What would the economic implications of salary capping be?

Oooh. Cool. I'm a conspiracy theorist after all! I certainly feel like a pawn in somebody else's game, anyway.

'all these supposedly highly intelligent people are a bunch of bulls and bears who don't really understand intellectually what they are doing and why, they just know how to make money for themselves and have no control over'

Lots of blogs and conspiracy sites had long predicted a financial crisis caused by the derivative bubble. Where were all these clever ratings agencies and highly paid regulators? Were they just pawns on the chessboard of the 'new world order'? Where were the cheques and balanced accounts? Why will the public pay the bill? Is the 'old order' over, has the public lost the game, is it a 'new world order' checkmate, will things ever be the same?

There are people who want a 'new world order' and the Euro crisis and financial crisis probably help take us a few steps closer to it, and it seems to be 'progressive'. But will it metamorphose as a beautiful butterfly from a caterpillar, or will it turn out to be a progressive hound of hell?
Will the people rue the day that the progressives have their way?

"Today?s decisions, of course, will not immediately solve the crisis. But we have begun the process by which it will be solved," Mr Brown said. "I think a new world order is emerging with the foundation of a new progressive era of international co-operation,"

www.telegraph.co.uk/finance/g20-summit/5097195/G20-summit-Gordon-Brown-announces-new-world-order.html

www.dailymail.co.uk/news/article-1166182/Brown-DOES-God-calls-new-world-order-sermon-St-Pauls.html

Brown wants a new world order

And if their only responsibility is to make money for themselves, then why are we throwing cash at them?

Well, yes, I know that. But my point is, we don't appear to know how much we owe, we just appear to be at the mercy of overpaid peoples' moods. We are expected to trust people who lent profligately to have suddenly become staid and sensible, rather than to go swinging wildly from one extreme to another. And we keep giving these idiots more and more cash which doesn't actually exist, it's just been swiped out of thin air and printed by the Bank of England in order for them to gamble a bit more for their own profits and not share any of it with anyone else. What is actually "real" money, anyway, if the Bank of England can print as much as it likes?????? And why on earth do we operate under a system which seems to be governed by such a ridiculously unhealthy herd mentality? Either there is an evil mastermind behind this, creating a new world order as per his view of how things should be, or all these supposedly highly intelligent people are a bunch of bulls and bears who don't really understand intellectually what they are doing and why, they just know how to make money for themselves and have no control over, or interest in, what this does to the rest of the world order.

Did we have a boom because we all imagined we were very rich, and now we're having a bust, because we all imagine we aren't???????

Pretty much yes. Too many borrowed money to pay for the things now which they otherwise would not be able to afford. People did it to fuel holidays, home improvements, moving to a better house, better car etc., governments did to fund spending sprees invest in services/benefits they otherwise couldn't afford. Too few stopped to think that when you borrow money, one day you must pay it back.

Now we have to pay it back. And the blunt truth is that you end up with less to spend now because not only do you have to pay the capital back, you also must pay interest too.

I think bankers have been watching too many episodes of Hustle.

Can anyone explain to me where money actually comes from these days? Is it all actually imaginary, and we are playing with imaginary amounts which we imagine we can afford, but not actually connected to anything? I know it's not connected to gold anymore, in any event... Did we have a boom because we all imagined we were very rich, and now we're having a bust, because we all imagine we aren't??????? It all seems a bit of a con to me that we have to give money to the banks in order to be able to borrow money from the banks and then they tell us we have to give them some more money via the Bank of England reserves before they will give it back, and even though we lent the banks the money in the first place just so that they could give it back to us plus an interest charge, they get to decide what they are willing to lend it out for (which happens to be for more financial speculation rather than investment in new businesses). Are we not just playing into their hands, parting with our imaginary cash and giving them more and more in return for being told we are now in huge debt, which they don't think we can afford to pay off (because they are making sure of it)?

Cogito - I keep having this little fantasy doing this little thought experiment in my head.

Imagine Mervyn King and George Osborne announced today that the BoE was going to withdraw all QE and the Treasury withdraw all tax payers money from the financial system over a steady two year period starting on Monday.

I suspect the stockmarket and all the banks might well collapse immediately. I supect the BoE and Trasury know thsi and of course they would never make that announcement. The problem I have is I can't ever imagine a time when it wil be right to go back to a normal economy where wages (including banker bonus), prices and credit are all allowed to come to an equilibrium.

"It is all about bailing out banks"

If you live on tick... which is effectively what most countries have been doing... then you can't be surprised if a lot of the money generated has to go towards paying off debts and keeping creditors like central banks happy. The Greek government were dishonest when they joined the Euro, have never balanced their economy since and are now in a hole and can't seem to stop digging. £50bn of quantitiative easing is not bailing out any banks as such... it's an attempt to stimulate the economy now that interest rates are at such perpetually low rates.

I think excessively high salaries trapped people into areas of the economy where they were not necessarily making the best use of their skills (eg trained engineers, scientists and mathematicians going into finance). The result was an unbalanced economy - a situation even worse than that of those trapped on benefits, in that some of the people trapped could have helped create more jobs and a more stable country by being elsewhere, doing something else.

That is my view too - looks like the Euro 130 bn Greek bailout has been 'agreed' with virtually no hard conditions as well.

More money to bail out banks. Only 17% of that Euro 130 bn of money will actually get to the Greek people. The other 83% will literally go straight back out of the Greek Treasury dept to the banks in the form of capital and interest payments.

To be fair, it also smacks of blind panic.

ttosca - just to let you know.

The Bank of England just announced today that it is doing another £50bn of Quantitative Easing and the ECB announced it is considering taking another Euro 7 trillion of poor quality loans off Euro area bank balance sheets.

It is all about bailing out banks - nothing to do with the real economy and real people. Makes me sick.

rabbit - no not for 1 min suggesting everyone is like my ex SIL thankfully.

Another thing I noticed when I was working in the City was the number of men who would, frankly, faff about half the day rather than get on with it, and then miraculously find things to do shortly before they were due to go home in time for their children's bedtime routine. They would then phone their spouses, all apologetic, saying that they were just snowed under and would have to stay at work late, and could they have a quick word with the kids on the phone, returning home later that night once the homework and bedtime routine was safely out of the way. Yes, some of the time they were really working hard, but a lot of the time they were evading their home responsibilities by pretending to be more busy than they actually were. Yet in a divorce, I'm sure all that would be conveniently forgotten and they would be the put upon husband who did all the hard work while their spouse got her nails done and never bothered to get a proper job.

Let us give the Tories a little bit of credit. You may be right, but at least the Coalition is now getting to grips with the regulation.

They're not doing this. Banks are still under-capitalised, still too interconnected, and still 'too big to fail'. They've basically changed nothing. If one of the big banks failed again today, we'd still have to bail them out again, and it would still caused another huge financial crisis.

The Tories don't want to touch the city because they're good mates with most of the people who work there. They receive 50% of party funding from the City of London.

There is no way that the Tory scum are going to regulate the City in any meaningful way.

That's not always the case, though, dreamingofsun! Unless you are implying that all SAHM watch TV, go shopping, make their husbands miserable and do nothing of use to anyone.

rabbit - though i don't think the vast amount of TV and shopping my ex SIL watched as a 'housewife' really balanced the hard graft that my brother put in at a paid job. though i guess you could call it 'teamwork' - he worked, she carried out the leisure activities.

Thank you, SinicalSanta. .

Unfortunately, I think your suggestion would be considered a little bit too close to a communist utopia to be considered acceptable to most people. And of course, the lowest paid and least skilled already tend to do a lot of the most immediately useful jobs, whether cleaning, farm working, rubbish collecting, caring, etc, etc. They don't get the rewards they deserve, given the amount of propping up of everyone else that they do, enabling them to go out and make money in more skilled jobs, but how you find a politically acceptable way of giving them a bit more of what they deserve is what ends up stumping most people. It's a bit like the arguments between divorcing couples where the woman is after a share of the assets: he says she didn't earn any of it and doesn't deserve it and she says he wouldn't have had the time, energy or ability to achieve what he did if he hadn't had her behind the scenes, looking after the children, organising the household finances, keeping the house clean and warm, preparing the food, etc. Teamwork is conveniently forgotten when it comes down to sharing out the profits and it is those with their hands on the purse strings who get to decide how to share it out.

I like the fact that Cameron is at least attempting to keep going and do something about the difficult situation we are in; that he is the sort of thick skinned person who can cope with the job and even appear to get some perverse sense of enjoyment out of it. I think you need a certain degree of arrogance and excessive self-belief to be able to keep going like that when everyone doubts you/tells you point blank you are utterly wrong. That's why it's so hard to find a good leader who doesn't tip into becoming a bit of a dictator as the years go by. What I didn't like about Blair was the constant stream of unbelievable statements that came out of his mouth, which either indicated that he was deeply deluded to the point of mental illness, or was bending the truth so far that it was no longer identifiable, in order to suit his own ends - and then persuading half the press to toady along with him rather than ask intelligent questions. I therefore did not like Blair. He was insincerely wrong and took spin to a whole new and unwholesome level, which is far worse than being sincerely wrong. Blair reminded me of other bad leaders who spent their early years saying everything their audience wanted to hear, changing the message slightly to suit the particular crowd they were appealing to at the time, but having no intention or ability to do all the things promised in the myriad different ways they had been promised to be done. Hitler had a good line in changing his message to suit the audience in his early years, until he had a big enough foothold on power to show his true colours with more honesty, too.

rabbitstew I have enjoyed reading your posts, very clear and thought provoking.

I wonder if, as a country, if the emphasis shouldn't be on the 'average and below' sector of society. If the ambition was that low skilled and average skilled people were working at jobs that were beneficial to society, and paid a liveable wage, how would that structure the economy?

At the moment the emphasis seems to be on the top level, and expecting the benefits to trickle down.

I don't know but would be interested in hearing thoughts.

I like Cameron. He is not arrogant and seems genuine. I also like Ed Miliband for the same reason.

I liked Blair at the start, it was only after some time that he seemed a little phony. But I don't dislike him either. He was only doing his job.

I find Cameron less nauseating than Blair, though. Probably because he is clearly right wing and isn't trying to hide himself in a supposedly left wing party.

I'm referring to the lot of them. They all seem to want to get back to "business as usual" as quickly as possible.