When I heard that the City bonuses are going to amount to £7 billion this morning, I sincerely wished that someone somewhere would start a revolution

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Coming as it does after yesterday's Child Benefit announcement, I am beginning to feel positively anarchic.

I think there should be a General Strike over this, or at least a protest march in London.

Surely if Ireland will implement any tax increases, it will be on their extremely low corporate tax, and not income tax. So I can't see why people of Ireland would revolt,

Morloth - Actually, a better analogy would be "Jews" and "WWII Europe".

without the banks the UK ecnomy would fall apart and we'd all be worse off.

I don't think any of the bankers/banking staff are afraid CoteDAzur, I think they are leaving because the money is.

DH was given two choices, either move to Asia (luckily for us they will let him work out of Australia - however he will be travelling even more than he does now) or be made redundant. Of course we went for option one.

Speaking to the relocation people there really is quite an exodus going on .

WI think you're being naive if you think we can just cancel the bonuses and the banking culture.

For a start, the suggestion that if you cap all bonuses then bankers won't have any choice but to just suck it up is completely bogus. Even if they don't all choose to move to some other, less socialist place where they can continue to earn huge money for themselves and the banks they work for, you miss the point that bankers make huge amounts of money for the banks they work for becuase they know they'll get a chunk of that. If they aren't going to get that, they'll simply stop working so hard or trying so hard to make all that money.

This is bad for everyone. Banks pay corporate tax which they will pay less of if they don't earn as much money. Banks also pay all kinds of extra in corporate social responsibility projects which again, they will stop doing if they are earning less money. Bankers themselves get taxed through the nose on those huge bonuses but obviously they won't be paying that tax money if their bonuses are smaller. Profitable banks also spend lots of money on other things - travel, entertainment, corporate hospitality, branding, etc. They also hire a lot of "normal" people like assistants, and cleaners, and accountants and lawyers. These are all jobs that are the first to go when profits get tough.

So all that cash that bankers generate, only some of which they get as a bonus, will no longer be generated and recirculated into our economy via taxes or just spending by banks/bankers.

It might stick in our craw to see the huge bonuses, but believe me, the money they generate is needed. It's got nothing to do with how hard they work or how clever they are. It's a simple fact that for whatever reason, there is a group of people who are able to generate huge profits for the organisations for which they work which then trickles down in various ways to the rest of us.

CoteDaAzur - Ireland is now in the position that it cannot access international bond markets to finance its budget. Investors fear it wil default on its debts accumulated from bailing out the banking system.

By destruction of the country I mean that its social fabric will be torn apart when it can no longer finance itself and pay for essential public services, basic pensions and so on.

I was in Ireland a few weeks ago and our taxi driver told us that a group of 20 young adults had left his village that morning as a group to go to Australia to look for work because they saw no future in Ireland. The young are the future of any country.

Greece is a more extreme version of this problem and it is becoming really very serious in Ireland.

The analogy is that finance industry is being persecuted and has started an exodus towards more welcoming jurisdictions.

Blingloving,

As an ex banker, I have to dispute some of your assertions.

"that bankers make huge amounts of money for the banks they work for becuase they know they'll get a chunk of that"

Do they? So, are the shareholders who have been invested in the banks for 10 years made huge returns? Umm, no, so in totality, the employees have lost money and, had it not been for government intervention, the they would have lost all their shareholders' funds. In fact RBS came pretty close.

"Banks pay corporate tax which they will pay less of if they don't earn as much money"

True, but have they paid more corporation tax over the last 10 years than the cost of the bailout? And, is there going to be any guarantee that they will over the next 10 years?

If the banks DID generate the money you speak of, your post might make sense, but a lot of it is a chimera.

That is not to say I actually advocate having no bankers or no bonuses. Some of them do genuinely earn high quality money via their talent and deserve to be paid for it. A lot do not, however. What we need is a smaller and better regulated banking sector, with no bank "too big to fail" and the government out of the picture. Otherwise, you are not advocating capitalism but a free option for the staff at the expense of the taxpayer.

Even Greece was not allowed to default when at junk rating, so I fail to see why you think Ireland will be "torn apart" just because it's credit rating was lowered to AA-.

As you must have noticed, given your interest in the matter, Ireland had recently cancelled it's bond auctions in coming months because it is (I'm paraphrasing) "fully funded until mid-2011".

Another point I feel you have missed is the EUR 750 bn emergency reserve created by EU some months ago, which Ireland can tap if it gets into trouble.

So, I do believe that you are incorrect in forecasting ruin and destruction for Ireland.

larry - I can't imagine any government dumb enough to actively legislate to decrease the size of the banking sector in the UK, which seems to be your suggestion. Correct me if I have misunderstood your last post.

I agree with CoteDAzur on this. I doubt that Ireland will fall apart. Greece is a country where the risk is far greater. It depends on the people and how willing they really are to challenge authority. The powerful will survive, there are few nations where the people really do make a difference.

Cote D'azur,

Ireland may not be ruined but its credit default swap is currently trading at 440bps, implying a 25% of default over the next 5 years. It is not in a good position.

It cancelled its auctions because it is as you say "fully funded" but also because it is prohibitively expensive to issue and they risk a failed auction. Countries who are fully funded still have regular auctions in order to maintain liquidity in the market and to give investors a benchmark as to where they are trading. They would only be cancelled in extremis.

Make no mistake, Ireland is in a very bad way! They may not default and, as you say, may get bailed out by the EC. But the UK would not have access to that fund (we are not in the Euro) and I don't think we would want to be dependent on the IMF again.

Cote D'azur,

We ARE effectively legislating it by high tax rates and regulation. Hence why bankers are leaving.

The book I read (and mentioned before) did tables showing what proportion of the time certain countries were in default since independence/1800 (whichever was the earlier).

Greece has been in default 50% of the time since 1800. I went to Athens pre-near default etc. and was quite astounded at the poverty (compared to Western Europe). It's not really a surprise that it's in the mess it's in.

And where was Greece's credit default swap just after its rating was downgraded? It is normal for cds to shoot up after bad news. It will settle down.

Meanwhile, some will make money. Like those of us who bought Greek bonds at 11%

Irish bonds yield what, 6% and a bit? Hardly where they would be if Ireland was expected to default.

Would you like to bet? I say Ireland will not default. What do you say?

Abs - That is not what we mean by "default". We are referring to a country defaulting on it's debt obligations - i.e. Not being able to pay interest or capital payments on the money that it has borrowed by selling sovereign debt.

Cote D'azur,

Well done on your Greek trade. However, I hope you take profit. The fact that Greece has "settled down" at a CDS of 772 (implying a greater than 50% chance of default assuming a 40% recovery rate) hardly means it is out of the woods.

I would not mind betting that Ireland will have to restructure or fall back on the EC fund within 5 years. Not sure whether you call that a default but it is.

Yes, you would call debt structuring a sort of default but no, you wouldn't call tapping the EU fund "default" because the debt obligations would still be met.

I see the probability of Greece or any other EUR country defaulting as astronomically small. EU has shown that they will not allow this to happen, and they are right in doing so.

I'm with you Larry.

Cote,

You are probably right in that there will not be a default, though it is far from a done deal.

However, in Greece, as in Ireland, there will be huge austerity. Service cuts and tax rises. That is the condition under which the EC will underwrite them. And, no, Ireland cannot raise their low corporate tax as a lot of companies use Ireland solely for that reason. They will just leave. Other taxes will have to bear the brunt.

So been and larry are betting that Ireland will default on its debt or will at the very least have to restructure it.

Anyone else wishing to go on record?

Ah, so is it just been who is forecasting Irish default?

Careful there CoteDAzur. There are people on here who dont much like City traders.

Corporate tax in Ireland can be raised quite a bit and still be low in comparison to other jurisdictions. Besides, many of those companies are funds who can't easily up and leave. I used to run a Dublin based fund (where "based" meant we had an Administrator there and went to Dublin for board meetings).

I'm not a "City trader" and having never lived in the UK, present time included, I don't feel threatened that some mums in the UK are harboring hostile feelings towards them.

Do you think mums on MN are moonlighting as villagers with pitchforks? How strange.