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Friday, July 22, 2011


An item on National Radio NZ yesterday (22/07/11) stated that the sum of bonuses paid in the UK over the past year was 13.6b.  That is 13,600,000,000 pounds sterling.  This link says that it was 14b, not 13.6, and that this was just to the employees of the banks.  It further says that this sector (the banks), which employees 4% of the people in the UK are getting 40% of the bonuses, which are paid in the UK.  Doing a bit of math (14/0.4) it would suggest that the total bonuses paid in the UK equaled 34billion pounds sterling.  I find it hard to get my head around big numbers like these so I am trying to get a handle on what it means.

Now the population of the UK is just below 62 million and the average wage is 500 pounds per month or 6000 pounds per year.  Unemployment is 2.45 million.  The GDP of Great Britain is $2.17trillion US or in today's money, 1.33 trillion pounds.  That is 1,330,000,000,000 pounds sterling.  The national debt of Great Britain is 0.8 of GDP or 1.06 trillion.  Lets look at these figures in a few different ways just to gain some perspective.  The figures are too large to grasp as they are.

How many of the unemployed could be employed at the average UK wage if we used the bankers bonuses to pay them.

We divide the 14b pounds of bankers bonuses by the average wage of $6000 pounds a year.  Answer - 2.3m.  That is just short of the 2.45m that are reported to be unemployed.

How many of the unemployeed could be employed at the Average UK wage if we used all the bonuses paid in the UK

We divide the 34b by 2.45m unemployeed.  Answer - 13.8m or far more than are unemployeed.

What wage could all 2.45m unemployed be receiving if we used the bankers bonuses.

We divide the 14b by 2.45m.  Answer - 5,714 pounds per year - just under the average wage.

If we used the bonuses of the banks to pay off the National debt, how long would it take,

We divide the national debt of 1.06trillion by the 14billion pounds of annual bonuses,  Answer - 75 years.

How about if we used all the 34b of bonuses to pay off the national debt.

We divide the 1.06trillion by 34billion.  Answer - 31 years.

Now I don't know what you think about bonuses to bankers but here is my take.  Firstly, these so called guardians of our economy; these people who produce nothing of intrinsic value and simply transfer money around the place so others can produce; these people who skim off some of the money every time it passes through their sticky little fingers,  have shown themselves demonstrably and conclusively to be incompetent.

It would be reprehensible but understandable if they had seen the looming economic crisis and had positioned themselves economically to make a killing from it.  Not hard.  You liquefy all your assets (turn them into cash) and then buy them up following the crash.  They didn't.  they didn't even understand the likely results of their actions. They are totally economically incompetent.

Then they are incredibly venal.  The very crisis they caused by pushing more and more credit on the public (toxic mortgages, for instance and ever increasing credit card limits) so that they could rake off a commission from every transaction caused the crash.  We bailed them out.  Money from our taxes was put into the banks so that they wouldn't fail.  We ensured that they would continue to have jobs ( we were not so lucky) and what did they do.  They used our money to award themselves obscene bonuses just as they did before the crash.

We, the public, at least, showed a modicum of good sense.  We stopped buying.  That kept inflation from going wild as various countries practiced quantitative easing (printing money).  We paid down debt (if we still had a job) instead of buying.  While that kept inflation in check, it put the squeeze on our businesses who had to discount heavily in an attempt to get us to part with our cash.  Now we face a further insult.

All that quantitative easing is potential inflation; inflation just waiting to happen. In essence the money supply equals the sum of all goods and services.  If you have more money and still the same pool of goods and services, the more you print, the less each dollar or pound is worth.  That's inflation.   Do you have a savings account.  The numeric amount of money in the account won't change but it's buying power will.  It is a stealthy way of stealing money (buying power) from your bank account without ever touching it.  You are being robbed without any need to point a gun.

I haven't yet got the figures for the US of A but I'll do the same calculation for them. I can't help wondering where these jokers get their amazing, unexamined conviction of their own self entitlement.  They produce nothing, gamble against each other and against us, bring down the economy produced by hard working people and then in the very year that the whole edifice crumbles, award themselves fat bonuses from the bail out we provided. 

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