The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘ft.com

State Department official, Jared Cohen, e-mailed Twitter – delay scheduled maintenance


This has little directly to do with banking per se, but it has a lot to do with information seeking, gathering, and the seismic shifts in how transparency of otherwise opaque bodies can be nullified by the internet tools available.  It is also just plain fascinating, and something all strategists should watch and try to understand.

Whether this was innocent or otherwise, it appears to be a fact that it happened hence the significance.  Also read here for discussion and note the ‘informed’ comments.  One cannot help but think that there is something deliberate to all this, and even that Twitter may be an unwitting accomplice.

[If this is the same guy, Cohen is actively engaged at State in Middle Eastern affairs, and published this “Iran’s Young Opposition: Youth in Post-Revolutionary Iran”.]

With a hint to Twitter, Washington taps into a new force in diplomacy | NY Times

Yet on Monday afternoon, a 27-year-old State Department official, Jared Cohen, e-mailed the social-networking site Twitter with an unusual request: delay scheduled maintenance of its global network, which would have cut off service while Iranians were using Twitter to swap information and inform the outside world about the mushrooming protests around Tehran.

The request, made to a Twitter co-founder, Jack Dorsey, is yet another new-media milestone: the recognition by the United States government that an Internet blogging service that did not exist four years ago has the potential to change history in an ancient Islamic country.

“This was just a call to say: ‘It appears Twitter is playing an important role at a crucial time in Iran. Could you keep it going?’ ” said P.J. Crowley, the assistant secretary of state for public affairs.

update: Whose views are being managed and by whom? (Washington Post)

“Twitter’s impact inside Iran is zero,” said Mehdi Yahyanejad, manager of a Farsi-language news site based in Los Angeles. “Here, there is lots of buzz, but once you look . . . you see most of it are Americans tweeting among themselves.

Written by Colin Henderson

June 17, 2009 at 11:36

“I’ve a feeling we’re not in Kansas any more” | Future of Capitalism


The Financial Times has kicked of a series on The Future of Capitalism and of course quite a bit of that is devoted to banking, and the implications for banking.

The Introductory article from Senior Economist Martin Wolf sets the tone, and without making explicit predictions certainly suggests directionally where the near future may lie.  There are consequential implications captured in these snippets from the article.  It struck me as interesting and perverse that the thing I have been worrying about us losing is regarded as one of the causes for the collapse – innovation.

It should be clear that when I say innovation, I refer to innovation in services and service offerrings for customers.  The innovation referred to in the article is innovation in the wholesale markets, eg, SIV, CDS and other derivative products.  That distinction is important because it tests the concept that the direct consumer as a group is more likely to need to understand what they buy, and therefore less likely to purchase services that make no sense to them as did the banks.

The levels of debt for consumers which are at a level that suggest innovation in reducing debt, not increasing it, would be something to consider.  Finally for bankers personally, everyone is aware of the internal targets for ‘maximisation of shareholder value’.  What does that mean now with the large banks partially, and in some cases majority owned by government?  In a managed banking system leaning towards financial utilities as banks (most places except Canada for now), what does it mean for shareholder value as a target?

Seeds of its own destruction

How did the world arrive here? A big part of the answer is that the era of liberalisation contained seeds of its own downfall: this was also a period of massive growth in the scale and profitability of the financial sector, of frenetic financial innovation, of growing global macroeconomic imbalances, of huge household borrowing and of bubbles in asset prices.

Meanwhile, inside the US the ratio of household debt to GDP rose from 66 per cent in 1997 to 100 per cent a decade later. Even bigger jumps in household indebtedness occurred in the UK. These surges in household debt were supported, in turn, by highly elastic and innovative financial systems and, in the US, by government programmes.

Yet if the financial system has proved dysfunctional, how far can we rely on the maximisation of shareholder value as the way to guide business? The bulk of shareholdings is, after all, controlled by financial institutions. Events of the past 18 months must confirm the folly of this idea. It is better, many will conclude, to let managers determine the direction of their companies than let financial players or markets override them.

And some relevant quotes on general economic and future trends:

Remember what happened in the Great Depression of the 1930s. Unemployment rose to one-quarter of the labour force in important countries, including the US. This transformed capitalism and the role of government for half a century, even in the liberal democracies. It led to the collapse of liberal trade, fortified the credibility of socialism and communism and shifted many policymakers towards import substitution as a development strategy.

The search for security will strengthen political control over markets. A shift towards politics entails a shift towards the national, away from the global. This is already evident in finance. It is shown too in the determination to rescue national producers. But protectionist intervention is likely to extend well beyond the cases seen so far: these are still early days.

These changes will endanger the ability of the world not just to manage the global economy but also to cope with strategic challenges: fragile states, terrorism, climate change and the rise of new great powers. At the extreme, the integration of the global economy on which almost everybody now depends might be reversed. Globalisation is a choice. The integrated economy of the decades before the first world war collapsed. It could do so again.

Written by Colin Henderson

March 9, 2009 at 10:44

Posted in Uncategorized

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