Friday, October 26, 2012

Penalise executives who make risky bets

President Barack Obama said the next important step 
for making the U.S. financial sector safer
is to make sure executive pay is less closely tied to risky bets.
In an interview to be published on Friday in Rolling Stone magazine..
.. the stability of markets is still at risk
because people making risky bets
are handsomely rewarded if the bets pay off,
but face limited consequences if those bets go sour.
"It tilts the whole system in favor of very risky behavior,"
he said.
"By the time the chickens come home to roost,
 they're still way ahead of the game."


Professor Z said...

The truth, Obama has been talking about it for the last 4 years and there is zero progress. Easier said than done.

CreateWealth8888 said...

Don't watch politician's lip. Just judge their actions.

Chee Ming said...

Very, very, very unlikely.

President can propose an Act, Congressmen can dispose of it. Also, don't forget that Lobbyist paved the way for Congressmen to enter the Congress with cold hard cash. Where did the Lobbyist get their $$ from? From "people making risky bets are handsomely rewarded if the bets pay off, but face limited consequences if those bets go sour."

yujuan said...

Obama made a big mistake in increasing big social spending during a Recession, no politician ever embarks on such expenditure when times are hard. The EU dun do that. Perhaps he has self interest, as the Blacks there are highly uninsured.
He should concentrate on nailing the big Financial Taipans who seem able to pull the rug off his feet. Instead of creating jobs for him, the FIs shortchange him by retrenching staff with IT replacement, and the top executives continue their old ways, rewarding themselves well with the job-cut savings. And the QE 3 is doing just that, putting money into the pockets of the FIs and the wealthy by buying the Banks' Mortgage Backed Securities.

yujuan said...

Peering into the crystal ball, if Romney wins, he has to take drastic strategy to put Humpty Dumpty back on the wall.
America is self sufficient in everything except mineral oils, they've got grains, beans, commodities and high end manufactured products. All Romney gets to do is to go the Protectionist way, tax high on foreign imports, esp Chinese products, following the EU. This would force American Companies from moving overseas, bringing jobs back to home ground. Obama's way of free trade has failed to create jobs for his people, and Romney has to do a different tack. Being a Mormon, he could be an extremist, unorthodox in thinking like his Church.
After all, Chinese wages are no longer cheap, the labour is restless, and the Chinese economy is still in a rut and not importing as before. So America can go insular and survive on its own. One bet here if Romney wins, he may reduce expenditures, contrary to Keynesian Theory on spending during a Recession to create jobs. Maybe we are wrong in analysis. The crystal ball is very murky.

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