Sir Mervyn King Warns Elite to Rein In Pay
THE DAILY TELEGRAPH: The Governor of the Bank of England has warned Britain's business and banking elite to rein in pay and bonuses or risk sparking a rebellion against capitalism in its current form.

In a speech to business figures in Brighton setting out the "arduous, long and uneven" path to recovery this year, Sir Mervyn King said the key to restoring growth would be "above all else ... to maintain support for a market economy and an open world trading system".

His fears reflect the recent backlash against capitalism, with the Occupy movement spreading from Wall Street to St Paul's and, this week, Davos – the Swiss ski resort where the world's rich and powerful are meeting.

Coming in the week that the Coalition laid out proposals to rein in excessive executive pay, Sir Mervyn said: "The legitimacy of a market economy will inevitably be challenged if rewards go disproportionately to a small elite, especially one which benefited from the support of taxpayers.

"Those taking decisions on remuneration, in the financial sector and elsewhere, need to understand that a market economy rests not just on incentives, but on the acceptance that the distribution of rewards is fair."

He said the growing sense of injustice was because "those who have suffered most have been those who bear no responsibility for [the financial crisis], and who accepted the disciplines of a market economy only to find that others were excused that discipline because they were 'too important to fail'". » | Philip Aldrick, Economics Editor | Tuesday, January 24, 2012

My comment:

Mervyn King is absolutely right to warn the élite about excesses. Capitalism is a flawed system, but it is the best economic system known to man. The élite need to be very careful that they don't 'cook their goose' through their greed. Socialism may have been defeated for a while, but it will surely be waiting in the wings to re-appear when the time is right. We would be ill-advised to assume that it is dead forever. Everything in life goes in cycles. I say this: Don't give the socialists a chance to bring the best system down. Moderation is key. – © Mark

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Fat Cats Look Out! Europe Wants to Slim You Down!
Angela Merkel has called for a crackdown on the 'fat cat' abuses after Porsche chief pocketed €60m last year. Photo courtesy of The Telegraph
THE TELEGRAPH: A group of key EU finance ministers will today launch an assault on the rewards earned by bankers and top managers in a move that poses a potential threat to the City of London.

A confidential document prepared for the gathering in Brussels finds the "short-term" pay structure of modern capitalism has become deformed, causing firms to take on "excessive risk" without regard to the interests of stakeholders or society.

While there is no concrete legislation on the table, ministers are eyeing curbs on stock options, bonuses and golden parachutes.

The move is a clear sign that the EU noose is tightening on bankers, funds and corporate elites that have enjoyed light-touch regulation.

Today's meeting is being held under the auspices of the Eurogroup, the quasi-official club of eurozone finance ministers. The forum excludes Britain and free market allies from Eastern Europe.

Shutting out Chancellor Alistair Darling enables Berlin and Paris to create a head of steam behind possible legislation that could undermine London's competitiveness as the world's leading financial centre.

The text for the meeting - leaked to Spanish newspaper El Pais - indicts the Anglo-Saxon market model as a danger to global financial stability and castigates firms for chasing "immediate profits at the cost of massive sackings".

The loose plans are part of a slew of proposals floated in Europe over recent months aimed at disciplining the market. Ideas have included a pan-European regulator, curbs on private equity and restraints on sovereign wealth funds. None has yet crystalised into a draft EU directive.

EU governments are paying close attention to a law going to the Dutch parliament this month. It imposes a 30pc supertax on pay packages above €500,000 (£398,000) and limits bonuses and stock options to 100pc of pay - far below the windfalls made by UK-based traders and bankers at the height of the credit bubble. EU to Launch Assault on Bankers' Bonuses >>> By Ambrose Evans-Pritchard, International Business Editor | May 13, 2008

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