Sunday, February 15, 2009

What De Long might call the London Times Death Spiral Watch

From a piece in today's London Times on bonuses:
It would be surprising if Brown did not meddle in this politically charged vote winner, but I suspect he’ll bungle it. These are migrant international workers and if Brown were to block pay-outs they would take their skills to other financial centres — if not now, then when the next upturn comes. ... Excessive interference would damage London’s status as a financial centre and stop financial innovation.

What planet does this guy live on? Note the language - "meddle" for the possibility of government acting for it's citizens against an oligarchy that has brought the entire nation to its knees. London's status as a financial centre is gone, my friend. And that "financial innovation" is leading us into what is now certainly the worst downturn since the Great Depression.

This is why the UK may be affected even more than the US: here the rot has set even deeper, an entire generation has internalized the nonsense spouted by the banking sector.

The compensation these people have received in the last few years was (i) out of all proportion to their contribution and (ii) a direct cause of behaviour that led to the crisis. The crisis will get even worse before it gets better, and if at the end of the day we end up with a utility-like financial system (see Canada), and a better balanced economy, so much the better. If at that point - after many trillions of dollars of losses worldwide and enormous distress - some people still want compensation of the kind that was available during the bubble and some country is enough of a financiers' oligarchy to offer such compensation, then it surely would be a good thing if these rapacious characters left our shores.


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