Saturday, 28 September 2013

Yen and art of libor fixing

An older, wiser colleague once told me/said out loud; I’m not working bloody investment bank hours if I’m not getting investment bank bloody wages. The recent and tragic death of an investment bank intern last month reminded me of this; the subsequent comments and reportage less so.

According to the Guardian, “Banking interns need protection from the City's 'all-nighter' culture” i.e. this is a real problem and something should be done about the exploitation of ambitious young people. Except, picking thru some of the accounts of life as an intern kicking about, a recurring point made is how much face-time they contribute i.e. are they actually working into the wee small hours every night? Sometimes I guess. Alongside this though are they sitting at their desks making sure their managers see them regardless of having no work and no other reason to be there? Oh yes, which strikes me as more boring than exhausting. And definitely tit-like.

More seriously, the way the Guardian dumbly describes the long-hours “worked” in this “brutal”, “glamourous”, “financially rewarding”, “competitive”, “cocktail nights”, “superstar” culture , tacitly legitimises, at least in the eyes of the London media, the vast rewards paid to investment bankers and the consequent economic inequality that increasingly characterises British society.

Like, why does he get a £1m bonus? Because he works mad long hours in a brutal environment and competed hard to get their that’s why. Except, lots of people work long hours and don’t get paid that kind of money, heck a big reason many people work long hours is because their hourly wage is so low (or latterly because they’re shit scared of the chop).

Rather than this being a discrepancy, which it is, I reckon its more meaningfully regarded as being symptomatic of a broader, class mentality. “They” deserve the big bucks because they work long hours, whereas "we", certainly in Jamie Oliver land, deserve nothing but the long-hours. 

Similarly, “they” deserve the big bucks because that’s how you attract the best whereas “we” need to have realistic expectations come pay review time because times are hard don’t you know and anyhow, as Mervyn King used to obsess, widespread pay rises are a potential problem because they threaten to boost inflation (unlike the never ending double digit rise in CEO wages).

I guess if pushed, someone wanting to defend investment bank pay would refer to the money investment bankers make their employers. Except, as the growing number of US court cases make clear, a lot of this involved pretty basic fraud and market manipulation rather than genius-like financial acumen, as these emails about fiddling the Yen market make clear.

And its worth emphasising these are US court cases, because the UK’s financial regulators and criminal system really doesn’t want to know to an embarressing extent given the example of the actions being taken following the“London Whale” arer almost entirely US led. And again, I reckon this is something best understood in terms of class with any chat about investment banking's long-hours only serving to distract from an entire industry's apparently untouchable bent-ness.

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