value ratios that provide a yield similar to that of a bond. It used to be that you’d apply at your local community bank for a 30-year mortgage where you’d make monthly principal and interest payments over the entire life of the loan. The banker carefully weighed the risks of extending the mortgage on the home you sought to purchase and the sustainability of your present income because he would have to live with the consequences of default.

Over the course of the past 5-10 years, however, the financial system has evolved to the point where bankers have more incentive to sell the right to collect your future monthly payments into a secondary market. This secondary market is created by large Wall Street firms who make commissions and fees in a fashion similar to that of the stock market. Therefore, the local banker has been transformed into an agent of institutional and individual investors looking to invest in an income-producing security that pays a yield greater than Treasury bonds.

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