Is it really easier to work in groups or is it just a way to shift responsibility?
This question is relevant after the recent summit in Pittsburgh, where the G-8 has sort of transformed into the G-20. And even though the G-8 will be still meeting annually as well as the new G-20 format, the world leaders have announced that G-8 is not capable to solve world economic problems alone anymore. Maybe there is a similar reason for Russia to insist on joining the WTO as a union with Belarus and Kazakhstan? It is still not clear why Russia has taken this course of action.
It looks like WTO membership is an Achilles’ heel for Russia. And recently, the Russian government appears to be searching for new WTO membership obstacles. In June, Prime Minister Putin declared that entering the WTO for Russia is possible only if it were to enter as a trade union with Belarus and Kazakhstan. He pointed out that partnership with neighboring countries has been much more important for Russia than WTO membership. In September, President Medvedev said that his colleague Mr. Putin was misunderstood. Of course, there is no need to enter the WTO as a union.
Whether Russia will ever join the WTO is still a big question. But it is certain that the customs union between Russia, Kazakhstan, and Belarus will take effect in July 2011, which was announced earlier this week.
Your host Richard Morrison welcomes returning guest co-host William Yeatman and special guest commenter Ryan Radia to the program for Episode 61 of the LibertyWeek podcast. We start with the FCC’s just-announced proposal for “net neutrality,” Treasury documents that reveal the true cost of cap-and-trade legislation and the plan for getting over California’s great depression. We then move on to the G20 Summit’s potential path to prosperity and the ever-expanding scandal that is ACORN.
We’re beginning to see the talent exodus from TARP-funded financial institutions. Yesterday in an op-ed Jake DeSantis of AIG-Financial Products wrote his “resignation letter” saying why he was leaving AIG. One major reason was the raging mob calling for the heads of those who received retention payments, now called bonuses, and the tepid defense that AIG’s $1-per-year chairman gave before Rep. Barney Frank’s rabid committee.
Today we learned from the Wall Street Journal that several top managers at Banque AIG in France are leaving, which experts say could cause defaults in $234 billion of derivative transactions. That’s because Banque AIG has to get French banking regulators to approve their replacements. If the regulators instead put in their own manager that could lead to defaults, since under the derivative contracts, such an appointment would mean a change in control and could null the contracts.
On top of that, two top Merrill Lynch strategists are leaving Banc of America Securities-Merrill Lynch research unit.
Retention payments to try to keep good managers in these trying times — to help resusitate ailing and failing financial firms — seem like a good idea, but not in the face of mob frenzy whipped up by policymakers and so-called community groups like ACORN, which has been leading protests and bus tours to point out “bonus” recipients’ homes.
An earlier post had speculated that London’s financial center could grow in power with U.S. financial talent being driven out. But that was before vandals attacked the Edinburgh home of the former head of the Royal Bank of Scotland, where they broke windows in his house and his car. Is London still safe from the anti-capitalist mobs that have threatened chaos at the G-20 meetings next week? Don’t bet on it. They too have been stoked up by policymakers’ — and world leaders’ — anti-capitalist rhetoric.
With the G-20 meeting looming in the midst of a worldwide recession, President Barack Obama sent an essay published today in about 30 newspapers to urge world leaders to work together to take “bold, comprehensive and coordinated action that not only jump-starts recovery, but also launches a new era of economic engagement to prevent a crisis like this from ever happening again.”
In his essay, Obama puts blame on the financial institutions for causing the crisis and the “absence of oversight.”
We must put an end to the reckless speculation and spending beyond our means; to the bad credit, over-leveraged banks and absence of oversight that condemns us to bubbles that inevitably bust.
He intimates that he would support some sort of global financial regulatory system, as he states:
Only coordinated international action can prevent the irresponsible risk-taking that caused this crisis. That is why I am committed to seizing this opportunity to advance comprehensive reforms of our regulatory and supervisory framework.
All of our financial institutions — on Wall Street and around the globe — need strong oversight and common sense rules of the road. All markets should have standards for stability and a mechanism for disclosure. A strong framework of capital requirements should protect against future crises. We must crack down on offshore tax havens and money laundering.
Rigorous transparency and accountability must check abuse, and the days of out-of-control compensation must end. Instead of patchwork efforts that enable a race to the bottom, we must provide the clear incentives for good behavior that foster a race to the top.
His essay ends with–
But I also know that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice that will not serve our people or any people.
Sounds like a false dichotomy to me.
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