Setting a Higher Standard

By |2017-09-29T10:13:26-04:00September 28th, 2017|Categories: Global Market Update|Tags: , |

Setting a Higher Standard How can we raise the bar? Photo: Doug Tengdin Cheaters cheat. That’s the lesson from Wells Fargo’s fraudulent accounts, the NFL’s “Deflate-gate,” VW’s emissions scandal, the fraudulent mortgages at the heart of the Financial Crisis, and a whole host of other scandals. In the early ‘90s GM had a special chip in its Cadillacs that shut off their emissions controls when the air conditioner was on. Since we don’t usually run the a/c [...]

Investor Rights (and Wrongs)

By |2017-08-07T14:37:53-04:00August 2nd, 2017|Categories: Global Market Update|Tags: , , |

Do investors have rights? 90 percent of an iceberg is under water. Photo: Ansgar Walk. Source: Wikipeida We ought to. After all, it’s our money. But the financial industry is filled with fast-talking rogues who take advantage of people’s trust. Ponzi schemes and outright fraud are just the tip of the iceberg. There are all sorts of ways for advisors to abuse their position that aren’t illegal. First, investors have a right to honest, objective, competent advice. [...]

On Cheating

By |2017-01-19T11:56:08-04:00January 16th, 2017|Categories: Global Market Update|Tags: , , , |

Do business ethics matter? Photo: Kristopher Psarakis. Source: Morguefile People say they care about whether a business is ethical. But do they mean it? 2016 was seemingly a bad year for business ethics. Wells Fargo systematically signed customers up for accounts they didn’t know about, and then fired employees who complained about the practice. VW admitted that they criminally deceived emissions tests in their diesel vehicles – and may have been copied in this by Chrysler. Drug-maker [...]

Setting a Higher Standard

By |2016-12-16T16:10:02-04:00December 16th, 2016|Categories: Global Market Update|Tags: , , |

How do we raise the bar for ourselves? Photo: Douglas Tengdin People face ethical issues every day. How meticulous do I need to be with my records? Could accepting a gift affect my objectivity? How responsible are supervisors for the actions of their subordinates? Most people can agree on a basic moral framework —universal rules like don’t lie, don’t steal, respect everyone, be kind, generous, and fair. But how do we work that out in practice? How [...]

Markets, Morals, and Money

By |2016-11-17T15:38:47-04:00November 17th, 2016|Categories: Global Market Update|Tags: , , , |

Why do business people care about morality? Source: Wikipedia Ben Franklin once said, “I’m not moral because it’s the right thing to do, but because it’s the best policy.” A market economy can only be sustained by certain standards, like trust, honesty, and fairness. It’s wrong to deceive people -- and it’s also bad business. If I buy a bag of potato chips and find that it’s mostly air, I’m less likely to purchase that brand again. [...]

700 Billion Little Birds

By |2016-11-17T15:40:44-04:00October 5th, 2016|Categories: Global Market Update|Tags: , , , |

Could $700 billion create some moral challenges? Lady Justice. Source: Wikipedia In the midst of the financial crisis, Congress passed the TARP program—originally designed to buy troubled assets from banks, but actually used to provide additional capital to the banks. It didn’t buy CDOs-squared and mortgage-backed securities backed by NINJA-loans—mortgages to people with no income, no job, and no assets. Instead, the TARP program mostly bought preferred shares issued by banks, injecting capital directly into the banking [...]

The Mosquito Coast

By |2016-11-17T15:52:21-04:00April 28th, 2016|Categories: Global Market Update|Tags: , , , |

What if we found a way to eliminate malaria? Photo: James Gathany. Source: Center for Disease Control I hate mosquitoes. When I was growing up in Minnesota, we joked that it was the “Minnesota State Bird.” Mosquitoes suck your blood and make you itch. And they carry a lot of diseases, including Malaria. Malaria kills half a million people every year, mostly children in tropical Africa. References to the disease have been found throughout history and around [...]

Good, Bad, or Indifferent

By |2016-11-17T15:53:24-04:00April 14th, 2016|Categories: Global Market Update|Tags: , , , |

Are you a good person? Photo: Joe Murphy. Source: Pixabay Most folks think they are. In fact, ask a group to raise their hands if they’re more ethical than average, and almost all the hands will shoot up. Part of this is personal bias—we think we’re better than average at most things. But ethics is particularly important: so much of our economy depends on trust. From Enron to Bernie Madoff to the Panama Papers, that trust has [...]

Counting on Accounting?

By |2016-11-17T16:14:51-04:00July 14th, 2015|Categories: Global Market Update|Tags: , , , |

It always starts small: Photo: Petr Kratochvil. Source: Public Domain Pictures A little “fudging” on the bank statement; Overstating income to obtain a loan; Rounding errors that round the wrong way; Fixed assets that aren’t so fixed, where amortization slows to a crawl—all boosting the bottom line. These are some of the ways accounting can be distorted to serve nefarious ends. In 2007 a 100-year old law firm merged with an 80-year old firm. Former partners included [...]

Confidence in Confidence

By |2016-11-17T16:36:38-04:00October 8th, 2014|Categories: Global Market Update|Tags: , , |

Can investors be confident that the game isn’t rigged?Consumer spending constitutes 2/3rds of the economy. When consumers stop spending, the economy goes into a tailspin. So naturally, anything that can predict consumer spending is of interest.Every month the University of Michigan conducts a survey of consumer sentiment that many investors find useful. When confidence changes dramatically, this can indicate that changes in consumer spending—and the economy—are coming. […]