Tag Archives: Goldman Sachs

#oneaday53: Democracy know your [place in] history

According to Wikipedia, ‘Democracy is generally defined as a form of government in which all the people have an equal say in the decisions that affect their lives. Ideally, this includes equal (and more or less direct) participation in the proposal, development and passage of legislation into law. It can also encompass social, economic and cultural conditions that enable the free and equal practice of political participation. ‘

The term itself comes from the Greek  word δημοκρατία – (dēmokratía) “rule of the people”,which was coined from δῆμος (dêmos) “people” and κράτος (Kratos) “power”, in the middle of the 5th-4th century BC to denote the political systems then existing in some Greek city-states, notably Athens following a popular uprising 508BC – again all according to Wikipedia.

Thus when the Western world heaved a collective sigh of relief a week ago when it was announced that a ‘deal’ had been done to ‘help’ Greece out with their debts. The deal was done by a few, behind closed doors and without agreat deal of democracy seemingly in play. Immediately ‘the markets’ cheered, bought and sold stock and overall bought more than they sold. Markets went up and everyone hailed salvation. No doubt some stock market dealers made a tidy sum that day.

Seven days on and the reluctant Prime Minister of Greece, Mr George Papandreou  who was elected on the back of a previous, highly corrupt regime incidentally, decided to call a time out on this EU move. Far from unilateral agreement on the part of the Greek
government on behalf of its people, George decided to get the ultimate buy in or buy out from his citizens and call a referendum.

This may or may not get through the Greek Parliament of course, and today it seems like it may not, but it feels like the first move of solidarity between the Greek people and their elected leaders for some time. It feels well overdue. Despite the fact that Greece has by all accounts been living the life of Riley on the back off corruption, back handers, inflated pay for all and very little economic infrastructure to support it all, this does feel right, despite what ‘the markets’ feel about it. Indeed the fact that politicians around the world are hostage to these financial markets highlights the complete and utter lack of democracy nowadays. No one voted for the people who run these markets, but seemingly they are the true masters of the universe, above law and free of any moral dignity other than to worship at the altar of Mammon.

Mr Papandreou has decided that his last hurrah will be an ironic nod to that ancient Greek principle of democracy. Ask the people simply ‘do you want to say yes to the loan accord from the EU, yes or no to Europe and yes or no to the Euro’.  Meanwhile the likes of Goldman Sachs, very much the puppet masters in this Greek tragedy will no doubt move on to their next deal, their next commission rake off and even bigger profits. The ‘Occupy’ movement will not go away until the elected leaders of democracies around the world take control of the financiers and their markets and ensure power is shared and not monopolised by the relatively few investment bankers and hedge funders who have fiddled and stolen from the many.

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#oneaday 14: Peter is skint, but are banks perfect employers?

Isn’t it time to stop bashing the banks? Reading about the ‘total compensation’ (ie pay to staff by way of bonuses in everyday PAYE speak) of the US based investment banks, JP Morgan and Goldman Sachs both being north of $15bn, you can’t help feeling a sense of awe and shock.  Incidentally, I am not sure if these figures are for all staff world wide or not, but whatever the spread is, it is a big number.

Interestingly though, it does rather suggest that these investment banks are founded on the principles of ‘partnership’. It seems that investment banks are capable of making astronomical profits, but they all seem to pay out a fair chunk of that profit to their staff who have made the deals work. This feels like fairness to me. Workers have worked hard to bring their company profit, and when they do so, their company has rewarded, or compensated, them very fairly and equitably. I bet many fellow workers would like to get a big share of the profits that they feel that they make for the companies they work for, right?

I am not sure I can argue with this policy. I run a business and our ultimate aim and neccessity is to make a profit. The problem seems to be that the sheer size of the profits made in investment banking are indecent to the vast majority of people, outside of sports stars and other investment bankers of course. No one can argue with that can they? But for this to work, and for these vast amounts to be sustainable, someone, somewhere has to lose out. However,  if the number of investment banks in any market is few, as it does seem to be today, then a small piece from trillions adds up to a big number  time and time again. If the number of players were to increase, as a  free market requires, then the argument could go that the pot of cash that they are all chasing stays the same, and therefore the share per combatant reduces. Except that in a capitalist system the winner takes it all and someone has to lose for someone to win. Therefore introducing more competition is only a temporary change, as winners get bigger than losers in the pursuit of market share, losers either die or are bought but winners or fellow losers who want to get bigger to beat the winners.  Still awake?

Ultimately, the obsecene amount of profits that investment banks continue to make suggests that our monetary system is either relatively worthless, because the numbers are so big, or simply many are losing out to a few. After all, investment banks can take away value, as is the case with most Hedge Fund business models, as well as add it, the way that they are supposed to do. Frankly, I cannot get my head around this system and the sheer amounts of money that seem to flow one way. Are these banks fair employers? Who knows. But one comment that was recently attributed to a banker recently when talking about their bonus being paid not in cash but in a mix of  share options and cash:-

“You don’t want to earn shares in your own company – it’s doubling a risk,” he says.

You want to own shares in someone else’s company. Because if your company goes belly up, you will lose your job and you will lose your stock options.”

So we are not really all in this together, are we, not even the bankers. It really does seem ‘all about me’.

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