Archive for Globalization

links for 2009-03-22


Finance after the Turmoil: Markets, regulation and Bruce Almighty

The rather optimistic title of this forum (… after the Turmoil) says it all: Host Ackermann sees “the dust settling”. What is the response to crisis, how can this lead to an “optimal system”?

The main challenges, according to Axel Weber, President of Deutsche Bundesbank are institution-specific approaches and all the mistakes that have been made. To the EU, this is even more pressing than to any other: we have to prevent happenings such as Lehman, *and* deal with the ones that happen in the US - including “fire sales”. The German response was a systemic approach, recapitalisation is within the remit of governments. In crisis, banks have much higher capital demands. You need to raise capital buffers, and this can only be done through the government.

Ackermann asks: Should there be one global accounting standard? Quick answer from Cerberus (apart from that this was that doggy in front of Hades, where these not the guys highly involved in M&A a la KKR?) Senior Advisor Cees Maas: Yes. Every country feels it has its own structure and therefore have their own interpretation. That is not helpful, so that within 3-4 years we might be there. Sounds like Lafontaine’s intimus Flasbeck speaking. Nice.

Thunell, CEO IFC, assumes that by spring, “we might be at an employment crisis including political tension”. It would therefore be essential to focus on the safety net for the very poor. So, Ackermann follows up with a question on if there should be an Early Warning System - distant from the aim of making money and who could this be (I had always thought that this is the role of central banks? Never mind). Weber takes this up with that there probably is “too much hope in EWS indicators” and if these would be successful, the people developing them would no longer be in academia (a bit telling, this statement from former Prof. Weber, or is it not?)

To put it politely: it probably rings true from all of the above that things in this forum were not really all to substantial. Another Erkenntnis was that Banks have departmentalised and thus minimised their risks even before the crisis, and, basically as Weber says “Banks are not Bruce Almighty” (well, bankers certainly thought about themselves in these terms, or did they not?).

Does this speak against accountability? I would say so, but then: I am not a banker. It certainly does not speak for the quality of this forum, hosted by the guy who had only six month ago the goal of reaching a 25% yield on its equity. I would have another thought here: If this is the summit of top European bankers, it’s a pretty low one. Certainly not Mount Everest. More like Kleiner Feldberg

They seem to feel this too: Ackermanns final apercu (accompanied by the famous Ackermann grin) ironically mentions Reagan’s statement “I think we should keep the grain and export the farmers”. You got it, man.


The role of the IMF

The basis of this discussion is that Mervin King suggested the IMF should become a non-resident board, IMF might be in charge of lending decisions, but the management should be much more independent. Thomas Mirow, President of ERDB, recommends to be cautious. “All that is decided, has daily impact on the people.” To think “the people will just be doing fine” would be naive (err… that’s an Erkenntnis, innit?) - regards Bretton Woods II that means that it would not be recommendable to spend too much time in creating novel institutions, more important is cooperation, regional integration. “We should not think that a college of wise man would be in a situation to govern the world.” (Laughter or jewellery rattling from the audience) Thanks for acknowledging.

On the other hand, Werder di Mauro sees that the advantages to more independence in banking supervision - towards accountability - would be logical to extend this to international institutions. I’d say she probably wants to be one of those wise women. Global vs regional coordination, it seems.

Jong-Wha Lee from South Korea sees the fundamental problem in governance and accountability. How do EU-countries report? They seem to be calling the shots. And, at the same time, a number of them are debtors. Why are Asian countries not included in decisionmaking of IMF? At the same time, “we support the increase of the financial importance, but IMF its not a regulator: without private capital influx, this will not be successful.”

Mirow makes another point towards his regional approach: A lot of banks think about leaving economies where they have made a lot of money: they should stick to them, because fundamentally they are good, and politically it would be a catastrophy. This is, what Köhler just earlier meant with  “Anstand”, making a plea to responsibility.

Seems they got the picture - or at least they are debating it?


On the Ruggie-Report

As the smoke seems to have cleared by now, I thought it would be good to sum up the major developments about the Ruggie-Report on Business and Human Rights. Here is the report as well as the collated comments - a fascinating and in my opinion quite convincing example of multi-stakeholder statements.

In a nutshell: Business and government must adhere to three principles - the state duty to protect against human rights abuses by third parties; the corporate responsibility to respect human rights; and develop more effective access to remedies, when human rights abuses have occured. Currently, business conduct produces what the report calls “governance gaps”, refering to differences of corporate behavior overseas and back home. These gaps and legal loopholes provide “the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation”.

However, according to the Global Policy Forum and Misereor (download), the report does not have global governance solutions to the global governance gaps it notes. Instead, it is limited to what its author deems politically achievable. This above all includes incremental steps, such as Bilateral Investment Treaties (BITs) and export promoting via Export Credit Agencies (ECAs). On a positive note (made by Oxfam Australia), Ruggie is in favor of strengthening judicial capacities to hear complaints and enforce remedies against corporations, thus demanding a stronger role for government. Even stronger, Ruggie states the opportunity and in fact necessity that corporate misconduct should be dealt within criminal courts such as the ICC - a primer in regards to business responsibilities. Still, Ruggie categorically rejects the UN Norms or any other global legal instrument to establish a fixed framework of human rights duties of corporations.

A critical look by Ethical Corporations’ Peter Davis led to a raging response by Professor Ruggie. So maybe the smoke has not cleared after all - which might not be such a bad thing in any case, as it will at least ensure that - and this is on what most stakeholders agree - the work goes on …


Is there life after work in China? - probably the most comprehensive source on CSR-issues as they emerge within Asia - ran a research on work-life balance that got prominent coverage by a number of chinese newspapers. After CSR-asia had reported about serious lack of work culture regards w/l in 2004 and called again for it in 2007, a significant improvement have seems to have happened since. And it did not go down unnoticed: Not only that South China Morning Post ran a big report (scanned in, as not linkable), so did Wen Wei Po, The Oriental Daily, Macao Daily News, and Metro Hong Kong. Other unlinkable sources include Other unlinkable sources that carried reports are the Hong Kong Economic Times and The Sun.

The blog of CSR-Asia comments: “Even though the research is excellent and the issue is topical, I am still surprised at the depth of coverage it’s received; editors clearly think that work-life balance is an issue people want to read about.”


links for 2008-04-09


ICCA conference

social_alternatives3.jpgHuman dignity and humiliaton studies (HumanDHS) points to an ICCA conference June 26-28 2007 by the International Center for Corporate Accountability (ICCA) on “Globalisation and good corporations”.

Watch out, wikipedia authors - there’s no information on ICCA at wikipedia!