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Thread: Are European leaders ‘victims of an ideological prison’?

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    Politics.ie Member LamportsEdge's Avatar
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    Default Are European leaders ‘victims of an ideological prison’?

    “What is lacking is the honest, intellectual, political, economic examination within the European institutions, of the fundamental failure, which the last four or five years has produced.”

    The President of Iceland Olafur Grimsson speaking at London Business School’s 2013 Global Leadership Summit. In attendance were business leaders such as Dr Josef Ackermann, Chairman, Zurich Insurance Group; Vice-Chairman of the Foundation Board of the World Economic Forum, Paul Polman, Chief Executive Officer, Unilever, Martin Wheatley, Chief Executive Officer, of the UK’s Financial Conduct Authority, Tim Breedon Non-Executive Director, Barclays Bank PLC in the audience.

    A live poll among the 600 attendees drawn from the business leadership community returned a 66% vote in agreement of the proposition that ‘European political leadership has exacerbated the economic crisis.’

    In his concluding remarks President Grimsson added that he does not understand why “banks are being considered the holy churches of the modern economy. Europe’s primary legacy to the world is not financial markets. Europe’s primary legacy that is given to the world, is democracy, the rule of law and human rights”.

    Linda Yueh, Adjunct Professor of Economics, London Business School, said:

    “Five years ago the financial crisis transformed the way bankers were viewed. Certainly the macro-economic impact was significant and even now, there is a huge debate over whether or not the very slow recovery that we see in the western economies is due to the unresolved reforms, in the banking system.”

    Interestingly a statistic was quoted which claims that 46% of business executives still believe that self-regulation is the most viable way to regulate compensation in the financial services sector.

    I find myself heartened with the remarks made by the President of Iceland and note the rather low belief levels in self-regulation even among business executives who are usually foursquare behind the principles of self-regulation.

    Are European leaders captive to an ideological prison in the corridors of which banking executives jangle their keys and plot a regulation free European Union?
    Whenever understanding exists, accepting or rejecting is unnecessary. (Fundamentals of a Gnostic Education).

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    Politics.ie Member The Field Marshal's Avatar
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    European leaders are anything but prisoners.

    These people are in the main kleptocrats who have artifically propped up an unsustainable financial system in order that their personal financial and comfort levels would endure.

    The hard decisions required to rescue the Euro from failure were never taken and its now all too late.

    The consequences and outlook is grim for Europes economy struggling under a broken banking system and incompetent politicians who destroy trust which is the basis of real democracy
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    Politics.ie Member statsman's Avatar
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    Quote Originally Posted by LamportsEdge View Post
    “What is lacking is the honest, intellectual, political, economic examination within the European institutions, of the fundamental failure, which the last four or five years has produced.”

    The President of Iceland Olafur Grimsson speaking at London Business School’s 2013 Global Leadership Summit. In attendance were business leaders such as Dr Josef Ackermann, Chairman, Zurich Insurance Group; Vice-Chairman of the Foundation Board of the World Economic Forum, Paul Polman, Chief Executive Officer, Unilever, Martin Wheatley, Chief Executive Officer, of the UK’s Financial Conduct Authority, Tim Breedon Non-Executive Director, Barclays Bank PLC in the audience.

    A live poll among the 600 attendees drawn from the business leadership community returned a 66% vote in agreement of the proposition that ‘European political leadership has exacerbated the economic crisis.’

    In his concluding remarks President Grimsson added that he does not understand why “banks are being considered the holy churches of the modern economy. Europe’s primary legacy to the world is not financial markets. Europe’s primary legacy that is given to the world, is democracy, the rule of law and human rights”.

    Linda Yueh, Adjunct Professor of Economics, London Business School, said:

    “Five years ago the financial crisis transformed the way bankers were viewed. Certainly the macro-economic impact was significant and even now, there is a huge debate over whether or not the very slow recovery that we see in the western economies is due to the unresolved reforms, in the banking system.”

    Interestingly a statistic was quoted which claims that 46% of business executives still believe that self-regulation is the most viable way to regulate compensation in the financial services sector.

    I find myself heartened with the remarks made by the President of Iceland and note the rather low belief levels in self-regulation even among business executives who are usually foursquare behind the principles of self-regulation.

    Are European leaders captive to an ideological prison in the corridors of which banking executives jangle their keys and plot a regulation free European Union?
    When things go wrong everyone tries to blame everyone else; that's hardly a surprise, is it?
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    Politics.ie Member Sync's Avatar
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    Quote Originally Posted by LamportsEdge View Post
    A live poll among the 600 attendees drawn from the business leadership community returned a 66% vote in agreement of the proposition that ‘European political leadership has exacerbated the economic crisis.’
    That number's meaningless though without the follow up question of the 66% as to what they feel exacerbated it. I'd argue that most would cite the ponderous decision making process that preceeds every move contrasted with the US's swift decision making based on their streamlined system. So that would involve a call for more centralistion of power as opposed to just getting rid of the system altogether.

    Interestingly a statistic was quoted which claims that 46% of business executives still believe that self-regulation is the most viable way to regulate compensation in the financial services sector.
    I'd agree. Ultimately it's down to the shareholders what calibre of people they want and how much they'll pay them. If those shareholders are governments then it's up to them to pay the way they believe to be appropriate. If the shareholders decide to pay a CEO $10000 or $1000000000, that's their perogative.

    You shouldn't confuse people thinking regulation is required with people thinking company's should set their own pay rates. I'd argue that a far higher % of those polled would believe that increased/more efficient regulation would have prevented many of the issues seen in the last 5 years. Pay isn't neccesserily a part of that.
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    Politics.ie Member LamportsEdge's Avatar
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    One area where politics and bank boardrooms have run a similar policy is in the infamous 'benchmarking' where politicians are assumed to be business leaders manque for the purposes of salary comparison and where in the bank boardrooms there has been a cosy cartel of non-executives eager to drive up boardroom pay because while they sit on the Remuneration Committee at one company they are Chairing or CEO'ing at another and are therefore helping to drive the salary cartel ever upwards.

    Good regulation does two things- automatically signals where there is an emerging problem- bank regulations failed to do that. And good regulation inspires confidence in a business and therefore contributes to the solidity of the bottom line.

    Banks and bankers became get-rich-quick merchants in a business that was supposed to be regulated to be stable.

    And the inevitable happened.
    Whenever understanding exists, accepting or rejecting is unnecessary. (Fundamentals of a Gnostic Education).

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    Politics.ie Member LamportsEdge's Avatar
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    Coverage in the media today (Bloomberg) reports that Iceland has put accession talks to the EU on permanent hold.

    The new government will consult the people with a referendum on whether talks should be resumed or not.

    The Icelandic Central Bank (ie 'the bankers union') has been lobbying hard for the talks to proceed but the new Prime Minister has declined to listen to the Central Bank.

    Since its banking meltdown in 2008 Iceland has twice been able to return to the markets, unemployment is now less than half of the Euro area average and credit derivatives are marked there at a lower risk level than Italy or Spain.

    Iceland is looking forward to the removal of capital controls on its financial system. Iceland Freezes EU Plans as New Government Shuns Euro Crisis - Bloomberg
    Whenever understanding exists, accepting or rejecting is unnecessary. (Fundamentals of a Gnostic Education).

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    Politics.ie Member Picasso Republic's Avatar
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    Quote Originally Posted by Sync View Post
    That number's meaningless though without the follow up question of the 66% as to what they feel exacerbated it. I'd argue that most would cite the ponderous decision making process that preceeds every move contrasted with the US's swift decision making based on their streamlined system. So that would involve a call for more centralistion of power as opposed to just getting rid of the system altogether.



    I'd agree. Ultimately it's down to the shareholders what calibre of people they want and how much they'll pay them. If those shareholders are governments then it's up to them to pay the way they believe to be appropriate. If the shareholders decide to pay a CEO $10000 or $1000000000, that's their perogative.

    You shouldn't confuse people thinking regulation is required with people thinking company's should set their own pay rates. I'd argue that a far higher % of those polled would believe that increased/more efficient regulation would have prevented many of the issues seen in the last 5 years. Pay isn't neccesserily a part of that.
    All well and good unless we have the situation where the majority investors in financial institutions are other financial institutions who all scratch each others backs for their personal or corporate benefit.

    Ummmm.........isnt that the situation we had??? !!!

    A limited number of companies operating in a cartel type environment where each is as corrupt as the other and everyone inside the club knows how bad the other is, cannot be trusted to self regulate.

    Its as bad as expecting politicians to come clean on the expenses farce - even Boyd-Barret and Claire Daly have their heads stuck in the trough after years of shouting from the sidelines - the banks are no different. Might be an idea to place the various regulators offices (banking etc) under the Garda Commissioner and give them teeth.
    Last edited by Picasso Republic; 22nd May 2013 at 04:05 PM.

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    Politics.ie Member LamportsEdge's Avatar
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    Sync speaks of 'shareholders' as if they were visitors from another planet. One wonders whether these shareholders are people or actual corporations taking cross-holdings in each other's corporations.
    Whenever understanding exists, accepting or rejecting is unnecessary. (Fundamentals of a Gnostic Education).

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    European political leaders were elected by their electorates and were supposed to be subject to criticism in a 'free' media.

    Financial managers were not subject to enough scrutiny and consequently were more inclined to take more risks.

    Regulation of the financial institutions by the democratic institutions was, therefore too lax.

    Criticism of the powerful at the head of both the political and the financial institutions by the 'free' media was also inadequate.

    Those problems were much worse in Ireland but were present on a European wide basis.

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    Politics.ie Member statsman's Avatar
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    Quote Originally Posted by LamportsEdge View Post
    Sync speaks of 'shareholders' as if they were visitors from another planet. One wonders whether these shareholders are people or actual corporations taking cross-holdings in each other's corporations.
    Mostly the latter. And pension funds; the ones who will pay your pension and mine.
    Put a thief among honest men and they will eventually relieve him of his watch. Flann O'Brien

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