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I work for a US multinational that 20-years ago was a powerhouse but is now a basket-case. Despite presiding over record losses the senior management get paid many times more than their equivalent German and Japanese who are running successful all-conquering companies.

The much acclaimed "Anglo-Saxon" capitalism of the US and UK does not deliver when compared with the business and social models of Germany and Japan both of which of course are delivering huge trade surpluses for their respective countries.

The US and UK merchant bankers claim to be efficiently allocating capital in the economy. Presumably this should result in more efficient industry. However, what do these bankers spend their bonus/salary on . . . . that's right, German or Japanese prestige cars or electronics.

The economies from which they accrued their wealth can no longer make the goods to which they aspire. A stinging indictment of the failure of their policies I would suggest.

Capitalism as practiced by the UK and US may not be the "least bad system" after all.

Modern Western (anglo-saxon?) finance is a scam, in which a massive transfer of wealth has been organised from taxpayers, pension fund investors and those foolish or unfortunate enough to have borrowed heavily to buy overvalued houses to the insiders running the brokers, banks and fund managers. The "heads I win, tails you lose" contracts with which they pay themselves have allowed massive payouts, even as the parent companies head towards insolvency. The remuneration of senior executives is structured in a very similar way, through the use of options schemes. Such unbridled greed creates a highly unstable system, which is now in the early stages of destroying itself. Expect more bank failures, more funds stopping investor withdrawals, property market falls and, in due course, government defaults as well.

Its not every day that a financial story comes along, upon which the combined readerships of the Investors Chronicle and Socialist worker can wholeheartedly agree.

Cut those figures any way you like and they still look silly. For example, if the bankers were to pay their shareholders back out of their own pockets, they would still be slightly more than twice as well paid as the average American household.

But it would surely be too simplistic to note that the banks' 190,000 staff paid themselves almost exactly the 2006 GDP of Bangladesh (pop. 150,000,000)

The amount that Bankers get paid for doing a poor job is just daft. The fact that the FSA allows the Banks to do daft things, allows them to pay stupid bonus's and has no bonus claw-back procedure for deals that turn out to be flawed is outrageous.

I would suggest that Bank employees should be rewarded in Share Options, which mature over a number of years and that the regulators not only put a cap on bonus payments, but also stop bonus payments on multi-year deals until the deal has totally matured.
The whole area of pay just re-enforces the image of fat-cat bankers talking the rest of us for a ride.

The amount that Bankers get paid for doing a poor job is just daft. The fact that the FSA allows the Banks to do daft things, allows them to pay stupid bonus's and has no bonus claw-back procedure for deals that turn out to be flawed is outrageous.

I would suggest that Bank employees should be rewarded in Share Options, which mature over a number of years and that the regulators not only put a cap on bonus payments, but also stop bonus payments on multi-year deals until the deal has totally matured.
The whole area of pay just re-enforces the image of fat-cat bankers talking the rest of us for a ride.

Who are the big shareholders in these banks? Pension funds and other institutional investors, I presume. Why in the hell aren't the managers of these funds exercising their rights and reining in absurd boardroom pay packages and huge staff bonuses in this loss-making year?

It strikes me that the top employees of these banks have become far too powerful for the good of the shareholders or for the rest of us making living in the general economy.

The City adds no value. There is no evidence to suggest that it has delivered a generally better economy for the UK by efficient capital allocation.

The City can take more when markets are rising and returns are high.

In the low inflation environment, the City has been in the game of miss-selling risk in order to generate apparently higher returns.

Think endowments, pensions, split capital and now mortgage bonds.

I feel the City is our generation's equivalent of the First World War - it has sucked in the best and brightest of our people and their lives have been worthless.

If you work in the City you should be ashamed of yourself. Go and get a job where you can add value and be proud of.

I agree with the sentiments expressed by DR Jones (#1).

Recalling an article from over 15 years ago, which pointed out that directors and senior managers in American companies were paid in ratios running into the thousands compared to the lowest paid workers in their organisations.

Whereas Japanese company heads were on average only paid between 30 to 40 times what the lowest worker got.

People like Jim Sinegal (Costco) are very much the exception in todays US Corporate environment - the rest appears to be unmitigated greed - which unfortunately has crossed the Atlantic - re the managers snouts in the trough at NR as it sinks beneath the waves.

The execs concerned should all be dismissed for their greed and foolishness. Failing that the shareholders must table a no confidence vote and get them out that way. They need to understand the untold harm they have done both to the economy and to individual shareholders many of whom are pensioners,

From now on their contracts must be altered to clearly defined performance related. The boards of these banks need to act now.

Well said. When Merill Lynch boss got what he got for quitting it was clear that the other's too would be handsomely "compensated" sub prime or no sub prime. Long live "Laisse fair".No wonder than Tony Blair has joined JP Morgan. Who knows how much he will be paid in 2008 for his Mid East intiatives by Jp .

The sub-prime fiasco only damaged one section of these Investment banks, the rest made good profits. But the crises has damaged the whole of the bank so they probably need to review their policies on handing out bonuses which reflects the success of the bank overall rather than individual business sections. The new merril lynch CEO has been talking of taking these steps

As an ex-banker, it's worth pointing out that for all the talk of big bonuses, these aren't cash payments. You don't get the cash dropped in your bank account (if you did, then you'd pay 40% in PAYE).

Bankers get paid in the shares of their bank, and other similar means, and often you can't touch the money for years, it's locked up. The shares of all these banks have plummeted this year, so last year's bonus has probably halved in value already.

To continually blame the investment banks for the problems of the economy is naive and shows either a lack of understanding of the financial markets or someone protecting the politicians who are actually responsible for ensuring that economy does not face any major difficulties.

The banks although ridiculously greedy they are private business whose aim it is to make money for the stockholders. Although they have lost money this year they have milked every penny out of the markets over the last 10 years and are still handsomely in profit. They have done very well at this and the reason they are being paid these bonuses is quite simply that if they are not paid they will move to a competitor who will.

The real problems that are hitting the economy is stagflation cause by a Politicians sitting back and enjoying the benefits of rapidly growing bubbles in every asset class, from equities to housing, without asking themselves what is happening. Their regulators did not regulate and they (allegedly) handed one of the most important tools for controlling the economy, interest rates, to a select group of academics and businessmen rather than take the blame when things go wrong.

They now know the last bubble has burst and they are blaming everyone else for the disastrous recession that they are about to drag us into. We are facing stagflation with rampant inflation (why has Gordon Brown all of a sudden decided to offer the Public Sector 3 year pay deals) and shrinking economy.

Instead of owning up and taking full responsibility in much the same way they took full credit when things went well (yeah right they are politicians after all) they are blaming the investment banks that took full advantage of the governments lax regulations and low interest rates. I full expect private organisations to take advantage but it is up to the regulators to stop this happening.

The most infuriating thing is that people rely on information from major new sites such as the ����ý to explain exactly who is to blame. So why is this not being done?????????

Banking , take from the poor and give to the rich, these guys get paid big bonuses by encouraging the rest of us to live in debt.
Even when they make some bad deals they still get a good bonus.Bonus schemes are responsible for the current credit crunch and dare I say it the recession which is here but everybody does not want to acknowledge.
Good concept take the money off the rank and file and then charged them interest at a high rate when they want to borrow it. Simple rule don`t borrow money let them rot with it in there hands.

Reasonable people will be infuriated that these bonuses are being paid, in spite of the damage done to our economy by the banks and their lending strategies.

As always 'the professions are conspiracies against the laity'.

My only hope is that the people receiving these bonuses will have invested in property and equities. However, with so much spare cash they will never suffer the hardships of the average workers in this country who end up losing their homes and livelihoods.

This has nothing to do with performance-related pay or the need to retain highly skilled experts. It's just about greed and a kind of cronyism any civilised society can well do without.

And I'm sure the same thing will happen here in the UK..

However - and it's a significant however - the Americans still have some of the most powerful and innovative engineering and technology companies on the planet and continue to create new ones.

But we don't... and it's that which really galls and makes the bonuses system and the people involved here even more repulsive.

Great Stuff. Brilliant article.

It is now so obvious that Markets cause a polarisation of humans into two opposing groups - the rich and the poor - that I am wondering when the Tony Blairs of this world, who lauded The Market as a force for good that would lift eg. Africa out of poverty, are going to come clean and admit their mistakes.

The market cap of GS has increased by approx. $32bn over the last 5 years. Maybe they're working on the princple that its worth retaining quality folk and it would be rash to lose people for the mistakes of a few on their mortgage and fixed-income desks? Would seem counter-productive, no?

As for the "rest of us paying", its difficult to see how Robert Preston can possibly empathise with those of us who have jobs that are actually at risk from the current malaise rather than being employees of a pseudo civil service organisation.

Well the oxford dictionary states.

bonus

• noun 1 a sum of money added seasonally to a person’s wages for good performance. 2 Brit. an extra dividend or issue paid to shareholders. 3 an unexpected and welcome event.

— ORIGIN Latin, ‘good’.

Can they explain what tangible good they achieved that justified any bonus being paid. From where I'm standing I would say a dismissal for exceedingly poor performance is more appropriate.

to #8... good! - let's call that 'market forces'.

to #9... a job for the history text books - or the voters in 18 months time. Actually, you gotta ask yourself where we really are when the 70,000 back room police staff get the full 2.5% back dated to 09/07 while the front line 170,000 only get 1.9%... and all in the name of curbing inflation! JOKE! ...but on whom one may ask.

The USA is gonna go with a Bush plan that can't mention the 'r' word (that's recession to you and me)...halhaluha.

When Bush and Blair(Brown) came to power, the World was (reletively) terrorist and war free. Our economies where prosperous and debt free. Our personal freedoms both obvious and accepted.

We are now at a point where the World wearily anticipates the next terrorist act. Wars are ongoing and so no longer news worthy. We have never been more personally or publically indebted as we are now (that's from surplus to cronic defecit in just 8 years) and all in a so called BOOM time. And as though to offer it as the cure-all-panacia, our government strives daily to role back our personal freedoms - all in the name of 'protecting the public' from International Terrorism... that monster they themselves hold the greatest responsibility for creating.

Is there a remedy?
Dunno... but if you got a revolution - I'm buying.

Having worked for two US Investment Banks, your article brought a wry smile to my face. I once sat next to a team of three proprietary traders (think 'internal hedge fund') who had been head-hunted at vast expense from a rival bank. To hire them, including signing-on bonsuses and headhunter fees cost $5 million. The first year of employment they made the bank $12 million, for which they were paid $6 million. The second year they made a catastrophic bet on short term Russian debt (guess the year!) and lost the bank $25 million. At which point they were head-hunted by another 'human capital' hungry bank, no doubt for another fat guaranteed package. The cost to my employers over the period they strutted our trading floor was well over $20 million, and that's ignoring the opportunity cost of the vast amounts of capital they absorbed (and wasted) while employed. I've watched their careers with interest ever since. Still moving from one bank to another, now vastly rich, their over-inflated reputations remain totally at odds with their very ordinary, quite possibly net negative, performance. Just one example of the gravy train that is investment banking. And yes, the last time I saw one of them he was - you've guessed it - in whispered conclave with a headhunter! And on, and on, and on......

Surely this is illegal state support favouring the two bidders left in the running? If the rumours are to be believed, a major UK high street bank would have been willing to rescue The Crock before news was broker of its diring funding situation. The talks apparently foundered when the government refused to continue supporting Crock's balance sheet after that acquisition.

One humiliating bank run, billions of pounds in extra government subsidies and several ruined reputations later the government seems to have now backed down. Favouring the vulture-like hedge-fund shareholders at the taxpayers' expense.

I thought you might find this interesting

We all know who the losers are in the subprime meltdown: shareholders of Citi, Merrill, Countrywide Financial, etc. One of the winners is profiled below, a hedge fund manager who made $15B (keeping $3-4B himself!) from the bursting subprime housing bubble.

WSJ: Trader Made Billions on Subprime
John Paulson Bet Big on Drop in Housing Values

By GREGORY ZUCKERMAN
January 15, 2008

On Wall Street, the losers in the collapse of the housing market are legion. The biggest winner looks to be John Paulson, a little-known hedge fund manager who smelled trouble two years ago.

Funds he runs were up $15 billion in 2007 on a spectacularly successful bet against the housing market. Mr. Paulson has reaped an estimated $3 billion to $4 billion for himself -- believed to be the largest one-year payday in Wall Street history.

Now, in another twist in financial history, Mr. Paulson is retaining as an adviser a man some blame for helping feed the housing-market bubble by keeping interest rates so low: former Federal Reserve Chairman Alan Greenspan. (See article.)

On the way to his big score, Mr. Paulson did battle with a Wall Street firm he accused of trying to manipulate the market. He faced skepticism from other big investors. At the same time, fearing imitators, he used software that blocked fund investors from forwarding his emails.

One thing he didn't count on: A friend in whom he had confided tried the strategy on his own -- racking up huge gains himself, and straining their friendship. (See article.)

Like many legendary market killings, from Warren Buffett's takeovers of small companies in the '70s to Wilbur Ross's steelmaker consolidation earlier this decade, Mr. Paulson's sprang from defying conventional wisdom. In early 2006, the wisdom was that while loose lending standards might be of some concern, deep trouble in the housing and mortgage markets was unlikely. A lot of big Wall Street players were in this camp, as seen by the giant mortgage-market losses they're disclosing.

"Most people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond," Mr. Paulson says. "Mortgage experts were too caught up" in the housing boom.

In several interviews, Mr. Paulson made his first comments on how he made his historic coup. Merely holding a different opinion from the blundering herd wasn't enough to produce huge profits. He also had to think up a technical way to bet against the housing and mortgage markets, given that, as he notes, "you can't short houses."

Also key: Mr. Paulson didn't turn bearish too early. Some close students of the housing market did just that, investing for a downturn years ago -- only to suffer such painful losses waiting for a collapse that they finally unwound their bearish bets. Mr. Paulson, whose investment specialty lay elsewhere, turned his attention to the housing market more recently, and got bearish at just about the right time. ...

I think in most businesses the financial advisors give their views and then... if you have any sense.... you usually ignore them.

The people responsible for building businesses do invariably understand them better than financial advisors…surprising as it often seems to those people.

The problem in the financial and banking markets is the financial advisors seem to end up advising each other... without any apparent moderator.

The idea in the article, that not only might the financial industry be prone to systemic errors; but the pricing of risk; and also the reward for failure, is mismatched.—may be because the lunatics are really running the asylum.

So in this madhouse everybody can receive massive cash bonuses for dismal failure--- while it is people in the real world that carry the can and start getting turfed out of their houses, jobs and lives as a result of that failure.

There seems a complete mismatch of reward, punishment, fairness and balance so I am going to suggest a solution may be to try a reverse application of the same --- to start with simply take any Bank or financial institution that "fails to perform" and sack 1/10th of the executives and take 1/10th of the previous year’s total remuneration from the remaining executives and allocate it to deserving causes.

The executives to be sacked can be selected by any random process that pops into the mind of the regulating body at any time and the above percentages can be varied on a whim.

The committee making up the regulatory body will be changed each time and be formed from the nearest bus queue each time, and the definition of "fails to perform" will be decided anew each time -- no reference to any past criteria or cases will be necessary.

As a way of introducing ‘checks and balances’ into the system; this is obviously an unfair , illogical, dreadfully unbalanced, nastily punitive, and totally random, non-system open to enormous abuses and manipulation--and as such I feel is entirely suited to purpose as it entirely mirrors the present non-system in place in Banking and Finance for allocating reward.

It just goes to show that the financial sector dependance we have in the UK is an unsutainable mess which effectivly allows unscrupulous bankers to gain control of the whole country. I dont see how capitalism has helped our country. Whilst I accept that markets must play a role in determining prices, the idea that individual greed helps the country as a whole is just plain wrong in my mind. Why should the majority be happy with the change that falls from rich peoples overflowing pockets when it is us who have helped to fill them!?! The trickle down effect doesnt work, end it now!

I think people are too quick to judge the investment bankers. They are just playing by the rules and doing what most humans do - optimise their benefits.

However, the system should be designed so that this greedy instinct leads to the most efficient system possible, and it seems to me that the current system is far from ideal.

For example, in the city there are lots of genuinely talented (and i'm not being sarcastic) people working in the city competing against each other. The recent crisis has brought winners and losers. Maybe the winners were just smarter. Maybe the winners just got lucky. Probably there is an element of both.

Whatever the reason it doesn't mean that the losers were totally useless. Society would probably have been much better off if the losers had applied their talents to something else.

Add to this the fact that the turmoil is entirely manmade - nothing majorly unpredictable happened recently. No comets colliding with earth, no plagues, no majorly unpredictable world wars. So humanity, through its own man made system, has just thrown thousands of smart workers' time after nothing (and probably hence also the poor allocation of other physical resources that goes with the poor investments that have been made).

So why do we believe that the system is actually efficient? Time after time we have crashes, and each time new regulations are introduced, but people still say that the market system is as close to ideal as realistically possible.

What worries me more is the people who then kid themselves that some ideas of capitalism are sacrosanct and undeniably lead to improved standards of living.

What we have at the moment may be better than communism but it doesn't mean that it is flawless.
If we don't acknowledge its failings then we will not be able to combat them effectively.

This whole crisis is a big lesson in the following: competition is opposite to division of labour. Competition is necessary to motivate lazy indivuduals. But division of labour is just as important. We've just wasted a huge huge huge amount of physical resources and human talent.

Its just a total a waste. Think of all the productive work all those whizzkids could have been doing.

Yes, it does seem very wrong if the net Wall Street bonus pool was larger than last year, and yes, it is unacceptable for boardroom bosses to receive huge golden handshakes for abject failure. The latter should certainly be addressed by shareholder action.

However many of the other points that have been made here are very unreasonable. Firstly most of the people receiving bonuses this year will have been working in other areas of banking (equities, currencies, mergers, whatever) that have produced value for their shareholders. Secondly, it is not as if banks have managed to lose more than their combined profits of the last 10 years - many will even show a profit for 2007. Are banks responsible if the economy slows? Does that mean they take credit for it growing then?

To those who think the City adds no value, are you sure the UK could do without it? The greedy bankers pay billions in tax which builds schools and hospitals. The greedy banks profits go to shareholders - a lot of it to pension funds i.e. pensioners. Presumably you think estate agents, lawyers, footballers add no value either, so the only job allowed should be farmer or doctor?

To those who think this shows 'the markets' clearly do not work, does that mean we should be using the 'proven' system of communism instead? I know it's easy to hate investment bankers, but trying to come up with a sensible system involving no trading of loans, shares etc i.e. no investment or borrowing, is not easy. No one could buy a house or start a business. And once you have this trading, how can you expect banks not to wage compete for the people who are best at it? If these banks constantly just pay insane wages in return for huge losses, then why over the long run are they such profitable companies?

Regulation and shareholder action is the answer, not knee jerk abandonment of all market forces!

The best thing that the citizens of the UK, or possibly subjects of Her Majesty is a better phrase, could do to stop the pillage of their hard earned cash by irresponible bankers and uncaring governments, is to make sure that they learn about 'money'. A good start would be to
research 'fractional reserve banking' so that they can at least understand that banks are the last place they should be 'investing' their money.

Robert Peston, with “Bonkers bankers’ bonuses” is raising a problem which is getting wide discussion at the moment, including a good piece in the FT by Martin Wolf on 15 Jan. Namely the fact that certain employees are allowed to participate in extremely risky and volatile business on a “heads I win, tails you lose” basis. And who loses? Well, in the case of banks it’s everyone, when we have irrational exuberance and its aftermath. But most specifically it’s the shareholders of the banks who, as has been pointed out in earlier posts, are ultimately most of us in some way through our pensions.

Quite a few of the posts above boil down to moans and despair. “Something must be done”. But what? In our society, those with power over the incentives given to key employees in the financial sector are the shareholders. But most of the shareholder power, apart from the fast increasing and substantial proportion of shares which are owned by non-nationals, lies with those who have been entrusted the management of our savings. If those with the shareholder power don’t exercise their responsibilities as owners, nothing will change. If our politicians understood the mechanisms better, it wouldn’t be impossible to encourage some subtle changes. Heavy regulation rarely achieves only the desired end, and often not even that.

“If you don’t pay them a lot, including big immediate bonuses, they will leave”. Should we accept this argument? Not necessarily, would be my response. Stop and think for a moment about personality types. Who do you want to look after your savings – someone who is motivated by and needs vast and immediate riches as a badge of self-worth, or someone who, whilst still very well paid, is motivated much more by the job of simply being a good steward? Does an intelligent shareholder really want a “high flier” to manage and lead the businesses in which he invests? What if “high flying” is totally at odds with leading an organisation as one coherent team? I suggest that if you look at the really successful leaders you will find people who are motivated to do the job for its own sake rather than for obscene levels of wealth. And as regards good long term returns to shareholders, I’m not at all sure that the best place to find them is in industries where there is a culture of prima donna or “rainmaker” employees. Such businesses are better structured as partnerships rather than joint stock companies.

I don’t at all go along with the suggestions in some of the posts that managers should be rewarded with share options. They are another example of “heads I win, tails you lose” and are dilutive for shareholders. Given that the motivation for granting them has simply been to find a way of enriching senior execs without having to really admit it, I think of share options as a form of legalised theft. Far better for these high risk businesses (a) to subsidise senior managers to spend part of their cash bonuses buying shares in their company in the market on the condition that they keep them for a long period and (b) to keep back most of the current profits which would otherwise be distributed to staff and put it into a pot of which only say 20% is paid out every year – but with the understanding that future losses could easily wipe out the pot. In other words, less excitement, more fear of loss, more responsibility to the team, more of a stewardship mentality.

Back in 2004, a report entitled “Restoring Trust” was published by the Tomorrow’s Company organisation. A brilliant exposition of the conflicts which need managing within our system of wealth creation, the report itself is not freely available, but you can find a speech which covers the ground by doing a search for “restoring trust speech by Sir Richard Sykes”. Its conclusions have since fallen into the long grass and it needs resurrecting.

Even further back, in 2002, Robert Monks, together with another Sykes wrote a piece entitled “Capitalism without owners will fail: a policymakers guide to reform”, and a web search will also locate this document.

Martin White

The key point to note is not that these individuals are earning ridiculous amounts of money (irrespective of whether you think it's a good or bad thing), but whether people have the opportunity, skills or access to achieve the same thing.

This would be a better indication of a meritocratic society.

So can someone tell me how I can get on this gravy train?

To those objecting against large bonuses...

Step 1) I work hard through school obtaining 12 A* GCSE grades.

Step 2) I decined the option to finish my education at 16 and proceeded to obtain 5 A grades at a-level.

Step 3) Having declined again the option to finish my education, I proceed to a top tier university and graduate with a high first in and a string of academic prizes.

Step 4) Having obtained a place at a top uk hedge fund, a mere three years out of uni I create a volatility trading algorithm that is profitable to the tune of several million. For my achievements I receive a bonus of only 10x the natinoal average salary - given the value add, i'd argue that i'm underpaid but doubt you'll see it that way :)

In personal income tax alone I have generated more than six figures for the uk economy this year. Looked at another way my tax bill has generated 4 trainee teachers, 3 trainee doctors or 6 graduate nurses.

For the endless drones moaning about the size of my bonus I counter with the following..

1) If you're simply jealous (a camp into which the majority of posts appear to fall), may i point out that you are perfectly entitled to apply for any of the jobs that offer 'excessive bonus' potential. I've worked hard and pushed myself to get where I am, perhaps you need to push yourself more - we create our own luck.

2) If you claim that I create no value for the economy, please see quantities of doctors / teachers / nurses above. I will continue to create key workers for years to come, what have you done this year?

3) It's not all upside. Once good friends can struggle to see past the many multiples of their salary that I now earn, as indeed do many of the bloggers above. It can be lonely at the top - but at least you won't be lonely at the wide part of the bell curve.

Regards

I never cease to be amazed (as a retired "City Banker" of 16 yrs service) at the stunning lack of general understanding of finance, what the City of London contributes to the U.K. and the continual illusion of the mythical City stereotype.

1.) The majority of bonuses are in shares of the company the banker works for - if the bank's shares go south, the bankers lose money too.

2.) If you leave the bank and job hop you lose a large percentage of your last "x" years share bonus.

3.) In my experience you had absolutely no (zero) job security. You are only ever as good as your last trade.

4.) Make no mistake no company pays you a large salary for no good reason. The CEO of a bank is incentivised to cut salary overheads and pay a bigger dividend to shareholders. Just working in the City does not change this fact of life.

5.) The sub-prime meltdown is just another one of the inevitable financial crisis' of a global financial system.
Nobody seems to remember the pain of the crash of 1987, Brazilian debt crisis, Mexico crisis, Russian debt crisis, Japanese economy stagnation (still struggling), Far Eastern Tiger economy crisis, U.K. EMU crisis, e.t.c. They all affected the U.K. economy. If you don't want a crisis then hibernate from the global marketplace.

Perhaps a better solution is to seek better ways of adapting to the inevitable strains placed on national economic & financial systems from time to time.

5.) Over 16 yrs I, on average, got up at 5:00 am to get to work and got home at 8:00 am - a minimum working week did not exist - you got to work when it was needed and you left when it was over, overnight if necessary. If travel for work was needed it was done on weekends - (weekdays were for work not travel) - I worked hard, dealt with a hugely stressful environment that was inevitably unhealthy, and missed a lot of my young family's life. I may have been one of the "lucky few" who got well paid but your employing bank gets its pound of flesh too.

In my experience very few people were cut out for the strain regardless of the money. I lost count of the people burnt out, ill, or made redundant over the years.

Despite this it was entirely my choice and I ask for no special treatment or sympathy (keep that for the NHS nurses who truly need it). However, please, please don't talk nonsense about the City unless you have the faintest clue about what it does and the array of different jobs and functions that are performed. Surprisingly perhaps not everyone works with mortgage debt!

I assume there are just as many saints as sinners selling the Big Issue, or working as High Court judges, as there are working in the City, but what I don't assume is whether those people working outside the city derserve their lot or not - because I don't know enough about them...

Judge others by what you truly know, not speculation and least of all media hype.

Its good to hear some people standing up for huge bonuses. Not least as it shows what a mad world we live in. Plenty of people get up early, slave through school and university, get good grades and then either choose a career that doesn't revolve around money or live in an economy with few job prospects.

In the industry I work in I once saved our business around 20 million $ for which I got approximately nothing and would hope that would be the case for the majority of folk (especially the public sector who should be stewarding our funds). A mindset in which bankers are entitled to skim off any returns flies in the face of protecting stakeholders. The worse thing is seeing how UK shareholders put up with the nonsense of laissez faire capitalism.

Bonus Potential, post 33: I'm afraid I have to disagree with you strongly.

I don't want to judge your individual case, or the size of city bonuses in general.

Indeed out of personal choice I nearly went to work for a hedge fund last year, and might go to work for one next year if my first career choice fails. But whatever I do I would be kidding myself if I used my tax payments, or the money I might save my employers, as a flawless indication of value to society. It all depends what my employer's ultimate business is.

I'd like to make an extreme example to make my point. Chess players are smart and work hard, and the best ones earn millions - completely honestly and completely openly. Then the taxes they pay are used to "educate" many doctors and nurses. But fundamentally all they have done is entertain people, and to some extent educate us about the limits of human computational power. The money they "earned" existed anyway before hand - and if it didn't, it would only have been created as a consequence of inflation in more important resources. Ok entertainment is important, but you can't argue that it is as valuable as the job of say, a farmer. In a war-like situation of tight resources, entertainment goes, farmer stays.

The point here is that money has flaws as an indicator of value because a single indicator of value will always be flawed. I don't mean that in a trippy-hippy way - I mean that with the most hard-nosed materialistic way possible.

So to decide whether your tax payments are really a good indication of your value, we would have to analyse precisely in what ways your hedge fund has contributed to the optimisation of society. That is a different debate, but I doubt it has been that worthwhile, whichever hedge fund it may be.

Tom, as you say, plenty of people get up early and slave through school etc, and then choose a career that doesn't revolve around money.
Yes, that is their choice. Just because they have chosen that path, doesn't entitle them to whine about others who have chosen a more profitable path eg banking.
Especially when they have no idea what that job entails, or its 'value-add' to the UK economy.

QUOTE: My old friend Hugo Dixon, the founder and chairman of Breaking Views, puts it rather brilliantly: “Marxism is a bankrupt philosophy. But its critique of capitalism – that profits are privatised but risks are socialised – always had an element of truth.”

Good to hear a little bit of lip-service from the other side, but what makes him so sure Marxism is bankrupt? The current City slump would suggest that Marx hit the nail on the head when he wrote about the "inevitability of crisis under capitalism." Not a bad shot at today's woes when you consider it was fired in the 19th century!

As for bankers being rewarded for screwing up, how many ordinary folk in our precious democracy have to stand up and cry "obscene!" before it gets put right?

It ought to be no surprise that bankers expect some kind of profit-related pay - plenty of other industries do the same to incentivise their workers e.g. estate agents, any kind of sales and so on.

It's illuminating to see some of the comments above from those who've worked in the City. Some seem to see the ridiculous hours and crushing of the rest of their life as somehow worth it if they end up with lots of pieces of paper with the Queen's head on at the end of it. I suppose saying otherwise might remove any kind of illusion that there is some good reason to subject yourself to that kind of b***s***.

I worked in Financial Services for 20 years, both in the City and elsewhere, but in IT - nothing in the world would induce me to be a trader, having seen the end results. So what if you have 10 million quid at forty - you've pissed the best years of your life away on something which is objectively worthless and you can't buy those years back again.

The whole system we live in holds up big cash as the worthwhile endgame and people buy into it without seeing the real cost. That's the tragic bit.