Monday, January 11, 2010

[RED DEMOCRATICA] CFR.org Daily Brief, January 11, 2010

 

From the Council on Foreign Relations

January 11, 2010

View this newsletter as a web page on CFR's website.

EXECUTIVE SUMMARY

- Banks Face Ire on Bonus Pay
- Yemeni President to Engage al-Qaeda
- China Overtakes Germany on Exports
- Afghanistan to Take Over Bagram Prison

Top of the Agenda: Banks Face Ire on Bonus Pay

U.S. banks face (FT) renewed public and political backlash as they prepare to announce multibillion-dollar bonus packages. Banks, under government pressure, say their bonuses will account for a lower percentage of annual revenues than in years past, but the sheer size could still provoke public ire. Christina Romer, head of the Obama administration's Council of Economic Advisers, said a new round of big Wall Street bonuses would be "outrageous" and would further motivate the administration on its financial reform package currently before Congress. Washington has yet to respond to the British government's supertax on bank bonuses. Wall Street's pay plans are unlikely to dissuade the Obama administration from its own efforts to curb compensation.

Banks and securities firms have told (WSJ) workers their bonuses will contain a bigger percentage of stock, which reduces employees' incentives to take too much financial risk. Employees say the shift to stock compensation could leave them short on cash to cover mortgages and school tuition, since stock is restricted in how it can be sold.

The commission appointed by Congress to examine the causes of the financial crisis hears testimony Wednesday (WashPost) from the heads of four of the country's largest banks. Philip Angelides, the Financial Crisis Inquiry Commission chairman, said he plans to hold public hearings on what caused the financial crisis as "a proxy for the American people, giving them the chance to ask what led this country to the economic precipice."

Analysis:

In Newsweek, Jacob Weisberg says it is time to figure out what caused the Great Recession and who is to blame.

In a CFR interview, Marc Levinson says efforts to curb banker pay or tie it to company performance aren't likely to be effective.

In the New Republic, Simon Johnson says Goldman Sachs should "come to its senses and pay no bonuses of any kind to anyone" and that the bonuses they announce "will become the rallying point for real reform."

Background:

This CFR Council Special Report examines major economic reform proposals to make the financial system more resilient.

MIDDLE EAST: Israel-Egypt Wall

Israeli Prime Minister Benjamin Netanyahu approved (al-Jazeera) plans to build a wall along Israel's border with Egypt, including advanced surveillance equipment to keep out "infiltrators and terrorists."

Yemen: Yemeni President Ali Abdullah Saleh vowed (NYT) to track down al-Qaeda militants, as Obama said (NYT) he has no plans to send troops to Yemen in response to concerns over the country's terrorist network.

PACIFIC RIM: China Overtakes Germany on Exports

China surpassed (WashPost) Germany as the world's largest exporter and is expected to surpass Japan as the world's second-largest economy this year.

North Korea: North Korea proposed (KoreaTimes) peace talks with the United States, either as part of the six-party dialogue on nuclear disarmament or in separate negotiations.

SOUTH AND CENTRAL ASIA: Afghanistan's Bagram Prison

Afghanistan agreed (al-Jazeera) to take over running the U.S. military prison at Bagram, which houses roughly 750 inmates. The controversial facility could be under Afghan control within months.

Pakistan: Pakistan and China held (Dawn) bilateral defense and security talks to work out a joint strategy on regional peace and security.

AFRICA: Nigerian President's Health

Nigerian President Umaru Yar'Adua, who has been undergoing medical treatment in Saudi Arabia for seven weeks, has brain damage (allAfrica) and can no longer act as president, according to Nigerian newspaper NEXT.

CFR's John Campbell writes that Nigeria could be in for domestic upheaval, and a diminished regional role, because of its looming transition challenges.

North Africa: al-Qaeda in the Islamic Maghreb is threatening (Reuters) to execute a French hostage if four al-Qaeda prisoners arrested in Mali are not released.

AMERICAS: Venezuelan Currency Devaluation

Venezuelan President Hugo Chavez says (MercoPress) the army will take control of any business that increases prices after Friday's decision to devalue the Venezuelan currency from 2.15 to 4.3 against the U.S. dollar.

EUROPE: German Foreign Minister Visits Yemen

German Foreign Minister Guido Westerwelle made (DeutscheWelle) an unannounced visit to the Yemeni capital, Sana'a, to discuss counterterrorism and security cooperation.

Croatia: Social Democrat Ivo Josipovic won (BBC) Croatia's presidential election with 60.3 percent of the vote in a second run-off against Zagreb Mayor Milan Bandic .

TRANSNATIONAL: Climate Change Post-Copenhagen

On his blog, U.N. Peacebuilding Fund adviser Dan Smith says the prospects for the global climate and for the majority of the world's population are worse in the aftermath of Copenhagen's climate talks.

Editor's Note: Please note the relaunch of CFR.org's home page offering improved site navigation, expanded content, and new multimedia options.

 

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