Third quarter estimates for Goldman Sachs are decidedly negative - with a growing number of analysts estimating the firm will actually post a loss.  Barclays Capital predicts that Goldman could reports a quarterly loss as high as $180 million.  If that's the case, CEO Lloyd Blankfein has a big decision to make about pay. Given the state of the markets, it would make sense to forgo booking any reserves this quarter for end-of-year payouts.  But popular opinion is that Goldman will allocate perhaps as much as half its revenue to cover compensation for its employees.  The numbers don’t look promising. But let's say Blankfein cuts the pay pool in half.  That reportedly would swing the firm to a profit of about $500 million.  No windfall, to be sure, and it equates a return on equity of just under 3 %.  Yet, should Goldman leave the compensation line empty for the quarter, it would fail to reap enough to meet its cost of capital. As the team at Reuters BreakingViews sees it, such restraint would nevertheless show a willingness to put shareholders first.  And it wouldn’t necessarily be just a short-term solution.  After all, Goldman’s first half wasn’t great, either.  Excluding the one-time cost of redeeming Warren Buffett’s preferred stock, it posted a return on equity of 10.2%.  That's around half of Goldman’s recent historical average through the cycle. Achieving a more respectable 15% would have required cutting the compensation ratio to 33%, a bit lower than in 2009.  Lower pay might have encouraged some to leave, though rivals weren’t exactly swimming in money, and over all, Goldman would still have squirreled away an average of $179,000 per employee. The other option, of course, is to cut its staff.  That move also has costs, though, especially with more stock payouts that take years to vest.  Keeping average pay higher in the first 6 months with a shallower compensation pool would have meant showing a quarter of employees the door, undermining morale and the ability to satisfy clients. Goldman may yet hold out longer before trimming pay.  But with no obvious signs of business picking up, bankers and traders may need to get used to the idea of sacrificing more of their waning spoils to keep shareholders on board. [Reuters Breakingviews, 10/6/11]