What you say and where you sit

German president Horst Köhler has some strong words about international financial markets:

Global financial markets have become “a monster” that “must be put back in its place”, the German president has said, comparing bankers with alchemists who were responsible for “massive destruction of assets”.

In some of the toughest comments by a leading European politician since the start of the subprime crisis , Horst Köhler – a former head of the International Monetary Fund – called for tougher regulations and the reconstruction of a “continental European banking culture”.

Mr Köhler singled out excessive executive pay, the focus of much public resentment against top managers, as a factor in the subprime crisis and accused bankers of acting irresponsibly.

“The complexity of financial products and the possibility to carry out huge leveraged trades with little [of their] own capital have allowed the monster to grow…also responsible [is] the grotesquely high compensation of individual finance managers.”

International financial markets are a monster that must be put back in its place? Bankers as alchemists? Tougher regulations on finance?

Now he tells us... I don't recall anything of the kind when he was running the IMF, do you?

Comments

[Ken Houghton]

ROTFLMAO (as I watch pension assets lose 5% a quarter).

[Peter]

Indian response to Bush's latest gaffe regarding high food prices:

http://www.nytimes.com/2008/05/14/business/worldbusiness/14food.html?em&ex=1210910400&en=2c9ea731eb359c6b&ei=5087

[Melvin]

No. And that's because, although he was head of the IMF, he wasn't running it.

[Chris]

His first term as president of Germany ends soon, and in case he wants to be reelected he will need the votes of the Socialdemocrats (given that he is a Christian democrat their votes are relatively secure). Given that the Socialdemocrats run a populist campaign blaming financial markets and investors for job losses etc., well I guess you can figure the rest...

[Finja]

I agree with Chris, it's more of a populist thing in Germany right now to blame everything on managers.
Won't be long before it turns out it was actually some guys at Deutsche Bank and Siemens who started WWII...

Germans are big on envy.

[Non-economist]

it's interesting that Prof Rodrik was much more ... understanding of the change of heart (and perspective) of his colleague, Larry Summers, who also held positions of power in the global financial establishment.

It is also noteworthy that the last couple years, with the last increases in the per capita income of China and India, should be fairly easy examples of the benefits of globalization (ie, we can count millions and millions of winners, no?). Yet, now, with the weakness in the US economy, is the time when the benefits of globalzation start to be more widely doubted.