October, 2009


21
Oct 09

Why bonuses power the government

Plus HFSB’s Borges on modifying the EU directive

Some people see conspiracy, others see cock-up. The best tale from the Conservative Party conference was that Gordon Brown’s eye problem – two injuries in the retina of his right eye, while his left has no vision – was a carefully orchestrated first move. This was to be followed by his stepping down for ill health, his substitution by a more electable party member and victory by the Labour Party in a spring general election. 

A delicious tale. As absurd as the posturing by the parties about a windfall tax on the banks. It feeds popular anger about (some unjustifiable) bonuses, but would be deeply counterproductive. Not only are two of the largest banks, Lloyds and RBS, government controlled, but all banks need to restore their balance sheets and produce profits to help move the economy out of recession.

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13
Oct 09

Why the regulatory burden is temporary

Sir Brian Pitman of Lloyds bets on the banks

In early 1945 Josef Stalin and President Franklin Roosevelt were discussing the future of Europe. Stalin said that Charles de Gaulle did not appear to realise that the French contribution to the Allied war effort on the Western front was minimal and that in 1940 “they didn’t fight at all.”

Meanwhile,  the envoys of the US president (who had dismissed de Gaulle as a man with a Jeanne d’Arc complex), were told by the French president that, “The French have the impression that you no longer consider the grandeur of France as necessary for the world and for yourselves.”


6
Oct 09

Yin & Yang views on the global economy: Baer vs Blejer

To the BBC to talk about bankers’ bonuses. The idea of clawback provisions seems the height of imbecility to me. It is all arbitrary, all to do with where we are in the economic cycle. For instance, assuming a banker had a clawback provision for the suggested three years anytime between 2001 and the first half of 2007, he would have received it in full.

I did suggest to the interviewer that politicians should also be subject to them. She rapidly moved on, perhaps alarmed at the thought of my mentioning an incumbent prime minister or two.