"The corporate brand is not only used to improve competitive
positioning and express company aspirations, it can also be a powerful
tool to motivate employees."
I have to disagree with my colleague Steve Taub on this, not because my heart bleeds for jobless, underwater homeowners, but to keep foreclosures from driving home prices ever downward.
Here's the thing: What is the "natural" price that Steve wants the market to find?
A column published on Tuesday by Project Syndicate sums up the world's flailing (if not downright cynical) response to the financial crisis in particularly apt terms, I'd say.
The governments' efforts to restore confidence in the banking sector without really addressing the causes of its loss of confidence is akin to trying to tickle oneself, observed Paul Seabright of the University of Toulouse in the piece, entitled "Financial History's False Lessons."
There's some additional recent work out there that's worth citing in connection with Karen's post on Tuesday.
In particular, I would point readers to the piece posted Monday on voxeu.org by Enrico Perotti, a finance professor at the Amsterdam Business School. Essentially, Perotti's piece explains why Kotlikoff's prescription is necessary. As it did the US Congress, the banking industry has fought off international attempts to get the so-called Basel Committee to force the industry to de-leverage its business model. And Kotlikoff's idea does exactly that, simply because mutual funds are financed entirely by equity.
I'm as a big a fan of Paul Volcker as the next guy but am struggling to understand why he objects to the so-called Lincoln amendment. All it would do at the end of the day is force banks to separately capitalize their derivatives operations, as Simon Johnson explains today.
I can understand why the bank lobby is against the idea. More capital would make their operations less profitable. But that's also the only way to make them less risky as well.
Corporate banking professionals are less pessimistic about Greece's financial condition than investors are, according to surveys by Bloomberg and by our editorial partner, the Benche, a website sponsored by the Swedish bank, SEB.
According to the Benche, half of its registered members, who work primarily in corporate banking, say Greece will fail to make timely payments of interest and principal on its debt.
As a follow-up to yesterday's rant, I see that investors are applauding the moves of European governments to reduce their budget deficits, as if the answer to deflation is more deflation.
Hasn't anyone ever heard of Keynes and the false dawn of 1937?
I see that Ben Bernanke, Sheila Bair and even Paul Volcker are trying to convince Congress not to require big banks to spin off their derivatives operations, or make other fundamental changes besides getting out of proprietary trading, the so-called Volcker rule.
Bernanke, in particular, is defending the rest of the current set-up and insisting, in effect, that regulators can take care of all of the rest of the problems that banks that are too big to fail represent, with just a few technical changes involving leverage and capital reserves and the like.
Gretchen Morgenson's piece in Sunday's Times points out how Fannie Mae and Freddie Mac are serving as a source of back-door bailouts for the banks.
And she quotes Dean Baker, co-director of the Center for Economic Policy Research in Washingto,n DC, to the effect that their continuing status as half governmental agency, half private enterprise creates an irreconcilable conflict between taxpayers and shareholders.
The violent backlash against the rescue plan that Europe has come up with for Greece should be a warning sign for those who think the bond market should rule public policy.
Yes, Greece must get its act together in terms of the black market and corruption, and tighten its belt on public finances. It simply has no other choice. But austerity isn't going to help the country repay its debt, not when the global economy continues to suffer from weak demand.
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