Curbing bank bonuses: I've found the victims

And so the money that isn't paid out as bonuses, and hence doesn't get spent on luxury goods vanishes into thin air does it? The trickle-down argument is as lame as the threat of migration of irreplaceable talent.

You could argue that building your entire business on such a tiny portion of the available market (big bonus earning city bankers can't be that big a part of the west country community) is remarkably short-sighted.

oh dear you've all been brainwashed by the politicians who have taken the heat off themselves by blaming the whole crisis on banking bonus's. Complete nonsense, who was it that was knighting all these bankers in the first place? By the way Roy (above) 41% of the bonus goes in tax (51.5% next year),no bonus no tax to support all those public sector workers,so as Dave says everything is interlinked.Finally banking is very mobile so you will start to loose the real talent.The politics of envy does huge harm.

Although I take your investment advice to heart Mark when considering where to invest my SIPP (I'm assuming there isn't more than one Mark Dampier) I can't agree that this is about the politics of envy.

The imminent cause of the credit crunch is decision-makers in the finance sector flanneling their superiors and shareholders into thinking that they were risk aware and conservative, whereas, in reality, they didn't really have a clue what level of risk they were dealing with.

At the same time they were heavily incentivised to continue to behave 'as if' they understood the risks they were taking and acting accordingly.

So annual bonuses were based upon producing illusory profits that would be lost in the future.

So there is a sound basis for reforming bonuses.

At the same time increasing capital requirements for firms makes sense too.

What is more problematical is changing the perception of the amount of investment risk that is being taken. 1) It requires a re-programming of the way the suits think and act (assuming they do it in that order) 2) It has potential leakage into the wider world, with ordinary people re-evaluating their risk budgets across their pension funds, ISAs and even reassessing downward their willingness to save long-term.

sorry Shaun the cause of the crisis was very low interest rates and rising land prices.The banks behaved in a vert logical manner and lent to everyone,banks do this everytime,the wonder is the politcians and regulators didnt do anything about it,but then they were too busy getting their bonus's!! Stamp duty alone was bringing in over £6bn a year,so the bankers were idiots,but they always are,but they are not alone in causing the problems as you might believe listening to politcians!!

Mark,

#4) If money is not creamed off the productive areas of the economy in such volumes, then it remains to be paid to shareholders such as pension funds, in interest to the actual providers of capital, and to be put to more productive uses through investment. Besides which, if it is not paid to bankers it is paid to others who will also pay tax - some of them even without avoiding it through nefarious means.

#6) Agreed, the bubble was down to politicians - primarily by selecting to demonise retail price inflation while canonising asset price inflation. However, politicians are an easily-led bunch who think with their stomachs. No surprise that Blair received a juicy role with a bank in gratitude...

It wasn't logical to assume that interest rates wouldn't rise, especially if you're borrowing short term to lend long term. The decision makers in the banks did not have sufficient insight into the nature of the risks they were taking and their remuneration didn't incentivise them into pausing for thought and considering whether or not an approach of making money out of people rather than making people with people was the way to build sustainable profits. Hence the banks failed. And when there were voices warning about the magnitude of potential risk within these now failed organisations they were sidelined.