IMF Head Says Crisis Set to Continue

[girl gone mad]

Global economic crisis to continue: IMF chief
http://www.reuters.com/article/ousivMolt/idUSTRE58B0K620090912">Reuters

The global economic crisis will continue and countries must do more to adopt financial market regulations, International Monetary Fund Managing Director Dominique Strauss-Kahn told a German magazine on Saturday.

Strauss-Kahn said he wanted to see more action from nations to curb bankers’ pay and tighten capital requirements in the banking sector.

“It is right to say that not enough has happened. I hope the Group of 20 meeting in Pittsburgh will bring new momentum,” he said. Leaders of the G20 meet later this month to try to agree on measures to help stop a repeat of the financial crisis.

Strauss-Kahn said the lesson of the financial crisis was that the market economy needed rules to function.

“Without new rules, there will be a return to the old behavior,” he said.

Governments needed to develop ‘exit strategies’ from the stimulus packages introduced to boost economies, said Strauss-Kahn, adding, however, that it was dangerous to think the crisis was already over.

“We need such “exit strategies.” We are working on them, but I would disagree with any …. demand to think about implementing them now,” he said.

Asked by the magazine how liquidity that had been pumped onto the markets would be withdrawn, Strauss-Kahn said a combination of higher interest rates and ending direct intervention of central banks would be needed.

[HamdenRice]

1. More accurate subject line: French Socialist IMF chief demands regulation to prevent another crisis

He is not saying that the crisis will continue, but that unless the G20 governments go back to old style financial regulation, we are setting ourselves up for another crisis.

Believe it or not, the Bretton Woods financial institutions (World Bank and IMF) are subject to political pressures and policy shifts. After the catastrophic tenure of Michel Camdessus in the 90s, and the devastating critique of the IMF by World Bank chief economist Joseph Stiglitz, policy at the IMF began shifting.

Strauss-Kahn is a technocrat from the French Socialist Party, and his appointment is an ideological reversal from the Camdessus era.

The IMF, like the World Bank, was originally a Keynesian, not Thatcherite institution. In fact, it was literally created by John Maynard Keynes himself at Bretton Woods.

Strauss-Kahn is demanding a return to the old system of international financial regulation to make sure the kind of crisis we are in never happens again.

[westerebus]

2. Banker's pay.

Why do we simplify the term "pay" when we refer to banker's or corporate CEO's or CFO's or C_O's pay?

How about executive officer's compensation? Let's include everything they get. Use of corporate jets, country club memberships, golden parachutes, free lunches, security details that include family members, charitable contributions made on their behalf, corporate retreats and vacations.

A bonus of $100 million in stock options is icing on the cake.

Bonus payments, even if the company is incapable of meeting it's financial obligations, are a part of their compensation. Not the whole.

If they can get someone to pay them a $100,000,000.00 in total compensation, then good for them.

How about we tax them on their total compensation? Say 50%.

If they can't live on $50,000,000.00 then what are they doing wrong? Living beyond their means? How is that possible?

Apologies are in order. The cost of buying the government wasn't considered. How stupid of me?

Sure, buying congressmen is expensive. Buying the White House was expensive too. But, these are tough times.

They will take less in the future. Offer them some of those CDO's to get them off your books. I'm sure they would jump at the chance.

May be some consulting work? A seat on the board? A job for their kids? A Cabinet position? Pocket change. Not even a line on the expense account.

How about free, as in you don't pay for it, health insurance? There's a tricky one. No fear there. The Congress is hard at work on that very subject.

Next thing they will want is "free speech" with corporate money. Well that will never happen.

The rich, they are just not like you and me.