Heads they win, tails you lose

So big bonuses are back for the banks bailed out by the taxpayer. Goldman Sachs, rescued by the US government, and the British state-owned RBS are gearing up to pay out huge wedges of cash to their investment bankers at the end of this year.

So how come they have made such massive profits when they have cut back on lending to businesses and corporate transactions have slowed down? One key source of income, as Vince Cable explains, is the sale of bonds to finance the government debt caused by the financial crisis. The banks are being paid a hefty commission for helping governments borrow money. In other words, they are being paid to clear up the mess which they caused in the first place. This Christmas, bankers will be walking away with bonuses that have come directly from the taxpayer. 

In summary, then, the story of the financial crisis goes something like this. The bankers gamble on complex financial instruments with your savings. The resulting bank crisis means that your savings are almost completely wiped out. This triggers a recession during which you get made redundant or get put on short hours for lower pay. The government is left with no choice but to bail out the banks with your tax money. This leaves governments around the world broke so they have to borrow money through the banks, to whom they must then pay commission, which again comes out of your taxes.

I make that four different ways we have been screwed by the bankers in the space of one year. 

Comments

[Wyrdtimes]

yep and it gets better...

The Royal Bank of "Scotland" was bailed by >80% English taxpayer and they are planning to close 300 or so branches - guess where.

England.

[JonnyN]

I don't believe there was no choice but to bail out the banks. There were alternatives: much cheaper, fairer alternatives that still protected depositors and wouldn't have exacerbated the existing incentive problems.

If I had owned bank debt paying a low yield because I figured that in the event of bankruptcy the bank would be bailed out then my views would have been vindicated. This encourages further lending to banks. Conversely, if I had held equity in a government bailed out (recapitalized) bank then I would have been almost wiped out. Equity holders with thus be looking for higher returns to make up for higher perceived risk, making equity financing expensive. If equity is expensive and debt is cheap then banks will finance themselves with debt giving high leverage which is what caused the problems in the first place.....

[Richard T]

It won't happen but I'd like to see an annual windfall tax on the banks which equates to the amounbt paid out in non salaried remumeration - bonuses, shares, gold or whatever other dodge the crooked bastards concoct. This would of course be applicable to the Board as well as all employees. The rationale is that if they can afford such payouts, they can afford the tax and I suspect that the shareholders would take a dim view on the loss of profits and hence dividends.

[Rastaman]

Once again Nick Griffin proves himself to be a stand-up Englishman.

As for the rest of you .... Baaa-aa-aaaaa

[chachi]

for once i agree with rasta on griffin, although you'd have to agree that he showed himself to be an ignorant, uneducated ape who could answer questions, even admitting to not knowing why he held the views that he does, blabbering idiot that he is.
Or maybe your on his subterraneal intellectual level & actually agreed with the nonsense that came from his overfed mouth.
He's wants all non whites out yet on national tv infront of millions he flirted with & smiled every time the black woman to his left made a comment, can't have it both ways griffin, beautiful black woman? or knuckle draggers?...which ones it going to be griffin?
You can relate to griffins confused state of mind can't you rasta?...I mean one minute your 'Rastaman'..next minute your 'hellpig'...whats happened to 'him' lately...medication keeping him away?