graphics of the global financial crisis


On bonuses, I can certainly imagine that more are being paid post-bail-out than otherwise would have been paid. And I would like to see some conditionalities placed on this aid package including limits of executive pay -- they need to have long term ties to the bank's value, so bonuses in common stock, maybe, which might also encourage more shareholder oversight as former employees worried about their retirement ask tougher questions than passive fund managers.

But ultimately, it's not that surprising that bonuses are higher than if there was no bail-out. What is more worrying is the inability of trad monetary policy tools to re-start the financial sector. Central banks can provide liquidity (though seemingly not in the UK), but its not so easy to make institutions solvent. As long as banks don't know the value of what's on their own and their counterparties' balance sheets, they won't lend to one another, and you can set the target rate wherever you like. But those are just the bare facts -- monetary policy isn't designed for times like this, so it's not realistic to expect that there will be a simple solution.

I saw Paul Krugman on TV last night, and he said something apt (this is from memory not a direct quote), that the difference between now and 1929 is that we know what happened in 1929, and therefore a great many people are working to make sure it doesn't happen again. Of course it's no guarantee -- Krugman also pointed out that we could probably prevent the Great Depression, but the problem is that we have a 2008 economy and not a 1929 economy -- but it is an edge. The banking system is screwed short-term and transformed long-term, but banks have stopped collapsing twice a day. Lehman's was a mistake, but it won't happen again.

john eden

male pale and stale


surely what this thread needs is some gigantic vacuous infographics




Last edited: