Review of Financial Markets: June 2020

The June issue of Review of Financial Markets features a look at capitalism; UK house prices; post-normal bonds, and more
Edited by George Littlejohn MCSI, senior adviser to the CISI


Capitalism in crisis? Professor Alex Edmans of London Business School has been at the forefront of thinking on purpose for many years, and his latest book, Grow the pie, assesses “how great companies deliver both purpose and profit”. In this issue of Review of Financial Markets (p.58), he outlines some of his key conclusions. Our article on pages 58–59 comprises extracts from the book.

Andy Haldane, chief economist at the Bank of England, declared the book 
“superb … it makes the case, compellingly and comprehensively, for a radical rethink of how companies operate and indeed why they exist. It is a tour de force.” Andrew Lo, professor of finance at the MIT Sloan School of Management, says of the book: “This is capitalism with a human face.” 

The foundations of property

Keith Robertson, Chartered FCSI, casts his eagle eye on property, and what it means for our sector's clients, from his eyrie in the far north.

From his introduction to the article, p.60:

This article was prompted by the unavoidable realisation that the distortion in London property prices does not indicate that capitalism is working well but rather, that its name is used to justify personal greed at the expense, potentially, of a safe and stable society.

... In the past 25 years, prices and affordability ratios in London have increased grotesquely for the reasons I describe in the article. The result has been that even moderately well-paid professionals like teachers, solicitors (outside the City’s ‘magic circle’), police, local administrators, let alone the masses of care workers, nurses, firemen, transport workers, and other essential workers that keep the city going, have been completely priced out of anywhere even half decent to live within reasonable travelling distance of their workplace.  

I believe this has huge implications for the future working of London and any city that cannot house its key workers in decent accommodation reasonably close to their workplaces. My proposed solution is radical and intended to provoke readers in financial services into thinking critically about these issues.

Post-normal bonds: financial instruments for a sustainable economy 
Before the virus struck, this article was picked as the winning submission by two authors, Yelena Muzykina and Yelena Novikova, of an essay writing competition amongst young finance professionals. The essay has turned out to be surprisingly prescient as the world seeks clarity, energy and purpose in this dreadful corona year. 

The authors consider the development and deployment of new types of financial instruments to help promote a new world order in finance. 

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Published: 10 Jul 2020
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