http://news.bbc.co.uk/1/hi/business/8503014.stm

massive taxpayers banking bale out, shareholders dividends dramatically cut back, and the investment banks grabbing the cash released through QE by the bucket load

yet everybody else has to tighten their belts and suffer so the bankers can maintain their bonuses, bankers you just gotta luv 'em …

What strikes me is the amount given in dividends is pretty much the same as raised by the companies through loans. So basically they are borrowing a pile of money then just giving it to their shareholders. What's the point in that? Sounds like the companies themselves are pretty much breaking even and should be using the loans they are getting to invest in improved infrastructure, employee training etc - basically things which will improve productivity and profitability in the future and mean they will be able to pay actual dividends for many years to come. And I f was a shareholder in one of those companies, I'd be demanding to know what the hell the board was playing at.

If there's anything that illustrates neatly how utterly broken the capitalist system has been for the last few years, borrowing money to pay dividends with just seems to be it.

Jon

The reason that they pay out dividends is to support their share price so it is easier to raise money via a rights issue. The market expects a return.

If you add in the fact that the banks are allowed to borrow from the one window at the government at close to zero and then lend back to the government for a higher rate at another window means that they get a free lunch at the tax payers expense. That is how much of the profits at the banks has been earned, without risk yet they still pay the bonuses, rather than build up capital.

What is needed for the semi nationalised banks is for them to have a ban on bonuses and if the staff walk then good riddance. If it that happens then while it might slow the period over which the banks pay the tax payer back, though the tax payer should hold on to the bank until it repaid in full plus extra for all the support they had. That will frighten the remaining banks so much more, because it could be decades before they get bonuses again.