Was The G20 Summit Actually Dangerous?

It is easy to dismiss the G20 communique and all the associated spin as empty waffle.  Ask people in a month what was accomplished in Pittsburgh and you’ll get the same blank stare that follows when you now ask: What was achieved at the G8 summit in Italy this year?

Perhaps just having emerging markets at the table will bring the world closer to stability and more inclined towards inclusive growth, but that seems unlikely.  Should we just move on – back to our respective domestic policy struggles?

That’s tempting, but consider for a moment the key way in which the G20 summit has worsened our predicament.

There is broad agreement that capital requirements need to be increased and a growing consensus that very large banks in particular should be required to hold bigger equity cushions.  This is a pressing national priority – if our financial system is to become safer – and reasonable people are starting to put numbers on the table, ever so quietly: Joe Nocera is hearing 8%, but Lehman had 11.6% tier one capital on the day before it failed and the US banking system used to carry much more capital – back in the days when it really was bailout free (think 20-30% in modern equivalent terms (see slide 40 here).

Obviously, raising capital standards in the US is going to be a long and drawn out fight.  The G20 could help, if it set high international expectations, but the opposite is more likely.  As Nocera suggests this morning, the inclination of the Europeans – largely because of their funky “hybrid” capital, but also because they have some very weak banks – will be to drag their feet.

Why should we care?  This administration seems to think that we need to bring others with us, if we are to strengthen capital requirements.  Our progress will be slowed by this thinking, the glacial nature of international economic diplomacy, and the self-interest of the Europeans.

Instead, the US should use its power as the leading potential place for productive investments to make this point: If you want to play in the US market, you need a lot of capital.  If you would rather move your reckless high risk activities overseas, that is fine.

It’s time to get past the thinking that our economic prosperity is tied to the “competitiveness” of the financial sector, when that means doing whatever finance wants and keeping capital standards low.

As we discovered over the past 12 months, undercapitalized finance is not a good thing – it is profoundly dangerous and expensive.  Other countries should be encouraged to raise capital standards also, but if they can’t or won’t, then their financial institutions will (a) not be allowed to operate in the United States, and (b) be allowed to interact in any way with a US bank only to the degree that the US entity carries an extra (big) cushion of capital in those transactions.  Any US entity found circumventing these rules will be punished and its executives subject to criminal penalties.

Of course, this process needs to be WTO-compliant and the G20 is as good a place as any to manage the high politics of that.  But stop worrying about what other countries might or might not do.  Establish high capital requirements in the US, and make this a beacon for safe and productive finance.

And prepare for the crises that will sweep undercapitalized parts of the world financial system in the years to come.

By Simon Johnson

48 responses to “Was The G20 Summit Actually Dangerous?

  1. This administration seems to think that we need to bring others with us, if we are to strengthen capital requirements.

    I don’t know if this is a reprise of Obama’s kumbaya bipartisanship fetish, or if it’s more a reprise of the obstruction dance the US and China have been playing for years on GHG emissions: “You go first”…”No, you go first”.

    Or in this case: “We must emphasize higher capital requirments”…”No, exec pay has to be reformed”…”Well, we agree something needs to be done, and that’s enough agreement for now. We’ll talk some more next year.”

  2. The ability of US banks to tap into the dollar’s reserve status via Fed money printing, or public bailout, gives them an advantage over European banks. That probably explains Europe’s reluctance.

  3. “Was The G20 Summit Actually Dangerous?”

    Sure seems so when Manny, Moe and Jack can turned it into a platform for warmongering.

    What mind-numbing hypocrisy, to claim that Iran was hiding a “secret”, second uranium enrichment facility at Qom when, in fact, Iran had informed the IAEA a week ago about it, a full six months before it would have been required to do so by IAEA regulations!

    http://news.antiwar.com/2009/09/25/as-required-iran-informs-iaea-about-new-enrichment-site/

    And this when no attention has ever been directed to the well known and secreted Israeli nuclear sites in the same region. Let no one ever believe that the stranglehold lobbies exert on American government is limited to the banking industry!

    Somebody needs to restrain this two-bit AIPAC Stepin Fetchit before he sets off another war in the Middle East killing thousands more innocent civilians than he already has in Afghanistan and Pakistan. Is there literally no limity to the moral depravity in Washington?

  4. Lehman’s situation could have been more effectively dealt with through central clearing of short-term borrowing. JP Morgan balked at clearing the bank’s trades.

  5. Beria,

    your remarks were useful and fair until you compared Obama to Stepin Fetchit, but what is that kind of racist ad hominem going to add to any debate about Middle East policy? You might even be proceeding from an analysis of Obama like Shelby Steele’s, which I still find one of the most penetrating guides to many of the President’s strategies and decisions.

    But language matters: it’s a short step from dehumanizing your opponents to bombing them; in fact, that’s the crucial step. I thought you wanted to reduce violence–isn’t that the point? Or is the point to parade how clever you are?

    You might want to count to ten before you hit “send” next time.

  6. Lehman had 11.6% tier one capital on the day before it failed

    And when it failed, Lehman had more than $200 Billion in bonds outstanding with recovery rate less than 10%. That is a $180 Bil hole in the balance sheet that no amount of equity capital would have been able to close.

    Given enormous magnitude of notional amounts that large financial institutions have on their books, even small miscalculations of risk would wipe out their equity many times over.

    Whatever the amount of equity JPMorgan might have, even if it is double or triple the current amount, if the markets were to perceive it to be in trouble, the financial system will go into seizure and the government will have to step in – again.

    So, yes, raising capital level is all good, and it can be used as an effective tool to penalize banks based on their size, but let’s be clear – in and of themselves capital requirements will not solve the fundamental problem of instability of the financial system. It can only be accomplished via regulatory limitations on permissible activities of financial institutions, whose bankruptcy would cause systemic problems (e.g., deposit-taking banks, derivative trading shops above certain size in notional outstandings).

    All government guarantees have to be explicit, and what is not explicitly guaranteed has to be explicitly ruled out. Implicit guarantees, hopes/expectations of future bailout create the worst kind of the moral hazard, which cannot be solved through capital requirements or compensation reform (which brings us back to Lehman – its compensation was mostly in the company stock with cliff-vesting after 5 years – it does not get more long-term than that).

  7. Given the gap between the spin and the numbers, is this going to be this administration’s “Mission Accomplished” moment?
    At least Hoover left Roosevelt with a solid currency, but now it’s becoming the last and largest bubble. Do these people think they can revoke the law of gravity?

  8. There’s no reason to give any response or opposing comments to what you stated in your post, for anyone with a reasonable mind can see them for what they are. What bothers me is a first time visitor to this site might think your comments are representative of what people usually see here.

  9. I just want say that Joe Nocera is one of the best financial journalists we have now. And Simon’s post was stellar as usual.

    I hope journalists and the public keeps “riding herd” on the politicians to set capital requirements high enough to keep systemic risk to an absolute minimum. 15%+ or better sounds right to me. Plus higher standards for what QUALIFIES as “capital”.

  10. Michael Brenner

    MUCH ADO ABOUT ALMOST NOTHING

    The Mother of All Economic Summits held this week in Pittsburgh evokes faded images of similar conclaves in the 1930s. The grainy footage from those times showed somberly dressed men with severe expressions carved on their faces. They walked stiffly from vintage limousines to the imposing façade of some temple of finance. They returned looking even grimmer. Today, things are done with more pizzazz. Colorful ties, a parade of fashionable spouses, and big grins all around – as if the American hosts had passed around gilded cards with the embossed message: “look upbeat and keep a positive attitude.” So they assembled cheerfully in the rotunda of the Phipps Conservatory beneath the lofty glass dome.

    The cacti that normally surround the rotunda were removed. Pity. By some Divine intervention, they might have pricked the conscience of the assembled statesmen – or some other part of their anatomy that could have jump-started the palaver.

    As it was, the heads of government were so exuberant in their self congratulations that they nearly O.D.ed on huge helpings of green shoots. A throwback to the ‘survivors parties’ the British once held in Calcutta after the monsoon season passed. All this celebration while the global economy they so badly mismanaged is still hospitalized. At the very least, Nicolas Sarkozy’s glamorous wife, the chanteuse Carla Bruni, could have composed and sang the debut performance of a Rehabilitation Blues.

    The scorecard for the Summit is extremely thin. It is easily summarized. Here are the highlights:

    1) most banks but not other financial institutions will be required to increase their capital. Specifics are left to a Working Committee. Monitoring and enforcement is left to the national governments.
    2) bank salaries and bonuses are to be restricted and made to conform to performance over a three year period. Specifics are left to a Working Committee. Monitoring and enforcement is left to the national governments. These prospective rules will not come into force until 2013, i.e. when the hunting season for 2012 campaign contributions is over. Also note the strong incentives for executives to grab as much as they can in the next four years – thereby adding to the risk of another crash (assuming that they’re truly worried – a highly dubious assumption).
    3)leaders agreed to work to reduce the structural imbalance between those countries that have large balance of trade surpluses and rely heavily on export trade (e.g. China, Germany) and those who have large, chronic deficits and consume too much, i.e. the United States. Specifics are left to a set of Working Committees and the goodwill of the governments involved.
    4)some adjustments will be made in the voting quotas of the IMF to give greater weight to BRIC nations. The U.S. retains its veto.
    5)the G-20 will replace the G-8 as the primary body for global economic kibbutzing. It will meet annually instead of bi-annually. Makes sense; as Simon Johnson remarked, “doing two summits a year – when you don’t have anything to report on – is embarrassing.”

    That’s it, folks – there ain’t no more. Regulation of CDOs and CDSs, over leveraging, too big to fail financial institutions, etc. never made it onto the agenda. The blood oaths of November and April to tackle head-on the practices that brought us to the brink of disaster evidently are gone with the wind.

    The real drama of the Summit was Obama’s before dinner delivery of the ‘breaking news’ that a new Iranian nuclear fuel facility had been discovered. In fact, the United States has known of its existence for months, conserving the information for the moment – and audience – when it could have maximum impact. The exquisite timing had the further benefit of distracting attention from Pittsburgh’s historic non-event – not to mention Obama’s own abject failure on Palestine when Netanyahu stiffed him at the U.N.

  11. Fed Vice-Chairman Kokn on Derivatives and Financial
    Stability: Speech May 16, 2007

    http://www.federalreserve.gov/newsevents/speech/kohn20070516a.htm

    Financial derivatives were introduced in the 1970s by the Chicago futures exchange. Innovation and product development have transformed regulated depository institutions “from holders of interest rate and credit risk to originators and distributors of such risk.”…”There are good reasons to think that these developments..have made the economy less vulnerable to shocks that start in the financial system.” From the 1970s to the early 1990s “financial crisis were centered on depository institutions , and because borrowers were so dependent on depository institutions for credit availability, problems at depository institutions meant problems for the financial system and for the economy more generally.” With derivatives, “Borrowers have a greater variety of credit sources and are less vulnerable to the disruption of any one credit channel; risk is dispersed more broadly to people who are most willing to hold and manage it.”

    The growth of derivative “products with substantial embedded leverage has made it more difficult to assess the degree of leverage of individual institutions or of the financial system as a whole.” The dispersion of risks beyond the banking sector “requires us to live with less control and less knowledge than we had when banks were dominant..” The uncertainty of where risks are lodged has increased. “Gathering additional information about the risk profiles of less regulated institutions is unlikely to yield insights that can be acted upon and may create a false sense of comfort among market participants, which could make the system substantially more risky. We need to have confidence in the invisible hand. But confidence does not mean blind faith,…”

    “We need to accept that accidents will happen – that asset prices will fluctuate,..resulting in distributions of wealth and, on occasion, will confront us with financial crisis.” ..”…despite our best efforts , crisis are inevitable..”

    “In sum,..financial innovation…including the emergence and growth of credit derivatives, has made the financial system and the economy more resilient But it would be foolish to think that these innovations have eliminated systematic risk .”

    This note is motivated by the belief that understanding the mindset of key decision-makers is key to any reforms.

  12. Central clearing alone would NOT have solved the problem. There was a paper written by Darrell Duffie and Haoxiang Zhu of Stanford University which examines this exact point. You can read about it at this link. http://www.gsb.stanford.edu/NEWS/research/duffie_clearinghouse.html

  13. “Instead, the US should use its power as the leading potential place for productive investments to make this point: If you want to play in the US market, you need a lot of capital. If you would rather move your reckless high risk activities overseas, that is fine.”

    Hear, hear! :)

  14. Lavrenti Beria

    Then with all the power of that terribly reasonable mind of yours, Ted K., please explain to all of those first time visitors you so superciliously imagine yourself to represent here why it is that you’re responding. Beyond that the only other thing I might suggest for you to consider doing is the possibility of bending over and cracking a smile. I mean there’s an awful financial mess going on at the moment and such a thing might have real entertainment value for that self-appointed constituency of yours. :-)

  15. I see the BBC is carrying a news item.

    “Foreign Minister Avigdor Lieberman said Israel wanted to see an “unequivocal” Western response to the development.”

    From http://news.bbc.co.uk/2/hi/middle_east/8276279.stm

    What a strange world we live in.

  16. This was Robert Peston’s summary of the G20.

    http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/09/g20_history_and_fudge.html

    Peston is the BBC’s business editor.

  17. This G-20 summit may offer (at least the prospect) of a fig leaf of justification for countries such as Germany, France and China to criminalize financial practices have consequences within their respective national borders, though the principal activities are conducted abroad. For quite some time, the United States has championed the position that it can prosecute extraterritorial conduct having effects in the United States. Leave aside dramatic situations like foreign planning of acts of terrorism and the orchestration of drug smuggling. The American government has successfully prosecuted Asian price fixing cartels operating offshore to set prices in the U.S., it certainly seems to be running UBS through all the traps for its offshore tax evasion schemes, and in connection with Enron the DOJ successfully went after British bankers who defrauded their (British) bank employer. In each situation, a territorial nexus with the U.S. was present, but attenuated.

    I wonder if any significant foreign governments will be emboldened to take a similar posture with respect to the originators, distributors, raters and facilitators of global finance as currently practiced. We just might find that gun kicks as hard as it shoots.

  18. Lavrenti Beria

    Egan,

    Don’t you ever dare accuse me of racism, you arrogant little maggot! I was marching in civil rights protests at a time that people got their heads caved in for doing so, likely long before you were born. And as to your presumptuous lecture series on the use of language, do I really have to explain to you that the term Stephin Fetchit used as it was in context, “AIPAC Stephin Fethchit”, is a behavioral, not a racial charicature? Take you PC and your counting to ten, bend over, feel around and when you’ve got the right spot, stick ‘em both where the moon don’t shine.

  19. Lavrenti Beria

    Yes, Israel’s own Joachim von Ribbentrop, Avigdor Lieberman. Here’s a man, a real Nazi, that has called for the ethnic cleansing of Israeli occupied Palestinian lands so as to achieve the realization of an imagined “Greater Israel”, the objective of every nut and religious crazy out there in premillenial prophesy land. And, sadly, in the past, he’s gotten his “unequivocal support” from the United States for doing just that. You’re right, this is indeed a strange world.

  20. Lavrenti Beria

    Paul,

    Just noticed this little tid-bit of Paul Craig Roberts’s, a fabulous analysis of this aspect of the G20:

    http://vdare.com/roberts/090925_g20.htm

  21. That’s a Blog to bookmark, thanks LB. I guess we can be grateful the economic crisis is keeping minds off the Middle East. Spent many months travelling in Israel,Palestine and Egypt back in the 80s and even then it made no political sense. These days nothing anywhere makes sense! Must be me!

  22. Sounds, as Simon asserted, very cautious with the risk of accomplishing nothing. So U.S., go it alone.
    I respect Obama’s desire for concensus building, but it begin to look a bit like timidity.

    If I may inject, although stabilizing the banks will give great help to the economy, I fear the banks have become too much an end in themselves. In a highly old fashion way, banks were institutions which facilitated the flow of money through an economy, through holding deposits, allowing available capital from party Y to be borrowed by party X for some productive purpose.

    The use of derivatives and other vehicles for market speculation, the focus on making things was lost to the art of manipulating money. As we have moved away from a sense of inherent value in a product or service. Increasing capital requirements will force banks into more conservative positions

  23. You and I are talking about two very different things. In this instance, I am talking about banks that provide short-term credit so trades can get done (“clearing banks”). JP Morgan was Lehman’s clearing bank. JP Morgan’s collateral demands as things were getting bad exacerbated the liquidity crisis at Lehman.

    I have argued multiple times in the past that central clearing for derivatives has a lot of problems. (And in response you called me a bank lackey.) But thanks for the link.

  24. Lavrenti Beria

    Paul,

    Robert’s articles appear also at http://www.counterpunch.org where there is excellent economic commentary by Mike Whitney and economist Michael Hudson. There’s much else there as well which you might find of interest. Best to you.

  25. Nope…that “mission Accomplished” moment comes sometime in mid to late December when the President signs a health care reform bill—and I mean any health care reform bill–whether or not it reforms health care, health insurance or does anything truly meaningful other than providing a signing ceremony opportunity.

  26. Capital requirements? How about the rule of law? How are about fair and standard accounting practices? How about skin in the game? (any fool can risk the bank on a stupid gamble, if they know their daddy, the government, ie the US taxpayer is going to rush to rescue and meet the market) These fiends aren’t mastersoftheuniverse, – they are naked ruthless THIEVES!!!

    Wall Street shades, MUST be forced to play by the same rules, laws, and abide by the same standards as the people. If NOT, THEN THERE ARE NO RULES, LAWS, and STANDARDS – and in a world where there are no laws, there are no laws for anyone predatorclass biiiiaaaatches!!!

  27. If you want to play in the US market, you need a lot of capital. If you would rather move your reckless high risk activities overseas, that is fine.

    It’s time to get past the thinking that our economic prosperity is tied to the “competitiveness” of the financial sector, when that means doing whatever finance wants and keeping capital standards low.

    Bravo!

  28. Add Steve Keen to your blog roll. He is obviously a very prescient commentator on all things economics right now:

    http://www.debtdeflation.com/blogs/

  29. “Lehman had 11.6% tier one capital on the day before it failed”

    This is false. Lehman’s Tier 1 capital ratio was 11% at the end of August 2008. Lehman didn’t fail until September 15th — two very volatile weeks and a massive Fannie/Freddie bailout later. Please get the basic facts right for once.

  30. Distinction without a difference.
    So, Lehman was well capitalized not the day before bankruptcy but two weeks before bankruptcy.
    The point still remains – capital ratios by themselves are not enough to prevent future crises

  31. “If you want to play in the US market, you need a lot of capital.”
    —————————-

    Uhmm, who exactly having a lot of capital would want to play in the US market? And why?

    Be careful what you wish for …

  32. Your answer is still bogus. The “clearing bank” as you call it, would not have solved the problem any better. You say JP Morgan “balked” at clearing Lehman’s trades. It implies JP Morgan had a choice, and that if they had “cleared” the trades the end result would have been any different. They were in no position to clear those trades, and made the right choice. Covering the trades would have stalled the inevitable.

    As far as me calling you a bank lackey, we were discussing a different bank topic at that time. If you think JP Morgan could have saved Lehman, then I would let others judge where you stand on the issue.

  33. The Niall Ferguson defense–works about as well for you as it did for him. If you really did march in the 60s, as I did, you’ve slipped since then. Your grammar’s not too good, either: an AIPAC Stepin Fetchit is still a Stepin Fetchit; you compared a black man to Stepin Fetchit. (Do you know how feature analysis works for metaphors? If not, you need to read up before you sling around phrases like that.)

    It’s a racist insult, whatever you thought you were saying. Hey, novel approach: why don’t you just say you’re sorry, you didn’t mean it that way?

  34. Lavrenti Beria

    Egan,

    Oh, goodness, son, no defense was ever purposed here. Just a little help for the slow-witted, that’s all. And since you would seem to have a rather considerable fascination with grammar, so you won’t again appear the schlemeil, you may want to look into the rules governing the use of capitals when multiple sentences follow a colon. :-)

    By the way, did you take my suggestion about bending over and feeling around for the sweet spot? I wouldn’t think so. That method usually is curative and, sadly, you give us no evidence whatsoever of a cure. Tell you what, try this approach instead: Draw a tub of hot water and set out in search of a razor blade. Don’t take too long, now. :-)

  35. On the traditional banking side the large banks have had to lever up because they must price down. They must buy business because they have adopted a commodity model. Sell money cheap, either in terms of margin or in terms of quality, or both. So as public companies to drive stock price they must keep feeding the production monster because they have never solved the problem of customer retention. When you have eliminated the local community function and cut cost to where service is poor, attrition results. Feeding the production monster requires immediate gratification for production staff and senior management. The rest is history, and sadly, still future.

  36. Good grief! Grow up! This kind of language is a discredit to any semblance of reasonable debate and disgreement:

    “Take you PC and your counting to ten, bend over, feel around and when you’ve got the right spot, stick ‘em both where the moon don’t shine.”

    “Draw a tub of hot water and set out in search of a razor blade. Don’t take too long, now. :-)”

  37. Fully agree:

    “language matters: it’s a short step from dehumanizing your opponents to bombing them”

  38. Anonymous,

    Now have we offended your very delicate and carefully nurtured sensibilities, anonymous? Why not take them, bend over, feel around, and when you’ve got the right spot, stick ‘em where the moon don’t shine.

  39. Good grief! Grow up!

  40. Anonymous,

    Something about, “Why not take them, bend over, feel around, and when you’ve got the right spot, stick ‘em where the moon don’t shine”, you didn’t understand, chief? Tell you what, then, try this approach instead: Draw a tub of hot water and set out in search of a razor blade. Don’t take too long, now. :-)

  41. Simon Johnson says “but Lehman had 11.6% tier one capital on the day before it failed and the US banking system used to carry much more capital – back in the days when it really was bailout free (think 20-30% in modern equivalent terms (see slide 40 here).”

    And for the umpteenth time Simon Johnson displays his absolute ignorance on what the Basel risk-weighted capital ratios mean.

    Before the Basel era the capital ratios of banks were obtained by dividing capital by “total bank assets”. Now with Basel, the capital ratios are the result of capital divided by “total risk-weighted bank assets” and so we are NOT talking about the same figures.

    If Lehman had only had a traditional 11.6% tier one capital ratio most probably everything would be just fine. The problem is that since the real denominator was so much higher that the “risk-adjusted” denominator the real ratio was so much lower in fact total capital to total traditional assets of Lehman, on May 31, 2008 was below 4.3%. http://www.google.ca/finance?q=OTC:LEHMQ&fstype=ii

    Let me explain to Simon once again some basic facts of life. If the risk-weights used when weighing risk are wrong, then the result means zilch!

  42. You must see the Sunday comic strip Doonesbury. THis is bold even for Gary Trudeau.

  43. I totally agree with you – MrM.

  44. http://www.occ.treas.gov/ftp/release/2008-152a.pdf (see the profits made by banks trading desks on downwards sloped equities markets)

    How many paid staff employees (at whichever levels) will step up and say financial markets are corrupted? How many of them would step up and write it? how many within organizations will step up against foolish CEO s strategy?
    The main public perception is a mitigated knowledge of the situation, never to be enriched by the financial press.
    After all J dos Pasos wrote of course CPI obliges, one should read billionaire.
    That was banality untill nowadays when the legacy has become the real world financial burden, when the economic future is impaired by a collective financial robbery having discounted the long term future.
    Bloggs are supplementing information defisciency,anonymity is not a lack of bravado,but the wish to be read for the substance in total abstract of recommendation ,professional or educational.
    Will you one day try to measure the positve contribution of the economics bloggs if only for offering alternative thinking? or just merely secretely aknowledge that shadow economics and illusionary financial power have produced unforeseen mutants?

  45. One of the key points is increasing the capital levels disproportionately for large, systemically important institutions. The notion is to create a cost to banks to get bigger, to offset the cost that the government would need to pay to rescue them.

    But as the general principle behind higher capital costs and requiring long term compensation schedules, you raise very good points here. Per K. commented that 11.6% tier one capital was its _effective_ capital after adjustment for debt rating. I admit to being slow in following this data – do you have any more information on this, or was 11.6% really it’s raw capital asset ratio?

  46. Wrong. The problem was not that big systemically important institutions had especially low capital requirements but that they were invested in assets that have especially low capital requirements and so the first step is to increase the capital requirements for all those “risk-free” assets… and the rest will follow.

    Again careful with whom you ask about capital risk ratios… most probably they will not know enough what they are talking about.

    On Lehman again, here you find some figures:

    http://www.google.ca/finance?q=OTC:LEHMQ&fstype=ii

  47. Simon, this is a very good post, and I stand fully behind your tactical recommendation to increase U.S. capital requirements above bottom-feeder levels.

    But I think you err in insisting “this process needs to be WTO-compliant.”

    As I blog about over at http://www.EyesOnTrade.Org, all the existing and proposed WTO disciplines on such domestic regulations are going in the opposite direction to what you propose.

    We should try to walk and chew gum at the same time: pushing for higher U.S. capital requirements, while simultaneously pushing WTO reform. If we don’t do both, the WTO will come to bite us later.

    Full post here: http://citizen.typepad.com/eyesontrade/2009/09/g20-summit-yes-actually-dangerous.html