London Rants

There’s a massive ongoing discussion about the massive bonuses of bankers. Its gone as far as Primer Minister Brown being ‘very angry’ about bonuses. Generally I don’t have a problem with bonuses, I don’t even really have an issue with large bonuses. The problem I have is with cash bonuses. Traditionally a large bonus haven’t been cashed based but rather share options. The idea behind this is that a bonus is provided as options that after a period of time become fully franked shares in the company in which the person works. The reason these are good is because if a month after the bonus is awarded, like in the case of Lehman Brothers, the company goes down the toilet due to the decisions that the the people that received the bonus had made the person is also impacted. So if a company goes broke a year or so later the person basically gets nothing, but if the company continues to grow the person does well. This should especially be the case for all member of the boards of directors in companies and the various CxO people. That way the bonus actually reflects their performance over a period of time. Very simple and the way it use to be, if PM Brown gets his way its the way it will be once again!

Wow, for the first time ever gold has reached USD $1000 an ounce. Yes, that’s right, all of about 28g. I can remember five years or so ago when in Australia they were closing marginal gold mines and mothballing them because they couldn’t cover their running costs. I seem to remember at the time gold was in the USD $200-300 range. The financial wizards are saying this is for two reasons. Firstly the crap USD and secondly due to the general health of the world wide financial markets. Gold has historically something that people have turned to as hard currency in bad times as its something they can see. Generally now days currency is electronic so hard to see and it fluctuates. I just wish the AUD$ would drop against the GBP£ but as can be seen here it seems unlikely as the Australian economy is too strong at the moment.