It could get worse, of course. The markets, I mean. “The worst is not/So long as we can say, ‘This is the worst’,” as Edgar cheerfully points out in King Lear.

Several big institutional investors expect to see another major banking collapse. A survey of 146 of them, carried out recently by Greenwich Associates, the US financial services consultancy, found that almost 60 per cent believed another failure would take place within the next six months.

Serves them right, you might say. All that absurd financial engineering was bound to end in tears. The former editor of The Economist, Bill Emmott, wrote last week that our sympathy for the Masters of the Universe should be limited. “The past year has actually not been very bad at all – unless you are a banker, a bank shareholder or Gordon Brown,” he said.

Now the financial wizards – or at least some of them – are copping it from another, unexpected quarter. A paper presented at last week’s annual gathering of the US Academy of Management in California suggested that there is something else we can blame the investment banks for: the spread of management fads.

Continue reading ‘Column: Beware of fad-loving analysts‘

Britain’s Conservative MPs have been told to read Nudge, a book that explores how businesses and policymakers influence behaviour at a subconscious level (see this post I wrote in June for a fuller summary).

David Cameron, the party’s leader, has embraced one of the book’s tenets: that politicians should use these techniques to “nudge” people into changing bad habits or adopting good ones. 

I saw Richard Thaler, one of the authors, speak in London last month. ”Don’t use bans and mandates, just nudge,” he declared. He convinced me that careful study of the way people make choices would improve market regulation and policy formulation.

However, his alternative to “bans and mandates” seemed too reliant on bombarding the public with information in the name of transparency. It’s worth checking out the Nudge blog, though. And here’s a video of Prof Thaler at the Royal Society of Arts.

Elsewhere:

1. Dealing with the talent shortage in China
2. Fostering leadership skills in Muslim women
3. How to raise capital without giving away your company
4. Confessions of a bank’s risk manager
5. The art of raising prices to offset cost inflation without alienating shoppers

Following the news that companies owned by the state of Dubai have taken a 20 per cent stake in Cirque du Soleil, some fresh research on sovereign wealth funds has caught my eye.

Building on material already published, the working paper - from a pensions research body at Wharton business school - ranks 37 public investment bodies around the world on their governance, accountability and investment policies.

Istithmar World, one of the two Dubai bodies that took the stake in Cirque du Soleil, comes in third from bottom in the ranking, just ahead of the Abu Dhabi Investment Authority and Council and the Qatar Investment Authority, which share last place.

The New Zealand Superannuation Fund comes out best, followed by the Alaska Permanent Fund and then the global arm of the Norwegian Government Pension Fund.

Writing before the circus deal was announced, the authors of the paper - Olivia Mitchell, John Piggott and Cagri Kumru - said sovereign wealth funds “appear to be demonstrating an increasing risk appetite, very little transparency and virtually no clarity of objectives”.

Keen readers of the FT will remember that Cirque du Soleil employs a heckler called Madame Zazou to disrupt its management meetings. If she quotes this research in future subversions then she is a very bold jester indeed.