Comments on: Dealing with Britain’s overpaid bankers http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: F1ddler http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23212 Sun, 16 Jan 2011 10:25:42 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23212 The Coalition has little incentive to cap bonuses as half of it comes back in taxes. Their only concern is that the issue has become a political stick with which Labour can beat them. Labour could evolve an alternative approach now, if they could see beyond the immediate benefits of beating up the Coalition using bonuses as the media-wielding stick. A State Savings Bank (RBS or perhaps Lloyds TSB with its branches and without a significant trading division?) would guarantee depositors and not indulge in hedge fund and derivatives trading. It could genuinely invest in UK-based small business and support first-time buyers! Depositors in all other banks would be told that there would never be any government guarantee of their deposits (no more bail-outs). Other banks could then do what they wanted (no more vain attempts to restrict their operations as all State prohibition policies are always doomed to fail) … but all the risk would be theirs not the taxpayers.

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By: write_thesis http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23210 Sun, 16 Jan 2011 08:33:03 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23210 ok

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By: DrJJJJ http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23166 Fri, 14 Jan 2011 16:48:47 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23166 Once confidence has eroded far enough, anything is possible! It’s the 12th hour folks, cut spending and begin to balance your budgets-you’re flirting with dynamite!

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By: DanHess http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23146 Fri, 14 Jan 2011 03:33:53 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23146 “The problem here is that so long as the City remains dominant in the UK economy, other sectors of the economy and regions of the country will never be able to attract the smart labor it desperately needs.”

Exactly.

And more, you get a finance-equivalent of Dutch disease. In the Netherlands from the 1960s onward, booming oil and natural gas made the currency abnormally strong and made manufacturing uneconomical. All the rest of the economy directs its attention to serving the needs of the booming sector. Similarly, much of the economy of the UK bends toward the service of the City.

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By: hsvkitty http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23125 Thu, 13 Jan 2011 17:12:33 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23125 The period at the end of Pdf URL has been imbedded, so you need to remove it to open the link.

Interesting read. I see the English are as fond of analogies as the North Americans.

One said that this financial crisis left a scar and TBTF banks and the systemic risk have to be fixed to ensure it doesn’t happen again. A more correct analogy is there is a gaping wound and in order to heal, the systemic risk that can again effect world economies has to be contained.

Banks need to be contained and constrained everywhere and the only way to do it is to break them down to manageable entities and enforceable regulation with addendum as the loopholes arise.

Dejavu:

“Stock dealings which had made bankers rich and respected
in the era of affluence now glared as scarlet sins in the age of depression. Disillusionment with speculators and securities merchants carried over from investment bankers to commercial bankers; the two were often the same, and an embittered public did not care to make fine distinctions”. Glass and Steagall made just such a distinction. They underpinned it with legislation, signed by President Roosevelt in June 1933.

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By: Greycap http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23117 Thu, 13 Jan 2011 13:56:22 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23117 “Do you really believe, even factoring all the bailout costs, that over a 10 year period finance sector contribution to the UK economy has been negative???”

Andrew Haldane does: http://www.bis.org/review/r100406d.pdf. “Put in money terms, that is an output loss equivalent to between $60 trillion and $200 trillion for the world economy and between £1.8 trillion and £7.4 trillion for the UK … assuming that a
crisis occurs every 20 years, the systemic levy needed to recoup these crisis costs would be in excess of $1.5 trillion per year. The total market capitalisation of the largest global banks is currently only around $1.2 trillion. Fully internalising the output costs of financial crises would risk putting banks on the same trajectory as the dinosaurs, with the levy playing the role of the meteorite.”

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By: chris12 http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23114 Thu, 13 Jan 2011 13:29:04 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23114 I find the bankers pay debate to be off topic as it is an agency problem more than anything else.

Shareholders do not have the clout they need to deal with the sky rocketing pay packages, whether they be bankers or incompetent is irrelevant.

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By: TocoToucan http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23113 Thu, 13 Jan 2011 13:19:10 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23113 Laurence Copeland in his article: http://blogs.reuters.com/great-debate-uk  /2011/01/12/bank-bonus-season-again/

appears to completely disagree with ‘tiger4’s assertion that the banks contribute more to the economy than what we’ve put into them.

He says “bear in mind that in the last two years they have cost us far, far more than they will ever provide in tax revenue, and that will still be true even if we are able to avoid another systemic banking crisis for the rest of the century”

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By: tiger4 http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23111 Thu, 13 Jan 2011 11:30:11 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23111 If it becomes unattractive to work in finance in Britain, the bright people will not go to work in other industries in Britain, they will go to work in finance in other parts of the world.

Seriously how many Brits are there even in the finance industry in London? Per my personal experience they are a minority. You really think they are here because they love living in London per se? horrible weather, horrible transports, ridiculously expensive… you get my drift.

If the finance industry migrates elsewhere, even the smart locals will leave (just like I left Switzerland to come here).

The only way this could be done is if it’s a globally coordinated effort, and good luck with that…

Your argument about finance sector = crack is also interesting. Do you really believe, even factoring all the bailout costs, that over a 10 year period finance sector contribution to the UK economy has been negative???

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By: TimWorstall http://blogs.reuters.com/felix-salmon/2011/01/13/dealing-with-britains-overpaid-bankers/comment-page-1/#comment-23107 Thu, 13 Jan 2011 09:56:10 +0000 http://blogs.reuters.com/felix-salmon/?p=6924#comment-23107 “The problem here is that so long as the City remains dominant in the UK economy, other sectors of the economy and regions of the country will never be able to attract the smart labor it desperately needs.”

I find this an incredibly strange attitude. We’re in the middle of a period of globalisation: the international division of labour. And just as last time around, at the end of the 19th cent, the UK’s comparative advantage is in finance, just as Germany’s both last and this time seems to be in capital goods production.

Why would anyone at all bemoan the movement of smart people into such an area of comparative advantage? It would be like moaning that the German machine tools industry is getting that country’s bright graduates, that Silicon Valley is getting the bright Yanks or mining clever Australians.

Getting the smart locals into the sector where there is such a comparative advantage is generally known as a “good thing”.

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