Saturday, January 9, 2010
Nothing has changed!
According to the NYT, Wall Street will distribute bonuses of up-to eight figures next week. Goldman Sachs will give each of its employees an average of nearly $600,000. Is it possible that so little has changed after the Global Crisis? The bail-out has saved banks but not changed their behaviour... How long until people really revolt? And does this mean that income inequality will (sadly) remain high in the Americas?
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We have the same problem in the UK with the one-off bonus tax being passed on to shareholders (which in some cases is the taxpayer). So no, I don't think anything much has changed; and yes, inequality will not only remain high in the US and UK but will continue to rise. We should ask ourselves why finance will not change or is not forced to change, and a very VERY interesting answer is given by Simon Jonathon ina now famous essay, The Quiet Coup. He equates the US finance industry and its incestuous relationship with Washington with the many emerging market oligarchies he has seen during his years at the IMF, and the influence they have on government policy. Finance does whatever it likes, and thus it shall be until politicians find the political will to cut them down to size or another crisis hits that really does break the (central) bank.
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