Untitled - the ultimate blog

More documents

Recommendations

Info

advanced to scale down much. If there is hope for the top brass, it is that Britain’s defence strategy will in the end be shaped by its international ambitions. Judging by a recent speech by William Hague, the shadow foreign secretary, or the admittedly little that is known of Mr Cameron’s foreign-policy instincts, a drastic curtailing of these under the Tories is unlikely. A repeat of the scale and frequency of Mr Blair’s wars seems fanciful, but so does the prospect of Britain guarding its own turf and wishing the world away. Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved. -75-
Bankers' bonuses Watered down Aug 13th 2009 From The Economist print edition A new code on rewarding bankers will not restrict payouts NOBODY trembled when the Financial Services Authority (FSA), Britain’s financial watchdog, unveiled a new remuneration code for banks on August 12th. Rather than prescribing how big banks should mend their executives’ pay, it merely suggested some remedies. At issue are the perverse incentives which led some bankers to pitch their banks, and the entire financial system, into peril. Those who suffered were not usually these overpaid employees but shareholders and taxpayers—and customers, who may have been ripped off along the way. Anyone hoping for a radical change will be disappointed—though the City will be relieved. The FSA’s initial draft in March contained threats to limit the share of bonuses that can be taken in cash, forcing at least two-thirds of the payout to be deferred and depend on future performance. Those threats have turned into “recommendations” that can be ducked, provided a bank can explain its behaviour. The FSA’s only real sanction will be to require a bank to put up more capital if its remuneration policy is judged over-risky. But how would the riskiness be calculated by anyone outside the bank? Peter Montagnon, investment-affairs director at the Association of British Insurers, which broadly applauds the new code, agrees that the calculation is a sticking-point. But “perhaps the threat of a higher capital requirement is enough,” he says. Nor did the FSA seem exercised by the news earlier this month that Barclays, a rapidly expanding bank, had agreed to pay a few new recruits multi-year guaranteed bonuses. The practice seems to be alive and well among banks trying to steal what they regard as top talent from each other. Hector Sants, the FSA’s chief executive, maintained recently that the size of individual payments was a question not for the regulator but “for politicians and society as a whole”. Few in Westminster appear to have any appetite for it, though in France it is a different story. There, the government has ruled that bonuses, limited to a one-year guarantee, must be paid out of profits, not revenues (see article). The Conservative Party, which is likely to form the government after the next general election, to be held by June at the latest, is also reluctant to be prescriptive. “We don’t want a cap on pay, apart from a limit on cash bonuses paid to those in state-controlled banks,” says an adviser to George Osborne, the shadow chancellor. “But we don’t want business as usual either.” The party would like to turn the FSA into a consumer-protection agency and give financial supervision to the Bank of England, which would be less inclined to kowtow to bankers, he says. At the heart of the general reluctance to be radical is a fear that unilateral measures might drive big banks away from London, putting its dominant financial position at risk. That is the main reason why the FSA’s code has been watered down, as its preamble admits. It will apply only to around 26 of the biggest banking operations based in the capital. And it looks unlikely now to be any tougher than standards being developed by the Basel Committee on Banking Supervision, a rich-country forum, and by the European Union. Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved. -76-
Page 2 and 3:
Search Requires subscription Econom
Page 4 and 5:
Politics this week Aug 13th 2009 Fr
Page 6 and 7:
Business this week Aug 13th 2009 Fr
Page 8 and 9:
KAL's cartoon Aug 13th 2009 From Th
Page 10 and 11:
Asia’s rebound has several causes
Page 12 and 13:
democratic region. But Brazil’s l
Page 14 and 15:
World trade and commercial aircraft
Page 16 and 17:
Galileo, four centuries on As impor
Page 18 and 19:
Correction: America's sex laws Aug
Page 20 and 21:
SIR - You mentioned the slaughter d
Page 22 and 23:
Professor of the history of art Sch
Page 24 and 25:
Their arrival coincides with, and i
Page 26 and 27:
and integrated well.) Peru has beco
Page 28 and 29: Clean energy in the Midwest Greenin
Page 30 and 31: The economics of natural gas Drowni
Page 32 and 33: meetings on health reform planned f
Page 34 and 35: Drought in Texas Not a cloud Aug 13
Page 36 and 37: Rich animals The dog will have his
Page 38 and 39: twice the national average. But it
Page 40 and 41: international institutions and the
Page 42 and 43: Energy v environment in Canada Bomb
Page 44 and 45: further sanctions. Yet it is doubtf
Page 46 and 47: egistered voters are frauds. Yet Mr
Page 48 and 49: Australia's opposition His own wors
Page 50 and 51: Taiwan's typhoon Taiwan's disastrou
Page 52 and 53: Banyan The Burmese road to ruin Aug
Page 54 and 55: Fatah and the Palestinians Fresh fa
Page 56 and 57: Iran and human rights The crackdown
Page 58 and 59: Security in Iraq A return to the ba
Page 60 and 61: Ethiopia's resilient prime minister
Page 62 and 63: America and Africa Hillary (not Bil
Page 64 and 65: Southern Italy's ills The messy mez
Page 66 and 67: Copyright © 2009 The Economist New
Page 68 and 69: Italy's vigilantes On the beat Aug
Page 70 and 71: crisis-driven entanglement in banks
Page 72 and 73: colluded with the Russian patriarch
Page 74 and 75: Prospects for recovery Mervyn's rea
Page 76 and 77: Conservatives will be fighting over
Page 80 and 81: Scotland's capital and recession Pa
Page 82 and 83: Edinburgh festivals Fringe-onomics
Page 84 and 85: Bagehot Love in the time of swine f
Page 86 and 87: Correction: Teaching in Britain Aug
Page 88 and 89: Their aim is more modest. It was sp
Page 90 and 91: At a review conference next year, s
Page 92 and 93: All this would not matter much, wer
Page 94 and 95: with state aid. In an average year
Page 96 and 97: Mauro Cutrufo, Rome’s head of tou
Page 98 and 99: Online auctions Mind the pennies Au
Page 100 and 101: hire in anticipation; they will wai
Page 102 and 103: Face value Top of his game Aug 13th
Page 104 and 105: Emerging Asian economies On the reb
Page 106 and 107: y 70%. One reason why Asia’s emer
Page 108 and 109: industries with subsidies and under
Page 110 and 111: Of the three firms, AIG represents
Page 112 and 113: Assessing quantitative easing Muzzl
Page 114 and 115: All these rules failed and the sche
Page 116 and 117: Retail bonds in Europe Small fry wa
Page 118 and 119: A current-account surplus that has
Page 120 and 121: politicians still seem fixated by e
Page 122 and 123: In an influential early example of
Page 124 and 125: Thinking space Another way to encou
Page 126 and 127: Detecting habitable new worlds The
Page 128 and 129:
The history of science Kepler's wor
Page 130 and 131:
Engels (whose name resembles the wo
Page 132 and 133:
prose, having gone from Uighur to G
Page 134 and 135:
anks to hold more capital, the flow
Page 136 and 137:
Football and economics Game for gee
Page 138 and 139:
There are two intellectual bugbears
Page 140 and 141:
she continued to lurk, roiling the
Page 142 and 143:
Output, prices and jobs Aug 13th 20
Page 144 and 145:
The Economist commodity-price index
Page 146 and 147:
Trade, exchange rates, budget balan
Page 148 and 149:
Markets Aug 13th 2009 From The Econ
Page 150:
Office vacancy rates Aug 13th 2009
show all

Untitled - the ultimate blog

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?