Technology & Finance

Wednesday, September 30, 2009

Shiller Receives Honors from Deutsche Bank

The highly respected US economist Robert J. Shiller receives the Deutsche Bank Prize in Financial Economics 2009, today in Frankfurt.

During a symposium titled “Financial Innovation and Economic Crisis” being held in connection with the award, leading financial economists, including Nobel Prize laureate Robert C. Merton of the Harvard Business School and the CFS President Otmar Issing, will discuss the topics explored in Robert Shiller’s research.

“There could probably not be a more appropriate time to honour Professor Robert J. Shiller with the Deutsche Bank Prize in Financial Economics,” said Josef Ackermann, Chairman of the Management Board of Deutsche Bank AG. “Shiller has developed instruments to gauge the extent of over-exuberance on
capital and property markets. He has also used these instruments to give timely warnings on the risks of such over-exuberance.”

Shiller’s empirical work on asset pricing and related macroeconomic risks is of great academic and practical value. As far back as 2000, at the height of new economy euphoria, he foresaw the market collapse. He also issued an early warning about the pending bursting of the property bubble in the US and the severe financial crisis from this development.

“I am really happy about receiving this award because it shows that my work is recognised and, above all, applied not only in academia, but also in practice,” Robert J. Shiller said. “Finance is a powerful technology, but a technology that has been only imperfectly applied for the betterment of humankind. There are many obstacles to the appropriate application of financial solutions. Some of them are due to institutional and regulatory rigidities, others to human
psychology. As regulation has improved, we have gradually improved our application of financial technology. The financial crisis that we have recently suffered is an example of growing pains with new financial technology, but not a reason to doubt that much more financial innovation is in our future.”

Shiller recently wrote an op-ed piece in the FT in defense of financial innovation.

Wednesday, September 23, 2009

China Celebrates its 60th -- What Does the Future Hold?

In Western publications, China is often portrayed as super successful—a booming economy, wise financial planning, controls which allowed it to escape much of the crash, a program to invest in the future, and huge dollar reserves.

So why, when I left Hong Kong Tuesday, did the South China Morning Post ask if China could survive? The country is running rehearsals for its 60th anniversary—troops marching through Beijing, fleets of helicopters flying over…

Maybe because it has only one managed a smooth transfer of power? Or because it faces riots around the country?

Some expert observers are very skeptical about the country’s political future.

Chris Patten is one of them, and he ought to know.

China has continued to do grow rapidly and its financial sector did an excellent job of aviding the leverage which led to so many meltdowns in the west.  Its recent record leads some to appreciate the role of autocracy, as the New York Times Tom Friedman did recently. However, Chris Patten offers come critical notes in his account of the handover of Hong Kong to China more than a decade ago.
Friedman in a recent Times piece
http://www.nytimes.com/2009/09/09/opinion/09friedman.html?ref=opinion
contrasts China’s one party autocracy with America’s one-party democracy (since the Republicans are sitting on their hands and refusing to cooperate in developing legislation)
“One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century. It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power. China’s leaders understand that in a world of exploding populations and rising emerging-market middle classes, demand for clean power and energy efficiency is going to soar. Beijing wants to make sure that it owns that industry and is ordering the policies to do that, including boosting gasoline prices, from the top down.”
China does look pretty smart, including in its financial regulation, but it is still an autocracy and may be less stable than it looks. Chris Patten, the Last Governor of Hong Kong, certainly is critical in his book “East and West. (You can pick up a copy at Dymocks, the great book store chain with locations around Hong Kong.)
He suggests that Hong Kong gets some of its energy from the fact it is a refugee city, built by people who had the courage to leave the past behind and are eager to improve their lives. The city’s booming economy gave it the money for vast infrastructure projects, including land reclamation and the new airport while he was there. At one point in his tenure the economy of Hong Kong was one-fifth the size of the entire Chinese economy. Unlike China, Hong Kong was governed by the rule of law, Patten said.
“It was the system, broadly speaking, that had so attracted Sun Yat-sen’s approbation in the 1920s when he noted that 4,000 years of Chinese history has produced nowhere like Hong Kong, a city where the rule of law provided that security and majestic neutrality within which bank balances, ideas and values could all flourish.”
Patten describe business leaders, both Chinese and British, who opposed any criticism of the Communist Chinese government (as Pattern consistently refers to it) because that might be bad for business. Apart from the ethical objections, Patten notes that the Chinese have done business with anyone who offers a good deal, making the German and French pandering not only embarrassing but unnecessary.
And the future?
“Chaos, as has happened at the end of other dynastic, is always possible. Indeed, there is a sort of Chinese cycle in which chaos customarily follows a period of authoritarian heavy-handedness.”
His postscript was written 10 years ago, but some of the problems sound current:  “…the plundering of state-owned assets by powerful public officials and their friends, the capital flight (as great during most of this decade as the inflow of foreign investment), the financial deception that sustains a bankrupt banking system,..the environmental hazards…No wonder there were urban and rural riots, no wonder the religious cults claimed ever more followers; no wonder the Chinese Communist Party leaders cracked down even harder on dissent. They were scared stiff.”

Average IQ at the TSA?

Think the TSA could find people bright enough to close up luggage after they search it?

On a trip last winter I arrived in London to find they hadn’t bothered, or been able, to zip close a fairly simple rolling suit bag—so they had wrapped tape around it. When I tugged it out of the cab it slipped apart, into a wet street, of course.

Coming back from Sibos I had placed books inside a canvas bag in the Sibos bag and wrapped a strap around it. They didn’t bother putting the books back into the canvas bag nor did they rewrap the strap—just stuffed it into an outside pocket.

Really, how difficult is this? Do I feel a lot safer that they searched my books and removed the plastic wrapping from Will Hutton’s colume on China.

Not really.

Tuesday, September 01, 2009

Emerging Hot Technologies Conference, New York by WSTA

“Emerging Hot Technologies”
September 23, 2009 7:30 AM-12:30 PM
Westin New York at Times Square, 270 West 43rd Street, NYC

This is a popular WSTA event every year as we present the latest technology trends that have immediate bearings on the financial markets. The content changes every year as the new technological solutions evolve. This event is designed to position you to start leveraging the “hot” technologies to improve your competitive edge and plan to embrace the “emerging” technologies at the most opportune points in time. You will get ideas on how to harness the power of disruptive technologies on areas such as collaboration, knowledge management, unified communications and next-generation content management.

Keynote Presentation “The Emerging Technology Trends that CIOs Should Care About”
Gene Leganza, Vice President and Principal Analyst, Forrester Research

Today’s technology trends may appear as only incremental changes compared with historic changes like distributed computing, ERP packages, and the Internet, but Forrester believes that we are in the initial phases of a major technology innovation and growth wave called “IT everywhere.” We are witnessing multiple trends that, when combined, will drive a dramatic change in technology adoption and use. Some of these trends — like X Internet, mobile computing, SOA, and BPM — have been around for a few years but are just gaining the footing required to bring about disruptive change to the enterprise. Others — including Technology Populism, Digital Business Architecture, cloud computing, IT ecosystems, SaaS, IaaS, the Information Workplace, real master data management implementations, Dynamic Business Applications, and Lean Software — are just truly coming online.

See the complete agenda.

DTCC Names Bridget E. O'Connor Chief Technology Officer

This is interesting.

Bridget was CIO at Lehman Brothers where “The technology organization consisted of more than 6,500 people in four major locations globally. While at Lehman, she aligned IT objectives with the broader business objectives and created an ongoing partnership between business and technology leaders.”

She was a leader in adapting new technology—I interviewed her ages ago for Windows in Financial Services when she was introducing Microsoft runninig on Compaq. Yup, that long ago.

She is sharp, personable and female—two of these qualities are not so common among IT leaders.

The DTCC said “O’Connor will be responsible for overseeing the critical information technology infrastructure at DTCC, including core networking services, processing and messaging systems, distributed systems and business continuity.”

She will report to William Aimetti, DTCC’s Chief Operating Officer and President.

§ Syndicate

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