Last week it was bash a banker, this week it’s bash a rail boss as the debate on executive pay ramps up.  Rewards for failure are indeed unjustified but measuring performance is no easy thing.

Should a banker’s pay be linked to how its share price performs, how much it lends to SMEs or how much the economy grows?  Should a rail boss’s bonus be linked to the promptness of its trains or the comfort of commuters during rush hour?  The problem is that employment contracts have been agreed and whilst some executives may not deserve the bonus they receive, they are contractually obliged to be given one.

Rail commuters and many rail employees will be delighted to see the bosses giving up their bonuses.  No one can justify such big packages for continual delays to services.  Executives need to be accountable and rewarded accordingly for good performance but the recent rhetoric is in danger of painting a grim picture of UK plc.  Top talent will simply consider other options open to them if they continue to see their own or other people’s bonuses stripped from them.  The cost to the exchequer is also something politicians ought to consider as these bonuses would have brought in decent sums to the tax man.  What really should happen is to pay the bonuses however insist that the majority, if not all of it, goes to improving their services and if that is achieved over the following year then they can keep the lot next time round.

Onto the markets now which have been moribund so far this morning.  The FTSE is flat hovering just below 5900 as investors continue to focus on what’s happening in Greece, which is basically nothing.  The real deadline has been set at next Wednesday as this is apparently the time at which a resolution has to be agreed upon in order for the necessary legalities to be formalised ahead of the 20th March bond exchange.  Otherwise it's default time and Greece really will exit the euro.  Even though the possibility of such an event is becoming more and more likely the markets have remained surprisingly strong.  This is particularly interesting since many analysts have been increasing the likelihood of a Greek exit and the politicians there have been discussing it themselves.  Whilst the country has benefited hugely from being a part of the euro, the situation now makes exit a laudable outcome as they’ll have all their debt wiped off and their currency would plummet devaluing it massively and assist in the country becoming competitive again.  If the next bailout does go through then you can safely bet that we’ll be discussing the Greek issue again in the near future.

We said in yesterday’s comment that the euro is likely to continue it’s decline until there is more optimism with regard to the Greeks striking a deal with their creditors and that’s exactly what happened.  Fearing an onslaught for the euro, Chancellor Merkel made a television appearance and stated “the EU cannot accept a Greek bankruptcy”.  This of course, encouraged FX traders to get long again of the euro and continue into this morning. The euro traded against the dollar as high as 1.3167 earlier, but could let off a bit of steam as the day goes on.

The bears seem so be outweighing the bulls on the gold see-saw and yesterday there was a further retracement in the precious metals' price as concerns over the Greek sovereign debt sent investors fleeing into the safety of the US Dollar.  After a powerful rally in January, it seems that traders’ worries have been grounded and the realisation that at any moment something nasty could materialise in the eurozone means that we’re seeing regular bouts of profit taking.  So by the end of yesterday’s session, gold had lost 4.8 dollars to close at 1720.1, which at time of writing has been added back on with the yellow brick trading back up at 1725.4.

Friday’s strong rally could not be kept up yesterday and the optimism over heightened demand for US crude on the back of increased jobs washed off.  On the other side, Brent posted a gain with a report of increased demand from Asia and also an embargo on Iranian oil pointed to concerns over supplies in Europe. This morning Brent trades at 115.85.