Monday, September 07, 2009
Question: Why is Kenneth Feinberg (and his like in other countries) referred to as a "pay czar"? Surely "pay kommisar" is more accurate, both literally and historically?
In any event, the G20 reiterated its desire to reshape the compensation structure of the banking industry over the weekend. And while Macro Man has no wish to dispute that banking pay practices have been suboptimal over the years, he is left to wonder whether or not the current vogue for the top-down allocation of resources isn't the first step on a very slippery slope.
Sure, some bankers get paid too much....but then again, so do some movie stars. And if we start to claw back, ex-post, contractual payouts rendered on a good-faith basis in real time, what does that say about the rule of law? If we do it with bankers, why not do it with sports "stars", particularly those playing in publicly-funded stadia? Hell, why constrain clawbacks to pay? Macro Man has little doubt that there have been a few occasions when the public would like to "claw back" its election of a particular candidate after a couple of years' performance in office.
While it's not exactly new news, the world is becoming frightenly Orwellian, seemingly by the week. Given the cronyism and fondness for dirigism in the corridors of power, it looks like we're all Communists now. Perhaps this explains the market's attraction to China this morning; after all, the Chinese have plenty of practice in the arbitrary abrogation of contracts and the central allocation of resources....and they're literal Communists to boot!
In any event, Macro Man's Bloomberg chat manager is alight with commentary on renewed interest in the CNY, which appears to be making impressive gains against the USD, as seen below.
It's impressive, of course, until you bother to look at the scale on the chart. Put into a slightly longer-term context, the recent breakdown literally doesn't register.
But hey, why let the facts get in the way of a good story? And if we're all Communists now, what other currency would we want to own but the most centrally-directed of all, the renminbi?
Just remember, folks: Poverty is prosperity. Insolvency is adequacy. Regulation is freedom. Plus ca change....