France Seeking Ban on Guaranteed Bonuses for BankersSarkozy's Minister of Finance, Mrs Lagarde, strikes again! the question of guaranteed bonuses for banks' top performers should be discussed at the next G20 meeting in September, as if the G20 did not discredit enough itself during the last meeting with its list of so called tax havens (remember the grey list where neither the Delaware, nor the Channel Islands nor China dominated Hong Kong and Macao were included, etc.). One farce is not enough, let's go for a second one.
Beyond what could be anecdotal (our politicians must not be busy to spend so much time on bonuses, whilst they should, at least, explain that performance must be rewarded - true, it would not bode well for themselves, just look at public deficits for the past 30-40 years...), it is very worrying that politicians are seizing the financial crisis (where they bear a huge responsibility - see previous post) to interfere more and more with the private sector. At least if they were managing economic affairs as well as the Chinese (don't misread me: I would not like to live under a Chinese inspired regime) one could discuss.
I am in broad agreement with Martin Spring's Newsletter:
If you think my recent comments have been over the top about how politicians and bankers have used the credit crisis to hijack the mega-billions of taxpayers’ money to promote their own interests, you should read what the Bank for International Settlements, the “central bankers’ club,” has to say in its latest annual report.
To recap, the essence of my criticisms of the way governments have been handling the crisis has been:
► Nearly all the effort, with its enormous expense, has been directed to containing the symptoms rather than addressing the cause -- bad debt. That’s like trying to cure cancer with doses of morphine instead of radical surgery.
► The money flood is largely being used to protect jobs and investments in a bloated banking system – it’s not flowing through to where it’s needed most, in the soundest companies in manufacturing and the other service industries.
► Even worse, the money is going to the least deserving – such as the big banks with the right political connections, with major responsibility for causing the crisis in the first place – putting at a competitive disadvantage their rivals, who were and are being managed responsibly.
► Banks, other financial intermediaries, and long-term investors such as pension funds, are all refusing to acknowledge the scale of their bad debt, write down so-called “assets” to their true value, and recapitalize and restructure accordingly.
► Stimulus packages are largely designed to favour political vested interests and ideological obsessions, rather than provide immediate and effective support for business survival and job creation. They are a huge waste of money – borrowed money that will have to be repaid by future generations.
► Political management of the crisis is so obviously corrupt, self-serving and incompetent, that it is producing a voter backlash that will gather momentum and make it very difficult to implement future unpopular measures, no matter how necessary they may be. The politicians, their bankster friends and the bureaucrats have poisoned the well.
N.B. emphasis mine
Bloomberg: France Seeking Ban on Guaranteed Bonuses for Bankers
BIS: An assessment of financial sector rescue programmes
BIS: Annual Report
Marin Spring: On Target Newsletter - Sept 2009 Issue