My perspective on banking sector
The banking sector has faced harsh criticism over the past one year on how they handled their underwriting standards. They have also beeen criticized for the huge bonuses given in the sector.
I have two things to say to the critics:
1.) The growth that happened in US after the 1980 economic recession was primarily becuse of the finance industry starting to leverage the American economy. American as superpower would have lost to USSR if that had not happened. I agree that thye got really greedy in last 6 years but we should blame them for everything. They also heled us win the cold war.
2.) Giving huge bonus is not a bad thing. You need to invest in people. A company that does not give bonus can never grow. If congress feels that the mangement is incompetent of these banks it should change the mangement not the bonus structure
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20 March 2009
Akash,
The problem is not in AIG giving bonuses but in government bailing out AIG and not taking over it completely. If you are true capitalist government should not bail out companies like AIG. There is nothing like to big to fail.
However i also agree to government point that it would cause a lot of hardship to people but that is true capitalism . It will bring you boh wealth and hadship. If you do not think you can handle hardship you should turn socialist and then the governement should nationalize AIG completely. The current situation of somewhee in between is worst of both worlds.
Regards,
Jordan
19 March 2009
I like your perspective on the banking sector.