Index.php

From Eu3

Revision as of 10:48, 13 May 2012 (edit) 31.52.18.135 (Talk) ← Previous diff		Revision as of 06:52, 14 May 2012 (edit) (undo) 31.52.18.135 (Talk) Next diff →
Line 1:		Line 1:
-	The EU and Germany have stressed Greece must keep to the terms of the two EU/IMF bailouts, after a surge of voter support for anti-austerity parties.	+	THE man who the polls suggest will be the next French president, Fran�ois Hollande, claims that finance is his �real adversary� in the coming election. Britain has just stripped the former chief executive of the Royal Bank of Scotland of his knighthood. Even Newt Gingrich is attacking the �vulture capitalists� in the private-equity industry. Perhaps the West is set for a �war on finance� along the lines of the �war on terror�, with similar uncertainty about how to define victory.
-	The two main parties, New Democracy and Pasok, attracted less than a third of the vote, in an election plunging Greece into political uncertainty.	+	Politicians seem to have three main beefs with the financial sector. The first is that bankers earn too much. The second is that banks take reckless risks and then need rescuing by governments. And the third complaint is that investors in financial markets have undue influence over an economy through their ability to affect bond yields and equity prices.
		+	In this section
-	Chancellor Angela Merkel said Greece's reforms were of "utmost importance".	+	The first two problems are really related. People do not worry too much about footballers� high pay. The problem with bankers is the extent to which they are subsidised by explicit and implicit taxpayer support. (Of course, you might worry about income inequality in general but that is not specific to banks and can be tackled by redistributive taxation.) It is hard to disagree with Paul Tucker of the Bank of England, who has written that: �Those who most espouse the disciplines of capitalism�bankers and financiers�should live by them.�
-	New Democracy leader Antonis Samaras will now face a struggle finding parties prepared to join a government.	+	The problem of banks being �too big to fail� is being addressed, albeit slowly, by the higher capital ratios being imposed by regulators. Higher capital ratios should mean lower returns on equity; over time, this should lead to less rapid pay growth for bankers. Andrew Haldane, a colleague of Mr Tucker�s, has found that the pay of bank bosses correlated well with returns on equity, but not with returns on assets�in other words, managers prospered by gearing up bank balance-sheets. That is now harder to pull off.
-		+
-	With about 99% of votes counted, centre-right New Democracy (ND) is leading with 18.9%, down from 33.5% in 2009.	+
-		+
-	New Democracy will try to form an austerity-supporting pro-European coalition government, perhaps with a third party, because it would not gain enough with Pasok to form an absolute majority.	+
-		+
-	But the anti-bailout party Syriza will also try to form an alternative coalition government. There could be a clash of the two - we could be facing fresh elections within weeks.	+
-		+
-	This country is now placed into a period of intense political instability - and by extension the eurozone as a whole.	+
-		+
-	A majority of Greeks have voted against the bailout and against the austerity, which will make it very difficult for the EU or IMF to call for yet more austerity here.	+
-		+
-	The success of the new-right Golden Dawn party indicates how comprehensive a rejection of the political mainstream, the bailout and austerity there has been.	+
-		+
-	The stability and the future of Greece are now in doubt once again. That will bring a lot of dismay to the financial markets and to the eurozone as a whole.	+
-		+
-	Euro declines on election results	+
-		+
-	A radical left coalition, Syriza, came second with 16.8% and a party of ultra-nationalists - Golden Dawn - polled almost 7%.	+
-		+
-	Speaking to reporters on Monday, German government spokesman Steffen Seibert spelt out Berlin's position that "the agreed programmes must be adhered to". He added that Germany would support Athens in returning to competitiveness and financial stability, "whatever its government is".	+

---

Revision as of 06:52, 14 May 2012

THE man who the polls suggest will be the next French president, Fran�ois Hollande, claims that finance is his �real adversary� in the coming election. Britain has just stripped the former chief executive of the Royal Bank of Scotland of his knighthood. Even Newt Gingrich is attacking the �vulture capitalists� in the private-equity industry. Perhaps the West is set for a �war on finance� along the lines of the �war on terror�, with similar uncertainty about how to define victory.

Politicians seem to have three main beefs with the financial sector. The first is that bankers earn too much. The second is that banks take reckless risks and then need rescuing by governments. And the third complaint is that investors in financial markets have undue influence over an economy through their ability to affect bond yields and equity prices. In this section

The first two problems are really related. People do not worry too much about footballers� high pay. The problem with bankers is the extent to which they are subsidised by explicit and implicit taxpayer support. (Of course, you might worry about income inequality in general but that is not specific to banks and can be tackled by redistributive taxation.) It is hard to disagree with Paul Tucker of the Bank of England, who has written that: �Those who most espouse the disciplines of capitalism�bankers and financiers�should live by them.�

The problem of banks being �too big to fail� is being addressed, albeit slowly, by the higher capital ratios being imposed by regulators. Higher capital ratios should mean lower returns on equity; over time, this should lead to less rapid pay growth for bankers. Andrew Haldane, a colleague of Mr Tucker�s, has found that the pay of bank bosses correlated well with returns on equity, but not with returns on assets�in other words, managers prospered by gearing up bank balance-sheets. That is now harder to pull off.