Friday, September 13, 2013

We Have to Put an End to Casino Capitalism

We have to put an end to Casino Capitalism.

We can do that by building a new investing ecosystem of evergreen cash flow sharing between evergreen trusts and evergreen enterprise, for an evergreen prosperity.

By evergreen, I mean ongoing. An evergreen investment is an agreement for the sharing out of cash flows between enterprise leaders and their capital sponsors that is open-ended and ongoing. An evergreen trust is a pension, endowment, foundation or other steward of other people's money entrusted to their care for ongoing investment and reinvestment to support the payment of chartered benefits to successive generations of charter beneficiaries that are ongoing and evergreen. An evergreen enterprise is any enterprise organized to generate cash flows through commercial competitiveness that is ongoing, and evergreen.

Evergreen prosperity just keeps going.

The paradigm shift to evergreen investing will be a Copernican Revolution in pension investing, putting pensions and other evergreen trusts at the center of their own investing universe of direct connections with enterprise leaders.

This is important because Casino Capitalism is killing defined benefit pension plans, and threatening retirement income security, in general.

Defined benefit pension plans are suffering a chronic condition of underfunding that is driving them to increase their risk on investment in pursuit of higher returns. This is only increasing their exposure to systemic risk, further undermining their ability to continue, and to continue providing income security in retirement to successive generations of current and future retirees.

We all suffer when pensions suffer the erratic returns, inadequate returns, misalignment of incentives, miscreant market manipulation, and the orphaning of social and environmental impacts through Casino Capitalism and the zero-sum games of extracting value from other investors that too often is what pension investing has really become today.

In a new evergreen investing ecosystem, pensions will be able to engineer returns to match their fiduciary responsibilities, putting them on a path to reversing the problem of underfunding and reducing their exposure to systemic risk while also simplifying their portfolio designs, internalizing portfolio management, reducing portfolio costs and controlling portfolio impacts.

In this new evergreen investing ecosystem enterprise leaders will also freed from the inauthenticity of quarterly financial reporting so they can focus more authentically on optimizing the commercial competitiveness of the enterprises they lead.

Evergreen investing will return Capitalism to its roots.

How do we act?

We need to come together as a community and have a conversation about this idea of evergreen investing. We need to imagine how it will work and how will improve outcomes. We need to clear a space where we can give it a try, work through the granularities of its implementation and see if it takes hold along the edges before swooshing into the mainstream, following the well-trodden path of other similarly disruptive, but needed and important, innovations.

Won't you join the conversation? Won't you help put an end to Casino Capitalism?

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