World Politics and Finance

The American FlagAnd here comes the G20 meeting in Pittsburgh. Just as the city itself built its reputation on forging raw materials into the structures and framework that built the U.S.A., so to will Obama need to solder on and brandish the framework of a new financial approach, if pre-summit hype and talk are to be believed.

Here’s the deal: the world wants answers from Obama about how he and the rest of the US are going to deal with the financial mess that, let’s face it, we pretty much caused.

Sure, everyone was involved and we should have gotten the message when Iceland’s banking system collapsed for similar reasons, but we didn’t and the last year or two have pretty much sucked. Unless, of course, you are a bank that isn’t Lehman Brothers (wasn’t Lehman Brothers) or one of the top executives who continue to get big bonuses, though many now are regulated by federal guidelines. Obama is responding to pre-summit talk by saying that he will work with the other leaders to make some financial regulations that stick and work and don’t leave gaps (I feel like I’ve heard that before somewhere…) and insists, according to Reuters, that “reckless schemes that yield "fat executive bonuses" could no longer be tolerated.”

I respect Obama’s vendetta against these bonuses, and it may be that I just don’t understand something about how the financial system works, but it seems like the bonuses are not the issue here. While they may be the motivating factor to get people to sell the crap that they sold, the fact that it can even be peddled as a viable product is the red flag here. People will always figure out a way to make more money or get bonuses- that’s part of the game. But selling products that have no value or legs to stand on- in any other business that is grounds for legal action. If you are a car dealer who only sells lemons, you’re in trouble. If you say “Well, hey, look, I thought they were ok, I mean, the people who sold me them said they were made of parts from a lot of different places, but basically that they should work out fine in the end” you go to jail. "We know we still have a lot to do, in conjunction with nations around the world, to strengthen the rules governing financial markets and ensure that we never again find ourselves in the precarious situation we found ourselves in just one year ago," said Obama.“Bonus Culture,” as it is referred to by Europeans, will be a key item of discussion and debate at the G20 conference.

Obama said, "We cannot allow the thirst for reckless schemes that produce quick profits and fat executive bonuses to override the security of our entire financial system and leave taxpayers on the hook for cleaning up the mess."

"At next week's G20 summit, we'll discuss some of the steps that are required to safeguard our global financial system and close gaps in regulation around the world.”

Safeguard the global financial system- that sounds pretty wonderful. Reckless schemes that offer get-rich-quick options under the guise of suit-and-tie credibility- well, that’s not going away.