G20 Meeting Signals Leaner Bailout Buffets

Bertel Schmitt
by Bertel Schmitt
g20 meeting signals leaner bailout buffets

We shouldn’t read too much into meetings such as those of the G20. Even G8 confabs usually produce nothing other than nice announcements. Finance ministers of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union met this weekend in Horsham, England.

According to Bloomberg, the meeting produced the not too unexpected pledges of a sustained effort to end the global recession. The U.S. called for more spending. The Europeans called for restraint. The usual solution was a joint decision to monitor further developments closely. But there were undertones that could signal the end of wholesale bailouts.

The G-20 set a dozen principles. Among them:

Shareholders should be exposed by the “maximum possible” to losses or risks prior to a government intervening. Cerberus won’t like to hear that principle.

Companies that receive help should be run “according to business principles” and impose conditions on executive pay. That principle, if taken seriously, would mean the end of GM.

Authorities should give only temporary assistance and explain how they will end it.
That principle, if taken seriously, would mean the end of GM.

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  • Edmond Dantes Edmond Dantes on Mar 15, 2009

    Any of you guys above read Peter Egan's article at the beginning of this month's Road & Track, "The Retreat of People Who Make Things"?

  • SparkieSparkie SparkieSparkie on Mar 15, 2009

    @ Edmond Dantes: Here's the article you are referring to from Road & Track http://www.roadandtrack.com/article.asp?section_id=26&article_id=7716 Excellent point of view.

  • Stu Sidoti Stu Sidoti on Mar 16, 2009

    Quote Peter Egan of R&T: " After all, assembly line workers with high seniority were dragging down $71 an hour, if you included medical insurance and all their other benefits. Why should a person who never even graduated from law school or sold a single junk bond get to own a house or send a kid to college? It was baffling." Uh...would someone please inform Mr. Egan that the vaunted '$71 per hour' figure is not a compensation amount paid to assembly line workers. The '$71 per hour' figure is the total cost per hour when you divide the total costs of retirees, wages, salaries and benefits by the number of active worker's work hours today. While I do feel empathy for anyone living in the same region as the Janesville plants, it is kind of scary when even a well-respected superb writer such as Peter Egan gets the figures wrong.

  • Dean Dean on Mar 16, 2009

    Stu: read the paragraph again. Egan is merely echoing the argument of a commentator on the radio program to which he was listening. He was clearly not presenting it as his own. That said, Egan is still deluding himself that the problems are a result of the banking industry collapse. No doubt that has made the situation worse, but he fails to acknowledge the dire straits that GM, Chrysler, and Ford have been in for several years.