Tuesday, 5 March 2013

Boris and banking talent

'This is possibly the most deluded measure to come from Europe since Diocletian tried to fix the price of groceries across the Roman Empire.'

Boris, the bankers' best buddy, having a go at the European Union scheme to cap bankers' bonuses last week:
Brussels cannot control the global market for banking talent. Brussels cannot set pay for bankers around the world.

The most this measure can hope to achieve is a boost for Zurich and Singapore and New York at the expense of a struggling EU. 
I think you might have to cross Zurich off your list, Boris. Financial services make up an important part the Swiss economy, too, but that didn't stop people voting to rein in their gnomes and fat cats. The Swiss might have gone further than some countries, but that doesn't mean that everybody else on the planet is simply ignoring the issues of inequality and perverse incentives and just waiting to roll out the red carpet for our hard-done-by British bankers.

Overwrought warnings that bankers will stop playing nicely* with us and take their ball away at the first sign of anybody crying 'foul' probably tells us more about whose side Boris and his cronies are on than it does about the likely result of any bonus cap. Although to be fair to Boris, maybe he's just worried that if he annoys the bankers, he might have to find somebody else to sponsor his bikes.

*For a given value of 'nicely' (see PPI mis-selling, rate-swap mis-selling, Libor rigging,  not to mention the ongoing story of economy-crushing failures and bailouts).