A long term place to be

Most people think that the bonus structure for bank employees is a main cause for the economic crisis that we're in.

The problem with the bonus structure is that the bonuses are making the employees look at short term earnings. For example of a short term earning, a banker sold mortgages to a home buyer who could just barely pay it's rate. If the home buyer took the mortgage, they would put themselves in a dangerous place to be. So they won't be able to pay the banker who was thinking he would sell lots of mortgages but he wasn't thinking about how responsible the home buyer was. But mortgages aren't the only example of short term bonus structure. There are many more. Even as the bank's income increases, they are still thinking short term or "cutting down the hedges"**** You would think that the banks would understand and take accountability, but apparently they don't really care because they would have stopped giving bonuses for short term thinking by now.

****A real life example is if you had an allowance of $1 a week, and you could earn $4 extra by cutting down the hedge & $3 more for cleaning your room. So if there was a big prize for the best looking hedge so you cut it every week, it would end up dying and so you wouldn't win the reward AND your maximum income for each week would be decreased from $8 to $4. SO FOR LONG TERM'S SAKE!!! DON'T CUT THE HEDGES!!!!!!!!!

source: NYT