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So How Did Bankers Spend Their Bonuses?


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A link to an article from the Daily Telegraph reminding us how those bonus billions were spent. Those billions that our children and grandchildren will be repaying for decades.

This Budget will make us pay for Britain's excesses for decades

This Budget will make us pay for Britain's excesses for decades

Now we must all pay for the wild excesses of an irresponsible minority, says Adrian Michaels.

By Adrian Michaels

Last Updated: 8:06PM BST 23 Apr 2009

I wish I had known I was having such a good time. I will, according to the Budget, be paying for the country's excesses for decades. It is time to pull in the horns and tighten the belt. But wait. My belt doesn't have any more notches. I've been presented by Alistair Darling with the bill for a party I didn't attend.

For months now we have been hearing that it is bankers that brought the global economy to its knees through their irresponsible business practices, made possible by compliant and inattentive politicians and regulators. Meanwhile, people in financial services were paid far too much for their destructive corporate behaviour.

How much, exactly? In December 2007, 15 bankers – all men, of course – sat down for lunch at the Cap Horn, a mountain restaurant in the French ski resort of Courchevel. It was just turning dark when they paid the 28,000 euro bill. There were no prostitutes or drugs, I am informed, and the near-2,000 euros-a-head tab did not afford access to the President of the United States. No. The bankers were playing "Par One Hundred" – a drinking game in which the object would appear to be to vomit on your neighbour as fast as possible – with magnums of Krug champagne. The Cap Horn currently charges 850 euros for a magnum of 1997 Krug.

So what? "They're on a different planet," one friend said. That is the problem, however: bankers are not on a different planet, they are on exactly the same one as the rest of us. If they really were otherworldly, we could just forget about them and their lunches. But we all pay the price for their behaviour. The cheapest item on the Cap Horn's menu is cream cheese with salt and pepper at 13 euros. "Spaghetti à la Bolognaise" is 25 euros.

So not only weren't we at the party that has just ended, the quality of our own lives was made worse by the fiesta's participants. Bankers made sure that we could not eat in the same restaurants as in the past, we could not take holidays in a growing range of destinations, and we could not live where we wanted. Ask the residents of Salcombe in Devon – "Chelsea-on-Sea" as it has become known – about the empty homes in winter and the fancy delis selling porcini mushrooms instead of corner shops selling pints of milk and packets of Quavers.

I don't care – well, not much, anyway – about the two Wall Street bankers I heard about who looked at the traffic report on a Friday night and chartered a helicopter to the Hamptons ("Manhattan-on-Sea"). But I still find it hard to swallow mid-terrace, three-bedroom houses in unpromising suburbs of London selling for more than three-quarters of a million quid. Those prices mean many successful, but non-banking, people are travelling double the length of time to the office, and spending far less time with their children.

Private schools, like restaurants, are having their fees paid by the Par One Hundred crowd. So, though once some middle-class parents could afford private education for their offspring, now they too have been priced out of the market. Rents for houses near good state schools have gone completely mad. Private primary education might be £7,000 or more, but a house near enough to a state primary with a good reputation could cost £500 a month more to rent.

Non-bankers can't sit near the action at the theatre, or a rock concert, or a football match. Unless they are the corporate clients of bankers whose companies are the only ones with both the money and access to the best seats. The Arthur Ashe stadium, home to the biggest matches of the US Open tennis championship, has not one but two rings of corporate boxes filling up the area from where one would most want to watch. Ordinary punters sit in seats so high up, watching ants playing ping-pong, that they instinctively look for air stewardesses when they feel thirsty.

Who were these financial services people ruining my life, and how much money did they have? Government data show that the financial and professional services sector accounted for five per cent of Britain's gross domestic product for more than 100 years from 1890-1997. But that percentage more than doubled to 11 per cent in the 10 years to December 2008. This was not because the number of people working in financial services doubled, although it did go up. In 1997, 17.5 per cent of the workforce was in these or associated sectors and that had risen to 21 per cent by 2008, drawn as they were by houses in Salcombe and front row seats for Madonna.

Of course, different professions have always paid different wages. Teachers are forever underpaid and people in other professions can still afford certain expensive pursuits. But the amount of extra money sloshing around financial services has meant that many undeserving people in the middle or lower ranks of their institutions have been messing with all of us.

Was not taking part all that terrible? Mortgages were available to all, kebab shops abound for those wanting to eat out, and there were always cattle-class airfares to take us on holiday to Bulgaria and its cuisine.

Now it seems we may even have to reconsider those choices. Inflation, higher interest rates and long years of austerity will give us a terrible hangover. It's a shame most of us can't remember the party.

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This sentence was revealing:

Rents for houses near good state schools have gone completely mad. Private primary education might be £7,000 or more, but a house near enough to a state primary with a good reputation could cost £500 a month more to rent.

This relationship between house prices and proximity to useful public services is one that everybody inately understands but isn't one that the banksters can alter in any meaningful way. Instead of directing his critiscism at the bankers and their bonuses the author would be better off spending his time developing the above line of thought and asking why this is so.

Edited by chefdave
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This sentence was revealing:

This relationship between house prices and proximity to useful public services is one that everybody inately understands but isn't one that the banksters can alter in any meaningful way. Instead of directing his critiscism at the bankers and their bonuses the author would be better off spending his time developing the above line of thought and asking why this is so.

Although valid, I think that's another argument.

The case being argued in this article is the knock-on effect of bankers bonuses on prices in general - whether it be for houses, private education, holidays, restaurants or whatever.

Private school fee rises reflected the money sloshing around in the top echelons - inhabited mainly by bankers. This put private education out of reach of middle classes who might formerly have been able to afford it. So the middle classes flocked to the catchment areas of the best state schools - driving up house prices and squeezing out the poorer classes.

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Ask also: So How Did Bankers "Earn" Their Bonuses?

Is it because they are so wonderfully skilful at allocating capital and assessing risk that they pay their way in society by ensuring that the rest of us are that much more efficient?

Or is it more because they control the expansion and contraction of the money supply?

Why do we bestow upon a privileged minority the power to supply us with our universal means of exchange and charge us so handsomely for doing so?

Collectively we could organise our own universal means of exchange at negligble cost.

The all-important question of who issues our money supply is the gorilla in the room that no-one addresses.

http://www.moneyreformparty.org.uk/

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Although valid, I think that's another argument.

The case being argued in this article is the knock-on effect of bankers bonuses on prices in general - whether it be for houses, private education, holidays, restaurants or whatever.

Private school fee rises reflected the money sloshing around in the top echelons - inhabited mainly by bankers. This put private education out of reach of middle classes who might formerly have been able to afford it. So the middle classes flocked to the catchment areas of the best state schools - driving up house prices and squeezing out the poorer classes.

Ok, but I don't see how bankers' bonuses push up the price of these items. As the author stated in the article:

This was not because the number of people working in financial services doubled, although it did go up. In 1997, 17.5 per cent of the workforce was in these or associated sectors and that had risen to 21 per cent by 2008,

So despite the bonus culture overall demand for services and goods such as fine wine and public schools would have remained relatively stable meaning that the purchasing power of these middle classes would have been unchanged.

I don't think there's any logic in arguing that bankers made restaurant prices so high as to be inaccessable to others, if during the boom times every restaurant priced to that market most would quickly find themselves out of business!

Edit for clarity: It isn't the bankers' ability to pay that will set the market price, its the suppliers' ability to charge.

Edited by chefdave
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Ask also: So How Did Bankers "Earn" Their Bonuses?

Is it because they are so wonderfully skilful at allocating capital and assessing risk that they pay their way in society by ensuring that the rest of us are that much more efficient?

Or is it more because they control the expansion and contraction of the money supply?

Why do we bestow upon a privileged minority the power to supply us with our universal means of exchange and charge us so handsomely for doing so?

Collectively we could organise our own universal means of exchange at negligble cost.

The all-important question of who issues our money supply is the gorilla in the room that no-one addresses.

Who are you refering to exactly? At what point does a cashier at HSBC for example earning £6/7 ph become part of the privileged minority? Perhaps you're talking about the shareholders, the ultimate owners of the bank.

Edited by chefdave
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Although valid, I think that's another argument.

The case being argued in this article is the knock-on effect of bankers bonuses on prices in general - whether it be for houses, private education, holidays, restaurants or whatever.

Private school fee rises reflected the money sloshing around in the top echelons - inhabited mainly by bankers. This put private education out of reach of middle classes who might formerly have been able to afford it. So the middle classes flocked to the catchment areas of the best state schools - driving up house prices and squeezing out the poorer classes.

From my observations in places like Surrey what actually occurred is that the people who made a living from "banker" spending - landscape gardeners, personal trainers, personal development coaches, interior designers, party consultants etc (people who would otherwise be unemployable) were able to climb the social ladder and make use of private health care and private schooling.

This made the state sector less attractive for ordinary folk with ordinary jobs and also allowed funding for state provision to be reduced without incurring the wrath of the chattering classes.

In places like Surrey and Kensington you have a choice of private schooling and healthcare or mix with the great unwashed.

Kensington and Chelsea has one of the highest percentages of state school children on free school meals in the whole UK.

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011.jpg

How much, exactly? In December 2007, 15 bankers – all men, of course – sat down for lunch at the Cap Horn, a mountain restaurant in the French ski resort of Courchevel. It was just turning dark when they paid the 28,000 euro bill. There were no prostitutes or drugs, I am informed, and the near-2,000 euros-a-head tab did not afford access to the President of the United States. No. The bankers were playing "Par One Hundred" – a drinking game in which the object would appear to be to vomit on your neighbour as fast as possible – with magnums of Krug champagne. The Cap Horn currently charges 850 euros for a magnum of 1997 Krug.

So what? "They're on a different planet," one friend said. That is the problem, however: bankers are not on a different planet, they are on exactly the same one as the rest of us. If they really were otherworldly, we could just forget about them and their lunches. But we all pay the price for their behaviour. The cheapest item on the Cap Horn's menu is cream cheese with salt and pepper at 13 euros. "Spaghetti à la Bolognaise" is 25 euros.

Cap horn is lovely went a few weeks ago - they have a truffle pizza for 45 euro (about 40 quid at the time)

they charged me 11 euro for 2 half pints .....

Unsurprisingly the resturant looked pretty empty... as you can see from my picture....

just because there is a riduculously priced resturant in the alps dont mean you have to go...

Its geared mainly for Russians though rather than bankers....

post-2251-1240649300_thumb.jpg

Edited by jonpo
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It wasn't that long ago we were being invited to feel sorry for the banksters and the spivs because they were being outcompeted by the Oligarchs ("Have nots and have yachts"). Who are now conspicuous by their absence... I suspect they never really existed in any real numbers in the first place.

Still, this is all nonsense, everyone here knows the real authors of our present suffering are the school dinner ladies and their unfunded £500 a year pensions that need to be seized back and repackaged into more bankster bail outs. <_< We'd all be nothing without the middlemen so leave them alone.

Edited by Cogs
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:o

Have you not heard about party consultants?

There was a Steve Martin film years ago that had one organising a wedding.

These people were fluorishing in the suburbs even for childrens parties. For a few hundred quid they saved you the trouble of booking the child entertainer and making up the party bags and ensured "Tarquin's" party did not leave him emotionally damaged because of the wrong choice of party theme.

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Who are you refering to exactly? At what point does a cashier at HSBC for example earning £6/7 ph become part of the privileged minority? Perhaps you're talking about the shareholders, the ultimate owners of the bank.

I am arguing for structural change of the money system.

Assuming a debt-based currency (a debate in itself), then surely the immense rewards that flow merely from issuing and lending to society at interest its universal means of exchange should benefit universally the citizens of that society.

Money in its role as a universal means of exchange should be, primarily and as far as possible, a utility for productive industry and trade.

To my mind there is no good reason why the supply of this basic utility, which could be organised collectively virtually cost-free, should be a profit-motivated "industry" in itself.

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To my mind there is no good reason why the supply of this basic utility, which could be organised collectively virtually cost-free, should be a profit-motivated "industry" in itself.

because cost free money is what you have in Zimbabwe ?

both buyer and seller of this 'utility' need to have some skin in the game ... otherwise its just crazy....

bankers lent money they didn't get back ... under any reasonable level of fairness 'caveat venditor' they need to go bust... what the politicos have done is said here have your money back venditors ...we will take it back with the tax system... its wrong and broken...

if you abolish lending as a business then it will go black ... the provision of capital will fall into the hands of organised crime... they won't pay tax... there will be loan sharks everywhere... it will be hell ... careful what you wish for...

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I am arguing for structural change of the money system.

Assuming a debt-based currency (a debate in itself), then surely the immense rewards that flow merely from issuing and lending to society at interest its universal means of exchange should benefit universally the citizens of that society.

Money in its role as a universal means of exchange should be, primarily and as far as possible, a utility for productive industry and trade.

To my mind there is no good reason why the supply of this basic utility, which could be organised collectively virtually cost-free, should be a profit-motivated "industry" in itself.

I see. So what you're arguing for then is a government monopoly over the entire banking system. And if somebody saw an opportunity to undercut the government's rates an an effort to inspire real competition they would be punished I'm assuming. (or more likely a black market will arise as Jonpo aptly pointed out)

Personally I don't see more gov't control as the way of ensuring the good life, it would be a step backwards IMO to an even more centralist/socialist style of social organisation. Anyway the BofE - a public owned bank- assumes monopoly rights over issuing notes already, and the government taxes bank profits so I don't see how taking this further helps to remedy the situation.

Edited by chefdave
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From my observations in places like Surrey what actually occurred is that the people who made a living from "banker" spending - landscape gardeners, personal trainers, personal development coaches, interior designers, party consultants etc (people who would otherwise be unemployable) were able to climb the social ladder and make use of private health care and private schooling.

This made the state sector less attractive for ordinary folk with ordinary jobs and also allowed funding for state provision to be reduced without incurring the wrath of the chattering classes.

Yes, that makes sense. The trickle down effect.......................

However, I still agree with the writer of the linked article that bankers' bonuses sloshing around the system were the cause of price rises pretty much across the board which did have the effect of pricing out those at the bottom of the heap - as the writer observes re three-bed terraces in none too salubrious areas of London costing £3/4 million. Formerly, these were the homes of the poor.

Edited by Methinkshe
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Right, so every single person in the front row at wimbledon or with a kid at a private school or whatever works for a bank? What a load of BS. This is no different from the idiots that see a single black person presenting the news and start ranting about media bias towards minorities. Pointless, unscientific ranting from someone with a sense of entitlement way bigger than the earning power that his meager talents can produce.

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because cost free money is what you have in Zimbabwe ?

both buyer and seller of this 'utility' need to have some skin in the game ... otherwise its just crazy....

bankers lent money they didn't get back ... under any reasonable level of fairness 'caveat venditor' they need to go bust... what the politicos have done is said here have your money back venditors ...we will take it back with the tax system... its wrong and broken...

if you abolish lending as a business then it will go black ... the provision of capital will fall into the hands of organised crime... they won't pay tax... there will be loan sharks everywhere... it will be hell ... careful what you wish for...

Zimbabwe is monetary hell, a prime example of how not to organise state-issued money.

I don't advocate the abolishment of lending as a business and I thoroughly agree that both lender and borrower should "have some skin in the game".

What I argue against is the commercial fusion of both issuing money and lending it at interest.

Any debt-based issuing of money should be done collectively, transparently and responsibly.

Once the money is issued, then the lending and borrowing should be left as far as possible to the free market.

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Zimbabwe is monetary hell, a prime example of how not to organise state-issued money.

I don't advocate the abolishment of lending as a business and I thoroughly agree that both lender and borrower should "have some skin in the game".

What I argue against is the commercial fusion of both issuing money and lending it at interest.

Any debt-based issuing of money should be done collectively, transparently and responsibly.

Once the money is issued, then the lending and borrowing should be left as far as possible to the free market.

well thats kind of what we had here before the BoE went all QuEsy on us... and the problem is that that the governments of the day will always try to manipulate interest rates to bring about growth... and even when they set up Qausi nongovernmental organisations e.g. central banks they have a remit to promote growth and inflation.... if you look at the 1800's we had inflation and deflation in faily equal meansures on a regular basis of 20 years or so thats what the gold standaard bought.. and thats where I think we will head again... once China has bought the IMFs stuff.....

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It's clear from reading this thread that no banker feels guilty about driving up prices for everyone else, and has no intention of handing any money back, so you can all f1ck off. They're Tories after all!

your post belies your ignorance...

people who are undeserved of such riches will often spend very quickly.. high velocity hot money.... people who have worked a lifetime to earn their capital e.g. pensioners will often be far more consevative...

bankers generally blow their swag on strippers cokaine and shampain... straight back in the economy you see.... thats oiled the wheels in the good times ... but no longer... it will have been the same for the tulip dealers of amsterdam in the 1600's

unless you are competeing for the same goods as them it really shouldn't matter... your not a drug addict are you ? or an addict of fine french wine ? why care its the economy stupid... any boom will always have its primary beneficiaries while it lasts... but then its over and the 'wealth' evaporates....

for every hedge fund trader sipping hot muld wine in cap horn there will be 10 mortgage advisors who used to be sipping beers in rond point... thats the game... but then it stops ... and they all sign on....

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From my observations in places like Surrey what actually occurred is that the people who made a living from "banker" spending - landscape gardeners, personal trainers, personal development coaches, interior designers, party consultants etc (people who would otherwise be unemployable) were able to climb the social ladder and make use of private health care and private schooling.

This made the state sector less attractive for ordinary folk with ordinary jobs and also allowed funding for state provision to be reduced without incurring the wrath of the chattering classes.

In places like Surrey and Kensington you have a choice of private schooling and healthcare or mix with the great unwashed.

Kensington and Chelsea has one of the highest percentages of state school children on free school meals in the whole UK.

Hmmm...let me see....mix with the great unwashed or with braying psychotic f*ckwits with clear self esteem issues who it transpires were so utterly incompetent they couldn't even make money lending it out at more than they borrowed it for. I'll stick with the great unwashed thanks. I'd still be perfectly happy to see them put in a cell with Jimmy 'slasher' Jones for a long time if public hangings really aren't likely to make a come back anytime soon though. If that's not possible - Courchevel would do I suppose. Great skiing, but chock full of total w4nkers.

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