Interest rate swap mis-selling scandal: Difference between revisions

← Older edit

Interest rate swap mis-selling scandal (view source)

Revision as of 12:28, 11 April 2024

778 bytes removed , 11 April

no edit summary

Amwelladmin

Bureaucrats, Interface administrators, Administrators

82,890

edits

@@ Line 19: / Line 19: @@
 This is a cost of business as inevitable as employees, plant and machinery. Businesses are figured out ways of managing employee costs: discretionary bonuses. These are ''ostensibly'' tied to business performance — the better we do the more you get paid — but really are tied to ''market'' performance: the higher your bid, the more you get paid.
-It would be fun to develop employment derivatives. They would be like interest rate swaps. A bunch of large employers would submit, daily, how much they would be prepared to pay to hire established categories of worker, to derive some kind of London Inter-Employer Bid-Offer Rate (can we call this LIEBOR?). Then the British Human Capital Managers Association would compile and publish a list of rates. Employer could swap out their fixed costs for a floating rate, thereby hedging employment costs. Employees could do the same, hedging against their intrinsic [[loyalty discount]], and restricting employee moves to genuine changes in role, or idiosyncratic hatred of boss, rather than just the need to rebenchmark periodically.
+It would be fun to develop [[employment derivatives]]. They would be like interest rate swaps.
-Lest you should think I am joking consider the cost of employment in a large financial services institution might be in the multiple billions.
 But we can surmise that businesses seeking to borrow money in 2002 might have been thinking rates were abnormally ''low'', and it might be a good time to lock in an interest rate.