An Elite that Lacks Class

Anyone who can be bothered to 'read between the lines' of some of my rants here will know that I am no enthusiast for The Age of the Common Man.

Today the BBC reports an excellent example of the lack of class shown by the present elite (I cannot bring myself to abuse the word 'Aristocracy').

International Banking Giant Goldman Sachs proposed to delay until April the payment of the vast bonuses it will award to its staff and thus time the payments to coincide with the reduction of the top rate of income tax - from 50% to 45%. This politically inept plan earned Goldman a fully-deserved bollocking from the governor of the Bank of England.  In consequence Goldman has has decided to try to save face by cancelling the plan.

How can a mature organisation the size of Goldman Sachs show such a lack of sensitivity and political nous?  After all they cannot (can they?) be unaware that the public have at least as low an opinion of the banks as they do of politicians - and it is well known that irresponsibility and greed amongst the bankers has been a major contributor to the present slump.

The answer is of course as I wrote above, lack of class.

Until the next time.

More on Bankers and the Financial Crisis

Source: Private Eye No 1231

Recently I wrote something about British Prime Minister Gordon Brown and Sir Fred Goodwin, erstwhile Royal Bank of Scotland chief executive.

It was reassuring to find today following the arrival of my copy of Private Eye, that Lord Gnome seems to agree as the cartoon reproduced above suggests.

There is interesting coverage in the same issue from "In the City". "Slicker" writing about the pension row says:

"What has followed has been little more than political posturing, not just by Harriet Harman but also by Brown, Darling and Myners. They all know that legally, Goodwin and his pension are probably bombproof but cannot admit that because of their failure to act back in October."

"Slicker" of course has a lot more to say - generally indicating that the situation has arisen ultimately for reasons of saving face - and of course Goodwin was reportedly a pal of Browns...

Finally, this evening I received an excellent email from a friend. For those of you who are baffled by the complexities of the "financial products" that led to the current crisis here is a straightforward explanation:

Heidi is the proprietor of a bar in Berlin. In order to increase
sales, she decides to allow her loyal customers - most of whom are
unemployed alcoholics - to drink now but pay later. She keeps track of
the drinks consumed on a ledger (thereby granting the customers
loans).

Word gets around and as a result increasing numbers of customers flood
into Heidi's bar.

Taking advantage of her customers' freedom from immediate payment
constraints, Heidi increases her prices for wine and beer, the
most-consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank
recognizes these customer debts as valuable future assets and
increases Heidi's borrowing limit.

He sees no reason for undue concern since he has the debts of the
alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these
customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These
securities are then traded on markets worldwide. No one really
understands what these abbreviations mean and how the securities are
guaranteed. Nevertheless, as their prices continuously climb, the
securities become top-selling items.

One day, although the prices are still climbing, a risk manager
(subsequently of course fired due his negativity) of the bank
decides that slowly the time has come to demand payment of the debts
incurred by the drinkers at Heidi's bar.

However they cannot pay back the debts.

Heidi cannot fulfil her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs
better, stabilizing in price after dropping by 80 %.

The suppliers of Heidi's bar, having granted her generous payment due
dates and having invested in the securities are faced with a new
situation. Her wine supplier claims bankruptcy, her beer supplier is
taken over by a competitor.

The bank is saved by the Government following dramatic round-the-
clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on
the non-drinkers.

Until the next time

Sorry about the formatting of the story above; HTM 'ell refuses as usual to let me do anything

Financial Chaos

It has been said that amongst the many types of "rocket scientist" employed, at least until very recently by the banks, were chaos mathematicians. It has also been said that a bank manager is one who will lend you an umbrella when the sun is shining.

Well, I might add, so it has come to pass. There are now politicians (all of whom of course are not responsible) who are saying things such as "These 'rocket scientists' came up with products and procedures that few can understand." As far as it goes I am sure that this is true.

Were it not for the fact of the misery and suffering that these financial crises cause, I would be cheering to the rafters at the discomfiture of the banks - all greedy bastards every one of them. I am not in the slightest a "man of the left" but just because this is the case, it does not mean that I think that there should be a financial environment in which the occupants can operate in a moral vacuum and without a scintilla of responsibility. Moral bankruptcy in fact.

My own bank is said to be the largest retail bank in France. I read recently that its profits had declined by 94% over the past year. It seems that I am personally expected to make good this decline in profitability judging by the charges it has exacted from me for an overdraft that at its largest was less than €500. These charges would make Shylock blush. Bastards - voleurs.

How I wish they could all go to the wall - but sadly it cannot be allowed to happen, which effectively means that national governments have retroactively to sanction the banks' greed and irresponsibility.

As a man who is not of the left, I loathe Government interference; how sad that it is necessary because of the culture of greed in the banking and financial services sectors! And sadder still that the taxpayer, already bled white by these parasites has to foot the bill - again.

As you know I often quote from the International Herald Tribune, an associate title of the New York Times/Boston Globe group. The IHT has produced an interesting piece suggesting that President Bush must share the blame for the current crisis. The NYT (and therefore the IHT) tends to a slightly Democratic view, but this piece is actually fairly balanced; recommended.

Until the next time (probably from a cardboard box)