Obama biffs bonuses
In the land of the brave and the home of the bonus, the new US president is about to impose a ceiling on the pay of executives in private sector companies that are rescued by the state.
That ceiling, according to overnight reports, will be $500,000 (around £350,000) - or $100,000 more than President Obama receives.
In the US, reports of the substantial bonuses paid to executives in banks propped up by taxpayers have been incendiary.
The impression has been created that top bankers are partying on their private jets while taxpayers foot the bill - and while millions of ordinary Americans lose their jobs and homes.
Not pretty.
The market for talent is - of course - global. Or at least that's what big UK companies say when gilding the remuneration packages of their senior execs.
So it will be pretty tricky for the British government to ignore the new US norm for running a semi-nationalised business.
At the moment, those running banks in receipt of massive financial support from taxpayers - Royal Bank of Scotland, Lloyds Banking Group and Northern Rock - are earning multiples of £350,000 a year.
The justification is that they're cleaning up a mess created by others.
But if the ratchet on pay over the past few years was upwards only, well, gravity has reasserted itself.
Those running banks or car manufacturers or any business which would fall over in the absence of funding from taxpayers will probably have to take much of their reward in the form of the nice warm glow that they ought to feel for doing their public duty - and defer the bonuses for a year or five.
I'm 
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Inside knowledge is
spend large
borrow large
apply for a big mortgage
while you can
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This is exactly why governments should never be involved in private business.
The bailouts should never have happened due to the moral hazard it creates.
One can only guess at the global level of fraud that has gone on for the taxpayer to fund.
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Oh dear oh dear.
It really says it all when the owner of Hamleys in London, Baugur, needs creditor protection.
If Hamleys cannot make enough profit, where does that leave everyone else ?
Will the Supermarkets end up the only Stores in town ?
Do we have a future of demilitarised zones and urban deacy to look forward to ?
The Gov't needs to abandon its Thatcherite monetarist policys, before it is too late !
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the american mentality is to borrow as much as your monthly income can cover servicing the debts, and sell your home when you retire to catch up
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I hope Brown and Darling have the courage to follow suit but I wouldn't be so sure.
As this will be a pay cut for these executives lets hope they don't enforce cuts for their workers. We all know where that would lead - Deflation.
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Brilliant, it will send a message to everybody that the days of exec excess are over. Brown needs to pick up on this quickly - it's appropriate for the times.
When are shareholders going to start to ask to get the bonus's back that were paid based on poor performance?
Make the board responsible for any bonus paid and personally responsible for paying the money back to the company if it can be demonstrated they were poaid in error.
What happens if all these top guys leave; well we may find a whole new generation of executives who are more responsbile. Don't underestimate the talent available; or overestimate the capabilities of those in charge.
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Off topic, please make a good case for press freedom at your meeting later on today with the Treasury Select Commitee. I do not agree with Simon Jenkins on this subject.
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They also lock people up in the US - including the most senior executives, a practice we could well adopt.
When you consider what Jeff Skilling was put away for - misleading statements about the financial health of Enron (for which he got 24 years + $45 million fine) and then look around at senior UK bankers ... and politicians !
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President Obama recently said "I think I screwed up, and, you know, I take responsibility for it and we're going to make sure we fix it so it doesn't happen again."
Sadly, I doubt if Gordon Brown will be copying that particular Obama example.
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'have to take much of their reward in the form of the nice warm glow'
£350,000 a year is an awful lot of money - beyond the comprehension of over 90% of the population who dream about winnig sums like this in the Lottery.
I am presuming you wrote this tongue in cheek??
A firm govt - like BO - is going to just say that's the rule - like it or ship out - I hope for once we are going to hang on to the USA coat tails on this one!
For me the figure in this country should be similarly marked against the PM salary - about £175k? I think.
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Thanks Robert, good post, but perhaps you should investigate the bonus's being earned by Insolvency Practitioners rather than placing adverts for their services on your business pages.
We all know Bankers and Banks are a problem but stop reacting and be proactive about your reporting.
Small and Medium sized business's are going under NOW and the IP's are rubbing their hands, they will tell you how well regulated they are (by who!) but anyone who has previous experience of them will possibly see it another way.
So yes Banks are very naughty but please focus on what this collapse will lead to, small and medium sized companies going under will leave one hell of a debt to this country and a social one too.
The actions of IP's must be more heavily regulated to avoid a total collapse in business confidence and business credit.
Unfortunately their fees will lead to more business failures rather than rescues.
Don't let them advertise on here without recourse and do a proper programme to explain to people out there just what they do and how much they charge and how it could be done so much better with little change in the law, sort it Pesto!
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About time too Robert. We need similar policies over here. How about a super tax on extreme wealth? How about bonuses no bigger than annual salary? Pheeew now these things would be quite a change from the grab-as-much-as-you-can-culture.
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Most executive and senior management bonus schemes are flawed, resulting in short term obsession with annual balance sheet manipulation. US bankers lead the charge...UK and other countries claim parity and get it. Other captains of Industry push their packages through the remueration committee buddy schemes. Risk free Senior Civil Servants demand similar ludicrous pay packets. TV newsreaders and presenters up the ante and their bosses collude because their packages increase accordingly.
We have a sick mentality that nobody will do their jobs to the best of their ability for a salary (however generous) ..and have to be paid huge bonuses to do what they were hired to do. President Obama has, hopefully, burst the bubble and the world might start the porocerss of returning to sanity.
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So if you have an employment contract which includes a bonus and you earn the company the money to justify that bonus, the company can now turn round and change things retrospectively, refusing to pay you what your contract says you're entitled to.
Sounds a good get out for the company - and a pretty poor incentive for achieving in future.
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Which is why Barclays didn't go down this. Mr Diamond couldn't mange on such small amounts.
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So now we can see that Obama is really no better than Brown - all spin and no trousers.
This pay cut makes good headlines but is really of no substance. The CEOs etc. will only re-arrange their pay structure so that they appear to comply whilst their bank balances remain the same.
It's just too easy to suddenly become an 'adviser', or CEO of group members, or claim that the majority of the salary was for being CEO of registered companies outside of the USA, etc. etc.
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In all fairness they should'nt be given any bonuses at all. And what is the problem with American people loosing jobs?? Why all this doom mongering?
It is so sad to see these doom mongers causing such hardship throughout the world. I care more about the jobs being lost in China/India/3rdworld because of all this. The reason why Jim Rogers still holds a US citizenship(and not chinese) is because he is worried that his children should not face the same fate as 20 million chinese workers who were just made redundant in the last 6 months.
For the last 30/40 years US and UK population have been suffering from a disease called "Afluenza". It's only healthy for the system now that we are getting rid of it. What I am against is all the doom mongering that is going on. The talk of war, the tension between countries, etc etc.
Remember the Katrina Hurricane,where people 5 times my size where complaining there was no food, and went on riot. This is an example scenerio of how pathetic the disease called afluenza can become. You just have to look around for other scenerios. If the population of Bangladesh started doing a similar thing, Bangladesh would burn many times over in a single year.
When the gov and even the queen in her new year/christmas speech start warning people that 2009 is going to be tough year is when things start getting pathetic. I do not think people who have asked the queen to say such words in her speech have any kind of clue what tough living conditions are.
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Robert-good luck today-please let us know how you get on.
Re bonuses-well wouldn't it be luverly if our government did the same? Not just on bonuses, but copied the inestigation and prosecutions intiative too?
Politically these measures would be a her good move - the electorate would greet such news with a cheer!
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unfortunately / fortunately the global model will end up being the american model by default, just like MTV
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Bankers shouldn't be paid anywhere near the amount the higher levels receive.
Money would be better spent paying their ground floor staff a decent wage. Currently it's not much more than minimum wage. These loyal staff have the hardest job in the bank-pay should reflect this.
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I have never understood the need for bonus culture .. if they are doing a good job they surely are getting paid in mega bucks anyway ..just how much money is needed to live the high life ! all the folk I know could live very well on the second home bonus mps get or the bonus the bankers etc get , the salarys are like a lottery win to most of us , we think we need never work again if we won a million ..
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Well done Mr President (Barak Obama) it is good to see that someone in authority is trying to impose some discipline on those greedy, self interested and and undisciplined senior bankers and businessmen.
I hope he does manage to carry out his threat to limit their earnings and if these people start to complain and ask what do they get if they do a good job, the answer should be one that I heard quoted to a senior manager of a large company that I once worked for (not me of course) in the 1970's
"you get to keep the job"
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Barclays could have been in RBS position.
Varley and Diamond were going hell for leather to get ABN and missed by a whisker.
Do not pay these great bankers any bonus at all. EVER
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This comment was removed because the moderators found it broke the House Rules.
14 peterJ42:
Come on Peter, get with it, we're talking about extreme bonuses given to people who have, in many cases, taken these bonuses while undermining the effectiveness of their companies. In other words bonuses used as cash-cows. A way to milk the company regardless of overall company performance.
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#8 citynickdrew has a valid point
apart from murder, violence and drink driving there are few if any crimes that you can be locked up for, except crimes that involve property.
We were all promised by HMG that there was no possibility of an Enron type scandal in the UK because of our 'regulatory system'.
What a joke and how farcical a statement was that?
Why don't we have tough legal action against the bankers, directors and employees of the banks?
Can't help but wonder if it is because the hold certain sectors of the financial industry has over the Government that makes HMG so terrified of taking legal action against bankers.
Far too many dark and dirty secrets and deals maybe?
We will never prosecute, just in case someone in the banking echelons squeals 'foul'.
Maybe Panorama's programme on Tax Havens, although simplistic, was near the mark when it was revealed that what is hidden in offshore tax havens is 'political dynamite'.
Back to Robert's point:
As for corporate exec pay structures, they can always cap their pay at the minimum wage and reward each other with shares, for exceptional performance (of course!)
If the shares 'pan', they will receive just reward for all their hard(?) work.
It is the only fair solution.
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I agree with caps on executive pay.
But the Government should impose a (retrospective) windfall tax on city workers bonuses
Say 40% of all bonuses paid over the past 5 years.
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Following the news of the 10% bonus to ALL Northern Rock staff last week, it's not just the execs of publicly buoyed, failed companies who need to bask in a "rosy glow" of public service, rather than expecting a handout for failure.
NR staff are lucky to have jobs. There is no need for them to recieve 10% of salary for crippling the company. They didn't get this much when it was doing well?!?!
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What's the market value of the sort of talent which created the present mess? Is it a non-negative value? If so, why?;-)
ed
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As Flash has plans to land a few bank directorships when he gets kicked out next year, I doubt he would want to put a ceiling on the pay.
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Time to ask just what do the people (men) at the top contribute. It is a cosy club of corporate incestuousness and mutual back scratching - multiple NED's and ED's and NED's remuneration committees all benefiting from the common understanding of the scale of pay and bonuses.
The success of large organisations depends upon teamwork throughout the structure and not on the 'brilliance' of 6 to 10 highly paid execs enjoying extraordinary beneficial T&C's and contracts that usually encourage and reward short termism and failure.
Obama's move should encourage focus on the social worth of the powerful elite that shapes our society.
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All of the jobs I have had I have been expected to PROVE that I could add multiples of my wage in benefit over other candidates each year to maintain my employment let alone get a bonus. This should be doubly so for people at the top of their professions. Unfortuantely we appear to have got a position with banking similar to football where a 'known name' is percieved to be worth above the odds and since there is a limited number of these it is then used to push up renumeration to those in the second tier.
Frankly the sums are obscene. No one person should be worth more that say 20x average wage and if it is a quoted company any bonus should come in the form dividends from shares.
These people take no risks with their own money like entrepreneurs do.
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Message to vegetable grower-would like to join your 'like minded group' of 17 (last count) as suggested by jericoa. can you post a link?
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On the latest development on the Aviva orphaned fund fiasco...this decision graphically demonstrates to me the pure arrogance of much of pension industry when it comes to dealing with 'customers' money. "Give us the dosh and we will decide if, when and how much we give you back...after taking our fees of course".
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No...I do not agree. A blanket solution is far from ideal.
Not all bankers are the same...not even those working for the same bank ! Boring perhaps, but detailed investigation needs to take place before deciding on any Banker's individual pay.
It is more important to know the suitability of those on Banks' Boards, Banks' Risk Assessment Committees, and Banks' Remuneration Committees.... are they proven suitable to the tasks appointed ? E.g. Why was a Pharmacist appointed Chairman of RBS ?
I, as a small private shareholder, asked RBS over 18 months ago as to how (and with which skills) members of the Risk Assessment Commitee were appointed. I was given a short AngloSaxon answer.
The person who gave me this answer is now, I understand, in Australia...possibly sunbathing on a beach near Darwin.
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That sounds to be one good firm step forward in resolving this mess...
As 8. noted above with a good link, another excellent step would be to call in a few of these banking senior executives for some questioning....
While we can hope GB will be swept up on the Obama coat tails and implement this here too, he is going to be held up to a certain amount of ridicule for having said in his Mansion House 2007 speech (again from Paul Mason's blog).....
"So I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London....And I believe it will be said of this age, the first decades of the 21st century, that out of the greatest restructuring of the global economy, perhaps even greater than the industrial revolution, a new world order was created."
What hubris!
What stupidity!
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So how many people on average wage does it take to pay a banker (in a virtually nationalised bank) 350,000 quid a year ?
Well 4,000 quid tax per person on average wage means nearly 100 people have to go to work all year to pay for the salary of one banker.
Or - all of the tax paid by a small business employing 100 people just to support one person who won't then loan that business any money.
How long will people play this game until they realise its the game itself that doesn't work ?
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Over the last twenty years we have been sold a myth of modern capitalism being about small entrepeneurs risking there own capital to follow in the footsteps of Henry Ford and create vast industrial empires which bring concrete benefits to the masses.
But the truth is that the overwhelming bulk of the economy is dominated by the existing multinational combines run by executives who have not risked a penny of there own capital but still demand vast reward.
It was always our money at risk. Now it is our taxes but thats only because our savings and pensions were not enough.
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If the head of Lloyds, RBS etc have pay limited to £350,000 then surely the pay of other government managers such as heads of councils, hospital trusts etc should also be reduced as they run much smaller businesses. Remember that many of the heads of the banks in which the government has invested were not there when the problems were caused.
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Halelujah for Barrack Obama for wanting to tackle this issue. Let's hope Gordon has the guts to look at it too.
This is obviously very difficult ground to walk, to get a balance between rewarding talent and recognising the significant responsibility & pressure that executive jobs in these huge companies bring. One thing that is evident is that due to globalisation, some companies have become too big to manage properly, and one or two individuals just can't do the job. Allowing larger salaries/bonuses just isn't the answer.
One thing we do need to tackle is the cosy circle of 'pat my back i'll pat yours culture' in executive board rooms that are invariably filled with friendships and/or people who've moved up from the Directors positions into the non executive positions, where elements of objectivity just seem so far removed from present day remuneration committees.
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If we take the argument to its logical conclusion then we must assume that all public sector salaries have to be capped at this level.
You then have to accept that junior positions and rolls will be capped at lower proportional levels.
Boy there are gona be some very angry Quango bosses.
How will we cope when all the TALLENT leaves the UKs Quangos.
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Just a thought.
Instead of invading Iraq and Afghanistan why not invade all the worlds tax havens, impose immediate martial law and open all the books.
ANY money found without good provenance should be confiscated and given to the exchequer of the country of the ultimate beneficial owners.
Switzerland should be included here.
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#31 watriler
what do the men at the top contribute?
its called 'protectionism'!
haven't we heard that before somewhere?
politicians, government ministers, bankers and industrialists everywhere will do anything to protect their own self interests.
its always been that way and always will be.
we should not be fooled that it will ever be thus.
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#27 (& Others)
Firstly, I am not a city exec so I speak without fear of £m windfall taxes.
I am sorry but this idea of retrospective taxes on bonuses, or indeed payback is utterly ludicrous. The rules may have been wrong but people operate within laws safe in the knowledge that they are not going to be penalised for doing so. If you start making retrospective changes, what sort of precedent does that set?
Should smoking become illegal, do you suggest we imprison everyone who smoked in the 5 years before the ban? I am all for changing the remunerative structures but please can we limit the discussion to sensible ideas!
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"The justification is that they're cleaning up a mess created by others"
"No, mush - the justification is that if you don't clean up what your fellow financiers have left behind, market forces will prevail, your company sinks and you don't have a job. That's the way it works in post-1980 Britain. Now get your hindquarters into gear and do it."
Or at least - that's how it has worked in the rest of the commercial world for the last twenty years or so. That's the advice (albeit in more muted language) that their predecessors have given to the world as companies have been squeezed more and more.
Forget the departed "others". Unless they can be shown to have willfully committed fraud then both they and their ill-gotten gains are almost certainly beyond legal recovery.
However, for the rumps of their respective organisations, now being kept out of the brown stuff by the long-suffering taxpayer, executive renumeration must be consistent with their role as bankrupts and penitents. Otherwise let the whole rotten rump fail and hand its future adminsitration to a £35K a year civil servant somewhere in Whitehall. While we might lose the "expertise" and "business acumen" of the bankers (both shown to have been smoke and mirrors in recent years) we would at least get honesty, transparancy and objectivity
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2. At 10:29am on 04 Feb 2009, truths33k3r wrote:
This is exactly why governments should never be involved in private business.
The bailouts should never have happened due to the moral hazard it creates.
One can only guess at the global level of fraud that has gone on for the taxpayer to fund.
-----------------------------------------
Quite right. Why on earth are we all allowing this madness to continue? If we don't vote this gang of corrupt, incomptenet spivs out at the first opportunity we will deserve all we get!
Frankly, as one who has been a stranger all his life to strikes and civil disobedience etc, I am surprised to discover that I am so angry that I look forward to an opportunity to physically vent my spleen.
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If they are nationalised - they won't be profitable for at least ten years! No one will want the jobs from the real banking sector!
We will have to have real captains of industry leading the banks and when they have recovered the 'pseudo CEO boys' might start to sniff around again!
Until then they will all diversify into oil and health industries until the dust settles!
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Obama has got it bang on.
Its about time that we did the same. I would actually go further and treat bankers that have taken risks to fuel their salaries, like organised crime bosses-prosecute them and asset strip them to help pay for the damage they have caused.
After all we prosecute crime bosses not so much for the crime but for the instability they bring to country and their immoral earnings- sound famailiar?
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"The justification is that they're cleaning up a mess created by others"
OK, then let them get their salaries and bonuses from the bonuses received, over the last 10 years, by those that got their businesses, the societies, the countries, the world, into such a mess.
To be entrusted with responsibilities over the welfare of many people or a society should be considered a rare privilege and honour, not opportunity for boosting egos, self-flattery and chance to fatup bank balances. For £250,000, there are probably many people who are willing and able to do a better job, with integrity, diligence and humbleness. I can recommend our milkman and an old carpenter.
Bonuses, if any, must be closely tied to the well-being of the country (GDP, debt/credit, employment, crime rates etc), a broad performance of the business (not just profits), and the taxes paid (low tax, low bonus).
The stop short-termism grab and run. The calculations must be based a much longer period of say, 5 past years so they care about what has been done, the current year and future 15 years long enough for misdeeds and incompetency to come to light. Tax deductable and payable in installments.
Get rich, of course, but slowly and responsibly.
The bonuses for the general public can be made in the form of tax rebates using set formulae lest it be used for party politics.
What Obama has done and propose to do in his two weeks in office makes our politicians and "leaders" look like self-congratulatiing, incompetent, arrogant wimps at best - unable and unwilling to quickly and effectivly tackle those who has offered them vain-glories while in politics, and winks and nods hinting at 13 silver pieces to come after politics.
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Most of us would regard $500k as an extremely generous annual salary. Surely running a bank cannot be such a rare skill that it is impossible to find someone of sufficient ability who would be delighted to do the job for much less.
I very much doubt if the knowledge and skill required is even comparable with that required to be a scientist, mathematician, doctor, lawyer or a member of most other professions.
Is it not time that someone looked into how these people got their jobs? So few of them were even clever enough to realise that when the credit driven asset price bubble burst, as it was bound to do eventually, their banks would suffer catastrophic losses.
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Would love to agree to this cap, but it is a nonsense to have a basis of the pm's pay being c£175k or the president's being £250k.
Tony Blair i understands received £5m for his memoirs, £2m advise to JP morgan, c£2m pa other consultancy and £1.2m pa on the lecture circiut.
To be fair i have always argued that bonuses should be paid for qualitative performance, not irresponsible gambles on short term profit.
Pay should be fair for all, albeit that i would want to reduce the ego element of salary i.e. the escalating spiral effect of we should pay our boy a little more than the competition to attract the best.
As a reasonable person what i would like to see is hard action taken against those who have been irresponsible and downright criminal.
where are the high profile investigations and prosecutions?
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in the present climate global requirement for top executives must have reduced
execs would find it difficult to find a job elsewhere paying the obscene rates they have come to expect
should we not now be calling the shots
if you don't like it - leave
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We are truly in an insane world where some business and finance leaders can be "pegged" at a salary level that some football players earn a month whilst people we rely on to keep us alive, teach our kids and feed us can expect a tiny fraction of the same.
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#9 RE 'screwing up'
Obama can cover 10 days of 'screwing up' in one sentence.
GB would be reading from an encyclopeadic set of prompt notes!!
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The conventional wisdom used to be that the market dictated the size of the salaries.
That is, that the apologists might say that we have to pay this rate because these wonderful individuals may go elsewhere.
In the actual event of global collapse this argument no longer stands up.
So when the global market collapsed should the salaries not have done the same? Or, are we talking about a differnt market here?
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Just how much actual gold does our cental bank actually have ?, has anyone counted it lately
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Bankerrs should retrospectively get pay ,pensions with bonus Made with their toxic pie in the sty,then their AAA's holes should be converted to legal tender with 666 of the beast branding irons and dropped by helicoptricks Bernanke onto the nearest tridents to decomission them with a golden goodbye .
They can then waddle away like little mutant pongwins .
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Indeed, Robert, bring back public duty.
One can only be in one place at any one time, wear one set of clothes at any one time, sleep in one bed at any one time, eat one meal at any one time and so on. Anything more is a luxury or gluttony.
So why are there some who aspire to more?
William Blake said that you would not know satisfaction until you had more than enough. I agree but once you have satisfaction why want more? It is pointless: enough is enough!
A bonus culture distorts business and the economy. Nobody is any the wiser as a consequence.
Nobody now standing in the ruin of our economy can argue that highly paid executives are talented. Their only measure ever was their high pay. To justify it they told everyone they were talented. Now we know better; there is no measure between pay and talent.
I must declare an interest. I will confess to being both an egalitarian and an economic puritan. If there wasn't a state I could even be a socialist.
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The only talent these bonus grabbing 21st
century robber barons have is their amazing
ability to lie cheat and swindle and get away scot free with their ill-gotten gains. Time to bring back the Stocks - a suitable punishment for the 'robbery and perjury' perpetrated by these
criminals. Three days of humiliation "at the mercy of the public" should be more than enough to teach them the error of their ways -
and it would be therapeutic for their victims to
watch them being pelted by the public with rotten vegetables and other suitable missiles.
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#27
Re: windfall taxes I'll repeat a post I made a couple of days ago:
1) Who are the "city workers" you are talking about? Board members, senior management, traders, stockbrokers, mortgage advisers, back office clerks, where do you draw the line? It's a ridiculous catch-all term.
2) Do you really think that all of the money paid to these individuals over the last 10 years has been salted away, or is it just possible that a lot of it was recycled into the economy?
3) Are you willing to pay back the money you have earned over the last ten years as a result of being the car salesman that sold the city worker a nice Porsche, or the waiter in the top-class restaurant who only had a job because the city workers used to pay the extortionate prices there, or the architect who designed new offices for the city workers, or the builder who built them, or the person who made money in buy-to lets because the city worker was willing (legally) to lend him money, or indeed the person who made money on selling their house during the house price bubble allegedly caused by those city workers?
4) If not, why not? You have profited from the money the city workers have put back into the economy, you should also share the pain.
5) Do you think that it's just possible that you might concede that things are a little more complicated than they appear to be in your blinkered view of the world?
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The world's economies are due for a major realignment. It isn't clear whether or not the atmospheric climate has reached a tipping point yet but there's no doubt the economic climate has and it's fallen off a cliff. In the end, old foolish debt which never should have been granted in the first place including loans to any and all individuals who walked through the door to buy houses, advance credit on plastic, loans to nations who spend far more than they take in, loans to banks who are insolvent, loans to companies that are bad credit risks, investments in complex intstruments that were made deliberately incomprehensible to disguise their risk and circumvent laws which restricted who could buy them will be wiped out, erased. This will not come by any law or court judgement but by inflation, the printing of vast sums of money to pay them off with cheap new found cash. It's every lender's worst nightmare and every borrower's dream come true. It is the only way out of the current mess because there aren't enough available tax revenues or other private cash in the world to begin to pay for what has been borrowed. In the new world where a cup of coffee at Starbucks may be $25 and the guy who serves hamburgers at MacDonalds may earn $80,000 credit will be advanced only on the likely ability to pay and at rates that give reasonable return on a loan while being completely transparent. Borrower and lender will know the exact terms. Nations and people who lived far beyond their means will have to change their expectations and life style. Companies that don't show profits based on sound open accounting practices will have their share prices suffer, and if uncorrected will go broke. Those who circumvent this transparency will be prosecuted and sent to prison for fraud. But before this happens, in the period of resistance to this process due to denial and unwillingness to change, we will have to suffer a very bad depression.
Europe, your cradle to grave guarantees and social safety nets are at an end. Produce competitively or learn to live like the third world does.
America, your lavish spending on every whim your bank credit cards will cover is over.
China, start developing your own country and stop trying to live off of the recklessness of others.
Russia, you can't exist on letting people pump oil and gas out of your ground, learn to make something useful the world wants or go broke again.
Third world, stop depending on charity of others, the donors' cupboards are bare. Get rid of your corrupt wasteful governments and your foolish cruel wars or starve to death.
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I do not support to limit salaries of people now - we still live in market economy, not socialist one. Let market decide.
However, bonuses should be given only to people who do outstanding work or/and achieve very good result.
What I support is to make people who made bad decisions and who brought us into the mess (not just top level) to return their past bonuses. They should be ashamed of putting whole country into the hardhip and get millions of GBP for this.
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This comment was removed because the moderators found it broke the House Rules.
As someone who has seen bankers idiocy at first hand over the past few years - I am an equity investor in privately owned sub-£50m turnover companies - where banks have priced equity risk as debt. I have to say that I am enjoying seeing bankers become the most disliked set of people in this country.
But, there are a number of issues that people have to consider.
1) The majority of bankers are fairly sensible, hard working and don't earn a fantastic amount.
2)That shareholders in banks should not be looking for returns in excess of that of a utility. We need to get banking to be boring, with unsexy returns, as it should be a defensive sector, that pays a steady dividend, and no more.
3) Investment banking should be seperated from the rest of banking activities. Whilst high street banks should be able to use the services of an invetsment bank for fundraising, they should not be buying and holding investments dreamt up by some whizz kid invetsment banker.
4) The senior executives of RBS should be held to account for bypassing normal credit committee when sanctioning lending to Russian oligarchs - who are now cash strapped billionaires. Fred the Shred should be charged with misleading shareholders for the fundraising prior to Govt intervention, and as RBS could be said to have been trading whilst insolvent, he could be prosecuted.
5) RBS should immediately stop treating their business support operation as a profit centre. They are the only bank that deliberatley tries to maximise their profits from business customers that are struggling, by charging massive monitoring fees, facility fees, and charging usury interets margins. Not only do they ensure that businesses fail, but they also worsen the position for trade creditors. Having recently been on the end of RBS trying to take an equity position in a company I have an invetsment in, in return for maintaining the overdraft facility (we rebanked to another wth a much enhanced facility), I will no longer allow any company I am investing in to use RBS for any service.
6) The cosy relationship between banks and insolvency practitioners needs to be reassessed, as well as the costs of IP's which are daylight robbery - effectively destroying any value that trade creditors might have expected.
7) The Basle II accord needs to be ripped up. Instead of forcing banks to put more capital aside during a downturn, they should be forced to do it during the boom, thereby taking the wind out of the sales of the economy in a more controlled manner before a banking issue develops.
Whilst executive pay is something that all SHAREHOLDERS be concerned with, you have to remember that Flash has benefitted to the tune of 41% of every bonus paid, a revenue stream he has become hooked on.
I do think, however, that it is time that instituitional shareholders in all companies should start kicking back on executive remuneation, and vote against excess. For privately held companies where the doers and the owners are one and the same, they should be able to pay themselves what they want - they do carry the risk etc.
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splendid news from the usa, lets hope brown and his shower do the same.
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#42 has a point:
The UK can sponsor a UN resolution to invade Liechenstein and Monaco on the grounds that they may possibly contribute to state sponsored terrorism and their contribution to global econcomic depression due to the lack of transparency in their dealings.
We can even add the intention to promote democracy and over turn their quasi-non-democratic forms of governments to justify our actions.
For at least the 2 days required to subdue the resistance the headlines will rung out the victory and the general economic problems will just disappear into a hole in the sand.
After that we will have to find a flaw in the Swiss democratic process, or make one up.
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I thought you were only rewarded with high salaries and bonuses if you were good at your job. These bankers were definitely no good at theirs i.e. the mess they got us all in. Most of them are friends of our politicians so I cannot see a curb put on their salaries or bonuses. Off the point Robert why don't you have a look at the UK mortgage companies that are a spin off from Lehman Brothers as I understand they are being sold in a fire sale so the people with mortgages will not know who owns them and the financial institutions buying these mortgages will not want to wait 25 years for their money.
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Yet the mantra continues to be that if not properly remunerated good staff will go elsewhere. This is what I am hearing from UBS staff taking a huge cut to bonusses. They will just leave. They seem to think there will be somewhere for them to go (if they are good enough) that will continue to pay the big bucks (or pounds).
There seems to be no recognition that significant and long term wage deflation needs to take place within financial services.
As a tax payer and middle class Londoner long made to feel poor despite a 6 figure income I feel sure that finance must face a reckoning and that a 50% reduction over the medium term must happen. Or am I being fanciful? If the big bosses get £350k where does the rest of the pack end up?
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It's incredible how many people here are whining about bankers' remuneration, yet will quite happily go to a football game this weekend to support people who are being paid far more than bankers just to play a game.
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Without offering world class salaries and bonuses to our business leaders, we will not be able to attract the quality of executive that we have now.
Similarly, if we continue to criticize the actions taken by our elected officials and overexamine such things as their expense accounts, then we will not be able to attract the quality of politician that we have now.
Hang on a minute, I think that I might be onto something here.....
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Well noted #8 cityNickDrew
Also of note:
Merrill Lynch: John Thain, the former chief executive of Merrill Lynch, the investment bank now owned by Bank of America, has been subpoenaed as part of an investigation into bonuses paid by banks that have received US governement bailout funds.
AIG: Christian Milton, a former executive at the US insurance group has been sentenced to four years in prison for his role in a reinsurance deal that prosecutors said had misled AIG investors.
WHEN DO THE PROSECUTORS OVER HERE GET OFF THEIR BACKSIDES?
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A good idea from Obama, if the only reason the business still exists is a state handout then it is clear that renumeration has to reflect this simple fact.
Gordon, one policy idea from someone else you can nick that no one will object to.
350,000 quid is more than enough for anyone.
It is a real shame that already distributed bonuses based on overblown notional profits cannot be recovered.
You can recover the proceeds of crime but unfortunately not stupidity. And being stupid is not a crime.
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How much do we pay other heads of public owned institutions that regularly lose money, e.g. the post office. Maybe their salary should be reduced a bit too.
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Someone once told me that Bankers are people who are obsessed with money who are not clever enough to pass either the Accountancy or Law exams.
I do not know if this is true but makes you think................................
However it may be this is your local bank manager - I suspect the ones that are being 'hunted' for are probably qualified accountants anyway - for all the rights and wrongs of what they did and what has happened banking at the highest level has got phenomenally complicated - which, of course, is the whole problem now.
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Who said our bankerrs were not tallonted,
They were certainly more skillfull than the Brinksmat Robbers which established the bench mark remuneration scales for skilled opperatives .
As for those who accuse the bankerrs of "ransacking and pillageing" thats a damnable lie!!!!
No one saw any ransacking .....just a deccade of quiet pillageing, as they wheeled their performance bonuses out the front door ,under the watchful gaze of the shareholders [hidden in full view]
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This comment was removed because the moderators found it broke the House Rules.
13.26: Just heard on "World at One" that the solution to the Lincolnshire strike is to "create" another 100 or so "new" jobs.
So we won't upset the Portugese workers - and have offered enough of a sop to the strikers. No jobsworths they.
The offer's been accepted. Why wouldn't it be? With the billions being thrown into all the other black holes, what's another 100 sinecures? After all, it's only taxpayer's money.
Please, can I wake up!
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#51 Kudospeter writes:
'Tony Blair i understands received ?5m for his memoirs, ?2m advise to JP morgan, c?2m pa other consultancy and ?1.2m pa on the lecture circiut.'
--------------------------------------------------------
But wait - you forgot about his role as special envoy to the Middle East, doesn't he get paid for that - after all he's been doing such a wonderful job recently.
Not.
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Gordon Brown take note.
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61
Prescient I fear
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#42 - excellent idea. This would raise billions. It could be done by co-ordinated action without the need for the military. Unfortunately they would be tipped-off by some of the politicos with 'investments' in said tax-havens.
Yes, Barclays only escaped the fate of the Pride of Loch Lomond by the width of a CDO squared. It says a lot about the quality of the senior management at Barclays Bank, even though they present themselves as having escaped the worst though 'good judgement'
By the way, note the hilarious comments of Onward-Ho (probably changed handle now) a true Zanu-Nulabour acolyte in disguise.
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Hello all, your friendly hedge fund rich kid here! Before you nail me to the stake, bludgeon me with your pitchforks and feed me to the fishes, perhaps you will allow me my 15 minutes of fame before I go back to my online shopping order with Prada.
Like many, Peston’s blog has become vital lunchtime reading. I’m compelled to comment today, as in the last couple of weeks we've all resorted to militant socialist ranting! Come on, we can do better than this! You vilify the banks and the politicians because they are the easy targets.
Home truth #1 - None of you moaned when your buy to let flats were printing you money, but none of you accepted the simple fact that the value of your investments could go down as well as up. Lesson 1 - If you can't afford to take the hit, then don't place a bet.
Home truth #2 - None of you moaned when your pension pots were inflated by a bull market….But , guess what, none of you can now believe that the value of your investments could go down as well as up?? Lesson 2 - Understand the risk of your investments and don't feign ignorance in your defence!
Home Truth # 3 - We will have a deep recession. More banks will fail. More of us will lose our jobs. It will be painful but sooner or later we will reach capitulation and the market will turn as assets become good value again…Hey presto, the jobs market will come back. Lesson 3 - The government does not owe you a job and we have to get into a more self-sufficient mentality.
Bank’s are being supported by the government because there will be a systematic failure if they do not do so during this liquidity crisis. Some of them will survive, some more will fail. But the banks were always going to be the most exposed to the deleveraging of the credit markets because they ARE the markets! Perhaps spare a thought for the 99.99% of bank employees who work very hard, are paid well, but not excessively, and did not have any involvement in today's global turmoil
The success of the British Government will be in its ability to reposition the UK for growth when the "green shoots" do actually appear. 5 areas to watch...
1) We need a sensible and balanced regulatory framework across global Financial Services, but for God’s sake don’t smother the free markets with unenforceable controls.
2) Capping executive pay…. Lip service by politicians. This will be self imposed and the answers lie in sensible linking of remuneration with medium-long term results. Already the investment banks are realigning around this model – Ask anyone at Deutsche Bank and UBS how their pay package has been changed over recent months if you think this won't actually happen across the City in the next 2 years
3) An investment in sustainable and profitable technologies. Who knows where future growth will be, but backing and aligning Britsh workers into “green” technologies which promote UK self sufficiency and a clear investment strategy in scientific and technological innovation will probably win out over arguments on the picket line.
4) Sensible investment in UK manufacturing. The UK can do it well. Take Nissan in Sunderland and Honda in Swindon and work out why that model works (and note also that even these highly successful companies needs to pair back operations when they are under market constraints!).
4)The realisation that public sector needs to deleverage as well as the private sector and that this HAS to be combined with genuine public sector reform and absolute accountability of all ££’s expenditure to all people who contribute to the UK bottom line.
5) The introduction of a proper long term public services strategy which is taken out of the political agenda. A 20 year vision for Education, welfare and Healthcare which transcends all political parties
I’ve no idea how points 4 and 5 could be implemented in practice without significant political reform… But here’s to hoping!
And finally, just to stoke the fire a little more… Post 27 - the majority of city workers have already paid 40% on their bonuses…. Where has that gone… Ah yes, right into guaranteed public sector retirement plan, no doubt… ha ha
Keep up the debate all!
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60 Rupert Tarquinson:
Pheeeweee Rupert. Relax, have a drink, sit down maybe take a power nap.
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Not half as much as after the International is released to remind us all of the details of BCCI. How many UK banks is it that are now on the Fed hitlist for behaving similarly, does anyone know?
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Executive pay inflation is created by publishing the numbers. This just results in proliferation as egos battle to out-do each other. If it were a private matter, then executives would not compete to demonstrate who earns the most...instead, their performance could be measured by traditional means...profit and share price!
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The real worry is that the recession has struck and we are realising that in rich countries the majority of people actually have enough stuff...there is no scope for boosting the economy by building cars and TVs because the ones we have last a long time and the technological advances on new models are small and peripheral ( ie do very little to increase their utility or our pride of ownership). The only scope in these countries is to greatly increase wealth creation by creating goods and services for all of us: infrastructure, health, education, novel energy sources etc. Three months into this crisis I would like to see evidence that we are starting to shift the economy in these directions. We should be running out of patience with the existing banks and recast them in a form which will do the job we now need them to do.
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Hmm, lets see, just how many Public Sector employees earn over 100 000 pounds.
Hmm, so how many earn over 20 000 pounds ?
Ah so the majority actually earn around 22 000, with many actually on far less.
By all means cap their Pay at 340 000 pounds !
To help get them there, how about a nice thirty percent pay rise to inject some money into the economy ?
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Hmm, now how many Politicians and Bankers have numbered Swiss Accounts ?
Now there's a little project for someone.......
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Obama may have the guts to say what he likes about 'bonus schmes' - but will he be able to pull it off? Methinks that he will soon find out that he does not, in fact, run America. It's business that runs America and us for that matter. I wish it were otherwise but it's not.
We can howl all we like about 'bonuses' but nothing will happen to alter how CEO's etc., earn their living, and it is 'who you know' and 'where you've come from' that keeps them in their jobs.
At #3 supercalmdown - yes, probably it will be only the Supermarkets and essential goods that will prevail.
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Of course govts can fix the salaries of people they employ and if they want to restrict salaries in businesses they rescue that is their right - private equity does the same when they buy companies. Whether you end up with the right quality of staff, fully motivated is the issue.
As for the poster who suggested invading tax havens perhaps you would like to suggest a definition of a tax haven - please do not start from the tax rates because that shows ignorance. If a country raises enough in tax to pay for its govt spending then why is it a tax haven? It is living within its means (unlike UK) the choice of how to raise tax be it corporate rates, personal tax rates, VAT etc is for each govt to make. Classic example is the Channel Islands. You label them tax havens because they do not levy corporation tax but they balance their budget rather better than UK
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No 53 - ShockLeader
No, it's not insane at all. Footballers are paid these obscene sums because they are assessed to be the best in their field by the managers and directors whose objective is to put together a silverware-winning team. These teams are financed - directly and indirectly - by punters who gain vicarious pleasure when the team with which they identify eventually lands the said silverware.
If these punters send back their Sky receivers, stop going to games on Saturdays and stop buying overpriced replica strips then the whole financial edifice collapses and the obscene salaries diminish. However there are no credible signs of it so far and the punters continue to willingly pay monies they can possibly ill-afford just to enhance their prospects of having bragging rights at work on Monday morning.
There is no such parallel with the current heads of the City's sick, lame and lazy. Beyond the security of his modest savings, the Man in the Kings Head seems to have little sympathy for the current management of NR, HBOS, RBS and the rest and whether they are being paid what their industry perceives to be the market rate. He just knows that he's not prepared to have it deducted from his pay packet.
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Bonuses are a lousy way of renumerating people, whatever the level in the company.
I have worked as a consultant to the financial services industry (investment banks) for over 20 years and the whold industry is bonus driven from top to bottom. I have come across situations on several occasions where bonuses act directly against a companies interest. The general problem is that issues that are very expensive in the long run are not raised early for fear that they will affect bonuses. Frequently we have seen computer systems go in on time (triggering bonuses) that are fault ridden and cost a company far more in the long run then they should.
We always try to resist bonus arrangements when agreeing contracts. Instead, we set a fee for a job and do the best we can to deliver. We always try to do the very best job that we can in the best interests of the client and do not need the promise of a bonus, or the threat of not getting a bonus, to motivate us.
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I'm with #29 and #59: the idea that the sort of people who were in senior positions in the banks that have got us all into such a mess had any sort of "talent", other than for feathering their own nests, would be laughable if it hadn't had such tragic consequences.
I actually have no problem with stratospheric bonuses for senior executives if they do a good job. But the word "if" in that sentence is crucial.
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#63,
Off topic??? See emphasised below!
For Helenhey (33)
Salaam, etc.
ed
Couldn't be more on-topic!
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Just speaking to post 5 by pdnash, post 38 ; Anthony-analyst's and alos post 44 3671276 (and many others)
I don't think (re 5) there will be a downward ratchet..these guys NEVER were worth £5Million plus bonus/option/pension each year of £14Million or whatever.... I think other "CEOs" and Directors in many sectors may see their own inflated (though much less so) salaries suddenly hit a wall as the very high peaks inBanking etc disappear (Greed is greed...and will look REALLY greedy at the top now the bublle has been pricked)
I don't think post 38 is right...though I see why he's saying it..but Google, You Tube (now Google owned) , Ebay, Amazon etc etc are massive 'game changer' companies that have been created by entrepreneurs (albeit often with a few million dollars of seed capital I have to admit) in less than a generation...let alone Microsoft, Dell ... and so on.
Finally regarding the point in post 44... he is 100% right that laws can't be retrospective but in many ways the issues are simply 'time frame ones'...IF a CEO was to get a bonus for performance acheivements A-E but ONE day later it was found that there had been a material fault in the calculation and performance acheivement D was simply false..he wouldn't get the bonus.
Here they have been given bonuses for creating "sharehodler value" that is always the metric, whether overt or hidden behind technical spec.... and patently, obviously, and spectacularly they haven't provided shareholder value....not at Northern Rock...or HBOS...or RBS or ...well.....just about all of them.
It's a bit like the " negligent or just incompetent' argument (---in this version either these people were all admittedly living in a bubble where in that year they thought at the year end they HAD delivered whatever shareholder value justified the bonuses (and flights to Barbados for jollies etc) ...but unfortunately within a supportable time frame (sometimes even before the actual year end) the company had ceased to exist totally, or spectacularly combusted and reduced to virtual zero value.....so their innocent assumptions were wrong and the bonuses paid in error.
OR (and probably worse) they took bonuses knowing the whole edifice was tottering and could collapse at any moment...that's possibly one for the courts.
Basically who is to blame...the person who builds the ramshackle tower block knowing two dorrs slamming at the same time MIGHT bring it all down?....or the two people who happen to slam their front doors simultaneously?
I think that's the counter argument to the retrospective calling to account--- basically what day are we to choose as the moment to divide retrospective from current.... ???
The day Northern Rock's finance officer left in early 2007?...or whenever the Govt finally gets round to enacting some legislation in 20whenever???...or some other date?
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Well,
At least Gordon Brown is still helping the hard pressed bankers (er sorry families)
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Geoff (70),
And that would be a bad thing? ;-)As for the "benefits" gained from the "global market" in executives...
Peace and knowing when enough is enough
ed
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71. At 1:07pm on 04 Feb 2009, BankSlickerminustheR wrote:
Well noted #8 cityNickDrew
Also of note:
Merrill Lynch: John Thain, the former chief executive of Merrill Lynch, the investment bank now owned by Bank of America, has been subpoenaed as part of an investigation into bonuses paid by banks that have received US governement bailout funds.
AIG: Christian Milton, a former executive at the US insurance group has been sentenced to four years in prison for his role in a reinsurance deal that prosecutors said had misled AIG investors.
WHEN DO THE PROSECUTORS OVER HERE GET OFF THEIR BACKSIDES?
There is a law for the RICH and a law for the POOR !!!
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So Gordon Brown has been waiting for Obama to take the lead in getting the world out of the mess it's in.
Well he certainly won't like what he's hearing for it seems to be in complete contradiction to what he is advocating.
Perhaps the US are realists and are fully aware of what they must do to protect their country and its people.
If Gordon can't agree then he must go for he cannot save the global economy on his own if everyone else has given up on it.
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"Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism"
Karl Marx, Das Kapital, 1867
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The pay absurd levels are of course not restricted to the financial sector, point the finger at the Beeb too, how much is it worth to bring a Corporation into disrepute, ask Ross, he knows.
More pay for the poor overworked moderators would help I am sure.
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#61 - come off it.
"loans to companies that are bad credit risks"
When you implode the entire substrate of the economy EVERYONE who is not cash-rich becomes a potential credit risk.
Creditworthiness of a company should be based on the P&L accounts BEFORE the recession ie: before the internet promulgated crash in the 3rd Qtr of last year. In other words general track record.
The credit rating agencies - along with the circuit judges who sit and hand out debt judgements - and the insolvency practioners must be laughing their socks off now. Never been so er,'busy' if ever such a word could be applied to those vampires.
Nothing on earth to be gained by hammering people in the courts. Do oyu hear me? Nothing! All in together now blah blah and it's about time Plodder started thinking that way AND acting that way. I have never, ever known Britain so disjointed at every level.
GC
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But what about the motivational effect on CEOs, and the aspirational impact on mid-level execs of Obama's decision? Won't they just up sticks and go somewhere where their skills are more appreciated? Surely, this will have a devastating impact on the ability of these firms to come through this crisis.
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69
Most people on these boards would have no qualms about bankerrs remuneration, if they could get a ringside ticket to watch them kick eachothers balls about the place saturday afternoons.
Then they would be seen to have earned their money.
What is telling is that not one person in the financial self service industry has been prosecuted for the unfolding credit farce ,thus for most inteligent observers ,establishing a prima facie case for colonousion and conspiracy in high places.
Or is there[silly me] something ive missed ?
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Post 69 Everyone thinks that football salaries are ridiculous too - they however (unlike bankers) are unusually talented people so like musicians and film stars that make a brand will always get a small fortune in re-numeration.
Bankers are not extremely talented they are merely talented people (even talented people make mistakes in heard mentalities hence the mess they have left us with....) - they can be replaced by other talented people - so they are effectively grossly over payed and have been for many many years.
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I'm fascinated to see that I have been moderated out again (24 & 76).
I wrote of an imaginary conversation between a British Prime Minister trying to explain to a top banker (and political donor) that his pay was being drastically reduced as his company had received state aid.
How can this possibly have broken the House Rules?
Can a moderator please explain?
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All Obama will do is antagonise the bankers and they will make him pay further down the line.
Can we please abandon the illusion that central banks have a social conscience. All they are here for is to loan money at interest. They loan as much as they can and when they become insolvent they pretend their own need is the same as that of the general public. In short a bail out is a scam disguised as a matter of pressing public need every time.
In fact the last thing the public needs is to bail out grossly wealthy bankers, because the result is always inflation. That inflation is happening already, and it is happening very fast.
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#64 - while you may be enjoying the fall from grace of the bankers, the woes of the banking industry can't be doing your IRRs much good.
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Bubbles (82)
You mean this isn't already a systematic failure? Or perhaps it's only systemic? I agree it's got a fair way to go, though.Let's have a look at today's bargains
Keep your powder dry
ed
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Fraserhoff,
Would you prefer shareholders didn't know?Complain about this comment
60. Rupert_Tarquinson
Trickle down was a myth that enabled the rich to loot the poor.
It’s a bit patronizing to assume that the man on the street should somehow be grateful that the big city boys got paid so much that the rest of us got to benefit from whatever crumbs they decided to drop our way. Lucky us! What a privilege.
Maybe if the banks hadn’t thrown so much cash at their top boys, they might have had a spare bob or two of their own left over for the bad times.
But they didn’t.
Instead they paid themselves extremely handsomely (beyond the dreams of avarice) and then blew all their beans in the capitalist casino and came crying to the taxpayer for more.
A cap on bonuses is no-where near enough. A retrospective windfall tax on previously earned bonuses is not enough. The shunning and ostracising of the top bankers is not enough.
The return of every penny of bonuses that were earned in the dubiously titled boom years, is not enough; though it might be; if coupled with investigations and prosecutions for theft, criminal negligence and fraud, in both the government and the financial institutions.
I’d like to comment on your last question.
The man on the street doesn’t think the world is that complicated. It really isn’t. He looks with his un-blinkered eyes and sees the rich doing what the rich and powerful have always done: Invent rules, change the rules, break the rules, do anything to the rules in order to keep themselves rich, and everyone else poor.
The poor man can live with that, as long as he can put food on his table and keep a roof above his head.
When he gets cold and hungry, he will act.
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88
Think of a very large number.
No, not large enough, try again.
No, still not large enough.
Now you are getting the idea.
Here is another game.
Think of all those countries where you are always being asked to make charitable donations.
Do you see how their politicians and high ups live?
Guess where the money is?
I once worked for a Swiss private bank.
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150
Having worked in very many of what are generally referred to as tax havens I can assure you from first hand experience that while the letter of the local laws may be being obeyed, an enormous amount of the money that is controlled in these places STINKS to high heaven.
Their regulators can protest all they wish but as an insider I guarantee that if you lift the stones and shine a bright light the world would be disgusted.
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Well done President Obama! I'm sure we will be inundated with calls of 'foul' from the suits with a vested interest. We, the taxpayers virtually own or have a major financial interest and concomitant risk in these banks. Why should we not control the salaries of the senior management?
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Now, when this year will the first Housebuilder go bust ?
And how great are the losses of the Commercial Property companies ?
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How many more UK firms are due to close down or go into administration this year ?
Now, if Santander runs out of money (Spain now with record unemployment and rapidly falling House prices) does the UK Gov't bail out Abbey Nat, Bradford & B and Alliance and L, or is that left to the SPanish Gov't ?
I ask merely out of curiosity.
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1: Surely a joke ?
Someone was saying about a Stockmarket crash.
Unlikely but then there is no chance of a recovery anytime soon either.
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Interesting debate on Stephanie Flanders' blog about Protectionism.
It is abundantly clear that half the people writing and possibly the blog owner herself haven't got a clue what they're talking about because they don't need to know anything about tarriffs or other P measures because they are not exporters adn importers - which I am. So before the P thing hits the headlines on RPs blog too and the whole thing develops a barmy momentum of its own based on myth I just want to say this:
The EU - as one example -already practices this on a gigantic scale - against non-EU countries, with VAT (varies betw countries) and import tarriffs (duty) imposed according to product, country of origin and whim. And that is just the start. Every other country in the world has import tarriffs some of which are 100% OR MORE.
Never mind the EU and UK currency - which to most non-dollar countries is a protectionist barrier in itself. And the pound was a HUGE barrier to export trade to the US for nearly 6 years!
Stop P? About as likely as a duff bottle of Hirondele. It's already HERE!
GC
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When the BBC showed pictures of the Prime Minister with his Chinese counterpart, there was a picture of two small flags of the U.K. and China.
The Union Jack appeared to be upside down.
In the Boy Scouts I was taught that this was a sign of distress.
Presumably the flags were made in China like most of our flags.
Was this intentional or an omen?
Frizzendancer.
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A ceiling on financial service workers pay will accelerate the move of such companies to friendlier/less regulated countries that have a fantastic opportunity to right now to offer the right trading environment. It is a fact that London/New York are not the best places to be a worker and sunnier climes with less corporation tax are very appealing.
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# 82 burstyourbubble
Well argued points
' I?ve no idea how points 4 and 5 could be implemented in practice without significant political reform? '
The significant political reform being two number 4's in the decimal number system presumably.
How much was your bonus ? :)
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I suspect that if you took every single publically quoted company and drew up a clear organisation chart and then made the head of each strand redundant and appointed the next in command, there would be little discernable difference in the performance of any of the companies other than to make them more profitable.
If you also ensured the salaries of the remaining individuals remained the same and new appointments were made from outside at the bottom end of these companies, keeping headcount the same, the effect on the UK economy would be positive.
If the geniuses who are at the top are so good, they will quickly find new employment and increase competitiveness all round. Or they will retire into the sunset leaving new blood in place all the way down their organisations.
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The only bonus that should be allowed is that you get to keep your job for another year, at a very modest salary.
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Gordon is clearly man of the moment. Lionized by other world leaders for his resolute action against world economic depression.
The steps taken have already saved the banks and are on the way to bringing forth early green shoots of recovery in a country best-placed to do so, because of low level debtand sound economic management over the past ten years.
This is a global problem requiring global solutions that affect every hard working family in the UK. Only by pulling together in the blitz spirit can we creat British jobs for British workers.
Our current problems stem from the United States and once the markets realize how strongly the UK is now positioned, recovery can only be days or even hours away.
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what exactly is the discussion here?
any organisation that has had tax payers money (a bailout) HAS to be subject to pay controls - (from the tax payer / electorate / government)
CEO's (etal) from organisations that have had bailouts and still paid themselves bonus' should be dismissed and prosecuted and the money NEEDS to be clawed back -
were such not the conditions of bailouts in the first instance? why has such been allowed to happen?
Flash is already designing the headlines: "BROWN THE GREAT FORCES THOSE BADDY BANKERS TO GIVE US BACK OUR CASH"
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No bonus should be paid until at least one year and a day has elapsed after the relevant tax year to ensure that any gains are not just manipulation of the financial status for that year.
There should be a legal definition to say that an improvement in a company must be sustainable before a bonus can be paid!
Commisions should also face a delay before payment to ensure that up-swings are linked to any down-turn and to allow any payments to be adjusted.
Golden hand-shakes again should be delayed so that if there is a down-turn in a company's fortunes that golden hand-shake can be adjusted or withdrawn.
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82. burstyourbubble
I have no problem with your 3 home truths or your 5 areas to watch, but I reserve the right to indulge in a little socialist, nay even Green anarcho-syndicalist ranting if it makes me feel better.
Ed Iglehart - great thanks for all the Wendell Berry and Tao extracts, we all need a bit of tranquility now and again.
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Rather more than 30 years ago, I had 50 shares in a Plc. One day I received a mail shot to shareholders saying that the company was launching a new product, complete with what was then called a Top Hat scheme to benefit the company's executives, in which we were all being invited to subscribe for shares. I reckoned that the shareholders already owned the new product, so why were we being asked to subscribe? Following a wonderfully brief correspondence, (I had threatened a letter to the FT) I met the Chairman in his office and he agreed to withdraw the planned launch. But he also told me that I really ought to understand that Companies were for the benefit of directors not shareholders and that he was glad all his shareholders did not read all the stuff he sent them. The Chairman's comments have a certain ring nowadays, don't you think? And yes, I nearly forgot. As soon as I sold my 50 shares, Alex Lawrie Factors was launched!
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53, 69, 91, 105. Footballers generate their income through gates, shirt sales, other merchandising, TV rights etc etc. However, they are obliged to 'produce the goods' on the pitch. If they don't, they're binned and replacements sought. They provide entrtainmenyt, joy and a sense of 'community'.
Bankers on the other hand...............
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No, I'm sorry, Obama, I love you but I think you have got it wrong.
Being a banker must these days be a pretty thankless task.
If some bright whizzkid can turn around a turkey bank form billions in debt to billions in profit they should be awarded in millions 'cos they deserve it.
And if they lose the bank money their shares go from being worth millions to being worth diddly squat.
And that is the real world.
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#3 supercalmdown:
"It really says it all when the owner of Hamleys in London, Baugur, needs creditor protection.
If Hamleys cannot make enough profit, where does that leave everyone else ?"
++
Those businesses which rely on discretionary purchases are all going to suffer first.
No more M&S, more Aldi and Lidl.
- And Pontins for your hols, it seems.
Baugur are Icelandic and are now Baugured because they borrowed the money to buy the High Street.
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Excellent, excellent, excellent!!!!!!!!!!!
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HMG migh usefully follow suite and tax at 100% remuneration from any source over £250k and simultaneously crack down company tax advoidance. No more foreign domicile or off-shore bases. Sqeeze greed out of the system. Let job satisfaction motivate the top echelons. Heresy? Yes, and needed.
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#120
You either are a banker which makes you self-serving or you believe the tosh that these guys peddle which makes you a mug.
Either way you know where the door is, you just ain't welcome anymore. Chow.
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#118 guycroft
Sounds like you haven't got a clue what you are talking about or, more likely are posting from self-interest.
There never has been a true free trade area. So what's new? Free trade, as it is presently constructed, is likely to wipe-out what is left of British industry if the politicians do not change their stance on some form of protection.
Even with protectionist policies, international trade will continue - it did in the 1930s if you care to look.
The more and the wider this issue is debated the better.
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100 wrap up warm
Perhaps that's the way Gordon Brown sees it too
Not communism a la Karl Marx but he's certainly cuddling up to China.
The man will do anything to stay in power.
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At #106 eddixon
I can explain - they, the Moderators, don't like you taking a swipe at the goverment.
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I'm curious regarding the questioning by MP's you underwent today. Will you be blogging this experience and your take on events?
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I've just watched a BBC 'man in the city' who stated that it would be wrong to limit top cat wages - how can I be sure he's not part of the problem?
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The British "establishment" is sticking to its' divine right to rip-off the working man.
But in the last few years it has gone much too far.
The Americans have had enough.
We must do the same, because the City is starting to stink.
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"Oh dear oh dear.
It really says it all when the owner of Hamleys in London, Baugur, needs creditor protection.
If Hamleys cannot make enough profit, where does that leave everyone else ?"
I was wondering when someone would latch onto the BBC's presentation of the Hamley's story. At least the BBC journalist did add the facts that this is an 'investor' not the owner of Hamley's that is in trouble. This sounds like business as usual and should not really have any affect on the ongoing business of Hamleys or any other of the compnies they have invested in.
But, as with many of the other muppets on here, never let the facts get in the way of a misjudged alarmist comment. Time to invest in foil-lined hats - could make a killing on this channel.
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@92 small_investor: "We always try to resist bonus arrangements when agreeing contracts. Instead, we set a fee for a job and do the best we can to deliver. We always try to do the very best job that we can in the best interests of the client and do not need the promise of a bonus, or the threat of not getting a bonus, to motivate us."
Very well said!
It may come as a huge surprise to the overpaid "captains" of the banking industry that doing good work is a reward in itself. What a dysfunctional set of fools they are, their ship has gone down and it was because of the holes in it that they didn't repair.
I would laugh to see them landing an Airbus on the Hudson River! (Did the real "Captain" of this particular ship get a massive bonus, or something much more valuable, the knowledge he and his team saved 155 lives?)
If you are going to call yourself a captain of anything, then please take responsibility for your actions.
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I have worked for people who were innumerate but knew numbers: as good and better than bookmakers!
Some were illiterate; they could not read.
They could run a business because they knew people and how to hire those with skills that they wanted to use.
What happens when the skill-base of the UK becomes so low that no boss would bother, no matter what their own feeling for business is?
N.
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Anybody who hasn't watched the little 3mins 11 secs video of Robert Peston squirming like mad and going a little pink and awkward - just stop blogging and get watching - it is very satisfying to watch - rather think he got off lightly in the end though - questionner was not persistent enough.
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Excellent! Now the UK can follow the US lead without a brain drain.
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About time these fat cats had some limits placed on them even small though they are. One hears the objections that they need high salaries to motivate them, well were else are they going to get $500k for playing pass the toxic parcel?
Let's have something similar here in the UK but with a somewhat lower amount, GBP 100k should do.
Payouts to failed execs like Fred the Shred should be canned and pension contributions also linked to multi year performance. Why should he have huge amounts put into his pension every year with no comeback?
The banking sector has become far too large, it needs to be cut back until just large enough to service the needs of real business. For starters, how about cancelling all the CDS where the gamblers do not own the things they are supposedly insuring? Also what sense does it make to insure the debt of say the US or UK governments? If they can't pay their debts how does anyone think a bank can cover this?
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What is the fuss? Why should any company go cap in hand to a government pleading poverty only to then go splashing the welfare cheque around?
I wonder if the American duds realise that an individual’s welfare is restricted to five years over their lifetime. Now, it those rules were applied to American companies...
We have income caps and savings caps on personal welfare and no one seems to think there is a problem with that. Indeed, we have the new proposal that those in receipt will have to earn the welfare they claim. Why not companies and those who work for them? This is a moral issue. There should have been no need for a cap. A degree of humility and self-imposed caps should been immediately put in place by each of these companies. Don’t forget, the car-makers were not humbled enough to dispose of the private jets. And there was the company who were told to cancel the jet on order last week.
If the cleaners in these companies left the City or Wall Street loos in a mess comparable to the mess created by the bosses they'd be sacked immediately. There is as much demand for these people as there is for a plumber who leaves leaking pipes in your attic, a brickie who leaves crumbling walls behind.
Cutting the salaries is a start at cropping the use of tax havens by this little tightly knit clique of mates.
Obama made it clear he would not support greed and incompetence. Well done Obama.
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Performance based bonuses need to be outlawed for the financial sector for ever and a day. These bonuses do not attract the
the best performers. They attract the cutest gamblers to try their hand at banking. Bonuses are the very root of the present problems.
Let's take Fred the Shred as a typical example. A clever man no doubt, but when appointed CEO of RBS he had no banking background of any description. The fact that in his capacity as an accountant, he had overseen the liquidation of a previously criminally run bank could have given him no inkling of how a respectable bank should be run. He and many of his ilk, are constantly referred to by the media as "bankers". He is no such thing. He and many others are men of great wits but no relevant professional learning who have been lured into banking by untoward gambling rewards.
Professional standards of measuring risk in both lending and funding models will not be restored while the bonuses are allowed to continue.
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87. supercalmdown:
Thanks for the reminder I was beginning to think you had changed your mind on demanding higher public sector pay.
An interesting set of statistics I picked up off radio 4 a while back - weekend moneybox:
Average pay in the Public sector is lower than in the private sector. You're not surprised I'm sure.
Median pay (amount which at which half the people earn more and half earn less) is the other way round. And so what you may think?
What this means that whilst there are a lot of low paid public sector workers there are a greater % of private sector workers in the same position. i.e more low paid private than public in both number and %.
Neither of these stats is particularly useful in describing real life situations. The focus should be on improving the conditions for the lowest paid in both sectors to my view and ensuring that minimum pay is a living wage (roof, food, clothes, heat and light).
General higher public sector pay would have to be paid for from higher taxes which would hurt the lower paid private sector workers more.
It fails my first test of any policy idea - First do no harm.
Even if there was spare money to fund it which there isn't. So it's a silly idea.
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How about a new twist on this for bankers?
"Pay back the bonuses you creamed off over the last X years or you are fired?"
This way, some of the historic bonuses can go into a pot to reduce the tax payers bail out burden.
Those who don't want to pay back can be the first to go, as the banks cut back anyway, thereby savings costs as well. Those who pay back get some job protection.
Seems fair to me.
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I have always been continually surprised at the level of "bonuses" that people have been getting for taking huge risks and not really being worried about what the effect is in the long term. Basically, people who brought in more money to the bank got the biggest bonuses.
It is time to stop these excesses and let the executives focus on building profitable businesses. Bonuses should have been taken away if their actions caused losses.
This excuse that they need to give bonuses to retain the best people makes no sense. People don't just work for money - they work for recognition and status too and, one would hope, to build a better world. Those who work only for money can't be looking for the long term viability of the company.
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Can anyone enlighten me. Is there a point when a recession technically becomes a depression.
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I am in the States and have watched Obama's announcement about salary capping.
Music to the ears it was.
Any suggestions on this blog, or anywhere else, that it is a bad idea were probably written by the people who will be having their salaries capped, or by their PR consultants.
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From Cheshire Cats, Fat Pigs,
Rabbit Holes and Tea Parties
Bank chiefs with cheshire fat cat grins
Licking up the cream with a greedy thirst
Licking their bowls clean until they gleam
Then metamorphing
Into fat pigs
Their snouts in the
Treasury trough truffling
And scoffing
While squeezing homeowners
Out of their homes
And squashing companies
Both big and small
By not lending loans at all
Jam tomorrow and jam yesterday
Borrow more than you can afford
To pay for - yesterday, tomorrow AND today...
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Robert,
Glad to hear that the Select Committee did not think that you were responsible for NR.
Perhaps some of the blue sky protagonists will now start to think!
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124. At 4:04pm on 04 Feb 2009, TheNewPonzi
Recovery started yesterday !! Ordinarily I 'crib' the newspapers over someones shoulder or 'leaf' one at work. Yesterday I bought one!
Surely that is blossoming signs of High Street spending. Has anyone told Gordon?
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If companies, banks etc choose to pay their executives ridiculously high compensation packages, then these should be directly related to corporate performance with a built in pay-out time delay of three years to ensure that short term gains do not destroy long term financial strength, viability and profitability. If executives choose to go golden parachuting then there the delay should be let's say five years to ensure that they haven't simply been "cooking the books". Also the entire compensation package should be subject by law to standard personal taxation with zero write-offs possible....
Unfortunately it is patently clear that today's leading bankers, investment and hedge fund directors have more in common with Al Capone, Dutch Schultz and Lucky Luciano than ordinary mortals realise...
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The bonus culture started in the UK in the early 1990's when the big American banks increased their presence. There was no justification for the escalation in salaries or bonuses, companies just shopped around for remuneration consultants who could give them data that justified ever-larger increases.
In the UK the additional scandal was the misuse of final salary pension schemes by finance executives. Additional years service were granted and 'executive' factors introduced which paid out huge pensions with no regard to the true cost. That plus beneficial share option arrangements.
If the UK Govt want to cap salaries they should also introduce one additional simple measure. Directors should only be permitted to be rewarded by direct salary payments. This would at least make the true cost of rewards clear to shareholders.
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# 124 TheNewPonzi:
"Gordon is clearly man of the moment. Lionized by other world leaders for his resolute action against world economic depression..........etc"
+
Just checking. Your entire post was sarcasm, right?
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#41 CarrotsneedaQUANGO2:
" ..... Boy there are gona be some very angry Quango bosses.
How will we cope when all the TALLENT leaves the UKs Quangos?"
+
I guess we will not be sorry if they ALL go.
If we have to put up with quangos then maybe we will get some TALENT ( note the one L ) in to boss the them.
UKplc [ possibly in receivership] will not be able to give public sector raises and there will have to be a lot of SACKING.
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#145 bodgitt:
"Excellent! Now the UK can follow the US lead without a brain drain."
+
Doing this got us into the fine mess we are in Stanley.
( BO mom was called Stanley, BTW)
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#144
watched it but very dull:
could sum it up
Chair: Tell us your sources we want another mole hunt.
RP: No but if you force me to name them you are first on the list.
Chair: Oh... err.... any other questions for Mr Peston.
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#152 houseallwayswins
No, it's really a difference of depth and time. A recession is 2 quarters of negative growth. It may last between 1yr and 18 mnths.
A depression is far more severe and long lasting 8-10years!
I believe that we are entering the latter
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I see they are still trying to pin the entire blame for the collapse of the world's banking system on a certain Mr Peston, so well done in standing up to the committee today and not revealing sources.
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104, 105, 129:
Your implications that bankers who receive the top salaries are not extremely talented are absurd. Perhaps you are unaware of the vast number of people working in the financial services industry who do not receive huge bonuses? Only the select few with exceptional talent make it to the top where the bonuses are huge.
Where footballers provide you with entertainment, bankers provide you with financing for your home, your business, your car, etc, plus myriad other services. And yet you argue that the footballers are more deserving?
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Excellent.
Yet another bubble bursts. That of senior execs pay.
Many of them are simply not worth their money. Their pay is proposed by biased remuneration committes and accepted by the City Shareholders.
It's all an inside job. Hopefully Obama will show they have been found out. Will super-Gordy follow suit...lol.
With firms going bankrupt left right and centre there is no longer an under supply of 'talent'. So supply and demand says the price must fall and so it should.
Some people in organisations are worth millions...those that directly earn profits well in excess of their remuneratin packages (eg salesmen)...very few directors do that. Very very few...even in the City.
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In the spirit of "co-ordinated global action to solve a global problem" will Crash follow suite and place similar limits on UK banks?
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It is called the
'Price for Failure'
Good performance should get rewarded.
Average performance deserves basic pay only
Poor performance deserves reduction in take home pay.
Perhaps the UK could extend the Obama Pay Principle to incorporate restricted pay for the Public Sector Bosses and Ministers who screw up on delivering their targets such as the over budget and delayed IT projects etc.
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#155 and others
You were not responsible for Northern Rock. NR was a disaster waiting to happen. You just reported it in your inimicable style and before any body else. That is why we know that if we are going to hear about TEM (Total Economic Meltdown) we will hear about it here first. I am told it is a week on thursday but you probably know better.
Noli Illegitimi Carborundum
Best wishes & keep keeping us informed
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Pity we wern't leading the world on this one. These bonus packages have been obscene and have now been shown to be totally unjustifiable.
Even at the risk of seeming to be copycats the UK government should legislate on salaries at the top end no later than next week.
I'll write to my local MP, Don Touhig, and get him to start the ball rolling.
Oh hang on, wasn't he the one who moved Parliament not to publish/act on MP's expenses..................
What chance of that then? :o). Never mind, green shoots, the Six Nations start this weekend.....................
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152.
Yes,
a recession is when your neighbour loses his job, it becomes a depresssion when you lose your own job.
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Watched this at lunch today. It will definately strike a cord with very many in here.
These labour polititions do seem to stutter a lot nowadays.
.
http://news.bbc.co.uk/1/hi/programmes/the_daily_politics/7870067.stm
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Robert
Just as an aside to your comment, I didnt know until tonight that a Thomas Huertas of the FSA gave a speach in April 2006 - a title something like Credit Derivatives : Boon to Mankind or Accident Waiting to Happen.
He concluded : "Although a regulator is always loath to say that an accident could never happen, it is perhaps beginning to be safe to say that the credit derivatives market is no longer an 'accident waiting to happen'."
To be honest, the regulation and industry all look pretty happy with everything even though apparently a hedge fund had just gone bust - some very interesting stuff about credit derivatives reducing banks' need for capital under Basel 11. Is this connected with why off-balance sheet vehicles started to be used ? Granite being the one Northern Rock used ...
Tell me, I thought this was all so complex no-one knew what was going on and this all came as a surprise to everyone. Obviously, I am reading the wrong newspapers.
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#165 smies42 wrote:
"104, 105, 129:
Where footballers provide you with entertainment, bankers provide you with financing for your home ...........etc"
+
Yes, they set me up with an endowment mortgage as a single person with no dependants. What was the insurance for?
Do not try to tell me how good bankers are!
The taxpayer has provided the financing for the banks this time.
COME ON PROSECUTORS! GET INTO GEAR!
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#162
with your dignity enhanced.I noticed that too. I laughed so much I had to watch it a second time.
Well done Robert.
You survived the playgound game of
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The bonus mentality is just another manifestation of Short Termism.
Bankers try it on and ask for a bonus.
They duly get the bonus.
They cannot believe their luck but what the heck. - Time to try it on again.
And again and ..
They get away with it because the rest of us are lazy.
We are all full of self importance.
Like the folk on this blog that post essentially the same as previous bloggers since they cannot be bothered to read beyond the last five posts.
But of course they expect everybody including RP to read theirs. Fat chance!
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#82 makes more sense than most.
Many banks and other financial institutions were overly aggressive and often careless in how they lent money but why do they get all the blame, rather than the people who borrowed the money and, implicitly, aren't proposing to pay it back ....
Also, save some blame for the ratings agencies, regulators, Bill Clinton (the father of the sub-prime market) and the politicians who dined out on the benefits of the UK's financial services industry.
As for executive pay, I don't care how much bankers are paid, so long as it's only a fair portion of realised profits.
I believe top politicians should be paid more, if we actually want somewhat competent people to take these roles and to minimise to constant petty fiddling and conflicts, created by politicians trying to make a living wage.
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Robert:
They should, without exception, have to re-apply for their roles...
Directors are one thing... Senior Managers another...
Bank Directors have proved their worth... and can be discarded as the social pariahs of their generation. Past behaviour will point to future behaviour... leopards and spots... once a thief, always a thief... Reasonably, in the new order to come there can be no place for ant of them? By all means they should be permitted to 'vacate their desks' in a dignified manner, but 'go' they most certainly should...
A 'retired' (redundant) Banking friend ruefully reminds me that fraud and theft are criminal offences and that Banks would pursue miscreats to the extent of selling personal assets and recovering pension contributions... He was in no doubt that Managing Directors would be quite willing to follow through on these undertakings... I have no issue with this - as would most...
However, whilst staff were 'cowed' in this manner, even to the extent that they would be 'guilty' even if they only 'harboured' suspicions, it might appear that Head Office and their coterie are exempt from this process...
It might seem fanciful or even 'fantastical' that no-one in Senior positions and positions of responsibility (for which they enjoy handsome reward) knew just how precarious the Banks positions had become?
Surley someone earning such vast sums knew something? Surely someone should have been able to voice concerns? For was it not true that on the 'shop floor' questions were being asked? Who was 'bullied' into inaction? Surely the Code of Conduct was signed by all staff - not just the 'numpties'... (a term overheard and not so uncommonly used in certain quarters)
What's good for the Goose is good for the Gander...
Given the current threat hanging over the genuine staff at our Banks - surely it is incumbent now on the StateBanks to instigate proceedings against all those who 'knew' - as well as those who 'should have known'.... If they didn't understand then... then they should know now...
A 'cap' on salaries should be the last thing on their minds...
Dereliction of duty deserves a rather more 'unkind' outrun...
For confirmation, ask the staff, shareholders and customers...
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165 - You are overlooking one very small minor fact. Bankers have caused this huge mess we are in. Bankers have caused tthe collpase of credit availability, bankers have caused a huge surge in government spending for years to come, bankers have caused the drying up of credit.
Bankers, as a result of their negligence and incompetence have stolen from the poor, the elderly and the sick in this country and have removed food from the mouths of the starving in the thirld world.
Bankers deserve little more than stringing up.
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Thought i would never say it:
TIME FOR SOME CORPORATE JUSTICE USA
STYLE.....
HEY GORDY,MANDY & THE GANG?
GET IN LINE PLEASE !
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I guess that Mark Thomson may be looking to take one of the private sector jobs paying a lot more than his BBC salary of £800000 plus.
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The devil is in the detail... as usual...
Obama has not imposed a limit of $500K p.a. reward. The limit only applies to the cash part.
There is plenty of scope for equity based compensation above the $500K level; albeit on a deferred basis.
As for the PM's £175k.... that can't be performance related can it? On behalf of the tax payers I demand a refund.
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Robert
Sorry to go on about who knew what, but I thought you and your bloggers would like an interesting angle on the US/International side of regulation / lack of it.
Check out Counterparty Risk Management Policy Group 11 report dated July 2005 delivered by E.Gerald Corrigan to Hank Paulson of Goldman Sachs ( wasnt he just the US Treasury Secretary?). It was all organised to, guess what, address complex financial instruments and avoid systemic financial 'disturbances' and 'shocks' to the international banking system - oh, and reign in hedge funds.
Dont get too bored because it talks about most of what everyone is talking about now. The masters of the universe give their judgment- less rules please but lets have principles. Oh, and lets have international conventions but lets not go overboard on the bureaucracy - its a bit of a pain.
http://www.crmpolicygroup.org/crmpg2/
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Surely now there is certainly a possibility of this so called 'talent' taking flight from the big firms to go find pastures new at the smaller investment banks, after all If you have someone who was making well over $1m, and now they are going to be capped at $500,000, it is very conceivable surely that they are going to look to go to a company that is not subject to those limitations.
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#165 If you want to go around calling other people absurd it is incumbent on you to provide some evidence to support your contentions.
The fact that you fail to do so relegates your remarks to pejorative invective.
The prevailing culture amongst traders and investment bankers is one of macho bravado where they go into work "ready to rip the ass of a bear" They claim to be happy to be judged by performance as determined by the market.
They have now been judged, and judged by their chosen standard - they have failed and they are losers, and they have failed and lost on a gargantuan scale.
If they are not the incompetent fraudsters, shysters, sophists and dissemblers that they appear then they will come forward and confess their arrant recklessness greed and stupidity.
Their future actions in this regard will reveal much about the real measure of these people.
Confession of failure is necessary and will be cathartic for the entire society. A public recognition of failure and stupidity is one way of making sure that the same mistakes are not repeated in the future.
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#122. sosraboc
Hmmm.
What happened to GEC when Lord Weinstock died?
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I am coming to the conclusion that if at all possible we should just stop dealing with banks. Don't store any money in them and don't borrow from them.
We all know that life isnt fair but really it is just so outrageous than anybody should earn 500K per year, basically at the tax-payer's expense.
Ordinary working/middle class people are getting completely shafted and we are expected to pay for the privilege through our taxes.
Surely the time is right now for a completely new political party to emerge. Of course none of us want a Hitler type character to rouse the masses, but there must be someone out there who is not on the political/banking gravy train who can represent our views.
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#147 coral bloom
It is so obvious isnt it once the bubble has been burst. He has pricked the bubble of the illusion that people in high finance are so valuable that they can defy financial gravity themselves, 'too talented' indeed to risk losing!!
You could not make it up could you.
These people are fallable human beings whom are (theoretically) good with managing numbers and assessing risk in a balanced way such that money is available for a balanced portfolio of sensible investment with a dash of more radical stuff to push the envelope...That is all it should be to serve society as it should.
They manipulated the mechanism to become a vehicle to create huge unparralled wealth for a very few and they did not mind how they unbalanced the system to achieve those aims, so long as they met their YEARLY targets to release their yearly bonuses. Bonuses of such value only 1 of them would be enough wealth for 50 lifetimes, let alone one.
I also like the fact that Obama, so early in his presidency had the humility to admit he 'screwed up' in a couple of his appointments.
I wish a bit of his honesty and freshness would drift over here. Gordon was falling over himself to be shown in the same spotlight as Obama to boost his popularity.
I think in reality he will find the glare of honesty from that spotlight too much to bear and he will have to go back to the shadows, GB does not do humility or freshness.
Do yourself a favour and the nation a favour Gordon, step down, show some humility. I think you will find people quite forgiving if you have the courage and wisdom to do that. Every day that you delay your legacy will be increasingly one of ridicule, ultimately you will be punished by your own pride and the nation you claim to fight for along with you.
Do the right thing Gordon.
Please.
Set an example, who knows those that have gained from creating the imbalance may follow your lead. It is called genuine leadership Gordon, lets see if you can do it, youe country needs you to.
Thank goodness for Barrack Obama.
Jericoa
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I seem to be missing something here, when the credit crash started did those who had any resposibility for it suddenly get up and leave?. Perhaps they had already left, a long time ago, which begs the question why did those who followed, and who are cleaning up the mess now, not do anything about it. Me thinks they just carried on as before.
Has there been changes in law and legislation to stop the greed that caused this credit crash that I am not aware of?. Other than the rather pathetic suspension of short selling I dont think so, business as usual then.
Other than pumping huge amounts of tax payers money into these failed banks nothing much has changed. Even those execs bleating not my fault, are still the same ones, being paid the same salary, leaving asside the bonus the salary is a nice lottery win.
All I hear from political leaders is hot air as usual, what I hear from joe public is redundancy, cuts in pay (not caps on bonus), lay off paid and unpaid, short working weeks.
CAP THE BONUS TO £350,000, you are having a laugh. NO BONUS AND A SERIOUS CUT IN YOUR WAGES, until you clear up the mess you and your buddies created.
I read that there was a fear that these execs would leave their failed banks and go and work for smaller investment banks not affected by this. Would you take them on?. Have the NR execs secured senior positions in other banks then ?, not that they need to on their wages and bonuses.
Sorry to rant on but this realy is an affront to hard working, honest, law abiding people like us, who face unemployment and the possble loss of our homes. A bank executive of a failed bank should only receive a yearly bonus equivilant to what people on average earnings take 16 years to earn, Joke. If you are on the dole, MAYBE A LIFE TIME.
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#94 Ed
Lao Tzu is a great favourite of mine, as relevent today as it was in 450BC. Magic.
helenhey..see post 94 for the information you need.
Jericoa
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Thank you for your continuing helpful, revealing and incisive reports, especially today. Was I the only one shocked at the breathtaking arrogance of the MPs questions, and the fact that they felt that the press should not be completely free to report the truth?
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This is so simple to set out!
MP's should earn, in total, no more than £50k per annum. The PM £65k and cabinet £60k, in recognition of their extra duties. Hotel and digs allowed for at cheap bed & breakfast rates. Travel costs to and from work should not be reimbursed. International travel at cheapest rates, as green as possible. Want an upgrade, pay it yourself. They are appointed by the people to work for the people. Some even get accommodation with the job! Priviledges enough!
Ban all bonuses, except Christmas ones which should be a flat rate of, say, £500 for everone, top to bottom, and only if the company Commission for sales people, on the fulfilment of the sale.
Salaries-well, should be according to commitment to the team they are part of. Management salaries should be a little more, maybe £2k, but with an expectation of leading by example and their ability to motivate and work with others. Top bosses should be seen to work and know their workers.
In my companies, my overall take home pay is less than some of my workers as I prefer to pay them a higher salary to do a good job. I take only what I need, and no more. Spare money is reinvested to improve our competitiveness, working environment, or staff salaries and savings. By safeguarding the companies' future, we safeguard our own.
Bankers should be boring. Bonuses for taking such risks should be banned.
Being a CEO is a priviledge. The responsibility is not one to be taken lightly nor abused. Any sign that power is corrupting should be dealt with swiftly and decisively. Integrity is the key.
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And regarding any 'non recoverable' bonuses-why can't the same rules apply as to Mafiosi, drug lords etc?
Seizure of any and all assets until the debt is repaid.
Sounds good to me!
I'd rather pay our security service personnel a far better wage. They are selfless unknown individuals in the main who work, unseen, to make our daily lives safe. Their dedication to their nation is appallingly taken for granted and disgustingly low paid. And for people who would lay down their lives without any of us knowing!
Meanwhile, an MP gets a stinking big salary by comparison!
No wonder so many publish memoirs when they leave-they need the money!
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banker bonuses
apologies to all competent and diligent bankers, this isn't aimed at you.
I had assumed most of your type were retired by head office long ago because you wouldn't have liked what they were getting up to, but ..........
If you look at the big picture, in the past 30+ years, the banks have basically lost everything they gained. They piled up the money in the short-tern with hair-brained schemes, and every time came a cropper.
Whether it was in South America and their national loan defaults, the collapsing tiger economies of the pacific rim, junk-bonds, dot-com stocks, LTCM, credit swaps, sub-prime, russian oligarchs, the banks love to chuck money in all directions and end up in a mess every time.
Without a wholesale clearout of the bonus-earners, they will keep trying smoke & mirrors gimmicks for a fast buck. I betcha there are a whole load of schemes they are itching to introduce.
I therefore don't see much reason for bonuses, and if they want to seek other jobs, I don't see much of a downside.
Presumably there is some talent that could either be promoted or brought out of early retirement to manage the new safe, boring banking sector. I don't think we need many rocket-scientist geniuses to run the banks.
No bonuses required, thankyaaaooou.
Regards,
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Well me ole China, they are gunning for you now! Keep it up Robert, don't let them kill the messenger. Enjoyed you in the house today, especially the sourcing question, you fired that straight back. Warmed the cockles ov me art it did, you blighter! ;o)
As for the executive pay ceiling, most are leaving, or have already left the sinking ships, taking the bonuses and fat pensions with them. So its... locking the stable after the horse has bolted.
Political words to calm the masses!
I don't think it will be long before you and your kindre spirits in the media are silenced. It's clearly unnerved the beeb. Keep it up while you can.
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#3 supercalmdown:
"It really says it all when the owner of Hamleys in London, Baugur, needs creditor protection."
I don't think that the finances of Hamleys itself are the problem. I haven't the time to check my facts tonight, but I believe that Baugur's empire was built on borrowed money - and that the assets it bought were collateral for the loan.
This was a problem of the boom - companies being bought with the value of their own assets. Now the boom is over - and debt needs to be refinanced, such conglomerates are proving to be economic paper tigers.
Abracadabra - flash - bang! the money that was never there vanishes from the economy!
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PS re bonuses etc: A TaxiDriver writes: - string 'em all up! It's the only language they understand! ;-)
No seriously, I'm not being a fascist! //:=0 But how can any bonuses be justified when the companies wouldn't be there without taxpayer intervention? Competition? They aren't going to get jobs with Merryl Lynch are they? Maybe with the FSA though :-(
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Wakey wakey moderators!
Maybe all our posts are being rerouted via GCHQ computers for dissention and incitement to riot!
Surely not!
I suspect it's just skeleton staff of one for all blogs-savings on overtime or night working regulations.
Alternatively, perhaps Auntie is training new moderators-possibly accounting for the extraordinary number of posts being removed or vanishing altogether before being posted!
Maybe it's simply a case of slowing it down so much, we'll all go to bed and forget about it!
Cut backs so Auntie can still afford to pay salaries and bonuses for Woss and his pals?
I'd love to know why blog moderation is so mind-numbingly slow-
Tell us please Robert!
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#53 - absolutely right
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To be paid bonuses on a failed business is wrong on every level. Why are share holders not screaming louder. Gordon - get these grossly overpaid fat cats sorted out now!
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#188
I'm so tempted to set up a business selling the latest new igloo homes, all built to high specification. A select few of us could make a mint right now.
By the time the snow has melted we'd be long gone with our bonuses.
Do you think I'd be able to justify my failure to understand the fact that ice melts in the summer and there is no more unitl the next cycle comes around? Obviously, it would be a successful venture and I'd keep my massive bonuses. And even blame the BBC weatherman for saying warm weather is due.
Nah, I could never find it in me to keep my face straight long enough to make a single sale.
The stock market is no different. We've been sold melting ice and they've been caught. And they made plenty of sales.
#172
The Daily Politics show is looping around on the Parliament Channel.
Forsyth makes some pertinant calls.
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Rammie (184),
And that's a bad thing?Glad y'all like the Lao Tzu. Here's a little HesiodRecognise anything prescient? (~700 BCE)
;-)
ed
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It is about time that the UK Government takes steps to restrict salaries and bonuses in the banks that they control. In the present market it is a myth that bonuses have to be paid to retain staff - where will they go? Most UK staff will accept that a salary is all they will get for 2 years at least. Let those that are unhappy at this prospect move elsewhere (if they can). To pay a bonus to staff at Northern Rock was the height of folly. Let us not see it repeated elsewhere.
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heh Robert I assume you won't be giving up your sources anytime soon, particularly when a lot of them are in gov't - and it's only a Select Committee not something serious like a Senate subcommittee
and they can't do anything too bad to you - Obama has announced the closure of the secret prisons and extraordinary rendition has been halted, so you are unlikely to wake up one morning with a sore head and find yourself Mullered in Morocco.....
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speaking of grillings in front of committees, have you seen the absolute roasting given to higher-ups from the SEC by a House Finance Subcommittee in Washington looking into the SEC's abysmal failure to notice the elephant in the room called Bernie Madoff
http://www.nytimes.com/2009/02/05/business/05madoff.html?_r=1
count yourself lucky you weren't up against these guys
any chance of the FSA getting a similar dressing down here for turning a blind eye to the reckless behaviour of NRock, RBS etc etc?
I doubt it
With the Americans quickly sorting themselves out the UK could become the one and only true home of
LIGHT TOUCH REGULATION
oh sorry I forgot about the Chinese coal mines
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Morning Robert,
I think this blog has missed the point of your article ...again!
If you took all of the bonuses paid to directors in the last 10 years to all companies the sum would be very small.
Reclaiming isn't possible so that's a red herring.
You are writing to divert attention from the real issue here....what happened to the 185Billion and how was it spent?
For the mathematically challenged, this sum of money equates to 7500 pounds per family!
Imagine if HMG had proposed a cash handout of 7500 pounds to every family in the UK!
As Deep Throat in the Watergate scandal said "follow the money". I think you will find some interesting scandals will unfold.
As an aside, I notice that the auditors of the banks about to publish their results are in something of a difficulty wrt qualifying statements. Could we have your investigative journalism applied here? No..I though not.
In true Northern Rock style, my predictions are for a General Election this year 2009 (probably spring) and a dramatic recovery in the stock markets THIS YEAR. (shame everyone is putting their money into bonds but the ordinary gambler always gets it wrong).
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186 Devil old chap
When Weinstock "appointed" his successor. George Simpson, this was an outsider.
Simpson had a reputation as a deal maker and pushed GEC down the hitech route into Marconi and penury.
Yet another wheeler dealer from outside the company.
Sound familiar?
Perhaps if they had done as I suggest and appointed from within GEC would still be a world beater.
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And extension of salary caps for entertainers, media actors and soccer players ?
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what a surprise british bankers(yes bankers) getting bonus payments, how theres not a large amount of civil unrest in this country i dont know.Also the the interest rate debate, nobody wants a cut ,we dont need a cut,savers have been hammered enough,and yet its going to be cut. who are these nobodies who are wrecking peoples lives? remember the bounty mutiny? ,how i would love to see brown and king and the fsa and the mpc .and most of this awfull corrupt government in that boat with bligh.
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#165 if these so called super bankers are so great how come the banking system collapsed? , in engineering these people would be out on their ears, economics isnt an exact science, its made up off the hoof by people who cant do anything else.browns the perfect example , a complete numpty, never done a proper days work in his life,phd in history,(duh), and running the economy for 11 years...enough said.
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210
Spelling error.
not running the economy
ruining the economy.
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"... I can get now satisfaction ..."
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The market for talent is - of course - global. Or at least that's what big UK companies say when gilding the remuneration packages of their senior execs.
Talent?
Robert what talent? Many of these bankers are just spivs and gamblers who deserve the opprobrium that they generate. As a so-called ex-entrepreneur with virtually impeccable business credentials I can assure you that “banking” in Britain and America is the pits - shark infested waters where the fittest at deceit, deception and dishonesty survive to proliferate..
Talent? What talent is there in gambling with other people’s money and bearing no responsibility when things go wrong? This great casino that is British Banking should be brought to book and totally nationalized! Either that or razed to the ground!
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152# houseallwayswins:
I think a recession becomes a technical depression after 4 consecutive quarters of negative growth.
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I can't believe similar restraints haven't been placed on our banks.
It's a pity there is no mechanism for forcing bankers to repay bonuses from previous years.
Maybe politicians want to feel that they can still go and get directorships with huge salaries for a day or twos work each year with these banks when they retire from public life
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135 - foredeckdave - you wrote:
"#118 guycroft sounds like you haven't got a clue what you are talking about or, more likely are posting from self-interest. There never has been a true free trade area"
I know exactly what I'm talking about. There is a true free trade area it's called the EU. The EU is effectively a protectionist setup. That goes to the very core of its foundations and I've studied EU historty and regulations far more widely than most (perhaps more so than you as well) because I stood as a UKIK candidate and felt I needed to.
You have completely missed my point which is P is already all around us and to collectivise it into some kind of mythical beast that will destroy global trade and shatter economies is completely barmy. First define in detail exactly what you mean by P and then the knock-on effect of each P measure can be analysed in sane manner.
Me - posting out of self-interest? I usually try to post in a manner that covers general interests as I (as in individual) interpret them to be. Does not every poster? Curious jibe to make, that. What precisely was it about my post that gave you that impression?
GC
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Please forgive me if I am talking nonsense, but I see it like this:
If the govt had not bailed out RBS it would have gone bust and the employees would not have received any salary, let alone bonuses.
Why then, as a condition of bailing out the bank, did the govt not grasp the nettle and: sack the majority of the management team, strip Knighthoods where applicable, cap the salaries of the remaning execs, and scrap all bonuses.
All this achieved by inviting everyone deemed fit to stay to reapply for their positions on revised contractual terms.
It would have sent out a better message.
Sounds harsh, but not as harsh as most of them having no job at all.
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187 'a completely new party'
could that be the Green party?
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#211 yes correct ruining the economy,i know one thing recession or no recession,as soon as i get my passport in im out of this hopeless country,you lot can keep brown ,political correctness,and the corrupt banking system im off to cyprus to do some proper work. keep smiling people youve only 15 months left of mr super brown...ha ha.
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So now we know the purpose of the bailout was to bailout bankers bonuses soon to be offshored .
Tony Blair seems to have offshored himself at the moment giving added poignancy to his last words "I WILL BE WITH YOU ALWAYS " to labour suckerrs left with the afterbirth of Tonys accension into haven
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Robert,
The root cause of everyone losing their Savings ,Pensions ,Property etc is because the Auditors and Regulators have been negligent.My Son in Law was employed by one of the big Accountancy Firms in London where he carried out Audits on large companies in the City.He says the old boy network prevails and the so called Audit is a sham with Regulators taken from the same spheres as the Auditors and that is why these scams were not brought to book years ago.Perhaps Companies House should take over the appointment of an Auditor to all PLC's so that it does not get too cosy again.The "Independant Audit could also look at CEO's to see if they had other Commercial Interests that could be detrimental or risk to the Company's commercial interest at Street level.
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217
They did that themselves about 15 years ago.
Only to the minions of course.
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"The market for talent is - of course - global"
The market for talent is - of course - rigged! There have been incestuous relationships between remuneration committees for years. The managers of the Pension funds etc didn't mind: they too had to be paid the going rate.
Galbraith's series of books, including "The New Industrial State" detailed how senior management had hijacked companies in their own interest even back in the 50s and 60s. It really is nothing new.
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Here is the next step towards the end of western dominance:
http://www.informationweek.com/news/management/outsourcing/showArticle.jhtml?articleID=213000389
IBM is offering to relocate engineers made redundant in the US to India and China where they will be paid Indian salaries. So basically the kleptocratic class have decided that engineering is not a high enough value skill to locate in the 1st world.
The small problem is that the countries with the best engineers and manufacturing also have the best weapons systems. And the countries with the best weapons systems tend to push everyone else about. Lose your science and engineering base and everything else can be taken from you.
Why don't we outsource the bankers and keep the engineers?
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# 152. At 6:21pm on 04 Feb 2009, houseallwayswins wrote:
Can anyone enlighten me. Is there a point when a recession technically becomes a depression.
As far as I know its when GDP decreases by 10% over a short period of time. Given 2008 third quarter was -0.5%, fourth quarter was -1.5% and 2009 is predicted to be around -3%, we are well on our way
UK GDP is around 15000 Billion £, each 1% drop means 1% of this sum is removed from the economy, imagine what a 10% drop would do.
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in my opinion ,you are so negative in reporting things.
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217 Modern banking is the equivalent of medaevil saucerry
eye of toad
bats testicles
donkey brains
wilderbeasts toe nail clippings
and magpie droppings
plus the magic added ingreedyent [to satisfy the thinkerrs of the enlightenment who wish to pretend to themselves and otherrs that they know what is going on]
"Racket science" and hey presto......
It becomes so complex that bank managers and CEO would bes have to be kept on after the patent dies with, fool bonuses just to pretend it can be sorted out .
Remember credit crunch is not just for breakfast its for sum ,a meal tricket for life .
Modern banking is a form of cyclotherrapy or cyclanalassis ,where the patient taxipayerr is cured when he no longer has any money for further "treat" ment or examination of his dreams fast turning to nightmares as he walks pennyless out the door
When banks books are examined they appear to make no sence
because infact they make no sense
They were not designed to make sense they were designsed to make money ie bonuses for the ceo's and pied piperrs running the banking industry and pension funds .
The opperation was a suckcess pit butt the patient died
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The market for 'talent is gobal? What talent? If there was any talent around we wouldn't be where we are. No, the only talent these characters have is to make money for themselves at any cost. They should get a reasonable salary and nothing more. Competing for the best jobs should be quite enough stimulus. I also think that investors from now on will be reluctant to have their investments managed by bonus-fed gamblers. It may even be a very good marketing tool by investment banks that they have some kind of moral compass and that their staff share this and eschew the bonus culture.
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This comment was removed because the moderators found it broke the House Rules.
All the money that the Bank of England have give to the banks should have been given to the people who owe the money to the banks. If they charged all the people 1% on loans to clear their debts, the banks would have there money back, people would have affordable loans which could be collected directly through the income tax system or the post office and we could all start again. To late now though I guess....
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To bloggers who say strip certain bankers of the Knighthoods ...my computer says NO !
If only we could have Lord Goodwin of Cowdenbeath to help the Govt Peers through the Third Stage of the Banking Bill.
Poachers turned gamekeepers...it a new Idea from a Congressional Committee. ONLY y'rst'rday when cross-examining a Wonderful Bostonian WistleBlower who was persistently ignored and Ignored and IGNORED by the SEC .Two members of the Committee came up with such a staggering IDEA.
Hopeless US Politicians...hopeless US Regulators...should their salries be capped ? Mr Obama Sir ?
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Bonuses for chief executive officers and their senior staff should be based upon the long-term performance of the company. Bonuses that reward short-term performance encourage the kind of excesses that resulted in the current financial disaster. Controls therefore are warranted, but care must be taken to ensure that qualified people can be attracted into the business of turning around the banks and other businesses in trouble. If the compensation is not there many people will take a pass.
A system of bonuses based upon performance of the company in the five to 10 year time period would be appropriate, if the performance measures are well thought out and actually reflect the health of the business and not the scams that have been perpetuated in the past to create the illusion of company health.
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President Obama's cap on pay is an important step forward. US$ 500,000 is a sensible limit. It is high enough to avoid the "If you pay peanuts you get monkeys" problem, and low enough to avoid the "If you pay gold you get pirates" problem.
It is far too easy to be cynical about the "nice warm glow" that a manager should feel for doing a service to shareholders or the public. Top people need to feel that they are making a positive contribution to society. This should always be a central aspect of their motivation for working. Without it they will never feel fulfilment from work, however high the salary. Without it we will never get a society that is run for the benefit of all. In recent years this "nice warm glow" aspect of remuneration has been total eclipsed by the issue of pay. One powerful reason for capping pay is that it will bring it back firmly into focus.
The new measure applies only to the very top people in the institution. This is important because it means that, in theory, institutions can continue to pay superstar traders and other top performers very high salaries; far higher than those of the CEO and executive directors. In practice however company boards have allowed the salaries of superstar traders to become grossly inflated because they help to justify higher salaries at board level. Once board level salaries are capped we can expect, over time, to see the board make a far more realistic assessment of what star performers are really worth. I have no doubt that this will lead to reduced requirements for traders, and to lower trader salaries.
The measure is not retrospective. Companies are only affected by the limit as they increase their dependence on government. This unfortunately creates a massive incentive on the institutions to avoid or taking government help. This will lead to some completely unjustifiable behaviours rather like Barclays accepting very expensive new capital from the middle east to avoid taking much more affordable government aid. It could also lead to banks concealing their true problems in order to delay the taking of government aid. Such behaviours, it seems to me, will lead inevitably to the nationalisation of banks. This is a serious problem, but it should be seen as a transition issue, not as a problem with the measure. Quitting our addiction to high executive salaries was never going to be easy.
In his speech (4th Feb 2009) President Obama hit the key point. He said, "But in order to restore our financial system, we've got to restore trust. And in order to restore trust, we've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street." Fundamentally the credit crunch is a problem of trust. There is an underlying question, "For whose benefit is this company being run?" Trust can never be restored while executive pay policy suggests that companies are being run for the benefit of the executives. The public sector can enforce lower executive salaries, but in the private sector they must be self imposed. If the private sector fails to do this then it will gradually disappear into the public sector.
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House prices up 1.9% in January - surely some sort of freak statistic brought about by the low level of activity?
Otherwise we have, as a population, quite simply, GONE MAD!
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Very bad news that house prices might have risen by 1.9%.
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An apt quote:
"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money ." - Josiah Stamp, 1st Baron Stamp, Director of the Bank Of England 1928
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Hi Robert
I agree that the Americans are ahead of us on this. Another flaw in Gordon Brown's plan.
As well as publishing this blog I hope you put this point to your father Lord Peston as he must have some influence on his party.
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121 BobRocket...
Two 4's for the price of one. Buy one get one free. I'm just trying to give the people what they want.
Tesco have been doing it for years and even the Government are getting in on it. They just bought one LloydsTSB and got a whole HBOS thrown in free. Bargain or what???
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What Obama has actually done is said that bonuses should only be paid in shares and hence linked to shareholder value- big flaw is that who can manipulate bank stock prices- the banks investments arms of course! So let us brace ourselves for the next big scandal- bank performs or at least reports that it does- execs get big stock bonuses- banks recommend buy and buy quite a lot themselves to shore up price- individuals get carried away and buy the stocks- banks are not really performing- banks stock price collapses again- execs have pocketed the cash and individuals get shafted again. Bonuses for execs that are stock or shares encourages banks execs to cook the books - so bad thing to do Mr President. We need to stop the bonus culture in banks- they are there to be solid and boring and a safe place to save. The past year has shown that we need banks to be totally socially responsible and bonuses juts conflict with that- good salaries and secure jobs is what should be on offer.
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Why do they get bonuses anyway? The vast majority of us turn up for work, do what we are paid for and go home again. I have a high paid, and some would say, stressful job. I don't expect a bonus for successfully completing a days work.
Give them a salary and stick to it. If they and their inflated egos think they are worth more, let them go somewhere else.
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#196 sashaclarkson:
#3 supercalmdown:
" .. I don't think that the finances of Hamleys itself are the problem. I haven't the time to check my facts tonight, but I believe that Baugur's empire was built on borrowed money - and that the assets it bought were collateral for the loan."
++
I think you are right, a leveraged buyout to use a U/S english phrase.
There have been a lot of these buyouts by Americans including major football teams.
More of these will unravel.
The Icelandic boss of Hamleys said on tv news last night that nobody saw this coming. Not true.
Warren Buffett was widely quoted on "financial weapons of mass destruction" in 2003 but was tragically ignored.
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234. GRIMUPNORTH77 wrote
"House prices up 1.9% in January - surely some sort of freak statistic brought about by the low level of activity?"
Dead cat bounce?
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#208 phares:
"And extension of salary caps for entertainers, media actors and soccer players ?"
As they are not funded by the taxpayer we cannot do that.
The soccer players may have their own adjustment. Please see my post #241
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#205 somali_pirate_SP500:
Terrific Link. Thanks.
Could we borrow Messrs Kanjorski and Ackerman for a week and have an **** kicking party over here with the FSA, Bankers and the CRAs invited?
I feel an enquiry will come. I hope it will have great big teeth.
An interesting comment was that "the SEC does not have the expertise to deal with this".
I feel that is the case with the FSA.
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OT, Apologies
A Corporation has fired someone for the 'G' word.
This same Corporation used to broadcast a show: The Black and White Minstrels!
Hypocratic at all?
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235
Of course it is good news that house prices have stabilized.
This banking crisis will only improve when asset prices improve.
And yes I believe the green shoots of recovery are appearing. The FTSE is I believe past the bottom, house prices may fall slightly but are very close to the bottom.
All the criteria are in place for a recovery low oil prices, low interest rates and a large fiscal stimulus the only ingredient still needed for a quick recovery is confidence.
As the spring arrives confidence will grow as people begin to feel things will improve.
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time for the rich to pay their correct tax, ie MORE !
trickle-down was a right-wing theory to justify paying those at the top more but NOTHING did trickle down !
cap the pay of top executives, they cannot claim we need to pay the going rate anymore and no bonuses until the END of any mortgage !
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**********************************
82. At 1:43pm on 04 Feb 2009, burstyourbubble wrote:
Home truth #1 - None of you moaned when your buy to let flats were printing you money, but none of you accepted the simple fact that the value of your investments could go down as well as up. Lesson 1 - If you can't afford to take the hit, then don't place a bet.
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Response #1.
Many people don't have a buy to let mortagage. Your comment is irrelevant. Many people are suffering due to investment banks and a sector of private investors placing bets when they can't afford to take their hits and then shifting their risk exposure outwards taking deep roots in the financial community such that their comeuppance has much wider reaching effects than your silly comment indicates.
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Home truth #2 - None of you moaned when your pension pots were inflated by a bull market?.But , guess what, none of you can now believe that the value of your investments could go down as well as up?? Lesson 2 - Understand the risk of your investments and don't feign ignorance in your defence!
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Response #2
The moment you take up a pension with a pension provider all your money is tied to that fund. You do not see the exposure that fund has, you do not see the change in exposure your fund undergoes. These changes in exposure are looked after by professional people whom we pay to manage that risk for us. If these experts lose money on my "investment" they take a cut of my pot. If they make money they take a cut of a bigger pot. Its a ridiculous suggestion that your implication is that everyone paying into a simple stakeholder pension understand the detail of that pension risk - that's what we pay you whizz kids for right?
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Home Truth # 3 - We will have a deep recession. More banks will fail. More of us will lose our jobs. It will be painful but sooner or later we will reach capitulation and the market will turn as assets become good value again?Hey presto, the jobs market will come back. Lesson 3 - The government does not owe you a job and we have to get into a more self-sufficient mentality.
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Response #3
Yes we will. You are correct in that a lot of people will get financially rodded over this. Some closer to the epicentre of blame than others.
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99.99% of bank employees who work very hard, are paid well, but not excessively, and did not have any involvement in today's global turmoil
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Final Response
Yes, the financial sector is an iceberg with only those at or near the evry top getting obscene remuneration. Anyone below the waterline in a supporting role is generally a hard working competitively paid person following policies laid down from on high.
Many ordinary people being brought down along with the system will not have sufficient cash reserves or saleable assets to ride out the storm that you and your friends may have. Perhaps this explains your somewhat laissez faire attitude? - An attitude reflected in the systemic problems that put us where we are.
On a more balancing note - the points you raise regarding recovery I find to be very good.
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#161. At 7:33pm on 04 Feb 2009, Toldyouitwould wrote:
#145 bodgitt:
"Excellent! Now the UK can follow the US lead without a brain drain."
+
"Doing this got us into the fine mess we are in Stanley. "
The only way out of the mess is to continue to follow the US. The UK can no longer go it alone.
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242:
I'm not sure of their exact formula but House Sales Volumes must be down.
There are a number of properties on my road that have been For Sale for many months now.
Maybe I don't live in a popular area !
Still 1.9% is not much, and if you Google the major Housebuilders they are all still discounting like mad and doing swapsies (old homes for new).
Well, doesn't pay to make assumptions.
(Such as:
I assume the Directors are telling the truth, my these Annual Accounts look good, followed by
Oh dear surely a Labour Govt will show some sympathy towards the small shareholders and pension funds (defrauded by american bondsellers))
I must take my rose tinted glasses off !
Hmm, more Snow ! I like Snow.
Where did I leave my Ski's
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A comment about the 1.9% house price rise in January.
As far as I am aware, these indeces track average price of all property sold that month, be they low-cost flats built on a land-fill site or mansions in Belgravia. Soooooo, if there is a shortage of people buying at the lower price level, this skews the average up, alternatively a shortgae of higher price sales skews things the other way.
The clever way would be to only track sales of properties sold previously and for which there is acurate data, and calculate an average annual increase in sale price over the intervening period, and then weight that in the light of average sale prices for a basket of sales during the month under review.
Not that it really matters, as on the way down, the current method gives doom mongers their day in the sun, and on the way up it gives the Walter Mitty brigade a chance to talk up the market.
Let's not let reality get in the way of a headline.
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President Obama’s curb on the greed of executive bonuses is to be applauded. According to some news reports, certain executives have been receiving in excess of $20 million a year! A big part of this sum has come from taxpayers now suffering severe hardships as a result of cock-ups by those very ‘executives’ and their organisations.
As the President so rightly said, it is shameful. I would add – obscene. There is no justification whatsoever for such a gross injustice and imbalance of payouts in America or anywhere else. Those so-called top executives need to renounce their private jets and other materialistic trappings before they can ever earn the respect of the hard working citizens they claim to represent.
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220. stilllitterarty
Re: "Tonys accension into haven"
You always tend to bamboozle us with your entertaining if somewhat over-referential pieces, but I do like the idea of Blair ending up as a bluecoat (definitely not a redcoat) at a seaside Holiday park.
He'd probably have better luck at Pontins though.
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Why don't they limit pay by saying the person at the top is limited to, say, 15 times that of the person at the bottom?
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Regarding yesyerdays pointless investigation robert.
Why were you not asked to clarify whom you meant "From the highest level"?
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If RBS bonuses are to be paid, they should be paid in cash NOT shares.
The cash should be held in trust in non interest bearing accounts with RBS until the bank is returned to full private ownership and then the money can be released.
Paying the bonuses in shares at potentially the bottom of the market could result in the SOBs getting even more money.
Does anyone in government ever think anything through?
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Half a percent off the base rate.
Well, that will put a little money back in the system.
However, it won't make up for the pay cuts, and rises in Household bills.
Not to mention soaring unemployment.
But what the hey ! Lets pretend everything is wonderful and perhaps we can fool foreign investors to buy our worthless firms and junk bonds !
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Where do people believe the FTSE will be this time next year ?
I think about 3800.
That represents about a one percent drop per month through out this year.
That sounds about right to me.
If you think I'm wrong your welcome to explain why!
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228 I agree they can't be that good. The leader of the French bosses union (yes they have one of those) is appalled because French strikers were front page news (so what's new) but especially apalled because ' OK they may have caused the problems but they are the best qualified to get us out of the problem too.
Good suggestion earlier to have Comapanies House as an independent auditors for the lot.
Surely there is a right to audit back accounts of companies and enforce fines if need be. (criminal proceeding even?)
I still believe we need to get started on a grand plan of building etc a la New Deal
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Is Mandelson's comment re RBS bonuses a warning shot across the bows or merely a sop where he intends to take no actions?
My own comments would be very blunt to RBS management.
Bonuses have to be earned and are not a given right. In view of the current state of RBS's finances and its need to retain capital to preserve the business no dividends or bonuses will be paid this year.
Any attempt to do so will be voted down and would call into question our confidence on the senior management's ability to manage the business going forward.
In plain language propose staff bonuses and your feet won't touch the floor on the way out of the door!
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254 - That's how it used to be many years ago, commitment to the company at all levels, for the duration. Now many top level guys just join for the few months stints and golden handshake
Same in football, When we swap UK football UK manager. I want to job for the pay out for being rubbish at it then I can retire.
The worse you are the better the reward for getting out of it
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#235. Wee-Scamp wrote:
'Very bad news that house prices might have risen by 1.9%.'
I agree, but I think some of the other comments about statistical freaks are probably near the mark. One factor must surely be that so many people who were doing well a few years ago have had to sell up, so that there are many more very expensive homes on the market - and some of them must sell - thus pushing up the value of the average sale; meanwhile, buy-to-let flats aren't selling at all, so that their new values are not measurable and have no impact on the average.
There may be a genuine but temporary upwards blip. To those who were watching the market a year or so ago, prices are beginning to look relatively attractive, and of course a lot of people who have been delaying a move (to a new job for example) have probably just had to get on and buy, thus putting some kind of a base under the market. The fundamentals, however are still dreadful: average prices are very high relative to average earnings, and there is now no credit and, I'd imagine, a greatly decreased propensity to borrow money to speculate. We have a whole year's worth of unsold stock to shift, and there will be more to come as jobs continue to go. Looking at the American market, I'd say we still have at least another 15-20% to go, and it might well be more, as markets tend to over compensate.
My money's staying in its mattress for a good while yet.
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BoE Interest Rate down half a percent
aka Government speak for
Borrow Now - pay later when the recession bites, incomes get walloped and your deposits earn zilch.
ps is there a Quango for Quangos ?
and a Quango for the Quango of Quangos ?
If not why not, because somebody should be keeping a curb on their expenditures which is far greater than the Bank bonuses. At least the Banks did try to do something whereas Quangos purposely get paid for doing nothing.
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i feel sorry for savers(i wish i had some to save) as they are basically paying people smortgages for them. i bet king doesnt get 1 per cent on his savings and the rest of the shower we call the mpc. brown do me a favour go and get lost.
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Crumbs,
Base rate down to 1%, an all time UK low since the formation of the BoE to fund our war with Napoleon. Things must really be bad. Perhaps our glorious leaders slip of the tongue wasn't really a slip.
Given that banks dont make any money from current accounts once base rate drops below 2%, will we start seeing a slew of Banks starting to charge (the value of the "free" money they dont pay interest on doesnt cover the cost of providing free services at such a low base rate despite what many people might think)?
On top of that, those banks having to offer way over Base Rate to attract savings to make up for not being able to balance the books, must be burning through profits and racking up losses at a furious rate.
Want to know who will be going back to the BoE for more bail-out money? Look at who is paying the highest savings rates.
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When people say employment is global they generalise too much.
Talent is what talent does and in most large banks the only talent is networking and building up fiefdoms.
Headhunters rarely get it more right than anyone else yet charge for the priviledge.
When we look at FTSE CEO's we see most have their jobs for 2 years only then push off. Why? Because they haven't a clue and it appears to take 2 years to get rumbled.
Nice work if you can get it but please don't let these people patronise the UK electorate with 'global' talent. That is absolute tosh.
All this clubby networking is not keeping the wheels turning just the digits on their respective personal bank balances.
There can be no arguement in paying for talent but please don't let anyone suggest these trumped up experts have any more knowledge on running companies, regulators or quango's than anyone else. The facts just don't justify any such impression
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come on Robert,
You're obviously spooked by your commons appearance, get on a report things that matter to us at home. Give us the depression scoops that are slowly making you a legend. stuff USA, what happened to your knifelike insight. What about the rate reduction? Surely you saw that one coming?
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@ #44
Firstly, smokers have not cost you and me our economy.
Secondly, those bonuses were paid for a job well done in the period leading up to payment.
We now know that those were NOT, in fact, jobs well done and those people who received millions of pounds in bonuses (note - I'm not saying remuneration) were probably unlawfully enriched.
I don't think back dated taxes on these incorrectly awarded bonuses are as silly an idea as you make out.
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If we (HMG/Taxpayer) are going to own 70 per cent of RBS and others, we should have that 70 per cent representation on the Boards.
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Calm Down,
Your ski's what?256. sosrabocWhy not in share options priced at something like the median price for the year before the crash? I agree it's daft to give them shares at what might be the bottom (though I suspect we've got a ways down to go yet). I'm still wondering when to jump into Citibank and Bank of America, but jut like Freddy and F*annie and AIG, they just keep shrinking....
Ah, Schadenfreude!
;-) ed
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I have long complained about ridiculous rewards for those who work in the financial sector. It was always nonsense to suggest that the "brightest and best" were needed there: the "brightest and best" need to be increased in number and shared around between finance, engineering, science, medicine, education, commerce, etc.
The very existence of the obscene pay given to financiers and bankers has led to the stretching of rewards in other sectors. Financial institutions should employ more people at lower salaries (half the current salaries, with nobody earning over 200k and very few earning over 100k, just like other sectors). Then they wouldn't be in such a greedy rush; they would be more capable of making reasoned decisions.
The matter is deeper than the issue of bonuses.
Hopefully, currently studying in universities are able students who will help forward-looking politicians to create conservative banks that serve society - just as there are clever medics, engineers, etc., studying to make a contribution to their fellow people whilst earning a good salary.
Why are our politicians so slow to realise the depth of anger and hatred that exists for the greedy fincial sector?
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A time of sensation, misinformation and contradiction
===========================
You would have thought than in an age of instant global communication that a crisis of this magnitude could be dealt with quickly and with a coordinated effort, yet all we consume is media sensation, misinformation and contradiction.
According to comments to this blog Thatcher demolished all traces of British manufacturing yet British manufacturing is suffering now. Either it exists or doesn’t, make your minds up.
A few weeks ago, according to comments on this blog I was going to be fighting on the streets overrun by the army under martial law as the bread ran out in supermarkets and cash from the cash machines, yet it didn’t happen.
Only this morning I read that all there is to look forward to is an age of demilitarized zones of ‘urban decay’,
It’s the very essence of British life that we let ourselves be ruled by the sensationalist and negativity
All we need do is reassess our lives and remember what’s important, because money, cars and houses are not important, at all.
Having the love of your family and health is important. Education is important. Lets let the organizations go to wall and from the ashes a new order can rise where we can once again respect our elders and invest our time, money and effort into educating out children; the very fundamental of a country that has been left far, far behind in the desperate scrabble in the mud for illusionary wealth.
What has infuriated me in this crisis is not the bankers getting bonuses, or how much they’ve stuffed it up as it only proves that everyone at the very top of any financial organization doesn’t have a clue what they’re doing, but how all this cash is suddenly available to prop up these corrupt fraudulent operations as our national infrastructure crumbles.
It’s also proved once and for all that the British private school system does absolutely nothing for producing intelligence in the slipstream of upper middle class Britain; just look at this government, the oppositions and the top brass running industries. Laughable.
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# 152 and #225 as far as I know there can be no precise definition of a depression or even a recession; economics is very inexact and different countries fiddle their stats in different ways
so for instance the US review old quarterly figures and adjust the stats, admitting towards the end of 08 that their recession began at the end of 07; most countries go on the 2 consecutive quarters of falling GDP, but that can be calculated in various ways too, as can inflation, unemployment etc; and house prices where everyone fibs according o what they want to happen
interesting to note that the US GDP figure for the last quarter of 2008 was -3.8% but they count unsold production as GDP and if they left it out the figure would have been -5.2% (annualised); our figure was -1.5% for the quarter which is 6% annualised
so beware stats and %; politicians will shortly begin to tell us that things are getting better, once the steepness of decline slows (getting worse less quickly - an altogether different thing!)
THE BEST DEFINITION OF A GREAT DEPRESSION I KNOW OF?
THE EFFECT BROUGHT ON BY BEING A REGULAR READER OF PESTON
this definition has been confirmed by a wide variety of higher-up sources in govt and the City, whose names cannot be divulged of course!
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Would one of you chaps indulge me?
Little off topic
The current price rises goods from ford, sony etc, due to the weak pound,
would you say this is the start of a new worrying phase.
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258. supercalmdown wrote:
"Where do people believe the FTSE will be this time next year ?"
When the pound has devalued by 90% I would expect the number to be the same.
The old problem price vs value.
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House prices up by 1.9% and mortgage costs reduced even further thanks to the base rate cut - whoppee, time to go out and buy that new car while they're still giving them away!!
# 262
"The fundamentals are bad etc...we have a whole year's stock to shift".
Not true....nobody's built anything for the last twelve months and they will not build anything for the next twelve.
I've noticed an marked increase in offers since the beginning of December and sellers are beginning to tell the so called "bargain hunters" to take a running jump.
Watch this space doomsters..........
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I don't think Brown et al have the moral courage to stop excess pay for undeserving and incompetent bankers. If he does act it might go someway to restoring confidence in his sense of justice.
Meanwhile most of us have much less to live on than the bankers and interest on any savings we may have is insulting.
As for other sectors such as car makers-why not nationalize the whole country and turn us into communists?
What worries me most is that as our manufacturing base is so low and financial services have collapsed, what are we as a nation going to live on?
Off topic- let Scotland and Wales go- that will give us a bit more money in England and perhaps some sensible Micawberish English politicians who put us first.
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In conewoawe, we downt get bonutheth. However, Rwobert Pestons excitable jourwnalistic style got me excited and made me do a run on the banks. I think he isnt an outstanding journalist and smellss of poo
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Big joke!
Billions have been skimmed off and sent here there and every where in the ‘Bank Bail out Bonanza’ . Bosses and traders have been paid millions. Has there been any attempt to get back bonuses already paid?
Every working man-woman has now got to “knuckle down and work harder” The USA is a broken and corrupt country and we are hanging onto its coat tails (and its morals) like the whimp that follows around the playground bully.
These ceilings for the bosses salaries are just an attempt to stop the ‘peasants’ from revolting. I think it is too little too late. The national guard are standing ready to restore order and justice!
Unless there is a paradigm shift to recognise the value of ALL people, their lives and the desire to exist in a world which should be a nice place for ALL to live in, then we are just following in the footsteps of countless civilisations who have failed.
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No not you Robert.
Who can remember the diithering by Alistair Darling when it took days to tell everyone their deposits would be protected.
I and many many more.
How dare this incompetent bunch in government try to find yet another scapegoat.
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Everyday, a new economic or fiscal action is up for debate.
Interestingly, no comment has indicated that there may not be a bottom to this current crisis.
We are already beyond economic debate and fiscal stimulus is leading us along roads upon which we have never driven.
Estimates now conclude that 15 million UK citizens will be subjected to the visit of a debt collector during 2009. This is one third of all households.
Too many people will be hurt and whilst we may dismiss their pain as their responsiblity they will certainly want us to join in with their world.
Upon which day in the future will the debate begin to rage upon our legal system?
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Who to believe?
Nationwide said their was a 1.9% fall in house prices in January.
Halifax said there was a 1.9% rise.
On average this means there was a no increase or decrease.
Does this mean there weren't many houses sold?
Trying to talk up a naturally falling market does no one any good.
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160. Toldyouitwould
Cheers for the speling pointer this dickslexeeor is a sod.
Sackings in the public sector indeed..... could be the silver lining of the cloud called downturn.
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The moderator's gone AWOL - he/she's gone out in the snow and may be some time.......
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I think the reporting of this matter over the past day and week is missing the point.
It is not just that the tax payer is bailing out the banks it is the fact that the bankers actions have caused untold damage to the wider economy and lives of millions.
So the bankers should not just be measured on the performance of their own organisations. They have should be measured in terms of Corporate Social Responsibility in which case they are due nothing by way of bonus payments.
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As a taxpayer I am not comfortable about bailing out banks and letting them pay themselves quite undeserved bonuses.
As for executive compensation does anyone really believe in banking "talent"? Is this the same self-seeking talent that got us into this mess?
It's more than time for a reality check for all concerned I think. The story of the credit crunch is the story of the Emperor's New Clothes writ large!
As usual in Britain, where there is no real tradition of direct action or indeed revolution, we take all this lying down.
It really is time to stand up and turn things on their head. It's more than time to sweep out the old "talent" with a new broom.
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I heard it on the grapevine that senior bankers bet with each other on who can feed Robert Peston the most outrageous tosh that later gets published.
Each weeks winner gets a bonus.
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Robert have you gone into hiding since your appearance before the Treasury Committee yesterday?
or being held incommunicado? just remember, even if you've woken up this morning and find yourself in KARACHI or on Diego Garcia, water-boarding is no longer allowed and secret prisons are right out
but be careful of the QUANTITATIVE EASING; I've heard that it can be very painful
don't worry, if there isn't a new post from you soon, us Mullerites will demand a statement from David Milliband on the matter
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274
It is just the start of the inflation we have all been warning about here; arising from weakened sterling and a wrecked budget.
The scientific term is Brownian motion.
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276
Sellers telling buyers to take a running jump?
Hubris nemesis catharsis but who will be right?
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Robert:
....I think that President Obama is very accurate of the capping of executive pay to 500,000-a-year for firms receiving U.S. Bail-out money.
Should executive pay be capped for firms getting a taxpayer bail-out? Yes...Because it is the taxpayers money that is being used to pay for the bail-out....
~Dennis Junior~
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286. ResolvingPower
As for executive compensation does anyone really believe in banking "talent"?
Nahhh I think its the oxymoron of 2008.
Ken Clark supposedly said that he considered investment banking but steered clear as he didnt really understand the principles too well.
It was only when he became chancellor that he discovered neither did they.
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Why hasn't our government slapped on the same limitation? Is it because large City wages are used as a justification to hike Civil Service and MPs' pay.
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.the rise in house prices is an illusion
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Thanks Robert
I wonder if Obama wants a Saturday job running the UK? Brown the Clown is not up to it. It was this bonus culture and a lack of oversight from regulators in both government, (Brown is particularity culpable on this) and non exec directors that got us into this. Pegging their p-ay to something reasonable while they are beholding to us, seems fair.
But watch your back! This does not make nice reading to some very powerful people.
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#283 CarrotsneedaQUANGO2:
"Cheers for the speling pointer this dickslexeeor is a sod."
I have become a member of the DNA too!
See my post 245.
Should have been 'hypocritical'
(DNA- National Dyslexic Association). Apologies to those who are dys.
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#274 Grand-Malphase:
"The current price rises goods from ford, sony etc, due to the weak pound,"
+
Could be:
1: Unfounded optimism
2: Resumption of the arrogance that every Brit will pay what they are charged
3: The manufacturers want to soak up the gap caused by the lower finance costs
4: Everything is now OK and will continue as before with higher prices.
It could be like BR in the seventies. Lose money, put prices up. Less passengers, put prices up more. Oh dear, lost even more money.
Let us wait and see, say a month?
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#281 KMVF21:
"Interestingly, no comment has indicated that there may not be a bottom to this current crisis."
It has been mentioned a lot on other RP blogs.
The problem is the SIVCDO/Derivative/Instrument Black Hole.
No one knows how deep it is.
How did we get to this situation? The asset (toxic debt) should have been valued by:
1: Accountants
2: HMRC
3: Regulators
4: Credit Rating Agencies
THEY ALL FAILED.
Enquiry and Sackings! NO BONUSES.
Sackings? No, JAIL in some cases.
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Well hats off and then back on again.....he's limited the bonuses to how much....I can see a lot of zero's but that is all I wanted to see!
Absolute disgrace! There is no justification for any bonus payments. On the other hand I would pay handsomely for evidence that puts the worst offenders behind bars.
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My boss has asked me to put forward a solution so they can win a big tender today.
I've decided to deliberately screw it up in the hope that I too will be handsomely rewarded.
Taxi for.....
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#274 Grand-Malphas:
"Would one of you chaps indulge me?
......
The current price rises goods from ford, sony etc, due to the weak pound,
Would you say this is the start of a new worrying phase?"
+
It was just put up on Teletext that HMG is considering giving a refund if you trade in your old car (9 years+).
In Germany where they have been doing this for some time you get £2,250 for you old car.
Bet we get offered some paltry amount.
Cynical of the car makers to put the price up first, eh?
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If Obama has the guts to put a cap on the greed of fat cat bankers and business leaders to only $500,000 per annum (which is more then he the President is paid), then why do our regulators and politicians not have the same courage to cap these bonus culture and rewards for failure?
This shows that a man of the type and likes of Obama is a cut above the rest!
If we start getting politicians of the likes of Obama in Europe then Europeans will vote for the Obama types in droves!
Big fat cat salaries and bonuses have not made the UK financial services sector a success. In fact the very opposite.
We have paid big salaries and big bonuses and we have got the worst peformance in the UK financial services sector in history.
Big bonuses and big salaries seem to have attracted big failures.
People get paid a salary to do a good job. If they do a bad job they get fired.
Most peoples contract do not contain any formula about bonuses.
In the 1900 to 1970s bankers did not get bonuses and they were lucky to get a Christmas Hamper as thanks. In those days the UK banks had their golden age
As for the excuse the fat cat executives give, that we need to pay big salaries to attract the best, the lesson learnt from the credit crunch is that WE HAVE paid big salaries but we seem to have attracted only the executive directors who have been failures.
There are thousands who are very able and would accept much lower executive salaries and do as good if not a better job of running banks and companies then those who have had these fat cat salaries.
Money does not always attract the best and if it does then greed is not the best..
If Obama can stop executive directors greed by a single stroke of his pen namely an "Executive Order", surely our politicians can do the same in parliament?
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