Archive for October 11th, 2008
G7 Negotiations
Why are the finance ministers and central bankers having so much difficulty coming to an agreement? Well, it probably has to do with a desire to be responsible to one’s constituents. No one wants to burden their citizens with the cost of a foreign bank’s recklessness. But the problem is more complicated than that. In the global economy there are global banks. So who bails out these behemoths? The residents of the country where the bank is registered, or the citizens of all of the countries where the bank has subsidiaries? And if it is the latter, in what proportion is the pain to be shared? These are difficult questions that are making a concerted response by the G7 difficult to achieve.
Procerity’s Prognosis: Those with the most to lose will be most eager to settle.