Government and regulators need to focus on the systemic risk engendered by excessive compensation. As calendar year 2009 draws to a close, it is bonus season for the financial sector in the West. In the last several months, the need to cap bonuses and compensation packages has been extensively discussed in the context of limiting the future impact of the next financial sector breakdown. On December 9, 2009, the UK was...

After dedicating most of 2009 to jump-starting financial markets through stimulus packages, developed countries are now turning their attention to reforming the basic architecture of those markets, especially the incentives for risk-taking. In a major step towards regulating systemic risks, the United Kingdom last week announced a one-off 50 per cent “super-tax” on bankers’ discretionary bonuses exceeding £25,000. The move could raise £550 milli on, which would be used to...

For about a week after the Dubai crisis broke, international financial markets chose to ignore it. Stock-markets climbed, commodity prices rose and the dollar continued to be beaten down. It is not too difficult to explain this initial indifference. For one, the magnitude of the Dubai crisis appeared piffling, at first glance, compared to the “subprime” crisis or the meltdown following “Lehman’s bust”. When global banks had run up losses...

One-third of India is starving. In fact, this population has been in a state of chronic hunger, a factor which should be taken into account while evaluating the poverty situation, human rights activist and eminent doctor Binayak Sen said in a lecture at the Tata Institute of Social Sciences here on Monday. As a physician, “it’s been my privilege to read the politics of the bodies of my people,” said Dr....

The world’s biggest industrial disaster took place in Bhopal on December 3, 1984 taking a toll of 20,000 lives and affecting 5.69 lakh people. The twentyfifth anniversary of that massive mishap at the Union Carbide plant in the city is being observed across the country today. That disaster is a crying shame for all our citizens. Why? For three reasons. First, the real culprit behind the mishap, the Union Carbide management,...