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Financial markets and sustainability

Observing actual news about the current development at the financial markets I raised myself the question about sustainability in that context. After US government interacted March 17, also the Deutsche Bank asked March 18 for governmental support.

Let’s first consider sustainability from a monetary value perspective:

  • We know since early 2000’s that stock exchange rates express an actual expectation for that share. This expectation can change dramatically from day to day. Not mentioning reasons or analyzing background at this moment, we should differentiate between realized and calculated turn over/revenue. Otherwise we are already trapped. If we therefore discuss today about a decrease or loss of market value we have clearly to distinguish between real and expected values.
  • Most of us remember the burned money due to oversized expectations in relation to start-up companies in the dot-com area and the later collapse of this business as those start-up’s weren’t able to execute on expectation. Questioning about reasons and duties is nice, but that didn’t change the impact of that collapse. Lessons learned from that phase? Yes, expectations aren’t that blond anymore.

Who were driver of this hype phase in the global economy early 2000’s? Is the actual finance crises a successor of that hype collapse? Who is victim and who is asked to pay the deficit? These are the typical questions people ask themselves hearing banks are asking government for support.

Sustainability from a society perspective:

  • We know that society consists out of several layers, differentiated by their typical way of money spending, investments, consumption attitudes and saving behaviours. Changing that world by reducing the heterogeneous character doesn’t limit such risk. Allocation and distribution of the negative impacts among all participants sounds logical. Although this seems to be logical in first instance, we should also ask ourselves about the insiders, who could reduce or limit such damage, and the non-insiders, who are completely surprised by the accident.
  • Impressive is the development in currency exchange rates “€ to $”. This doesn’t affect US and Europe only, but also those emerging countries dependant to both currencies as eastern European, Latin American, African and Asian markets. Finally the oil price is also partly based on actual financial market constraints. Because oil is still the first energy resource, some emerging countries will perceive stronger impact as they are more dependant to US $. Emerging countries dependant to € will have strong impact by export abroad the EU.

If sustainability discussions focus on the way how life and business can continue over longer periods what does sustainability means regarding financial markets? If CSR is part of an overall sustainability, which corporates should take the lead resolving this crisis and what is meant with social regarding emerging countries.

Kind regards Paul   

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