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HKS in the News April 3, 2012

1. Tectonic Forces in Fiduciary Duty Can Erupt in Governance Earthquakes (Lydenberg) Compliance Week

2. US likely to get tougher on North Korea after rocket launch but doesn’t have many options (Park) The Washington Post

3. Greece should follow Argentina into default and devaluation (Navarro-Staicos) Christian Science Monitor


Tectonic Forces in Fiduciary Duty Can Erupt in Governance Earthquakes

Compliance Week

April 3

Quoted: Steve Lydenberg, Hauser Center

Topic: Fiduciary Duty

In the world of corporate governance, fiduciary obligation underpins the legal responsibilities of everyone from corporate directors to institutional shareowners. Like tectonic changes, evolution in fiduciary duty is hard to spot…

In the United States, Steve Lydenberg of the Hauser Center at Harvard recently won $10,000 for his paper, Reason, Rationality and Fiduciary Duty, which identifies the major fault line for fiduciaries as reasonableness vs. rationality. How that balance resolves affects the way investors behave in the market. Reasonableness, he argues, grows out of legal tradition and takes into account a number of factors such as how the actions of one group or individual affect others. By contrast, rationality seeks only the most efficient way to achieve internal goals, such as maximizing return at an acceptable risk level. While the two have always waxed and waned, Lydenberg argues that the dominance of modern portfolio theory, with its emphasis on financial markets rather than the real economy as a driver of investment returns, has caused rationality to dominate. But rationality fails in a number of areas, including the inability to: (a) “allocate benefits impartially between current and future generations,” (b) assess whether a fiduciary's actions actually benefit those for whom he or she acts since portfolio returns are only a portion of a beneficiary's life, and (c) understand what drives investment return in the real economy. Those are weaknesses that can harm portfolio companies and ultimately the investor, pensioner, or saver for whom the fiduciary acts...

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US likely to get tougher on North Korea after rocket launch but doesn’t have many options

The Washington Post

April 3

Quoted: John Park, Belfer Center

Topic: U.S. sanctions on North Korea

Despite tough talk from President Barack Obama, the United States and its allies have limited options if North Korea goes ahead with its planned long-range rocket launch this month.

Washington is likely to take the matter to the U.N. Security Council, analysts say, and could tighten its already tough sanctions. But such efforts would struggle without support from China, which can be expected to resist any moves that might threaten the stability of its neighbor…

“The U.S. is highly likely to unveil another round of sanctions to send a clear political message to North Korea,” said John Park, a Northeast Asia specialist at Harvard University’s Belfer Center

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Greece should follow Argentina into default and devaluation

Christian Science Monitor

April 2

Commentary by: Juan Navarro-Staicos MPA/ID 2012

Topic: Greece’s economy

In 2002, Argentina devalued its currency and defaulted on its debt. An already severe recession worsened to the point where 1 in 2 people were poor.

This outcome is what European policymakers want to avoid as they attempt to keep Greece in the eurozone. However, Argentina’s decision to devalue and default was the right one. It was the only step that offered a way out of the crisis facing the country.

Last month, Greece pulled off a massive restructuring of debt held by private investors – offering bondholders new debt with less than half the face value. Guess what? Most private investors accepted the painful deal and the world did not fall apart. Greece should proceed to a restructuring of its remaining debt. And like Argentina, it should also free its currency…

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In the HKS TV Studio

David Ignatius

BBC News, 4/2

Topic: Osama Bin Laden’s wives’ arrest in Pakistan


This selection of media appearances is compiled by the Office of Communications and Public Affairs.

To submit an item please email Jane Finn-Foley


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