Bankes Bonus and More

The profession of Banker was long ago one of respect and high esteem, well-educated people and very knowledgeable. Not anymore we are observing now, inept top-managers misusing their trust and loyalty totally incompetent. Scandalous scoundrels are too nice words to describe these criminals. Once in charge their interest is not mending skilfully the banking business, but filling their pockets with money that with faith was trusted to them.
Their rogue behaviour has put the world economy in the grip of the most severe recession that soon will turn into depression. Novel banking magic was applied to obscure their stupidity. They turned the global financial system in endless supplies of cheap money, causing rampant speculation, fraud, greed, and delusion. Making the system terminally ill, by thinking that stimulus packages from government buyouts and bailouts would restore the economy to health. Pure nonsense. Whatever is going to happen, count with numbers of banks going bankrupt, at last only the conservatively managed ones will come out stronger by acquiring the 'healthy' assets from the ruined others.

Banks are ailing as the manufacturing industry is collapsing. Consumers have lost much of their wealth and unemployment is climbing. In the meantime the ineffective bankers depart from their banks with golden parachutes of undeserved millions, mind you: paid from the bailout money! After emptying the tilt and having spend their bank’s money on ineffective acquisitions that culminated in disastrous purchases, miscalculations and manipulations, which caused record losses, now they are compensated for their departure by the taxpayer that is going to cost many billions.

A blatant example; at the Royal Bank of Scotland, RBS, its chairman Mr. Goodwin, at the top of this bank for a decade, was in charge of such disastrous strategies that amongst others culminated in the purchase of ABN-AMRO, a Dutch bank in 2007. He was sacked after his purchase turned sour, and ‘his’ bank went belly-up. To get him out, RBS Board (with the knowledge of policymakers?) paid him at age 50 at once a lifetime pension of US$ 1.000.000/year, as compensation for his catastrophic mismanagement! He apparently needs that money to continue his lifestyle, because no sensible other company may hire him. Appeals to his sense of honour to reduce this payment to normal proportions have yielded nothing but his refusal. Baah…

To bring this in better perspective:
About a year ago RBS paid $100 billion for ABN-AMRO.
For this amount as of February/March 2009, RBS could have bought:

•    Citigroup $11 billion
•    Morgan Stanley $36 billion
•    Goldman Sachs $23 billion
•    Deutsche Bank $13 billion

And still have left $17 billion in the tilt with which RBS would have been able to buy 100% of GM, Ford, Chrysler, the Honda F1 Team and many others more.
How could all that happen?
At the start of this century the feds encouraged people to borrow, to lend and spend, with the contention that the economy should grow forever. Stupid. But people did it. And then they over-did it. And when they finished overdoing it they discovered that the industry had built way too many houses, cars and so on. All these were priced far beyond what people could afford to pay for. What followed was a crash in the housing and other markets. It was not too much later that the financial industry realized that its collateral was being undermined. That's when all Hell broke loose. Suddenly, practically every asset in the world was called into question. Now they started to realize how much was owed and to whom? And what to do if they couldn't pay back?
The authorities misinterpreted the ensuing credit crunch. They thought it was a liquidity problem. So, they put out even more trillions of dollars to 'solve' the problem. Too much spending had caused the problem and they still think that if a few trillions more are spent the problem will be over. Of course, that won't happen, because the real problem is debt. And to get rid of debt there are only three ways to solve that problem: You can default. You can inflate. Or perhaps, you can work your way out.

The quasi-nationalization of banks by the Government is clearly a disaster in progress for all concerned. There is little disagreement that two of the major banks – Citigroup and Bank of America – are in the zone of insolvency. Their assets are worth less than their liabilities while their shareholders have been wiped out in all but name those are left to give it quasi-public status, while they actually already are nationalized. Maintaining the illusion of public ownership has enabled some of the individuals running these institutions to engage in several of the most irresponsible behaviour ever seen in the history of American business. The payout of billions of dollars of bonuses to the executives and employees of Merrill Lynch on the eve of its forced takeover by Bank of America is unashamed misuse of trust and underlines the greed mentality.

Actually none of this rescuing has created any good. Every bank and business that has got help deteriorated as is observed. The FED let Lehman go bust but saved insurance giant AIG. Now, AIG is in trouble for he fourth time in a row. And a further $30 billion will bring the total bailout expense to $180 billion. Factually the Government now has the controlling stake.
Bailouts are all the rage right now nearing a total of $2.5 trillion. Unfortunately, no one is paying attention to the hardworking U.S. taxpayers who is footing this bill. The entire U.S. financial industry is "effectively insolvent," writes Forbes, as result of their mismanagement, errors and omissions.

Policymakers now have spent Trillions of dollars for these fraudulent bailouts. AIG, for example, has been described the place 'where taxpayers' money is going to die.' However it doesn't die in AIG, it goes to pay off debts to the biggest creditors called Merrill Lynch and Goldman Sachs. Because Goldman with Tim Geithner now Treasurer in Obama’s Government and the FED were present when the decision was made to 'rescue' AIG. Goldman may not have mentioned at the time that AIG owed Goldman billions of dollars. With the consequence that taxpayers’ bailout money to AIG ends up at Goldman. Doesn’t that smell bad?