EU Bankers' Bonus Cap

The main parties all make unrealistic promises in terms of what they will do once in office, this is the only way they can get elected in the first place. In that sense they are populist and it means that the real problems are almost impossible to tackle, the expanded client state must be fed.

Excellent point.

 

Glidd,

To your points raised:

1. The people have voted. Repeatedly. For what would suit their own best short term interests (living beyond their means whilst governments and institutions would allow them to) rather than the longer term best interests of the country. That's the structural issue with a short term (4-5 year) economic cycle considering long term (generational or multi-generational) matters. It will always default to short termism. No different actually to incentivising bankers to generate short term profits (annual bonus) at the expense of longer term management of their bank (multi-year).

2. Agreed - it's fairly rotten behind the scenes. I have family involved so know the inner workings of some of it, and the mental logic that is used to justify rampant self-interest is staggering - and delivered with an utterly straight face!

3. Levels of taxation might be static, as a %age of GDP, but it is the level of spending in excess of current taxation over a long term, coupled with monetary expansion that means the liability/total debt is rising - so the long term structural debt burden, together with some even larger future liabilities "off balance sheet" like social security and medicaid. No company in the world would get a clean audit on the same basis as a set of government accounts! Therefore out of the current level of taxation raised, a growing percentage is being used just to service the debt burden, thus further reducing government "net disposable income" if you like. It is theoretically possible for this to continue until all current taxation is used to service debt interest, and then collapse is certain. However, usually, once a certain maximum has been reached (we are there now), the debt markets take fright, and this happens earlier than that extreme example.

I like the point on pyschopaths, and tend to agree with you! I am sure if you profile most performance outliers (including upper echelons of mgmt) you will find some interesting personality profiles.....

BTW - your other point on Switzerland - I have spent a lot of time there too, and have to say I agree with you right up to the point that no-one knows what the real economic affairs of Switzerland would look like if it ceased to be a tax haven in the middle of Europe with residence rights based on wealth! It's functional status in that regard is an anomoly..... it is like a sponge of capital for Europe. An interesting case study no doubt!

 

I think the reasons for Swiss wealth are several:

Staying out of world wars obviously saves a massive amount of money, both in the waging and the subsequent rebuilding.

Hard working populace with a real work ethic.

Good niche industries (watchmaking, banking, machine tooling, chemicals)

Very inventive people (more patents per head in recent years than any other country)

Very well governed. I believe that a large part of that is the direct democracy which seems to be an anomaly in the world and is often derided as over-expensive. But when you look at the results...
Switzerland can be seen as a cushy place with no issues. Not so. Try running a country in 3 or 4 languages and 2 religions with different valley mentalities. Not simple. But they have the best parliamentary system in the world. No wonder they don't want to give it up to Eurocrats. I say "they". I should say "we". I am one of them.

 

There should be a cap on bankers bonuses.If any Company gets itself into such a mess that it requires taxpayer bail-outs,then how can you possible justify rewarding the very people who made the fuck-ups in the first place?
Also,bankers play/risk other peoples money:whether they get it from individuals deposits,pension fund managers or Government Central banks,it is someone elses money.So they risk nothing (except their employment,which we all do,everyday),but gain everything,it seems regardless of whether they are successful or not.
Genuine,shareholder owned companies success/failure is totally dependent on the decisions of management,and the output of the workforce.Make a balls-up and theres rarely a taxpayer willing to keep you in business
When an organisation or company is deemed,"too big to fail",by the Government,there is no reason for the management to make the correct decisions.Failure will be underwritten by the Taxpayer,so risk taking will go unpunished,and failure rewarded.
The failure of Northern Rock was due to both the lax lending decisions of the bank managers,and the greed of those who borrowed without the means to repay the loan.
I admire people who have made money by risking their own.
I begrudge people making unduly large sums of money by shuffling other peoples hard-earned without risk to themselves,whether they are bankers,fund managers r other so-called financial wizards.
On the prog about Bank of Dave the other night they talked about the German Sparkasse,where it appears depositors could invest their money and get a reasonable return,and borrowers could borrow at a reasonable rate of interest.Small banks,not too big to fail,and therefore dependent on providing what their customers wanted in order to stay in business.Of course these are located in the strongest economy in Europe,so we definitely don't want them here....
So,
I want to see a cap on bankers bonuses,because they already get paid for doing their jobs.
I want to see a system where an Investment bank has to stand or fail with no risk to the taxpayer:the shareholder and the Investor takes the potential rewards.
And I'd like to see lots of different retail banks on the street,which loaned money at affordable rates to people who could afford to repay the loans,and which paid a reasonable return on peoples saving.
As the man said,it's not brain surgery....

 

And lack of an underclass.

 

Spot on.

 

This may be slightly off tangent for pete1950s purpose of starting this thread, but it is sort of connected. Why is the UK govt not shouting from the rooftops the attractions and benefits of the Post Office, as an alternative to the banks ( and converted building societies) as a source/mechanism for business/personal funding?

from its own website....

Key benefits


Your front office: a way for you to give the public access to essential local and national services
Located everywhere: with 11,500 branches and no closure programme planned we’re at the heart of every community
Efficient and economical: we can help reduce costs and improve services
Why work with us?


We can provide a wide range of application and payment services, and because we’re a trusted and established part of the community you can be sure you’re reaching people in a secure, economical and convenient way.


93% of adults live within 1 mile of a branch (99% within 3 miles)
92% of adults visited our branches within the last 12 months (78% last month)
20 million adults – half of the adult population – visited a branch last week
All socio economic groups use us – 42% of those who visit weekly are ABC1
Half of all small businesses use us every week"

Just a thought.

tt

 

Seems the Swiss haven't done a great deal...just adding some weight to shareholder votes on pay policies. Hardly revolutionary...

 

The actual laws have yet to be made. The people just voted to force the government to make them, so they will have to.

Indeed, not revolutionary (the Swiss aren't very revolutionary). All they have done is

a) scrap golden hellos
b) scrap golden goodbyes
c) make the AGM responsible for voting on top execs pay
d) enable online AGM voting so you don't have to be there
e) ban voters' representation at AGMs by other stakeholders (typically banks or pension funds). Naturally, in this day and age, few people would actually (or could actually) show up to an AGM, so they would normally be represented by their bank. As if they would vote to limit top exec pay... That will be now done away with.

All these changes only apply to SMI companies or those listed on the stock exchange. Nothing to do with small companies, where there is no change.

 

I think my previous posts may have been fuelled by excessive consumption of red wine. Tonight, I have been abstemious, so have nothing to say!

 

Go on! Open a bottle (or two)!

 

As it was discussed on the radio today, the law changes being progressed Outlaw the hello/goodbye payments and only given a right to vote on pay policy not the actual pay of executives, and the AGM can be as little as every 3 years for this purpose.

 

I imagine we'll all get to vote again when they've finished drafting the legislation. So they better go far enough, or it will whack back in their faces. The people know what they want. 70% voted for the change - that's a lot.

 

Glidd, your advice is

1) against the well-being vote , and

2) fucking good!

 

50% turnout so about a third or so of the eligible voters said change needed. You wonder who the other 50% were

 

Good article in the torygraph today - Boris Johnson opposing the bonus cap.
Boris Johnson attacks EU bonus cap - Telegraph

 

Elites looking out for elites.