Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
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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