Making bankers behave...

has a cost, as Augar notes in the FT, reacting to the letter from Barclays' new boss that signals a push to reform the business culture and ethic of banking at Barclays. It is costly for Barclays, but it is also costly for the society as a whole, for the behaviors of a few discredit an entire profession whose activity requires social trust. 

Culture shift is a long and painful process though and it is still not very clear how to make value statement stick. More importantly though, if these kind of sporadic moves at the firm level are not accompanied by clear and simple signals at the state level, it risks being simply windows dressing. Yet,  it seems that the contrary is happening.  Financial regulation is getting more and more complex, but basic rule of law is being eroded, as noted in previously here. The latest case in point is HSBC deal with US government over charges of money laundering for mexican drug barons and terrorist groups and advices to Iran on how to avoid US sanctions. 

After too big to fail and too big to regulate: too big to jail. 

What does crowdfunding funds?

courtesy of saleschase.com where you can find the entire infographic

Crowdfunding is a form of financing start-up and SMEs that is becoming trendier and receiving a lot of attention lately. Experts do not see it replacing private equity and loans from banks however. The knowledge and management advices that SMEs get from private equity and bankers cannot be replaced by the power of crowd. There is, arguably, something unique in the lending relationship which has a lot to do with the transfer of knowledge and information. Crowdfunding, for all its benefits, does not reduce the distance between the investor and its investment location. Moreover, it seem more appropriate to fund certain sectors than other. The Economist provides the figures: 

A total of $320m was pledged by 2.2m people, making possible creative projects including a documentary on fracking, a home aquaponics kit and a community centre for circus arts. Games, a category which includes video, board and card games, received the most support, with $83m pledged to more than 900 projects. Given their high development costs and passionate fans, video games are a good match for crowdfunding, particularly as established publishers churn out ever more sequels, leaving a long tail of unmet demand

The paradoxes of financial regulation...

...when it has to regulate complex financial sector, is that it might have the opposite effects that financial regulation is supposed to have. The European Union intention to regulate of hedge funds and private equity funds might risks to be counterproductive. Sinead Cruise from Reuters explains the heart of the problem: 

A central plank of the new rules, which will be brought in from July, involves money managers who market funds in the EU being required to work with independent depositaries. These are banks that, for a fee, track what the manager does with clients' money and agree to cover investor losses in the event of unauthorised trading. Appointing a depositary is supposed to prevent a repeat of last year's MF Global debacle, in which $1.6 billion of client assets were allegedly used to top up bad bets that the now-bankrupt broker had struck with its own money. But it remains unclear how many funds or managers these financial custodians will be willing to backstop, or how much they might charge for the service.

This will be certainly be very costly for the industry, which risks driving many funds "underground", that is unregulated location, thereby concentrating the risk that the regulation want to reduce into fewer hands.  

Georgia's unobserved economy

has an importance for the dynamic of entrepreneurship. Half of the work force is considered as self-employed, officially unobserved. This represents a pool of entrepreneurial resource that Georgian policy makers shouldn't underestimate. So far little has been done. Agricultural centers with shiny big John Deer tractors  have mushroomed in the regions, but haven't been visited by anyone (expect official delegation), as it costs too much for farmers to rent this type of machinery, which is anyway not adapted to the small fields they have to plow. Details and figures in the article I wrote for the Caucasus Analytical Digest.