The hunger of fast market returns is hurt UK

Mental clouding judgment? Short term is becoming so well that some have it marks "quarterly capitalism." Photo: PA

Andrew Haldane, Executive Director of the Bank of England financial stability, argued in a speech in Brussels Monday that markets are failing because they undervalue benefits to long-term rewards faster but less. Providing a welter of evidence, he added that the trend towards the "short term" gathered pace during the past decade.

"It is a market failure", Mr. Haldane said, arguing that it discredits in addition "the efficient market hypothesis". Investors are wrong decisions because they are more attracted by returns faster than the real value of a project, hungry worthy of investment in long-term funds.

"[Long term projects developed pricing] would tend to lead to investment being too weak and... suffering disproportionately", he said. "".This could include projects with the build high or sunk costs, including infrastructure and high technology investment.

"These projects are often felt to give the best yields long-term (private and social) and therefore offer the greatest coup de pouce future growth." Making short term a matter of public policy. »

Short term is becoming so well that some have it marks "quarterly capitalism." Responsible companies are upgrading investments as without value in half the time that suggests "rational" analysis is correct, according to research by Mr. Haldane and his colleague Richard Davies.

"If promised returns tomorrow fail to induce savings today, there is no investment tomorrow." "If so, the well-being and long term growth would be the victim."

Makers should consider to intervene to encourage more emphasis on long-term objectives. He proposed to link pay more closely to performance in the long term, expanding the fiduciary duties of Directors to include long-term objectives, rights grant and vote for investors in the long term by improving and introducing tax measures ".

"It might be time to increase the level of political ambition." "Without intervention, the long could again become shorter", said Mr. Haldane.

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