It beggars belief that having just managed to remain solvent by means of huge cash injections from Asian and energy producing sovereign wealth funds – a further $21 billion was raised this week – the leading international banks are still paying themselves enormous bonuses. Morgan Stanley’s $5 billion of new funding from the Chinese government is almost exactly the increase in the bonus pool. Citigroup, meanwhile, having paid out more than $100 million to its ex chief, Charles Prince, is now planning to pay out approximately 50% of the new capital raised this week as a dividend next month.
Aside from the levels of stupidity and narcissism of this behaviour it is proof, if proof were needed, that the financial centre of gravity is shifting inexorably eastwards and we will not be able to consider its implication until the current market panic and turmoil settles.
There is a much clearer picture in the currency market with the euro yen almost completing a head and shoulders top, a classic chart reversal pattern. A weekly close below 154 could lead to a very dramatic collapse with other yen crosses following.