Now, bankers come under fire for high bonuses in UK

UK has set up a bank reconstruction agency to oversee its GBP 37 bn bailout of banks, in order to ensure banks start lending to recession-hit industry. The arms length agency will manage the government's contribution even as British MPs start a formal enquiry into the financial crisis.

Chancellor Alistair Darling, BoE governor Mervyn King, and FSA chairman Lort Turner are facing a grilling from MPs, who have in an unusual move asked the public to write in with their questions for the enquiry. While UK's bank bailout plan was initially lauded, the honeymoon is now over, and there's increasing criticism because the move has not yet started the banks lending.

More critically, the City's bonus culture is expected to come under fire, including what measures the government will take to curb it. This comes at a time when there's a public outcry that despite taking state aid, troubled banks like Royal Bank of Scotland has set aside GBP 1.7 billion for staff bonuses, and Barclays has opted for gulf money to protect its bonuses.

It's a bad time to be a banker. Once seen as masters of the universe, investment bankers have become social pariahs. People in the financial business say that these days, as soon as they meet anyone, the first thing they have to say is "I'm not an investment banker, I work in something else." Tales from the City abound about how many investment bankers are switching over to other professions, keeping the Ferraris in the garage and taking the tube, and even hiding their profession at dinner parties. High street gossip is that trophy wives are also now sneaking around luxury stores and spas instead of triumphantly marching around them.

Nobody has yet thrown stones at their houses, but British society, never very happy with mega-rich lifestyles of the few in the City, is moving from glee that the mighty have fallen, to outright anger as ordinary taxpayers and the rest of the public is dragged down in the crisis. Homeowners may be the next on the hate list.

There's still some bullishness about emerging markets. PwC has argued that emerging economies like India and China may overtake the developed world in as little as 5 years, accounting for more than 50.2% of world GDP by purchasing power parity. John Hawksworth, PwC's chief economists, said that the lopsided nature of the global downturn means a shift in the balance of power by 2013, reports the Guardian. PwC's projections estimate that emerging economies, which now account for 43.7% of global GDP are on track to grow.

China is on course to overtake the euro area as the world's second biggest economy, while India would be challenging Japan for fourth place. According to the PWC calculations, the US would remain the world's biggest economy but its share of global GDP would decline from 21.3% now to 18.8%, while Britain will drop to a 2.9 % share, behind Russia. While Russian estimates may need to be scaled down, the same could be said of western country growth projections, PwC has argued, since emerging economies are less affected.

Source: EconomicTimes