Een boek schrijven is werken

Professor Jonathan Holslag neemt een sabbatjaar om na te denken en te schrijven. Blijkbaar is het zelfs op de universiteit lastig om diepgaande analyses te maken. Iedereen kent het wel: je dagen zitten zodanig volgepropt met vergaderingen, mails en andere administratieve overhead dat je bijna niet meer aan je hoofdtaak toekomt.

Academici hebben nog het voordeel dat ze hun papers kunnen gebruiken als basis voor een boek. Bij mij was dat niet het geval. Hoewel ik in een bank werkte, is Hoe bankiers geld scheppen niet gebaseerd op mijn toenmalige job. Toen ik besliste om mijn boek te schrijven, nam ik ontslag. Alleen zo kon ik voldoende tijd vrijmaken. Continue reading “Een boek schrijven is werken”

Knowledge management is not a fad

In his excellent article Who owns a scientist’s mind?, historian Douglas O’Reagan describes how business managers have tried to protect the know-how of their companies. Firms own real estate, machines, software and patents. But how can they control the ideas and experience inside their employees’ minds?

Because the article was written for Physics Today, the focus is on the tacit knowledge of industrial physicists. However, some of its lessons extend beyond engineering.

I just want to comment on one thing. The author describes Knowledge Management (KM) as a fad:

Business interest in controlling tacit knowledge did not fade, however. It would return in several forms, perhaps most visibly in a 1990s business management fad called knowledge management (KM).

It’s true that management gurus and software vendors tend to hype expectations in order to sell ‘solutions’. But good knowledge management is very valuable to companies and most definitely not a fad.

So I was relieved that O’Reagan is more nuanced about KM later in his article. He explains how the focus of KM shifted from technology to human-centered KM1. In addition, some practices seem so obvious now that we don’t think of them as KM anymore:

At a basic level, some of KM’s key insights, such as the value of encouraging employees to maintain informal social networks throughout the industry, became even more a normal part of business than they had been.

In my own courses, I always stress that KM doesn’t imply extra tech or bureaucracy. On the contrary, if you’re doing it right, you’ll have more time to focus on your core competencies.

“legally”

In a recent episode of the Macro Musings podcast, David Beckworth talked to professor and author Laurence M. Ball about his new book The Fed and Lehman Brothers: Setting the Record Straight on a Financial Disaster.

Starting around minute 45 of the podcast, they discuss the role of Henry Paulson, the Secretary of the Treasury. Professor Ball notes that “It was Paulson1 who was making the decisions. That’s a little bit odd, because legally, under the Federal Reserve Act, it was the Federal Reserve’s job to decide whether or not they made loans. The Treasury Secretary legally didn’t have any more role than the Secretary of Agriculture or the Governor of Maryland. But Henry Paulson just arrived at the New York Fed and started saying what was gonna happen and people did what he said”.

This doesn’t surprise me one bit. In times of crisis, you cannot avoid politics.

In ‘The next crisis’, the final chapter of Bankers are people, too, I wrote

“It remains to be seen how long regulations will keep risks in check. When a major (shadow) bank fails in spite of all the monitoring and supervision, the value of the institutional framework will become clear. Because of the importance of banking to the economy, I am sure that the highest officials
in government will be involved if a too big to fail bank is about to collapse, whether or not that is against the law.”

So much for legal constraints during a major crisis.

How Europe’s financial regulation is made

CRD IV, EMIR, MiFID, Solvency II… Financial risk managers in Europe deal with these regulations every day. But where do they come from?

In his brief article It’s hard to love the European Union when you see it up close, Owen Sanderson describes the EU’s legislative process. It’s not a pretty sight.

Highly recommended if you’re into risk management and/or politics!

Can we avoid another financial crisis?

Can we avoid another financial crisis? Ten years after the Global Financial Crisis (GFC), we’ll hear the opinions of countless pundits about the likelihood of a new crisis. However, few commenters will be able to answer the question as profoundly as professor Steve Keen. Keen elaborated his views in the 2017 book with the appropriate title Can we avoid another financial crisis? Continue reading “Can we avoid another financial crisis?”

Social credit

The Chinese authorities are implementing a Social Credit System. People’s behavior results in rewards (e.g. renting a car without having to pay a deposit) or restrictions (e.g. getting barred from buying plane tickets). So it’s kind of a big carrot and stick mechanism.

As is often the case, it’s not clear what is hype and what is true about the Social Credit System.

This article does a good job explaining the misrepresentations in the media.

Now, there are a few things missing from articles about the Social Credit System that deserve further investigation. Continue reading “Social credit”

“We were simply not aware”

To be fair to Mr. Decressonnière, most bankers don’t understand money creation.

Stop bike-shedding, ECB

Last week, Positive Money Europe celebrated its launch with an event in Brussels: Time to rethink the European Central Bank.

Several speakers noted that it is important for central banks to communicate with society, not only with the financial sector.

One of the people in the audience remarked that it is not enough that the ECB explains what it is doing. It also needs to respond to the needs of society.

The representative of the ECB replied that his institution has become more transparent in response to feedback from the public. For example, the meeting notes of its board are published.

However, this is a classic case of bike-shedding. Publishing notes is a trivial gesture. The real problems in the euro area are massive unemployment in the southern countries and the poor performance of the European economies compared to the US. A genuinely responsive central bank should do much more to support the well-being of Europe’s citizens.

The ECB should care about boosting economic growth, not the color of its bike shed.

So I agree, it is time to rethink the ECB. Let’s break some political taboos and rev up the engines.

Bankers’ guilty conscience

The Vatican recently published a document on the economic-financial system. The Church notes “the irreplaceable social function of credit” and that “most of [the financial industry’s] operators are singularly animated by good and right intentions”. However, the text mainly condemns all kinds of “immoral behavior”, ranging from credit default swaps to offshore banks. Continue reading “Bankers’ guilty conscience”