Liddy needs to open up to taxpayers 18 Mar 2009 AIG s CEO is under fire for paying out retention bonuses. The public outrage means future bailout funds could be at risk. Taxpayers already own 80% of AIG. But Liddy still sounds like a typical cautious company boss. However tough it may be, he must answer to his new owners.
Taxing AIG bonuses would waste time and effort 17 Mar 2009 The payouts rightly raise popular and political ire. But one idea for redress loading tax on recipients risks the same damaging fallout as breaking the contracts: uncertainty. Besides, they're a historical distraction. US lawmakers have more than enough to do for the future.
US backtrack on mark-to-market is badly timed 16 Mar 2009 FASB s imminent easing of rules for reporting financial asset values looks like a rush job under bankled political pressure. It will also confuse investors the group supposed to benefit from accounting standards at an already volatile moment. It s bad policy at a bad time.
Citi’s new board picks hit the right note 16 Mar 2009 The ailing bank sorely needs some experienced and respected market heavyweights as directors. Pimco s former head honcho, a retired Fed president and two savvy bank bosses could do the trick assuming they and Citi chief Vikram Pandit can work together effectively.
Obama’s AIG populism undermines his authority 16 Mar 2009 The US president said Tim Geithner should pursue every legal avenue to block bonuses to AIG executives but it seems like Geithner already has. The bonuses stink. But raising doubts over contract commitments and contradicting his officials is unwise. Obama needs to be smarter.
AIG’s disclosure should just be the beginning 16 Mar 2009 The US insurer finally revealed that nearly twothirds of its $180bn bailout cash has already gone, mostly to US and foreign banks. AIG should disclose more, but it s a start. At least annoyed policymakers now have data to inform their critique of the AIG bailout and others.
AIG bonuses stink – but taxpayers must hold noses 15 Mar 2009 Paying $165m in guarantees to employees involved in making AIG a ward of the US government is disgraceful. But the commitments appear binding. Still, the government can name and shame to mitigate the pain, modify behaviour and avoid a firestorm that does more damage than good.
Swiss devaluation need not spark trade war 13 Mar 2009 Switzerland has sold francs to weaken its currency. The precedent sounds frightening. In a growthhungry world, are competitive devaluations back? They needn t be. The Swiss problem is unique safe haven status has made the franc too strong. Imitation is not recommended.
One-size stimulus for all doesn’t make sense 12 Mar 2009 The US idea that every G20 country government should pump 2% of GDP into the economy is impractical and wrong. Sure, some EU members could do more to fight the recession. But Europeans are right to point out that their generous welfare states are powerful antislump weapons.
Obama himself must draw line under bank crisis 11 Mar 2009 As long as Washington dithers on getting the banking system working, other economic initiatives are likely to be futile. The precise terms of the rescue are important, but what really matters is being able to declare credibly that the crisis is over. Obama must take the lead.
Obama wants to make IMF belle of the G20 ball 11 Mar 2009 After being snubbed by US policymakers for years, it now finds itself key to Obama s international economic recovery plans. The US wants to stuff its coffers and even wants it to name and shame countries that it deems too stingy with stimulus. It s a big reversal of fortune.
UK’s lack of trade and goods makes recovery hard 11 Mar 2009 British manufacturing output plummeted in January back to the levels of twenty years ago. The shortage of manufactures is a problem hampering a UK recovery. The slump in the global economy makes the task harder still. The rebalancing has hardly begun.
Hard times make China look, well, normal 11 Mar 2009 Plunging exports pushed the country s economy almost into balance in February. That may not last. But it s an encouraging view of what China could look like were its Rmb4 trillion spending spree deployed wisely and a grim view of where that would leave its neigbours.
Bernanke offers hope that there’s a real plan 10 Mar 2009 The US central bank chief still blames Asia s excess savings for America s woes. But otherwise, his diagnosis of the roots of the economic crisis too big to fail banks, ad hoc financial infrastructure, procyclical regulation, fractured oversight makes sense.
Turkey should rethink its brinksmanship 10 Mar 2009 Delays on an IMF deal have driven Turkish equities and the lira down to fresh lows. The Turkish government s haggling may look suicidal. But the bet that Turkey is too strategically important to be allowed to fail may pay off for now. The longterm effects could be disastrous.
US Congress shouldn’t foment economic nationalism 9 Mar 2009 A committee plans to criticise Treasury officials for allowing US banks to invest money abroad after receiving government infusions. Such grandstanding could further impede the effective functioning of international capital markets at the worst possible time.
State control could save Lloyds’ bosses 9 Mar 2009 The crisis has justly cost many executives their jobs. Lloyds bosses would probably be for the chop too, after the UK bank s HBOS deal handed majority control to the state. But the new lead shareholder has another view. The lesson? Doing the government favours may help careers.
Geithner badly needs reinforcements 6 Mar 2009 With the US Treasury secretary's choice for his deputy apparently withdrawing from the nomination process, Geithner looks even more like Atlas supporting the entire financial world on his shoulders. Only he's not that strong, and every day the world crumbles some more.
Lloyds stalemate turning into farce 6 Mar 2009 The UK bank was meant to have agreed its badasset insurance with the government last Friday. There s still no deal, and the shares have since fallen 30%. Lloyds is right to fight for its shareholders. But with confidence in the banks shot, someone needs to bash heads together.
AIG bailouts need a dose of Obama’s openness 6 Mar 2009 Senators want to know which counterparties were made whole thanks to $180bn of government funding. A full explanation could put conspiracy theories to rest. Besides, AIG is effectively owned by taxpayers it's a perfect test of the administration's commitment to transparency.