RR Phantom
Location : Wasted Space
Job/hobbies : Cayman Islands Actuary
 |  Subject: OZschwitz: Professional parasite PM Rudd, claims greed is bad and that "extreme capitalism" had failed  Wed Oct 15, 2008 6:39 pm | |
| KEVIN RUDD declared that "extreme capitalism" had failed comprehensively as he gave notice yesterday that his Government would seek to curb excessive executive salaries in the finance sector.
As a senior member of the US Federal Reserve admitted that the US had officially slipped into recession, Mr Rudd fixed his sights on corporate salaries, telling the National Press Club that greed and fear were "the twin evils" that had sent the global economy into a tailspin.
"Fear is the first of these demons we must see off. Dealing with greed which has caused the fear will come after that," he said.
Janet Yellen, president of the Federal Reserve of San Francisco, revealed that the latest Fed data showed no growth in this quarter, and an "outright contraction" was quite likely in the fourth quarter.
"The US economy appears to be in a recession," she said.
This was in spite of joint efforts by the US Treasury and the Fed on Tuesday to halt the turmoil by announcing a plan to invest $US250 billion in direct stakes in nine big banks to encourage a freer flow of credit.
The admission came as Rio Tinto chief Tom Albanese confirmed a marked reduction in China's demand for commodities.
In Australia, new Bureau of Statistics data showed the average wealth held in property, shares and other assets had posted its biggest fall in 18 years, tumbling $12,100 in nine months to an average of $237,000.
Mr Rudd said it was ironic that the Government was having to clean up the mess.
"What we have seen is the comprehensive failure of extreme capitalism - extreme capitalism which now turns to government to prevent systemic failure. The [same] institutions of government that extreme capitalism spent decades deriding," he said.
Mr Rudd said as well as pushing international efforts to curb corporate greed at next month's G20 summit, he wanted tighter regulations imposed in Australia "to deal with the problem of executive remuneration to financial institutions".
He would ask the financial regulator, the Australian Prudential Regulatory Authority, to propose measures to be implemented by the end of the year.
Financial companies that rewarded executives for high short-term returns and excessive risk should be forced to have higher amounts of capital in reserve.
"APRA will now develop a template, not just for this nation for the future but also for examination by the G20 and other international institutions, of how excessive executive compensation can be reined in."
Ian Ramsay, from the University of Melbourne's Centre for Corporate Law, said the task would not be simple.
"I can understand why he's raising it because out of all the solutions to the crisis, this is the one that touches the nerve with the community - what should financial institutions give up in return for taxpayer and government support?" he said. But defining "excessive risk-taking" would be difficult.
ANZ chief economist Saul Eslake said there was less need for change in Australia than elsewhere but "I'm not saying that there's none".
The chief executive of the Australian Bankers Association, David Bell, said: "There is no evidence that Australian banks' salary packages have weakened our banks."
Last night the Opposition Leader, Malcolm Turnbull, used a televised national address to attack the Government's handling of the global financial crisis and claim credit for several measures introduced in recent weeks.
He implied the $10.4 billion package to stimulate the economy was excessive.
Mr Rudd said: "We are delivering this package at the right time to the right people at the right amount of strength."
The Treasurer, Wayne Swan, said the package was not big enough to deter the Reserve Bank from further interest rate cuts.
Despite repeated attempts by the Opposition, the Government refused to release the economic assessments that underpinned the rescue package.
Most recently, the International Monetary Fund warned that economic growth would slow to 2.2 per cent next financial year and that unemployment would hit 4.8 per cent.
The Finance Minister, Lindsay Tanner, said these estimates appeared optimistic and the figures would be "significantly worse".
LNK |
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RR Phantom
Location : Wasted Space
Job/hobbies : Cayman Islands Actuary
| | Subject: Re: OZschwitz: Professional parasite PM Rudd, claims greed is bad and that "extreme capitalism" had failed Wed Oct 15, 2008 6:46 pm | |
| - Nemo wrote:
- "Fear is the first of these demons we must see off. Dealing with greed which has caused the fear will come after that," he said.
Isn't the rational approach to deal with the cause first? |
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