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The bonus questions

Robert Peston | 11:13 UK time, Monday, 11 January 2010

If you and I had the power to hire and fire investment bankers (that would be quite a thing, wouldn't it?), there are a few questions we would probably ask before lavishing bonuses on them.

Stephen HesterHang on a sec. We do, in a way, employ them, since taxpayers own not far off the whole of Royal Bank of Scotland. So here are a few pertinent questions for RBS - which will perhaps be asked on our behalf tomorrow by MPs on the Treasury Select Committee, when they interrogate RBS's chief executive Stephen Hester.

First, what proportion of investment banking profits can be seen as an exceptional windfall, stemming from the unprecedented financial and economic support provided by governments and central banks to lessen a recession that was caused in large part by the recklessness of banks?

This question can be broken down into two parts.

(1) How much has been earned by what investment bankers style as a "carry trade" with central banks? This is the business of buying assets that yield 5, 6, 7 or 8 percentage points over the official lending rate, and then refinancing those assets with the central bank at that official lending rate. Borrowing at close to zero from the central bank and lending almost risk-free at 6 or 7% is not the most stressful or challenging way to generate bumper profits. Investment bankers tell me this carry trade has been happening on a system-wide scale, in spite of central banks' precautions to prevent it.

(2) How much of the investment banks' profits is the result of a generalised rise in asset prices, caused by the easiest monetary conditions for a century, which has led to a recovery in the price of securities that in the previous year generated spectacular losses for the banks? This gain from marking investments to the market price should not be seen to be the consequence of management genius, since the main reason the banks didn't sell the securities in the previous year is that they were unsellable.

Bankers tell me that a vast proportion of all investment banks' profits stem from these factors. It is visible in the sharp increases in revenues from so-called trading and principal investments - a doubling in some cases - which in turn is the main driver of banks' overall profits growth.

There is an acknowledgement by some bankers that these gains are in effect an unrepeatable jackpot, the consequence of the authorities' bail-out of the economy, and not the result of their great prowess.

Or to put it another way, only the generation of losses in these benign market conditions would require a very special talent. Making profits? A suited monkey could do it.

So bank bosses accept that in an ideal world they wouldn't pay bonuses from these windfalls. But my own estimate is that bonuses paid in the coming weeks by the world's main investment banks - from the US, UK, Switzerland, the eurozone and Japan - will be greater than $80bn in total.

How so? Well, it is a classic example of competition leading to a mad outcome. No bank wants to be the only one in the world to pay less than what all the others pay, so they all pay too much. You might argue, of course, that there's a bit of vested interest in play here, in each banks' refusal to take a lead in cutting pay.

Oh, and by the way - as the FT points out this morning - compensation as a proportion of revenues will fall. However, that doesn't mean the banks are being hideously penny-pinching in respect of staff rewards.

At Goldman Sachs, for example, compensation and benefits for employees will be nearer to 40% of net revenues for 2009 than its typical payout ratio of 50%. But with revenues soaring, Goldman will still provide around $20bn in remuneration - including about $10bn in bonuses - or more than $630,000 of remuneration per employee.

Which brings us to question number two for the banks, and for Royal Bank of Scotland in particular. Since bonuses are discretionary, on what basis have they decided to pay record amounts to some executives, just months after more-or-less every bank in the world was minutes from meltdown?

At RBS, for example, I am told that executives in its Global Banking and Markets division who have previously never earned more than £1m at the bank have this year been told they'll be pocketing over £5m. And that a small number will be making over £20m.

As I mentioned well over a month ago, in total RBS's management feels it has to pay bonuses worth in aggregate over £1.5bn. I guess with an anxious Treasury breathing down its neck and in the full glare of publicity, RBS's board might scale this back a bit when it signs off the remuneration package in mid February.

But I would still expect it to pay very substantial bonuses. And it'll have the backing of UK Financial Investments, the arm of the Treasury which manages taxpayers' investments in banks, in doing so: UKFI accepts the argument that taxpayers would be worse off if RBS was perceived to be a lousy payer and lost its best investment bankers.

Which brings me to my final question. Are these investment banks as dependent on the skills of "special" individuals as they think that they are?

I am told that a good chunk of Royal Bank's revenues from investment banking - and this is very much to its credit - is in effect an annuity: it is foreign exchange and debt business provided by medium-size companies that are loyal to the firm, not to any particular individual.

But if that's the case, there would be less need to provide enormous rewards to the individuals who look after those clients, because the clients would probably stick with RBS, even if the individual bankers defected.

There are, of course, brilliant bankers who have exceptional abilities and can make the difference between a mediocre performance by their organisations and a good one.

But do we really think that collectively the investment bankers of the world should be paid bonuses for 2009 equivalent to considerably more than the annual economic output of Slovakia, Morocco or Vietnam?

PS: For the effect on bonuses of the chancellor's super-tax, see my post of last week, Bumper bonuses mean bumper tax.

Comments

Page 1 of 3

  • Comment number 1.

    All true, of course. But it's worth remembering that those bonuses will yield tax to treasuries around the world. The money will also either get spent, keeping people in jobs, or reinvested. So while it is completely unfair that those bonuses are effectively unearned, they are at least not going to complete waste.

  • Comment number 2.

    Another excellent post Robert!

    My view is more cynical than yours, I'm afraid - The bankers do it simply because they can - because they are out of control and have paid too many 'bungs' (over the years/ recently?) to the priests and politicians (political donations) for anyone (politicians, priests or even the regulators) with sufficient authority to even question them - never mind bring about the essential changes that are needed.

    The executive bankers just sit their laughing with their fingers in the tills!

    Why do Bankers get 'knighted' etc? Can anyone tell me? How many bankers have been knighted in the last 13 years - who are they and what were they doing?

    I wonder how much bank bung money is going into our next general election to fund political parties?

  • Comment number 3.

    The whole idea that "special skills" are required to borrow at 0% and lend at 7% is a folly propagated by bankers. Also the "investment banking" should be clearly separate from "utility" banking. There is no harm in letting RBS become a truly "utility" bank ditching its investment banking arm.

  • Comment number 4.

    You cannot have it both ways,Robert, criticising the banks for losing money, then criticising them for making it..... but what it does go to show is how right HMG were to bail out the banks and the profits coming in will help public finances considerably.
    Who's the victim?

  • Comment number 5.

    Bonuses, if paid at all must be for proven performance. That is retrospectively for results. The problem is that they have not been.
    Also as the Governments action has shown, the "banks" will be bailed out no matter what the circumstances. This is the ultimate perversion of the so called free market.

    The truth is that no institution is dependent on the "special" individuals there are PLENTY of equally skilled individuals out there who would in all probability do a better job. This was demonstrated clearly when the top executives were exposed as having no specialist banking qualifications at all!

    It is very much scaremongering that we need to continue to pay obscene bonuses in order to retain staff. Let them go! Everyone of these executives in banks that have been bailed out needs to understand that they are now accountable to voters/taxpayers and the rest of us as those voters/taxpayers MUST hold them to account

  • Comment number 6.

    Don't sweat this, by the end of the year we'll have tidied up the zombie banks completely - full nationalisation. We will then move on the 'outliers' that 'got away' last year.

    All will be well and the music will have (at last) stopped, indicating the end of the party.

  • Comment number 7.

    Whatever the level of bonuses, there comes a point an increase in the level doesn't make the investment banker any better. If a bank suddenly stopped paying huge bonuses, and all it's bankers left, there would still be more people willing to be bankers at these lower levels of pay. And how can anyone say that these new people are worse than the previous shower? Is it just because they previous lot had high pay or did they really have exceptional skills.

    80% of the bankers will be mediocre and the levels of bonuses do not truely reflect their skill level. 20% will be very very good and could command high bonuses, but even then millions of pounds? Does anyone need that much to live. What if they got hundreds of thousands of pounds. Unless they really needed the huge estates and Sandbanks houses (which they don't) they could do with lower levels of bonuses and still be very happy and still be in the top 0.1% percentile of the population.

  • Comment number 8.

    The idea of those in power abusing it for their own benefit is not new in this country or in the world.

    'Nearly all men can stand adversity, but if you want to test a man's character, give him power'. Abraham Lincoln.

    What is frustrating is that it is fairly clear that the money men in the City are in cahoots with all the politicians and the rest of us are going to suffer - most of us have not suffered yet because there have been no spending cuts by the Government and no tax rises - we are simply running at a loss. Once we stop spending and start cutting and try and break even (stop living the dream) then things are going to get quite nasty - to balance the books we need to cut spending by 25% - that is huge!

    I suspect that 95% of the population will find out how good they are at surviving adversity in the next 10 years.

  • Comment number 9.


    This begs a bigger question; namely, what are the special qualities required to be a banker that are in such short supply? Clearly, anyone can lend at 7% and borrow at 0%. Anyone can be a winner in a win-win situation: such as when you a reinflating an asset-bubble and creaming off a %

    I have no problem with someone who generates a huge profit for a business, being rewarded in proportion to that profit. But most of these people, most of the time, are just in the right place to benefit from the one-way bets on offer.

    Perhaps if the people still in jobs, and getting bonuses, should be asked why they are so much more valuable than all the banking people laid off last year - who might be willing to work for considerably less.

  • Comment number 10.

    At last - the world catches up.......well done Robert for stating what I have been banging on about for weeks now.

    The bankers bonuses are not 'real' - i.e. they are speculative profits supported by Government intervention. When Government intervention (QE) stops then so will the profits and on come the losses.....

    What should concern people is the following:

    1) Why did it take the journalists of this world so long to reach this conclusion?
    2) Why are the bankers paying themselves bonuses earned from speculative QE money? - do they really not know where their 'profit' is coming from? Surely the people who at the tiller of the Economy shoudl have a clue what they are doing - surely???

    3) .....if they do know what they are doing in 2) - then why is the Government about to aide an abet the next grand robbery of the state???

    Meanwhile, back in the REAL world there is a counter weight to this larceny - this is why reposessions are being kept down - but can anyone guess the outcome of this?

    http://news.bbc.co.uk/1/hi/business/8450518.stm

  • Comment number 11.

    What would I ask them? Easy......

    I'd want to know how they can justify not putting at least a reasonable percentage of these bonuses into real venture funds to increase the number of high value adding start-ups and spin-outs in order to help the process of rebalancing the economy.

  • Comment number 12.

    Fantastic. This monkey has a suit so where do I sign up for the gravy train?

  • Comment number 13.

    I've long been sceptical about the argument that 'you need the best'.

    The nearest space to this where we have hard facts is stock market investment - and year after year the figures there show that very few generate returns much above what you'd get with a tracker fund - unless you're running a Ponzi scheme of course ;-)

  • Comment number 14.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 15.

    Investment bankers are modern day alchemists who, with slight of hand, can appear to create wealth from nothing. In so doing, they can award themselves a large slice of that 'created' wealth as a bonus.

    In fact, of course, wealth cannot be created from nothing. They control the flow of certain kinds of money, and - like river management - can speed up and channel the flow. But the river water would flow, whether it was mananaged or not.



  • Comment number 16.

    The banks will NOT be paying bonuses - because our Labour government have said they were going to stop it. They took action so that bonuses would not happen. We must trust our government. When Labour say they are going to do something we must trust that they do it. Were this not the case government would be nothing more than an expensive joke.

  • Comment number 17.

    And so, the biggest heist in history continues. . .

  • Comment number 18.

    FICTITIOUS CAPITAL

    The circulation of capital is: money - commodities - more money.

    More specifically: money capital - commodity capital (in the form of labour-power & means of production) - Productive capital - commodity capital (products) - money capital (sale of the products)

    And whilst some of the government (our) money will actually enter this circuit of capital, it does appear that most has gone on assets, hence asset inflation (shares, gold, property, etc).

    This rise in asset prices covers up the real fall in profit rates, but this is only temporary as asset prices cannot increase forever, just like a Ponzi scheme cannot go on forever.

    It looks like the experiment with fiat currencies is going to come to an ugly end.

  • Comment number 19.

    This is just the beginning...

    Many homes 'using credit cards to pay mortgage'
    http://news.bbc.co.uk/1/hi/business/8450518.stm
    Up to one million households have borrowed money on credit cards to pay their mortgage or rent over the past year

  • Comment number 20.

    Without a doubt there is a certain element (and it may be substantial) of banking profits this year that has resulted from government intervention - but so what?
    We are not asking the tens of thousands of (non fixed rate) mortgage holders across the country to repay their windfall gains made as their SVR has reduced are we - so why should this be any different for the banks?

  • Comment number 21.

    Robert, any more blogs like this and you will need police protection! Compare the socially useless activities of the bonus encrusted bankers with the soldier on the front line or the hospital consultant who almost on a daily basis is saving lives. Unfortunately we have a government so unwashed in the ways of the world of money making that their devotion to the enclaves of finance capitalism amounts to religious worship. There is still the opportunity to change the public ownership of most of the UK's banking system from a knee jerk crisis driven measure to adopting and adapting it as a chosen strategic outcome.

  • Comment number 22.

    15. At 12:40pm on 11 Jan 2010, richarddorset wrote:

    "Investment bankers are modern day alchemists who, with slight of hand, can appear to create wealth from nothing. In so doing, they can award themselves a large slice of that 'created' wealth as a bonus.

    In fact, of course, wealth cannot be created from nothing. They control the flow of certain kinds of money, and - like river management - can speed up and channel the flow. But the river water would flow, whether it was mananaged or not. "


    ...so now there's two of us - very well put richarddorset and very simple for everyone to understand.

    I have been asking every week for a banker to come on here an explain how they "generate wealth" - a phrase used by the media (including Robert) on many occassions when referring to bankers.

    Unfortunately there is no wealth creation - there never was and I suspect bankers know this - they are just afraid the public will work it out and lynch them.

    Sadly I can only assume that politicians and journalists are just too stupid to understand banking that they simply go along with the assumption that they must be wealth generators because they are paid so highly.

    This country needs a harsh lesson in price vs value - and I think the next 10 years will be a crash course.

    I am mystified as to how this lie can be maintained in the hard face of truth.
    The country needs wealth at the moment - so why aren't the bankers getting on a creating it? Come on fools - show us how much wealth you can create today.

  • Comment number 23.

    I find it incredible that a balance of a bank does not reflect a position where if we the tax payer removed the guarantees they would disappear in a cloud of bonus's.

    Perhaps we should withdraw or at least put a massive premium on those guarantees and see how they fair then ????

    With banks we must put in place a system of accountancy that reflects the TRUE position of a bank.

  • Comment number 24.

    Oh and Robert, you keep mentioning these fabled 'financial priests' that have so much control of the economy and who have be giving such great advice to the current incumbent and no doubt will be giving even more sterling advice to the next.
    Any chance you could do a decent job and actually name them, every single one of them, since the decisions they have been making have had such a drastic effect on how we all live.
    Would be nice if you could inform the public (who after all, pay your wages) as to who is actually pulling the strings.


  • Comment number 25.

    The question I would ask is has the bank got the maney to pay the bonus out of once it has settled its debts, any other company would or could not pay out bonuses if it didn't have the money. they should think themselves lucky to still have a job, they may have done well personally this year but take it on the chin and look at those less fortunate and now out of work. Blame your irresponsible colleagues and the gambling culture that has been allowed to develop, and allowed them to make a fortune on previous years. I have heard that some have increasesd the salary by over 200% to avoid additional tax on any bonus paid. If tax payers money is used for bonus payouts then that is wrong.

  • Comment number 26.

    Agree 100% with you on this post Robert!

    You deserve a bonus! (How much is yours by the way?)

  • Comment number 27.

    What I don't understand is why someone who earns a massive bonus on top of a more than generous salary doesn't just bank it and leave the rat race. How much is enough? Why not "retire" let someone else have a go and go and do something more useful instead? I'm sure they could put some of their easily earned cash to some good use for society.

    The truth is that people are addicted to their high-powered (supposedly) jobs and status.

  • Comment number 28.

    18. At 12:43pm on 11 Jan 2010, duvinrouge wrote:

    "The circulation of capital is: money - commodities - more money."

    ....but in the case of banks is it not M-M-M, Money - Money - Money?

    Money (Capital lent) - Money (Interest paid) - Money (Capital repayed)

    At least in the real world the business must transform the Capital before a profit is made - the banks don't even have to go to that trouble - if they did then they would be a real business.

  • Comment number 29.

    Hester should be asked the same basic question that any business who employs people faces....

    When a few employees tell you that they can get paid more elsewhere and that they are thinking of leaving, how do you know they will, until they do?

    It sounds to me like he is being a bit of a patsy in the face of a few threats from one or two employees. He should be properly calling their bluff (although I appreciate he has a vested interest himself in keeping staff levels high, so his own remuneration does not look so bad).

    Have you heard any news yet, Robert, of large numbers of people leaving RBS in disgust and immediately finding employment elsewhere on higher salaries?

    No, I didn't think so.....

  • Comment number 30.

    Clearly banker's bonuses didn't cause the Financial Meltdown of 2008. But the payment of bonuses in the years running up to the meltdown did indicate that those paying them were not competent in judging whether or not banker's activities added real value or not.

    As bonuses are now being paid again, it means that we are expected to accept that two important changes have taken place. The first is that the paymasters have now worked out how to recognise real value added through banking activities and the second is that all of the new methods of measuring it have been met.

    I have not yet heard a banker tell us that this is true (let alone a journalist ask one if it is) so the suspicion must remain that the bonuses are being paid against what we now know to be a discredited criteria.

    Perhaps you, Robert can be persuaded to put this question to one of those happy to pay?

  • Comment number 31.

    Come off it Robert! "Do we really think that collectively the investment bankers of the world should be paid bonuses for 2009 equivalent to considerably more than the annual economic output of Slovakia, Morocco or Vietnam?" Inviting people to rant against the size of banking bonuses is hardly courageous reporting, is it? No seeker after truth you.

    How about digging a little, rather than moralising. What's the story with the latest US employment figures? How does the Japanese devaluation affect us? What's the truth behind Darling's talk of cuts/tax rises?

  • Comment number 32.

    Good one, Robert. Our mediocre or worse Governments of either colour don't have the brains/courage to deploy radical measures to curb this astronomical inequity, and I as a tax-payer continue to be shafted - at least I now know the size of the poke. I advised my Oxford graduate of a son in 2000 NOT to go into the City because the profession would not explore his overall merits in building up his capability and contributing to this country; neither of us regret his decision to engage in social enterprise. But it's so disheartening to see cunning, selfishness, complacency, etc rewarded at our expense. We are both emigrating - it's the only way.

  • Comment number 33.

    #4. onward-ho wrote:

    "Who's the victim?"

    Are you serious?!

  • Comment number 34.

    As I understand it:

    We the public have no right to renegotiate a contract of employment

    We forewent that right when we bailed out the banks rather than allowing them to collapse and then selling off the good bits and isolating the bad when as a natural course all previous employment contracts are cancelled by the administrators/liquidators.

    The original bodies therefore still stand, no caveats were introduced by the government in its bank bail out

    This government also has a penchant for law, and demanding these employment contracts are dismantled could cause a run on employment tribunals where only the law is applied, not public sentiment. Plus these tribunals are far more likely to expose the deals that were done by the government during the bail out.

    It is not the fault of the bankers and their masters that we are in this situation, it is the poor way that this whole matter has been handled and regulated by our government that is, despite the fact that they must have been aware of employment law (they passed much of it)

    No reward for failure

    Call an election

  • Comment number 35.

    What's the best way of ensuring a bonus for oneself?
    Well, having the 'opportunity' helps.
    Make sure that one' fingers are stuck in the tills like barnacles - and 'possession is 90% of the law'.
    There you go - 'Enjoy'!

  • Comment number 36.

    20. At 12:50pm on 11 Jan 2010, nottcl wrote:

    "Without a doubt there is a certain element (and it may be substantial) of banking profits this year that has resulted from government intervention - but so what?
    We are not asking the tens of thousands of (non fixed rate) mortgage holders across the country to repay their windfall gains made as their SVR has reduced are we - so why should this be any different for the banks? "


    yeah - I just checked my Mortgage account and whilst I have been making overpayments due to the low trakker rate I'm on - there wasn't a £5 million pound bonus in there!

    Also, I don't know what rates you're on about but the SVR at most places is about 4-7% - and yet the BoE base rate is 0.5%

    Therefore on a standard £200k mortgage over the last year a homeowner has 'saved' a tidy £6k.

    However the bank that lent the money has made an additional profit of £7k (borrowing at 0.5% lending at 4%)

    I'm being very generous with the rates because the best rate with a 40% deposit is 3.9% APR - but for those with only a 25% deposit - they pay 4.9% and for a 80% LTV it's a whopping 5.7% APR.

    Is that what you call fair? - a 5% markup for doing nothing (other than lend out what you have already accumulated) and for a venture which has very little risk (certainly with the 40% deposit - it's nearly half the value of the house!!)

    Do your sums before justifying the bankers practices - you may be happpy with their parastical practices but it's certainly not fair game to try and align the exhorbitant profits of the banks with the measly reduction in some mortgage holders interest payments.

    Trust me, when the rates start rising again as we slip into national downgrade the banks will maintain their profit margin but the homeowners will certainly not be retaining their discount.

  • Comment number 37.

    RP, respect for starting to detail the specifics of where bank profits derive, leading to an understanding of the rewards that are "deserved" for performance but imo this can only be an understanding rather than a calculation along the lines of; with retrospective knowledge what would an "average banker" likely to have achieved. To keep the football anology going it would be like trying to calculate the goal scoring bonus of a striker after taking into account how may goals were as a result of poor defending, how many were made for him as a result of above average performane from the midfield and how many an average striker could have scored. In a former life as a retailer i would say over 80% of shop manager's who made their bonus target were not much better than 80% who did not, environmental factors are virtually always going to be the major influence on good or bad results in all walks of life, this though is unlikely to influence the motivational or "carrot" effect of bonuses.

    A Second point is that although many of us may find hugh bonuses for borrowing money at c1% and lending at c6% virtually risk free, the worlds finacial system would be far stronger if banks stuck to virtually risk free activities in the past than rather their gambling ways. Your model would seem to pay bonuses as a result of the winners of casino banking

    you state "There are, of course, brilliant bankers who have exceptional abilities and can make the difference between a mediocre performance by their organisations and a good one", is this really true it seems to me fairly fundamental that higher returns are as a result of higher risk. The problems remain that banks don't really want brilliant bankers they want banking people who are a part of the bank, they also want higher and higher returns in the short term without real concern to the long term risk. This is why a fundamental change of bank culture is important

  • Comment number 38.

    I've said it before and I'll say it again -

    They are little more than parasites, they've worked out a way to skim money off the top of the economic output of the rest of society whilst contributing almost nothing.

    In fact they are probably a weight, a drag on the 'real' economy.

  • Comment number 39.

    wear a suit we give you money anyone could do it if it's that easy why don't you give me the money and save on the suit?

  • Comment number 40.

    28. writingsonthewall

    That's my point, M-M-M is not capital.
    It's fictitious capital.

    Capital, as I'm sure you know, is a process which must involve production to be able to generate surplus value (where profit comes from).

    The trouble is most people never think about where profit comes from.
    They swallow the surface explanation that profit comes from capital invested, that somehow money magically grows by itself.
    The rises in asset prices reinforces this illusion.

    What's even more of a problem though is it's not just ordinary people who fall for this illusion, so do the media.
    Unsurprisingly, because a deeper analysis will upset the ruling class.

    At times of crisis like this all we can do is encourage the few to think a bit more deeply.


  • Comment number 41.

    I would ask Bankers the following questions

    "How irritating is it to read ill-informed comments from airchair economists and worse still so called financial journalists"?

    "Do you feel that the average journalist could run a sweet shop let alone a Bank"?

  • Comment number 42.

    29. At 1:07pm on 11 Jan 2010, Noideaatall

    ....and what does a good premiership manager do when his start player does the same 'thinking about leaving' speech?

    shows him the door

    This is how bankers should be treated - you go and play for 'Real Madrid' and we'll see you in the next years Champions league - or maybe not.....

    There is a lesson for all bankers in the actions and consequences of this behaviour in football. Earning the most money doesn't get you the most respect as a player - and the most expensively assembled team in the world is not a guarantee for success - in fact all you're guaranteed to get with big money is big strops.

    It was all a bluff - I wonder what they will come up with next to try to maintain their rewards for failure?

  • Comment number 43.

    "Borrowing at close to zero from the central bank and lending almost risk-free at 6 or 7% is not the most stressful or challenging way to generate bumper profits."

    I find it deeply disturbing that a 'prominent' BBC business journalist has apparently learnt nothing from the entire banking crisis and continues to describe assets priced to yield a significant spread against treasuries/gilts as 'almost risk-free'. It seems if Peston were a banker in 2006/2007, he would have gotten himself as long of subprime-backed assets as everyone else did.

    Bob

  • Comment number 44.

    #41 Decentjohn

    So you still think bankers know best do you?

  • Comment number 45.

    30. At 1:07pm on 11 Jan 2010, MotBarber wrote:

    "Clearly banker's bonuses didn't cause the Financial Meltdown of 2008."

    ....but the tendency for profit to decline is accelerated by the taking of excess profit - so surely the huge bonuses, which were from excess profit - assisted in speeding up the process and making it more severe?

    Paper profit is ficticious - that's why it's now disappeared and what we have taken in the last 10 years as 'profit' must now all be paid back.

    Currently the Government holds the cheque (passed to them by the banks) - but they're winking at you to hope you'll pay for it.

    Meanwhile the 'profit' taken in the last 10 years has been used to buy a nice yacht in Monaco, a house in Biarritz and a lavish snorkling holiday in the Maldives - unfortunately you were not invited, but pick up the tab for us, there's a good man....

  • Comment number 46.

    Robert, well done.
    What are the chances any of our questions will be asked tomorrow?

    I'd ask the following:
    Given you pay so much to the best talent, can you explain what talented means to you and how you measure these quaalities (in detail), given the economic disaster these people brought about?

    Why do you hire sheep who do no more than follow the crowd, claim they are talented and pay them vast amounts of money?

    What tax havens are currently being used to ensure your organisation, staff and/or clients are avoiding UK tax?
    What global financial structure, if any, do you most fear?

  • Comment number 47.

    Am I right in assuming that bankers are paid really poor salaries (below the average?) so that bonuses are needed?

    Also I was under the impression that market forces push down, or at least hold down, remuneration when there is an abundance of labour (I believe a lot of bankers have lost their jobs - presumably not all are rubbish)!

  • Comment number 48.

    22. At 12:50pm on 11 Jan 2010, writingsonthewall wrote:

    I am mystified as to how this lie can be maintained in the hard face of truth.
    The country needs wealth at the moment - so why aren't the bankers getting on a creating it? Come on fools - show us how much wealth you can create today.


    As usual, well said.

  • Comment number 49.

    33. At 1:24pm on 11 Jan 2010, Bob wrote:

    "#4. onward-ho wrote:

    "Who's the victim?"

    Are you serious?!"


    It's well known that as a supporter of the City onward-ho will not see the victims until he is having to step over the dead ones on the way to his work

    Until that point he will continue to live in his fantasy land of money made from nothing and profits from thin air....never once questioning the logic behind this world for fear of cracking his virtual reality.

    This is how the City gets through this 'tough period' - unfortunately this is just the visible ire of the public - you wait until it dawns on them how much is actually owed when the tax bills start coming through.......that's when the perpetrators become the victims.

  • Comment number 50.

    Banks -whether nationalised or not- are public institutions in the sense that they provide a service to the public in the form of administering people’s money, the ultimate aim being the financial well-being of citizens in the community. They should do their work as a matter of civic responsibility; none of these bankers have civic virtue as the drive of their actions (neither do many civil servants earning over £50K a year). One should feel proud of working for the prosperity of one’s community without expecting big bonuses in return. Instead personal performance relies on money , like the chimpanzee on bananas to do its act, when are we going to abandon this backward model of development called capitalism? Haven’t we had enough of it?

  • Comment number 51.

    41. Decentjohn

    Yes you are right, the bankers or traders were not to blame for this, they saw an opportunity using their skill and took it, it's the public's fault for borrowing too much and buying too much.
    Give them the bonus now or else we will lose them for ever when they move elsewhere, they dont deserve any of the flack they got.
    Now off to get some CDS's sorted for my bet against Sterling

  • Comment number 52.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 53.

    36. At 1:34pm on 11 Jan 2010, writingsonthewall wrote:
    "Do your sums before justifying the bankers practices "

    My sums are fine - I am merely pointing out the hypocritical view of most of the media and the people that read it that it is unfair that the banks have made all of this profit on the back of government intervention worldwide.

    As I said, many tens of thousands in this country have benefitted and we are not asking them to repay. The size of the windfall is irrelevant.

  • Comment number 54.

    40. At 1:40pm on 11 Jan 2010, duvinrouge

    Ah ha - but is this the day we've all been waiting for?

    Robert seems to have changed his stance and is now asking the same question (in a disguised manner for his own protection ) - where does the profit come from?

    If he can get on the news tonight and stare into the camera and ask the same question of the bankers - he will be the man who started the dominos of freedom.

    Come on Robert - we're all rooting for you. Lets not make Blair's appearance at the Iraq war 'cover up' be the catalyst for revolution - sieze the moment Robert Peston, sieze it - your time has come.

    Progress my dear duvinrouge, progress....

  • Comment number 55.

    #47 bentalls -

    "Am I right in assuming that bankers are paid really poor salaries (below the average?) so that bonuses are needed?"


    I hope that's sarcasm!
    No, they are paid well above average. Their basic salaries would make most people consider themselves pretty well off.

  • Comment number 56.

    49. At 1:54pm on 11 Jan 2010, writingsonthewall wrote:
    33. At 1:24pm on 11 Jan 2010, Bob wrote:

    "#4. onward-ho wrote:

    "Who's the victim?"

    Are you serious?!"

    It's well known that as a supporter of the City onward-ho will not see the victims until he is having to step over the dead ones on the way to his work
    >>>>>>>>>>>>>>>>>>>>>

    'Supporter of the City' or 'paid by the city' (i.e. and/or in receipt of government contract money for 'general spin', advertising, media or other government contract) or similar tax payer funded concern?

    I wonder which one(s) it is?

  • Comment number 57.

    Why do we call this investment banking when it is clearly legalised gambling with other peoples money, lets stop this nonsense now.

    The banking bailout means not made a single penny of profit has been made in 10 years from banking, so whats changed for the next 10 years?

    Nationalise these banks and pay them public sector rates now.
    Lets have a proper change for the future where the profits are real.

  • Comment number 58.

    Bonuses should be completely removed from remuneration arrangements. What is wrong with giving people pay rises for exceptional performance? We should also legislate hedge funds out of the financial world. These are the sort of measures needed if we are ever to eliminate the greed culture which permeates every part of the financial services industry. Asking bankers questions won't do the job - John McFall and his Treasury Select Committee has already done this - its the corrupt system that needs an overhaul.

  • Comment number 59.

    #50 welcometothejungle

    "Instead personal performance relies on money , like the chimpanzee on bananas to do its act, when are we going to abandon this backward model of development called capitalism? Haven’t we had enough of it?"

    Like democracy, it's the worst system except for all the others. Humans, as a race, are -

    Petty
    Jealous
    Acquisitive
    Tribal
    Greedy
    Violent
    and Dumb

    Capitalism is the only system under which such progress as we have achieved in the west is possible, other systems are vulnerable to abuse, to game theory and to dictators. Communism is a lovely idea but humans are not driven to advance the group, only themselves and their families. Forcing them to conform in the name of altruism is the first step towards devaluing the individual and thus opening the way for mass abuse of human rights.

    I'll take imperfect capitalism tempered with welfare programs over anything else you can suggest, thanks.

  • Comment number 60.

    Ok Robert so what your saying is through their reckless investing and poor due dilligence the banks had to be bailed out in the billions. Then instead of repairing their balance sheets they took money borrowed at 0% and loaned it out at 7% an surprisingly have made loads of profit. what talented individuals these bankers are! "Should we strengthen our balance sheets even more or pay out rididculous bonuses that even a four year old with a basic understanding of 2 + 2 could probably pull off.
    I on the other hand work in a architects practice, I am now avergaing 9 - 10 hour days generally average a 12 -14% profit margin but have not recieved a bonus or in fact a pay rise. For want of a better phrase they a seriously extracting the urine and are hiding behind false claims that the picture is a lot more complicated than it is and talent needs to be retained etc. The sooner we get back to a more diverse economy where nearly %45 of our GDP is not reliant on the service sector (namely banking) the better off we will be. Yes we may not generate huge amounts but we will also not lose huge amounts when it all goes wrong because of greed and incompetance.
    Why is Western society so obsessed with economic growth which is clearly unsustainable? we don't have enough Earths to keep growing indefinatley.

  • Comment number 61.

    Surely the banks must pay back the money they owe to the tax payer before paying bonuses ?

    Banks would sure enough expect people to pay their mortgage's before spending their money on wine, women and song ?

  • Comment number 62.

    If making money in a bank is as easy as Mr Peston makes it out to be, why are they not employing thousands more. Quite simple really- the level of technical analysis and number crunching is beyond the intellectual capabilities of the majority. He is simply making outlandish statements to catch the misguided publics attention to boost his journalism career by jumping on the 'bash the bankers bandwagon'.

  • Comment number 63.

    Judging by the amount of companie shares that are being marked up in price, yet have less than 1,000 shares traded in volume, Market Traders/Makers must consider its their duty to the country to big up the Publicly Quoted Companies.

    Must be the First Trump card played this year.
    Wink.

  • Comment number 64.

    30. At 1:07pm on 11 Jan 2010, MotBarber wrote:

    "Clearly banker's bonuses didn't cause the Financial Meltdown of 2008."

    No but the opportunity for bonuses led to the behaviour that caused the meltdown.

    Without the bonuses there would probably have been no need for the regulation (that also failed magnificently) because no one would have had any incentive to operate in the manner that was clearly going to fail in the long run.

    To be an investment banker probably requires a degree, which probably requires some level of intelligence and therefore I am sure that many receiving the bonuses knew that they were leading the banks to a position that could not be sustained - but selfishly it did not matter because at this point they would be rich beyond our wildest dreams - lie winning the lottery twice a year for 10 years - and even if the worst happened they could always move on to another job/bank.

    These huge bonuses feed the culture of greed - this leads to the keeping up with the Joneses mentality that leads to all the credit card debt and mortgage debt that is causing this country to fail.

    We need to return to more basic values - more needs, less wants - sadly as I have said before it would be better if we could get there under our own volition, actually it is going to be forced upon us.

    Being poor though will be a good thing - what truly makes us happy are the basic things in life - not fast cars,money, yachts and big houses - the enjoyment from those things passes very quickly - the joy of the laughter of your children is free, the joy of sex is free, the joy of a wonderful view is free. You aren't wealthy until you have something money can't buy!

  • Comment number 65.

    Does anyone has an amount of the pre tax profits the banks posted in the last 10 years, an amount of the tax this government received through these profits & the amount of losses that have/are due to be reported?

    I would like to see how much money was actually real in this whole process.

  • Comment number 66.

    WOTW

    Remember Robert is a social democrat at heart.
    He may be happy to see the workers get a fairer slice of the cake, but he's not one to take the cake from the capitalists & give it all to the workers.

    Any capitalists out there want to explain where profit comes from?

  • Comment number 67.

    #64 What you been smokin Grim ?
    Can I have some ?

  • Comment number 68.

    Nothing changes, simply nothing! What was that statistic I was given whislt studying 99% of the worlds wealth is owned by 1% of the worlds population! I'll abbreviate it for you SSDD!!!

  • Comment number 69.

    41. At 1:41pm on 11 Jan 2010, Decentjohn wrote:

    "Do you feel that the average journalist could run a sweet shop let alone a Bank"?

    I think we should ask bankers with their failed knowledge of finance as to whether they could manage the books of a sweetshop without bankrupting the establishment after they took a £6 million bonus for selling 4 gobstoppers, 2 murray mints and a packet of bon bons for 68p!

    The old ones are the best "oh ordinary people are too stupid to understand the complicated world of finance - only geniuses can really understand properly"

    ...is very similar to
    "oh ordinary people are too stupid to understand the complicated world of the car mechanic - you just pay me what I want and I'll fix it"

    ...or...
    "oh ordinary people are too stupid to understand the complicated world of the plumber - you just pay me what I want and I'll fix it"

    This is the vengance of the division of Labour - seemed like a good idea at the time....unfortunately for it to work well you need trust - something which is in short supply in a world run by liars.

    Decentjohn - could you enlighten us as to the source of the bankers profit and where wealth is created in the process?

    I've been asking for weeks and I think only 1 person attempted to explain it and failed miserably.

    Do ya feel lucky?

  • Comment number 70.

    There is a saying “The graveyards are full of indispensable men”

    No-one is indispensable, sorry Robert not even you, You would be missed but give it 6 months and someone would be in your place. If a banker want to leave, let them go. Is it really the case that our big banks are being blackmailed by a handful of individuals!!!!

    Anyway my question would be where were all these amazing bankers working last year when everything went wrong and has any banker ever paid back a bonus when a deal of theirs subsequently went wrong


  • Comment number 71.

    #67 - I've always believed problems start at the top and feed down.

    We are ill with greed.

    Bonuses
    Expenses scandals
    Bribes for this and that
    Environmental meltdown
    4x4's we don't have any real need for
    Going to war over oil

    We need medicine - I have smoked nothing - perhaps the world would be a better place if we all smoked something though!

  • Comment number 72.

    I'd like to know more about all this "attract the best" stuff. All I know is that it's used by various people to justify inordinately large salaries. Examples include senior posts in the BBC, newspapers, banks, the civil service and, of course, MPs.

    Two aspects of this approach confuse me.

    First, we don't seem to be getting even average ability candidates into posts in any of these areas, as demonstrated by mediocre output, poor quality of decisions made and lack of integrity of individuals.

    Second, the recruitment process seems to be far from transparent. Where are the "better" jobs that these fantastically talented people would migrate to if they didn't get paid millions in bonuses at state-owned banks? And where can I apply for one of these top jobs. A quick look in the jobs section of the Western Morning News and Somerset Standard yields nothing.

    My conclusion is that the whole thing is a con. Bring on the Revolution.

  • Comment number 73.

    CEOs often say that if they get 50% of their decisions right they are happy. It is not unusual for people to think that 50% right is acceptable.
    Why then, dont we employ 16 year olds to make decisions as they are just as certain to be right 50% of the time. Any one who is right more often than this is simply downright lucky.
    Many people work really hard but only the lucky ones make lots of money
    The luckiest people of all are CEOs who employ Consultants to advise them and if it doesnt work out the Consultant takes the blame and the CEO keeps his job!

  • Comment number 74.

    65. At 2:18pm on 11 Jan 2010, sirHellsBells wrote:

    Does anyone has an amount of the pre tax profits the banks posted in the last 10 years, an amount of the tax this government received through these profits & the amount of losses that have/are due to be reported?

    I would like to see how much money was actually real in this whole process.

    >>>>>>>>>>>>>>>>>>

    Even better ... look at turnover - v - profit and then really start wondering what on earth the banks have been doing?

  • Comment number 75.

    Money makes the world go round.

    But it is in a death spiral!

  • Comment number 76.

    50. At 2:01pm on 11 Jan 2010, welcometothejungle

    I completely agree with those sentiments.

    The people who are motivated by money are essentially lazy - they need the incentive of bettering their neighbour in order to get off their backsides and do something productive. The ultimate 'goal' of living off unearned income is motivation for these people to keep on earning and earning which in itself becomes the end and no longer the means.

    There are however a lot of people in this country (certainly enough to do all the work) who are not motivated by money but by the effect that work has on the community (how many people felt good for clearing the pavement / road outside their house this month for free?)

    Alas this is where the division of Labour cracks once more - because most people in thier 'work' cannot see the end results, the happy face, the need of another human fulfilled - the joy of production is far removed from the efforts invested. The bankers cannot see the faces of the people they have just made unemployed just as most of us work without ever seeing the end result - Alienation.

    The result is a workforce who are producing, but no longer know why and for whom with diminishing natural enthusiasm and a elitist class who ride the workers knowing they are blinkered from the truth but who do not realise that you can actually ride a horse to death and whom are in danger of doing so.

    Essentially it's a war of the hardworking and productive over the lazy and non-productive elements of society.

  • Comment number 77.

    Trevor, your post humors me.

    Legislation restricting the bankers bonuses means they leave to other up and coming financial center with more favorable tax environments- Shanghai and Dubai spring to mind.

    I highly doubt readers of Western Morning News and Somerset standard are the banks ideal target market when looking for talent. Maybe go to the top universities if you doubt they actively recruit individuals.

  • Comment number 78.

    WOTW, Post 69, thanks for asking the questions I wanted to of DecentJohn (post 41).

    I will await his responses with interest.

  • Comment number 79.

    I put it to the Great British voting public (and fellow posters) that if you are sick to the back teeth with the bank bailouts, bankers bonuses, Westminster expenses and general establishment corruption...then you just might want to consider a proposed course of action...

    ...which would be to spoil your ballot paper in the forthcoming GE by putting a cross in ALL of the boxes. Remember, this would be OFFICALLY recorded as a 'spoilt' ballot paper. This would therefore be considered as a defacto 'abstention'...and all spoilt ballot papers are (of course) counted, recorded and announced.

    ANY OTHER 'VOTE' IS A VOTE FOR THE STATUS QUO. DON'T WASTE IT!

    If you think this is a good proposal then please send an e-mail/Tweet/Facebook message to 10 of your friends asking that they do the same.

    Send out a message to the City and Westminster that the people are now ready for REAL change.

    Put a X in every box!

  • Comment number 80.

    How any bank, effectively owned by the taxpayer, can be paying out fat bonuses while it's simultaneously withdrawing business overdrafts and personal facilities, thereby causing redundancies, repossessions and other assorted miseries, is beyond belief. Caledonian Comment

  • Comment number 81.

    The, selfish, questions for UK plc are:

    Where does the income come from? As most of these investments are external, the answer is from other countries.
    How much tax gets raised from these bankers? From those that are UK resident about 50%.

    So, a large amount of money raised from overseas investments finds its way into the UK treasury. It may stick in the throat, but that is a good deal for UK taxpayers. Now for the third question:

    Who would like a knife to cut their own nose off?

  • Comment number 82.

    53. At 2:03pm on 11 Jan 2010, nottcl

    You implied that journalists don't understand the banking process because they do not have the skill.

    First of all Robert worked in the industry - which means he has knowledge on the subject

    Secondly banking is not complicated - it's made to look complicated by those who wish to retain their position

    ...and then that view is backed up by people like yourself - keeping the lie going....

  • Comment number 83.

    I'm not sure there is any point in asking the bankers any questions? They will simply obfuscate and lie. Prime examples "this is an exceptional deal" Eric Daniels about the HBOS merger followed by Archie Kane confirming Lloyds knew HBOS was technically insolvent when they did the deal.

    I would rather question politicians and especially Brown and Darling. Questions:

    1. Was the point of the bailouts to release lending to SME's and consumers or was it to fund bankers bonuses?
    2. What have the banks got on politicians that makes it so impossible for Governments to control their behaviour?
    3. The public has been mugged over and over again by the banks we bailed out - does the Government have any suggestions AT ALL where the public can go for protection?
    4. Public outrage in the US over bankers bonuses and bankers behaviour is reaching fever pitch - as we tend to follow it their footsteps, what is the Government going to do when this all goes horribly wrong and people start getting hurt? After all, the Goldman boys in New York have their guns to protect them - is the Government going to issue cricket bats to our bankers?

    The whole thing is laughable ( or actually weepable). Anyone not happy with our banks should look at this blog http://tinyurl.com/yfu6ph8 It's a small step but at this rate, the public can't do any worse than the GOV has in ending national rape by banks!

  • Comment number 84.

    we could teach the afghan government a few things no brown envelopes now

  • Comment number 85.

    76 WOTW - sometimes you really annoy me ;-)

    I say something and then you explain it in a way that makes me understand the problem better than I did when I wrote what I did.

    I did clear the path and I felt satisfied and proud and delighted when an elderly lady passed by and thanked me. This cost me nothing.

    Similarly your description of why most derive no satisfaction from their work is so true.

  • Comment number 86.

    59. At 2:09pm on 11 Jan 2010, Gothnet

    "Like democracy, it's the worst system except for all the others. Humans, as a race, are -

    Petty
    Jealous
    Acquisitive
    Tribal
    Greedy
    Violent
    and Dumb"

    ...speak for yourself there ;-)

    Most of these traits are brought out because of Capitalism not because they are natural traits.

    Capitalism enhances and promotes the deficiencies of human nature but in reality the very first man could not have survived if these traits had all been present as they are today.

    ...which is why when you stick a bunch of modern people in a house, or on an island, or in the jungle their chances of survival are minimal but most interestingly they very quickly abandon their 'Capitalist skills' and go back to the sharing and communal relationships which are truly natural.

    People have only abandoned their communities because they think they no longer need them. There will be millions of people re-kindling their relationship with theirs over the next 10 years as they quickly realise their safety and salvation will lie in a strong community.

    I mean does anyone seriously believe that:
    a) Recessions don't increase crime?
    b) Government cuts will not reduce policing further and the ability to protect the public?

    As they cut the services we will have to look closer to home for our protection.

  • Comment number 87.

    1. State regulation provides the mechanisms and structures that the banks use to make money.

    2.Without the state's 'permission' to run a bank these businesses would not exist and nor would their profits.

    Banking is about as far removed from the 'free market' as you can get. Yet, when it pleases them, the bankers claim the projection of the 'free market' to let them do as they please, and when it all goes bad through their incompetence they expect the State (that is the people of the state - us) to bail them out. These guys are jokers (and vastly over remunerated!)

    It all boils down to who gets, and who does not get, a licence to run a bank - and that is fundamentally corrupt. The banks together represent a vastly well protect cartel (or group monopoly) and their profits are completely artificial and dependent solely on their monopoly.

    However, we need banks to oil the wheels of daily life and commerce and facilitate trade. And that is precisely what they should do handle the settlement of trade and provide mechanisms of efficient monetary settlement.

    Our (the State's) massive error is believe the deliberate untruths told by the publicity and propaganda departments of these organisation (the Banks etc.) We will have to control these fools as they have proven themselves unable to manage their our businesses. First we need to appoint proper regualtors. That is we must replace Mervyn King, Nick Macpherson, the MPC and the FSA as they have failed in their civic duty by constructing and manipulating the regulatory process under their delegated control to create the bubble and the inevitable collapse. If any of the post holders had any integrity or understanding of their role and duty to the people in economic regulation they would resign. (As they have proven themselves completely economically incompetent I will not be holding my breath!) It is not sufficient to replace the politicians.

    Bonuses are a side show, and a deliberate side show at that, promoted by the banks themselves to divert attention from our proper concerns.

    Robert (Peston) by concentrating on these bonuses you are a fellow traveller of the propaganda machine run by the banks - smell the grapeshot before it is too late for the licence fee!!!!

  • Comment number 88.


    Sorry missed this bit...

    "Communism is a lovely idea but humans are not driven to advance the group, only themselves and their families. Forcing them to conform in the name of altruism is the first step towards devaluing the individual and thus opening the way for mass abuse of human rights."

    I agree with the 'forcing' bit but the root of this problem is people have been lectured on individualism being the salvation - whereas it's plainly not (I mean if we all take an indivudalist stance on the environment then we're all in trouble - salvation it is not)

    People only do not 'advance the group' because they do not see themselves as part of that group - however this group promotion is fighting through the Capitalist world even at Capitalism's peak - through Facebook, MySpace, Bebo etc. Here people are voluntary promoting themselves as individuals but as part of a wider group / community

    ....now who 'forced' them to conform? or is it a natural phenomena suppressed by Capitalism - because what's very interesting is that most people who take this on freely are the young - those less used to the modes of Capitalism and skills required as they haven't yet started in the world of work and their individualist conformity yet....

  • Comment number 89.

    I’ve mentioned this before, but still:

    The financial negligence is usually represented to us in term of many billions of £’s.

    Not a figure that most can easily comprehend, I being one for example.

    So why not try and simplify it, and here’s an example:

    The average cost of heart by pass surgery in the UK is around £20,000, and the NHS needs more money to treat more people.

    The RBS bonus payments are £1,500,000,000.

    The RBS does not want to give this money back to the Government, they want to pay it out in bonus payments to themselves.

    £1,500,000,000 (£1.5 billion) = 75,000 lives.

    Simplistic example I know, but there it is.

    Quite a high price for a lot of people to pay, when you think about it.

  • Comment number 90.

    #86 writingsonthewall

    I'll agree that capitalism doesn't make any of those attributes any lesser, but I disagree with pretty much everything else you said!

    What you're talking about when you say people will go back to sharing is small family or tribal groups. Yes, we know they work that way, but try to extend it very much further and the metaphor breaks down. Very quickly there is an "us" and a "them" and it's human nature to work to benefit the self, the family or the tribe above anyone farther removed from that.

    Basic, fundamental human behaviour.

    We no longer live in a sparsely populated agrarian society. The majority of humans will not work as hard for others as they would for themselves (and their family and tribe), society would not advance as far under another system. The poor and downtrodden of UK society are better off than ever before and fare far better than their counterparts in any given socialist or communist society.

    You can lament this as much as you like, but you know it's true.

  • Comment number 91.

    Another question.

    Could a banker or one of the supporters of banks who post here, please provide us with a job description of what these people do.

    Break it down and make it simple - on an hour by hour basis what are these people doing.

    Then we can all look at it and say "yes I could do that" or "ahh thats why they are paid so much"

  • Comment number 92.

    Well Robert, back to your financial priesthood at the FSB and Basel Committee and their principles of sound compensation to which Our Great Leaders are committed via G20 . There must be "effective alignment of compensation with prudent risk taking". If the Authorities around the world create the circumstances for a brainless monkey in a bank to make loads of dosh with little risk he falls within prudent risk taking and his compensation can be effectively aligned.

    It all makes sense to the priesthood and you've made the case for the bonuses to comply with the PRINCIPLES.

  • Comment number 93.

    also be aware the bankers deserve their bonus unlike the gurkhas who put their lives on the line who now wont be getting a full pension, they were not clever enough to become bankers, so deserve all they get

    http://news.bbc.co.uk/1/hi/uk/8452393.stm

  • Comment number 94.

    87. At 3:08pm on 11 Jan 2010, John_from_Hendon wrote: Bonuses are a side show,

    You’re right, the issue in my view is the control of the creation of money.

    If it were me, I’d have that as the sole privilege of the state.

    And don’t get me wrong, I’ve nothing personal against banks or bankers, I just believe that something as economically potent as creating money, should be state controlled.

    So I’d let them carry on banking and investing if they wanted to, I’d just stop them creating money as debt.

    It’s simple, straightforward and sense making.

    But will likely never happen.

  • Comment number 95.

    #91

    Yes no problem. I get to work at about 9.30 after a difficult commute from my large house in Kent (or similar) - I have to leave my house by 8am to even get here for this time - simply horrendous. After a cappucino and a danish pastry I read the pink (the FT to you) and consider what it all means (I never get any further than considering because I don't really understand it). By now its 11 am and time for an essential decaf (remember I've been up since 7am).

    11.15 and its time to look at what the FTSE's been doing all morning and the exchange rates before getting a briefing from my secretary as to who I'm lunching with.

    11.30 and time to spend an hour or so on the BBC blogs and Test Match special if there's any cricket on before leaving for lunch at a fantastically expensive restaurant.

    2.30 Return from lunch - time for a decaf.

    2.45 Nip to toilet for half hour afternoon nap.

    3.15 Meet with member of junior staff to find out what's been happening in world of banking - tell him what to do until tomorrow.

    3.17 Afternoon cappuccino and scone.

    4pm Time to join the commute home.

    5.30pm Arrive home having been away from home since 8am a full 9 and a half hour day.

    Too exhausted to play with my two lovely children Xavier and Rupert have dinner and rest until about 6.30pm when its time to go out to our box at Chelsea for the football.

    Albert Banker.

  • Comment number 96.

    #82. writingsonthewall wrote:

    "...banking is not complicated - it's made to look complicated by those who wish to retain their position"

    The same could, in all fairness, be said about almost any job, from computer programming to brain surgery. The principles are extremely straightforward, but it's the skill with which you perform the necessary tasks that determines how successful you are.

    If an employee of a bank has created a profit of £10 million for his employer (with the usual caveats of what "profit" is and how you measure it) then I see no problem with that person receiving a bonus of £5 million. And the fact that the UK government is the largest shareholder in a small nuber of banks should make no difference to the bonus process or culture.

    There seems to be a lot of anger and jealousy in the comments on this blog but very little informed debate.

  • Comment number 97.

    #88 writingsonthewall

    Taking facebook, myspace, bebo etc as evidence of a global culture of sharing, as a sign that people are ready to change from capitalism is laughable.

    1. The internet has, for each of those, ten bile-filled pools of hatred dedicated to aggression and antagonism towards others.

    2. They themselves are full of petty social posturing, one-upmanship and competition.

    3. There is no sharing of resources implied, just information.

  • Comment number 98.

    #95

    I thought you were being serious until I got to your last paragraph, at which point I realised your post was a clever spoof.

    I fear that might say more about me than I would wish to admit. ;-)

  • Comment number 99.

    27 janchild

    "What I don't understand is why someone who earns a massive bonus on top of a more than generous salary doesn't just bank it and leave the rat race. How much is enough? "

    J.D.Rockefeller, once the richest man alive, was asked once, "How much money is enough money?"

    He replied, "Just a little bit more."

  • Comment number 100.

    66. At 2:19pm on 11 Jan 2010, duvinrouge

    Any capitalists out there want to explain where profit comes from?
    ..comes from?
    ...comes from?
    ....comes from?
    .....comes from?
    ......comes from?

    The echo in here is incredible - where are all the Capitalists when you need one?
    Must be too busy counting their fictional paper money which gives authority to one man owning another...

 

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