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Archive for February, 2010

John Mack, head of US bank,  Morgan Stanley hit out at overpaid bankers. He said, “I still don’t think the industry gets it.” Rather than reduce the amount that bankers get paid, banks are looking at restructuring of pay agreements to defer bonuses. He warned that, “If we [bankers] don’t do something on pay the government will.”

Even banks that are making losses and under government control are still receiving bonuses. Royal Bank of Scotland (RBS), 84% owned by the government, announced losses of £3.6bn but is still paying staff more than £1.3bn in bonuses.

Bankers say that these salaries are the market rates. As an example of the huge sum that change hands, Mr. Mack cited, a trader that had recently left Morgan Stanley to work for a hedge fund. He was being paid $11m but was poached by the hedge fund for a $25m.

The UK inflation rate rose unexpectedly to 3.5% from 2.9% the previous month. There are two measures of inflation the Retail Price Index (RPI) which measures a general domestic inflation by measuring the cost of a fixed basket of retail goods.Consumer Price Index (CPI) is a second measure of inflation which is a more general measure of inflation and is the  measure targeted by the Bank of England.

The increase was a result of the rising of VAT back to 17.5% and higher petrol prices. However, this rise has taken the CPI more than 1% above the government target. Mervyn King must write a letter to the chancellor to explain the rise.

Many economists had fears that inflation would begin to rise with the injection of £200bn into the economy through quantitative easing. (QE)

While it was announced that the UK had limped its way back to positive economic growth ending the recession, the job market is still suffering and the future looks bleak especially in the public sector where a report has said that one in three public sector employers plan to make job cuts this quarter.

Unemployment is currently at 2.46 million people. After the bailout of the banking system the UK government is faced with the prospect of making huge cuts in services and the possibility of more taxation for year to come.

In the private sector, outsourcing of jobs abroad is a likely prospect as costs are cheaper. India and Eastern European  countries remain popular outsourcing destinations.

At the mint in Chile, the general manager has lost has job after failing to stop the issue of 50 peso coins which were struck with a spelling mistake. It is particularly embarrassing as the mistake is the name of the country. Instead of the Chile the coins were stamped with Chiie. Such a dramatic mistake has turned the coins into a numismatists delight. People are keeping them in the hope that they will rise in value.  Rather than trying to destroy the coins they will remain in circulation. This is not the only mistake that has been made by the mint. There have been two incidents where rare coins and medal which should have been kept in the museum have found their way onto the open market and being sold to coin collectors.

If you work in an investment bank and your colleague is being interviewed  on the television, it is probably not the best time to be checking your email from your immature colleagues or spammers as happened during a television interview with Martin Lakos, an analyst from Macquarie Private Wealth, to discuss  interest rates. But the interest in the interview was elsewhere as an investment manager is seen looking at semi-naked models in the background.

The video has ended up on YouTube becoming an instant hit. Eagle eyed viewers have identified the images as model Miranda Kerr. Only near the end does the foolish worker realise his error and turns toward the camera. No bonus for you this year.

Open plan offices are often in television interviews. It is certainly very funny when something like this occurs although I am surprised that this does not happen more often.