Killing the Golden Goose

[Suff]

Banks looking to move from the UK has been on the cards for some time now.

However the, quite literal, rabid ranting of the press and governments about how they need to "control banking", "Punish Bonuses" and raise huge levies from them to pay for their "social programs" has finally hit the limits of some large banking boards.

Simply put all this ranting does two things. It deters new business from coming to the UK and it raises the cost of doing business.

This can't go on yet I still hear virtually nothing but how we should be hammering the banks.

Banks are businesses and the UK is the single largest clearing centre for financial transactions in the world. The US comes a poor second.

So what do we want to do??? Drive the business away???

Way to go UK governments. Much of this is EU legislation. Easy for them to say, the central EU banking transactions are piddling in comparison to the UK, so carry little risk to their countries.

We have to get off this hobby horse and cut the sound bytes. Banking is a key and important business for the UK economy. So we need to stop making it harder to do that business in the UK and start protecting that business from loss to other countries.

Of course we won't because Bankers are "bad" and the press don't have a new long term hobby horse yet. As I stated weeks ago, Milliband's wet dream about taxing Bankers Bonuses to pay for schemes is exactly that, just a wet dream, we already tax them at over 50%.....

Our government is like our Military procurement. What we get is the lowest acceptable quality for the lowest possible price. Not the way you want to end up running a country...

[Aggers]

Life would be pretty boring if we didn't have any Fat Cats to moan about.

[Suff]

I had a long response written out here but, in the end, I decided "why bother".

I decided to give you some other figures and see if you could decide for yourself.

There are currently 9 million people "not contributing to the economy" between 16 and 65.

If we were to put even half of them back to work at the minimum wage, that would put £45 billion of money to work in the economy for people

It would bring in roughly £14 billion in taxes
It would net the government roughly £20 billion in value to the government in welfare payments they would not have to pay, although they would have to top it up with working tax credits. Perhaps even more as people would have to contribute to their own housing.

OK £20 billion. That would fund? Everything every party is currently talking about. Oh and it would also give 4.5 million people back some personal pride in working.

So, what are the press talking about? The massive issue with people "not working"? Oh no they are talking about "Fat Cats" and their bonuses.

Why, you might wonder, are the press hammering on about this? Why is Red Ed not talking about the real issues with people out of work and the benefits it would create to the UK as a whole to get these people back in work?

After all, is it not core Labour Party policy to have Everyone working at a reasonable wage?

No the reality is that Labour caused the problems that put 9million people out of work and everyone wants to hide it and only talk about the 6 month sliding window which is Jobseekers allowance. A number they can manage and a number which becomes smaller even if there are more people out of work.

Fool me once, shame on you. Fool me twice, shame on me. I am not fooled.

[Workingman]

Part of the reason why Fat Cats get a bashing in the media is because of the ever widening gap in pay between them and the average worker, and also the % pay rises they get in comparison. Another reason is that ever more seem to be getting drawn in to the high-pay system, especially in the public sector. We have head teachers on 5x the salary of the average teacher. We have GPs paid a fortune for offering fewer services than before. We have department heads in local councils being paid 3x the amount of the Prime Minister. Meanwhile the average Joe and Jane have had pay freezes for the past five years. It is no wonder that there is an atmosphere of anger.

As for the banks and bankers. The spivs and the roulette players freely bought in to the market that caused the global crash. The managements of those institutions did sod all to put a brake on their casino activities and so were complicit in the financial disaster we are all paying for. Yet the spivs still received bonuses, get that, bonuses, in the £millions. They got more in one year's bonus than the average worker will get in a lifetime. Do they deserve a bashing? Hell yes, and then some!

[Kaz]

What Frank said!

[Suff]

Frank, in the fist part of your mail you mention something which is endemic in the press today.

Did people get 5* the normal pay.

Yes.

Were they permanently paid that?

NO!

BUT again and again in the press, which has this hobby horse, we see crisis management resources paid crisis management rates presented as permanent resources at these wages. Let's get real here. Those temporary resources have seen their wages drop by 50% or more. Not a case of being below inflation, not, again, a case of simply sitting at the same pay and losing money, BUT, seeing their net pay drop by 50%. Are they going to gouge the companies? (or in this case government services). Hell yes they are. As will I the first chance I get.

I'm currently being paid at a wage lower than I was paid in the late 1990's and if I complain I'm being told that I'm lucky that they are not cutting my wages more. So much so that we are sucking in more and more resources from Eastern Europe and India because nobody will travel and work for these wages.

So, my sympathy for people who are in a permanent job and haven't had a wage rise is nil, nothing, nada. I have no pension from a company and I get no sickness benefit. All I get is excuses for why I can work for less and less money, whilst those in their "low paid" permanent job get more and more protection and higher and higher wages (I don't care if it's 0.5% on average or a loss compared to inflation, it's more than a 50% net loss)....

The second part of what you state is partially true and partially false. Yes bonuses have been paid when the financial institutions are suffering. BUT, other bonuses are NOT being paid at all. In fact in this market if you can't make stellar returns, then you're out. Forget bonus for failure, OUT.

Then there is the other part. Branch Banking loses money. So whilst the customer bemoans the loss of the branches they visit once a month, the RBS allocates more than £1m per day for branch banking losses. Any other business and your local services would be lost. Witness what Tesco is doing now. Then again most of those employees, making a loss for the company, will decry the massive bonuses paid to those who actually pay their pay. Talk about GRATITUDE!

The reality of traders bonuses is this. When I worked in ABN back in 2000, 60% of the banks disposable profits were made in treasury and capital markets in London. Probably a dozen guys of whom the top 2 or 3 were making the most of it. I happened to be involved in the failure of a $1.1bn currency transaction, basically because it was lost due to the failure of our email system to confirm the transaction. That ONE transaction on that ONE day, by that ONE trader, would have net the bank $11m in profit.

So, let's see. We have a trader who can net us at least $11m per day in smart trading. Let's say he works 220 days a year and makes that on average every day. So he makes, for the bank, $2.4bn in profit.

And we're going to give him what? 50 quid and a pat on the back? Yep that will work. He'll move to New York, take that $2.4bn in profit away from the bank and he'll get, maybe, $50m in bonuses ( a measly 2%) and the UK will lose the tax on those transactions AND his bonus of which the government will take $25m or more.

I mean, what is the OTE for a salesman? 20%? 30% in extreme cases? So, tell me, why is it reasonable to pay someone 30% of what they bring in in profit to one person and only 2% (well that's what people are moaning about, probably more like 0.2%), of what they bring in in profit in another. Oh yes, it's "unreasonable", because people who don't have the skills and are not willing to put their entire life on hold 24x7 365 for 5 or 6 years don't like it.

Sorry, but in my estimation this is "Stupid is as Stupid does". A lack of understanding of how the industry works is not an excuse for driving that industry away.

There is a hell of a lot of greed going on here, but it's not the Bankers who are being that greedy. It's the Government, in my estimation, who are being greedy. Just because the average people do not understand the numbers being discussed here and cannot relate it to their lives, does not make the mechanism wrong.

I will not sit still and watch a whole industry exit the UK for Political reasons just because the people on the ground (and half the press apparently), don't understand the scale of the numbers. The people running the country understand the numbers all right but they are not going to correct the press. After all it was directly the responsibility of the last governments failure to monitor and regulate the banks (in fact the opposite was true), which brought us to the financial crisis.

All this wittering on about Bankers Bonuses is nothing but a ruse to direct the people away from the truth. Namely that our government failed us miserably and our banking industry collapsed as a result. For which the government had to take "our" money and fix their "own" mess.

Just another thought about Bankers Bonuses. Where do you think the money will go if they don't get paid it? Back into the business? On employee's salaries? Not a chance. It will go to the shareholders dividends and that is taxed at 20% net at the company before disbursement. Most of these shareholders will apply very aggressive tax avoidance to pay a minimum of tax on it. Say, perhaps, somewhere between 20% and 30%.

If, however, we massively expand these bonuses to the executive and star traders, the Government gets 50% of it.

You, it is absolutely guaranteed, will see not one penny of it.

Me? I'm for more bonuses taxed at 50%. So our government has more money to work with. Oh and I'm for getting 4.5m people back into work.

But don't mind me, bemoan these obscene bonuses. Already banks have had to more than double pay to directors due to bonus limitations. Remind me again, what do you have to do for base pay? Oh, yes, turn up. There are no KPI's on executive base pay, just key objectives to keep the job.

Oh and remind me again. What are pensions paid on? Yep, base pay and not bonuses. How long is that pension commitment until? From the time they retire to the time they die.

So reducing bonuses have massively increased directors pay and exponentially increased the pension commitments for those executives when they retire.

Note the figures I gave you for Tesco which everyone ignored. In the last 2 years the CEO pay has gone up 137%. Why? Because the new incoming CEO demanded pay to cover what would have been delivered in performance related bonuses.

Way to go British Government. If you don't understand what you are doing LEAVE IT THE HELL ALONE.

Stupid is as Stupid does!

[cromwell]

The hypocrisy of the Labour party on this is absolutely astonishing. Labour removed the Bank of England from having power over the banks. Labour introduced the "light touch" regulatory system which allowed the banks to do whatever they liked, to get themselves into a massive hole - which the Labour party then bailed them out of, with billions of pounds of public money!

Labour are shouting and yelling about the banks because their politics is the politics of envy - someone has more than you have - that's NOT FAIR, is it? The louder they whinge about the banks, the more they hope to bury their own incompetence in the past.

And if they think that the banks or rich people in general are just going to stand still whilst Labour come along and whack them with big taxes, well good luck with that. The money will be out of the country before you can say Jack Robinson.

Yes, the banks behaved badly. But don't forget that they were allowed and encouraged to do so, and then bailed out by the very people who are now shouting "foul!".

People are suffering in this country, but that is a lot more to do with globalism and the politicians lack of care for their own people than just being all the fault of the banks.