Terry - Not enough
10:38 | 22 Oct 2009
Good on ya President Obama trouble is, it doesn't go far enough. Most of these parasites should be fired the remainder on 90% pay cuts. Not likely to happen here though, nobody got the guts.
CS - It's our money
11:18 | 22 Oct 2009
Most reasonable people recognise the need to reward talented people. These same reasonable people, however, would doubtless believe that, in the interests of fairness and natural justice, no one should be able to "earn" the astronomical sums which senior individuals, not just in banking, but in many other industries are currently allowed to pay themselves.
After all, these people are not real entrepreneurs. They are not taking the enormous risks that bring in the huge profits on which their salaries and bonuses are based by employing their own capital. They are employing their shareholders' capital. In the case of many bankers on both sides of the Atlantic, they are making current profits employing capital that has effectively been lent to them by taxpayers.
Admittedly, if they get it wrong a time or two, they may lose their jobs, but doubtless the blow to them will always be softened by a superb redundancy and pension package and the money they have made in previous years. After all, when you are regularly earning over 40 times the salary of Mr average is surely doesn't take very long in the job to squirrel away a tidy sum!
The cost to the taxpayers of making these huge injections of capital has yet to be fully understood and calculated. Each and every taxpayer will be paying extra taxes ( possibly for years to come) at the same time as the value of his own individual, and frequently very modest, savings are certain to be eroded and the prices that he has to pay for food, goods and services are certain to rise as his currency is devalued by the inevitable inflation that must result from the astronomical debt that governments have had to raise to fund the bail outs.
The bottom line on this is that if governments allow any senior manager in a bailed out company to take disproportionate rewards before every penny has been paid back to the taxpayers, they are not fit to govern us.
In the UK, where in return for the loans, the government has become the majority shareholder. They have the power to ensure that salaries and bonuses are capped at reasonable levels.
Of course, there will be cries from the BBA and others that all the talented players will leave for greener pastures. Well, some may well leave. Should that happen, I believe that we will not be at all surprised at the numbers of equally talented folks from the lower ranks who will be more than happy to step up to the mark to fill what will, for them, be higher paid jobs, at salaries and bonus packages which will be substantially lower than those of their predecessors.
So come on Gordon & Alistair, New Labour usually slavishly follows American policies when they have been patently wrong, why not follow them this time, on one of the few occasions when they have got it right!
Tom - Bonuses not the fundamental problem
12:18 | 22 Oct 2009
The fundamental problem is that financiers around the world are essentially highly concentrated cartels which operate on a mates rates basis.
Added to the mix is that financiers are absolutely critical to the proper functioning of any economy because it controls the allocation of capital - and these bankers know it.
So what is the government doing about it? Well the problem is Cartels suit governments because they are stable unless everyone stuffs up like in this financial crisis. They are easier to regulate and deal with. They also make "sense" because scale means economies of scale (they forgot about the economies of dependency risk part...)
The only reason Bonuses are so outrageously high is because the people that dole them out get them in return from their other mates who are no doubt mates of mates of the person that got the bonus. In other words, its in everyones interest in the industry to not be reasonable about bonuses. And why should they?, they know they oil the wheels of any economy and as a cartel can do what they like.
What about outsiders you ask? media? regulators? well dont forget financiers always have mates in governments and the media as well. What do they do? they remind governments that they also need finance and so do media companies. Is it any surprise hard questions are never asked? and if asked, not asked voluntarily.
Obama can only do so much because he knows he needs the financiers. And their argument you gotta reward the best cannot be argued against. Its how capitalism works. The problem with cartels is there is no depth to the industry and if you get rid of one or two companies there's no alternative to turn to-its always the same people or their mates or their mates, mates.
The solution? the government should have either introduced programs to encourage the creation of new banks (to keep lending going) or to create one itself (at least temporarily). Instead, where did TARP money go? to existing banks to pay for their deficits. Why? because governments were advised by self serving former wall street bankers. Why would they ever advise themselves and their mates out of a job or onto lower pay unless they absolutely had to?
CS - What if Tom is right?
13:31 | 22 Oct 2009
Well, I thought I was cynical. I clearly cannot hold a candle to Tom.
He seems to have a deeper perspective than mine on this issue. I suspect much of what he says could actually be true. Heaven help us!
With the kind of people he describes in our midst, why on earth are we wasting time and resouces today fighting The Taliban. We clearly have much more dangerous enemies of mankind threatening us from within.
Since governments seem to be powerless in protecting us from these dark forces, and may even be in cahoots with them, what will it take to make a better world?
Answers on a postcard please!