UK
After this morning’s disastrous market performance in Europe, last night’s disastrous performance in Asia, and before this afternoon’s likely disastrous performance in the US, 200k may sound like a big paycheck. This is just as well, because as ex-banker Oliver Kamm at The Times points out, it makes sense for bankers who are being bailed out to earn less than the Prime Minister – and Gordon earns just 189,994. One hedge fund already seems to have gone for the pay cap idea. Financial News reports that Polygon Investment Management is capping partners’ pay at 100k. Any additions can be drawn from fund performance, but Polygon is currently down 19%, so earning more than 100k looks kind of unlikely at the moment.
“…if London becomes badly paid then there will be an exodus to Mumbai, Shanghai or Dubai.” (Guardian)
Does a double-digit stock market fall over five minutes qualify as a crash? (FT Alphaville)
Morgan Stanley (and Goldman) on downgrade watch. (Bloomberg)
“Morgan Stanley has become a critical test case. If it pulls through, it would represent an important milestone in the search for a stock-market bottom.” (Wall Street Journal)
John Mack doth protest too much. (FT Alphaville)
Mitsubishi to buy Morgan Stanley stock at more than twice its closing price. (Financial News)
Oil companies forbid traders from dealing with Morgan Stanley and Merrill Lynch on liquidity fears. (Wall Street Journal)
“Let the competent banks take over the incompetent banks. Everybody starts over.”
(Bloomberg)
Setting the stage for an inflation holocaust. (CNBC)
In the minute or so it takes you to read this post, Lehman Brothers’ senior bankruptcy lawyers could have earned nearly $16. (DealBook)
Icelanders start fishing again. (Wall Street Journal)
Robert Peston transformed into pure energy. (Daily Mash)
Anyone who has even done undergraduate economics will know about agency theory.
If you cap executive pay, then they will find other ways of getting value out, but less effficiently and less transparently.
For example, company cars, a more liberal view on allowable expenses, a nicer office, more “training” in exotic foreign locations, and the employment of deadbeat relatives and friends.
I agree with Dominic. I also think that capping remuneration is as effective a way as possible of saying ‘top talent unwelcome’ which will have a combined effect with the knee-jerk regulatory responses of limiting earnings, and by proxy, government tax receipts for years. Given that government spending is a big driver of GDP this doesn’t bode well for any future economic recovery being speedy.
How can any family man reasonably survive on 200k in London??
200k…you’re having a laugh aren’t you? I might as well be working for charity!
On the Guardian comment, why does the commentary expect an exodus to Dubai, Shanghai, etc? Why do you think these countries will take on the excesses from London?
Asians were fortunate to escape this tsunami with little damage, and the credibility of western financial experiences has totally gone down the drain! Asian institutions will probably start relying on local-bred talents first – gone are the days when US / Europe bankers imagine they are more superior than their Asian counterparts.
How can a family man survive on 200k in London? Just ask the average guy in London, making about 35k per year!
In any case, many of us, I’m afraid, will have to find an answer to that question….