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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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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"?
@ 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.
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.
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.