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In his book Fooled by Randomness, Nassim Taleb, who made a fortune as a trader on Wall Street, described the whole financial markets thing as a massive game of Russian roulette. The only difference is that the pistol has more than five empty chambers, so people like him get away with playing the game for much longer than they should.
As long as their luck holds, they make huge profits for their firms, get fêted like kings and earn more in annual bonuses than doctors, teachers, nurses and even journalists earn in a lifetime. But ultimately it ends in disaster when they run out of luck and the gun goes off and metaphorically blows their head off. By then, though, they should have made enough in bonuses to last a lifetime. Their employers are frequently less lucky and, as we see from the looming disaster of the credit crunch, so are the rest of us. When bankers make mistakes, the rest of society has to pay.
In circumstances such as these, with the world facing its worst financial crisis for 30 years largely because of the excessive greed and recklessness of bankers in the past 10, one might have thought it time for a bit of humility as we approach the annual bonus season.
But yesterday it was as if the crash had never happened. Morgan Stanley dished out eye-watering multimillion pound payments to its star performers. The financial world may be crumbling, but that appears not to be the investment bankers' problem even if it is their fault. Investment bankers don't do humility - or moderation.
In justification, the banks and brokers say their people are worth it. If they make £20 million for the firm, then why should the person responsible not get a generous cut? The real issue, though, is how the £20 million is made in the first place.
How much risk is a trader taking when his bank dominates a market sector and sees most of the business? Why is it that the customers pay the banks the fees that allow them to make these excessive levels of profit, which in turn fuel the bonuses? The answer is, of course, that it is always other people's money. When a company executive decides to pay a bank £100 million for advice on a takeover, it is the shareholder's money he is handing over, not his own.
Though the City is ferociously competitive, the competition between firms rarely extends to price - not to a degree that will derail the gravy train. It is probably what economists call a complex monopoly, a market structure where competition is controlled by convention and which allows the participants to make excess profits from which they can pay excessive bonuses.
However, no politician - here or in America - is going to launch an antimonopoly probe against them. In the US, Wall Street has in effect bought all the politicians with massive campaign contributions. Here they don't pay but the banks are simply too powerful and too embedded in Whitehall to be seriously challenged.
The plus point in all this is that the money the City earns makes London's wheels go round. But we should also consider the downside - the fact that doctors, teachers, nurses and train drivers can no longer afford to live anywhere near the centre of London, so the public services that depend on their skills are plagued by shortage of staff.
The City's money drives London, but increasingly towards a world of private affluence and public squalor. It risks fracturing society when the rewards for one group are so grotesquely out of kilter with what the rest earn and even the seriously untalented city banker collects a million.
Most of all in these troubled times it risks a massive backlash when these bonuses are paid against a backcloth of mounting distress across the economy - much of it caused by the bankers themselves.
TWO UK mobile companies have at last decided they don't need their own individual masts and could save a vast amount of money and reduce the number of eyesores if they shared.
In a groundbreaking deal announced today, T-Mobile has linked with 3, the Hutchison-backed group, that will allow them still to compete but to do so from a common infrastructure. The companies reckon the link could save them £2 billion over the next 10 years - mainly by the elimination of duplicate masts. If this figure is remotely right, it suggests other operators such as Vodafone and O2 will be pressured to strike similar deals.
Many might think it has taken too long for this outbreak of common sense, and perhaps it has. It is not all the companies' fault though. For some reason that is hard to understand given how competitive it is, the mobile market has a regulator, and his rules have effectively prevented such deals before now.
