Golden Handshake or just give the lot?

Financial crisis news in the UK this past week has been dominated by Pensions. Not the fact that pension schemes continue to decline in value as markets dive, or that many schemes are chronically underfunded and will not be able to meet their obligations, or that the public is generally worried about whether they will need to keep working well into their 70's to keep afloat. Or even that Pension providers have blown literally billions in betting on risky derivative contracts.

No, the dominant news was Sir Fred Goodwin's 700 thousand pound yearly pension. Rather than face the ignominy of the sack after the collapse of RBS the former chief executive was granted early retirement (he's 50 years old) on a pension that is not much below his yearly base salary. So as the UK government was effectively nationalising the involvent bank, Sir Fred's colleagues were voting him an effective pension pot of over 16 million pounds.

Not surprisingly the media has focused upon "the rewards for failure" that Sir Fred seems to be reaping, which is now at the taxpayers expense. Its been reported that his pension would have been 27 thousand pounds a year if RBS had not been taken over by the government. Images of the "pigs at the trough" engendered when chief executives of the newly privatised utility companies and their incestuous relationship with their government advisors who creamed off millions, comes to mind re the dark days of the 80's and 90's when the key gas, water, electricity and other public assets were virtually given away to private companies.

What is of greater concern and surprise is the lack of comment on the outrageous commitment coming in the same week from the UK government to guarantee "toxic assets" of the banks to the tune of 330 billion pounds in addition to the 25 billion of additional contributions to RBS's capital. While a 700 thousand pound pension is certainly substantial, it pales into insignificance compared to the far greater bailout numbers (using public money). A simply gargantuan fraud perpetuated against the people. In fact the latest insurance guarantee for the "toxic assets" (a contradiction in terms if ever there was one) of 330 billion is a mere 20,000 times the pension pot of Sir Fred Goodwin. Yet where is the public outrage over this larceny?

The Muslim world of course is also no stranger to the regimes profligacy with the public wealth. The oil and natural resources are public property for the benefit of all, yet the Shariah laws clearly distinguishing the private, public and state property have not been an impediment to the theft of this wealth by the governments. A model embraced by the western governments, with the UK government outdoing all others by committing close to two thirds of UK GDP to what is effectively cover for the bank's gambling debts.