Dr. B. comments on H-P's recent decisions on Marketwatch.com:
H-P’s unfolding strategy reflects how America’s evolved capitalism misguides our corporate conduct. Management at H-P feels compelled to chase faster profit growth to enhance share price appreciation for investors and stock gains for executives. This madness springs from a stock market architecture that blesses growth, regardless of the cost, while penalizing responsible service to the common good.
The Financial Crisis Inquiry Commission recently published its findings in a 500+ report published on the FCIC web site. On the homepage, the authors summarize their conclusions like so:
The Commission concluded that this crisis was avoidable—the result of human actions, inactions, and misjudgments. Warnings were ignored. “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again.”
Impact investing, if pursued on a large scale, could become the next best thing to a sweeping overhaul of capitalism’s financial architecture. Nonetheless, neither socially responsible investing (in general) or impact investing (in particular) is a suitable substitute for redesigning the entire Wall Street system. Investors in the U.S.A. and abroad should pay attention to socially responsible investing, positive investing, impact investing and other financial accountability initiatives while moving forward with plans to redesign how we capitalize public ownership of business and industry.
Free markets and their attentive politicians are always serving up something new. May’s service — an 872 point Dow Jones blowout — clearly dampens recovery hopes. Is it right that financial markets impact the underlying economy so remarkably? Could a different financial architecture help mitigate this problem — an architecture that does not shortchange honorable merit when it comes to financial rewards?
How much time will elapse until California becomes America’s Greece? If the EU thinks it necessary to bail out one of Europe’s most profligate state economies, will the U.S. face the same perceived necessity with one of our wayward state governments?
Wall Street could learn a few things from the Tiger Woods apology on February 19. Wood’s detailed apology is an important step toward a gradual rehabilitation of his image. Nevertheless, the healing will not be easy. Nor should it be. People who commit grand larceny — maritally or financially — should expect penalties. Woods faces the prison of public opinion as well as the loss of endorsement revenue. He stole a lot from his wife, kids and supporters. He is deserving of his reward.
Has America lost its soul? Is America too immoral and shortsighted to allow prudent capitalism to work properly? (Yes.) Is the Canadian hedge fund manager, Erick Sprott correct that the U.S. government is now a “dead man walking,” with central bank intervention the main dynamic that allows the U.S. Treasury to roll over government debt at low interest rates? (Marketwatch, Oct. 20, 2009).
It pays to look at where we’ve been if we’re to understand where we’re going. The U.S. stock market bottomed in the first week of March 2009, beginning a vigorous bounce in the month’s second week. By late March a breeching of the midterm downtrend line suggested significant changes in store. Nevertheless, most members of the general public thought the March rally was nothing more than a dead cat bounce.
Purportedly, President Obama may attempt to shift the focus of the G20 summit from banking improprieties to a rebalancing of trade. While a restructuring of trade is important, Obama is out-of-step with the American public if he diverts attention from the need to cap bank bonuses, heighten scrutiny of hedge funds, and corral the shadow banking system. Recent reports of a power regrowth in the investment banking sector lend support to this concern.
In September, 1901, Vice-President Teddy Roosevelt uttered his memorable adage, “speak softly but carry a big stick.” Shortly thereafter, President McKinley was assassinated by an anarchist, making TR at age 42 America’s 26th president. As president he failed to speak softly at times but did carry an executive bludgeon. His legacy still shines because he swatted at the insolence of his own party as well as Democratic interests. Our current president would do well to consider Teddy Roosevelt’s example in matters of economic justice.