The CEO of the Royal Bank of Scotland has, under media and governmental pressure given up his reported bonus of almost £1million although other senior staff at the bank are still in line for theirs. Given that bankers bonuses affect the economy and therefore practically everyone else, what are your views on this controversial topic? Please keep it strictly to the economics of the situation and not invite thread closure by straying into the political side of the equation.
"L'art de la statistique est de tirer des conclusions erronèes a partir de chiffres exacts." Napoléon Bonaparte.
"Je crois que beaucoup de gens sont dans cet état d’esprit: au fond, ils ne sentent pas concernés par l’Histoire. Mais pourtant, de temps à autre, l’Histoire pose sa main sur eux." Michel Houellebecq.
I think it's crap. I'm sick of rich people getting richer. **** them.
Fred Goodwin, former CEO of RBS was nicknamed "Fred the Shred" for his ruthless management style. His Knighthood was revoked.
I have met quite a few guys who have Knighthoods, MBE's and blah blah. They love it, take it and themselves very seriously. Yes, money is a big part of their makeup, but EGO and Society are equally important if not more so than money.
This likely stung him good and hard.
Being annoyed that the rich get bonuses is a sign that social mood is becoming bearish. In a bull market few people would care. However, the bear market really starts heating up when there no longer is any money to pay those bonuses.
My blog: https://frankhubeny.blog/
The bear market bottomed in 2009 for most sectors and exchanges. The recent movement against Wall Street and CEO's and well, capitalism is a revolution made for TV and will have little real effect. I should add that I do empathise and sympathise with all of us in the 99%, but we are talking about free captialist societies.
Many of the countries in question have already had failed, but well intentioned stabs at socialism or light versions of it. Price and salary controls in practical terms is difficult, but can vary from country to country in terms of ratio.
Captialism is not pretty and is at times violently cyclical. We have and will go through recession, depressions, booms, and flat line periods. I know of no other system that works as well, but I wish I could say differently.
Occupy is not "made for tv." The big networks did all they could to neutralize it. The movement was conceived and promoted by an organization which opposes the very existence of television itself. What we saw in the late summer and fall was just a taste of what will soon become the new status quo - widespread protests and social unrest.Originally Posted by tonywalt
As far as capitalism goes....you're right. It works maybe the best from all the models we have to consider. But there are different types of capitalism. There's the unfettered free-market variety and there's the more rationally regulated one. The latter has proven the superior.
About banker's bonuses...... JP Morgan recently announced that it was drastically curtailing its bonuses as well. I don't think this is a controversial issue. I've never heard anyone who themselves was not in Wall Street's employ argue that million dollar bonuses for bankers are anything but unduly extravagant and, when those bankers make their millions swindling people and bundling toxic mortgages, they ought to be imprisoned, not rewarded.
No it has not, Every indication is that free-markets do better than regulated markets, that is why policies such as isolantionism and tryign to reulate import/export with large taxes has always failed in history.
As for the Bonuses. If it was a bull market period, it would be fine. But considering the economic depression we are in, well, it is like giving generals bonuses after having lost a war.
Yes, some will do this for a time. I can tell you from a close perspective that the primary reason for any of this is publicity, they will spin this hard. It will fade away after this cycle ends.
Darcy, I am with you in spirit, but the realist in me writes the above.
Last edited by tonywalt; 02-01-2012 at 01:28 PM.
I think the realist in everyone finds the whole occupy movemnt, well intentioned but utterly inefectuall.
Free trade and free market capitalism are not the same thing. Mixed economies have proven to be very effective and enduring, given that the entire Western world consists of them and they are likely to survive for much longer. Germany has a mixed market economy since the end of WWII and has flourished. The USA has a mixed economy since the 19th century, and has flourished. Canada had a heavily regulated banking sector which sheltered it through bank failures.
"If the national mental illness of the United States is megalomania, that of Canada is paranoid schizophrenia."
- Margaret Atwood
The banking crisis in the U.S. in 2009 was largely the result of the repeal of the Glass-Steagle Act of 1932 which was a response to the out-of-control speculation that contributed to the great depression. Now investment and commercial banks are permitted to freely merge, allowing the banksters to play craps with people's life savings and retirement funds. Without regulation you have disaster and chaos. Its a lot more nuanced than the past contrast of the rigid state controls of the Soviet regime versus the more open economies of the West.
And anyone who thinks free trade is a good thing should look at Mexico and the U.S. Mexican agriculture has been grievously decimated in the wake of NAFTA, America's manufacturing sector equally hard hit as a result of the kind of practices promoted by the WTO.
Yes but you cannot compare Canada to Germany or the U.S - what works for Canada, what protects is, also means that it cannot achieve the same econimic succes as other countries. Your depressions may not hurt you as much but your booms did not profit you as much.
I agree with you as to banking regulations, but those regulations are not free market regulations, they must be there because the money in banks is not theirs, regulations protect the consumers money invested in banks which is necessary.
When it comes to free trade regulations, well just look at history, every nation which has adopted a free tarde policy compared to every nation that has not, the latter always enconomicaly fail compared to the former. I am not sure how to argue with you on this point as it seems an uarguable point from your point of view.
The economic system one prefers is subject to a person's own philosophy.
On a board like this, the majority (from what I see) believe egalitarian society(or close to it) is the best. If I go to my trading forum, I will get a very different set of beliefs and the vast majority on the trading forum are part of the same 99%.
They will take a laissez faire cowboy system even with the rougher ride, and I include those who suffered in the recent rough ride. They do not want certain European models, even if it meant they would have a better safety net. The vast majority are educated, intelligent, and not spun by any media in any direction.
Creative destruction is part of the unfortunate cycle of human advancement. The greater do well and a significant minority suffer and on and on it goes, even with regulation.
Railroad industry was decimated by the internal combustion engine. Jobs lost and jobs gained.
The camera film industry was destroyed by digital. Many unspoken jobs lost and gained.
Primitive labour driven farming replaced my high tech farming. Many jobs lost, many jobs gained. That was a tough transition.
In 1970 421,000 people worked as telephone switchboard operators. Jobs lost, jobs gained.
Manufactoring is shifting to regions with low cost labour. Cheaper goods free up investment and purchasing power for other items. Low wage jobs lost, higher wage jobs gained.
The overall model favours with great rapidity a better educated person now more so than ever. This trend will continue and the results are not always attractive to view.
The amazing thing is that the bonus culture was created by the bankers themselves. Nice work if you can get it, but they were able to get away with it because: a.) most people don't take an interest in financial affairs, and: b.) they shovelled unlimited credit onto people that stopped them from worrying about the consequences of bankers plundering their countries wealth.
I was once awarded an honorarium for work undertaken above and beyond what I was paid as a normal salary; I had no say in the matter it was decided independently from anything that I might have thought, but if I could have set it myself, I would be living in the South of France right now.
Back in 2007, I was reading the financial pages of my evening newspaper and my eye alighted on the words 'sub-prime' in relation to mortgages that were trading as parcels of debt on the financial markets of the USA. From that moment, and coming on top of the 'junk bond' market of a few years earlier, it seemed pretty certain to me that the **** was going to hit the fan big time but it was just a question of when rather than if.
"L'art de la statistique est de tirer des conclusions erronèes a partir de chiffres exacts." Napoléon Bonaparte.
"Je crois que beaucoup de gens sont dans cet état d’esprit: au fond, ils ne sentent pas concernés par l’Histoire. Mais pourtant, de temps à autre, l’Histoire pose sa main sur eux." Michel Houellebecq.
I don't want to exaggerrate the importance of this nuance I'm making here, but the traders at the trading forum might be united by the fact that they are traders as much as anything. That might go hand in hand with a philosophy that takes into account others who aren't traders, and what's the best way for everyone, etc. (even if that means every person for themself)--but I think there might in a lot of cases be a more direct line between the trading and their opinions about regulation of trading (i.e. freer and less-regulated trade), and it might not have been arrived at by some period of objective philosophical musing.
Trading might be the way some people find self-worth (rather than "I have a trust fund", it could be "I'm a trader"...). Some traders might even have something resembling a gambling problem, and be quite enthusiastic despite consistently poor returns. Others might make a point to combine their trading decisions with particular political/social objectives. Some might simply believe it's the best way to get a good return on their money, and find that it is so (without any consideration of the ramifications pro or con for the rest of society, or perhaps with serious consideration of it, or maybe occasional consideration, etc.). Some people well-poised to take advantage of trading (lots of money to invest; time and talent for financial analysis) might prefer to use a mutual fund and devote their time to other things besides trading and trading forums--and they might agree or disagree with the prevailing views among more active traders. And so on.
Again, it is maybe a very fine nuance here, but the point I'm wondering about is to what degree a trading forum is concerned about impacts outside of trading, and thus to what degree would the opinions there be relevant to overall economic philosophy.
As far as this particular forum (LitNet) goes, I'm not surprised that it's a lot different than a trading forum regarding these matters, but, without visiting trading forums, I can only wonder which place would end up being more or less one-sided in the opinions of its members, at least in regards to topics of immediate interest to online short-term traders.
Last edited by billl; 02-01-2012 at 03:37 PM.
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