Sunday, July 5, 2009

I would love to know how this will work

Darling wants to link bonuses to capital requirements. It is great idea for a Sunday morning headline, but it is totally unworkable.

How can the the government set the minimum level of capital of complex financial institutions based on the salaries of its highest paid executives? I don't think it is possible.

From today's Observer....

City banks that pay out lavish bonuses for short-term profits will be forced to set aside a bigger cash cushion against losses, Alistair Darling will announce this week, as he sets out the government's plans to crack down on the practices that led to the credit crunch.


  1. Another idea that will be quickly forgotten. It is so Brown....

  2. It's called one-sided economics, so beloved of politicians. There's no skill involved in dreaming up this crap and, if implemented, it either has no effect (because people see the loopholes straightaway) or it makes things worse.

  3. Sounds OK, but I'll wait for the details...