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Home > Blogs > Author > Ian Fraser

Ian Fraser

Ian Fraser
Ian Fraser, a journalist since 1988, is working on programmes about the banking and financial crisis for the BBC. He writes about business and finance for the Financial Times, the Sunday Times, the Independent on Sunday, the Daily Mail, and the Mail on Sunday. He is a visiting lecturer in financial journalism at the University of Stirling (since October 2009). Previous roles include business editor of the Sunday Times Scotland, financial editor of the Sunday Herald, deputy editor of Director, assistant editor of EuroBusiness and editor of internal publications at Unilever. He previously worked in the advertising industry in Edinburgh, London, and Paris. Ian graduated MA honours in English from the University of St Andrews.

Recent blog posts

  • Without a statistical revolution, Africa’s renaissance is built on shaky ground
    The economic historian Morten Jerven has set several cats among the continent’s pigeons by arguing that aspects of Africa’s economic renaissance are a mirage.
  • Malaysia’s economic outlook clouded by debt and discrimination
    For most of the past five decades, Malaysia has lived up to its billing as an “Asian Tiger”. However in recent weeks economic commentators have argued the Malaysian miracle is at risk of unraveling – or that the outlook for the ex-Tiger is looking distinctly cloudy.
  • Modi's neoliberalism may come as a shock to India
    Following his stunning election victory last week, India’s new prime minister Narendra Modi is determined to inject some dynamism into the country’s economy. Seen as a neoliberal, Modi has set his sights on removing inefficiencies, tackling corruption and rolling out free-market policies along Thatcherite lines.
  • Asset management: a sector in urgent need of an overhaul
    The finger of blame for the global financial crisis of 2007-09, which saw hundreds of banks worldwide dump their losses on taxpayers and whose fallout continues to be felt six years on, has been pointed in a number of directions.
  • 'Headless chickens' wreak havoc on emerging markets
    Emerging market economies are even more exposed to the vagaries of global financial markets than at the time of the Asian crisis of 1997, according to new research from the International Monetary Fund (IMF) which, in its usual slightly hectoring tone, is also recommending steps they can take to protect themselves from at least some of the fallout.
  • In spurning Alibaba's $15bn IPO, Hong Kong puts principles before profit
    In refusing to bend its own rules for Chinese internet giant Alibaba, the Hong Kong stock exchange has put principles over profits. China’s eighth richest person, Jack Ma, wanted to list Alibaba, the sprawling e-commerce sourcing and social media empire he founded in 1999 on Hong Kong Exchanges & Clearing (HKEx). But, after the bourse refused to relax its listing rules in order to suit his needs earlier this week, he confirmed Alibaba will float in New York instead.
  • Who's to blame for emerging market turmoil, and how serious is it?
    In the aftermath of the global financial crisis, and especially during the eurozone crisis of 2010-12, the emerging markets seemed like a reliable, steady and ethical engine that was capable of rescuing the traumatized developed world. However, since last summer, that engine has been showing disturbing signs of weakness. It has been misfiring, stalling, and even in some places grinding to a halt.
  • China and Japan's dispute over Africa turns ugly
    Watching CCTV-News in Hong Kong last week, I was struck by the vitriol that Chinese official sources are heaping on Japan. Speaking on the Chinese state broadcaster's English language Dialogue show on 14 January, Einar Tangen denounced the Japanese prime minister Shinzo Abe as a “dangerous psychopath”. Tangen also accused Abe of practicing “voodoo economics” and warned viewers of “a growing concern that he [Abe] is sliding into fascism.”
  • Hong Kong insists China's free trade zones 'an opportunity, not a threat'
    The Shanghai pilot Free Trade Zone (FTZ), unveiled with fanfare by the Chinese government last September, has been billed as China’s most important stab at economic liberalization since the country set up its first special economic zone in Shenzhen, north of Hong Kong, under Deng Xiaoping in 1980. It has also been labelled a threat to Hong Kong's hegemony as an international finance center.
  • Hong Kong has narrow window to prepare for Renminbi convertibility
    Ian Fraser travelled to Hong Kong as a guest of the Hong Kong Trade Development Council. In this blog, he writes about Hong Kong's need to become a more broadly-based financial center and prepare for Renminbi convertibility.
  • Chinese investment giant warms to US shale revolution
    Ian Fraser travelled to Hong Kong as a guest of the Hong Kong Trade Development Council. In this blog, he reports on Ding Xuedong's speech at the Asian Financial Forum as the chairman of China's largest sovereign wealth fund and how Chinese investment giant warms to US shale revolution.
  • Mumbai airport transformed but slum dwellers face eviction
    Arriving in India’s financial capital, Mumbai, by plane has long been a disagreeable experience. But that is set to change later this month when a new £2 billion international terminal opens to replace the existing clapped out facilities.
  • Vietnam turns to executions in bid to clamp down on graft
    They do things differently in Vietnam. In a bid to quell public unrest and an explosion of online dissent about the levels of corruption in government and among the country’s state-owned enterprises, one banker and three senior business executives have recently been sentenced to death.
  • Nigeria tackles the albatross of corruption
    A spat between the Nigerian central bank and the country’s state-owned oil and gas company Nigerian National Petroleum Corporation (NNPC) over nearly $50 billion of missing revenues has highlighted the risks presented by corruption in the West African republic and the determination of its central bank governor to root it out.
  • India opens door to foreign banks in bid to reinvigorate economy
    Raghuram Rajan, the governor of the Reserve Bank of India, believes he’s found a silver bullet that will transform India’s banking sector. Rajan, who took over as governor of the Mumbai-headquartered RBI on 4 September, wants to roll out the red carpet to foreign banks and to ease the regulatory regime for domestic players.
  • India’s economic wounds are self-inflicted
    Ben Bernanke is a convenient bogeyman for India’s unfolding economic woes. On May 22, he unnerved global investors by suggesting that the quantitative easing program that has helped prop up the US economy since early 2009 would be scaled back from next month, driving many investors to reassess their portfolios and withdraw funds from emerging markets...
  • China must wean itself off addiction to investment-led growth
    Just in case the two men who were recently installed as China’s leader-in-waiting – premier-designate Li Keqiang and Communist Party of China chief and president-designate Xi Jinping – are short of advice about how best to steer the Chinese economy over the next few years, they have just received some from the International Monetary Fund.
  • François Hollande, the eurozone's unlikely Thatcherite
    On November 20, Moody's Investor Services slashed France's rating from AAA to Aa1 and threatened to cut it further unless the country brings in measures to liberalize its labor market and overhaul its economy, in which public sector spending accounts for 57% of GDP.
  • India's commitment to financial reform hangs in the balance
    To liberalize finance? Or not to liberalize finance? That is the question. And it is one that is dividing India’s policy-making elite.
  • Senkakus/Diaoyu islands dispute turns ugly, hitting Toyota where it hurts
    Anti-Japanese sentiment in China, whipped up by a dispute over the ownership of an obsure group of islands in the East China Sea, has been welling up in recent weeks. The economic fallout looks like it could be serious, with Japanese manufacturers with operations in the People's Republic among the biggest victims. Some are even predicting the current dispute could flare up into a full-scale war.
  • Looking on the bright side of the emerging market slowdown
    The slowing of economic growth in emerging economies, especially China, and the increased vulnerability in Latin America, are a mixed blessing for the global economy, according to Stephen Cecchetti, economic adviser to the Bank for International Settlements.
  • Hong Kong holds aces as London tries to become offshore RMB trading hub
    China is already the world’s second largest economy but its currency, the renminbi, is barely traded internationally. Unlike reserve currencies such as the US dollar, and despite China's emerging position as a global economic powerhouse, the Chinese currency is hardly used in international trade and scarcely held by foreigners. This is gradually changing but the City of London is probably being optimistic if it thinks it can grab a significant portion of that trade.
  • Norway oil fund opposes $70bn "Glenstrata" deal, amid allegations of passivity
    Even as Norwegian sovereign wealth fund throws its weight behind attempts to block the merger of commodities trader Glencore and mining company Xstrata, experts are claiming the fund has more in common with a giant passive, or index-tracking, fund than with truly activist investors.
  • A cruel end to summer for hedge funds as they’re forced to “open their kimonos”
    Hedge funds are so used to operating in a light-touch regulatory environment, where inscrutability and even obfuscation traditionally prevail, that transparency and Securities and Exchange Commission form-filling are anathema. But that’s changing. In the US, all hedge funds above a certain size must, from August 29, “open their kimonos.”
  • Unless bankers face consequences of their actions, the Augean stables will not be cleaned out
    Out-of-court settlements, such as the one involving Standard Chartered announced yesterday, do little to alter bankers' behavior or to put the global financial system on sounder footing -- and may even promote financial crime.
  • End of US hegemony brings need for fresh economic thinking
    As global economic power ebbs from the West to the more solvent emerging economies of the East, conventional economic wisdom is being turned on its head.
  • Libor manipulation scandal may yet bring profound change to financial world
    The reputation of banks has sunk so low in recent weeks, one wonders if it can plummet any further. On June 27 the the Libor rigging scandal erupted when Barclays became the first of many global banks to reach a settlement with the US and UK authorities. In the ensuing days, the bank went into reputational meltdown and, so far, four directors including chief executive Bob Diamond fell on their swords.
  • Hugh Hendry proud to exist outside 'the accepted belief system'
    The hedge fund manager Hugh Hendry became something of a media darling in 2008-10. Bouyed after his Eclectica hedge fund gained 31.2% in the crisis-torn year of 2008, the Glaswegian, ex-Baillie Gifford & Co fund manager became a frequent visitor to television studios and was interviewed for several prominent TV programmes about the crisis. In a New York Times profile in July 2010, the paper's London correspondent Julia Werdigier described him as "a plain-spoken Scot, has positioned himself as the public contrarian thinker of this city’s very private hedge fund community."
  • FSA insider: Blindness to risk left banks vulnerable to "open-ended" losses
    The cluelessness of most banks and G-SIFIs about their own financial strength was recently highlighted as the number one cause of the global financial crisis by Andy Haldane, the Bank of England's director for financial stability. One of the main reasons for the bank's inability to know what they're actually doing or to accurately consolidate their own numbers is the shocking inadequacy of their IT systems, many of which are a patchwork of legacy systems whose cores are over 40 years old. In this blog post, however, I intend to focus on IT and structure as the main reasons for banks' cluelessness.
  • Diamond tells MPs: I have done nothing wrong
    Bob Diamond's performance in front of the Treasury Select Committee on Wednesday afternoon was less entertaining, less rumbustuous and less explosive than may had been predicting, but it was still a seminal moment for the future of Barclays and other leading UK banks.
  • Debate on commodities speculation turns ugly
    A row is building in Europe about whether commodities speculation is good or bad for the economy. In the blue corner the Nice-based Edhec-Risk Institute, which is closely aligned to the asset management sector and is responsible for a number of indices of risk and investment performance. In the red corner is Finance Watch, a Brussels-based lobby group which aims to ensure the voice of ‘end investors’ is heard in the corridors of Brussels when legislation covering finance is being developed
  • NatWest and RBS systems meltdown blamed on 'offshoring' to Chennai
    The fiasco at RBS and NatWest over the past few days has caused disruption to some 12 million retail and business customers, many of whom found themselves unable to access their cash, and forced the banking group to extend its opening hours. It was also entirely predictable.
  • Financial regulation: With Griffith-Jones' appointment, Britain keeps it in the family
    I was surprised and exasperated to learn last week that the UK government has rubber stamped the appointment of John Griffith-Jones, the senior partner of KPMG, as chairman-designate of the Financial Conduct Authority, one of the two financial regulators that will take over from the soon-to-be-disbanded FSA. As the news of this "revolving door", "poacher-turned-gamekeeper" appointment sank in, my heart sank and my disappointment bordered on outrage.
  • How a flawed ideology provided cover for an epidemic of financial crime
    As I was putting the finishing touches to a speech on whether greed and corruption are endemic in the City of London, which I'm due to give in the Institute of Directors on June 12, I remembered someone claiming that neoclassical economics provides a perfect smokescreen for rampant financial fraud.
  • Soros: The Germans must show “leadership” or the euro is toast
    George Soros caused quite a stir in his speech at the Festival of Economics at Trento, north-eastern Italy on Saturday June 2, when he outlined the unpalatable choice that now faces Europe. With a Greek exit looming and the Germans resolutely ignoring Spain's pleas for direct bank access to European bailout vehicles, Soros said the continent has three months to decide. Either it must either rapidly proceed to full political union (which would, of course, require humiliating u-turns in both Berlin and Frankfurt) or face the implosion of the single currency...
  • Anat Admati: Mending the roof of a bankrupt banking system
    Five years on from the start of the financial crisis, the debt overhang at the world’s banks remains terrifyingly huge. Balance sheets are liberally sprinkled with ticking time bombs that could explode at any time bringing down economies. Yet, despite the urgent need to focus on deleveraging, most senior bankers continue to reward themselves vast sums for policies that make the situation worse, warns Professor Anat Admati at the Stanford Graduate School of Business.
  • Jamie Dimon's downfall brings fresh hope
    Jamie Dimon, chief executive of JP Morgan Chase, had a good crisis and has since been posing as a latter-day George Bailey (the character played by Jimmy Stewart in It's A Wonderful Life). In recent years he's been insisting that his bank is better managed, with better risk management systems and greater integrity than the other Wall Street players.
  • Battle lines drawn over Chinese auditing
    Regulators in China and the US are on a collision course over the future of bean-counting. At stake is how Chinese companies are audited, and how the Chinese operations of the ‘Big Four’ audit firms will in future be managed and regulated. The US doesn't want to see investors getting burnt when they invest in Chinese firms that are listed in the US; China, for its part, wants to see fewer barriers to Chinese firms raising overseas capital and less overseas interference in how Chinese firms are audited.
  • UK's shareholder spring risks becoming a winter of discontent
    The "shareholder spring", which has seen UK institutional investors rise up against corporate greed and 'rewards for failure', and which is named after last year's populist uprisings across the Middle East, has got off to a remarkable start
  • A missed opportunity for Sir Mervyn King
    I was taken back by the vitriol that was leveled at Sir Mervyn King after his Today lecture last week (amusingly summed up in an earlier post by Shaun Richards of Mindful Money). The Bank of England governor, due to step down in 2013 after a ten-year term, was lambasted for a multitude of sins.
  • The West has much to learn from Islamic finance
    Given they are barred from charging interest and must abide by a strict religious code, Islamic financial institutions are often dismissed by sophisticated western bankers as living in the dark ages. However, according to a couple of recent major reports, shariah-compliant financial institutions are not only coming of age, but also have much to teach their western counterparts.
  • CBI and Barclays still ensnared by the delusion of performance-related pay
    The debate over executive pay is getting ugly. In the UK, investor disquiet about the unwarranted rewards routinely doled out to bankers despite weak and unethically achieved performance is reaching boiling point. It could well explode at the Barclays AGM in London's Royal Festival Hall which kicks off later today.
  • City analyst: Barclays' approach to paying Diamond is "just laughable"
    I was happily reading my Sunday Telegraph business section at the weekend, when a particular quote jumped out at me. A City investment analyst was not only pouring scorn on Bob Diamond's excessive pay and bonuses; but accusing the boards of all UK banks of being wholly detached from reality where pay were concerned.
  • Exchanges have much to lose as high frequency traders get emasculated
    There can be little doubt that high-frequency trading (HFT) is a malign force in the financial markets. High-speed traders use powerful computers to identify orders as they emerge and instantly trade ahead of them, hoping to earn a small crust on each trade. They use complex algorithms to churn out thousands of trades, and to lesser extent orders, on multiple markets in fractions of a second. And if they can do this in huge numbers, the rewards can be immense. It’s a 'zero-sum' game that is being won by those trading outfits with the best computers, the smartest ‘quants’ and access to the best algos, but lost by the rest of us.
  • Fear and loathing in London as Barnier taps consumer power
    Michel Barnier is viewed with a mixture of fear and loathing in the City of London. In the Square Mile the Frenchman is variously regarded as a bogeyman, a champion of dirigisme, and even as the ringleader of a sinister Franco-German plot to undermine London’s position and ensure Frankfurt and Paris can seize its crown. However, Barnier, the French-born EU commissioner for the internal market and services, and a close ally of French president Nicolas Sarkozy, is in fact none of these things...
  • Charles Goodhart warns of regulatory overkill
    In forcing the world's banks to dramatically increase their capital ratios at a time when capital is scarce, are global policymakers and regulators over-reacting to the crisis and reinforcing deflationary tendencies? And with their obsession with promoting new entrants and increased competition in the banking market, are they at risk of sowing the seeds of the next crisis? According to Charles Goodhart, emeritus professor of banking and finance at the London School of Economics, the answers are yes and yes.
  • Robert Jenkins: Britain's banks must kick their RoE habit
    Robert Jenkins, the Bank of England’s Financial Policy Committee member who last November famously slapped down UK bankers for lobbying to water down reforms, has penned a brilliant column on what’s gone wrong with the banking sector – and how it might be fixed.
  • To change investors' priorities, first change the law
    The UK government desperately wants investors and asset managers to act as its front line in the war against ‘crony capitalism’, irresponsible management and fat cat pay. Investors, unenthusiastic about performing such a role even at the best of times, are warning they are probably unable to unless the law is changed.
  • Neo-classical economics led us into a cul-de-sac. Now we must find a way out
    The so-called “Washington Consensus” ought to have been consigned to the scrapheap of history by now. The consensus -sometimes known as neo-classical economics- underpinned macroeconomic policy, including financial (de)regulation and central bank policy, for most of the past three decades. But the Panglossian assumptions about financial markets that underpinned ultimately gave rise to the global financial crisis from which many economies have yet to recover.
  • Gauging China's economic future: fair to middling
    China is so vast, its leaders so inscrutable, it’s future so tied to imponderables -- including who will succeed premier Wen Jiabao, whether the country can realistically remain a one-party-state and the true depth of state-sponsored graft -- that its mid-term economic prospects are hard to gauge. The country faces headwinds, including rising labor costs, the risk of higher inflation, slower demand for its exports, faltering capital flows and high local government debts.
  • Attempts to make swaps market safer may backfire
    First of all, a word of warning. Today I am writing about a particularly jargon laden corner of the financial markets. The Washington-based regulator, the Commodities Futures Trading Commission, is making better-than-expected progress towards its goal of re-regulating the swaps market and implementing the objectives outlined in the Dodd-Frank Act.
  • Hong Kong losing out to Singapore in battle of the Asian financial centers
    On December 13, fuelled by the rise of non-banking services including IPOs and insurance, Hong Kong usurped the USA and Britain to become the world’s most advanced financial centre. At least, according the annual Financial Development Report published annually by the World Economic Forum, it did. According to an exhaustive report, the former British colony leapfrogged Wall Street and the City of London to become the first Asian country to top the rankings.
  • If Hector Sants gets PRA role, it will be the ultimate reward for failure
    The Financial Services Authority's chairman Lord Turner made a fairly staunch defense of FSA chief executive Hector Sants at a hearing of the Treasury Select Committee on January 30.
  • FSA's Hector Sants passes the buck for financial crisis
    At a hearing of the Treasury Select Committee last month Hector Sants, chief executive of UK regulator the Financial Services Authority, seemed determined to persuade the MPs that he had done something – anything – to prevent the failure of Royal Bank of Scotland. Prior to its October 2008 collapse under the leadership of former chief executive Sir Fred Goodwin, the Edinburgh-based bank briefly became the world's largest with $3 trillion in assets.
  • MF Global collapse prompts regulatory rethink in Washington
    A commissioner at one of one of the most important US financial regulators has launched a stinging attack on his own organization, accusing it of having its priorities all wrong.
  • The media frenzy about RBS bonuses and Fred Goodwin's knighthood is a sideshow
    Financial commentators are, suddenly, in demand and it's largely down to the continuing failure of banks to reform themselves in the wake of the global financial crisis. According to a Guardian Review article from January 28 (New masters of the media universe) financial hacks are now being encouraged to break free from the comparative ghetto of the business pages and being asked to try and interpret the arcane world of finance to the lay man. In the Guardian article Elizabeth Day wrote:
  • Are the hedge fund and private equity boys pulling a fast one?
    The Berkshire Hathaway chairman Warren Buffett once famously quipped that a hedge fund is a “compensation scheme masquerading as an asset class”. The remark, a reference to the fact that many hedge funds provide investors with feeble returns whilst massively enriching intermediaries (the hedge fund managers and 'prime brokers') at investors’ expense, is even more true today than when Buffett reportedly first said it last decade.
  • So does RBS boss Stephen Hester deserve his £1m bonus?
    The board of RBS and its remuneration committee, led by ex-Coca Cola executive Penny Hughes, must have decided let's just go for it and to hang with the consequences.
  • 2012: The Year Ahead– Investors in China pin hopes on slowing inflation and rate cuts
    China faces some severe challenges in 2012. They include wage inflation which is undermining its economic model, the delicate task of popping a property price bubble without bringing down the whole economy, inadequate macro-prudential oversight, and a growing suspicion about widespread corporate fraud and weak governance.
  • 2012: The Year Ahead – Winners and losers in the war over financial regulation
    The spirit of global co-operation and desire for a harmonized set of global financial rules to prevent further blow-outs that pervaded around the time of the G20’s Pittsburgh summit of September 2009 has, to a large extent, evaporated. As we enter 2012, I suspect the climate of rancour and disagreement between nations, global banks and financial institutions will intensify. In such an environment, the finance sectors is arguably finding it easier to play different jurisdictions off against each in the hope of creating loopholes in the tightening regulatory net.
  • 'Big Four' audit firms losing the plot over Barnier
    The response of the “Big Four” accountancy firms to plans from EU internal markets commissioner Michel Barnier to shake up their oligopoly made me think of a quote from George Bernard Shaw; writing exactly a century ago in 1911, the great Irish playwright wrote that "All professions are conspiracies against the laity".
  • FSA's failure to tackle 'white collar' crime endangers the City of London
    Ever since its first failure became apparent with the collapse of Northern Rock in September 2007, the UK's Financial Services Authority has shown a remarkable lack of introspection or contrition about its own pre-crisis role. The reported attempts to brush the 2008 near-wipe-out of Royal Bank of Scotland under the carpet, via a 480-page report blaming RBS's failure while skirting around the roles of chief executive Sir Fred Goodwin and chairman Sir Tom McKillop, is just another symptom of the culture of cover-up and denial at the Canary Wharf-based institution.
  • St Paul's shines light on the City of London's dark heart
    The bizarre contortions that the Church of England got itself into over the protesters camping outside St Paul’s Cathedral are nothing compared to the tortured mindsets of many who work in the City of London. The survey 'Value and Values: Perceptions of Ethics in the City Today' was commissioned by the St Paul’s Institute, an organization affiliated to the cathedral and carried out by independent pollsters ComRes based on an online survey of 515 managers in the financial sector between August 30 and September 12, 2011. The report was undertaken to mark the 25th anniversary of Big Bang, when massive deregulation arguably opened a Pandora’s Box for financial markets.
  • Anthony Bolton takes a hammering but remains upbeat about the future of China
    Things are not going too well for the star fund manager Anthony Bolton. His Fidelity China Special Situations fund, launched with some fanfare 18 months ago, has turned in a dire performance in the past six months, a period which Bolton admitted has “severely tested” his optimism about the Middle Kingdom.
  • The world is making a meal of OTC derivatives re-regulation
    Ironically, derivatives were developed as a way for corporates, investors and financial institutions to mitigate and manage risk. However, the global financial crisis taught us that, far from reducing risk, over-the-counter derivatives actually amplify it.
  • Mike Mayo is one of the few voices of reason on Wall Street
    Most investment analysts tend to looks at the corporations they cover through rose-tinted spectacles. You just have to look at the preponderance of "buy" and "hold" notes, as opposed to "sell" notes detailed in my earlier blog post 'Anonymous takes aim at the cosy world of investment analysis', to see how and why this happens. In this comfortable world of mutual back-scratching, CLSA's Mike Mayo stands out as the leading heretic.
  • IMF raises red flags about China's financial system
    In its first ever formal assessment of the stability of China's financial system, the International Monetary Fund has blamed heavy-handed government intervention for creating "vulnerabilities" in the system, whilst providing Beijing with a detailed blueprint for reform. What the IMF recommended and what China's reaction was is a fascinating discussion to read into.
  • The new sheriff in finance's global village
    The wild swings in global liquidity that continue to distort economies around the world might, if left unchecked, trigger the end of open capital markets and free trade, Bank of Canada governor Mark Carney warned in a recent speech. Carney, named head of the G20’s Financial Stability Board on November 4, suggested that this is a monster he intends to tame.
  • Do we trust banks? Diamond's Damascene conversion on the road to St Paul's fails to convince
    What’s up with Barclays chief executive Bob Diamond?
  • Europe's 'comprehensive' rescue package only buys a few more months for the euro
    The package of measures, whose details remain sketchy in the extreme, was initially met with euphoria by the markets. But this was probably because the politicians had - for the first time since the onset of the crisis in October 2008 - done something to address the underlying problem of unrepayable debt. The trouble with this deal, however, is that it only papers over the yawning structural gaps and fiscal imbalances that make the single European currency unsustainable.
  • Andy Haldane's proposals for breaking the bankers' doom loop
    For a central bank director, Andy Haldane is remarkably alert to the widening cracks in the global financial system. In a speech given in London on October 24, Haldane tried to shake policymakers and regulators out of their complacency by calling for a "fundamental shift" in their attitude to bank regulation.
  • The dukes and earls in America’s Great Tower of Bulls**t are starting to blink a little.
    As I tried to explain in yesterday's blog, 'Democracy for sale', what the protesters really want is political and financial reform. They want to replace the corroded crony capitalism that has predominated in the West since the 1980s -- as well as the corrupt political and financial system, rigged in favour of the rich and powerful, that underpins it -- with a saner version of capitalism and a more inclusive democracy.
  • Democracy for sale: Occupy Wall Street is right, our politicians and banks have failed us.
    The Occupy Wall Street movement that started in Manhattan’s Zuccotti Park on September 17 has, since last weekend, spread like wildfire into more than 1,500 cities around the world. Given that the dangerous and unsustainable forms of "crony" and "casino" capitalism that now predominated in the Western world, this is hardly surprising.
  • Given the economic devastation they've caused, should Sweden's academy really be honoring economists?
    A pair of US economists, one of whom is from the discredited “Freshwater School" of economics and whose faith in efficient markets played a part in stoking up the global economic crisis, have just won the Nobel prize for economics. The decision to give them the award has had what can best be described as a 'mixed reception'.
  • World on brink: As central bankers run out of ammo, the need for alternative models has never been more urgent
    The Bank of England governor Sir Mervyn King yesterday added to the general sense of doom that has pervaded financial markets by saying "This is the most serious financial crisis we've seen at least since the 1930s, if not ever."... King didn’t catch the financial markets unawares... However, King did take bankers by surprise on October 25, 2010, when he said: “Of all the many ways of organising banking, the worst is the one we have today.”
  • Cries for a sustainable economy are a wake-up call for the investment community
    Today’s system for allocating capital via the global financial markets, whose agenda is set by short-termist investors, is looking increasingly broken. One of its worst traits is that it encourages, or perhaps even forces, corporate managements to focus on growing the bottom line to the exclusion of people and planet... The London-based asset management group Aviva Investors, which has £250 billion of assets under management, believes it's time that investor and corporate behavior was rethought, and has sponsored a major new report arguing for a more holistic approach.
  • Anonymous takes aim at the cozy world of investment analysis
    Why does anyone rely on ‘sellside’ research? The investment analysts who produce it, for free, tend to work for investment banks that also have some very big ticket services to sell, such as the underwriting of IPOs, to the very companies whose performance they are supposed to be evaluating... Well, an unexpected player has emerged on the investment analysis scene, which promises to shake things up. Anonymous, the 'hacktivist' collective, has branched out into investment research with the launch of Anonymous Analytics.
  • Charting the psychological journey of the UBS 'rogue' trader
    The gigantic $2.3 billion losses that Union Bank of Switzerland is blaming on a Ghanaian-born “rogue” trader have added power to the elbows of all those who believe that “casino” banking ought to be completely separated from “utility” banking and should never be underwritten by the taxpayer... UBS, whose City of London acquisitions have included the merchant bank SG Warburg and broker dealers Phillips & Drew, has yet to provide a credible excuse of what went went wrong.
  • Vickers report and ringfencing may turn out to be a sideshow
    At the time, the divisions within the coalition government over what to do about the UK's bloated and dysfunctional banking sector were distracting the government from more important issues such as tackling the deficit... However, the economy is still a long way from recovery and we may already have entered a double-dip recession... So the government may end up having to enact the reforms after all.
  • Norway's 'safe haven' status could harm its economic health
    Few countries have been as well-cushioned from the global economic crisis as Norway. The country’s economy is on track to grow by 3% this year and 3.75% next year, according to central bank forecasts. Alongside Switzerland, Norway has the lowest level of unemployment in Europe, at 2.8%, while underlying inflation rose to 1.2% in July from 0.7% in June.
  • The struggle to erase Mubarak's legacy and build a saner Egyptian economy
    The January 25 revolution that toppled Egypt’s former dictator Hosni Mubarak will almost certainly bring more social justice, personal freedoms, human rights and democracy to Egypt’s 84.5m people, but the jury is still out on whether the revolution will be good or bad for the economy.
  • Egypt's economic outlook neither blissful nor heavenly
    Mubarak was finally forced to step down after 18 days of protests in Tahrir Square and elsewhere in Egypt on February 11, in what must be one of the biggest achievements of the ‘Arab Spring’. Since then, an interim military government has been in power... However, I’m afraid the outlook for the Egyptian economy is some way from being blissful or heavenly.
  • Does over-reliance on wind energy risk the lights going out across Europe?
    I might be simplifying things but the debate about the future of energy seems to be largely divided on political lines... The debate is intensifying as the deadline approaches.
  • Cry for banking reform as policymakers drive economies into a cul-de-sac
    There are eerie parallels between the recent precipitous falls in the shares of most European banks and the stomach-churning gyrations seen in September and October 2008. However, if governments, regulators and bankers had done more to address the root causes of the first crisis, then surely this second one might have been averted?
  • Europe's short selling bans suggest the lessons of 2008 have gone unlearnt
    The temporary short selling bans imposed by Belgium, France, Italy and Spain in the hope of rooting out perceived market abuse and trying to restore a semblance of calm to volatile financial markets have gone down like a lead balloon in the markets.
  • US downgrade shows the rating agencies work in mysterious ways
    When Standard & Poor’s stripped the US of its AAA credit rating on August 5, it didn’t have quite the apocalyptic consequences some had feared. But it has still shown that, despite being widely discredited over their handling of CDOs in 2005–07, the credit rating agencies still hold tremendous sway over the markets...
  • Buoyed by massive oil reserves and uneasy peace, Iraq is not such a crazy place to invest
    When fund management group FMG invited me to a seminar to promote their Iraq Fund, I thought they must be joking. After all the Middle Eastern country has barely recovered from the 2003 Iraq War and, from media reports, still appears to continue to be plagued by car bombings, each claiming scores of civilian casualties. Surely putting money into such a place would be a recipe for disaster?
  • Taking stock of George Soros, the SEC and Quantum
    New regulations brought in with the Dodd-Frank act mean that any US-based fund with assets in excess of $150m must register with the Securities and Exchange Commission (SEC) by April 2012, and must then provide full details of its investors, employees, assets and potential conflicts of interest... Soros doesn’t like the sound of this. To avoid it, the legendary investor has opted to convert his fund into a “family office”.
  • To ensure the euro's survival, eurozone leaders must become more radical
    The package of measures agreed by European policymakers at their emergency summit on July 21 was immediately hailed for its boldness. After months of prevarication the continent’s leaders seemed to have pulled out all the stops in their bid to save the euro... Perhaps they had little choice.
  • The post-crisis triumphalism of China may be premature as whispers of a China crisis circulate
    Last year only a minority of commentators were predicting a doomsday scenario for the Middle Kingdom... The country’s banking sector, property bubble and ubiquitous credit tide were the main causes of concern.
  • New dawn for Thai economy: has one of the most chaotic democracies turned the corner?
    Managers of UK investment trusts with holdings in the South-East Asian nation are particularly hopeful right now. But other seasoned commentators of the Asian economic scene are warning that it might be a tad premature. Who's right?
  • Accountants who don't want to be 'conservative' or 'prudent' are serving capital markets ill
    Few lessons were learnt from the Andersen collapse of 2002 and the “Big Four” audit firms helped stoke up the global financial crisis with their unquestioning acceptance of the often wildly optimistic valuations placed on bank assets by bank boards, and their failure to ask difficult questions about excessive leverage and excessive concentrations of risk in the financial sector.
  • Dagong chairman calls for radical reform of global credit rating system
    Guan Jianzhong, chairman of Dagong Global Credit Rating Co has accused western democracies of using credit rating agencies to pull the wool over the eyes of their creditors such as China. In this piece in China Daily he also comes up with some constructive proposals for an alternative framework for rating credit, which he suggests would serve investors, and indeed humanity, better.
  • Willem Buiter: Reasons to be cheerful about Greece
    Given the recent blood-curdling, apocalyptic warnings about Greece it’s a relief to find there are some economists who take a relaxed, almost a nonchalant view of Europe’s sovereign debt crisis. Willem Buiter, global chief economist at Citi, is one such.
  • Salmond dreams Scotland can become a Celtic Lion; but will it work?
    Alex Salmond, Scotland's first minister and leader of the Scottish National Party, has an undergraduate joint honours degree in economics from the University of St Andrews and was an economist at the Royal Bank of Scotland from 1980-87. But I am increasingly beginning to wonder what sort of economics he learnt there.
  • The Osbourne Ultimatum: banks must split or else
    The announcement from Chancellor of the Exchequer, George Osborne, that British banks are going to be forced to “ring fence” their retail and commercial banking (“utility”) activities from their investment banking (“casino”) activities has received wildy different receptions on either side of the Atlantic.
  • Salmond's silence on banking is "elephant in room" for Scottish independence
    Since Alex Salmond’s Scottish National Party secured a majority in Scotland's parliamentary elections on May 5, there has been much debate about how well or badly an independent Scotland might fare. The debate both north and south of the border can be expected to get even more heated in the run up to Salmond’s mooted referendum on independence scheduled for 2014 or 2015.
  • David Tuckett: economics fatally under-estimates importance of emotions
    The myths of the rational investor and the efficient market hypothesis have much to answer for. Arguably, they underpinned the folly that was Alan Greenspan-ism, fuelling the insanity that overcame banking and financial markets ahead of the global financial crisis.
  • It's time investors saw sense and stopped giving credence to ratings agencies
    The credit rating agencies performed so woefully in the run-up to the global financial crisis, one might have thought they would be utterly discredited by now. One of the agencies biggest and most costly mistakes was their rampant mislabeling residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) in 2004-07.
  • France's economy turns corner, but only to smash into wall of debt
    The French economy may not have not made quite the assured recovery that Germany has, but it it did grow faster than expected in the first quarter and is showing promising signs of being on the mend. However this has not impressed Dagong Global Global Credit Rating Co which on June 1 issued a stinker of a note on La Republique Francaise.
  • It's time the IMF had a non-European at the helm
    European nations still haven't quite got over their loss of empire and status after World War II. Prior to 1939, countries like Belgium, France, Italy, the Netherlands and the UK still had power and influence over much of the “Third World” (as emerging markets were then known) - and indeed Britain still retained an empire over which the sun never set.
  • ETFs' breakneck growth makes them an accident waiting to happen
    Terry Smith, the pugnacious founder of London-based asset management group Fundsmith, has launched a broadside at the exchange-traded funds sector, arguing that it is an accident waiting to happen for investors and asking whose neck(s) will get broken as a result of its “breakneck” growth.
  • Après Strauss-Kahn, le déluge?
    Dominique Strauss-Kahn's resignation letter meant the starting gun in the race to succeed DSK had officially been fired. And this race is about much more than mere personalities. It has also arguably become a seminal moment for the global balance of power.
  • As Vietnam loses faith in the dong, Hanoi struggles to rein in inflation
    The commodities price correction of early May has led some, including New York Times columnist Paul Krugman to believe the spectre of inflation has been banished, at least for a while. However I am not so sure.
  • What Dominique Strauss-Kahn's arrest means for the markets - and for France
    The surprise arrest last Saturday of the IMF managing director Dominique Strauss-Kahn at Kennedy airport in New York on sex charges could not have come at a worse time for international financial markets. Rather than dwell on innocence, guilt or the detail of the offences of the former French finance minister is alleged to have committed, I wanted to focus on three topics in this blog.
  • Paul Krugman punctures self-serving nonsense of the elites
    Who really got us into this mess? In Wall Street, in the City, in the corridors of Whitehall and Washington DC, and in the Berlaymont Building, it's quite common for the general public to be blamed. The argument goes that banks and supranational organizations such as the EU were merely trying to give the people what they wanted - bounteous supplies of cheap credit.
  • Fidelity is confident its MINTs won't suck
    Jim O’Neill has a lot to answer for. In 2001 the British-born Goldman Sachs economist and senior executive coined a term to describe the resurgent economies of Brazil, Russia, India and China - 'Brics'. The latest investment group to have a stab at it is Fidelity. It has come up with the term Mint - which the Boston-based asset management firm tells us, in a press release, stands for Mexico, Indonesia, Nigeria and Turkey.
  • EU asset management reforms 'are in industry's best interests', says State Street
    Europe's asset-management industry is generally unenthusiastic about the torrent of regulatory change emanating from Brussels right now. But according to a report from Boston-based asset-servicing and asset management giant State Street, the changes will be in the industry's best interests.
  • It's securitization, but not as we have known it
    When the global securitization market froze up as a result of sub-prime contagion in July 2007, many practitioners headed for the hills, assuming the game was over. But some diehards stuck it out, confident the structured finance market would one day return, albeit perhaps it in a different form. Their patience is now beginning to pay off.
  • Crispin Odey: "You need three bear markets before you know what to do"
    Investment managers who haven’t lived through at least two bear markets are bound to make serious blunders, a bit like jockeys who haven’t yet fallen off a horse. The fact they have never experienced the joys of ending up face down in the mud, as their horse advances riderless and aimlessly, means they probably don’t know the meaning of risk and have a tendency to lose their backers' money.
  • Kotlikoff: financial system is a Ponzi scheme that could collapse at any time
    Speaking at a pensions summit in the Netherlands, Professor Laurence Kotlikoff of Boston University told delegates that the global financial system – which remains largely unreconstructed despite near implosion following the collapse of Lehman Brothers two years ago – is a massive con trick, characterised by lack of transparency, and largely made up of fraudulent guarantees and financial promises that cannot be kept.
  • Defaults might be the only way to ensure the eurozone's survival
    The response of the European Union to the unfolding eurozone sovereign debt crisis has, so far, been of the headless chicken variety. Or to put it more politely, it has revolved around treating the symptoms rather than the causes of Europe's closely interwoven sovereign debt and banking crises. Brussels has been sticking the equivalent of Band-Aids on limbs that in fact need much more radical surgery.
  • FairPensions exposes conflicts at heart of pensions management and calls for shake-up
    FairPensions has produced an in-depth report which lifts the lid on the conflicts of interest at the heart of pensions management, and calls on institutional investors to mend their ways by adopting what it calls an “enlightened fiduciary” model. Under the FairPensions proposals, which were launched at an event attended by government minister Ed Vaisey last month, investors would be forced to prioritize the interests of their end users (savers, beneficiaries etc), whose interests they are supposed to represent, rather than just paying lip-service to them.
  • Life insurers to be saved from the consequences of their own short-termism
    It looks like the UK life insurance sector is to be saved from the consequences of its own short-termism thanks to timely re-regulation by the Financial Services Authority. Five years ago I quoted the leading insurance analyst Ned Cazalet as saying that the practice of churning was...
  • As Portugal succumbs to an EU bailout, Spain could be next in line
    When prime minister Jose Socrates formally requested a bailout for Portugal on April 6, it left just two of the five PIIGS countries standing. While the details of Portugal's expected €80bn facility from the EFSF have yet to be hammered out, it left only Italy and Spain still able to refinance their sovereign debt - albeit with significant support from the ECB - from the markets without external assistance. So which of these two Mediterranean countries is likely to be the next domino to fall?
  • 'Big Four' auditors on back foot after UK parliamentary report exposes failures
    The report into the audit profession published by the House of Lords economic affairs committee last week signals a major turning point for the accountancy profession. In a previous blog, I wrote that accountancy firms had become "so big, so conflicted, so self-interested, so obsessed with growing revenues and profits ... that they had become a danger to capitalism itself."
  • The spin-free cycle of Next's corporate reporting bodes well for future transparency
    The chief executive’s statement that accompanies a listed company's annual results is often so laced with corporate spin and disingenuousness that it's as good as useless. The document is increasingly being used to puff (embellish) the past year's performance, to present a distinctly rose-tinted vision of the future, and of course to shy away from telling investors anything about the true risks and challenges the business and its sector face.
  • Libor probe tests regulators' faith in "Chinese walls"
    One of the biggest financial scandals of recent weeks involves the alleged "rigging" of Libor rates by a group of the world's largest banks. The story first surfaced on March 15, when Brooke Masters, a journalist at the Financial Times, spotted the following on page 318 of UBS's 2010.
  • The UK government is wrong; investors cannot be relied upon to police corporate behaviour
    Can investors be relied upon to police corporate behavior (governance) and guide the companies in which they invest to take decisions likely to create enduring value, and bring wider benefits over and above short-term profitability gains?
  • Reducing corruption and the kleptomania of autocrats the EITI way
    The extractive industries are one of the biggest sources of foreign direct investment for many emerging economies - often accounting for over half of total government revenues - but frequently the money does not end up in the right hands.
  • Buffett slams Black-Scholes and 'flat earth' economists
    This is the second part of Ian Fraser's blog on Warren Buffett’s letter to shareholders in insurance conglomerate Berkshire Hathaway. Here, Fraser examines the Omaha-based investor’s thoughts on derivatives pricing, his views on academic economists, leverage, and hedge funds.
  • Buffett on hiring, accounting, cash hoarding, and the avoidance of corporate excess
    This is the first part of Ian Fraser's blog on Warren Buffett’s letter to shareholders in insurance conglomerate Berkshire Hathaway. Warren Buffet's annual letter to shareholders in his Berkshire Hathaway Inc insurance-based conglomerate is eagerly awaited - largely because it tends to contain some useful pearls of management thinking.
  • BoE governor Mervyn King and the case for reforming Britain's banks
    It’s virtually unheard for the governor of a central bank to launch an outspoken attack on the integrity and purpose of his country’s banking sector. But this is what the Bank of England governor Mervyn King did last weekend.
  • Quantitative easing is not only failing, it's also sparking global unrest
    Andy Xie, a board director at Rosetta Stone Advisors, is a man worth listening to. The 49-year-old former Morgan Stanley Asia-Pacific chief economist published an article, Apocalypse Soon, on his blog in August 2008.
  • Inside Job: Afflicted by conflicts of interest, economists must share significant blame for the global crisis
    Charles Ferguson’s movie about the financial crisis, Inside Job,, has finally made it the UK. I went to see the Oscar-nominated documentary last night - and was hugely impressed. I would recommend this film, that was released in the US in October 2010, to any thinking adult, even if they profess to have zero interest in economics and finance.
  • How a deceptive report from Merrill Lynch sank Ireland
    Michael Lewis, author of The Big Short: Inside the Doomsday Machine and Liar's Poker, has invented a new journalistic genre. It’s called “financial disaster travel journalism” and involves Lewis visiting various bombed out European countries and doing an old-fashioned thing that many journalists seem to have forgotten about - reporting.
  • Challenging investment banks over 'rights issue' charges
    What’s the difference between an underwriter and an undertaker? According to a recent article in The Economist (Vexed in the City), not that much. Both operate in arcane and little-discussed areas. And since buying underwriting services from an investment bank for a corporate fund-raising (sometimes known as a equity “rights issue”) and organizing a funeral are both are “distress purchases”, suppliers can charge pretty much what they like.
  • Project Merlin should be quietly allowed to expire
    Project Merlin, the wizard scheme dreamt up in autumn 2010 by the ex-Barclays chief executive John Varley and RBS chairman Sir Philip Hampton, in the hope of appeasing the government and drawing a line under “banker bashing”, has descended into farce.
  • India's reputation as magnet for foreign direct investment at risk
    During the recent World Economic Forum in Switzerland, India made a concerted effort to present itself as an attractive destination for foreign director investors. Indeed, on the closing night of the Davos event, the Confederation of Indian Industry hosted a themed “Bollywood Night” for visiting dignitaries and CEOs.
  • Remutualizing Britain's ex-building societies might benefit its banks
    Vast quantities of hot air and newsprint have been expended by British politicians and media on how to reform the banking sector, make it more customer-centric and less capable of being "bilked" by bonus-hungry executive teams.
  • Fretting about the price of onions: inflationary pressures build in the Indian economy
    India is in a state of high anxiety right now ... about the price of onions. One year ago, a kilo of onions - a staple ingredient of even the most basic Indian cuisine - cost 25 rupees in a typical street market. Today that’s soared 50 rupees ($2). Earlier this month the price briefly breached the 100 rupees per kilo barrier, triggering a national furore and banner headlines on the front pages of Indian newspapers.
  • Accountancy has forfeited its right to call itself a profession
    Stewart Hamilton , Professor Emeritus at the IMD business school in Lausanne, wrote a prescient article about the accountancy profession 22 years ago. Writing towards the end of a decade that saw "Big Bang" and other deregulatory measures reshape the financial and corporate landscape on both sides of the Atlantic, Hamilton warned that the accountancy profession had embarked on a dangerous course.
  • 'Big Oil' driven into blind alley by myopic investors and 'resource nationalism'
    Big oil and gas companies are being pushed into a dangerous corner by a combination of “resource nationalism” - which is excluding them from the low hanging fruit in easily accessible fields - and flawed metrics that investors and analysts use to gauge their performance.
  • Scrap mark-to-market accounting or face further crisis, warn investors
    The interrogation of Barclays' newly-installed chief executive Bob Diamond by the Treasury committee of the House of Commons last Tuesday was an unsatisfactory affair. The two and half hour session gave the politicians the opportunity to “grandstand” and channel popular anger about bankers’ bonuses, tax avoidance and reluctance to lend to SMEs.
  • Onward, Christian bankers
    Islamic finance has been in vogue in recent years, with Sharia-compliant products being widely introduced by many of the world’s largest banks and financial institutions. HSBC even has its own Islamic finance portal, HSBC Amanah.
  • There is a way out of the EU's debt slavery
    There are a number of reasons why the eurozone might disintegrate and many of them are historical. First, is the way the currency bloc was originally constructed – as a currency union that lacked either an economic or a fiscal union (by the way, I am not aware of any previous currency unions lasting very long without being reinforced by the other two, but correct me if I'm wrong).
  • Dear PayPal: Wikileaks is not a terrorist organization
    Much of the debate surrounding Wikileaks's release of confidential cables sent by US diplomats to their bosses in Washington D.C. has revolved around whether the whistleblowers' website is right or wrong to have selectively released some 1,000 of the 250,000 state department cables it has in its possession.
  • If the FSA wanted a whitewash, PwC was well-placed to deliver it
    This is the second of a two-part examination of the UK Financial Services Authority's (FSA) recent inadequate response to the collapse of the Royal Bank of Scotland (RBS). The FSA's choice of PwC as an “independent third-party investigator" to handle its inquiry into the pre-crash behavior of RBS raises questions about what sort of outcome the FSA wanted from this probe...
  • FSA’s attempt to rewrite history over RBS lacks credibility
    This is is the first of a two-part examination of the UK Financial Services Authority’s (FSA) recent response to the collapse of the Royal Bank of Scotland. The FSA’s obsession with “light touch” regulation from 1997 to 2008 did more than anything else to transform London into the “Wild West” of finance in 2000–08...
  • The EU's cack-handed rescue plan may not be enough to save Ireland
    You know that things must be getting desperate in Ireland when significant numbers of the country's population want to draft in Michael O'Leary, the controversial and famously outspoken Ryanair chief executive, to help run the country.
  • Water wells up corporate agenda to become issue for CFOs
    To a large extent, water has traditionally been taken for granted by the world's largest corporations. They have seen it as just another (usually free or cheap) abundant natural resource, the usage of which goes largely uncosted, unrecorded and unaccounted for.
  • "Blindsided" by crisis, Bush denies all responsibility for its fomentation
    George W Bush's memoirs Decision Points provide a fascinating and revealing insight into the thinking - or the lack of it - that helped inspire the former US president's decision-making during his eight years in the Oval Office.
  • Chinese ratings agency says QE2 is "like drinking poison"
    The mood ahead of the G20 summit in Korea is turning ugly. America's actions - especially its policy of deliberate dollar devaluation through quantitative easing - are looking increasingly irresponsible and even reckless to its creditors, some of whom are starting to snap.
  • "This is the monetary equivalent of a nuclear war"
    The Federal Reserve’s policy of effectively shafting its international creditors by debasing the dollar through the mechanism of quantitative easing ain’t nothing if it ain’t controversial.
  • Banks who bend the law are serving capitalism ill
    Alan Sloan is one of America’s most respected business and financial columnists; he is also a man who genuinely loves capitalism. So when Sloan starts suggesting US banks risk destroying the capitalist system with their cavalier disregard for the law, one really ought to sit up and take notice.
  • Double agents in the asset management industry
    recent article in the Financial Times’ asset management supplement spoke volumes about what's wrong with the industry it covers. The piece, "Bank-owned funds used as props", prompted FT Alphaville to run a parallel one headlined "Double agents in asset management".
  • Corporate governance reform: Cable means business
    The corporate governance model that existed before the crisis may not be entirely broken, but it is certainly in need of a major overhaul. In recent weeks there have been several initiatives intended to disassemble the stalled engine, take a long, hard look at the oily mess within and then seek to reinvent it as something that actually works.
  • Lord Turnbull reveals extent of delusion that overcame Gordon Brown
    I’ve always suspected one of the main reasons the UK economy is in a more parlous state than many of its peers was because of hubristic and self-delusional economic thinking inside Westminster and Whitehall during New Labour’s 13 years in power.
  • As flies to wanton boys are we to the central bankers
    The global “currency war” first highlighted by Brazilian finance minister Guido Mantega on September 27 is showing little sign of abating. Finance ministers attending the IMF meetings in Washington DC failed even to pretend they had poured oil on the crisis, which now looks certain to spill over the G20 meeting in Korea.
  • Bullish about the bear: Putin sets out stall to lure international investors to Russia
    The Russian economy is on the cusp of major structural change, with the government aiming to limit dependence on raw material exports – particularly oil and gas – normalize the economy and lure in more foreign investment.
  • Stiglitz: We're turning Japanese
    There was some good news for US taxpayers from the US Treasury last Tuesday. They were told that the cost of bailing-out US banks had been much lower than expected. Ian Fraser discusses differing opinions, including those of the economist Joseph Stiglitz.
  • We need a stronger EFSF to stop the PIIGS from slip-sliding away
    Luis Rodríguez Zapatero, Spain’s prime minister, recently declared the European sovereign debt crisis was over. He told the WSJ, "I believe that the debt crisis affecting Spain, and the euro zone in general, has passed." But Zapatero may be being hopelessly optimistic.
  • Basel III: Will it deliver a more stable financial system?
    It's probably too early to say whether the Basel III reforms, unveiled by the Basel Committee of the Bank for International Settlements on September 12, will achieve their goal of creating a more stable and sustainable global financial system.
  • Holding the auditors accountable for missing corporate fraud
    Should accountancy firms be able to walk away from corporate train wrecks Scot-free –  leaving everyone else, including shareholders, bondholders, employees, customers, governments to pick up the tab? In the wake of the banking and financial crisis, which saw several banks collapse within a few of months of having been given a clean bill of health by their ‘big four’ auditors, this is certainly worthy of examination.
  • Here's how the US can get tough on money laundering
    If the US government is serious about tackling money laundering by well-known banks on behalf of drugs barons, other big-time criminals and rogue states, it is going to have to raise its game...
  • As Britain prepares to junk the FSA, some in the City still believe the market knows best
    The Financial Services Authority—founded by ex-chancellor Gordon Brown in May 1997—is widely regarded as having made a dog’s breakfast of regulating the UK’s financial sector over the past decade. The Tories pledged to scrap the FSA before they gained power in May...
  • Barely a whimper in City as Barnier ushers in pan-European financial regulation
    Only a few months ago, Michel Barnier, the European Commissioner for the internal market, was being portrayed as a “bogeyman” in the City of London.The city’s hedge fund and private equity community were terrified the Frenchman wanted to regulate them out of existence as part of some French plot to usurp London as Europe’s leading financial centre.
  • Thanks to IFRS, Irish and UK banks have lived in a fool's paradise for years ... and they're still residing there
    Debates about financial reporting and accounting standards can seem arcane, tedious and irrelevant: angels dancing on the heads of pins stuff. However the current debate about whether international financial reporting standards drove banker recklessness is getting interesting.
  • Betting on Chinese equities as short-sellers predict Sino armageddon
    It’s fashionable to be glum about China right now. Harvard University professor Ken Rogoff, along with hedge fund managers Hugh Hendry and Jim Chanos are among those predicting catastrophe or slump for the world’s second largest economy.
  • CalPERS and other activist investors to gain a seat in the boardroom
    If you believe that increased shareholder engagement is the key to a corporate nirvana in which responsible investors can force companies to change their behaviour - for example by thinking longer-term and eschewing corporate excess - there's been a most welcome development.
  • Dealing with the euro mood swings
    When the PIIGS crisis was at its height in May, many economists believed the eurozone was going to hell in a handcart and that the euro was doomed. There were predictions that fiscally-challenged economies such as Greece faced bankruptcy, ejection from EMU and a reversion to currencies such as the drachma.
  • China’s love affair with US bonds is not over...yet
    I wrote a blog post six months ago saying that Americans should not be paranoid about the possibility that China, the country’s biggest lender, will cause economic mayhem by dumping the $1 trillion plus of US Treasury Bills and dollar-denominated assets it currently holds.
  • Turkey remains one of world's hottest emerging markets, despite fiscal slip-up
    On a visit to New York in December 2003, I interviewed Jim Rogers, the renowned investor and ex-colleague of George Soros. Rogers – who, in my view, speaks a lot of sense about macroeconomics – had recently returned from the round-the-world trip on which he based Adventure Capitalist: The Ultimate Road Trip.
  • Ukraine's recovery still rests on shaky ground
    Ukraine was the bread-basket of the Soviet Union but 17 years after gaining its independence, the country became an economic basket case as a result of the credit crisis – ranking in the hall of economic ignominy alongside the likes of Iceland, Ireland and Dubai...
  • US coming to terms with tax rises, despite Ryan's road map
    A new front has opened in the war of words over the best macro medicine for the damaged US economy between the neo-Keynsians, who generally favor continued borrowing and continued stimulus, and the deficit hawks, who favor a form of starvation diet: and it’s tax...
  • Are Europe's banks sleepwalking to disaster once more?
    It would be crazy if, three years after the start of the last one, Europe was to sleepwalk into another banking and financial crisis. But there are plenty of commentators who believe that is exactly what’s happening right now...
  • Samba set to continue despite Brazil's necessary slowdown
    Brazil's turbocharged economic growth—its GDP grew at 9% in the first quarter of 2010—may be showing signs of slowing but the authorities are welcoming this. They believe the pause for breath should enable them to ward off the spectre of inflation...
  • Indian bank stress tests expected to provide only superficial reassurance
    It seems that bank stress tests are catching on. In the wake of the US tests, whose results were published in May 2009, and the less exacting European ones, whose results came out on July 23, India is poised to embark on stress tests too...
  • Dodd-Frank better suited than Sarbox for rooting out accounting fraud
    The recent settlement between Houston-based computer manufacturer Dell and the US Securities & Exchange Commission provides further evidence of the failure of the Sarbanes-Oxley Act to improve corporate behavior in the US. Despite Sarbox – a draconian, “tick box” set of rules introduced in the wake of the Enron scandal in 2002 – Dell was able to carry out an accounting fraud between 2001 and 2006...
  • Clueless banks happy to drift in sea of inexactitude
    Do the world’s leading banks have a firm grip of the true value of their assets, their true exposure to risk (including the likelihood of their borrowers defaulting) and their own true capital strength? And if they do have such information at their fingertips, are they accurately communicating it into the public domain for the benefit of regulators and shareholders?
  • Hendry's eclectic approach gives pointers to global outlook
    The Scots hedge fund manager Hugh Hendry has lately become something of a media darling thanks to his sheer outspoken-ness. But he also puts his clients’ money where his mouth is, often making them handsome returns, and has some genuinely interesting things to say about the outlook for the global economy...
  • Dodd-Frank Act won't prevent future crises
    American banks and financial institutions can hardly have expected to have faced no regulatory or enforced structural or behavioral changes after their lead role in causing the worst financial crash since the 1930s...
  • FSA challenges audit profession to sharpen up its act
    Do auditors tend to be so close to the management of the companies whose financial results they’re supposed to be auditing that they are predisposed to take whatever they’re told by their paymasters at face value? And if auditors are failing adequately to challenge management on book-keeping and audit methodology, what is the value of the audit reports they produce?
  • Curing the world’s financial ills in four not-so-easy steps
    The inadequacy of the communiqué from the G20 summit, which made it clear that the high-level talking shop in Toronto had failed to deliver a unified global stance on preventing double-dip recession, has prompted fears that we are now entering the next phase of the banking and financial crisis. The G20’s inability to agree on a global approach to resolving developed world indebtedness and economic failings prompted...
  • The spin-free life of SocGen analyst who cut himself off from herd
    What is it about Sociéte Générale? Not only has the French bank spawned the “rogue trader” Jerome Kerviel, currently on trial for alleged fraud in Paris, and the deep-thinking global strategist James Montier (author of a QFINANCE viewpoint article). Now it has delivered a leftfield, maverick investment analyst whose outsider's perspective could revolutionize equity research. Marc Mozzi, a real-estate analyst with Sociéte Générale in London, differs from his peers...
  • Having recognized role in crisis, fund managers put themselves on the couch
    The villains of the financial crisis, whose aftershocks are now forcing austerity on millions of Europeans, are many and varied. Groups singled out for blame include bankers, investment bankers, rating agencies, politicians, central bankers, “no touch” regulators, and credit-hungry consumers and corporations. But there is one group whose role has not yet been fully recognized or explored: the fund managers...
  • Osborne’s shock therapy represents “kill or cure” for English patient
    Britain’s new chancellor, George Osborne, has this week come in a volley of abuse from neo-Keynesian economists, left-wing commentators and opposition Labour MPs. His critics are enraged by his decision to "supplicate before the market Gods" and "recklessly endanger Britain economic future" by imposing an austerity budget on Britain last Tuesday, June 22nd...
  • Bankers square up to regulators over economic fallout of Basel III
    The war of words between regulators, including central bankers, and bankers over the economic impact of the proposed Basel III reforms is not showing much sign of abating. The proposed new rules, which are a key part of the G20’s push for a stabler financial system, would force banks to hold more capital and liquid assets. The rules are being finalized by the Basel-based Bank for International Settlements, the oversight body for the global...
  • Europe's rush to impose austerity measures could prove disastrous
    Call it the new frugality but deficit reduction has become economic flavour of the month across most of Europe. The turning point came at the recent meeting of G20 finance ministers and central bank governors in Korea, in early June. Fortune magazine said those present had a collective crise de coeur after becoming "alarmed by the public finances of some countries". Together they "made clear that they could no longer wait until...
  • UK competition watchdog nips at investment bankers' heels
    It’s pretty much been a one-way street for investment banks since the UK and US governments started to deregulate financial markets in the 1980s. Indeed Philip Augar, former investment banker and author of The Death of Gentlemanly Capitalism, has called it a “stairway to heaven”...
  • BP disaster shows that environmental and social risks are also financial risks
    British pension funds are learning some important lessons from the Deepwater Horizon catastrophe. Until this crisis, pension funds regarded London-based oil giant BP as a “safe” bet for the long term. After all the oil company’s shares have tended to rise in value year-on-year, as well as providing a regular and robust dividend stream. They have formed a major component of most UK pension fund’s portfolios. But the Gulf of Mexico environmental disaster...
  • Has love of “easy money” driven Washington to distort inflation figures?
    Ben Bernanke is confident America has inflation under control. Speaking in Tokyo last Wednesday the Federal Reserve chairman said: "Despite increases in inflation a few years ago and now declines of inflation to very low levels, inflation expectations in the United States are very stable.” The remarks helped pour oil on troubled markets, which are fretting about financial instability and possible sovereign defaults in Europe. There have also...
  • ECB becomes Europe’s “feudal overlord”
    Europe faces a terrible future, with the “welfare socialism” that characterized the post-war years being swept away and a possible return to feudalism, the economists Simon Johnson and Peter Boone have warned. In a thoughtful piece published in the Daily Telegraph, they argue that the European Central Bank is Europe's new feudal overlord, and that its serfs and vassals are countries and, of course, voters...
  • There is method in Merkel’s madness
    The decision by German chancellor Angela Merkel to unilaterally impose a ban on “naked short-selling” last week was derided by many market commentators as an act of sheer folly. The move was dubbed “an act of desperation” (by Brian Yelvington of Knight Libertas), “moralistic hysteria” (Charles Dumas of Lombard Street Research), “simply unfathomable” (Uwe Parpart of Cantor Fitzgerald), and “a distraction from the major...
  • Investors shooting themselves in foot with acceptance of "golden hellos"
    The £3.3 million, no-strings-attached “golden hello” recently handed by Unilever to its incoming finance director, Jean-Marc Huet, caused dismay among some investors ahead of the Anglo-Dutch consumer goods company’s annual general meeting on May 13. The main reason that investors, including UK-based Cooperative Asset Management, were so incensed was that the award came without any performance conditions attached...
  • Roubini's 10 part prescription for a more stable financial future
    Nouriel Roubini, the New York-based economist who can justly claim to having foreseen the crisis, has proposed a comprehensive list of 10 reforms to limit the chances of such a cataclysm occurring again. The proposals, outlined in Roubini's new book, Crisis Economics: A Crash Course in the Future of Finance, co-authored by Stephen Mihm and published yesterday by Penguin, include an overhaul of securitization, a ban on CDOs, the shifting…
  • Roubini: “The crisis ripped the sleek shiny skin off what had become a gangrenous mess”
    The economist Nouriel Roubini is astonished that, even though the market-fundamentalist, laissez-faire belief system that dominated economic and political thinking for most of the past five decades is now utterly discredited, nothing has yet emerged to take its place. In his new book, Crisis Economics: A Crash Course in the Future of Finance, Roubini argues that policymakers, bankers and economists allowed themselves to be seduced by…
  • Euro crisis morphs into the sovereigns' subprime
    Hope triumphed over fear with last Sunday night's dramatic €720bn ($1 trillion) EU/IMF intervention to prop up the eurozone, but there remain widespread suspicions that this solution—dubbed the biggest bailout in history—may yet prove too little too late to save the eurozone. Even after news of the EU/IMF package, which wrongfooted investors who were betting on a Greek default, dribbled out from Brussels on Sunday night and Monday morning…
  • Senate's Goldman dossier lifts lids on internal practises
    The internal correspondence from inside Goldman Sachs amassed by the Senate’s Permanent Sub-Committee on Investigations makes for shocking reading—which must be deeply embarrassing for Goldman Sachs and the managing directors concerned. The voluminous evidence, including memoranda, personal emails and credentials presentations, would (almost) be enough raw material for someone wanting to write a book or a film script…
  • Hell hath no fury like a Wall Streeter scorned
    An anonymous memo is doing the rounds of Wall Street and the City of London. It could be a spoof. But it does have the ring of authenticity. In the memo, a peeved Wall Streeter rails against attempts by President Barack Obama's administration to cramp his style by reining in the wild beasts of finance. The writer issues a stern warning to the rest of America ("Main Street"). He or she basically argues that if Wall Street is to be "knocked off the top of…
  • Greek bailout rewrites rulebook for EU sovereign debt
    Is the European Union and the IMF's €110bn bailout of Greece a good or a bad thing. If you’re a German voter, 57% of whom reportedly oppose the rescue package (largely because they hate the idea of salvaging a profligate nation such as Greece), the answer is definitely the latter. Others in the “bad” camp include the investor Jim Rogers, who was interviewed about it on BBC Radio 4’s “World at One” on Monday. Rogers, famous for best-selling books…
  • Former President Clinton concedes he got it wrong on derivatives
    Former President Bill Clinton has admitted that he ought to have tightened up the regulation of derivatives when he was in office, but insisted he had no regrets over the decision to repeal of the Glass–Steagall Act, which separated commercial from investment banking. A relaxed Bill Clinton told ABC’s “This Week” he should never have listened to the advice of his former Treasury Secretaries, Robert Rubin and Lawrence Summers, both of whom recommended…
  • SEC vs Goldman Sachs suggests changed days for Wall Street
    The torrent of speculation surrounding the SEC’s chances of succeeding with its attempts to nail the “giant vampire squid” (a.k.a. Goldman Sachs) over alleged fraudulence in its Abacus 2007-AC1 collateralized debt obligation seems to have obscured the true import of what happened last Friday. For Goldman Sachs, traditionally the most successful and powerful investment bank on Wall Street, to be charged with fraud by the leading regulator in its…
  • Iceland makes a drama out of its crisis
    Iceland’s Truth Report (or “Black” Report) into the October 2008 collapse of its banking sector is exactly the sort of forensic inquiry from which a number of other countries where laissez-faire politicians allowed cavalier banks to pursue reckless growth trajectories could also benefit. The findings of the Truth Report, put together by its Special Investigation Commission and published last Monday, are also being performed in a Reykjavik theater…
  • Breaking up is the hardest thing to do
    Three years since the onset of the crisis, the US Congress has finally got around to debating some serious proposals for reforming America’s banks and other financial institutions—and specifically for overhauling how they are regulated. But will the measures outlined in Senator Chris Dodd’s financial reform bill be sufficient to prevent another crisis? And can they be expected to make it through the political mill given the opposition of laissez-faire Republicans…
  • Banking’s new age of experience
    The weaknesses of bank boards and particularly the lack of financial industry experience of nonexecutive (or external) directors at banks, is seen as one of the reasons why so many such banks and financial institutions came within a whisker of going bust during the crisis. According to new research from Moody’s Investor Service, this is one area that US and European banks have been striving to address in recent months by replacing…
  • US rescue plan: Stiglitz vs Gold
    Three years after the crisis began is as good a time as any to take stock of the US policy response to the fallout from the subprime catastrophe—and assess the response’s effectiveness in nursing the world’s largest economy back to health. One of the fiercest critics of recent US economic policy is the Nobel prize-winning economist Joseph Stiglitz. In his book Freefall: America, Free Markets, and the Sinking of the World Economy, he lambasts…
  • It was not lack of regulation, but lack of ethics, that killed The Street
    The former Salomon Brothers bond trader who lifted the lid on sharp practice in Wall Street with Liar’s Poker in 1989 has returned to his former stamping ground. In his new book, The Big Short: Inside the Doomsday Machine, Michael Lewis focuses not on bulge-bracket banks but on a small band of wacky outsiders, including one described as “a loner with a glass eye, a medical degree and Asperger’s syndrome”…
  • Lehman Bros: Time for Sarbox to be rethought post-Valukas
    The time bombs detonated by the court-appointed examiner’s report into the collapse of Lehman Brothers have by no means all gone off. Indeed, further explosions are expected to continue to reverberate and echo around the financial and regulatory landscape for some years to come. The report—a 2,200-page, nine-volume page-turner written by lawyer Anton Valukas—revealed that the failed investment bank continuously manipulated its accounts…
  • Pension funds search for climate change risks and opportunities
    Pension funds are increasingly being asked by politicians, non-governmental organizations, campaigners, and pressure groups to mobilize their financial clout more actively and to take their responsibilities as corporate owners more seriously. The chances are it could change from being “asked” to being “required.” At the vanguard of the movement is UK Treasury minister Lord Myners who recently berated pension funds for…
  • UK’s uncertain outlook clouds stockpicking picture
    The man who took over the reins at Fidelity International’s Special Situations Fund from the legendary investment manager Anthony Bolton has been outlining his investment vision. Sanjeev Shah said that his preference is for companies capable of “generating solid underlying organic growth”—largely because of his suspicion that UK economic growth will remain muted for some time. Even though the UK recession officially ended in…
  • Greek tragedy’s happy ending—A European Monetary Fund?
    The Greek crisis has brought the structural flaws in European Monetary Union (EMU) into sharp relief, as well as weakening the euro and the credibility of the euro. But out of the furnace of the sovereign debt crisis an eminently sensible proposal has emerged. Instead of unseemly internal bickering over the extent to which richer eurozone states should dig into their pockets to bail out fiscally irresponsible partners, plans are being drawn up for a new institution that should help…
  • Beijing unlikely to go MAD any time soon
    Americans (some Americans anyway) remain deeply anxious about China’s ownership of $1–2 trillion of their country’s debt. The fears that these massive holdings leave the US vulnerable and expose intensified on February 15 when it was reported Beijing had dumped some $34.2 billion of US Treasury bills. There are fears, for example, that Beijing might suddenly offload its circa $1.5 trillion holding of Treasury bills and, in so doing, spark an economic version of mutually assured destruction…
  • Buffett advocates more stick, less carrot to ensure bank bosses shape up
    Legendary Omaha-based investor Warren Buffett often uses his annual letter to shareholders in Berkshire Hathaway group to impart some homespun financial wisdom and disseminate a few trade secrets. The letter accompanying the conglomerate’s 2009 annual report, released on Saturday, doesn’t disappoint. Perhaps Buffett’s most pertinent recommendation, concerns the corporate governance of large financial institutions. Buffett, 79, strongly believes that…
  • The wider consequences of Greece’s tragedy
    It’s time that institutional investors woke up to the wider repercussions of the Greek tragedy and rethought their attitudes to risk as well as their approaches to asset allocation. Obviously investors are aware of the way in which the credit crisis has accelerated the shift in the balance of economic power from the developed and towards the emerging world, a shift that has obviously been influenced by the fiscal irresponsibility of the former…
  • Tobin makeover not quite what it seems
    The campaign for a “Tobin” tax on global financial transactions, first proposed by the Nobel prize-winning economist James Tobin in 1971, has gained a new lease of life. The idea was given fresh impetus by “Red” Adair Turner, chairman of UK regulator the FSA last summer. Yet, despite the public’s dislike of bankers, the proposal never really caught the public’s imagination. This probably had little to do with dire warnings issued by the City of London and London Mayor Boris Johnson that the…
  • IPO window slams shuts in “howling gale of fear”
    The flotations window that has been opened up since the bear market rally kicked in last March has been slammed shut as risk aversion stalks global financial markets. Institutional investors are concerned about the ending of quantitative easing and the uncertainties that have been caused by the sovereign debt crisis in the EU. Both have sparked stock market volatility and rendered the near-term outlook for some corporates somewhat cloudy. The apparent closure of…
  • Volcker’s right: Prop trading was at heart of crisis
    There are plenty of powerful voices on Wall Street and in Congress out to rubbish President Obama’s ‘Volcker Rule’ right now. Their main gripes are that it won’t really work in practice (since it doesn’t apply to many banks and that others will find ways around the proposed rule), and that the rule will undermine the competitiveness of US banks and diminish their ability to lend to the real economy...
  • G20 reform agenda knocked sideways by Obama
    Despite the worthy talk at the recent World Economic Forum in Davos, the world is even further from reaching unanimity about how best to re-regulate banks and financial institutions than at the G20 summit in Pittsburgh last September...
  • Turner turns fire on bean counters
    Lord Turner, chairman of the UK's top financial regulator, angered people in the City of London when he told them last August that much of what they do is “socially useless” and that governments had been wrong to allow the financial sector to pursue untrammeled growth for so long. In a recent speech to the Institute of Chartered Accountants of England & Wales (ICAEW) he went one step further and attacked the bean counters—and specifically standard setters such as…
  • HSBC goes with the economic flow
    If you need tangible evidence that economic power is ebbing away from Western financial centers such as London towards more dynamic economies in Asia, then look no further than HSBC’s decision to move its head office from London to Hong Kong. Ahead of next week’s historic move, which reverses the bank’s 1992 move from Hong Kong to London (a UK government requirement without which the Hong Kong and Shanghai Bank would not have been allowed to…
  • Stiglitz lambasts Obama over handling of crisis
    He may be something of a pariah on Wall Street thanks to his calls for a new tax on “upper income” Americans but, in his latest critique of the Obama administration’s handling of the financial crisis, Nobel prize-winning economist Joseph Stiglitz makes a great deal of sense. Stiglitz—described as “perhaps the closest thing we have to John Maynard Keynes in both his theoretical outlook and his cogent kibitzing of policymakers” by…
  • How to boost investment returns: Invest responsibly
    It’s official. Caring for the environment and for society can actually benefit your wealth. And according to a raft of recent surveys, the benefits of investing responsibly are increasingly being recognized by the global fund management industry, puncturing expectations that the financial crisis might put paid to such hopes. The only real negative to emerge from the recent surveys—and unfortunately it’s a big negative—is that…
  • Bernanke’s land grab falls flat
    There’s an interesting tussle going on in the US over whether the Federal Reserve should be given more powers—or indeed whether the Washington-based central bank should have its wings clipped. Those arguing in favor of the Fed gaining additional abilities perhaps unsurprisingly include its chairman “Helicopter” Ben Bernanke. He has recently been claiming—to the wry amusement of some economic commentators and guffaws from others…
  • Pondering recovery amid the snow
    The picturesque Swiss ski resort of Davos will later this month again play host to the World Economic Forum (WEF), the annual jamboree of the global great and the good. This year the event is likely to be dominated by soul-searching about the state of the global economic recovery. Specifically, speakers will be assessing whether the neo-Keynesian medicine doled out by most governments is going to be sufficient to…
  • Tobin becomes fashionable
    It was recently suggested that the US economist James Tobin renounced his commitment to a globally implemented tax on financial transactions just a few months before he died in March 2002. Tobin first proposed the idea, which he believed would curb speculation on foreign exchange markets, in 1971. In the wake of the recent financial crisis, the proposal has been gaining some traction in the…
  • Asian economic miracle version 2.0
    The flow of economic power from West to East has been massively accelerated by last year’s banking and financial crisis; indeed if investment managers’ predictions for 2010 are to be believed the process has become unstoppable. Many of the world’s leading investment management firms are predicting, in their outlooks for 2010, that the emerging economies of Asia-Pacific, and to a lesser extent Latin America, will outperform…
  • Roller-coaster ride for Chinese equities
    With economic recoveries and stock market rallies in the developed world looking shaky, investors are increasingly turning their eyes eastwards to benefit from the continuing economic boom in China. The latest to take the plunge is Anthony Bolton, the highly regarded British investor, currently president of investments at Fidelity. So enthused is Bolton, 59, by the opportunities in China…
  • Propping up failures only prolongs recession
    Are governments too eager to sustain banks that would otherwise have gone bust and are they too keen to lend a hand to the casualties of recession, such as US car manufacturers? And in doing so, are they at risk of inflating asset price bubbles that could turn out to be every bit as dangerous as that which burst so spectacularly in 2008? The way in which readers respond to this question will…
  • No-one can afford “too big to fail” banks
    The thorny issue of what to do about institutions that are “too big to fail” has been addressed by Mervyn King, governor of the Bank of England. In evidence to the House of Lords Economic Affairs Committee, King said it is impossible to construct a credible regulatory system while dinosaurs that are “too big to fail” are still allowed roam the financial jungle. By “too big to fail” King means…
  • Asia’s unprecedented opportunity
    Asia has a critical role to play in pulling the global economy out of recession and towards a more sustainable future, according to Dominique Strauss Kahn, the French-born managing director of the International Monetary Fund. But delivering the Monetary Authority of Singapore lecture on Friday, November 13th, he stressed…
  • Back to the future
    Morality and business ethics were on the agenda at the closing session of the QFINANCE debates on the future of finance held in Doha this week. Following a lively debate, delegates at the CNBC debate on the future of finance (“Same rules, same game”) voted on four possible outcomes of the banking and financial crisis. Each proposition was advanced by a finance practitioner, advisor, or scholar. In the end, the winning proposition at the debate…
  • Don’t count chickens on recovery
    There is a danger that central bankers including Jean-Claude Trichet of the European Central Bank and Ben Bernanke of the Federal Reserve will hold interest rates too low and for too long—just as their predecessors did after the terror attacks on the United States in September 2001. Speaking at the launch event of QFINANCE in Doha on Wednesday, Rajar Kumar Gupta, senior partner emeritus at management consultants McKinsey & Co, warned…
  • Mark-to-market a cure, not a cause, of crisis
    It is wrong to blame fair-value accounting, also known as mark-to-market accounting, for causing the financial crisis that last year nearly tipped the global economy over the edge, according to the chairman of Goldman Sachs Bank USA, Gerald Corrigan. Also a managing director of Goldman Sachs, Corrigan said: “I do not believe that fair value accounting was the cause of it.” In his role as co-chair of Goldman Sachs’s firm-wide risk management committee in the run up to the crisis…
  • New dawn for Gulf finance
    A new era has dawned for financial services, in which Gulf financial centers are well placed to demonstrate their virtues and fully compete with Western centers, according to Abdulrahman Ahmed Al-Shaibi, non-executive director of the Qatar Financial Center Authority. Addressing the QFINANCE launch event in Doha (“FT Rethinking the Future of Finance” conference), Mr Al-Shaibi said the time has come for…
  • Sovereign funds chastened
    Transparency has turned out to be something of a doubled-edged sword for the world’s $3 trillion sovereign wealth sector. Analysts suggest that sovereign wealth funds, which last year decided to embrace transparency, are now paying the price for being open and honest about their investment performance. Vociferous public disapproval of the losses they have incurred by investing in Western banks just as the credit crisis started to unfold is forcing them to…
  • Challenges on talent front
    Gulf nations will have to become less rigidly hierarchical if they are going to boost entrepreneurialism and attract and retain overseas talent, according to speakers at the Doha Business Roundtable. Linda Hill, professor of business administration at Harvard Business School, one of the speakers at the Economist-organized event, said that if expatriate workers are denied the chance to get to the upper echelons of indigenous businesses...
  • Doha revisited
    Protectionism has become the “crack cocaine” of modern politics and anti-globalization forces have been emboldened by the global downturn, according to Mike Moore, the former prime minister of New Zealand. Speaking at the opening of the Doha Business Roundtable, “Gulf 2020: Scenario planning in a post crisis-economy,” in Qatar, Moore highlighted a recent report from the WTO which exposed...

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