Monday, Nov 16, 2009

End City boys dolce vita

Greg Pytel: Curbing City pay will give it competitive advantage

"Interfering with bankers' contracts is a 'dangerous route to go down', a former chairman of Royal Bank of Scotland has told the BBC. Sir George Mathewson said that he thought the Financial Services Authority (FSA) already had enough powers to regulate bonuses." (http://news.bbc.co.uk/1/hi/business/8362000.stm)
This is a pretty much silly comment that could have been just dismissed if it were not “dangerous”. It also shows Sir George’s substandard intellect of being unable to comprehend the obvious.
Read Pytel’s article. He explains why it is the case.

Posted by ant @ 03:17 PM (1013 views)
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9 Comments

1. the number cruncher said...

I hear that the Mafia pay very good wages - probably for the same reasons the banks do.

Monday, November 16, 2009 04:23PM Report Comment
 

2. ontheotherhand said...

How exactly would we, " (not) observe a lack of top talent in cycling and rowing, because football and golf pays much better." I see a whole lot of pushy parents with their darlings down the driving range, but no crowds at the rowing lake. Yes we get talent in every sport, but more talent goes where there is money. This is akin to claiming we have all the top talent we could ever hope to get in teaching since paying them more like bankers would not attract any more people. Nonsense.

Authors like this should take their logic the whole way. Let the State decide what is noble and good and cancel all salaries and taxes. The State would hand out the compensation it deems appropriate and force students to take the degrees and jobs it deems good.

Monday, November 16, 2009 04:33PM Report Comment
 

3. refusetobuy said...

Don't call yourself a banker

simples

Monday, November 16, 2009 05:14PM Report Comment
 

4. easybetman said...

The only thing that we need to do is to ensure that the banks are playing with their own capital and their own money
and not the depositor's money. Other than that, they can pay whatever they like.

How about increase the supply of talents to drive down the price?

Introduce more grammer school / selective school and get those students to do more maths, business and finance.

Or perhaps this will happen sooner or later anyway as large pool of financial works from china/india enter the game.

Monday, November 16, 2009 05:19PM Report Comment
 

5. ant said...

ontheotherhand wrote: "Yes we get talent in every sport, but more talent goes where there is money." There is no evidence of this. Usain Bolt is a prime example of someone in athletics (not the best paid sport) making more impact than string of golfers in the last decade. Furthermore if money was such a driving force Usain Bolt (and other top young sprinters) would have easily been poached to American football (a lot of money is there). Yet, apart from few examples, this is not happening. Indeed Jeremy Wariner moved the other way: from football to sprinting.

From the above this is clearly nothing to do with letting the state deciding anything. ontheotherhand is clearly not a logician and his knowledge of sport is limited.

ontheotherhand also wrote: "This is akin to claiming we have all the top talent we could ever hope to get in teaching since paying them more like bankers would not attract any more people." Clearly ontheotherhand did not understand Pytel's article which does not make such broad brush judgements on extreme examples.

Monday, November 16, 2009 05:22PM Report Comment
 

6. ant said...

If we are to make a general assessment of the level of talent in banking, the current financial crisis shows that the level understanding of rudimentary principles of finance is very low indeed. The current echelon of bankers is a mix of criminals who engineered a crude pyramid scheme that caused the liquidity crunch and bunch of incompetents who were executing this crime who were delighted to have been paid a lot (like mindless child soldiers in Africa).

So peddling a myth of somewhat unusually high level of talent in finance is just silly and dangerous. Most bankers do not know how to calculate properly a daily paid interest rate out of annual interest rate.

Monday, November 16, 2009 05:39PM Report Comment
 

7. stillthinking said...

Let banks fail. If they fail guarantee the first 50K and swap debt for equity on the rest. What on earth are we doing in the UK guaranteeing banks which have no way to recoup their loans !

Monday, November 16, 2009 07:11PM Report Comment
 

8. icarus said...

number cruncher @1 - do you mean they both have public authorities on their payroll?

Monday, November 16, 2009 07:25PM Report Comment
 

9. the number cruncher said...

ontheotherhand @ 2

I think you are only seeing half the picture, and letting your theoretical economic knowledge cload the wider picture.

Y of course the banks attract the best and the brightest because of money, that's a no-brainer - but they pay over the odds salaries because they then get our best and brightest to work in an economically unproductive way, making money in fraudulent or near fraudulent ways. I know a couple of investment bankers very well and the work they do is more akin to confidence tricksters and insider dealing than oiling the wheels of our economy. They are paid so much as they are very bright people, but have to devoice their moral compass from what they do. They money is blood money.

Everyone has a price and if you are offered half a million a year you will do a lot of morally dubious things. If you are not paid so much and have greater job security then morals will start creeping into your work and you will earn, in the short term, less money for your work. Bonuses are inherently bad for banking as it has turned our bankers into near criminals working against our country's long term economic interest.

Stillthinking @ 7
There are many analogies from the Mafia to the bankers

Firstly it is to pay people to do morally bad things - to get people to do things they would not normally want to do you have to pay them more money.
as you say undue control of public bodies and lawmaking
a lot of money is made from fraud such as tax avoidance or insider trading
money is made by the formation of monopolies and control of curtain industries
very few ever go to prison if they do something wrong

Tuesday, November 17, 2009 10:27AM Report Comment
 

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