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What I am missing in the piece is why banking is different from other functions in this regard. You write:
So I benefit from (i) dealing with large amounts (anything below a million is chump change), (ii) being very specialised (and thus harder to replace), (iii) being on the front line with the client (thus able to influence outcomes and claim credit) and (iv) actually getting deals done (hey, give us a little bit of credit!).

Let's compare that to a an operator in an oil refinery or other chemical plant, someone who literally controls the tap of a plant delivering millions of euros every day. But no one expects this person to receive 1% of the plants output, even if he has the ability to shut customers off.

Perhaps the " being very specialised (and thus harder to replace)" bit is important, but again I am quite sure that somewhere in the plant hierarchy there is going to be a highly educated plant manager with decades of experience who is hard to replace and highly critical for the plant operation, but still is not earning a poor banker's salary.

I mean, if bankers are keeping too much of the flow going past them, and that might well be true, what is keeping people from setting up another bank, with lower bonuses and lower prices to their customers for the same services?

And if bankers are using their special relation with customers to force their company to pay bonuses, why not fire them? Just imagine what would happen if VW's drivetrain engineers said "Without an engine the car won't run, so we need a bonus or we won't design engines"

I would really like to hear why bankers and banks have (had?) this apparent bargaining power that highly skilled people in other sectors do not seem to have.

by GreatZamfir on Tue Feb 3rd, 2009 at 05:29:45 AM EST
GreatZamfir:

I would really like to hear why bankers and banks have (had?) this apparent bargaining power that highly skilled people in other sectors do not seem to have.

because kings, governments, parliaments, corporations and common people are in hock to them?

similarly to the defence industry, they have made themselves indispensable.

differently, bankers make out in war or peace...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Feb 3rd, 2009 at 07:12:40 AM EST
[ Parent ]
But the principle of banking would be that they are in hock again to others...

And while the defense industry as a whole is fat and powerful, its employees are not that much wealthier or powerful than their equivalents in other industries.

I mean, the strange thing about banking isn't just that they take in loads of money, but that so much of that money ends up with people who are not the top-level bosses or shareholders.

by GreatZamfir on Tue Feb 3rd, 2009 at 08:53:04 AM EST
[ Parent ]
GreatZamfir:
But the principle of banking would be that they are in hock again to others...

by social contract, you mean?

GreatZamfir:

money ends up with people who are not the top-level bosses or shareholders.

i don't catch your meaning here. do even bankers that are low on the food chain get massive bonuses?

the other thing that differentiates the two industries is the extreme secrecy of the defence, need to know etc.

why should banking be so opaque, unless it's for shady reasons?

because it's competitive?

with the economy in ruins due to malpractice, malign neglect, corrupting the regulation processes through lobbying pressure, and i believe much malice aforethought, i'm with other posters here who believe that the glamour and exceptionalism must be stripped from banking. they're just so goddamn powerful, and have forgotten the virtues of discretion, become self-referential, and hubris reigned supreme.

these were the bush years, so they took their cues from that, but it's been coming for a long time before.

the fact that the setup right now, between their non-nationalised status, state permission to do fractional reserve hat/rabbit trick games etc, already makes their jobs more secure, privileged and important than most. letting them become the equivalent of some blend of fighter pilots, masters of the universe, formula one drivers... they can obviously not be trusted to keep any humility going, unless imposed from without.

and i hope the next time some one tries to deregulate them, peoples' memories are better.

i mean, they already were doing well, they got so greedy, and now we pay.

they should be able to get away with just a 'oops sorry!' and back to business as usual?

they're lucky they're not swinging from ropes, and i still wonder if that might happen later this year and next, as the full whammy of what they have done comes home to the people who believed their lies and flim-flammery, and who are collecting their anti-bonuses for their credulity.

they already are winning the prize for shameless, insultingly tasteless behaviour.

it's a profession that once had dignity, after all, much of it false, i'll grant you, but now?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Feb 3rd, 2009 at 01:18:44 PM EST
[ Parent ]
by social contract, you mean?

No, just that banks borrow the money they lend from someone else again. Their banks after all, not just rich...

do even bankers that are low on the food chain get massive bonuses?

As far as I can tell, yes. Or at least much lower on the food chain than elsewhere. People I knew who started as lowly analysts in London already got high salaries, although they had to work their brains out. But the weird bonuses already started a little higher up the ladder.

Not multi-million or so, but still amounts most people would call a good year's income, and importantly depending on short-run performance.

That's what I never understood. I understand why CEOs can give themselves free money: there is no one above them in a position to stop them. Doesn't mean I like it, but I understand the mechanism to some extent.

But both for bankers and banks I don't understand.

by GreatZamfir on Wed Feb 4th, 2009 at 04:38:16 AM EST
[ Parent ]
Trading is one of the industries where personal contacts and knowledge are the most important, whereas "hard" capital is quite easily replicable ; any large enough bank can provide the financial capital. The way traders got huge bonuses is by theatening to quit and join another bank ; this was usually done by the head of a trading desk, threatening to leave with its whole team. A trading desk leaving a bank and being hired more or less intact by another bank can take the customer base with it, and the profits that go along with it. There was sociological work on this by Olivier Gaudechot, a French sociologist ; I don't know if he has been translated.

The same kind of reasonment applies to Merges and Acquisition bankers...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Wed Feb 4th, 2009 at 05:19:09 AM EST
[ Parent ]

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