Coca-Cola’s controversial share award scheme takes a bad idea to a foolish extreme. Paying workers in their employer’s paper makes no sense. The share price has too little to do with corporate performance, and the work of any single employee has little effect on the share price.
Empty coffers await the opposition leader who is widely tipped to be the country’s next prime minister. Instead of pursing self-defeating austerity, Narendra Modi could pass on more federal spending budget to India’s states. Their expenditure produces three times more output.
The vicious cycle of two years ago is turning virtuous – see Athens’ return to the bond market last week. More can be done to maintain momentum, especially rooting out vested interests. As ever, the weak spot is politics.
What does credit do after it has funded productive activity in the economy? It fuels asset price inflation and funds profligate governments. Leverage increases, bringing crisis and recession. If only policymakers showed more awareness of the line between useful and useless debt.
IPO investors’ willingness to accept second-class stock and governance that favors insiders suggests an imbalance between providers of capital and its consumers. The “coattails equity” peddled in the offerings of Box, GrubHub, Moelis, Virtu, and Weibo risks storing up trouble.
Two years ago, the country looked like it was set for a messy default and exit from the euro. Now it is on the verge of returning to the bond market. There are still political and economic risks. But the financial turnaround of Greece is truly impressive.
Prime Minister Mariano Rajoy has achieved a lot in just over two years and growth has finally returned. But as Spain enters a new electoral cycle, the appetite for reform is waning. What’s more, in two years, there is a big question mark.
President Obama calls inequality the defining issue of our time. The general public isn’t persuaded. That could be because the gap in lifestyles has hardly widened. The real problem is the relative power of the elite. That is dangerous – it threatens to undermine democracy.
April Fools’ Day joke? Nope. It’s a shareholder proposal on the ballot at GE’s annual meeting. Setting aside the absence of buyers for a $260 bln company, it illustrates the kind of shareholder democracy gone wild that many boards and an SEC commissioner would like to squelch.
Wolfgang Schaeuble and George Osborne, the German and UK finance ministers, want European treaties redrafted to shore up the euro zone and keep Britain in the EU. But just because they want this, doesn’t mean it will happen – not least because treaty change isn’t needed.