Record £13billion in City bonuses,so that £50Bn came in handy then ?

Question

ref

http://www.telegraph.co.uk/news/2022633/Record-and16313billion-in-City-bonuses.html

Answer 1

This story is just another in a long line of stories related to the financial sector that encourages risk without consequences for the risk-taker.

The problem is not with the individuals who receive exorbitant amounts in bonuses, though there are many who deserve to be called immoral, but with the system itself. For hedge fund managers, first they are paid to manage their client funds, then paid once again on a sizeable chunk of any profits they make. So, how do they increase the latter? By leveraging (Borrowing) vast sums of money from other institutions and risking it in their ventures. It's the idea of proportional returns. And if they lose money? There are no consequences - financial or otherwise - fund managers get paid whether they lose or win. So, they are being actively encouraged to be reckless with other people's money because there is no personal risk to them whatsoever.

If we lived in a fair world, the rewards would reflect the risks, and we would be paid on the basis of physical and mental effort. If only.