The Rambles of Neil Monnery

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Archive for the ‘bankers’ tag

Would MPs back a law that sees them go to jail for running the country in a ‘reckless manner?’

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Look I know everyone hates bankers. Thanks to a delightful mixture of media and political scapegoating bankers are now as beloved as Joe Kinnear in the North East. However at some point surely some common sense has to breakout and we as a nation actually stand up and say ‘No, no Mr Politician and Mr Media Mogul. This is enough of the lambasting of the banking industry and can you please move on to actually dealing with the issues of the day in a grown-up manner.’ I suspect though that I’m pissing into the wind on this. As I always seem to do.

Anyway what is this latest tidbit of absolute bollocks that Labour MPs want to bring in and the coalition certainly don’t seem opposed to? Oh yes jailing bankers. Pur-lease.

Let me at this point quote from the Telegraph:

Andrew Tyrie MP, the chairman of the Commission on Banking Standards, warned that bankers had escaped “personal responsibility” for their actions, and said that drastic reforms were the only way to restore trust in banks.

Personal Responsibility. An interesting term. I do presume that said MP (and in turn all senior MPs) back a law to jail senior politicians who screw things up? Surely if they think bankers should pay in terms of jail time for making errors that force the economy to plunge then there is no doubt that they should as well? Norman Lamont’s performance on Black Wednesday cost this country £3.3bn – I’m sure that is worth a few years in the slammer under this law?

All the Labour MPs who apparently let the bankers do what they wanted that led to this recent recession must take some responsibility, yes? They ran their government in a reckless manner by not overseeing the banking industry strongly enough. They saw the good times and let them do what they liked believing that the good times couldn’t stop. I’m pretty sure sticking your head in the sand isn’t a defence under the law.

Now the thing is I wouldn’t advocate this law. Running a country and a bank and in turn any giant multi-national is probably a rather tricky job and mistakes will be made. Things will happen that you couldn’t see and outside influences will have a significant impact on how you perform which are totally out of your control. However this proposal in the Banking Commission report isn’t exactly viable and in my opinion is solely a political cheap shot knowing that the public will lap it up.

Also shall we look at it this way. The government are telling banks that they need to lend more and get money circulating in one breathe but in the next they are saying they want to send bankers to jail who give out plenty of loans that in turn can’t be repaid as that’ll be running a bank in a reckless manner. Can you see the irony?

If you are a senior banker you basically shut the purse strings with the public and deal solely with large companies and countries where the risks are absolutely minimal. Why would they deal with risky investments like lending the average person money for their business or for a mortgage? It would make no sense. No sense whatsoever considering the money they make from the public is vastly inferior to what they can make from other avenues but is in fact one of their riskier investments. Did the world’s economies stall and tank because of bad mortgages? No but they were certainly a significant catalyst.

If the government wants to bring in a criminal offence called ‘in hindsight you cocked up’ then so be it – as long as they do exactly the same to their decisions in the House of Commons and then spread it to the House of Lords then I’ll be fine with it. Just putting a provision in place to criminalise one section of the economy who make poor decisions and not applying it to others is just wrong. However the best thing to do is ignore this proposal but of course deep down we all know they won’t as the banking industry and bankers have become the poster boy/girl for public and media anger about the economy.

Jailing bankers in hindsight of what happened. What absolute bollocks. sadly though this would certainly up any governments approval rating. At this point I shall retire and despair.

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Written by neilmonnery

June 19th, 2013 at 12:42 pm

Posted in Politics

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Lib Dem Baroness Ros Scott has caused me to blow a gasket

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Oh Lib Dems what are you doing to me? I sit her in my toothpaste stained jogging bottoms and a t-shirt saying ‘Brain Loading…47% Please Wait’ and feeling good playing Bejeweled Blitz and then I see a tweet and my anger soars to record (well that’s a lie – nowhere near record levels but still I’m pretty pissed off) and why I hear you ask? Well because of this tweet from a Liberal Democrat Peer…

Baroness Ros Tweet

Lib Dems…the grown-up party – or so I thought…

It seems pretty innocuous but still, ‘We were told if we didn’t pay huge bonuses to bankers they would all go abroad. And the problem with that is? ‘ I think I need to respond for what the problem with that might be.

First of all the city is actually a vital part of our economy. As much as it is hard to say in this day and age when everyone wants to crush the bankers and the banks as I have blogged about on numerous occasions before, I think it is fair to say that the city helped us get into this mess but that without a strong city it is highly unlikely that we are going to get out of it. We can’t just kill the city because all that will do is stunt growth. It isn’t rocket science but it seems like it might be for some people.

The winner of the Best New Lib Dem Blog last year Richard Morris agrees with the Baroness:

Richard Morris Tweet

Richard agrees with the Baroness…

@neilmonnery @baronessros of course you are presuminging (sic) that A)they would go & b)we wouldn’t find anyone equally ‘talented’ to replace them

Well first of all I think the presumption that bankers might leave the UK if they get offered more money overseas is a fairly safe one to presume. I know – and I repeat – I know – that this is already happening. People that I know are losing staff members because their bonus cheque for the last financial year was shall we say lacking. These are people that actually make money for the banks – and in turn therefore make money fr the UK tax payer – but they are going because they can earn more money elsewhere.

I also think it is fair to say that this happens in all forms of life. People will move on if they get a better pay packet elsewhere. It is why I can never understand why football fans get so worked up when a player leaves for another club and a huge pay increase. People go where the money is and everyone has their families to worry about and such. Even if they don’t then why wouldn’t they take more money to do a similar job? You would as would I. If someone offered me a job to do the exact same as I was doing today for a lot more dosh then I’d be off like a shot. We all would.

So I think we can safely say that the very best will move on – and we know they are the very best because other banks will want to hire them. The people who are crap and make no money won’t be highly sought after. This is how it works. That is purely logical. If you are good at your job then you will have more doors open to you to move onwards and upwards. If you stink then you try to tread water and stay where you are.

As for presuming that it would be hard to find people equally talented enough to replace them, well this one is simple. If they wanted to work in the banking sector then they already would. Rightly or wrongly the banking sector is motivated by one thing – money. If you work in the city then it is highly you like money – and a lot of it. You may also like women and drugs but these aren’t as big of a prerequisite as liking money. No-one gets into the banking industry because they want to save the world. They get into it because they are clever enough to and want to live a good lifestyle.

People say that they want the bonus culture slashed because it is obscene that bankers get huge bonuses when they do a bad job but what about doing a good job? If regulations are put in place in the K (and for UK based firms operating overseas) that reduce the bonus culture then all it will succeed in doing is force the good workers who make money to leave. They won’t stay and enjoy seeing their salaries culled they will just move on.

Going back to the original tweet what is the problem with all the people who make money going overseas and stopping making money for UK firms who employ people in the UK and pay plenty of tax in the UK (both the company and the employees) well let me think…I think I may have showed exactly the problem in that previous sentence.

Look I know it’s cool to bash the bankers. It is cool to see them as a collective and they are all as bad as each other. Well one thing I have learned in life is not to tar everyone with the same brush. Not all redheads are fiery and gorgeous (although most are), not all fat people are jolly, not all Tories were born with a silver spoon, not all Labour voters think pie & mash is the best meal ever invented, not all my online dating experiences have been horrific (well this one is close) but yes you get what I mean.

Yes the bankers who were dishonest and screwed things up should face the consequences but should those who have done and continue to do a good job face the same sanctions? Morally of course they don’t. You have to be an idiot (or a member of #ukuncut) to believe such nonsense but putting aside the moral argument it doesn’t make sense from a financial standpoint going forward either.

Like it or not many bankers are terrific at their job and earn their bonuses. If a department earns a company say £50million profit then what is wrong with a percentage of that money going to the people who helped earn the money? There are two things that motivate most people and money is the big one and the other is the promise of sex. They are the things that will motivate most people so if not money then do we propose lots of free sex on tap for good work? I’m not sure that will go down well in some departments so if it’s neither money or sex then what motivation do bankers have to work those extra hours and get business done? Not a great deal.

Some bankers are bad. Many more aren’t. Until we can get our stupid heads around this fact then bankers aren’t going to fare well. The sad fact that both the media and the government (both sides of the house) are willing to throw the banking industry under the bus because it fits in with what the electorate want to hear is depressing and when Lib Dem peers think that the bankers are one entity – and in so think they are all bad and wouldn’t be missed – then even the Lib Dems are starting to lose their sense of the real world.

I hope you enjoyed this blog post. Please leave any comments or contact me directly via the E-Mail Me link on the Right Hand Nav. You can stay in touch with the blog following me on Twitter or by liking the blog on Facebook. Please share this content via the Social Media links below if you think anyone else would enjoy reading.

Written by neilmonnery

July 1st, 2012 at 7:00 am

Posted in Neil Rants

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Today is Bankers Bonus Day at the Lloyds Banking Group. Are all bankers evil? Discuss…

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As some of you may know bankers bonuses has become the most important buzzword in politics. It is tantamount to political suicide to even think about defending the bankers let alone actually say it out loud. Well folks unsurprisingly I’m not one to follow the rules and actually have a brain of my own so lets look at what this actually means and what will happen next.

The Lloyds Banking Group is 41% owned by us – the people. HM Treasury holds that stake in the company which is well known on the British High Street with LLoyds TSB, Halifax and the Bank of Scotland being part of the company. So we have a very real reason to scrutinise what they do.

We have no issues with the bonus culture in other industries but then I suppose we don’t have a financial stake in them so that parallel in unwarranted. So the big question is what do we the public get for in-part paying these people vast sums of money.

Well the bonus culture is here to stay in banking. The UK government cannot stop bonuses in privately held firms and banks based overseas. These companies will still pay top dollar with huge bonuses should they reach set targets so no point fretting over the bonus culture at large. Bonuses are not evil. Many of us have bonuses written into our work related contracts reliant on our good work and/or good profits for the company as a whole. So I think it would be wrong to say that bonuses themselves are an evil product.

The question is whether bankers earn their bonuses. I’m going to tell you a shocking revelation now that neither any politician nor anyone in the media wants you to know. This is a trade secret that is out there but is kept away from the public. Are you ready for it…?

Not all bankers are evil.

I know. Shocking huh but that is actually the truth of the matter. There is another big secret out there. Are you ready for this one…?

Not every banker was involved in bad banking practices that led to the financial difficulties that we are in.

I know. Crazy. We have been led to believe that they all live in their ivory towers using £50 notes as toilet paper laughing at all of us using regular toilet paper but no, that actually isn’t 100% accurate.

Are bankers bonuses too high? Probably but they are dictated by market forces. Is Manchester City offering Robin van Persie a reported £210k per week obscene? Yes but market forces dictate that he is worth that much. Employees are worth whatever an employer is willing to pay them.

Is a new iPhone worth £499? That depends but people are willing to pay them at that price so that is why Apple chooses to market them at that figure. If they believed they would get as many sales at £599 or £699 or £799 then they would sell them at those prices. The whole economy is driven by market forces.

So lets go back to the Lloyds Banking Group. Today I know people will hand in their notice at the group. They will have seen that their pay packets are not brimming half as much as they were. They will move on to pastures new because the UK banking industry – certainly the banks that are part owned by HM Treasury have slashed the bonus pot. It has been obliterated in all honesty. These people will be able to get far more money elsewhere and leave.

Now I know most people will be yelling ‘why should we care?’ but the truth of the matter is really rather simple. If there is success in the UK Banking sector then we all benefit. If these banks are profitable then we make money. Also the more successful they are the higher the share price and the easier they are to sell on and move them out of public ownership again.

For example I have been told of a man whose department made £40million last year for the Treasury. He led the department into a far better place through good management and his good work has meant that we the taxpayer benefit to the tune of £40million. Seems like he’s done a pretty darn good job then for all of us. His reward? To lose 90% of his pay compared to a year ago. So for making us tonnes of money we are penalising him in his pocket. This has nothing to do with a Bankers Bonus Tax but to do with just slashing his money.

As a whole one large section of the group will have more than doubled its profits in the past year. They are in a far better financial situation than they have been for years. They are generating large profits and income for the government and for this the whole bonus pot has been slashed by just over 75%. So for doing a far better job they’ll be getting paid a whole lot less.

That doesn’t seem like a great bit of business to me.

The problem is the most talented individuals who do it right and generate the wealth for HM Treasury will move on to pastures new where they can get paid what they feel they deserve. If yu are making £40million then you’ll feel you are entitled to a £1million bonus for example. Is that better or worse for HM Treasury than generating £20million of income and getting £100k as a bonus Well lets look at the math.

£40million – £1million = £39million revenue for HM Treasury.

£20million – £100k = £19.9million revenue for HM Treasury.

Yes. Just as I thought. It pays to have the best people as they will generate enough income for them to get the top bonuses. The top people will go where the money is. I think we can all agree that is fair and is just like how we all do it. If you or I was offered more money to do the same job somewhere else we’d probably take it. Nothing wrong with that so the bankers will do the same.

The problem with this is by doing so it will mean that the top people will not be working in the UK Banking industry. This means that less money is made by these companies therefore they’ll pay in less tax to HM Treasury. They’ll be employing less qualified staff who’ll be earning less so will be taxed on their income less and in turn spend less in the economy. As for the banks that we hold shares in they’ll be making less profits and be less commercially attractive to potential buyers and investors going forward because I think we can all agree that the best people will make the most money and generate the best profits for a company.

The problem with the banking industry was two-fold. They got too cocky and took their eye off the ball as they were so unregulated that people could take stupid risks and that people were rewarded for doing a bad job. Bonuses should be a reward for doing a good job.

The first point has been fixed as banks around the globe have got their act together. Banks now have far more liquidity than they did before. This is why Lehman Brothers went down. It wasn’t because it was a poorly run business but because all of their assets were tied up in medium and long term ventures. These days banks have those liquid assets to hand. Risks are taken less frequently because they are monitored much more closely and the bad practices of the early part of the last decade have been consigned to the dustbin.

Do we really want to be lazy and tar al bankers with the same brush? Is that what we do nowadays? We get an idea implanted in our minds and use that scapegoat even when it isn’t reasonable to do so?

Yes there is no doubt that some banks and some bankers made some pretty bad decisions that led to a global recession. However not all banks and not all bankers were part of that so why should they be penalised and bad mouthed for the sins of others?

If you had a son or a daughter who was a thief would that in turn made you a thief and should you face the same ridicule? If your son or daughter had to wear an electronic tag and had to abide by a curfew for being a thief should you have to do it as well because you are related to them?

The simple answer is no.

We are all individuals and should be treated as such.

This goes for bankers just as it does you or I. If Banker A gets a bigger bonus than Banker B but generates more profits then that seems fine to me. As long as people aren’t rewarded for doing a bad job then surely we should all be ok with it?

Bashing the bankers is safe political ground at the moment because we love a scapegoat. Sadly the second scapegoat are immigrants which makes my blood boil. Yet again as a whole we like to tar everyone with the same brush and people have turned on these people because they need a scapegoat.

Don’t punish people for the sins of others. To me that is simple basic etiquette and how it should be.

One day I hope we can have an honest debate about everything but sadly in the political world we live in that isn’t possible at this juncture. This is one thing I wish that we could change. For today though I’ll continue to write my thoughts down for the handful of people who’ll get around to reading them.

My dream is to live in a world where we get all the facts and can have an honest debate on how to interpret them and not just think how we are told. That is how I feel sometimes as to the world we live in is not that. Politicians and the media will drive home a story and use it to enhance their own ends and not report it how it is meant to be. This to me is a sad sad situation…

I hope you enjoyed this blog post. Please leave any comments or contact me directly via the E-Mail Me link on the Right Hand Nav. You can stay in touch with the blog following me on Twitter or by liking the blog on Facebook. Please share this content via the Social Media links below if you think anyone else would enjoy reading.

Written by neilmonnery

March 12th, 2012 at 11:57 am

Posted in News,Politics

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