Sustaining Stimulus Efforts

As Ben Bernanke has declared that the recession is nearing a slow end and many around the world are looking to reduce stimulus efforts in an effort reign in out of control spending, the U.K. has affirmed that they will continue their efforts. This WSJ article further details what our European friends are thinking.

I applaud their efforts, as I insist to all anti-New Deal conservatives who claim only WWII brought America out of the Great Depression, I would argue that the scaling back of federal spending and other measures around 1937 slowed the return to "normalcy" in the economy as the country needed continued stimulus. Governments around the world must recognize such a potential mistake as one may devastate the progress many countries have seen in getting out of recession.

The Say On Pay: Should the Federal Reserve be Empowered to Regulate Risk-Inducing Pay?

A year after the economic meltdown that brought on bailouts and ultimately an economics stimulus package to the tune of trillions of dollars, the government looks to be trying to stop such an occurrence in the future. The proposed antidote being a new authority assigned to the Federal Reserve where compensation packages will be analyzed to see if they could bring down the economic system.

I don't really buy this. The government should not have any say on how companies pay their executives unless when federal money is involved. Whilst the bank bailouts of '08 could create a moral hazard problem whereas financial sector companies could not feel compelled to limit risk and stay solvent thinking that the government will help them regardless, I believe that even those companies that have been saved see the value in limiting risk. The fact of the matter is that it's the pay that drives the best talent to these companies and if American companies are going to be put at a severe disadvantage in terms of offering superior pay over overseas competitors such as Deutsche Bank and Barclays.

While stopping another 2008-like economic meltdown is important, it should not be handled by allowing the government to put limit pay packages that put American companies at a competitive disadvantage.

Has not much changed?

This WSJ article talks about the lack of realized reform nearly a year after the collapse of Lehman and the rescues of numerous financial institutions.

While realized reform is not present, the mindset of firms, regulators, and of consumers has changed the landscape of financials. The scrutiny that these corporations are now put under when it comes to executive bonuses and debt holdings has increased exorbitantly and there aren't any signs of that changing.