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Cutting City cant: Terry Smith thinks Occupy protesters have a point, and markets should work properly 

I once proposed a short book, to be called How to Make Money out of Life Assurance. This would have read, in its entirety: "Don't buy it, sell it." Such disrespect for the City's accepted wisdom found no takers.

Terry Smith was luckier. His book Accounting for Growth denounced some of the City's favourite arithmetic as pure self-serving cant. Nowadays he runs a big financial company, but he still classes accepted wisdom as a contradiction in terms. In Guildhall the other day, he told a City gathering that the Occupy movement's protesters might be right. 

If they find fault with the way in which the markets have been operating, he agrees with them. He begins, as they do, with the banks. High street banking and investment banking are, to his mind, hopeless bedfellows, with divorce the only remedy. Their marital woes were made worse by securitisation — wrapping up loans in a parcel and selling them on: fine, until somebody opens the parcel.

Bonuses helped to keep the parcel going round. They could be designed to reward the performer and leave the risk with his paymaster. Too often, they were. For that, the blame lies with the business's owners. They should not expect others to do their work for them.

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