ayase said:
We do need the bankers. Part of the reason we went into a recession was their mistakes, but then part of the reason we're out of recession is because of their success. Like it or not, capitalist economies depend on them.
Banks are PART of the reason we went on the recession. The big problem was people borrowing more than they could pay, then defaulting. But like I always say, who wants to go and beat the guy who has just got his house repossessed when bankers make so much money.
BlackWolf said:
Which is one of the reasons my friend wants to vote the communist party in the next election...
The problem of communist is that it creates a stale society. Who wants to put the extra effort with no reward insight? I know that if this was a communist society I wouldn't have make 5% of the effort I do on a regular day. I bet most people wouldn't as well.
Tachi- said:
One of my best mates works in a bank... so does his mum and sister, i get to listen to him moaning about making certain targets (10 sales a quarter) and balancing tills and filling and paperwork....i know more than the average Joe about banking, i just think its boring and old
We need to change that sooner rather than later....the heads of banks are beginning to think their actually better than others.
Well, I'd draw a line between a bank clerk and a investment banker. Your friend sounds more like a bank clerk. The bankers that the papers talk about are the investment bankers. Like I said they are salesmen. While nominal annual pay is high, it is less than doctors and lawiers. BUT, like I said, they are salesmen, they get commission in form of bonuses. The average Joe gets a 0.2% ~ 0.5% cut from the profit his deals makes. If he gets a million pounds in bonus, it means he made 200,000,000 for his company. On an average day in my bank trades a silly amount of money (on the 10 digit scale of number), it's obvious to me that out of that, a lot becomes profit and will be given to the trader as bonuses. Bad performance? Just kick the guy out. It's one of the jobs with the least tolerance to mistakes that you can imagine, sa one mistake could mean that the pension of thousands of people would bee worth nothing. In my opinion they are rewarded on pair with their responsabilities.
ayase said:
I think I've said before that the reason I don't think communism works is because people are lazy if there's no reward for success - That and not all people are created equal. Some are more intelligent, manipulative, ruthless etc. and you just get people like Stalin in charge (not that we don't have the same kind of people in charge in a capitalist society, but in a communist society they have more control over everything).
I think welfare capitalism is probably the best model - I mean, in order to make his own workers more productive and to enable them to buy the very cars they were making, Henry Ford used to pay his workers $5 a day, the equivalent of over $100 a day in today's economy. What happened to that attitude? We all got greedy. The bosses would rather pay the workers less, the consumers would rather pay less for the products, so all the work went to poor countries.
And we call that globalization. Isn't it wonderful? But one thing that happens in third world countries is that this demand created by the first world demand makes salaries higher.
From 10 years experience in the work mkt in Brazil, salaries rose around 60% between 2004 and 2007. Why that? skilled work is in demand, then people have to shop around for skilled people. Which usually means, attracting them with better pays. Employee rentention on the third world sucks and that's a good thing. Hopefully, it makes the distribution of wealth a little bit more even.
BlackWolf said:
Oh don't get me wrong i think communism fails for the same reasons you do, he just seems to think that it would work better a second time, but its far harder to change people's nature then he thinks. For it to work in this day and age it would need to be at gun point and no system of leadership should ever be run like that
Ask your friend that if he is given the choice to work in whichever job he wanted and for as many hours between 5 and 10 hours a day, how many hours would he work in a day.
My contract says I'm a 9-2-5 employee, but in reality it's more often than not for me to start at 7am and only stop working around 17 or 18, simply because I want to progress in my career, which would mean more money to me. Would I do the same if I knew the compensation is the same? Hell no. Why would anyone do any sort of extra effort if there were no rewards in the future? This rewards could be anything. Money, prestige, time off whatever. Without reward there would be very few people willing to work. Without reward no one would be a nuclear reactor cleaner! (or a cleaner altogether)
Tachi- said:
And Ayase; The banks put us in a recession but got us out of it, thats the same as if i took a puppy and stuck its head in a river and wouldn't let it breath until it lost conscious, then I took it out and used CPR on it and brought it back to life. Its not the fact that I've brought it back that's important, it’s the fact that I'd have done it to the poor little thing in the first place, that would matter more. So i'm sorry but i'll be the last to praise them on their recovery of the recession they put us into.
The logic seems right, except that the several puppies jumped into the pool on its own accord, the guy noticed the puppies heading to the pool, but was busy looking at the hot blonde in the bikini. Once the guy noticed that some of the puppies were drowning, then he acted, but by then they had drank too much water and needed CPR. Other puppies knew how to swin and got out of the water on their own.
The puppy is the general public and the pool is debt. Some of these people could pay for it and it was fine, the some couldn't but thought they would be able to because the economy was growing fast. The banks realized people were getting into debt, but the hot blonde called profit made them also believe taht everything would be al right in the end and these people would be able to pay their debts off. The problem is, they were not able to pay offtheir debts. Then, everyone entered in a state of panic and money that otherwise would be available for loan was suddenly withdrawn. This money available fro loans is not the mortgage money. It's the money goverments and companies borrow to invest in new projects, it's the new Tesco store, it's the new car model from Ford and so on. Less investment means less jobs. With less people employed, Tesco thinks it won't sell as much as they actaully already bought, so in order to fulfill their responsabiities, they lay people off.
I hope this makes sense.
ayase said:
I'm not saying they didn't make some stupid mistakes, but if they were gone... the economy would go with them. They are the ones propping it all up, and the way our economy is structured there is nothing we can replace them with. Believe me Tach - if the bankers were gone there would be bread lines in the street by this time next week. The number of British jobs the financial sector supports is... staggering.
If they were gone, things would be stable. For instance, lets suppose that you got a loan to start up your book store. Me, as an investor would give you the money you needed and I'd say, I'm taking a stake on your risk. If your business goes well, you pay me back with a little extra, based on how well you did. This is the basic concept behind the stock market. The basic idea is to put people who needs money in contact with those who have the money.
Tachi- said:
Then stricter measures put in place. And take away their bonus' there's no reason why someone should be getting bonus' when they put countries into reccession.
You don't give a mass murderer a shotgun and say "you killed alot of people.....that was bad of you, here's your reward"
Like I said, bonuses are based on performance. If you didn't give a profit, you should not get a bonus.
Whenever a country enters recession there are talks about strricter measures, but the truth is, stricter measures means you're putting a break on your economy growth. As soon as we walk out of the recession all talks about being stricter will go away...
And once again, like I said before, the one to really to be blamed is the guy who had his house repossessed, but beating those guys up is inhumane, so put all the blame on bankers.
ayase said:
In one circumstance, you do - and that's if that mass murderer is still responsible for creating most of the wealth of your country.
*hands a cookie*
Capital markets is the main reason behind a countries growth.
ayase said:
If there's no incentive, there's no reason to work hard. They'd all go somewhere they would get big bonuses. And then this country and all of us with it would be up **** creek. They're holding us to ransom to a certain extent, yes... but what's the alternative other than to give them what they want? A second great depression, probably.
Or they would become farmers and florists. Many of these guys are adrenalin junkies, but seriously, would you like to be responsible for milllions of pounds belonging to others?
ayase said:
@Black - I certainly thing it would be fair for them to take a pay cut, along with a lot of others for 'The Greater Good' but unfortunately, things don't work that way. Nobody wants to make sacrifices willingly.
Edit @4.30 - And I am outta here... See ya later guys.
Bankers salaries are usually smaller than doctors and lawiers, but their bonuses are theorethically infinite. And as I mentioned before, their bonuses are linked to profits.
Bank's CEO's on the other hand have contractual bonuses and stuff. In my opinion their bonuses should be paid 100% in mid / long-term stock options.
SundayMorningCall said:
if you want to tackle the financial sector, then the best way is to regulate the system better, something like the "safe" and "risky" banks idea sounds good to me, having some for everyday use that arent allowed to take risks and such (nationalised), but still having the risky banks for people who want to use them, of course, using a risky bank means that the government wont help you or the bank if they do something wrong or stupid and lose your/there money.
Problem is, no one would invest in public banks, they would go to the risky banks. Every bank have safe (fixed income products) and risky investment (equities / derivatives). What happened with the current crisis is that investors took money away from the risky market and put on the safe market. Most of the fixed income products require you to leave your money in there for a set amount of time (ie a year), which means you're taking money out of the market, which is not being used to consume or as an investment.
SundayMorningCall said:
the government should tax bonuses imo, not stop them altogether as that probably would drive the bankers away, but its only fair imo to expect some of thoose bonuses to go in taxes for the services there customers and employees no doubt use.
Bonuses are taxed and have always been. I know mine were And once again, the rich is the mobile people. If you have money you can live anywhere in the world. Anywhere, so why live in a country which i have to pay more taxes? I would just move to another one.
