The Implementation and Effect of CRD IV

The Basel Committee on Banking Supervision agreed on voluntary financial regulatory standards in 2010 and 2011.  These standards have been adopted by the European Union and implemented under the fourth amendment to the Capital Requirements Directive (CRD IV).  CRD IV requires financial institutions to increase their reserves to protect against losses.  The implementation deadline was originally set for March of 2013 but has currently been extended until March 2019.  CRD IV allows flexibility in its implementation while maintaining broad minimum standards.

The financial crisis of 2007 exposed further possible flaws in the global banking structure.  Because of the crisis, the Basel Committee recommended regulations that require financial institutions to carry more capital reserves and increase liquidity.  Greater access to liquid assets, the committee argues, will provide greater security for the institution during times of economic and financial crisis.  The reserves banks are required to hold are a set percentage of that institutions risk assets.  That percentage can be increased during stable periods of high growth.  Whether it is increased is at the discretion of the country or regulatory body. 

The Basel Committee regulatory standards were drafted based on voluntary enforcement.  CRD IV and its corresponding European Union regulation give the standards the force of law across EU member states.  Member states do have discretion on certain aspects of implementation.  Not all financial institutions are required to maintain the same percentage of reserves.  Small and medium sized investment firms may be exempt from implementing reserve quotas.  Large multinational banks are the focal point of the legislation.  However, the definition of global systemically important institutions is left up to the national central banks.  Buffers against long term, systemic risk are at the discretion of each member state. 

CRD IV implementation has been extended until March 2019.  A phased approach will be undertaken than what was originally planned.  Milestones will slowly be phased in until full implementation in 2019.  Because of this delay, the impact of CRD IV is partly theoretical at the moment.  An Organisation for Economic Cooperation and Development study predicts a medium term average drop in gross domestic product of 1%.  Such economic output could be offset by a reduction, or at least a delayed increase, in monetary policy rates.  Further, to meet the new reserve and capital requirements, banks and financial institutions will, most likely, pass that cost on to customers.  As with all forms of legislation prior to implementation, critics have argued that regulation will slow grown while others argue that the regulation does not go far enough to protect consumers, financial institutions, and global markets and economic systems.

The intended effect of CRD IV is to strengthen the financial institutions that have a multinational or global influence.  Ultimately, the aim is to prevent another recurrence of a financial crisis that the world experienced in the 2000s.  It is difficult to tell whether CRD IV will succeed in these terms.  A global economic downturn will prove the legislation’s worth.  But, given the flexibility in implementation, based on local economic conditions, and the maintenance of minimum reserve requirements across the EU, CRD IV stands a fair chance of dampening the fallout of future financial crises.   

Hyphenated Americans

While coaching at a youth summer sports camp in Ireland, I was asked if my last name was American.  It certainly wasn’t Irish, much to the shock of the kids, after all, how could I be in Ireland without an Irish name?  The conversation was as follows:

Girl:  Is your last name American?

Me:  No.

Girl:  What kind of name is it?

Me:  German

Girl:  So, you’re German?

Me:  No, I’m an American.

Girl:  So, your parents are German?

Me:  No, they’re American as well.

Girl:  How are you an American if you have a German name?

Many people who go to the United States, especially those from Ireland, find it odd, irritating, and even ignorant to hear Americans say they are ‘Irish’ or ‘German.’  So, are they?

Yes.  And, no.  The demographic history of the United States tells the tales or world oppression, pestilence, conflict, and greed.  Those born in the U.S. are not, categorically, anything other than American.  But, we are more than where we are born or our last name.  Native Americans are the only real, true Americans.  They roamed the Great Plains long before European ‘discovery.’  The rest of us are immigrants, or descendants of immigrants. 

It would be foolish to believe that once immigrants land on American shores they lose the identity and culture of their homeland.  Euphemisms and colloquialisms may change, but the core remains intact.  A son of Polish immigrants growing up in Chicago will be taught the Polish language and will be raised nearly identical to the way his parents were.  Likewise the daughter of Swedish immigrants, and so on. 

So, who am I?  Am I German?  Am I American?  The answer is, I am the combination of my entire heritage.  Am I German?  Partly.  Am I American?  No.  My ancestors came to this country from across an ocean.

If, on your travels in the United States, you come across one of the many claiming to be ‘German’ or ‘Irish,’ keep it in perspective.  Accept the fact that culture can transcend generations and that we can be more ‘German’ than ‘American.’   

What a Watch Can Say About a Man

Watches are indicative of the people they adorn.  Regardless of whether a watch turns into a little robot (I was the coolest kid at school when I was 5) or shoots lasers like James Bond, they can still be used to tell time.  But, they are also so much more.  After all, what is the point of telling time if you cannot chime it out like Big Ben?

Omega

While Omega may not have the worldwide recognition of its competitor, Rolex, it boasts a far more spectacular lineage.  Omega watches are known for their precision and durability, especially the Omega Speedmaster Professional.  They are a luxury brand not for the status seekers.  Rather, Omega’s are for the real men who make decisions that affect life and death.  It is the brand of powerful men.  If you are seated next to someone wearing one, you are at the big boys table.  That timepiece belongs to American presidents and British princes alike, and even favored by 007 himself.  However, more telling is the fact that Omega’s were, and are, the only trusted watches to be taken to the moon.

Pocket Watch

The pocket watch is iconic.  For centuries, it was the standard.  Today, the watch is mainly used by hipsters, train conductors, and psychotherapists.  In today’s busy world, one can hardly be pressed to pull a watch from their pocket and open the case just to tell the time.  Unless it is a Patek Philippe: an iconic watch from an iconic watchmaker.  If the wearer has an opulent chain then they are just showing off.  But, if their Patek Philippe is modestly adorned, the wearer is cool under pressure, mentally collected, and, above all, iconic.

Rolex

What can anyone say about Rolex that counterfeiters the world over have not done so already?  More likely than not, one brandishes a Rolex so that everyone knows they have a Rolex.  It is a status symbol.  Certainly, they are quality watches, but the name has eclipsed their utility.  The wearer plays golf with tycoons and rap stars.  Time does not matter, those pesky minute and hour hands only get in the way of the name on the face of the watch.  Nonetheless, Rolex’s are a trusted brand, with a great history (see the Great Escape) and are deserving of their reputation.

IWC

The International Watch Company was created in the mid-1800s with the idea of fusing Swiss craftsmanship with American engineering technology.  Today, IWC crafts high end timepieces for people who actually want a watch.  Who buys an IWC?  The philosophers.  They think about what a watch actually means.  The wearer desires the safety of knowing that when they cease thinking, time will march on: a timepiece for the end of time. 

There is a watch for everyone.  Some opt for clocks around their necks; some for one that turns into a robot.  Many others will be content to rely on their satellite adjusted cell phone for the time.  But, to many, their watch is one item they carry with them on a daily basis.  Look at your wrist, or in your pocket.  What does your timepiece say about you?  If you are looking for a new watch, what do you want it to say about who you are?  

The Terrible Passions of Humanity

“I have tried to express the terrible passions of humanity.”  Vincent Van Gogh wrote these words in a letter to his brother about his painting The Night Café, one of his most well-known works.  It is this idea that underlies Van Gogh’s art.  He, the artist, sees this particular café as the embodiment of ruinous human desires.  However, we can only see the outcome of humanity’s darkness; “night prowlers,” the destitute, the drunks take up residence in the all night café.  The desolation is not conveyed in the details.  Van Gogh chooses to use the contrast between colors to create the loneliness and despair of the scene.  The viewer is left dispirited and alone. 

Van Gogh is considered a post-impressionist painter.  He used color and thick brush strokes to evoke feelings and his perception of the scene.  Impressionism sought to recreate sensation in the viewer.  Through stylistic techniques, ordinary subject matter, and emphasis on light and angles, painters presented elements of human perception and experience.  Van Gogh derived his art from this style.  Having been born in March of 1853 in the Netherlands and spending most of his career in France, he would have had great exposure to the impressionists of the time.  While he was influenced by impressionism, he expanded on some of the techniques, colors, and subject matter to create a more expressive effect. 

Vincent began drawing as a child and never stopped.  He took up professional painting relatively late in his life.  The last two years of his life saw the production of some his best known and critically acclaimed work.  He painted extensively including oils, watercolors, drawings, sketches, and prints.  In his nearly ten years as a painter Van Gogh produced more than 2,100 works of art.  His work covers a wide variety of subject matter including portraits, self-portraits, and landscapes.  One of the theories Van Gogh held about art was that “real painters do not paint things as they are . . . They paint them as they themselves feel them to be.”  This emotion and perspective forms the basis of his work.

Van Gogh suffered years of painful anxiety and frequent bouts of mental instability.  The well-known incident of Vincent cutting off his own ear, while shrouded in mystery as to the motive and precise timeline of events, is a clear indication that he was not mentally well.  The sheer volume of his productions is even more astonishing considering that he would, from time to time, enter periods where he was unable to work due to despair and mental illness.  The demons in his mind could, and would, shout down the artistic angels.  Perhaps the greatest gift Van Gogh documented for us was the emotional honesty he was able to convey in his works.  Today, we can only speculate the extent his mental health influenced his paintings.  But, for an artist who wanted to paint the world as he saw it, we can only surmise that his art does not necessarily speak for itself, rather, for himself. 

At the early age of 37, Vincent Van Gogh died.  Again, the exact series of events is shrouded in mystery and conspiracy.  However, death is death, regardless of the cause.  On July 27, 1890, he was shot in chest with a revolver.  There were no witnesses and it is unclear where the event even took place.  He died on the 29^th of July.  Thus ended a tormented life. 

Van Gogh only ever sold a couple paintings, and those he did sell were to family members.  He was not celebrated as a great artist in his lifetime.  Through all the uncertainties of his life, we can be certain of this: he used all of his passion and all of his pain to portray the magnificence of our world.  We see the world slightly different after viewing his work.  He was, and continues to be, one of the world’s greatest artists who has ever lived. 

Vincent Van Gogh did not have any children.  He viewed his paintings as his progeny, a piece of himself.  In this regard, he is the father of modern art.  His work has influenced generations of painters producing heirs that paint today.  

Spring Break: Who Needs Panama City

It was a good train ride.  The majestic Rhine Valley gave rise to evergreens thawing from a cold continental winter; the vineyard's terrace highlighted only by the contrast of soil and vine.  The castle remains, though in ruins, cast haunting regal stares on us below, still waiting for the next wave of North men, vigilant to the last.  But we are from the west.  And the horseless carriage plowing along the west bank of the river shielded us at times from the years of long ago.  We were not there for a history lesson, I had studied that enough in my classes, it was Spring Break.  Being March, I had a parka over my swimwear. 

Now, I can hear the question: why would you go to Germany for Spring Break?  Why not Miami, Panama City, or South Padre Island perhaps?  Oh sure, I missed the hedonistic right of passage for jail bait and collegiate brass polisher alike.  Hilariously embarrassing after stories aside, what do I want with a bunch of inebriated, and often underage, hooligans whose quest for liquid divinity supersedes common sense and human courtesy?  If I wanted to be subject to the whims of mass appeal, I'd turn on a TV.  And in reality, Germany has everything that the usual Spring Break haunts have but with better accents.  So it was, with a sense of adventure, an escape of the routine and an addiction to not be like everyone else, I set off with the cheapest tickets to Europe: Chicago to Frankfurt, Germany. 

So, for this Spring Break, avoid the temptation of the Gulf.  The usual hot spots are just an extension of the parties you have already and will continue to attend on campus.  Try the less traditional locales.  Bars and clubs are still more than happy to entertain you and take your money.  You can still meet others you can hang out with throughout the week.  So, go on, pack your parka and gain a unique experience.  Remembrances and sobriety are optional.  

Who is to blame for “Black Friday” violence?

Each year we hear about violence in stores on the Thursday after Thanksgiving in the United States.  As this commercial trend has been exported, the violence has followed.  This violence is morally reprehensible.  But, who is to blame?  Is it the companies?  Or consumers?

Companies

Bob Port, editor of sayanythingblog.com, argues that the only people we have to blame for “Black Friday” is ourselves.  Speaking from a more commercial standpoint, he advocates that companies are essentially the middlemen in the consumer chain.  They are open, because people are buying things.  These sentiments were echoed by Wal-Mart President and CEO Bill Simon.  In an interview with Today, he said, “We’re in the service industry.  We open when our customers want to shop.” 

The problem is companies have trained consumers to shop for deals.  Advertisements leading up to the holiday prominently display savings and deals designed to get shoppers on the sales floor.  Certainly, customers could shop elsewhere, or not shop at all.  But, over the years, consumers have become so trained that they will wait, all night, in the cold, to enter a store.  This is a situation that the companies have had a hand in creating.   

However, as reported by Suzanne Kapner in the Wall Street Journal, Black Friday bargains are little more than smoke and mirrors.  An item is artificially priced high during the year so that when it goes “on sale” the item is selling at the price point they want to sell them at.  Dana Mattioli argues that the prices on some items are raised before Black Friday to allow for the discounts.  But, these discounts are more about getting consumers in the store in the hopes that they buy items that have actually had their prices increased for the country’s busiest shopping day.  Combined with the fact that the same prices, if not lower prices, are offered in November or throughout the holiday season, and it makes the companies look a little bit greedy using artificially created discounts to get consumers to buy other goods that are priced higher than normal. 

By artificially inflating prices, all prices lose their integrity.  Supply and demand seem to hold little sway over prices.  The sales tag reflects what people are willing to pay, not what basic economic forces dictate the price should be.

Companies, I suspect would argue that they have a responsibility to turn a profit.  Revenue goes to pay employees and operating costs.  Profits are used for future investments.  But, I argue that companies have a responsibility to the communities they serve, aside from employment and the services they provide.  That responsibility includes assisting in the betterment of the community.  There is no better way to assist the community than to provide a non-threatening shopping experience.  Having more staff on hand to assist shoppers has done nothing to stem violence.  So, either there is not enough staff, or the staff is not preventing violence.

The argument for blaming companies for Black Friday violence would be as follows:

Companies have created the circumstances that lead to violence.  They have trained consumers to shop for deals.  They create a sense of urgency with discounts that are artificially created to get shoppers in the store to buy other items at a high price.  Lastly, the stores have a social responsibility to prevent violence, and yet do not.  This sounds an awful lot like negligence, at false advertisement at the least.

Consumers

Companies don’t commit violent acts, people do.  Are we, the people, to blame for all the violence?

Thanksgiving once was a time for family.  And, the Bears v. Lions game (Bear down!!)  However, the tradition of sitting at home as a family has eroded over time. 

One New York woman left the holiday dinner to by a large TV.  While the shopper confessed, “I don’t really dig the Thanksgiving night thing, I feel bad for the workers.”  But, that did not stop her from skipping out to the store in the first place.   Furthermore, some families wait in “Black Friday” lines as a family.  Some may claim that cherished memories have been created this way.  Simply put, the scene of family bonding has changed from the sitting room to the waiting line.  Over time, people have changed their traditions.  The argument is then made that shopping, or going to stores, is something that people enjoy doing, at least some of us. 

Perhaps the strongest link to the blame of consumers is the reports from the United Kingdom on “Black Friday” violence.  Reports of violence from Bristol to Belfast, raise the alarm that such incidents may not be a simple matter of “Americans being Americans.”  Many of the scenes described, irate customers and stampedes, are now being played out in the U.S. and abroad. 

Thanksgiving traditions have changed.  An increasing number of people are focusing on material possessions.  Some, simply like shopping.  So, consumers seem likely to go shopping on Thanksgiving.  Also, people, by their nature, can be territorial and slightly selfish.  In the direst of moments, self-preservation often prevails, even if it is at the expense of others.  Humans are social beings and can often fall prey to the herd mentality.  Companies can hardly be blamed for that. 

So, who is it?

This is not an exhaustive study.  It could go either way.  Ultimately, it becomes a matter of who we think is more evil: human nature or corporate greed.  I’m more afraid of the latter.  

Black Friday – Evading Americanism as an Emigrant

As a recent emigrant from the United States, I find myself more and more attempting to downplay, or outright hid, my country of origin.  And, as I read articles about “Black Friday” violence I find myself cowering further into the corner. 

There is a good amount of news coverage on the U.S. around the globe.  And, like all news, if it bleeds it leads.  Certainly, random acts of kindness rarely make it on the news.  There are no TV crews following do-gooders around.  That is what makes voluntary kind acts so appreciative.  But, when the U.S. unilaterally invades a country, it is plastered on the front page of the Yekaterinburg News.  And rightfully so.  Military incursions by one sovereign nation-state in another is world news.  But, is that what I will be labeled?  Is that the only thing that defines people from the U.S.? 

The logical and philosophical answer is “Of course not.”  However, combine such news items with entertainment exports and the picture being painted is not necessarily a positive one.  When one has never been to the U.S. media and stereotypes form the basis of judgment about its people.  We can always enter social situations with an open mind but tucked away neatly under the stack of aging newsprint is a stereotype assembled over time. 

What must people think when they see “Black Friday” violence?  It must be horrifying to think that a simple and joyful task of buying someone a gift can come with the price tag of one’s life.  Even more insidious is that this violence is not born of necessity but begat from greed manifested by companies and living, breathing human beings. 

It is instances like this where I channel Rick Blaine. 

We sit in the pub near the open fire.  “What’s your nationality?” they ask.  “I’m a drunkard.”  And that makes me a citizen of the world.