Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Kay’

The Bezzle Years

Posted by hkarner - 7. Oktober 2015

Photo of John Kay

John Kay

John Kay, a visiting professor of economics at the London School of Economics, is a fellow at St John’s College, Oxford, the British Academy, and the Royal Society of Edinburgh.

OCT 7, 2015, Project Syndicate

LONDON – More than a half-century ago, John Kenneth Galbraith presented a definitive depiction of the Wall Street Crash of 1929 in a slim, elegantly written volume. Embezzlement, Galbraith observed, has the property that “weeks, months, or years elapse between the commission of the crime and its discovery. This is the period, incidentally, when the embezzler has his gain and the man who has been embezzled feels no loss. There is a net increase in psychic wealth.” Galbraith described that increase in wealth as “the bezzle.”

In a delightful essay, Warren Buffett’s business partner, Charlie Munger, pointed out that the concept can be extended much more widely. This psychic wealth can be created without illegality: mistake or self-delusion is enough. Munger coined the term “febezzle,” or “functionally equivalent bezzle,” to describe the wealth that exists in the interval between the creation and the destruction of the illusion.

From this perspective, the critic who exposes a fake Rembrandt does the world no favor: The owner of the picture suffers a loss, as perhaps do potential viewers, and the owners of genuine Rembrandts gain little. The finance sector did not look kindly on those who pointed out that the New Economy bubble of the late 1990s, or the credit expansion that preceded the 2008 global financial crisis, had created a large febezzle. Den Rest des Beitrags lesen »

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The money trap

Posted by hkarner - 23. August 2015

Date: 22-08-2015
Source: The Economist

A perceptive book on the need for financial reform

Kay BookOther People’s Money. By John Kay. PublicAffairs; 352 pages; $27.99. Profile; £16.99.

John Kay, is a visiting professor of economics at the London School of Economics and a fellow of St John’s College, Oxford University. He is a director of several public companies and contributes a weekly column to the Financial Times. Kay is the author of nine previously published books and coauthor of The British Tax System with Mervyn King. John Kay lives in London

WHAT is the finance sector for? This vital question is all too often forgotten in the debate about the debt crisis of 2008 and its aftermath; it certainly seemed to be forgotten by bankers in the build-up to the debacle. But if the world is to avoid future banking collapses, or at least limit their economic impact, people need to think clearly about the issue.

John Kay’s new book, “Other People’s Money”, does the job; it should be read by everyone concerned with preventing the next crisis. The early books after the crash, like Andrew Ross Sorkin’s “Too Big to Fail”, analysed how the collapse unfolded in minute detail; Mr Kay, an academic and columnist for the Financial Times, takes the longer and broader view.

In doing so, he skewers the pretensions of the finance sector and questions whether its high rewards reflect its true economic contribution. Barely a page goes by without an acute observation or pithy aphorism. “A country can be prosperous only if it has a well-functioning financial system, but that does not imply that the larger the financial system a country has, the more prosperous it is likely to be,” he writes. “It is possible to have too much of a good thing.” Den Rest des Beitrags lesen »

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Should we have „Narrow banking“?

Posted by hkarner - 21. Juli 2010

A contribution to the book „The Future of Finance“ by John Kay.

The credit crunch of 2007-8  was the direct and indirect result of losses incurred by major financial services companies in speculative trading in wholesale financial markets. The largest source of systemic risk was within individual financial institutions themselves. The capital requirements regime imposed by the Basel agreements both contributed to the problem and magnified the damage inflicted on the real economy after the problem emerged. The paper argues that regulatory reform should emphasise systemic resilience and robustness, not more detailed behaviour prescriptions. It favours functional separation of financial services architecture, with particular emphasis on narrow banking.

futureoffinance-should we have narrow banking

 

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The Future of Finance: International Edition

Posted by hkarner - 20. Juli 2010

Simon Johnson

Jul 15, 2010 9:21PM

Bankers and hedge fund managers are fond of saying, “if you place restrictions on our activities in New York, we’ll just move elsewhere – like London.”  This makes attitudes towards the financial sector in other countries – particularly the UK – highly relevant for American public policy debate on this issue. 

Is it the case that the new found skepticism about modern finance and its effects on the real economy is confined to the United States?  Or is there a broader shift in thinking around the world, including in other leading financial centers? Den Rest des Beitrags lesen »

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