"Held Hostage by the City's Bankers"

There's no point in going on about the excessive profits and out-of-control bonus culture in investment banking. The title is that of an editorial in Saturday's Financial Times. Put simply: to avoid any pain to bankers having to pay the one-off 50% tax on bonuses imposed by the Chancellor, many banks will simply increase the size of the bonus pool. As the editorial notes, banks seem increasingly to be run for the management and not the shareholders. So come on major shareholders, start using your powers, get these people under control. They are not as irreplaceable as they think.

Hubris and nemesis are inseparable.

Falling on swords

On a day when it is reported that RBS will post the biggest loss in Britain's corporate history and when its share price plunged 67%, the government increases its stake to 70%. Where are the swords, the shame, the apologies?

Mr Elster writing to the FT at the end of last year spelt it out:-

"Sir, I am deeply saddened to find that my newspaper of choice for more than 30 years is indulging in the same shabby rewriting of history as our prime minister. One expects this from politicians, not from the FT.

Your editorial "Why free markets must be defended" (December 27th) is grossly disingenuous (not to mention over-simplistic). To say that "incompetence, and is some cases outright fraud, had grown so quickly that by the time market participants woke up to the problem, the entire financial system was threatened" suggests that nobody saw the problem coming. Of course they did. I suggest you read some of the brilliantly prescient articles written five years agao by your own journalists, some of which you have featured recently in advertisements for the FT.....

The fact is that we failed to protect the financial system in the same way we have failed to protect so many valuable components of our society because of complacency, lack of accountability and the failure to attach value to anything. Opportunism, recklessness and fraud were bound to fill the vacuum this created.

That large numbers of people in the financial sector have made huge amounts of money while acting irresponsibly, recklessly, incompetently or dishonestly is beyond doubt. That huge numbers of "little people" are now going to pay the price for this is also beyond doubt. That this should not have been allowed to happen, and that politicians, bankers, regulators, economists and bit players such as financial journalists (with a few honourable exceptions) have been complicit in what has happened, is also beyond doubt...........

What has happened is rooted in incompetence, recklessness and criminality of such grotesque proportions yet of such a simple and obvious nature that to suggest this was a complex and unforeseen failure of the market is a gross and self-serving distortion of the facts....."


And more tempered but equally accurate:-

"Last week, Rowan Williams, the Archbishop of Canterbury...called into question many of the assumptions business leaders and financiers have made over the last two decades. He criticised the "endless spiral of accumulating wealth, which has nothing much to do with producing anything". He talked about creating "sustainable wealth", which supported "long-term welfare for populations" rather than putting extra noughts in the bank balance for [certain] individuals. We needed to consider wealth creation in terms of the well-being of society, he said."

Not too profound perhaps, but it needs saying.

Today's the inauguration. Let's hope for change, real change.