Celebrity chef Antony Worrall Thompson has been all over the press this week, complaining about the banks. He’s not the only one, of course, but he’s got more reason than most. The chef has had to shut four of his six restaurants after his bank refused to lend him more money – at least, not without personal guarantees, such as putting his home on the line, that he was unwilling to give.
You can see why he’s angry. Like every other small businessman, he sees the banks getting a pile of taxpayers’ cash. Meanwhile, his own business is left to fail. And he’s right not to pledge his house, particularly at his age (57). But the trouble is, his bank is right too. Even if you had all the cash in the world, you’d have to be mad to lend it to an upmarket restaurant business right now. With people trading down and expense accounts being slashed, few businesses can be more doomed to failure.
And for all that Mr Worrall Thompson condemns the greed of the banks now, the hard truth is that his business and others like it were built on outrageous City bonuses and huge banking profits. Without a clientele willing and able to put ridiculous bills for lunch and dinner on their expense accounts, London could never have sustained such a wide range of expensive eateries – nor quite as many celebrity chefs, I suspect.
But now those outrageous bonuses are set to become a thing of the past. A great deal of column inches has been devoted to the topic this week, but it’s pretty straightforward. Putting the morality of bonuses aside, the point is that the banks are bust. If the taxpayer wasn’t propping them up, they would go to the wall. So all discretionary spending – including bonuses – should be cut to the bone and put into making sure the bank can survive without further money from us. It’s that simple.
And the idea that you need to pay big bonuses to keep staff in this environment is laughable. For most people, just having a job is bonus enough right now. And if a couple of canny hedge funds poach the most ‘talented’ traders, so be it. I’d rather have the ‘star performers’ working out of small boutiques where the damage they cause when they inevitably make a big bet that goes wrong is limited, rather than have them turn into future Jerome Kerviels or Nick Leesons on the trading desks of a big taxpayer-funded bank.
Like it or not, big money for bankers, like the cult of the celebrity chef, was a bubble phenomenon. That bubble’s burst now. We’ll just have to get used to life without overpaid bankers and overhyped cooks. I think we’ll cope, somehow.