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Karl Marx Dies A Second Death As EU Moves To Cap Banker Bonuses

"Shadow banking", literally
"Shadow banking", literally
François Vidal


PARIS - Game over for the last of the European Marxists.

Europe is getting ready to cap the size of bonuses for bankers. New rules would prevent bankers in European Union countries from receiving bonuses higher than their annual salary. This world first would put an end to the practice that allows these “workers” to receive up to 50% of the wealth they contributed to create – right under the nose of the “capitalist” bank shareholders.

So unless the only holdout – the UK – somehow manages to derail the vote, come next year, huge bonuses will be a thing of the past. It was a question of public safety – these bonuses sometimes reached unjustifiable heights, which can sometimes be very tempting for traders, inciting them to take inconsiderate risks. Case in point the subprime crisis, the Libor scandal or rogue traders Kerviel and Adoboli.

This reform makes the European Bank like the financial world’s star pupil, the one who now offers the best security guarantee. The regulation process has been chaotic since 2008, but the goal has finally been attained. In the last five years, the risks of the Old Continent’s banking system have been significantly reduced. Prudential rules have been strengthened, monitoring has increased, the most speculative activities have been limited and now bonuses will be capped. This is a revolution, which bankers have not fully understood yet, but that certainly gives European taxpayers the feeling that they are better protected from finance’s depravation.

The problem is this is a false sense of security. For one simple reason – the field of action of this measure is too narrow. Two major actors in finance are largely able to bypass it. First, the American banks. The Basel III accord still doesn’t apply to them and they continue to grant generous bonuses. This year, Wall Street bonuses will cross the $20 billion bar. Enough to maintain the culture of greed at his highest level, while undermining European competitors.

Second, there is “shadow banking,” and more specifically the Wild West that is hedge funds. It’s an expanding market where everything goes and where bonuses are in the hundreds of millions, sometimes even billions of dollars. As long as these black zones exist, global finance isn’t done with systemic risks. The only good news is that the next financial crisis probably won’t start in Europe.

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FOCUS: Russia-Ukraine War

How Vulnerable Are The Russians In Crimea?

Ukraine has stepped up attacks on the occupied Crimean peninsula, and Russia is doing all within its power to deny how vulnerable it has become.

Photograph of the Russian Black Sea Fleet headquarters with smoke rising above it after a Ukrainian missile strike.

September 22, 2023, Sevastopol, Crimea, Russia: Smoke rises over the Russian Black Sea Fleet headquarters after a Ukrainian missile strike.

Kyrylo Danylchenko

This article was updated Sept. 26, 2023 at 6:00 p.m.

Russian authorities are making a concerted effort to downplay and even deny the recent missile strikes in Russia-occupied Crimea.

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Media coverage in Russia of these events has been intentionally subdued, with top military spokesperson Igor Konashenkov offering no response to an attack on Russian Black Sea Fleet headquarters in the Crimean city of Sevastopol, or the alleged downing last week of Russian Su-24 aircraft by Ukrainian Air Defense.

The response from this and other strikes on the Crimean peninsula and surrounding waters of the Black Sea has alternated between complete silence and propagating falsehoods. One notable example of the latter was the claim that the Russian headquarters building of the Black Sea fleet that was hit Friday was empty and that the multiple explosions were mere routine training exercises.

Ukraine claimed on Monday that the attack killed Admiral Viktor Sokolov, the commander of Russia's Black Sea Fleet. "After the strike on the headquarters of the Russian Black Sea Fleet, 34 officers died, including the commander of the Russian Black Sea Fleet. Another 105 occupiers were wounded. The headquarters building cannot be restored," the Ukrainian special forces said via Telegram.

But Sokolov was seen on state television on Tuesday, just one day after Ukraine claimed he'd been killed. The Russian Defense Ministry released footage of the admiral partaking in a video conference with top admirals and chiefs, including Defense Minister Sergei Shoigu, though there was no verification of the date of the event.

Moscow has been similarly obtuse following other reports of missiles strikes this month on Crimea. Russian authorities have declared that all missiles have been intercepted by a submarine and a structure called "VDK Minsk", which itself was severely damaged following a Ukrainian airstrike on Sept. 13. The Russians likewise dismissed reports of a fire at the headquarters of the Black Sea Fleet, attributing it to a mundane explosion caused by swamp gas.

Kremlin spokesman Dmitry Peskov has refrained from commenting on the military situation in Crimea and elsewhere, continuing to repeat that everything is “proceeding as planned.”

Why is Crimea such a touchy topic? And why is it proving to be so hard to defend?

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