Tuesday, April 29, 2008

Follow up: Triple Play in the FT Today

Good to see great minds are interested in some of the same topics I've been writing about. The FT Comment page today carries pieces on not one, not two, but three of my recent blog topics:

  • Abbie Hofman writes about i-bankers and their role in our recent credit market problems ("The binge culture of banking must be changed") just as I did in "Levers, Gears, Pulleys..." She's better with the word than I about those topics common to her piece and mine. For example, I listed "clouding" as one of the i-bankers bag-o-tricks. She uses the more formal "obfuscation." She goes beyond just agreeing with me, though. She astutely points to compensation structures and Jones-man-ship ("if another bank sells the product, so must we") as areas which must change in order to avoid another period of i-banking pain. She correctly points out that we need more directors who come from the industry and can understand the concepts being bantered about in board meetings. Here's a great quote-of-a-quote: "...we have been told that bankers were paid so much because you were cleverer than the rest of us. Now it turns out you were not..."
  • Leszek Balcerowicz talks about the natural tension between collectivists and free-marketers ("Free marketers must fend off the statists"), very much in the vein of my recent blog on the government interference behind the Bear Sterns work-out ("Move Over Eagle ..."). I particularly appreciate his Eastern European viewpoint. He and his generation are probably the world's best experts on the topic of statism vs. capitalism. It's no surprise he's such a staunch advocate of the latter.
  • And finally staff writer Gideon Rachman takes on the SWF issue ("Do not panic over foreign wealth") summing up the message that I had provided background for in my "Yabba Dhabi Doo" series. His take is spot-on: these guys are not going to invest billions in a US firm only to topple it, or the US economy at large. To the contrary, I would argue that they, by investing their national treasure in global companies, will finally and perhaps unwittingly cure one of the major causes of their cultures' historic religiously-based and paranoia-fuelled stances toward the rest of the world -- the haves vs. the have nots -- the evil empires hell-bent on domination -- the imperialists looking for conquest -- the hell-bound hedonists who must be slaughtered. By participating in the world economy, they suddenly have a very direct and clear motivation to do what's in its best interest, thus aligning their national interests more closely with ours. As he says, "... if governments ... have large investments in the US and EU, then they also have a direct stake in the continuing prosperity of Ameria and the EU ... it surely must make it less likely that political differences will escalate into conflict..." It's also nice to see that a British FT staff writer agrees with Dubya: protectionism in the West is a cloud on the horizon ... one of locusts to be taken very, very seriously.

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