T'is the season of giving, and nowhere is the tradition more sacrosanct than in the financial services sector. Some firms have done very well indeed in the rebound from the crisis and have earmarked considerable sums to compensate employees in the form of bonuses.

But in many countries the taxman is getting ready to mug the financial Santa and relieve him of a good portion of the goodies he intends to distribute. Governments are in a particularly mean mood, and gearing up for a spate of banker bashing.

Beating up bankers goes down extremely well with the populace in the US, the UK and elsewhere. Gordon Brown, who is fighting an uphill struggle to do better in the polls, is keen to please the voters, and what better target than the banks? As for the business-friendly Conservative party, it has been forced, judiciously, to give in and support the government move.

Even in the US, the land of media domination and manufactured consent, business interests have had a hard time defending the powerful bankers. Polls repeatedly indicate the degree of popular anger at the way errant financial firms have been saved by government intervention.

It is difficult not to agree with the view that if the capitalist game is to be played fairly it makes no sense for the public to underwrite all the major risks while businessmen pocket all the gains. The ruling ideology has, after all, constantly trumpeted the superiority of free-market capitalism over state intervention. And, yet, it was massive state intervention that prevented the system from collapse after an orgy of risk-taking.

Where is the modern equivalent of Edward Bernays, when the business interests need him so badly? The gentleman in question is, of course, the enormously influential father of the public relations industry. His methods of distorting reality and manipulating public opinion in the fields of advertising and politics have had a lasting impact on society.

The problem for the PR people is that the speed and scale of the financial crisis and the resulting government bailout left too many bare realities exposed to view, and the cover-up was difficult to implement. What irks the average Joe on Main Street is that Wall Street, saved by taxpayer dollars, has bounced back heartily while he is still struggling, staring at a nastily high unemployment rate.

It comes as no surprise that bankers are squealing about the damage that the tax take will do to them. Strange though, that there wasn't the slightest squeak of complaint from them when the government was bailing them out with gusto, earlier on. Overall, the US, where the financial services sector has great clout in Washington, has taken softer line on the issue of bonuses than Europe.

Goldman Sachs, ever the clever manipulator, is conducting a PR campaign to assuage public anger. It announced recently that, this year, its executives are likely to receive their bonuses in stock rather than cash. This doesn't actually represent a radical departure from normal practice at Goldman, where a substantial portion of bonus compensation is in stock or options. Meanwhile, the firm has also engaged in a number of charity-related initiatives.

Pointedly, Lloyd Blankfein, its chief executive, has reiterated the view that they need to compensate their employees adequately for fear of losing their competitive edge. This is not just propaganda. He is correct in what he says. The business is built primarily on the basis of the quality of its human capital, which is quite mobile.

The proprietary desk at Goldman has been very effective at boosting the firm's earnings. As a measure of comparative success, note how lacklustre the performance of the prop desk at rival Morgan Stanley has been. Talent needs to be compensated adequately; otherwise it will find a new home. Indeed, there are fears that prospects of tighter government regulation may prompt Goldman traders to depart for established hedge funds or set up their own.

Of course, there is a solution to the problem faced by firms like Goldman Sachs, and that is to separate there various activities into independent companies. George Soros has rightly complained about the fact that such firms' hedge fund activities have the signal advantage of having a safety net provided by the banking arm, which has access to Fed funding and would be a beneficiary of potential government bailouts. The average hedge fund has no such advantages. Goldman, though, is happy to have its cake and eat it too.

Iraj Pouyandeh is a strategist and senior portfolio manager at LOM Asset Management. He manages the LOM Global Equity Fund. For more information on LOM Asset Management please visit www.lomam.com