It’s a Crazy World

Everyone in UK is happy, we have 4 day weekend due to bank holiday on Friday and Monday. In Cyprus people were panicking because they have bank holiday for 2 weeks.

Now the banks in Cyprus are meant to be open, but they have currency controls. This means that the Euro’s in Cyprus are not worth as much as the Euros in other countries at the moment.

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Rewarding failure

RBS’s losses for 2011 could be reduced by 1/3 by withholding bonus’ due to the financial straits it is in.

Bank       % public ownership       Net income 2011      Bonus 2011-12
RBS       83%   £(1969) million  £ 780 milion
Lloyds   40%      £(2714) million  £ 300 million

Note numbers in nice brackets () represent negative numbers, so that is LOSSES of 2 billion and 2.7 billion.

RBS

Stephen Hester = £963,000 bonus alongside his over £1 million salary, bonus is based on 25% appraisal rating.
Staff = 4,800 jobs lost;
Shareholders = 40% wiped off shares (80% nationalised using borrowed money at approximately 3% interest rate).

RBS reported a 1.4 billion pounds first-quarter loss compared with a loss of 116M£ for the same quarter last year  largely due to a  £2.5bn change in the value of the bank’s debt. It was also forced to compensate customers mis-sold payment protection insurance at a  cost of  £125m.

Lloyds

Lloyds bonus is lower because they are not do not have an investment banking operation. Losses are large due to cost of ‘restructuring’.

Banks are lucky

Banks are lucky that they are the right size to ‘save’, as we remember, the banks were ‘too big to fail’. Which meant that when some of the banks became insolvent (bankrupt) all of the banks were eligible to receive welfare payments so that they could continue paying their bank clerks huge bonuses for doing the job they are already paid to do.

Now this week we learnt that it is also possible to be ‘too big to save’ like Italy, Spain and Portugal. These countries are too big to save if they get into financial difficulties, so we need to make sure it is possible to lend to them cheaply now just to make especially sure that they wont need to borrow money in the future.

Those banks sure are lucky to be ‘just the right size’ so receive state subsidies.

Guardian reports, only 1 in 25 business leaders may be a pyhcopath

According to guardian, http://www.guardian.co.uk/science/2011/sep/01/psychopath-workplace-jobs-study

and

http://www.guardian.co.uk/money/2004/sep/27/careers.theguardian

If you’ve ever secretly harboured thoughts that a colleague – or even your boss – behaves like a psychopath, you may be closer to the truth than you dared to imagine. A study has found that there are far more sub-criminal psychopaths – self-serving, narcissistic schemers who display a stunning lack of empathy, but are not criminally inclined – at large in the population than had previously been thought. Some even end up in managerial positions.

This is despite shift in the use of the diagnosis.
http://en.wikipedia.org/wiki/Psychopathy

Psychopathy (/saɪˈkɒpəθi/[1][2]) is a mental disorder characterized primarily by a lack of empathy and remorse, shallow emotions, egocentricity, and deceptiveness. Psychopaths are highly prone to antisocial behavior and abusive treatment of others, and are very disproportionately responsible for violent crime. Though lacking empathy and emotional depth, they often manage to pass themselves off as normal people by feigning emotions and lying about their pasts.

Do psychopaths make better bankers? Well they may be more successful ones…
http://2020speculator.wordpress.com/2011/06/25/banker-as-amoral-psychopath/

Here is example of banker who is at large, a banker in Brazil ran over a group of cyclists who were delaying him:
http://road.cc/content/news/31482-brazilian-driver-claim-self-defence-over-critical-mass-carnage-says-lawyer.

If we can find medical condition for bad bosses and bankers, does that make them innocent of any ill deeds they commit?

Bundesbank Press Release about Weber resignation.

For some reason I was reading press releases from Bundesbank it seems they have a sense of humour.

9 February 2011

Bundesbank denies rumours about Weber statement

The Deutsche Bundesbank denies rumours concerning an impending statement on the professional future of Professor Axel A Weber.

11 Februar 2011

Statement issued by the Deutsche Bundesbank

Bundesbank President Professor Axel Weber notified Federal Chancellor Angela Merkel today that, for personal reasons, he wishes to resign from his post on 30 April 2011 after completing the seventh year of his term.

Until then, President Weber will conduct his official business as usual and will attend all agreed appointments.

Tony Blair earns millions after leaving post as PM

According to article here: Business insider / Blair Kuwait Consulting Fees Tony Blair has received fee of $43 Million dollars form government of Kuwait for preparing report “Kuwait 2035”. Along with position of advisor for JP Morgan and other consultancy fees he may have earned as much as $5 for each of the 1 million dead caused by his illegal invasion of Iraq.

Tony Blair

Tony Blair

No news about Gordon Brown yet, but he made noises that he wanted to do Charity work, so expect to see him show up at IMF, UN, WWF, etc. He should have lots of banker friends after selling of most of UK’s gold at lowest possible price.

LIberal Doublespeak – paying more is paying less

http://www.bbc.co.uk/news/uk-11946112

http://www.bbc.co.uk/news/uk-politics-11947701

Liberal democrats are claiming that students who will pay more for their education in the future will be paying less.

Their argument seems to be that the longer you delay paying back a loan, and the slower you pay it back the better.

I’m a bit worried that politicians can make this argument so easily, I think this is the same way they think about borrowing on the national scale. At least on the national scale one thing they often seem to forget is that the cost of borrowing can change.

I think it is very disingenuous to claim that richer students will pay more for their loans because they will pay them back sooner. Also does this mean no one will have a choice but to borrow to pay for their education, will it be compulsory to take loans from the government, or will students be allowed to pay upfront if they have the money? Paddy Ashdown seemed to claim that no one will pay for their education (only pay it back later).

Did we enter the world of double speak?

If anyone knows where I can read the proposals for this legislation please let me know. Mr Ashdown suggested we should read, but didn’t say where.