Why worry

I could not resist laughing out loud when I saw, while visiting Ibiza’s harbor in the Spanish Balearic Islands last week, the name of one of those mega luxurious yachts moored there. It’s name was: “WHY WORRY". At least a multimillionaire with a bit of sense of humor, I thought!

Talking about not worrying, have you seen that big Bonuses Are Back (BAB) for our dear bankers.

You know! The ones that created the financial meltdown a few months ago that all of us, poor mortals, will spend decades paying for.

Politicians around the world have been putting the blame of the crisis, which started with the credit crisis, onto a bonus culture pushing our bankers to take unreasonable risks with our money.

They have asked for reforms and more oversight on the way they are paid. Would you really bet on any real change of culture, other than a cosmetic one, happening? I would not…

Bankers’ bonuses only dried-up for a year or so (poor sods!). The latest barometer seems to indicate that bonuses are back in full swing particularly if you are in the currency, bond (governments' need to finance their deficits!) or fixed-income markets:

  • Goldman Sachs is setting aside half of its $1.81bn first-quarter profit to reward staff, much of it in bonuses. It is rumored that 973 of their bankers got $1m or more last year, while this year's payouts are on track to be the highest on record for most of the bank's 28,000 staff.
  • Barclays is paying out an estimated £730m (i.e. around $1.2bn) to about 410 of its employees. That’s an average of £1.8m ($2.9m) per person if my calculation is right. Not bad at all.
  • Royal Bank of Scotland, now 70% owned by the UK government i.e. by the taxpayer after a dramatic bail-out following disastrous investments like ABN-Amro, has awarded in March 2009 millions of shares and options already worth £8m ($13.2m) to one of his executives.
    I do not even talk about its new CEO, technically named by the government, which has been awarded a package worth £15m ($24.7m) if he manages to bring the bank’s share price to £0.70 (from £0.37 today… maybe not a target that stretching if you think that the share price of RBS was at around £7.20 in the first quarter of 2007).

In the meantime, not being bankers ourselves, we are going to see our taxes being substantially increased and our benefits and pensions significantly reduced.

Would I call my boat “Why Worry II” if I was in their shoes? I think so.