The Great Merlin Project

The Great Merlin Project
Merlin, son of an incubus, used his magic to help King Arthur; particularly with prophesies. The government wants the magic of the Merlin project to restrain bank bonuses, and increase loans to small businesses.
Debate over loans centred on whether lending should be net or gross. Net lending is current or new lending, less any repayment of loans. Gross lending is current lending plus the repayment of existing loans. Merlin wanted net lending; the banks argued for gross lending. The banks argued that the gross figure shows more clearly the full extent of their lending. The problem here is that there was a sharp increase in the repayments of loans in 2010. So the banks had more to lend. But net lending to small businesses was not increasing. It was falling by about £1bn a month in February.
The gross figure hid the real reduction in lending to small businesses. Currently Merlin has agreed that the net lending figure will not be used; and may not be even published in future. The gross figure for 2011 will be £190bn, with a “pledge” to lend £76bn of this to small businesses.
Debate over bank bonuses centred on what to reveal; options included, the top 5 paid employees, the top 5 dealers or traders, the top paid directors, naming the top paid, and giving individual or aggregate pay levels. The final Merlin decision was none of these. It was decided that the director in charge of the remuneration committee would write to the Financial Services Authority to confirm that bonuses are lower than “normal”.
As the February news trickles out of the 2010 bonus levels it will become clear if the government’s Merlin has correctly prophesied lower bonuses; or not!

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