Economy




we need a global Debt restructuring Framework - Joseph Stiglitz: LINK ¤ the GUARDIAN

_________________________________________

 

  • "when the euro crisis began half a decade ago, (Keynesian) economists predicted"

 

 

 

 

 

_________________________________________

  • "that the austerity being imposed on Greece and the other crisis countries would fail"

 

 

 

 

 

 

 

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  • "it would stifle growth and increase unemployment - and even fail to decrease the debt-to-GDP ratio"

 

 

 

 

 

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  • "others - in the European commission, the European Central Bank, and a few universities - talked of expansionary contractions"

 

 

 

 

 

 

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  • "we hardly needed another test"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "austerity had failed repeatedly, from its early use under US president Herbert Hoover, which turned the stock-market crash into the Great Depression"

 

 

 

 

 

 

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  • "to the IMF "programs" imposed on east Asia and Latin America in recent decades"

 

 

 

 

 

 

 

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  • "Greece largely succeeded in following the dictate set by the "troika" (the European commission the ECB, and the IMF)"

 

 

 

 

 

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  • "it converted a primary budget deficit into a primary surplus"

 

 

 

 

 

 

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  • "but the contraction in government spending has been predictably devastating:"

 

 

 

 

 

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  • "25% unemployment, a 22% fall in GDP since 2009"

 

 

 

 

 

 

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  • "and a 35% increase in the debt-to-GDP ratio"

 

 

 

 

 

 

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  • "and now Greek voters have declared that they have had enough"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "so, what is to be done ?"

 

 

 

 

 

 

 

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  • "first, let us be clear: Greece could be blamed for its troubles"

 

 

 

 

 

 

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  • "if it were the only country where the troika’s medicine failed miserably"

 

 

 

 

 

 

 

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  • "Greece has once again reminded us"

 

 

 

 

 

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  • "of how badly the world needs a debt-restructuring framework"

 

 

 

 

 

 

 

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  • "excessive debt caused not only the 2008 crisis, but also the east Asia crisis in the 1990s and the Latin American crisis in the 1980s"

 

 

 

 

 

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  • "it continues to cause untold suffering in the US, where millions of homeowners have lost their homes"

 

 

 

 

 

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  • "given the amount of distress brought about by excessive debt, one might well ask why individuals and countries have repeatedly put themselves into this situation"

 

 

 

 

 

 

 

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  • "after all, such debts are contracts"

 

 

 

 

 

 

 

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  • "that is, voluntary agreements - so creditors are just as responsible for them as debtors"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "in fact, creditors arguably are more responsible"

 

 

 

 

 

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  • "typically, they are sophisticated financial institutions, whereas borrowers frequently are far less attuned to market vicissitudes"

 

 

 

 

 

 

 

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  • "every (advanced) country has realised that making capitalism work"

 

 

 

 

 

 

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  • "requires giving individuals a fresh start"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "at the international level, we have not yet created an orderly process for giving countries a fresh start"

 

 

 

 

 

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  • "since even before the 2008 crisis, the UN, with the support of almost all of the developing and emerging countries, has been seeking to create such a framework"

 

 

 

 

 

 

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  • "but the US is adamantly opposed"

 

 

 

 

 

 

 

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  • "does anyone in their right mind think that any country would willingly put itself through what Greece has gone through"

 

 

 

 

 

 

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  • "just to get a free ride from its creditors ?"

 

 

 

 

 

 

 

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  • "if there is a moral hazard, it is on the part of the lenders - especially in the private sector - who have been bailed out repeatedly"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "when companies go bankrupt"

 

 

 

 

 

 

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  • "a debt-equity swap is a fair and efficient solution"

 

 

 

 

 

 

 

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  • "the analogous approach for Greece"

 

 

 

 

 

 

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  • "is to convert its current bonds into GDP-linked bonds"

 

 

 

 

 

 

 

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  • "if Greece does well, its creditors will receive more of their money; if it does not, they will get less"

 

 

 

 

 

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  • "both sides would then have a powerful incentive"

 

 

 

 

 

 

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  • "to pursue pro-growth policies"

 

 

 

 

 

 

 

 

 

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  • "one hopes that those who understand the economics of debt and austerity"

 

 

 

 

 

 

 

 

 

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  • "and who believe in democracy and humane values, will prevail !"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Capital in the twenty-first Century
- Thomas Piketty
: LINK ¤ the GUARDIAN

_________________________________________

 

  • "in case you haven't noticed, Piketty's "Capital in the Twenty-First Century" is a publishing sensation"

 

 

 

 

 

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  • "and it has jolted the right, who are scrabbling around for an answer to its main message"

 

 

 

 

 

 

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  • "rising inequality is killing capitalism !"

 

 

 

 

 

 

 

 

 

 

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  • "it is a big book in every sense of the word, using empirical evidence from 30 countries"

 

 

 

 

 

 

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  • "to describe how capitalism has evolved over the past 300 years and is now reverting to what Piketty calls the Downton Abbey world of a century ago"

 

 

 

 

 

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  • "that said, it is still a book about economics, and many readers will find it hard going when they get to the sections on the Cobb-Douglas production function and the marginal productivity of capital"

 

 

 

 

 

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  • "like Adam Smith's "the Wealth of Nations" and Maynard Keynes's "General Theory" it is a tome that will be more quoted from than read right through"

 

 

 

 

 

 

 

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  • "the gist of Piketty's book is simple:"

 

 

 

 

 

 

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  • "returns to capital are rising faster than economies are growing"

 

 

 

 

 

 

 

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  • "the wealthy are getting wealthier while everybody else is struggling"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "inequality will widen to the point where it becomes unsustainable - both politically and economically"

 

 

 

 

 

 

 

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  • "unless action is taken to redistribute income and wealth !"

 

 

 

 

 

 

 

 

 

 

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  • "Piketty favours a graduated wealth tax !!!"

 

 

 

 

 

 

 

 

 

 

 

 

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  • "Lord Adair Turner, the former Chairman of the Financial Services Authority: "Capital is a remarkable piece of work""

 

 

 

 

 

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  • "we have a set of tendencies at work to which the offset has to be a degree of redistribution. I completely agree with him"

 

 

 

 

 

 

 

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  • "Krugman says Piketty's work will "change both the way we think about society and the way we do economics""

 

 

 

 

 

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  • "a rather shy man, he seems bemused by his rock star status. "Economists are not highly regarded in France, so you have to be modest""

 

 

 

 

 

_________________________________________

  • "what is new about this book is that he has been able to collate data on such a scale: "until now there has been very little historical evidence""

 

 

 

 

 

 

 

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  • "Piketty draws a number of conclusions from his meticulously compiled data"

 

 

 

 

 

 

 

 

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  • "the world is moving in the wrong direction"

 

 

 

 

 

 

 

 

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  • "something can and must be done !"

 

 

 

 

 

 

 

 

 

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  • "in Britain, the poorest half of the population owns just 3-4% of the wealth"

 

 

 

 

 

 

 

 

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  • "it must be possible to do better than that !"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Archbishop of Canterbury criticises Bankers
- the Guardian
: LINK ¤ the GUARDIAN

_________________________________________

  • "the archbishop of Canterbury, Justin Welby, a member of the cross-party "banking standards commission""

 

 

 

 

_________________________________________

  • "has accused bankers of having "a culture of entitlement""

 

 

 

 

 

 

_________________________________________

  • "in a scathing critique of the City's ethical and professional standards"

 

 

 

 

_________________________________________

  • "in banking and in the City of London, a culture of entitlement has affected a number of areas"

 

 

 

 

_________________________________________

  • "in which it seemed to disconnect from what people saw as reasonable in the rest of the world"

 

 

 

 

 

 

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  • "serious consideration should be given to forming a professional regulatory body"

 

 

 

 

 

 

 

 

 

 

 

 

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Bank Reform - US cable - 2009: LINK ¤ 09LONDON2121

_________________________________________

  • "members of the US Congress and members of the British Parliament cited"

 

 

 

 

_________________________________________

  • "the lack of oversight from boards of directors as one of the root causes of the economic crisis"

 

 

 

 


 

 

_________________________________________

  • "Todd and Sally Keeble, Labour Party, noted the need to have international coordination"

 

 

 

 

_________________________________________

  • "especially when dealing with large, systemically important firms"

 

 

 

 

 

 

_________________________________________

  • "Lord Adair Turner, Chair of the (Financial Services Authority), identified several causes to the crisis:"

 

 

 

 

 

_________________________________________

  • "too much leverage"

 

 

 

 

 

_________________________________________

  • "insufficient liquidity, too low reserves"

 

 

 

 

 

_________________________________________

  • "too much focus on mark-to-market accounting rules"

 

 

 

 

 

_________________________________________

  • "too much risk-taking"

 

 

 

 

 

_________________________________________

  • "and too little oversight"

 

 

 

 

 

 

_________________________________________

  • "a multi-tiered approach was needed to prevent such crises in the future"

 

 

 

 

 

 

 

 

 

 

 

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bankers speak out - help us help ourselves:



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  • "a single systemic risk regulator was needed, the bankers unanimously agreed"

 

 

 

 

 

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  • "the banking industry can not regulate itself sufficiently to prevent any future crisis"

 

 

 

 

 

 

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  • "the regulator must be able to check the industry's worst impulses"

 

 

 

 

 

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  • "said Gary Lynch, executive vice president and chief legal officer, Morgan Stanley"

 

 

 

 

 

 

 

 

 

 

 

 

 

______________________________________________________________________________

Mea Culpa - US cable - 2009:
LINK ¤ 09LONDON1069

_________________________________________

  • "apologizing for the bank's past excesses, senior Royal Bank of Scotland (RBS) executives acknowledged"

 

 

 

 

_________________________________________

  • "that ambition drove the company to overreach and pursue investments with quick returns"

 

 

 

 

 

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  • "which landed the bank in the deep trouble it is now"

 

 

 

 

 

 

 

 

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  • "RBS executives had rigorously pursued"

 

 

 

 

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  • "a vision of becoming one of the leading global banks"

 

 

 

 

 

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  • "the lesson learned is that RBS must concentrate on its core businesses"

 

 

 

 

 

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  • "to recover strength and repay the British taxpayer"

 

 

 

 

 

 

 

 

 

 

 

 

 

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global Coordination - US cable - 2009: LINK ¤ 09LONDON1044

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  • "bankers were positive about the results of the G20 London Summit"

 

 

 

 

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  • "and the recommendations of the de LaRosiere Report of EU Financial Regulation"

 

 

 

 

 

 

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  • "firms hoped for additional practical details"

 

 

 

 

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  • "and greater cooperation between EU, UK and US regulatory authorities"

 

 

 

 

 

 

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  • "many firms supported de LaRosiere's support for a single EU supervisory body"

 

 

 

 

_________________________________________

  • "this would make implementation more pragmatic for global firms"

 

 

 

 

 

 

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  • "bank representative understood there was justifiably a great deal of public distrust"

 

 

 

 

 

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  • "in financial markets"

 

 

 

 

 

 

 

 

 

 

 

 

 

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Bank Regulation - US cable - 2009: LINK ¤ 09LONDON2478

_________________________________________

  • "the UK government is getting tough on compensation for bankers"

 

 

 

 

 

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  • "UK government officials also are debating whether there should be a return to "narrow banking""

 

 

 

 

 

 

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  • "with Bank of England Governor Mervyn King advocating a break-up of large banks"

 

 

 

 

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  • "so that taxpayers do not have to bail-out banks"

 

 

 

 

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  • "involved in risky trading activities in the future"

 

 

 

 

 

 

 

 

 

 

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a new Glass-Steagall:



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  • "anger has deepened since many of the most profitable banks"

 

 

 

 

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  • "have seen profits in their investment banking activities"

 

 

 

 

 

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  • "while credit to household and business consumers remains weak"

 

 

 

 

 

 

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  • "Bank of England Governor Mervyn King called"

 

 

 

 

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  • "for a "serious review" of how the banking industry is structured and regulated"

 

 

 

 

 

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  • "regulators will need to confront the "too important to fail" question"

 

 

 

 

 

 

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  • "and separating the utility functions of banks"

 

 

 

 

 

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  • "namely deposit taking and payment systems"

 

 

 

 

 

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  • "from riskier ventures - dubbed "casino" banking"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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International Cooperation
- US cable - 2009:
LINK ¤ 09LONDON251

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  • Prime Minister Gordon Brown: "the results of domestic action can be multiplied"

 

 

 

 

 

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  • "by coordinated international action"

 

 

 

 

 

 

 

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  • "an early warning system is a priority"

 

 

 

 

 

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  • "so that international financial flows are monitored"

 

 

 

 

 

 

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  • "as a first step, the international community must use the "Financial Stability Forum""

 

 

 

 

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  • "to create a framework for international governance"

 

 

 

 

 

 

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  • "second, the international regulatory deficit needs to be addressed"

 

 

 

 

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  • "with the current ad hoc international regulation proving inadequate"

 

 

 

 

 

 

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  • "the G20 should discuss a "Charter of Principles""

 

 

 

 

 

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  • "that would guide financial regulation and supervision"

 

 

 

 

 

 

 

 

 

 

 

 

 

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Supervision - US cable - 2009: LINK ¤ 09LONDON723

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  • "Lord Turner, chairman of the Financial Services Authority (FSA), recommended"

 

 

 

 

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  • "an overhaul of the UK's regulatory regime"

 

 

 

 

 

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  • "and an end to its "light touch" approach to supervision"

 

 

 

 

 

 

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  • "reforms to remuneration structures, credit rating agencies"

 

 

 

 

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  • "off-balance sheet vehicles and product regulation"

 

 

 

 

 

 

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  • "a system-wide macro-prudential perspective is vitally important to prevent a repeat of the current crisis"

 

 

 

 

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  • "remuneration policies should be designed to avoid incentives for undue risk taking"

 

 

 

 

 

 

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  • "off-balance sheet vehicles which create substantive economic risk"

 

 

 

 

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  • "must be treated like on-balance sheet for regulatory purposes"

 

 

 

 

 

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  • "regulators should be given the power to apply prudential regulation to hedge funds"

 

 

 

 

 

 

 

 

 

 

 

 

 

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one-Way Bet Culture - US cable - 2009: LINK ¤ 09LONDON478

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  • "the Royal Bank of Scotland (RBS) caused a media outcry"

 

 

 

 

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  • "when it announced it planned to pay GBP 1 billion in bonuses"

 

 

 

 

 

 

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  • "despite share prices falling 90 percent, having to write-off GBP 20 billion of assets"

 

 

 

 

 

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  • "predicting a GBP 8 billion loss"

 

 

 

 

 

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  • "laying off 2,300 staff and being 70 percent owned by the taxpayer"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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International Coordination
- US cable - 2009: LINK ¤ 09LONDON23

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  • "Prime Minister Gordon Brown said the length of the economic crisis will depend"

 

 

 

 

 

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  • "on the degree of international coordination"

 

 

 

 

 

 

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  • "the need to reform the World Bank and the IMF"

 

 

 

 

 

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  • "and to increase global supervision through a college of regulators"

 

 

 

 

 

 

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  • "the IMF and World Bank were built for a particular set of challenges"

 

 

 

 

 

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  • "and need to be rebuilt for the future"

 

 

 

 

 

 

 

 

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  • "the World Bank to be a bank for environment as well as development"

 

 

 

 

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  • "investing billions in alternative energy sources for the poorest countries"

 

 

 

 

 

 

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  • "the IMF should offer an early warning system for the world economy"

 

 

 

 

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  • "so that countries do not get caught up in global financial turbulence without being alerted in advance of the problems"

 

 

 

 

 

 

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  • "without supervision across borders, namely a college of regulators"

 

 

 

 

 

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  • "that will supervise multinational companies"

 

 

 

 

 

 

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  • "it would be very difficult to monitor exactly what was happening"

 

 

 

 

 

 

 

 

 

 

 

 

 

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Bank Profits - US cable - 2009: LINK ¤ 09LONDON2208

_________________________________________

  • "Lord Adair Turner, Financial Services Authority, expressed concern"

 

 

 

 

_________________________________________

  • "that bankers had not learned a lesson from the crisis"

 

 

 

 

 

_________________________________________

  • "and were returning to "business as usual""

 

 

 

 

 


_________________________________________

  • "unless bankers' get the message that profits should not immediately go into their pockets in the form of bonuses"

 

 

 

 

_________________________________________

  • "but rather be re-invested to restore the long-term health of the economy"

 

 

 

 

 

_________________________________________

  • "there will be another round of public and political backlash"

 

 

 

 

 

 

_________________________________________

  • "the public anger would be particularly acute since much of the recent profits are being generated"

 

 

 

 

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  • "as a result of managing large government bond issuances"

 

 

 

 

_________________________________________

  • "of issuing debt at record low interest rates"

 

 

 

 

 

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  • "in other words, the banks are making money from the crisis"

 

 

 

 

 

 

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  • "there was too much lobbying"

 

 

 

 

 

_________________________________________

  • "and too close of a relationship"

 

 

 

 

 

_________________________________________

  • "between financial institutions, the regulators, and the legislators"

 

 

 

 

 

 

 

 

 

 

 

 

 

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Financial Stability - US cable - 2008: LINK ¤ 08LONDON116

_________________________________________

  • Prime Minister Gordon Brown: "to build not just security but environmental stewardship"

 

 

 

 

 

 

_________________________________________

  • "and prosperity free of global poverty"

 

 

 

 

 

 

 

 

_________________________________________

  • "we need a G8 for the 21st century"

 

 

 

 

 

 

 

_________________________________________

  • "a UN for the 21st century"

 

 

 

 

 

 

 

_________________________________________

  • "and an IMF and World Bank fit for the 21st century"

 

 

 

 

 

 

 

 

 

 

 

_________________________________________

  • "I will work with others to propose a comprehensive agenda for a "Global Europe""

 

 

 

 

 

 

 

_________________________________________

  • "a Europe that is outward looking, open, internationalist"

 

 

 

 

 

 

 

 

 

_________________________________________

  • "and able to effectively respond both through internal reform and external action"

 

 

 

 

 

 

 

 

_________________________________________

  • "to the economic, security and environmental imperatives of globalisation"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Finanzsteuer - der Standard: LINK ¤ der STANDARD

_________________________________________

  • EU-Parlament: "mit einer Finanztransaktionssteuer soll sichergestellt werden, dass der Finanzsektor"

 

 

_________________________________________

  • "einen "fairen und spürbaren" Beitrag leistet"

 

 

 

_________________________________________

  • "um die Folgen der Wirtschafts- und Finanzkrise zu bewältigen"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

______________________________________________________________________________

ECONOMY - Wikipedia EN: LINK ¤ ECONOMY

_________________________________________

  • "an economic system consists of the production, distribution or trade, and consumption of limited goods and services"

 

 

_________________________________________

  • "the English words "economy" and "economics" can be traced back to Greek words: "one who manages the household""

 

 

_________________________________________

  • "in most of the countries the economic system is called "social market economy""
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economy - 14043ECO
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