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"in the autumn of 2008 all big banks were just hours from meltdown"

Where do you get your lines from? What, ALL big banks? Including Barclays and HSBC and Standard Chartered who never took a penny from the government support schemes; they were 'just hours form meltdown' too?

This is sensationalist hype... clearly an attempt to resurrect the 'Gordon Brown saved us all' argument in an attempt to rescucitate his fortunes.

Have you read Mike Geoghegan in the Times today?
'The Government can’t spend more than it actually collects in taxes' This has become the bruning financial issue that newlabour fails to address again and again. Never mind the bankers; that's yesterday's news; we now have governments worldwide trying to prove they can go on spending more than they collect without serious economic consequences for everyone.

has anyone even attempted a debate about what would happen to the pension system if the UK were to be downgraded? Mass, instant destruction of value is the answer and another headache for someone else to sort out.

"It's a funny old world"(!)

It's fraud, corruption and theft on a mass scale is what it is. They've stolen more and terrorised more people than any conventional terrorists ever could. And this is their reward. Instead of body scanners we should be disarming these financial terrorists.

IT'S A ROBBERY!

Can anyone from Goldman actually explain how their 'moving fictional money around' does anything productive and produce profits?

NO NO NO NO NO - THEY CANNOT.

Why? - because when the working world finally figures out the bankers live off them they will want their 13 Billion back.

Still, on the bright side, Goldman, and other banks ignorance of this fact means they will continue to pay out fictional profits - which is unsustainable and is likely to see another bank fall and require a Government bailout.

Robert, you keep debating the pointless in's and outs of how their bonuses are broken down - but never ask the fundamental question "how did they generate them".

You won't look - for fear of what you will find....

The bankers are making more because they just take a cut off the top of all the money moving around.

UK and US are currently printing loadsamoney.

More money going round means that their cut off the top increases. Its simple really.

Lots of the money they are now loaning is being loaned to the government / taxpayer.

This takes a really special skill and justifies the salaries doesn't it.

Just two words: Legalised theft.

#3

Oh yes Robert don’t look at it, especially with your sharp (not!) eye, we are gripped by fears!!!

#1 rockRobin7
To some extent RP is correct. in his statement of ALL banks. If those who were very unsteady had gone under, then those who were more steady might have lost money that they had lent via the interbank market. Likewise, because of mark-to-market rules, any holdings of notes for those companies would have disappeared and more money would have been lost by the survivors.
However, to report that does not sound as good as a headline "All banks on brink of failure'!
The other thing to remember here is that the average is £500k per employee, so for every employee on £1million bonus, there is another on 0 bonus. Again, that does not make great headlines does it "Bank Employees Get No Bonus"
But now we will get the rabid and jealous screaming about how all bankers should be shot at dawn......

"Average take-home pay for Goldman's 32,500 permanent and temporary employees is a mere $500,000 for their performance in 2009."

What is the min and max there Bob?

Those figures are pointless as I will bet the peons are get a minimal amount.

We're all being robbed by the men behind the financial system and hoodwinked by the politicians who are still telling us it's ok for them to do it.

Whilst it's very interesting to hear how the 'Goldmen' are rewarding themselves, but lets look at how it all works?

The theory (the free market one) is that all market participants negotiate prices, and whilst some may get 'ripped off' and others 'cream it in' - on average these deals all find an equilibrium price - the market price.

Fair enough - but what about default?

If participant A takes a long position and B takes a short one - and it turns out A is right and B loses out - as the losses for B are limitless (an un-hedged position) then B is left with a bill he cannot pay and subsequently defaults.

The consequence of default means that either A goes without - and the price struck is not relevant in the price equilibrium (because it may have been wrong, we will never know) or some sucker Government (or scheme) has to cover the loses of B in order to maintain the equilibrium (which is no longer an equilibrium as the Government has supported it)

The consequence of this is that when defaults start to occur frequently during a recession, the price you see for anything is unlikely to be a price struck through price equilibrium - it's a false price.

In order for equilibrium to exist there must be an equal number of winners and losers - but in our Economy the losers simply fold their company, walk away and start again in 5 years time. The 'winners' can then become the 'losers' - through no fault of their own, but the defaulting of others who did not appreciate the risks they were taking.

This is also why free markets seem to function so well on the way up (or at least not so you can see it) and when the defaults arrive then the volatility goes mental - simply because the price struck is not reflective of the value of the instrument involved.

Lehmans were operating in a free market, finding price equilibrium with CDO's and other credit derivatives - which was fine on the way up. When the hidden risks came home to roost and the mortgage holders started to default the prices struck were shown to be false - they were struck too high and not just individual prices - the average (equilibrium) price.

An Economy based on false prices is a false Economy. False Economies tend to collapse - which is what ours is doing right now. The only time a free market model achieves price equilibirum is shortly after a recession - at that point defaults are tiny and do not affect the equilibrium price.

P.s. The Government made this 100 times worse with their invention of the IVA - it now allows personal default to be a lot less of a stigma. They had to bring this in because of the increasing number of bankrupts each recession - but the consequences actually contribute to making the problem(s) worse.


....but what do I know - lets leave it to the 'Economic experts' of this world who are strangely silent on market theories at the moment...

Just to reiterate my suggestion that, in the interests of cIarity, I think Goldmans really should change their first declared "Business Principle" as currently outlined on their website from:

"Our clients' interests always come first.
Our experience shows that if we serve our clients well, our own success will follow".

to:

"Our own interests always come first.
That is to say the interests of our Directors and of our Employees.
Our Shareholders interests come next.
And right at the end come the interests of our customers.
Well, no that's not quite true in fact. Right at the end come the interests of the wider society in which we operate, which includes government. Although when things go wrong for us we expect them to bail us out.
Our experience shows that customers should make up their own minds about all dealings with us, and be careful not to be swayed by any advice we give them, given that this advice will always be in our own interest".

1. At 3:27pm on 21 Jan 2010, rockRobin7 wrote:

"Where do you get your lines from? What, ALL big banks? Including Barclays and HSBC and Standard Chartered who never took a penny from the government support schemes; they were 'just hours form meltdown' too?"

....so you have all the full details of all the investments of HSBC, Barclays, SC etc which prove they had no exposure to any of the following

US Sub-prime
UK Banking / Mortgage sector
UK Commercial and retail sector
US Property (Commercial and Household)
Middle East property
Japanese Currency
Airlines
etc.

Do you know what these bank do for a living? - well let me enlighten you - they lend money, that's how they make money.

Now in an Economy where the demand has dropped like a stone - who are you going to lend money to? Where does your income come from?

I realise banks can simply 'print money' - but there are limits to this. Without the stimuli there would not have been a single mortgage taken out this year - and those banks would simply not be here because I knoew for a fact that if NR hadn't been bailed out / nationalised and the savings guaranteed then I would have closed my HSBC (and Barclays) accounts and put all the money under my mattress.

So a bank with no customers to lend to and savings flooding out - how 'stable' do you think they would have been?

I fear your comment is 'sensationalist propoganda' spurred on by those banks claiming they had nothing to do with all this.

....you will notice these banks in question haven't exactly been voiciferous making the same point you did - I wonder why....?

4. At 3:40pm on 21 Jan 2010, somebody_help

I have a theory for this.....it's called the 'thin slice theory'.

Many millionaires are made from this theory - where you get a large audience (even better if they're 'captive') and simply engage them in an activity which they can cream off a tiny (unoticeable) slice. The sum of all these slices make an absolute fortune.

This is what the Lottery is based on - the bankers are playing a free lottery game every single day - with our pension money.

Nice work if you can get it - which of course you can't - unless you're in the old boys club and went to Eton and did a near-irrelevant 'classics' degree.

It's not fair to generalise all bankers. To put it simply...I manage my shareholder's money through proprietary trading. If i make money on my trades, then i should be compensated for the profit i generate from trading the market and the stress i endure for making the call to trade. I think it's fair I should get a bonus if my performance is over and above the target set by my bosses. Not all bankers are living off tax payer's money...in fact, we contribute in taxes since our bank isn't one that failed.

#1 rockRobin7 wrote:

"in the autumn of 2008 all big banks were just hours from meltdown"

Where do you get your lines from? What, ALL big banks? Including Barclays and HSBC and Standard Chartered who never took a penny from the government support schemes; they were 'just hours form meltdown' too?

------------------------------------

Simple!..there would have been a domino effect!

...but if meltdown had been allowed to occur, all the oligarchs would have lost their investments...and if we'd had a Glass-Steagall type law...all the plebs would have had their bank deposits protected within the retail banking sector.

I am tired of the scaremongers who keep going on about the UK being "downgraded" by the credit ratings agencies. That'll be the same agencies who handed out triple A ratings pre-crash and played a large part in the financial mess we're in.

Bankers getting bonuses is obscene and they should be paying this money to the deficit they've caused, not public services. We can't be conned like this.

Based on the assumption that next year there going to be substantial tax rises.

And if you’re still in work, you’re going to get hit by these tax rises.

Now it’s possible that you have a mortgage.

And it is also possible, that because of the increased taxes you have to pay to fund bailing out the banking sector you may no longer be able to keep up with your mortgage payments.

So the banking system you have bailed out, now takes your house off you.

You’ve got to hand it to them, the sure no how to stick it to the average Joe & Jane don’t they. And whilst they have you over, they carry on paying themselves their bonuses.


Lord Mandelson to the P.M. late on Friday afternoon

‘As long as the sheep are bleating about class and education, they won’t hear the slaughterman loading his gun’

Sssssssshhhhhhhhhhhhhhhhhhhhh.........

Nothing going on here - move along....

"Lloyds cut more jobs"


"Jessops Liquidate"


"GM close European factories"


"FTSE ends down for the secongd day in a row, probably closely followed by the DOW"


Is this the beginning of the 'great sell off'?

Can someone explain how Goldmans can make expand their profits in a contracting world Economy? Surely the profits are only made from increasing production levels, so how can profits be going up?

....unless of course it's all worthless paper money - no profit - just paper, and not having to properly value your assets makes it even easier!

#13

Instead of venting your inadequacy on this blog days in days out what about doing some work? I know you are busy preparing the revolution but having to work once in your life might give you a different perspective...just a suggestion :-)

And yes what do you know...obviously not much, though I am sure Wiki must be your best friend ;-)

"Goldman Sachs Group Inc. (GS) on Thursday delivered its richest quarterly profit in the investment bank's 140-year history"

...in the biggest decline in modern Economic history - how can it be possible?????

....answer - it can't, it's all fantasy and sooner or later the rest of the world will work it out (well it seems the rush for gold proves that some are already expecting the worst)

#13
Nice work if you can get it - which of course you can't - unless you're in the old boys club and went to Eton and did a near-irrelevant 'classics' degree.

Hmmm, are you one of Brown's lackeys using phrases like that? I work in the city and I was raised on a council estate and have worked hard to get where I am now.

No I do not work for Goldmans, but yes it is a bank. Yes I hope to get a bonus, but then again it will be nowhere near the values RP reports. And yes, it compensates for the 80 hour+ weeks I do.

And yes, I went into this field because part of the package offered included a discretionary bonus on top of basic wage - but I feel after 25 years hard graft, with another 25 to go, that I should reap some rewards now and again. And my bonus will be subject to tax and NI, what is left will get spent in the economy on goods and services, so are you saying that the money I spend is not real money and that others do not benfit from it?

Poor President Obama! Stuffed like a Turkey in Massachusetts Tuesday, where the party's most faithful seem to have spotted that the financial services industry is to be clobbered over the course of the next ten years for the cost of bailing out the conspicuously useless motor industry several hundred miles to their west. Financial services is a rather large employer in Massachusetts, where very high local taxes and already progressive health care provisions render his Healthcare Bill an indulgent gift to the rest of the Union... There he is, caught with his snout in the pork barrel by his own most loyal voters and given the raspberry. A time to act and act firmly with decisive populism. But to whom to be popular? There seems to be a bit of a divergence of opinion there, within the inner sanctum. Barney Frank, who will be up for re-election, also in Massachusetts, now suddenly favours a focus on job creation rather than healthcare reform.

Yet a pop at the vampire squid never misses. Tear it into ten pieces. As another contributer has already suggested it will probably only reinvent itself into a new creature. As squids live in water no doubt Melody Maker or the like will coin a phrase about a many headed Hydra, a vile creature that has committed the unforgivable sin of not being involved in mortgage securitization because it saw it all coming. And paying back the TARP money it was told it had to accept after only a few months with 23% interest to the American tax payer. And on top of those heinous sins doing what it does well. Shocking! I wonder who'll get to be Hercules?

And where might this dreadful multi headed creature resurface? possibly not primarily in either New York or London. After all, it knows all about BRICs. Maybe Port au Prince? I expect they'd welcome the inward investment although I doubt it would be a good commercial choice. Then again why don't they just pay off Haiti's foreign debt out of their obscene profits as an act of contrition. Or the Ö÷²¥´óÐã could do it first just to make them feel bad. After all it would only be about 15% of Auntie's annual allowance.

It really is too bad. Enough to make a fabian Brit weep. You can't stop class.

Anyone for a tea party?

Thus far all the financial effort has been predominantly directed to keeping the banking sector from sinking whilst others in commerce and industry are allowed to fail.

Whish does tend to prompt the question, are other sections of commerce and industry less important that the banking sector?

And if so, why?

#16 - You are being conned!!

The banks did not cause the current deficits - the governments did, but they have found a scape goat in the banks.

Do you really think that thisd month's record budget deficit is as a result of the bank bail-out? As the HSBC chief said, the government can't spend more than the taxes it receives - the problem is the government have been doing that for the last 10 years!!

I try hard to be rational about this but it is very, very difficult.

Lets assume that 20,000 of those employees are normal hardworking people doing a normal job and that they get paid a pretty good average salary of $50,000 per year - that takes care of the first billion dollars.

That leaves the other $15.25 billion for the other 12,500 employees at an average of over $1.2 million each. That is an incredible amount of money that in any other organisation only the very puinnacle of people would achieve.

If you change numbers to 30,000 e'ees and $100,000 average then that only takes care of first $3 billion. So $13.25 billion for the remaining 2,500 employees at a whopping $5.3 million each.

The split is almost irrelevant - these are staggering sums of money for doing a job and I do not believe there is any way they can be justified.

The reality is that the bonuses are obscene because the profits are also obscene for what is simply a service industry.

If we then bring in the future nature of those profits, the uncertainty they will really occur, the money sloshing round in the economy due to bank bailouts by the state, how normal people are really struggling, the wealth and poverty gap growing and growing and the fact these bonuses are still being paid out at a time of such bad public feeling towards the banks then you really have to wonder where we are heading.

It would also appear that both Lloyds and RBS are down on the day - now I don't actually care about share prices as I am not a gambler - but unfortunately the Government has already 'placed a stake on my behalf'.

So how far are we off the break even point (although it's not 100% clear what that figure is)

Lloyds - Current 53.30 - B/E 74p
RBS - Current 35.2 - B/E 50p

The break even price is an estimate because the amount of shares sold into the market will move the price (downwards) - but some of the share classes do hold conditions which may favour the taxpayer.

Either way, this is now about a £26 Billion loss we're all sitting on - and I thought this was going to be 'short term'.

Alas - we took these stakes in October 2008 which is over a year ago and we are still pretty much sitting in the same position as back then - and now we're going in the wrong direction...

Thank you Robert for keeping the spotlight on the 'obscene' bonuses that many bankers consider as their birthright whilst the societies they have helped to empoverish fall apart. We need immediately a serious structural and regulatory banking reform. Many of the necessary reform proposals have been discussed on the comments pages of your blog, most importantly to separate the retail and investment parts of banks again (bring back the Glass–Steagall Act of 1932 in the US and similar laws in other countries). For more resources and many more details exposing the very destructive impact of the badly malfunctioning global finance sector please visit:

14. At 4:19pm on 21 Jan 2010, tutiana wrote:

"It's not fair to generalise all bankers. To put it simply...I manage my shareholder's money through proprietary trading. If i make money on my trades, then i should be compensated for the profit i generate from trading the market"


...and how do you 'generate profit' merely by exchange? Surely as the value of the items traded hasn't changed (it can't have) - then all your profits are in fact irelevant to the underlying principle of value.

By your ideas I could trade you something and you could trade it back, and we carry on back and forth with the same item - and soon we will both be millionaires.

Such is the stupidity of banking.

"we contribute in taxes since our bank isn't one that failed."

That's good - especially as everyone pays tax and contributes, you may be surprised to hear that even people outside of banking pay taxes!

Are you sure that this is 'take home pay'?

It is always conveniently overlooked by the bank-bashers that a very large proportion of these bonuses (40 - 50+%)are paid in tax and NIC.

19. At 4:47pm on 21 Jan 2010, darksurfer

...well maybe if you did less work and more thinking (and more people like you) then we wouldn't all be sitting here passively as the greatest robbery in history takes place.....

Tutiana I think you are fooling yourself but not anyone else. Whose money are you risking? Yours? I dont think so. So if you lose money will you have to pay it back? I thought not. Okay you might lose your job but the money would be gone.

What's all this stress rubbish? Anyone can lose their job and I would hazard a guess that prospect is a lot more stressful when you haven't got last year's basically unearned bonus to fall back on. Like any normal person. Obviously your thoughts on your bonus in the light of the ongoing train-wreck of the world economy are as deep as a shampoo commercial - because you're worth it.

Or is your comment just a wind up?

17. At 4:46pm on 21 Jan 2010, Dempster wrote:
...that because of the increased taxes you have to pay to fund bailing out the banking sector you may no longer be able to keep up with your mortgage payments.

So the banking system you have bailed out, now takes your house off you.
----------------------------------
As well of course the unknown level of interest this year, a 1% rise or 3% or what?

Recently it was claimed that 1 million mortgage holders were relying on their credit cards to live on so that mortgage payments could be met.

Does this mean that increased tax, increased mortgage rate and increased credit card rates will result in a million repossessions? I cannot see that doing the banks or the housing market much good.

Hey guys leave the squid alone. The leeches don't like it.

#18. writingsonthewall wrote:

"FTSE ends down for the second day in a row... Is this the beginning of the 'great sell off'?"

It might be, or it might not be; no-one can see the future.

But I don't recall you ever remarking on the FTSE when it has risen two days in a row, which is something it has done rather a lot recently. If you're going to use market values to support an argument (or prejudice) then you can't really ignore the figures that inconveniently undermine your argument.

#26. writingsonthewall wrote:

"RBS - Current 35.2 - B/E 50p"

More selective reporting?

I don't report you rejoicing in the paper profit that we had made when the RBS share price was 59p a while ago. So why get all gloomy about the paper loss now?

I really have to wonder, WOTW, why you feel it necessary to see the negative side of each and every piece of economic news that comes our way. Are you a paid stooge, or merely naturally miserable?

If this is how they make when the banks are saved how much better off would we be if they had gone to the wall?

Maybe we would all be better off.
And the cheek of bankers to say it is good for the country.....

#30

Oh is this verbal diarrhea is what you call thinking?

I think some of the figures and hype in the article are not totally accurate. Firstly GS made a "charitable Donation" to the tune of $500m, if assumed a one-off then the "Compensation Ratio" would be slightly lower at 34.7%

Secondly, the GS Board announced that they would not take a Cash Bonus in 2009 ie they would take stock which is deferred. There would be no PnL expense in 2009 but there will be in 2010 onwards. So this would increase the compensation ratio.

The cash pot has reduced significantly, however who knows how much deferred awards ie stock have been awarded to the Big Hitters.

In reference to the UK payroll tax, again no one knows what the bill would be (even in GS!!), looking at the figures it doesn't look like they have included it in the 2009 expense so they may pay this in 2010.

GS has and will always pay big bucks, this year they have been clever and paid a considerable amount in stock which would have no impact in 2009.

......and why do people always go on about average $ per employee? It doesn't mean anything. There are people in Prop trading that would be getting 30+mil for their bonuses. That would skew average joe in payroll wouldn't it. average means jack.

So Robert what you are saying is every employee get approx $500,000 take home pay. I have a pretty high pressure job so I think I should apply to join them as a lowly clerk or maybe just be in charge of the stationary cupboard.Getting rid of all the stress at the same time, $500K pa sounds a good deal to me. Where do i sign?

34 rbs 18 WOTW
Oh yes you can (panto voice if you can please) and he's very good at it.
Haven't seen a mention of the "SURPRISING" unemployment figures or the "SURPRISING" mortgage lending figures for December either. Wait for it.......
TM StH

Tutiana (14), you don't "manage" your shareholders money, you gamble with it. You are quite willing to accept your bonus when you guess correctly but what responsiblity to you bear when you get it wrong?

Have to agree with rockRobin7 (comment at the top). Not entirely sure I agree that "...all the big banks were just hours away from meltdown...". Agree that the systemic nature of the problems last year put many banks in a precarious position, but wouldn't go as far as the general meltdown comment. Qualification required I think. Suppose it makes for a more entertaining (if exaggerated) blog.

rbs_temp wrote:

"But I don't recall you ever remarking on the FTSE when it has risen two days in a row, which is something it has done rather a lot recently. If you're going to use market values to support an argument (or prejudice) then you can't really ignore the figures that inconveniently undermine your argument."

No - I can leave that to you - and FTSE going up is irrelevant really - simply because it's a bubble (and it's hard to find anyone who disagrees with that) - all that matters is when it pops.

Luckily it's going up tod...

"I don't report you rejoicing in the paper profit that we had made when the RBS share price was 59p a while ago. So why get all gloomy about the paper loss now?"

A while ago? - can you inform us when 'a while ago' actually was?

"I really have to wonder, WOTW, why you feel it necessary to see the negative side of each and every piece of economic news that comes our way. Are you a paid stooge, or merely naturally miserable?"

Oh dear, well your 'negative side' is actually my 'realism' - we have been living in a bubble of optimism for 10 years - and look where it's got us. I have the media, Government and fools to provide the optimism.

Maybe my pessimism reflects my understanding of the seriousness of this situation. You'll notice most of the people singing "recovery is nigh" either have a vested interest or are simply putting faith in the people who brought us to this point - nice logic.

37. At 5:57pm on 21 Jan 2010, darksurfer wrote:

"Oh is this verbal diarrhea is what you call thinking?"

...from the man who put a joke up about bankers taking money out in wash bags.

I've looked at your last 5 comments and they all seem to be directed at criticising me - haven't you got any response to anything I have written?

....ah no - of course not, because you cannot challenge what I say, only the manner in which I say it.

41. At 09:32am on 22 Jan 2010, remoteislander wrote:

"34 rbs 18 WOTW
Oh yes you can (panto voice if you can please) and he's very good at it.
Haven't seen a mention of the "SURPRISING" unemployment figures or the "SURPRISING" mortgage lending figures for December either. Wait for it.......
TM StH"


Would this be the fall in unemployment pre-christmas SHOCK!!!

Do you live on this planet? Is it your first year and you have never seen Christmas shopping before?

How about those mortgage figures - well who would have thought it - stamp duty ges back up in January and there is an increase in mortgage approvals for December.

Oh you really need to try better....

It seems WOTW is taking things a little too personally. Think you should calm down

To quote Southpark:

"They took our jobs!"

...but not necessarily. I've created 20 new jobs in a rural area in the last 18 months. The difference between myself and Tutiana # 14 is that I do not, as a consequence, feel entitled to draw a huge bonus for my efforts. In order to create the jos / business I worked 7 days per week for the duration, often working 100 hours + per week. If Tutiana thinks "stress" involves looking at a computer screen and gambling other people's money, she should try a stint as an entrepreneur - but then this would involve gambling her own money, and of course that wouldn't do!

Greed is greed, some are just better at it than others! If I had a pound for every person that says money is not everything, I'd be a rich person right now. But I like to think my standards would be far more modest than some of these greedy benefactors........

Can people please stop this ranting and jealousy towards bankers!

I didn't get a job offer Goldman, but those I knew that did were at the top of my subject group at Cambridge - and they weren't from "Eton" or "old boys clubs". I doubt anyone posting on this website has had an offer from Goldman either or is in a position to apply.

Bankers were not the cause of this crisis, the general public were.

Where I live in Asia we've got the same banks / bankers and similar (or even perhaps lower) lending standards. We're not in the same mess as you in the UK, since people here didn't take on debt for things they couldn't afford or shouldn't have been buying. Stop complaining and realize how fortunate you are compared to most countries.

46 WOTW - Have to do better eh? All I have to do is hint and you rush to fall into every bear trap.....
1/ So you think that December employment is all to do with RETAIL? That explains the increase in vacancies as well does it? In a month when manufacturing lays off all the short term staff needed for Christmas production and neither the private or public sector hire anybody for half the month? And presumably these retailers were employed in November when the unemployment numbers were almost identical and retail sales were down on December's?
2/ Which proves the point I always make about house prices and you continualy refuse to accept - which is that it's both irrational and much more resilient than you think. Sure there's a blip in the figures to reflect stamp duty changes (you think I didn't know that?!?), but if your "end of the world as we know it scenario" is likely, wouldn't they be better defering the purchase, losing the duty discount, but gaining the 10% drop in house prices you're forecasting for this year?
You'd have thought - but there again, they live in the real world. Oh and sales in January will probably be down, not for macro economic reasons, but because you've had 20 days of appalling weather and the usual "Christmas is over we'll look at what's about" presumably hasn't happened. There's a rumour that retail sales might be effected as well. That would hardly be a surprise, but I know I can rely on you to produce the figures (if they suit you) as the absolute proof of the imminent demise of the Capitalistic system.
Good to see the value (as well as volume) of retail sales up in December (year on year) and on the year as a whole (3.6%), well above inflation, so both volume, value and margin up in 2009. And all in real terms. Who would have thought it? And yet QE hasn't percolated down to the comrade in the street for him to borrow....
I noticed that you used some car stats in one of your other posts as a certain indicator of doom. Typically they actually meant little other than to tell us what we already know - we are in a recession. And western markets have been hit hardest. Mind you, you could take the EC car production figures for December, which are up 25% on December 2008 as proof that boom times start next week. Or you could take a month of the Honda Swindon figures (when they were closed for a couple of months) as proof that all industrial production in the UK ceased. All statements are based on "FACTS" and all used as you use them, misleading.
Hope you've spotted the next bear trap....

and 47, don't worry about it, WOTW is always personal, we all love it and it keeps him out of the rain. Remember every Circus has to have a clown. And for very good reasons - we all need to smile occasionally, even or perhaps particularly when times are very difficult. He forces us (paid bank bloggers, motto "Services for Financial Services - brown envelopes a speciality) to think about and justify any opinion that's different to his. That's a good thing. I just wish he wouldn't peddle his political wish lists as economic facts.
TM StH

48 Houseflogger - well done - hope it works out for you. Nobody that hasn't done what you (and I) have done is qualified to talk of stress or risk. They'll all feel that they can, but that's because they ain't been there. Hope your hours are saner now.
TM StH

''Here's the thing: in the autumn of 2008, all big banks were just hours from meltdown; and here is Goldman, a year later, generating a fraction less than its all-time record 2007 revenues.

It's a funny old world.''

not really. it's just being clever and having big brass b*lls.
whilst everyone else was dumping stock and reducing balance sheet they did the opposite and hoovered up

As a senior bank auditor told me months before the meltdown:
1. Few bankers at the top understood derivatives
2. Many junior ones didn't care as long as they made money from their dealings
3. Banks that were called to task for their highly leveraged and poorly understood risks would call their elected officials to make certain that the damning audits would not be made public and that prohibitions would be ameliorated to mere recommendations.

If the US government had not interceded, possibly,even probably, all US banks would be history. One can only speculate the subsequent effect elsewhere,but...

Worse, the same people are doing the same trading again with others money and the inevitable disaster will recur unless these" best and brightest" are taught a lesson they should never forget.

22 January
Christmas Bonuses for all? Part Two.
In a previous blog I speculated about Government management of the banks in the City through attempting to control bonuses.

The success, albeit small, of this attempt is now clearer. A pattern has emerged of major banks taking a variety of actions to comply, in part, with Government controls. Two of the biggest banks, J.P.Morgan and Goldman Sachs have reduced the percentage of their revenue given over to their bonus pool. For J.P.Morgan the reduction was from 40% in 2008 to 11% in 2009. Similar figures for Goldman were from 48% to 35%. These reductions seem to imply that more money has been retained by the bank. This retention may be to create a greater base of capital to ensure future stability; or it may be for quite other reasons. Only time will tell.

The Treasury may well have expected banks would increse the size of their bonus pools to compensate for the "loss" of the 50% tax imposed before Christmas. The opposite seems to have happened. Further, Morgan Stanley has put more of its bonuses in shares than cash. The shares are deferred for up to 3 years, and there is a possibility of clawback depending on performance. Goldman has reduced the size of the bonus pool by giving $500.000 to charity. Morgan Stanley has also agreed to share the 50% tax amongst all it's employees world wide; and not let it just fall on it's 7,000 employees in London. Credit Suisse in London has agreed that it's top executives will take a 30% cut in their bonuses, to create a larger pot for it's other employees.

Despite all this J.P.Morgan's profits has doubled in 2009 from 2008. Goldman's profits, from a low base in 2008, has grown five times! This has prompted more aggressive calls for a "levy" on banks in America. This has implications for future bonuses next Christmas. Many of today's bonuses may well be much higher than 2008, because profits are much higher. And why is that? Firstly, there are fewer banks than last year. Secondly, there is the very contentious "recovery" in the world's financial markets; more takeovers.

The banks have changed their practices on bonuses; but other practices need to change in the coming year!

See my blog at:
whyworktoday.spaces.live.com/blog/

Thank you for all the rantings against bankers. I fully understand the public anger against us. So as a financial terrorist / an overpaid paper shuffler / gambler etc, as in previous years, I'll make sure the bonus I get will be spent on shopping for goods and services to create more jobs.