People and rewards

It's been hectic in the econo-political world and the dust is not settling, Indeed the dust is being used to obscure the absence of the much promised reforms. The latest slap in the face of the electorate, delivered by the RBS executives, is the disgusting level of cash awards to themselves. Why are these vagabonds permitted to carry on in the same routines that have already caused the collapse of the banking system? If the 70% ownership of the bank is not sufficient to have any input to the regulation of salaries can anyone explain what purpose is served by taking shares? This bank is now a government institution and all employees should be subject to the rules that apply to the control of salaries. There has not been one word offered by the bankers to answer the question, What do you do to warrant the salary plus bonuses that you award yourselves?

Recently there was the case of the Ghurkas who sought to be paid the rate of pension paid to British servicemen. The argument from Government had been " we can't pay them a pension which would put them in a class above their fellow countrymen when they go back to Nepal". Common sense eventually prevailed and the Court judgement brought a change in policy. This is a similar case to the claim by bankers to be paid the going international rate. Salaries paid in a country should be relative to the local standard and not referred to that of any other country What is the basis for paying such vast sums to those whose actions have destroyed lives? And what about the pensions fiasco? By what right are employers allowed to wind up a pension scheme? Such schemes form part of the contract of employment and represent an inducement to join a company, in effect, wages in abeyance and being saved for future use. The banking fraternity in particular should remember that it was the pension funds that were used to save the banking industry in the 1970's. The system will be changed when people lose their fear , not their jobs.

The Price of Nothing.

Until recently there was a single word that was used ad nauseum; the word was 'absolutely'.
The single word has been replaced by a phrase but there appears to be some doubt as to which one of several is correct.
Should it be 'economic downturn',or perhaps more nearly correct 'global recession' or, much better 'financial meltdown'?
There are other phrases but the gist of what is said suggests that you know what the game is, and that the news is bad
because the game is over.
The players had listened to the gospels according to Milton Freidman, the Chicago Boys, and Prof. Alan Walters (who was
Mrs. Thatchers' special adviser) and they proceeded to convince the politicians that economies should be manipulated to create something known as 'a level playing field' on which to set up their heaven on earth, called the free market.
The blueprint called for governments to be rid of nationalised industries,and reduce public sector borrowing requirements to an absolute minimum. All businesses, they said, should be run by private companies and 'lame ducks' should be allowed to go to the wall. These rules had to be adopted and existing rules amended, to allow the 'monetarists', as they are known, to play their gameswith a multitude of different games plans; aka "creative accountancy"
Theoretically, in the virtual world of finance, all things are possible.The virtual world uses pieces of paper and computers, and the object of the game is to maximise profits. It is played thus;
Take some pieces of paper,preferably with some very large numbers written thereon, and give them to a 'borrower, who promises to repay the sum stated, plus a little extra to reward the lenders' generosity.
As a safeguard the lender then passes the note of the loan (IOU) to a hedge fund; this is an organisation which purports to calculate the risk of non payment and charges for accepting that risk. The hedge fund then attempts to reduce its risk and passes part of the note value to another risk insurer And so the routine is repeated until no one is able to say who is the owner of the debt or the risk.
Another fascinating facet of this virtual world is the dealings in 'futures'. This is a different kind of gamble The player uses his computer to determine likely market trends,. Using this information the player bets on shares that look likely to increase in value and buys them. When his choices are good he makes a profit. However there is a danger that arises when the REAL world intervenes, such as happened in the case of Barings Bank. the earthquake in the Far East was responsible for the collapse of a well respected business and the futures gambler faced prison. Although Barings Bank was wiped out its main players left the game with their rewards for 'past performances'.
Another version of the futures gamble concernss what is termed 'shorts selling', which is a transaction whereby shares are given on temporary loan to a business. The shares are retained until the price/value is favourable and exchanged for a profit before they are returned to their original owner. Strangely this is a practice that is permitted by the Financial Services Authority (FSA) the body that is charged with 'controlling' the game. Those in the business of market trading favour thisdespite the practice being akin to insider trading..
For the gamblers/players in the virtual world nothing is of any consequence other than winning. No concern of theirs that the virtual money is replicated in the real world. Unfortunately the parallel worlds are inextricably linked, and when the virtual games crash the effect on the real world is catastrophic. The unfortunates, who have invested monies in banks; or in retirement pensions; or saving for a holiday and who have no control over the game, find that their homes are sequestered; their livelihoods destroyed and their standard of living diminshed. They are then punished by the the system offers minimumsupport and the public castigates them for living off the state.
Ther has to be a better way of conducting the system. The stock markets and banks cannot be allowed to continue unfettered pandering to the few whose irresponsibility and unbridled greed have brought about a situation that the 'crash' of the thirties is tame by comparison.
Solutions must be sought for the real world. Those who have been guilty cannot be permitted to return to their domain to continue as they have done in the past; new rules with enforceable check and balances must be imposed, and no more nonsense of paying phenominal bonuses for taking perceived risks. Gambling is not the way that the system should be run.
A few questions; What happened to the insurance from hthe hedge funds?
Why should the taxpayers pay to save banks and businesses that have already been beneficiaries of profits on
the back of bad debts?
Why should future generations pay again for the deliberate abdication of responsibility by the financial and
business players?
Answers may not be readily forthcoming but they must be found. The world is waiting because the free market brigade and others have yet to acknowledge that the hymn sheet was wrong and that mammon is a false god. The world awaits a new beginning.