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Mikhail Liebenstein

Bank Bonuses Go Bye Bye

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Looks like the G20 is going to clamp down on Bankers bonuses:

http://news.bbc.co.uk/1/hi/business/8239587.stm

The reality is that none on the short-term profit can be sustained in the long term, so if bonuses are delayed or held back, it looks highly likely that bankers pay will certainly be reduced.

That said, I also want to see tough rules on capital adequacy, so that they can't make pretend profits at all.

Fingers crossed for some lean years in bank. After all bankers don't actually produce any real wealth.

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Cue some city boy to pop up at this point and smugly counter that the banks will simply raise base salary to compensate- while being comicly unaware of just how big a hole this blows in the idea that banker pay is somehow performance related.

They may as well just admit that they pay themselves so much because they get first dibs on the money, and drop all this fiction about entitlement based on performance or 'wealth creation' activity.

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By employing their incredible talents to ensure optimal allocation of capital? :lol::lol::lol:

Yes, without their expert guidance we would all be engaging stupidly in non-productive activities like selling each other houses at ever-increasing prices.

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They'll 'look at the issue some time in the future...'

You can't get much tougher than that.

I don't think.

Those bankers must be really trembling.

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How do bankers 'create wealth'?

By providing an efficient framework for use of capital; specifically, they provide a method for me to invest my wealth easily and provide a method for productive businesses to borrow money to enhance their productivity faster than they could do with capital alone.

If I convert my wealth to gold and stuff it in a hole in the ground, what good does that do anyone, or indeed me? I get no benefit from my wealth, it is merely being stored. By contrast, by taking it to a bank and asking them to invest it, my money goes to work and gets a return. Of course, I could, instead put an ad in the paper asking for interested businesses to approach me in a dragon's den style competition - but it's a lot easier just to ask someone to do it for me. The availability of this service is wealth: it frees up my time, and it allows someone (who should be more expert at it than me) to do the difficult task of ensuring optimal use of my wealth.

Similarly, the businessman who needs money to support his new idea, is often better served by getting an easily negotiated loan from a bank with considerable capital - than by hawking his idea to venture capitalists. The easier availability of credit is wealth - because it saves time for the business which could be more productively spent.

Of course, there is a caveat, and it's one that hinges on what wealth, itself, is. If there is too much of a product, or service, or asset then it may lose its value. Manufacturers create wealth, no one would argue over that, but what if they were manufacturing million upon million of 150 sq ft 'luxury studio apartments'. There is limited demand for these, and quickly they lose their value. In the same way, the excessive avaialbility of credit has devalued it, and instead made it into a liability.

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All this rubbish about limiting bank bonuses is just the governments trying to stop people in normal jobs expecting pay rises themselves or even rioting in the streets. The governments are trying to pretend they are in control, instead of being on a banker's string.

There is absolutely no point in limiting bonuses without capping pay and the now familiar "welcome handshakes".

RBS recently paid £7m just to sign a banker:

http://www.newstin.co.uk/tag/uk/138783179

If salary and welcome bonuses are so high what do the bankers care about long term profits/bonuses? All they need is a job for a few months, no matter how it goes and they are made for life.

Anyway bankers are just the tip of the iceberg. If the governments were in control and serious they would also do something about executive pay in general.

Edited by Redhat Sly

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It would be great if someone did the legwork to show how each bank owns shares in other banks (in each others pockets thru different veiled sub companies - the illusion of city competition!) and how many MP's/ex MP's are indirectly involved through subsidiary companies.

It would be great to see which names pop up again and again under major shareholder and show up the huge buy/sell 'merry-go-round' of how they up their bonuses!

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A "pledge" is very very different from a "promise"

The air vented from these filthy g20 mouths is simply intolerable. Rest assured, they will take no action at all.

They simply aim to instill some faith in a market awash with criminality. Still no convictions, no arrests.

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By providing an efficient framework for use of capital; specifically, they provide a method for me to invest my wealth easily and provide a method for productive businesses to borrow money to enhance their productivity faster than they could do with capital alone.

If I convert my wealth to gold and stuff it in a hole in the ground, what good does that do anyone, or indeed me? I get no benefit from my wealth, it is merely being stored. By contrast, by taking it to a bank and asking them to invest it, my money goes to work and gets a return. Of course, I could, instead put an ad in the paper asking for interested businesses to approach me in a dragon's den style competition - but it's a lot easier just to ask someone to do it for me. The availability of this service is wealth: it frees up my time, and it allows someone (who should be more expert at it than me) to do the difficult task of ensuring optimal use of my wealth.

Similarly, the businessman who needs money to support his new idea, is often better served by getting an easily negotiated loan from a bank with considerable capital - than by hawking his idea to venture capitalists. The easier availability of credit is wealth - because it saves time for the business which could be more productively spent.

Of course, there is a caveat, and it's one that hinges on what wealth, itself, is. If there is too much of a product, or service, or asset then it may lose its value. Manufacturers create wealth, no one would argue over that, but what if they were manufacturing million upon million of 150 sq ft 'luxury studio apartments'. There is limited demand for these, and quickly they lose their value. In the same way, the excessive avaialbility of credit has devalued it, and instead made it into a liability.

Do you honestlyreally believe that banksters/moneylenders work on your behalf :unsure:

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By providing an efficient framework for use of capital; specifically, they provide a method for me to invest my wealth easily and provide a method for productive businesses to borrow money to enhance their productivity faster than they could do with capital alone.

If I convert my wealth to gold and stuff it in a hole in the ground, what good does that do anyone, or indeed me? I get no benefit from my wealth, it is merely being stored. By contrast, by taking it to a bank and asking them to invest it, my money goes to work and gets a return. Of course, I could, instead put an ad in the paper asking for interested businesses to approach me in a dragon's den style competition - but it's a lot easier just to ask someone to do it for me. The availability of this service is wealth: it frees up my time, and it allows someone (who should be more expert at it than me) to do the difficult task of ensuring optimal use of my wealth.

Similarly, the businessman who needs money to support his new idea, is often better served by getting an easily negotiated loan from a bank with considerable capital - than by hawking his idea to venture capitalists. The easier availability of credit is wealth - because it saves time for the business which could be more productively spent.

Of course, there is a caveat, and it's one that hinges on what wealth, itself, is. If there is too much of a product, or service, or asset then it may lose its value. Manufacturers create wealth, no one would argue over that, but what if they were manufacturing million upon million of 150 sq ft 'luxury studio apartments'. There is limited demand for these, and quickly they lose their value. In the same way, the excessive avaialbility of credit has devalued it, and instead made it into a liability.

If that is the case that any knumbnut can do it, then why don't we fully nationalise the banks and turn it into a state service? That way we can close down the casino departments, and remove the loophole that as money can slip so fluidly through one's fingers and out to an other market somewhere else in the world, quicker than you can read a full stop, then as someone comes snooping, it will.

If this is a purely mechanical process, where someone is assessed against a set of criteria, then no real skill is required. And clearly the banks had no real skill, as we are in the mess we are currently in.

I seem to remember a Mr Benn advocating this in the 80s...

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The government can't control the bankers as they have already admitted that they cannot let the banks go bankrupt. RBS if I remember rightly was bailed out with taxpayers money, £7m of which has now been given as a golden hello. Equally the government have no wish to control or limit executive pay - this where they go after they stop being MPs. How much do you think Major and Blair 'earn' today.

There are also serial company wreckers who go from one company to the next; Corbert (Gerald not Ronnie) who was in charge at Railtrack and Woolworth.

Not true. They just have to execute a few bank chiefs.

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The banks are too big fail. Guess what that means? Yes... they won't be allowed to fail.

While the banks are in this no lose situation they can do what they want. Casino banking with any losing bets covered by tax payers.

There is now no talk of either limiting the size of banks or splitting casino banking from retail. The FSA and Osborne briefly mentioned this but were obviously told to shut up by their banking masters.

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Just pay them in whatever it is they create, or a mixture of this and shares in the bank they work for. 50% CDO returns and 50% HBOS shares sounds about right to me...

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Just pay them in whatever it is they create, or a mixture of this and shares in the bank they work for. 50% CDO returns and 50% HBOS shares sounds about right to me...

Agreed. In fact while we are at it, lets force them to deal in their own currency called the Bancor and make it illegal to take Bancors in exchange for real goods, services and physical assets.

I wonder how the bankers would last with their own currency.

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If that is the case that any knumbnut can do it, then why don't we fully nationalise the banks and turn it into a state service?

Even ff the former were true, the latter still wouldn't follow from it.

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The same needs to happen to the sports industry, in particular footballers. They get enough money from sponsorship and should be grateful for the publicity that their participation in the sport provides. Get it back to a sport that all members of society can afford. Great bit of news on bankers bonuses though, certainly a step in the right direction.

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