A 'Must See!' film from the ruefully brilliant mind of Michael Moore
Typically, Michael Moore’s brand of cynicism and his Liberal take on the great issues of American politics is not my cup of tea because I am by bearing and temperament far more a pragmatist in nature. (Now, here comes the ‘but.’)
But after being invited to a pre-screening of his most recent film, ‘Capitalism: A Love Story,’ due to be released 2nd October 2009, I think, like Jon Stewart, the guy is a virtuosity. I highly recommend plopping down your $20 bucks per person — or whatever it costs these days — for a ticket and a bag of stale popcorn to see it. You can start by viewing the movie trailer below.
Watching the film, I felt like Michael had climbed inside my head, made a list of all the things that have been obsessing me for the last 12 months, and brought them horrifyingly to life. It’s one thing to know these things are happening; it’s another to see them happening in front of your eyes.
Right from the beginning — after a funny set-up juxtaposing End of Empire Rome and Modern America — Michael goes directly to the beating heart of the economic crisis, showing a hard-working, middle class family being evicted from their home. The knot in your stomach starts to tighten — and the outrage starts to build. Read more here.
Moore’s own take on his latest film..?? “I made this movie as if it was going to be the last movie I was allowed to make.” And, on the film itself, “It’s got it all - lust, passion, romance and 14,000 jobs being eliminated every day.”
In its World Economic Outlook, the fund’s prognosis was marginally better than its prediction in July that growth in 2010 would reach 2.5 percent. But it emphasized that the upswing was mainly a result of aggressive crisis management in the United States, Europe and Asia, not a self-sustaining recovery.“Premature exit from accommodative monetary and fiscal policies seems a significant risk, because the policy-induced rebound might be mistaken for the beginning of a strong recovery in private demand,” the fund wrote. It added that the “fragile global economy” was still vulnerable to other potential shocks, including a run-up in oil prices, a widespread outbreak of swine flu, global political events and protectionism.
The forecast masked significant differences among regions, the monetary fund said. It predicted China’s economy would register 9 percent growth next year.But the United States can expect an expansion of 1.5 percent, and the 16-nation euro zone a 0.3 percent growth rate, weak performances for advanced industrial economies.The I.M.F. had previously forcasted the American economy would contract 2.7 percent for all of 2009, and the euro zone’s would shrink 4.2 percent. The forecasts come as the monetary fund acknowledged that the world was emerging from a difficult recession, helped by stimulus policies in the United States, Europe and China.
“The global economy appears to be expanding again, pulled up by the strong performance of Asian economies and stabilization or modest recovery everywhere,” the fund wrote.
The monetary fund emphasized what private sector economists have observed about the upswing, that it is driven mainly by a rebuilding of depleted inventories. But the fund also said there were “some signs of gradually stabilizing retail sales, returning consumer confidence and firmer housing markets.”
But it also observed that rising joblessness remained a threat. “Unemployment rates are expected to remain at high levels over the medium term in a number of advanced economies,” it stated.
(FT) We are at the point of maximum confusion in the multi-year transition of the global economy, markets and policymaking. We have left the global growth regime that was driven primarily by debt-financed consumption in the US, but we have not as yet reached a position of more balanced, albeit anaemic, growth. Those who lack a robust anchoring framework, be they investors or policymakers, risk being misled and backtracking to outdated ways of thinking.
The signs of inappropriate reversion are multiplying. Confusing temporary factors for sustainable ones, a growing number of analysts have extended the ongoing stimulus/inventory bounce to a V-like recovery next year and beyond. The momentum for meaningful financial reform is stalling in spite of clear evidence that financial activities have far outpaced the regulatory infrastructure. And some banks are returning to the bad habits that almost destroyed them.
This reversion is intimately linked to the inadequacy of the anchoring analytical frameworks. Appropriate frameworks provide important protection against the short-termism that can contaminate markets and policymaking. By contrast, ill-designed frameworks can encourage short-term thinking, leading to market and policy overshoot on the way up and down. Today’s lack of appropriate anchoring frameworks appears to be exacerbating short-termism. The issue goes well beyond the still-limited appreciation of the multi-year realignment of the global economy, which is gaining momentum. It also relates to tendencies well-documented by behavioural economists – such as framing the problem wrongly and refusing to question past approaches.
Given all this, we would be all well advised to follow the admonition of Mervyn King. Last month, the governor of the Bank of England stated bluntly: “It’s the level, stupid – it’s not the growth rates, it’s the levels that matter here.” Investors have not yet accepted his insight that the absolute levels of income, debt, wealth and unemployment, not just the rates of change, are what matters today. They need to, and soon.
Analysis of key levels in the global economy points to important deviations between desired and actual levels. The outlook for major countries will continue to be driven by the levels of key variables, not their rate of recovery. Consider four examples.
First, consumer indebtedness is still too high relative to income expectations and credit availability, particularly in the US and the UK. This inconsistency will hold back any sustainable bounce in the most important component of aggregate demand.
Second, some banks’ balance sheets are still too geared for the comfort of regulators or their own managers. This will inhibit them from lending to the real economy at a time when certain sectors (such as commercial real estate, but also residential housing) still require significant refinancing, and when consumers need time to work down their excessive debt loads.
Third, unemployment has risen well beyond expectations, and is likely to prove unusually protracted. It will take years for US unemployment to return to its natural rate, even after the natural rate shifted upwards. This will . . .
Guru Greenspan endorses Obama Consumer Protection agency.
A keystone of Obama’s Wall Street reform agenda is getting support from the unlikeliest of corners. Alan Greenspan, an acolyte of Ayn Rand and extreme free-marketeer, is backing one of the most far-reaching elements of the financial overhaul: the Consumer Financial Protection Agency. Greenspan told the Washington Post that pushing for the CFPA was “probably the right decision.” Given the former Fed chairman’s penchant for obliquity, the straight-forward endorsement takes on greater weight.
Wall Street and community bankers argue that the proposed agency will restrict financial innovation and otherwise inhibit economic growth. Those are the types of arguments that Greenspan was prone to make during his tenure as chairman, but the financial crisis has persuaded Greenspan that the “intellectual edifice” buttressing radical free-market ideology has, in his words, “collapsed.”
Rep. Brad Miller (D-N.C.), the lead backer of the CFPA in the House Financial Services Committee, recalled the Greenspan opposed consumer protections while he was chairman. “It’s a dramatic turnaround from his public position and even more so, apparently, from what he was privately pushing within the deliberations at the Fed,” he told HuffPost. Greenspan has acknowledged that the collapse has led to a crisis of faith. “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Greenspan said at a House hearing last October under questioning from Rep. Henry Waxman (D-CA). “In other words,” said Waxman, moving in for the kill, “you found that your view of the world, your ideology, was not right, it was not working.”
“Absolutely, precisely,” said Greenspan. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
It’s one thing to reject a failed ideology, but another altogether to embrace the kind of regulation represented by the CFPA. “He has already said that he erred in assuming that the market would take care of things–the Ayn Rand point of view–but this seems to go farther than he’s gone before in calling for a new agency to protect consumers from financial products,” said Miller. Greenspan told the Post that the Fed has enough responsibilities to manage and that consumer protection would be too much. Miller noted that Greenspan’s position is “diametrically opposite of what leadership at the Fed are saying now.”
Top Fed officials are pushing to make consumer protection a core Fed responsibility. But Democrats passed a law in 1994 requiring the Fed to adopt rules protecting financial consumers. When the GOP took over Congress in 1995, the Fed decided not to act. It didn’t write the rules until Democrats retook Congress in 2007 and began work on a new set of laws. “The damage was already done,” noted Miller.
The CFPA would gauge the safety of financial products and be given broad powers to require understandable explanations of the terms of financial instruments and otherwise restrict behavior that now goes on unmolested. It was first proposed by Harvard Prof. Elizabeth Warren, the head of the congressional panel overseeing the financial bailout. It is fiercely opposed by the banking lobby. Financial Services Committee Chairman Barney Frank (D-Mass.) earlier postponed a vote on the agency until after the August recess. The banking lobby’s stiff resistance made it difficult for the chairman to be sure he had enough votes to pass it. The vote is now expected in October.
Last week, Frank issued a memo to committee members outlining proposed changes to the original package, which had been blasted by the Chamber of Commerce for over-reaching and going so far as to regulate butchers who give meat on credit.The original bill would have required financial institutions to offer standard, “plain vanilla” financial products meeting certain basic guidelines for transparency and safety. That requirement has been dropped, according to the memo, which was obtained by HuffPost. Some consumer advocates expressed alarm at the proposed changes, but others following it closely say that the changes are largely technical and that the real fight is yet to come.
The political dilemma of public outrage: Guns vs. Band-aids
Health care on first blush may not seem like a topic natural to a Global Markets and Foreign Policy blog.But to the extent that it is an issue of comparative political economy; and to the extent that it is an issue that accounts for approximately 17% of the U.S. GDP and growing rapidly, well, then it seems quite natural, actually. My first admission, however, is this: I am perplexed. No, not on the topic of healthcare reform, in and of itself.On the one hand, Americans resist government efforts to repair a Healthcare system that everyone acknowledges is broken; but on the other hand willingly tolerate the “Free-market” pilferage of consumers by the private sector Health Insurance industry in a system that severely hinders the global competitiveness of our nation. President Obama said as much in a recent radio interview, noting:
‘Passing a big bill like this is always messy. FDR was called a socialist when he passed Social Security. JFK and Lyndon Johnson, they were both accused of a government takeover of health care, when they passed Medicare. This is the process we go through because the American people have a long tradition of being suspicious of government, until the government actually does something that helps them, and then they don’t want anybody messing with [it] afterwards.’– Pres. Obama
Even more, I’m also perplexed, as Rachel Maddow pointed out recently, that the people most likely to benefit from healthcare reforms have been ginned up into populist rage to oppose it by fear-mongers using vile partisan antics. It’s ironic isn’t it, that the states, largely in the South and the West, that have been most skeptical of President Obama’s agenda for health care reform also have the highest levels of uninsured people in the nation..??Precisely the population that’s most causing the rest of the nation’s healthcare system to buckle under its cost.Take this one fringe Conservative extremist, Kenneth Gladney for example, who allegedly got himself beat-up trying to hi-jack a Town Hall meeting in St. Louis, MO. It turns out Gladney had just gotten laid-off from his job, and had to end up begging for donations to pay his medical bill from the melee. President Obama’s health reform proposal would protect people in precisely such a situation. When in doubt, lie and obfuscate the issue, then resort to a falsetto’s brand of “patriotism.”Standard GOP play book.Where is the compassion among the “compassionate conservatives”..??
After all, the cost of providing health care to 48 million uninsured Americans is economically and practically, unsustainable. Medical costs are soaring at twice the rate of inflation. Even if you don’t pay the bills directly, you see the medical inflation rate in higher insurance premiums, deductibles and co-pays. And just what are we getting for the money..??A system that already limits our choice of doctors & hospitals; often doesn’t cover necessary services; forces patients to satisfy a complex labryinth of procedures and paperwork just to get reimbursed; keeps us tethered to a job we might not enjoy for fear of losing health benefits, and strands us without affordable protection if you lose coverage after experiencing health problems – sometimes even minor ones.
Even Fidel Castro raised an interesting point on the Healthcare debate. It is admittedly difficult to take seriously much of anything Castro has to say.But on this one point, it seems he has a prescient point.Castro criticized the U.S. recently for being willing to spend billions on our high-tech military – sometimes even for toys we don’t need – but finding it difficult to approve healthcare reform that would protect the poorest among us. He wrote in a commentary published on a state-run Internet site that huge military budgets are approved easily by the U.S. Congress, but noted that President Obama is struggling to convince federal lawmakers to pass a bill that would “deliver health services to 50 million Americans that don’t have [healthcare protection].”
He is right. We spend over $1 Trillion per year on our military-industrial infrastructure – about one half of the annual Federal budget, excluding debt service on military spending – but only about $200 Bn on government-sponsored healthcare to our populations most in need of it – the poor, working-class and middle-class Americans. Yet many Americans, as recent Town Hall meetings indicate, seem grudging, parochial and petty in their consideration of this most pressing of social issues – especially considering that the majority of uninsured are the nation’s most vulnerable women and children.
‘Huge military budgets are approved easily by the U.S. Congress, but President Obama is struggling to convince federal lawmakers to pass a bill that would “deliver health services to 50 million Americans that don’t have healthcare protection.”‘ — Fidel Castro
The main stumbling block against providing health insurance for all Americans is the question of how to pay for it. Of the President’s $1 Trillion proposed plan, $800 Bn is already accounted for through the existing group of federal health plans – Medicare, Medicaid, Children and Veterans Healthcare, and the Prescription drug plan – passed by the previous Bush administration, but never funded. To fund the prescription plan, the White House negotiated $80 Bn concession from the Private health insurance industry and approximately $20 Bn concession from the Pharmaceutical industry. The government will need to find a way to plug the remaining $100 Bn revenue hole to subsidize those not getting it through workplace or unable to pay otherwise — about $100 billion. That’s what all the wrangling going on in Congress is about.
Marginal tax rates can and should be raised on high-earners as one source – for example, income earners making over $500,000 a year. But another very viable funding source, albeit never mentioned, can come from a 10% reallocation in military spending, which now is running amok at over $600 billion annually – that figure does not include (1) veterans benefits, (2) the 80% of interest costs on the national debt which comes from bonds issued for military operating and capital expenditures, and (3) the secret budget of our nation’s intelligence agencies. Most knowledgeable intelligence analystestimate the total U.S. military budget at approximately $1.2 Tn of the federal governments $2.5 Tn annual budget. The Pentagon’s spending rate is now higher than it was at the height of the Cold War, and is about one-half of the entire world’s military spending, and we spend six times more than the next largest military spending nation, China, although they have 20% of the world’s population, while we have only about five percent of the world’s population.
It seems clear the military budget in the U.S. is a sacred cow and, according to Republicans, a matter of “patriotism” while attending to the health and wellness of our citizens is not. We are Sparta, it appears, rather than enlighten Athens.
It has been reasonably well known for some time that the U.S. spend more per capita on health care than any other country – developed, or not. What may be less well known is that the U.S. has the highest medical inflation rate in the world.That is, it has the highest growth rates in per capita health care spending since 1980 among high income countries. In fact, the medical inflation rate in the U.S. is rising faster than the nation’s economic growth, and three times faster than real wages – which in recent years is actually declining. In simplest terms, that means if we do nothing the problem only gets bigger, faster.
So what drives health care spending..??In the U.S., chronic, but preventable diseases — obesity, diabetes, cardiovascular disease and cancer — accounts for fully 75 percent of health care spending.It has been reasonably well known for some time that the U.S. spend more per capita on health care than any other country – developed, or not. What may be less well known is that the U.S. has the highest medical inflation rate in the world.That is, it has the highest growth rates in per capita health care spending since 1980 among high income countries. In fact, the medical inflation rate in the U.S. is rising faster than the nation’s economic growth, and three times faster than real wages – which in recent years is actually declining. In simplest terms, that means if we do nothing the problem only gets bigger, faster.
In the clearest terms, the National Coalition on Health Care(NCHC) – a rigorously non-partisan, non-profit public interest organization – has a website outlining the gravity of the issue with a compelling set of empirical data that frames the issue, and what it means to us. Among other things, here’s a concise list showing how this extraordinary escalation in health care costs and insurance premiums affects several segments of our economy:
1.Surging health care costs slow the rate of job growth by making it more expensive for companies to add new workers. They also suppress wage increases for current workers by driving up total compensation costs.
2.As health care costs rise, corporate operating margins are cut, which reduces the capacity of firms to grow by investing in research, plant and equipment.
3.High and escalating out-of-pocket costs are forcing families to delay mortgage payments or sell their homes, cut back on normal household expenses such as for food and utilities, and take on onerous medical debt.
4.High medical costs can require retired families to spend hundreds of thousands of dollars out of their savings for out-of-pocket health care expenses.
5.High insurance costs are eroding the ability of firms to fund current levels of pension and health benefits.
6.They put American firms at a steep disadvantage in world markets, where they have to compete against companies with much lower health care costs in the nations where they operate.
7.Rapidly escalating costs are producing severe long-term budgetary problems in the public sector affecting the solvency of federal and state health insurance programs, such as Medicare and Medicaid.
We have reached the point where the public’s main domestic concerns — the economy, jobs, and health care — are really one and the same issue. Unless the health care cost crisis is addressed, we cannot assure robust economic growth, strong job creation, or financial security for American families as we struggle as a nation to recover from the global economic crisis. Healthcare reform is necessary to anyone who studies or understands the topic. The real issue it seems is what will ‘Healthcare reform” look like..??
On that score, the arguments about the comparative political economies of healthcare between developed industrial nations are familiar. Simply stated, it is the comparative measures of empirical outcomes between healthcare delivery systems in similar democratic-capitalist nations – for instance, between those of say the U.S., Britain, Canada, Japan, Australia, Germany and France. The evidence in most objective comparisons show that the U.S., while being the wealthiest nation, is also the only industrialized country in the world that does not have universal health care coverage for its citizens.
single payer system. On one end of the continuum, a few Scandinavian countries have the government own the entire care system and directly employ the care providers. Most others use a mixed model of government care and private care. Some European countries completely exclude the government from the entire process. Those countries use only private caregivers and they provide all coverage to their people exclusively through competing private, completely nongovernment health insurers — with no government coverage at all. The only thing we can conclude from looking at each of the many countries that have achieved universal coverage is that no two countries have chosen the same model.The models vary from one country to another. But what doesn’t vary is that every Industrial competitor, and even some emerging nations have managed to cover all of their citizens—even in destitute Cuba. And we have not.(Excerpts from Healthcare Will Not Reform Itself, by George C. Halverson.)
Bank lobby aims to kill consumer protection agency
WASHINGTON — If you doubt that U.S. banks long to return to the days of impotent regulation, you need only look at one of the financial sector’s top legislative priorities: killing a proposed new agency with generous help from Congressional Republicans that would be dedicated solely to protecting consumers’ financial interests.
The Obama administration is asking Congress to create a new Consumer Financial Protection Agency to regulate consumer financial products ranging from credit cards to auto loans to home mortgages, and to simplify full and fair disclosures about them. Though virtually every cause of the nation’s recent financial crisis was rooted in weak consumer protection [and anti-government deregulation], the pro-business U.S. Chamber of Commerce and their powerful lobby is leading the fight against the proposed agency on grounds that it would make credit less available and more costly. The American Bankers Association, the Independent Community Bankers of America, and the Financial Services Roundtable also oppose the measure.
“We have no argument that regulation failed. Consumer protection is just one of the many areas where it fell down,” said David Hirschmann, the president of the U.S. Chamber of Commerce’s Center for Capital Markets, which opposes the panel. “It just simply adds a new layer of regulation without fixing . . . our outdated, broken regulatory structure that was a contributing factor in our crisis.”
The Chamber said it’s spending about $2 million on ads, educational efforts and a grassroots campaign to kill the agency. It said that the grassroots effort has led to more than 23,000 letters sent to Congress to date. The Center for Responsive Politics said that for the 2010 election cycle, commercial banks have donated almost $3.7 million to lawmakers — 54 percent of it to Republicans. Companies that provide credit have given about $1.4 million, 59 percent to Democrats. Mortgage bankers and brokers have given $581,423. “Maybe instead of making government BIGGER, we should focus on making government BETTER,” reads one Chamber ad. The Chamber warns that the agency could morph into a monster regulator.
“If you look at this actual bill, the powers are so broad and so ill-defined that the scope of who is covered is incredible. They’ve managed to create a proposed new regulator for anyone who directly or indirectly provides credit to consumers,” Hirschmann said. “If you allow people to give gift cards for your store . . . you’ve got a new regulator. It’s amazingly broad in scope, scale and power.”
The administration scoffs at those charges as a disingenuous rouse by the powerful pro-business and finance lobby. “Contrary to some advertisements you may have seen, we have no desire to interfere with Main Street retailers’ ability to provide credit to their customers. That argument is to the financial regulation debate what the Death Panel argument is to the health insurance debate,” Lawrence Summers, the chief economic adviser to President Barack Obama, said in a recent speech. “We have become convinced that it is essential that consumer financial regulation be carried on by an independent body whose mandate is uniquely and exclusively consumer and investor protection.”
Until the current crisis, responsibility for these consumer protections fell to several separate regulators, who made consumer protection subservient to their core mission of regulating institutions for safety and soundness. Predatory lending and no-documentation loans helped spawn the housing crisis. Weak oversight by federal regulators allowed mortgage bonds to be sold to investors as the safest of investments when they were far from it. When economic times got tough last year, banks began padding their balance sheets by socking surprised consumers with new credit card fees that were hidden in contractual fine print. Read more here.
(NYT) WASHINGTON — The Federal Reserve and the Treasury are preparing broad new rules that would force banks to rein in practices that made multimillionaires out of many financial executives during the housing bubble, officials said.
The rules depart from the hands-off approach that dominated bank regulation for the last three decades, but are not as strict as proposals from some European leaders and suggestions from some members of Congress angered by the financial troubles of the last year.
Fed officials would give banks wide leeway in how they structure their rewards. They would not prohibit million-dollar pay packages or address issues of fairness. Rather, the rules are intended to restrict pay plans that encourage reckless behavior by rewarding only short-term gains. And because the rules would be applied through the confidential bank examination process, it would be hard for consumers and investors to judge how strictly the rules were being applied.
The effort is also meant to be an alternative to proposals by some European leaders for specific limits on bonuses to financial executives, an idea opposed by the Obama administration. Officials from Europe and the Treasury are negotiating . . . Read more here.
Fed Chief Ben Bernanke calls it: says U.S. recession likely over.
(NYT) WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, said Tuesday that it was “very likely” that the recession had ended although he cautioned that it could be months before unemployment rates dropped significantly. See FT.com report here.
“Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time as many people will still find that their job security and their employment status is not what they wish it was,” Mr. Bernanke said in response to a question about unemployment trends. “That’s a challenge for us and all policy makers going forward.”
The cautiously optimistic assessment came at the end of a speech at the Brookings Institution observing a year after a market crisis that was precipitated by the collapse of the investment bank Lehman Brothers.Shortly before the speech, the Commerce Department reported that retail sales had surged in August as consumers swapped old cars for new ones under the “cash-for-clunkers” program. The increase, by a seasonally adjusted 2.7 percent rate over the previous month, widely surpassed analysts’ expectations and was the largest monthly increase since January 2006. Mr. Bernanke said the consensus of economic forecasters was for moderate economic growth for the remainder of this year and next, particularly as credit markets thaw, consumer confidence takes time to heal and the federal government begins to unwind spending and lending programs intended to mend the economy.
“The general view of forecasters is that growth in 2010 will be moderate, less than you might expect given the depth of the recession,” Mr. Bernanke said, because of several issues, including continuing financial and credit problems, deleveraging by households and the need to end the economic stimulus programs. All these elements will “make the 2010 recovery moderate, in particular not much faster than the underlying growth rate of the economy,” he added. Read more here.
G-20 to confront global economic imbalance created by financial crisis
Pittsburgh, PA will host the next G-20 Summit slated for Thursday & Friday, September 24-25th, 2009. President Obama will chair this meeting of leaders from countries around the world who represent 85% of the global economy. At the Pittsburgh G-20 Summit, leaders will review the progress made since the London Summits and discuss further actions to assure a sound and sustainable recovery from the global financial and economic crisis.According to today’s Financial Times of London(FT), the global economic imbalances between nations resulting from the global financial crisis will be front and center on the agenda. An interesting debate with economic foreign policy implications is brewing between high-consumption (e.g., U.S., UK, Germany) and high- savings nations (China, India, Japan). The push on global imbalances is motivated in part by the US belief that high savings rates in emerging economies with export-led growth models helped to foster the financial crisis by creating a global savings glut that depressed borrowing costs and induced excessive borrowing by US consumers. That assessment is contested by officials from high-savings nations, who argue that the problem lay in the misallocation of abundant global capital by mismanaged and badly regulated financial sectors in New York and London.
Yet another pressing topic that promises to be high on the agenda will be a flare-up of economic nationalism between the U.S and China, sparked by President Obama’s recent decision to impose tariffs on tires made in China. The president argued that the Chinese tire imports were harmful to American companies and workers, that the tire imports were inferior in quality, manufactured using unfair labor practices, and that China was ”dumping” tires into the $1.7Bn U.S. market. Under WTO rules, “anti-dumping” tariffs can be imposed under the President’s stated reasons. In retaliation, China quickly countered with — nationalist fervor — that they would impose equally harsh tariffs on American made automotive parts and U.S. chicken exports. This should make for an interesting Summit.
—-
FT (London) — The US administration, with support from Europe, is seeking to reach agreement on a new framework for tackling global economic imbalances at next week’s G20 summit in Pittsburgh. The goal is to achieve both a basic agreement on what needs to be done to produce more balanced global growth and a process for ensuring that countries deliver on their commitments.
But it is still unclear how far China and other trade surplus nations will be willing to go, and whether the G20 as a whole really is ready to submit to meaningful global policy co-ordination.
“We hope to reach agreement on a framework for balanced growth, for agreeing on how to address the imbalances that led to this crisis and on some process for holding each other accountable,” Michael Froman, deputy national security adviser for international economics, told reporters yesterday.
One idea – promoted by some European governments – is for the G20 to establish a high-level task force of senior officials from the major economies to co-ordinate a global push to reduce imbalances, with support from the International Monetary Fund. The IMF held so-called multilateral consultations on global imbalances before the crisis, but without strong political backing the discussions led nowhere.
President Obama addressing Wall St. executives at Federal Hall
“It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system and a more broadly shared prosperity.”
Mon, 14 Sept - President Obama reinvigorated his administration’s effort to reform the financial regulatory system by taking his bare knuckled message directly to Wall Street.Speaking at Federal Hall directly across the New York Stock Exchange and using the one year anniversary of the collapse of Lehman Brothers the president reminded prominent financial industry executives of their role and risk-taking behavior that led to a global economic melt-down. And flexing some muscle in the face of recent positive economic trends and a robust +48% rebound in Market performance from the March lows, the president also reminded the audience of measures his administration took to pull the Markets and the economy from the brink of collapse.
Pulling no punches the president offered a sharp admonition that “there are some in the financial industry who are misreading this moment.” “Instead of learning the lessons of Lehman and the crisis from which we are still recovering,” he noted, “they are choosing to ignore them,” Mr. Obama said in a speech at Federal Hall in Lower Manhattan. They do so not just at their own peril, but at our nation’s.”
Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they [on Wall Street] are choosing to ignore them…They do so not just at their own peril, but at our nation’s.”
Turning screws a little tighter, the president added “I want everybody here to hear my words,” Mr. Obama said. “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”
The president shed no new light, nor offered any new proposals to his administration’s financial industry regulatory overhaul plan called the New Financial Foundations. But he did outline how his vision and his plan could prevent future systemic risk and financial system meltdowns. The president also specifically touted the administration’s plans to increase capital adequacy requirements at big banks, plans to give the Federal Reserve new oversight powers to regulate systemic risks to the financial system, and plans to establish a new consumer-protection agency, which would have broad powers over retail finance products such as credit cards, home mortgages and other consumer loans. Mr. Obama also urged banks to adopt changes before Congress acts by simplifying the language they use with consumers, overhauling their executive pay structures or allowing shareholders vote on bonuses. He vowed to press the G-20 for action on regulatory reform, and cautioned top executives not to squander public trust with huge year-end bonuses.
We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.
Of particular note on the one-year anniversary of Lehman’s collapse, a Federal judge citing basic fairness principles rejected a proposed legal settlement between the SEC and Bank of America over $3.6Bn in executive bonuses.Judge Jed Rakoff wrote the settlement “does not comport with the most elementary notions of justice and morality.”
‘This settlement does not comport with the most elementary notions of justice and morality. “It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away”’
The ruling directed both the agency and the bank to prepare for a possible trial that would begin no later than Feb. 1. The case involved $3.6 billion in bonuses that were paid by Merrill Lynch late last year, just as that firm was about to be merged with Bank of America. Neither company provided details of the bonuses to their shareholders, who voted on Dec. 5 to approve the merger. The judge focused much of his criticism on the fact that the fine in the case would be paid by the bank’s shareholders, who were the ones that were injured by the lack of disclosure. “It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away,” the judge wrote.
Several MSM sources provided excellent coverage of the speech which are outlined below.In addition, you can find the full text of the speech here.
