Stephen Green the chairman of HSBC, the world’s second biggest bank, has given an interview about the credit crunch on the BBC website, see: http://news.bbc.co.uk/1/hi/business/7613509.stm
About banker’s pay levels he says:
‘there has been far too much focus on payments that are very short term focused, people who pick up the tab for short term profits, without having to bear the costs of long term impairments.’
James Robertson** who works tirelessly to promote alternative economics puts his finger on the core of the problem, he says:
HSBC chairman Stephen Green's acceptance of the need to reform bankers' pay is welcome. But it won't touch the root of the problem - which is that, by their profit-making loans to customers, the banks now create almost all the money supply.
A monetary reform is needed. It would transfer responsibility for creating money to the central bank as an agency of the state. Creating a stable public money supply conflicts with competitive borrowing and lending. Neither function can be efficient unless they are separated.
The present credit crunch, the latest in the recurring series of credit booms and busts, is the inevitable result of confusing them. Chuck Prince of Citibank explained why it's inevitable from the banker's point of view: "So long as the music is playing, you’ve got to get up and dance".
**James Robertson was said by Mikhail Gorbechev in 2003 to be “An outstanding example of a modern thinker at the service of society’. For more on his ideas for monetary reform see http://www.jamesrobertson.com/books.htm
At every level of public and business life, people are encouraged to asses the risks that might flow from their actions, or lack of them. The way we allow banking to work, escapes this scrutiny and so it is that millions of ordinary people suffer badly from the financial crashes that regularly ensue.
Read The Free Lunch –Fairness with Freedom for more on such problems and how we might move to a fairer society for all.
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