@Rob the trouble with those sort of metrics is they encourage management to sell tomorrow for jam today. In the end the pay negotiations tends to be on a yearly cycle and business strategy can take years, even decades in some cases. There’s an inherent asymmetry between pay, which is paid and is generally irrevocable due to the contractual nature, and business performance, which can look great for a while and then suck great gobs of cash out when the longer term consequences show.

We’ve never really cracked this though bonuses seem to have been a giant step in the wrong direction. How do we know your cracking performance this year hasn’t shafted the firm in the next downturn?

Some of Germany’s Mittelstand shows long-term even multigenerational investment can work wonders…

@Lupulco Maybe the problem is the dark underbelly of democracy we want everything now and governments have simply become better and giving us what we want

There has also been an appalling change in entitlement culture though. I’m sure we were a little more au fait with that if we wanted something it took work in previous generations. The introduction of the credit card and the interest-only mortgage were probably not greta finacial innovations in retrospect!

I vaguely recall hearing about merchant banks in the 1970s I hadn’t realised that Mrs T combined them in a pre-echo of Clinton’s repeal of the Glass-Steagall in the US. The temptation to speculate rather than lend customers’ money seem irresistible!

@g Agreed – we don’t seem to be good at making sure banks stay like banks, there seems to be an inherent force towards speculation. Havig said that I don’t mind if JPM lose $2billion it’s when other people have to cover the downside that it gets rough. At least JPM isn’t a bank in the terms of holding a checking account there.

1] A Government sets up a National Bank be it private and/or state controlled.
2] Next they creates electronically, or otherwise a billion currency units.
3] The National Bank loans the billion currency units to licensed banks A, B & C. at MLR + 1%.
4] The licensed banks purchase bonds from the government, redeemable over 10/20/30 years at an agreed rate of %
5] On the security of these bonds, the licensed banks loans 3 or 4 times this amount, to the public, at interest rates between 8-15% +. So the public can buy property, business and material things.
6] On the profits the licensed banks make, they pay taxes to the Government who licensed them.
7] These taxes the government spends on whatever?

Now is this form of banking and/or credit wrong? Or is it just a means of allowing people to buy goods and services instead of trying to barter things that they produce for goods and services other people produce?

Or has the problem been, we the public borrowed too much, for things that we wanted? So that we could keep up with other people due to greed or envy? After all banks don’t force anyone to borrow from them.

Credit or money is neutral it is just a lubricant to keep commerce turning, how would you ship 50 sheep, 20 cows etc, to pay for 10 bags of wheat etc, or do your weekly shop?

The problem as been us, we have tried to satisfy our wants, not needs, also some of us have lacked the discipline and have maxed out on our credit. In some cases, with the collusion of the banks, [and encouragement of governments for the banks to lend more] we have overstated our incomes and understated our outgoings?

Who do we blame, the banks, the Government, or ourselves?

Do we blame the Government for the National Debt? After all governments have spent this money for one main reason. To get into Government and remain in Government and we the public have been happy to go along with it. That is until the true weapon of mass destruction as come into play, Compound Interest.

Very few, if any, Democratically Governed Countries have run a balanced budget for years. The voters have been happy to accept the bribes? Tax breaks, subsidies or benefits offered by ALL political parties for your vote.

The main question is, what can we/they do about it?

Last comment about the banks, the main mistake was made back in the 80′s when the good old High Street banks and Merchant banks merged. [Mrs T and boy Cammeron?]

On another note, should Barclay’s shareholders be unhappy with that performance I’d happily do the job of CEO for a mere £1m a year… that’s a bargain in my eyes.

I do agree with you though.. pay an income and you get a percentage of that according to how well you have done. 100% if you do a cracking performance and 0% if it is awful.

@Macs – oh yes, it is lots of fun, especially when you invite people round and get them to mill the ingredients for the food you prepare for them! I think the usual problem with steel plates is over heating – that doesn’t really happen with a hand mill unless it is turned too fast. No risk of that with me doing it!

@Rob – I am sure if Mr E did a full return on investment analysis the business case wouldn’t look so good I spent my time in my “proper job” learning skills and aquiring equipment that would make it possible for me to live on lots less once I was no longer a desk jockey. A curious side effect was that people have become interested in self sufficiency in the intermediate years so I have probably _made_ far more money writing articles about all this stuff than I have _saved_ by using it…