Never waste a good crisis. So says Rahm Emanuel, Obama’s right hand man. Sorry Rahm but it looks like we already have. At least, that’s what this banker told me, and with the return of big bonuses by firms recently bailed out by government, I fear he’s right.
A few weeks ago, after a scintillating lecture about Credit Derivative Swaps (yeah I know, I’m a sad, sad, boring man), I was sipping a cocktail at the bar of the Frontline Club, standing next to two bankers. In my friendly American way, I started chatting with them. In my irritating American way, I let them know what I thought of their profession, ranting that investment bankers have become parasites, that finance no longer serves the needs of the real economy, that the financial tail is wagging the productive economy dog. One of them, a short prim man in an expensive suit, turned away with a snort muttering something about how risk management has been around since ancient Egypt and is the hallmark of civilisation (I thought it was fresh bread or maybe fermented grapes) and but the taller one was amused enough to continue our conversation….
To my shock and surprise, he kept agreeing with me. He agreed that the big bonuses are earned for activities with minimal or even negative societal value. He agreed that private equity leveraged buyouts (in which investors find a company with h…