That’s where the chefs are British, the lovers Swiss and the mechanics French. Pirelli risks becoming the corporate equivalent: the management Italian (as in the joke), its owner a Chinese state enterprise, and other partners Russian. Minority investors won’t find it funny.
The German bank spent two decades expanding massively into the capital markets business. Along the way, it lost touch with its original mission of serving German businesses and their owners, without finding a viable new one. The crisis has spurred a return to traditional values.
A revolt by investors during the 2013 taper scare forced authorities to sacrifice output to preserve financial stability. But the risk of the U.S. Federal Reserve playing spoiler is retreating. The quest for growth is back. The economy can afford more monetary stimulus.
Open competition can change industries in a good way. Look how market mechanisms are shaking up the British supermarket business. But when it comes to driverless and electric cars, cooperation and regulation dominate. Capitalists should recognise the limits to markets.
The problem with Jeff Immelt’s conglomerate isn’t inertia, bad managers or crummy assets. GE faces a harder nut to crack: Investors don’t seem to give a damn. As Microsoft’s experience before Satya Nadella suggests, the perception of a stock as dead money is hard to shake off.
After a stressful week of stress-testing, U.S. mega-lenders might want to kick back and earn some money. If only it were so easy. They’ve mostly proven they can weather a flood, but not yet a break in the levee. That comes next with the Fed and FDIC resolution requirements.
The obvious question for fund professionals is why they earn so much: pay could soon overtake that at investment banks. The easy answer is because they can. The larger issue is what are they doing? Most strive to outperform on secondary markets. That does the economy no good.
The new left-wing government complains the euro zone central bank is meting out tougher treatment than it gave the previous right-wing administration. The difference is justified since Athens isn’t working well with its creditors. If that changes, the ECB should be more flexible.
Defaulting on its debts and quitting the euro would be a disaster. So would imposing capital controls, while defaulting and staying in the single currency. Athens has no rational course of action apart from working with its creditors to vigorously reform its economy.
Investors now pay Germany to take their money for five years. It’s a bizarre result of today’s fluid understanding of money, in which notes and coins are the real aberrations. Postmodern finance might work, but it’s risky, high-handed and not fair to savers.