Sustainability I

An opinion piece we published in 2010 on Sustainability we believe to be as relevant as ever today…

theMarketSoul ©1999 - 2019

The focus on sustainability and sustainable practices is a self defeating objective.  Sustainability means that business leaders take their eye off the equity holder’s value creation ideal, as it flies in the face of self-interest as promoted by Adam Smith some 234 years ago (The Wealth of Nations , 1776).

Profile of Adam Smith

Self-interest and the pursuit therefore is being clouded by a multitude of other non value adding factors that is diluting the message and contributing to more uncertainty and risk and therefore capital flight and volatility in the financial and capital markets as we have experienced over the last 2 years.

This process and Zeitgeist will not disappear or be properly understood, unless we develop a deeper understanding and familiarity with uncertainty as a driver of the innovative spirit of human endeavour.

Risk management per se is not the answer and panacea it is held out to be, and if…

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Capricious Markets

Some thoughts on #Markets and #Risk from our archive (2010). Still relevant today?

theMarketSoul ©1999 - 2019

The market is capricious.  We are paraphrasing a line from one of Bernard Cornwell’s series of historic novels on 9th century England, where he referred to the ‘old gods’ (pagan gods) of the Danes and Vikings as capricious.

So if the impulsive nature of markets is to be appreciated for what they are, then why are we trying so hard to manage risk completely out of existence?

We will focus on two specific factors today in what we refer to as the ‘dumbing down of risk’.

A strict or narrow definition (old financial language) of risk is possibly that it is a quantifiable number with a probability ranking and we can therefore attach a statistical inference to the occurrence of the risk event.

Yet in The Health & Safety Executives language a risk and “Risk management involves you, the employer, looking at the risks that arise in the…

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Moral Hazard PLUS – Part 2

Part 2 – Revelations
 Moral Hazard symbol utilized by theMarketSoul
In part 1 of this article we focused on the economic cycles and the underlying drivers for future Moral Hazard risks.
In today’s edition we will dwell a little on the revelations 2014 brought about in a series of disclosures and financial regulatory deals concluded.  As Tony Robinson put is so eloquently in a recent Twitter feed:  “In 2014 £1.4bn in financial penalties were paid by UK financial institutions. whenever has a legitimate industry acted so lawlessly?

 

Image used to convey the idea of currency conv...
Image credit: Wikipedia

 

What we notice is that only the financial institutions (and consequently their customers) bore the fines, no individual has yet been brought to justice and account for the near fatal financial collapse he 2008/9 Financial Crunch brought about.  Yes, individual traders who acted recklessly and outside of the bounds of their remits within financial organisations have been brought to account, however, the scale and ferocity of the collusion by Forex traders, the Libor scandal, PPI mis-selling, etc., etc., has yet to yield individuals sanctioned and barred for ever acting as officers and employees of these large financial institutions.  Do the regulators and law enforcers and criminal justice system believe that the market will be protected by not taking appropriate action?  The longer we leave punishment and sanctions off the agenda, the more urgent the growing threat for Moral Hazard PLUS will be.
Therefore, we have now had and will no doubt continue to have revelations drip fed to the consumer masses, but more importantly will we take the necessary steps to mitigate individual Moral Hazard risk, as a lot has already been done to tighten and improve regulation at the institutional level?
This is the biggest and most burning question we believe drives Moral Hazard PLUS today and not the near term future.
In the concluding part of this article we will wrap things up by concentrating on large scale corruption and unpunished collusion that fester and provide fertile soil for Moral Hazard PLUS to continue to grow and exist.
© theMarketSoul 2015

Thoughts on 2014 – Moral Hazard PLUS – Part 1

Reflections on 2014

As a behaviourally focused economics publication we have been very quiet and inactive during 2014. A year of reflection and introspection, however, we are ready to resume service, with vigour. And what better way to start than with a reflective piece and thoughts on the biggest risk we believe are developing under the surface without warning. Our concluding theme of 2014 is that of moral hazard.

As Margaret Thatcher once said: “There is no society”; we state today that there is ‘No Moral Hazard’; in fact there is only Moral Hazard PLUS.

We believe that there is a strong correlation between QE (Quantitative Easing) and economic moral hazard developing a new strain, mutating like an unseen virus.

QE might have saved the financial system of the developed world, but it it only provided a shot in the arm and acted as a stimulus for sustaining moral hazard.

Economics follow a flow and cyclical pattern, as discussed in our article entitled ‘Information Age Irony‘. These patterns and flows weave themselves into the fabric of our lives and affect individual economies in different ways.

It is important to understand where and how economic cycles develop and flow and how much influence they have on our general economic activities on a day to day basis, but we should not become overly obsessed by them, as they can be short-circuited from time to time by policy and policy-maker’s actions, wherever individually or collectively.

In part 2 of this article we will focus on the revelations of QE and the underlying threat of moral hazard returning on a grander and more catastrophic scale, if it goes unchecked and misunderstood.

© theMarketSoul 2014

Immediacy – Analysing the Behavioural Dimensions

Revisiting some posts from 2013…

theMarketSoul ©1999 - 2019

The problem of getting too distracted by constantly fire-fighting in business settings

Français : Logo de Connecting Emotional Intell...

We might have heard it referred to as phrases such as “blinkered vision, short-term thinking”, possibly even “tunnel vision” or something similar; however the challenges of Immediacy is (1) the hidden cost and (2) damage it does to our organisations and culture within those organisations.

This is a behavioural consequence of a much more deep rooted problem.  It could possibly be insecurity or ‘over’ control, mistrust or some other behavioural issue.

However, we would like to make a bold statement that the problem is one of an over commented emotional connection to what we do. Too much passion and care in other words. This is not a bad thing in itself, but it must be tempered and balanced by its opposite twin, namely logic and deliberation.

Too often we let the Emotional Intelligence (EI) side of our…

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The Market Burden

Thoughts on regulation and a skewed market:

theMarketSoul ©1999 - 2019

Illustrates the intersection of supply and dem... Illustrates the intersection of supply and demand curves as the free market equilibrium (Photo credit: Wikipedia)

Today’s post is actually only a short sound bite for further conversations to be developed in the future:

The real burden of the open and free market is the fact that it does not always behave and act in the way the market participants anticipated. [In other words, the market might be open and free but not perceived as fair – a real challenge when the clearance mechanism experiences the odd bottleneck moment, because in the long run, the market should and will always clear and achieve equilibrium].
The burden the market then bears is in the form of interference and regulation…
Counter argument always very welcome.
theMarketSoul  ©2013

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Funky New Job Titles

A reminder to be creative everyday…

theMarketSoul ©1999 - 2019

Below is an extract from a posting we made back in 2008.  Maybe still relevant today:

In this new, new world of work

What titles are there yet to lurk?

The new MD

He or she or it could be:

Maverick Director;

Not your average reflector!

The IM is the person

Where intuition is the key

Or are they the Ideas Merchants

or just another fee?

IT stands for Interesting Thing

Technology drives the process

And we are told that knowledge

Must definitely be better than porridge!

The SD drives the sales

Or Sets Deception

Yet revenue collection

their fortunate projection

The HR director,

You’d better respect ‘er

Yet Human Potential

Sounds much more consequential?

Or politically correct,

You OLD cynical fool!

Now even that word

We must reject!

Where am I heading?

With this you ask

Must there be an end?

Or just another bend?

Charisma, inspiration

Or just…

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