Friday, September 25, 2009
G-20 agrees on time table for reforms
As the G-20 Summit closes. It will be interesting to see if these new guidelines on debt, executive compensation, and loaning will make a difference in preventing the economy returning to "the brink".
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3 comments:
It seems to me like this article involves a lot of talk but not much action. Leaders set rules aimed at improving quantity and quality of bank capital and discouraging excessive risk-taking, yet did not detail a way to enforce them. The same is true for executive compensation standards. The language developed at the summit seems very vague and unenforceable. I don't think measures like merely asking firms to take less risks is going to prevent another crisis, since the incentive to take risks still exists.
I feel that the G-20 should enforce a strict method for how firms structure their executive compensation standards because without enforcing strict ground rules, we will continue to see firms handing out outrageous bonuses. It is also a good indication that the G-20 is making progress on the idea of rebalancing how major countries' economies interact with one another. If we continue to work with other countries I can see us making larger strides in stabilizing our global economy.
I agree with Christina's comment that it seems like a lot of talk with very little action to follow it up. The rules they have planned to create seem very vague. If they come up with more strict guidelines by the time these things are put in motion, they might have some success. However, if they remain as they are listed here, it doesn't seem like much good will come. However, something I did find interesting was close to the end, where it spoke of trying to get the United States to promote private savings, and then spur the demands of China - an Asian nation. This part fits very well into our class discussion of the Asian model of savings, as opposed to the US which tends to just spend.
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