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Nothing new under the sun to make money and cheat people you've got to have a ruthless streak.Some of them give to charities to clear their mind.
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Richard Branson and Lord Sugar make lots of money in their chosen fields and we give them knighthoods and peerages.
Bob Diamond makes lots of money in his chosen field and people are calling for his head.
Also worth noting Diamond's personal profit is buttons compared to the other two.
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Branson and Sugar put their own money on the line. Diamond is merely an employee and puts someone else's money on then line.
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Don’t be the first to bare your teeth
Don’t be the last to blink
Don’t seem to be too thoughtful
Don’t let on what you think
Don’t forget Chanel Pour Homme
To mask any putrid stink
And don’t be too damn successful
Or we’ll all end up in the clink.
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>> Richard Branson and Lord Sugar make lots of money in their chosen fields and we
>> give them knighthoods and peerages.
>>
>> Bob Diamond makes lots of money in his chosen field and people are calling for
>> his head.
>>
>> Also worth noting Diamond's personal profit is buttons compared to the other two.
>>
>>
Branson and Sugar don't expect the UK taxpayer to bail them out when they lose £ billions of customer money by gambling.Nor the taxpayer to lend them more £billions at 0% interest.
Last edited by: madf on Tue 17 Jul 12 at 06:44
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...don't expect the UK taxpayer to bail them out when they lose £ billions...
Barclays took no money from the taxpayer.
Diamond and the board used their business nous to attract inward investment from abroad.
In other words, they could save their clearing bank when RBS and Lloyds TSB could not.
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>> Barclays took no money from the taxpayer.
They may not have sold any shares to the taxpayer, but they took countless billions from the liquidity released into the market - even if indirectly via other banks. Without the BoE's cash, Barclays would have joined the rest of them - and we would be trading with each other in sweets.
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What is it with all of this psychopath stuff?
Billy works in a sales team, has a mortgage to pay and a wife and two kids to feed, and yet makes little commission and risks losing his job, because the other sales guys lie to the customers.
So, Billy starts doing a bit of lying too. Does that make him a psychopath?
True psychopaths are about 1% of the population. They are unable to empathise. That is not the same as being able to empathise, but putting your interests before those of others, or before some supposed moral code.
Don't nice guys finish last? Does that make all the other guys psychopaths?
Of course, bankers are an easy target, they live in big houses and make loads of cash. If they spent their days bending/breaking the rules and taking big risks, but all lived in rat infested terraced houses and earned minimum wage, I think there would be far less envy and banker bashing.
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Of course, bankers are an easy target, they live in big houses and make loads of cash. If they spent their days bending/breaking the rules and taking big risks, but all lived in rat infested terraced houses and earned minimum wage, I think there would be far less envy and banker bashing.
Wrong.
Bankers take customer money and place huge bets with taht money. If they make money they get a commission.
If they lose money - and remember it's customer money - and the bank goes bust - the customer is refunded by the state and the bankers keep their commission.
Their bets inflated the price of oil by approx $20 according to research into the last oil price spike..
Remember PPI? And loan hedging? All ending up making huge profits - £ billions - for the banks at the expense of the customer.
Banks as they exist are a means of fleecing customers and the state and paying employees vast sums which they could never earn elsewhere. (Financial Services pay their employees more than anyone)
And do they have any shame or remorse? Nope.. Bob Diamond said that the banking crisis was over years ago and they should be left in peace - to screw more customers...
On top of that, when one gets into trouble they all do and place the economy at riisk placing others' jobs at risk.
About time some were jailed - a couple of 20 year terms for tehft and fraud might pass the message to them.
HSBC - despite frequent warnings - allowed its Mexican subsidiary to launder about $7 billion - allegedly of drug money. And did nothing.. And who has gone to jail? No-one.
Last edited by: madf on Tue 17 Jul 12 at 12:07
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>> Wrong.
>>
>> Bankers take customer money and place huge bets with taht money. If they make money
>> they get a commission.
>>
>> If they lose money - and remember it's customer money - and the bank goes
>> bust - the customer is refunded by the state and the bankers keep their commission.
There a lot of emotive language around the subject of bankers, including psychopaths and "betting".
A lot of it gets in the way of of understanding.
There is definitely something to be said for splitting investment and retail banking, and properly ringfencing it, but the vast amount of money that the investment arms trade with is not retail banking money.
So, then it depends what you mean by bankers betting.
Investment arms exist to invest money, and there are expected to make a return. You can't make a return in real terms without carrying some risk.
In that sense, pension funds are betting with your hard earned pension.
Sometimes the amounts can seem huge, like the recent JP Morgan trade, but that is often just because the amounts they have to invest are huge too.
Last edited by: SteelSpark on Tue 17 Jul 12 at 12:29
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>> There is definitely something to be said for splitting investment and retail banking, and properly
>> ringfencing it, but the vast amount of money that the investment arms trade with is
>> not retail banking money.
In fact, in the case of Barclays, according to MorningStar
"High ring-fencing regulations would be likely to affect Barclays, in our opinion, despite the fact that Barclays does not use retail deposits to fund its investment banking operations."
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>> >> If they lose money - and remember it's customer money - and the bank
>> goes
>> >> bust - the customer is refunded by the state and the bankers keep their
>> commission.
>> There a lot of emotive language around the subject of bankers, including psychopaths and "betting". A lot of it gets in the way of of understanding.
>>
>> There is definitely something to be said for splitting investment and retail banking, and properly
>> ringfencing it, but the vast amount of money that the investment arms trade with is
>> not retail banking money.
It doesn't alter the fact that when it all goes wrong, the bank goes bust, the customer is refunded by the state and the bankers keep their salary - let alone their bonus.
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>> It doesn't alter the fact that when it all goes wrong, the bank goes bust,
>> the customer is refunded by the state and the bankers keep their salary - let
>> alone their bonus.
Why shouldn't they keep their salary and their bonus?
They are paid to invest money, and they have to invest it in a way that takes on risk. It's impossible for anybody to guarantee a return, especially over the period of time that a salary or bonus is earned.
Do surgeons not get paid if the patient dies?
You're paying for their expertise, not necessarily their short term results.
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>>Why shouldn't they keep their salary and their bonus?
Because it's a one-way bet for them. The bigger and riskier the bet, the bigger the potential gains and there is almost never a downside. The point is not that they shouldn't keep their salary, it's that they shouldn't ever have salary/bonus on those levels in the first place.
>>Do surgeons not get paid if the patient dies?
If it happens too often they get struck off. If a banker kills too many patients they get another job elsewhere.
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>> >>Why shouldn't they keep their salary and their bonus?
>>
>> Because it's a one-way bet for them. The bigger and riskier the bet, the bigger
>> the potential gains and there is almost never a downside.
It's not a one way bet though is it. If you don't create a track record of success, then you won't get promoted, with the big salary and the big bonus.
>> The point is not that
>> they shouldn't keep their salary, it's that they shouldn't ever have salary/bonus on those levels
>> in the first place.
Yes, my original point. That envy plays a large part in banker bashing.
>> >>Do surgeons not get paid if the patient dies?
>>
>> If it happens too often they get struck off. If a banker kills too many
>> patients they get another job elsewhere.
Well, no they don't. See above. If they don't have a good track record they don't get promoted, and maybe even leave the industry.
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Well, yes they do. (If you believe the Guardian.)
www.guardian.co.uk/business/2012/jul/09/barclays-bob-diamond-martin-taylor
There's a real attitude of "he makes lots of money by making big aggressive bets, he's a great trader. Poor chap, that bet has gone wrong and he's lost money (even more money than he's ever made in all his profitable trades). But he's normally a great trader, he was just unlucky, let's promote him."
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>> There's a real attitude of "he makes lots of money by making big aggressive bets,
>> he's a great trader. Poor chap, that bet has gone wrong and he's lost money
>> (even more money than he's ever made in all his profitable trades). But he's normally
>> a great trader, he was just unlucky, let's promote him."
I'm not sure why you're coming to that conclusion.
You've picked one incident from Diamond's career, there have been a lot more ups and downs like that. Do you really think that if he was just making big trades and regularly losing more than he was making, that he would have had a career?
We have to accept that the job they do means that they have to take on large, risky positions.
You're right that the industry rewards them for taking large risks and making large gains...but only if they think they'll come out on top in the long run.
There can't be any guarantees that a given position will turn out positive, but their job is to take positions. You can't whack them every time they are wrong. Even if they are wrong over quite a long period.
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>>I'm not sure why you're coming to that conclusion.
Because all to often that's how it works. Talk to some traders.
My real problem in all this is the role of the shareholder. e.g. when Diamond joined Barclays some twenty years ago, the share price was £2. When he became chief exec it was £6. Now it's £1.60.
What exactly has he done that is so great? Well, I guess he's only lost two thirds of investors' money. HBOS lost 100% of it. Does he therefore really deserve his very high salary let alone his bonus? Of course he deserves a salary, just like the rest of us do for turning up to work. But these companies are run for the benefit of senior management, not shareholders.
You cannot argue with the share price.
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>> Because all to often that's how it works. Talk to some traders.
No it doesn't. Do some people get further ahead, through ability augmented with personality and political acumen? Sure, in banking as with any other profession. Would somebody rise to be head of Barclays Capital, if they couldn't point to a strong track record? No.
>> My real problem in all this is the role of the shareholder. e.g. when Diamond
>> joined Barclays some twenty years ago, the share price was £2. When he became chief
>> exec it was £6. Now it's £1.60.
When he became Chief Exec it was actually at £2.60.
>> What exactly has he done that is so great? Well, I guess he's only lost
>> two thirds of investors' money.
The share price is actually down about 40% since he took over. But so what? The stock price is not the same as the equity in the business or its profits.
Due to the European Debt Crisis, shareholders are dumping financial stocks, regardless of performance. There is nothing that Diamond could do about that.
Shareholder equity increased from about £50bn to £55bn in his first year in charge, and if estimates profits will have increased from £6bn to £7bn from the start of 2011 to the end of 2012.
So, he has increased the shareholder value, but that's very different to how the market decides to price financial stocks at the moment.
Ask those traders you know.
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>> When he became Chief Exec it was actually at £2.60.
Sorry, you're right of course. I think I meant joined the board.
Doesn't alter the fact he's helped run the ship for over a decade of zero growth.
>>Due to the European Debt Crisis, shareholders are dumping financial stocks, regardless of
>>performance. There is nothing that Diamond could do about that.
That's completely missing the point. The banks, along with governments, caused the Debt Crisis. Together; almost all governments and banks helping. They conspired to destroy shareholder value by having inadequate risk management.
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>> Doesn't alter the fact he's helped run the ship for over a decade of zero
>> growth.
What figures are you using to determine that?
>> That's completely missing the point. The banks, along with governments, caused the Debt Crisis. Together;
>> almost all governments and banks helping. They conspired to destroy shareholder value by having inadequate
>> risk management.
It depends what point you are making. You said:
"What exactly has he done that is so great? Well, I guess he's only lost two thirds of investors' money." and "You cannot argue with the share price."
You seemed to be suggesting that he was personally responsible for the drop in the share price, and that the share price is the same as shareholder value.
Whereas, it is investor sentiment following the Credit Crunch and the European Debt Crisis which has reduced the stock price.
Was he involved in banking at the time that the seeds of those two events were sown. Yes. Can you blame either of them solely on him? No. Could his personal contribution to the events be classified significant? No. Would they have happened even if he had never been born? Yes.
If the drop in the stock price is caused by those events, how can you say that he personally lost two thirds of investor's money? And, even if you could, shareholder value and the stock price are two different things.
Last edited by: SteelSpark on Tue 17 Jul 12 at 16:00
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>> >> Doesn't alter the fact he's helped run the ship for over a decade of
>> zero
>> >> growth.
I dug some figures out for you MM.
2002
Earnings - £2.5bn
Equity - £18bn
2012
Earnings - £7bn
Equity - £65bn
So over 10 years that's almost a trebling of earnings, and more than a trebling of equity.
Zero growth?!
Last edited by: SteelSpark on Tue 17 Jul 12 at 16:14
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SS.
On the first of January 2002 Barclays shares stood at 576p. Today they are 160p - i.e. a little below one third of the value then.
What is your definition of shareholder value, as it's clearly not the same as mine? (I'm happy to add in the approx £2 of dividends distributed over this period.)
What you're telling me is that in fact Barclays is worth three times what it was worth a decade ago, yet the shares are less than one third of the value. In order words you're telling me that the market has - on some measure - reduced the value it attributes to Barclays shares by almost 90%.
Have you identified where you are misreading the accounts yet?
Last edited by: Mapmaker on Tue 17 Jul 12 at 16:54
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>> On the first of January 2002 Barclays shares stood at 576p. Today they are 160p
>> - i.e. a little below one third of the value then.
>>
>> What is your definition of shareholder value, as it's clearly not the same as mine?
That's because you are not looking at shareholder value, you are looking at the share price.
You can value a company in many ways. Book value and earnings being two of the main ones. Both in terms of book value and earnings, the value of the bank is about 3 times what it was in 2002.
You don't value it based upon the stock price!
You can increase the value of a company, as has happened at Barclays, and the share price can still go down.
That's because of market sentiment, which has been bad for the past few years.
The stock price was around 50p at the bottom of the market, so do you think that they have increased the value of the company 3 fold in the last 3 years? No. But 3 years ago investors thought that the banking systems was going to collapse, so they would pay very little for banking stocks. The same is true now, with the debt crisis.
>> Have you identified where you are misreading the accounts yet?
I'm not misreading them. I'm just reading them. Whereas you are just looking at the stock price.
Last edited by: SteelSpark on Tue 17 Jul 12 at 17:33
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Let me try to put it in simple terms.
You start a business in 2002, which has total assets of £1m, and makes £100,000 profit.
You issue a million shares and people bid the stock price up to £50 a share, which is 50x book value and 500x earnings.
A year later, you have total assets of £5m and make a profit of £1m a year.
However, the market is now paying £10 a share, which is 2x book and 10x earnings.
So you have increased the value of the company substantially, but because people were paying over the odds for the stock, the stock price has come down by 80%.
Have you destroyed 80% of shareholder value? No, you have increased it, but previously people were paying too much for that value.
Using the book value and earnings metrics, Barclays have increased the value of the company by about 3 times in 10 years.
The fact that people were overpaying for that value 10 years ago and/or are underpaying for it now, doesn't alter the fact that they have created value.
Last edited by: SteelSpark on Tue 17 Jul 12 at 17:43
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>> Billy works in a sales team, has a mortgage to pay and a wife and
>> two kids to feed, and yet makes little commission and risks losing his job, because
>> the other sales guys lie to the customers.
>>
>> So, Billy starts doing a bit of lying too. Does that make him a psychopath?
>>
It certainly makes him dishonest.
The salami principle. Hitler and the SS...
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>> It certainly makes him dishonest.
>>
>> The salami principle. Hitler and the SS...
LOL.
So it seems that Godwin's Law is correct....
en.wikipedia.org/wiki/Godwin's_law
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i.e. reductio ad absurdum. Billy lies a little bit. So his colleagues lie more, so Billy has to lie to catch up etc. etc.
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>> i.e. reductio ad absurdum. Billy lies a little bit. So his colleagues lie more, so
>> Billy has to lie to catch up etc. etc.
Until we finally come to the absurd conclusion that Billy lying about double glazing, has any connection with the rise or actions of the Nazis.
Taking an initial argument to an absurd conclusion in an attempt to attack the original argument.
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Are you in favour, therefore, of Billy's "little bit of lying"?
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>> Are you in favour, therefore, of Billy's "little bit of lying"?
No, I'm not in favour of it.
My point is that it doesn't mean that he is a psychopath, just because he puts his interests ahead of others, and is prepared to lie.
By the same token, it doesn't mean that bankers are psychopaths.
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I'm not sure why you think it is my view that he is a psychopath?
Dishonest, though.
Do Barcap's employees care how the world views them? Not the ones I know. They give a gallows laugh and take their salaries and bonuses, thank you very much.
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>> I'm not sure why you think it is my view that he is a psychopath?
I didn't say it was. I initially commented on the title of the thread itself, making the point that bankers are not psychopaths just because they act in their own self interest and don't care about the impact on others.
Then you jumped in with some stuff about the Nazis.
>> Do Barcap's employees care how the world views them? Not the ones I know. They
>> give a gallows laugh and take their salaries and bonuses, thank you very much.
I'm sure you're right. Why should they care? They've got a job to do like everybody else.
Last edited by: SteelSpark on Tue 17 Jul 12 at 14:51
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Many bankers are psycopaths - Dutchie
