Browsing All Posts published on »September, 2010«

How Company Chief Executives Get Lucky with their Stock Option Grants

September 30, 2010

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The cynic within me has always believed that company board remuneration sub-committees are always working hard to find excuses to maximise the amount of shareholders’ cash awarded to the executives (and to themselves) in the form of salaries, bonuses, pensions, option-grants, and various parachute payments to protect the management teams’ wealth when things happen to […]

The Emerging Split on the Bank of England’s MPC

September 29, 2010

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The Bank of England’s Monetary Policy Committee (“MPC”) has maintained interest rates at current 0.5% level since March 2009 and its Asset Purchase Programme (a.k.a. quantitative easing) at £200bn since November 2009, the consensus amongst the committee members is now beginning to break down, creating uncertainty regarding the future direction of monetary policy.  One member […]

Why I Don’t Invest In Initial Public Offerings

September 28, 2010

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No event in financial markets seems to get investors (institutional and retail), stockbrokers, bankers and journalists excited in the same way as a new initial public offering (“IPO”). The announcement of a new IPO is always greeted by a frenzy of analysis and commentary, with the prospectus being poured-over in detail and much being discussed […]

Factions of the UK Labour Party

September 27, 2010

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This is slightly removed from my usual topics of finance, investment and economics, but this set of data released by the UK Labour Party on the voting records of MPs and MEPs in the recent party leadership election won by Ed Miliband was simply too juicy to pass up.  The election was conducted on an […]

Socially Irresponsible Investing

September 22, 2010

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Wikipedia defines socially responsible investing (or “SRI”) as: “an investment strategy which seeks to maximize both financial return and social good. In general, socially responsible investors favour corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some (but not all) avoid businesses involved in alcohol, tobacco, gambling, weapons, the military, pornography, and/or […]

The Partial Success and Unintended Consequences of Quantitative Easing

September 21, 2010

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When the Bank of England formally launched its quantitative easing program in March 2009, the minutes from the meeting stated that this policy mechanism would work by: stimulating the demand for corporate credit instruments [and] improve the supply of funds to the corporate sector. The purchases would also mean that the banking system would be […]

Nine Zero-Cost Policies the UK Government can Implement to Encourage Economic Growth

September 16, 2010

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Economists know that long-term economic growth is driven by fixed capital accumulation (ie. of manufacturing plant & equipment and communications & utility infrastructure) and increases in factor productivity (ie technological innovation which is a consequence of research and education). Economists also know that lower tax rates lead to higher levels of GDP growth. However, with […]

Why Hire an MBA-wielding CEO?

September 14, 2010

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The conventional wisdom today regarding the hiring of senior management, particularly in the USA, is that aside from extensive experience in across a firm/industry, it is advantageous if the hiree also holds advanced academic qualifications, of which the MBA is the most favoured. This study from 2005 shows that 62% of S&P 500 company chief […]

Why Creating Inflation Is The Wrong Policy Choice

September 13, 2010

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While reading a recent commentary posted on the Guardian Comment Is Free website, I came across the following economic policy suggestion from Dean Baker, co-director of the Centre for Economic and Policy Research: The Fed should be targeting a higher rate of inflation, in the 3-4% range. This would reduce real interest rates and debt […]

Cash-for-Clunkers: ~$3bn Well-spent?

September 8, 2010

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Upon signing the Cars Allowance Rebate System (or “Cash for Clunkers” program) into law in August 2009, President Barack Obama stated: Now, more American consumers will have the chance to purchase newer, more fuel efficient cars and the American economy will continue to get a much-needed boost. Administration officials were quick to proclaim the program […]