It would seem that bankers have replaced real estate agents as the profession to hate right now. The new hate wave is starting again with the announcement of some large Christmas bonuses for the supposed architects of our worldwide recession.
No-one deserves all that cash
The general opinion of the masses seems to be that the bonuses are too big, these guys don’t deserve them and it’s our money. Or it could just be jealousy!
We all should be jealous and it’s natural so let’s not go looking for a moral high ground to fire our arrows into the boys in the tailor-mades. The reality is that nothing has changed – multimillion dollar payments have been going on for the last twenty or thirty years – my direct boss got paid $28m in 1997 and sure the green eyed monsters way back then said he didn’t deserve it but hold on – these payments have always been approved directly and indirectly by shareholders – as they are now. And why are they approved?
For three reasons: 1. The organisation made a profit 2. The individual performed well and 3. The shareholders made money
Who DOES deserve the cash?
So surely the only reason for complaints now is jealousy? Just like premiership footballers or US baseball swingers the money (profits remember) can either go to the players (footballers or bankers) or the fat cat shareholders. What’s more in most G20 countries they pay higher rates of tax – up to 50% in the UK next year! So again what’s the problem? I can hear you screaming from here and it’s all about the level of Government intervention – be it TARP or European bank bailouts – $20 trillion of our money poured into the economy. Without that money the banks would not be in existence and they wouldn’t be able to pay bonuses now, so the argument goes.
Correct – and every pension holder would have a load of worthless paper to take into their retirement, every mortgage holder would be in negative equity and every high street would be a boarded-up reminder of our greed. In short the world would not resemble anything like the world we have known since the 1980s. It is a fact that financial markets would have collapsed and lots of fat cats would be out of work – along with millions and millions of ordinary Joes - the plumbers, the shopkeepers, the workers - the real people would be on the streets with no money, no jobs and no hope.
Cash is King – For all of us
So why get so hot under the collar now with the bankers? They didn’t make the rules. They are not the governments who bailed out their old college mates with no constraints and no rules. They are just doing what they have always done – executing extremely smart financial engineering and taking percentage points of huge profits for themselves in return. If we don’t like that then best we stop borrowing money and best we stop living in houses valued at x10 our annual salaries. Let’s go back to the good old days in the 1960’s and 1970’s when we paid 20%+ interest rates on mortgages and credit was virtually non-existent. That’s right folks stop the bonuses, stop the smart guys working in banks, stop the banks making too much money and they’ll start charging you more – or maybe not even doing business with you at all so you go back to living in your parents terraced house until you are married, travelling by bicycle and paying everything off in cash over three and four years.
You know what is folks – it’s jealousy – it’s human and its fine but it’s also a necessary evil of our lives. The fat cats are necessary evils. You don’t have to like them and to be honest on the whole they are deluded, self obsessed horrors – much like our elected politicians who have demonstrated that they haven’t got the first clue of how to manage an economy or regulate the smart guys. Deal with it – and if you can’t just make sure your kids do their sums at school and become the next generation bankers.
It may not be popular but these bonuses work for us and improve our lives too.
Friday 30 October 2009
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