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.
As a counterweight to the view of the Great Depression expressed by the Chairman of the Federal Reserve, Ben Bernanke, I recently embarked on a reading of Murray Rothbard’s “America’s Great Depression”, Rothbard being a pupil of Ludwig von Mises, the key figure along with Friedrich Hayek, of the Austrian school.
French President Nicolas Sarkozy’s freehand sketch of a new capitalism for the 21st century astonished more than a few of the delegates at the 40th World Economic Forum held at the ski resort of Davos. What Sarkozy is against came through a good deal clearer than what he is for. He is against rampant “bad” capitalism as epitomised by the greed of global bankers, but then again, who isn’t these days?
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.
I’m continually impressed and amazed by the speed of change in the technology of the investment markets. For example, last year was all talk about low latency and lit versus dark pools. This year, it’s all about private cloud-based services based upon co-location and proximity services. Next year, it will be all about real-time liquidity and settlement.
It seems that sovereign wealth funds are the latest “scary” thing in the media – perhaps scarier than high-frequency traders, Irish banks, Greek tax collectors or U.S. subprime borrowers. But there’s a difference: where the latter may blow up an economy, SWFs merely threaten to take it over, or at least its commanding heights (whatever those are these days).
Rallies continued all week in Cairo’s Tahrir Square, as protestors aimed to oust current Egyptian president Hosni Mubarak. Concerns over instability in the Middle East possibly affecting shipping in the Suez canal led to a surge in oil prices.
French President Nicolas Sarkozy is probably the leading proponent among supposedly free market politicians, of vigorous state intervention in the markets wherever and whenever things do not seem quite “right” to him. In particular Sarkozy has sought to demonise “commodity speculation”, conjuring up images of sharp suited spivs manipulating the price of agri-commodities such as wheat to the detriment of honest French farmers.
For the last of these three blogs on Hayek (last for now, anyway) I want to look at his suggestions for a practical implementation of his ideal form of minimal government. As with the previous blogs, it is worthwhile to set this against our present context of a huge upsurge in state intervention in the markets, via quantitative easing and re-regulation.
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.