Tuesday, Apr 29, 2008
Mervyn Gives our Banks a Good Kicking
Guardian: Lure of City money too strong for young, says Mervyn King
Some nice plain speaking: "The governor of the Bank of England issued a stern rebuke to the City today, saying that too many of Britain's most talented young people are being lured into financial careers by the huge bonuses on offer."
Posted by quiet guy @ 01:12 PM (992 views) Add Comment
29 Comments
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1. whiteknight said...
really??
we wouldn't be highly exposed to a downturn in finance would we?
we wouldn't have had a brain drain into finance would we?
unfortunately a lot of them have now been trained for 10 years to be highly unusable.
here is some advice then - don't put another 50 billion in the top that perpetuates them being able to pay more than others.
2. whiteknight said...
.. and just on that topic:
given that the bank will exchange bonds for the mortgage backed securities (whatever form that takes).
who retains responsibility for actually collecting the payments on those instruments? Given that those are on the BofE balance sheet - is it them?
3. whiteknight said...
Whilst we are about it - has anybody else spotted the intuitive effect of supplying more liquidity to perpetuate loans that might otherwise have been bad; that it will be easier for these people to continue to generate their profits than people who are creating real "value".
One observable proof of this theory would be if people were sucked out of the venture capital game and move further up the chain where there is plenty of "money sloshing about" because the "returns" in monetary terms are greater. But arguably a decreasing amount of value in "doing-ocity".
4. d'oh said...
Interestingly, around 1999 or so I remember there was an article in the THES about the fact that not a single British 1st class honours student in that years class from the top 8 UK economics departments had stayed on to do a Ph.D. - all of them had been sucked into the city.
5. whiteknight said...
In addition: - workforce mobility infact has been absolutely shot to bits has it not?
People have to build extensions when they cannot afford to move due to stamp duty and house prices? They also simply cannot sell at the moment?
6. geed said...
So what sort of qualifications do you need to work in the "city" or investment banking. Surely they would only take someone who has studied finance or economics? Maybe this is problem we have, a misalignment of qualifications and roles. After all, didnt GB study History?
7. icarus said...
This business of financial engineers being paid a lot more than proper engineers has been a major UK problem for a long time. It's especially damaging when you consider that a lot of the skills common to both - maths, model-building etc. - are drawn into the former. (Fortunately the loss of Blair's prime ministerial skills to a bank is not quite so serious.)
8. Taxed2much said...
I work within the scientific industry, what's left of it, in UK. Not for long though, I'm off (again), out of the UK - but this time permanently. I'm no amabassador for any youngster looking for something other than a non-degree, an MBA and a high paid job peddling debt. The UK doesn't respect/support/encourage anything else except finance/debt/greed.
Just hoping, hoping, hoping that someone will buy my house. I'm not being greedy, but the market is pretty much dead down here in the SW, as is the SW.
9. Duncan54747 said...
75% of last years electrical engineering masters (MEng) cohort from Imperial went into the city rather than pursue a career in engineering. Perfect example of the braindrain, but compare the average salary of a grad engineer, approx 24,000 to senior engineer approx £50,000. Then take a look at investment bankers, start on £50,000 moving to £100,000 + after a couple of years, so not surprising really.
10. doomwatch said...
Merve is so out of touch; the majority of young investment bank employees are now from overseas. On the
business side there's the grand ecole French & in IT it's India and Singapore etc. Brits are the minority, thanks
so a poor eduction system started by Maggie & continued by Blair.
11. cornishman said...
@geed
Chemistry graduates are highly sought after in the city, I believe. What a waste of skill and training.
12. Retiredbanker` said...
Geed-
Science graduates are highly sought after by the City financial institutions, as I am aware from several instances in my own family which
includes the holder of an honours degree in biology from Oxford.
13. last_days_of_disco said...
This is all well and good, but what are they doing to actually build the real Engineering base of this country? I am tired of being ten times more skilled than these so called "elite" bankers and being treated pretty shabily. I make real things, they just shuffle money around. Finance is not a wealth creating activity. It needs to be vigourously regulated down to size, to free up skilled people to do real jobs instead.
Maybe then we wouldn't have such a decayed society because the skilled people could get employment in actual wealth generating activities. Hey maybe we could get some actual skills in the public sector instead of just throwing money at it to assage our consciences. We need to *do* stuff in order to solve the big challenges in our public services and education.
14. geed said...
There does appear to be a lot of engineers persuing this site, an observation which was highlighted some months ago. Engineering is truly undervalued, anyone who has sit through a triple engineering maths lecture, nevermind pass the exam!, will know the commitment required to graduate from an engineering course.
It is no wonder then, that many like us are disenchanted when we see the first Plumbers van drive by with "Corgi registered Heating Engineer" written on its side (no disrespect to any plumbers out there). That disenchantment turns to despair when you learn that the plumber will earn far more than you for many years to come. You can't call yourself a Solicitor if your not qualified.....
Engineers are much more valued in other parts of the world I have worked in. I was also recently talking to a family freind whose father was an engineer. She reminded me that in the late 19th/early 20th century, engineers were truly held in high regard with development and industry being major priorities.
oh how things have changed.....anyway I digress
15. cornishman said...
@ last_days_of_disco said...
if you got some skilled people into the public sector - what would you do with all the people they displace?
16. whiteknight said...
qualifications?
finance? economics? you are have a little joke right?
17. whiteknight said...
qualifications? who is going to "award" them? the FSA?
18. Green Clay Duck said...
geed - Qualifications - I believe they are keen users of aptitude tests. Or, as the chaps taking the biggest risks are meant to have the highest testosterone, perhaps they just measure the size of the boolies ;)
cornishman - I did chemistry, after three years I and many of my fellow students were determined to have a career in anything but chemistry, it's really badly paid and not great for your health either. Apparently 10% of chemistry graduates go into accountancy.
19. crash n burn said...
Well I'm an Engineer and am peeved beyond belief to see how little I earn in comparison to some of those numpties. I have learnt not to listen to those so called brilliant city brains when I trade / spread bet... In fact, I think it is worthwhile to have a good knowledge of what's going on, but its better to just take your own decisions and go for it... I find looking at the market psychology through Technical Analysis is one of the best ways. Actually, I have noticed quite a few of the members in the Society of Technical Analysts are Engineers!
20. icarus said...
last_days @10 - " I make real things". Financial engineers say they are "manufacturing" "products". In their language a mortgage is a product that they have manufactured. Mmm...even this area of manufacturing is declining now.
21. pelethar said...
Interesting snippet at the end:
Michael Fallon, deputy chairman of the committee, expressed optimism that the worst of the credit crunch was now over.
"The Bank of England is now starting to focus all its efforts on fighting inflation, which is clearly out of hand," Fallon told Bloomberg TV after the meeting.
I guess we'll see whether they make good on that promise when we see what they do with interest rates over the next 6 months.
22. Agentimmo said...
Yep. I know an Oxford grad in chemistry who works in the City. Hates it, but it pays the bills. he wishes he could have found something that paid even a 1/4 of what he gets now, but in his chosen field. Alas, most research jobs paid a pittance.
23. uncle tom said...
Bring back the Capt. Mainwarings..!
24. inbreda said...
ldod said: "Finance is not a wealth creating activity."
It is in the Channel Islands where I come from - we basically move everyone elses money around and skim off the top - thereby collecting money for our economy.
Of course it is highly immoral, and effectively theft from the poor, but it definitely creates wealth - you only have to look at some of the rich t****ers over here to realise that.
25. Tipping Point said...
The answer is simple. Get rid of Employer NI and raise Corporation Tax to pay for it.
This will effectively move the tax burden from manufacturing and retail onto the city, hence improving profits in manufacturing and hence incentive-izing the payment of larger wages to engineers.
But getting it passed politicians who election budgets are paid for by rich financiers is another thing.
26. Nickpike said...
I was a Development Engineer for 37 years, but now develop software for games.
Engineering pay was very poor.
Reinstate manufacturing if you like, but I would never advise a young intellectual to waste their skills for such poor remuneration
27. bystander said...
"The Bank of England is now starting to focus all its efforts on fighting inflation, which is clearly out of hand," Fallon told Bloomberg TV after the meeting."
...this man talks sh8te, almost immediately after he said this he then went on to say that he expected at least another 50basis point reduction to the ineterst rates. How does this lend itself to fighting inflation, what a moron. Bet the forex traders heard this latest bit of NulAB postering. (sterling down again aginst the euro). We'll fight inflation by letting inflation get above 3% and get Merv to write a letter, that'll do the trick.
28. Fed Up said...
Er, and how did Merv get where he is today?
29. jonb said...
Tipping Point,
Most city finance companies don't pay Corporation Tax in significant amounts. Employers NI is about the only way to get tax money out of them.
Also, as most engineering companies tend to be pretty capital intensive rather than labour intensive, your plans would hurt them more than they would hurt the city banks.