Friday, 9 May 2014

Brief comment on Barclays and bonuses

We all remember how Barclays` CEO, Anthony Jenkins, justified his action, when announcing 10% increase in bonus payments for many of its investment bankers, despite profits falling sharply. He said it was because the "best people" had to be prevented from defecting to rivals, and a "death spiral" had to be avoided. Now we read of thousands of job losses, including 8000 from the investment sector.  Surely this is bad economics? With its "investment bank income falling by 28% in the last quarter", Jenkins could have saved the bank billions by awarding no bonuses, and watching as thousands deserted ship, thereby saving millions more on having less redundancy payments! 
   The truth is, of course, the public is being conned by bankers and big business in general into believing these people deserve obscene wealth for their "socially useless" work. "Death spiral"? As if. There is no evidence showing bankers move banks if not given outrageous bonuses, and even less showing them leaving their luxurious and tax-friendly lives in London.

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