Well, it's good to know that Alistair Darling, the Chancellor of the Exchequer, has persuaded the big banks to sign up to a voluntary code of conduct on the matter of bonuses for bankers - in line with agreements reached at last week-end's G20 meeting. Will it make much difference to the obscene amounts of money paid to executives and investment bank traders? Of course not. Already, the signs are that investment banks are going to make huge profits this year - just 12 months after they were bailed out by the tax-payers of the western world - and these huge profits will translate into huge payments to staff. Politicians of all governments and all persuasions have promised to take action against the banks but it seems that they lack either the will or the ability to actually do it. In the general public, many people complain about excessive bonus payments but, unlike me, few seem to be absolutely livid. Is it just that people do not understand how monstrously OTT payments to staff are? As I have said many times, it is not just a handful of workers in investment banks being over-paid, it is the whole damned lot of them. Lord Turner of the FSA has said that most of what they do is socially useless and yet they take home sums of money way beyond the wildest dreams of avarice of any ordinary person.
I will repeat the facts about Lehman Bros. At the time of their demise in September of 2008, they had 24,000 employees world-wide and in 2007 - their last full year of trading - they were paid, ON AVERAGE, $320,000 per annum - not including bonuses. These bonuses added, ON AVERAGE, another $200,000 to their annual incomes. These figures are typical of investment banking and it is totally and utterly wrong that they be paid so much. It is claimed that the have special expertise that justifies such payments - yet, these were the very people who brought the whole international financial systems crashing down. It may be that they were just totally incompetent. But, more likely, it may be that they lost the plot completely because all that they were concerned with was their own enrichment. I think that this is the case and unless they are totally constrained from doing the same thing again, they will do it again. What they have been doing over many years, is robbing ordinary people of their money and their jobs in order to maximize their own remuneration. It is wrong and it has to be stopped. One fundamental action that could be taken would be to split high street clearing banks from investment banks. Then if the investment banks fail, let them go to the wall; do not use state funds to bail them out. This will be resisted by the banks but the two activities must be separated. We cannot have investment banks operating on the basis of heads, they win; tails, we lose.
Mr Darling's agreement will make no difference to pay rates as all forms of remuneration are redefined to avoid the constraints of the government, the FSA and the Bank of England.
For many years now the City [London] has been allowed to do what it likes while various governments have presided over the steady destruction of our wealth creating industries to the point that we are now a third world state - a contracting economy. Let the hedge funds go to Switzerland or the Cayman Isles; let the investment bankers go to New York. Let us rebuild our country to make things that the world needs rather than have an economy that relies on massive debt and the crumbs that fall from the tables of the super-rich bankers and their impenetrable speculations.
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