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Cheers - AE

Sunday, 15 November 2009

The state and your pay packet.

You're my bitch now, right? This fist is going right up your arse.

Just in case you thought that the terms of your employment, particularly in respect to how much you get paid and what the bonus structure is, was pretty much between you and your employer it's worth knowing that the government has other ideas.
Bankers who are paid “unjustifiable” multi-million-pound bonuses face having their contracts ripped up and their banks fined, under new legislation to be unveiled this week.
The new rules, which critics are likely to suggest amount to a State-enforced “incomes policy” for banks, will be contained in the Financial Services Bill to be announced in the Queen’s Speech.
The bill will give the Financial Services Authority (FSA) the power to cancel bankers’ contracts to prevent them receiving payments that it believes would cause instability in the financial system.
This would be the same FSA that handled the British side of the financial crisis so well, yes? The same FSA that ensured that Northern Rock didn't buy up a load of bad debt and made sure that healthy banks weren't brought down by buying up ones with toxic assets, right? The same FSA that... oh, who am I kidding? We all know they were hopelessly inept and were as much use as a chocolate teapot. Are we seriously expected to believe that they'll be any better at intervening and overruling salary and bonus packages for bankers? Do me a fucking favour. What will happen is some arbitrary lines will be drawn, some drones at the FSA will override a few contracts that exceed them until the banking sector get the message and they'll pat themselves on the back for preventing
bankers receiving bonuses that it believes are too high, or cancel remuneration packages that it thinks reward undue risk-taking.
This will 'work' right up to the point that it suddenly doesn't, because in reality it will never have worked at all. Sure, dangling a big carrot in front of bankers is going to encourage excessive risk taking among a few, but the other side of it is that taking risks apparently has no downside up to now because of the widespread perception that the government would bail them out. And as we all know they turned out to be right. The Rock was rescued and the state owns a significant chunk of Lloyds-TSB and RBS. Has the government any intention of tackling this? Of course not. That would be sending the message that they were wrong to bail them out, and besides it's only money after all. Whenever you want more you can simply tax the proles right now or just borrow or print money (which is kind of just taxing the proles in the future instead). Doesn't matter how much the fuckers are paid, as long as that safety net is there, or they believe it is, there's no downside to risky lending. Unfortunately this particular elephant is unlikely to be dealt with as long as things are being driven by the politics of envy.

But aside from the issue of putting this in the hands of a regulator that has already succeeded in regulating but failed spectacularly to make any difference and aside from the apparent unwillingness to rule out future bailouts there's another point. What the hell has it got to do with the government anyway? Not satisfied with minimum wages they're now talking about maximum wages for certain people. Today they're talking about bankers, and that might well be popular with the downtrodden masses if they're not thinking about the precedent it sets. Today fat cats, tomorrow it could be you. It's also hard to see how they're going to reconcile maximum wages with the 50% tax rate. Won't the fat cats pay less tax if there's a ceiling on salaries and bonuses? And doesn't this in turn mean that the government has a disincentive to set the limit low enough to do much beyond avoiding headline grabbing 'Fred the Shred' packages anyway? It strikes me that this is just another badly thought out policy that will make the bruvvers and sisters happy but will encourage a few more of Britain's wealth generators, already unhappy with the idea of having to hand over the lion's share of what they earn at gunpoint, to give up on the country and fuck off somewhere else. Look, I'm as envious of fat cat salaries as the next man, but only to the extent that I wish I made that kind of money. I can't see how driving them out of the country through a combination of taxation and intervening to override whatever contracts they negotiate with their employers does anyone any good, and I sure as hell wouldn't want the government to start doing it on my behalf. Doubly so when the idea comes from a politician who re-designated his main residence four times in as many years so as to milk the MP's allowance for personal gain - all within the rules of course, the cunt.


JuliaM said...

"Are we seriously expected to believe that they'll be any better at intervening and overruling salary and bonus packages for bankers?"

Well, no. But this is a government that never misses a chance to be seen to be doing something, even if that something is clearly going to miss the point by a country mile...

This is purely so that, when they are addressing their die-hard voters come election day (in the front parlour of someone's small terraced house, or a phone box, if they can find an unvandalised one) they can claim to have 'stuck it to the fat cats'.

All the while hoping that no-one there is so uncouth as to point out that they are the fattest felines on the block...

Angry Exile said...

True. It is the usual politician's error of, to paraphrase Sir Humphrey Appleby, mistaking activity for accomplishment, which in a way means that we really are expected to believe that the FSA will somehow work properly on this, no trust us, really really it will. And the usual class envy thing of course.

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