http://news.bbc.co.uk/2/hi/business/7958501.stm
It is a good move for the Obama administration to launch the trillion dollar plan to buy toxic assets jointly with private investors by giving them a lot of inducements. There is also the welcoming news that China has pledged to continue her acquisition of US Treasury bonds despite adverse comments on China's worries over those bonds by the Chinese Prime Minister Yun Jar Bao earlier.
While commending the Obama administration on the above move I must also a sound the warning of avoiding too much expectation and complacency in counting on an early return to normalcy in the global financial market because there are still numerous obstacles to be overcome on the road to full recovery.
The trillion $ trick as I call it has still a few pitfalls although it is a positive measure in the right direction.
Monday, March 23, 2009
Monday, March 16, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 16 ) - Blocking Bonuses is the Best Bet
http://news.bbc.co.uk/2/hi/business/7945774.stm
Obama was literally choked with anger in condemning the proposed payment of huge bonuses to the derivatives managers and other high ranking executives of the embattled AIG insurance giant which is receiving enormous amounts of rescue funds approved by the US Congress ( please refer to above news video from BBC ). When it comes to money people have will not give a damn whatsoever to decency or proper restraint. Enough is enough. What kind of logic is behind this payment of bonuses to the custodian of a failed financial institutions through greed and possibly fraud and incompetence ? Some black sheep corporate custodians are now public enemy number one who should be severely punished instead of richly rewarded.
No doubt these black sheep will fall back on their so called legal contracts of employment and their claim on the sacred protection of the law to justify their claim to the proposed bonuses. Mind you if any contract is drawn up unfairly the court has the power to annul it. Just think about the general circumstances under which most corporate employment contracts of CEOs and their likes are concluded. They are approved by the board of directors who are all ( with the fewest of exceptions ) aiming at maximizing their own remunerations at the expense of shareholders that are mostly absentee owners. Even when the directors are major shareholders of the corporation in question they can still benefit by drawing huge remuneration packages part of which will be born by the minority absentee owners. This is the basic pitfall of all limited liability companies as explained in my article on the FT ( entitled " 2008 Economic & Financial Tsunami - An Overview for the Lay Person ). The reader can access my article by clicking on the title of this blog to reach my website or click on my complete profile.
Let me put it this way. If I were the CEO of a big corporation how else can I justify my own out of proportion remuneration package if I do not hire my subordinates with substantial amount of salary and bonuses ? Let me quantify this for you. If my assistant does not get $5 million a year how can I justify my $10 to $15 million annual salary ? It is all a matter of you scratch my back I scratch yours kind of situation. Furthermore, who votes for the unreasonable amount of most CEO remuneration packages at the board of directors' meeting ? Of course, it is the directors themselves. There is a clear conflict of interest here which I will propose to disallow in my summary proposal for the reference of the G20 summit to be held early next month. You may say that some CEO may not even be a board member. True in so cases but the prevailing corporate culture makes it easy for a collusion between directors and high ranking executives to stick together to benefit themselves at the expense of shareholders and now the society as a whole as a result of their greed and callous behaviour. In short, it is an exclusive boys club that teams up to rip off shareholders. Basic reform on corporate law is urgently needed.
By challenging the remuneration contracts of these greedy executives despite their skill ( with the help of their black sheep legal advisers ) in manipulating through the gray areas of the law we can force them to justify their claim and so learn their dirty tricks for our future reference when planning the regulatory reforms. Needless to say, bringing them to court and hopefully getting the court to annul their contract because of their bad performance will no doubt raise the morale of the struggling public who are all suffering tremendously as a result of their evil deeds.
I have delayed the summary ( which is in progress ) of my proposals to combat the FT so as to draw everyone's attention to the basic weakness of the limited liability concept which unfortunately we cannot do without in our modern market economy. Since this concept is indispensable to economic growth and full employment by channeling savings into investment we had better improve our regulatory system in the right way to deal with this problem if the FT is not to be repeated.
JKHC.
Obama was literally choked with anger in condemning the proposed payment of huge bonuses to the derivatives managers and other high ranking executives of the embattled AIG insurance giant which is receiving enormous amounts of rescue funds approved by the US Congress ( please refer to above news video from BBC ). When it comes to money people have will not give a damn whatsoever to decency or proper restraint. Enough is enough. What kind of logic is behind this payment of bonuses to the custodian of a failed financial institutions through greed and possibly fraud and incompetence ? Some black sheep corporate custodians are now public enemy number one who should be severely punished instead of richly rewarded.
No doubt these black sheep will fall back on their so called legal contracts of employment and their claim on the sacred protection of the law to justify their claim to the proposed bonuses. Mind you if any contract is drawn up unfairly the court has the power to annul it. Just think about the general circumstances under which most corporate employment contracts of CEOs and their likes are concluded. They are approved by the board of directors who are all ( with the fewest of exceptions ) aiming at maximizing their own remunerations at the expense of shareholders that are mostly absentee owners. Even when the directors are major shareholders of the corporation in question they can still benefit by drawing huge remuneration packages part of which will be born by the minority absentee owners. This is the basic pitfall of all limited liability companies as explained in my article on the FT ( entitled " 2008 Economic & Financial Tsunami - An Overview for the Lay Person ). The reader can access my article by clicking on the title of this blog to reach my website or click on my complete profile.
Let me put it this way. If I were the CEO of a big corporation how else can I justify my own out of proportion remuneration package if I do not hire my subordinates with substantial amount of salary and bonuses ? Let me quantify this for you. If my assistant does not get $5 million a year how can I justify my $10 to $15 million annual salary ? It is all a matter of you scratch my back I scratch yours kind of situation. Furthermore, who votes for the unreasonable amount of most CEO remuneration packages at the board of directors' meeting ? Of course, it is the directors themselves. There is a clear conflict of interest here which I will propose to disallow in my summary proposal for the reference of the G20 summit to be held early next month. You may say that some CEO may not even be a board member. True in so cases but the prevailing corporate culture makes it easy for a collusion between directors and high ranking executives to stick together to benefit themselves at the expense of shareholders and now the society as a whole as a result of their greed and callous behaviour. In short, it is an exclusive boys club that teams up to rip off shareholders. Basic reform on corporate law is urgently needed.
By challenging the remuneration contracts of these greedy executives despite their skill ( with the help of their black sheep legal advisers ) in manipulating through the gray areas of the law we can force them to justify their claim and so learn their dirty tricks for our future reference when planning the regulatory reforms. Needless to say, bringing them to court and hopefully getting the court to annul their contract because of their bad performance will no doubt raise the morale of the struggling public who are all suffering tremendously as a result of their evil deeds.
I have delayed the summary ( which is in progress ) of my proposals to combat the FT so as to draw everyone's attention to the basic weakness of the limited liability concept which unfortunately we cannot do without in our modern market economy. Since this concept is indispensable to economic growth and full employment by channeling savings into investment we had better improve our regulatory system in the right way to deal with this problem if the FT is not to be repeated.
JKHC.
Thursday, March 12, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 15 ) - The Madness of the Madoff Mess
http://news.bbc.co.uk/2/hi/business/7939145.stm
The above link to a BBC report on Madoff's road to perdition reveals huge loop holes in the US financial regulatory system. It was a tragic story from rags to riches and then falling from grace due to a pathetic fraud. As usual greed is the culprit but the story has also revealed the lack of effectiveness of the US financial regulatory system. It is not as if Madoff's operation is so perfectly planned that it has completely evaded detection. Instead, the US financial regulatory body - the Securities & Exchange Commission ( SEC ) has investigated Madoff's operations 8 times in total during his 16 years in operation and failed to detect any wrong doing. This is the hardest part to swallow.
There are three logical inferences to be drawn from these circumstances. Firstly, Madoff's deception is highly skillful. This does not seem to be the case. Preliminary assessment of the facts simply show that the so-called investment portfolios did not exist. He simply used new investors' funds to pay back to old investors so it is just like the crude carry over method very often used in cash embezzlement by some third grade petty cashier. Any standard audit procedures of requesting for third party independent documentary confirmation would have unearthed the sinister scheme. This points conspicuously to possible collusion between Madoff and some professional regulators along the way in respect of the annual statutory audits of Madoff's investment accounts.
The second logical inference that could possibly be drawn is an outright neglect of the SEC's regulatory functions. It would amount to a total dereliction of duty and a fragrant violation of the principles of due care and diligence on the part of the US regulatory authorities. My theoretical conjecture in this respect would be tragic if proven true. I must not speculate further until the case has been heard in court. However, with Madoff's guilty plea to all 11 charges that carry a total maximum sentence of 150 years' imprisonment the details may never be officially known except through a congressional hearing. I strongly support this move to see what lessons could be learned for the benefit of the financial regulators and in the public interest.
The third possible logical inference is the worst case scenario. And that is the existing regulatory procedures are totally inadequate to detect even the most simple kind of fraudulent scheme. This is not likely to be the case which reflects on the higher possibility of possible corruption and collusion. In any event, a public inquiry seems to be the best move to restore public confidence in the regulatory system through further enlightenment from the circumstances of this tragic case. Madoff has be nicked named " the Jewish T- Bill ". T- Bill stands for US Treasury bills meaning his investment policy has been so secured and reliable. If T-Bill could be faked what could happen to the whole US financial system ? This is again one of my rhetorical questions that does not require a response.
JKHC.
The above link to a BBC report on Madoff's road to perdition reveals huge loop holes in the US financial regulatory system. It was a tragic story from rags to riches and then falling from grace due to a pathetic fraud. As usual greed is the culprit but the story has also revealed the lack of effectiveness of the US financial regulatory system. It is not as if Madoff's operation is so perfectly planned that it has completely evaded detection. Instead, the US financial regulatory body - the Securities & Exchange Commission ( SEC ) has investigated Madoff's operations 8 times in total during his 16 years in operation and failed to detect any wrong doing. This is the hardest part to swallow.
There are three logical inferences to be drawn from these circumstances. Firstly, Madoff's deception is highly skillful. This does not seem to be the case. Preliminary assessment of the facts simply show that the so-called investment portfolios did not exist. He simply used new investors' funds to pay back to old investors so it is just like the crude carry over method very often used in cash embezzlement by some third grade petty cashier. Any standard audit procedures of requesting for third party independent documentary confirmation would have unearthed the sinister scheme. This points conspicuously to possible collusion between Madoff and some professional regulators along the way in respect of the annual statutory audits of Madoff's investment accounts.
The second logical inference that could possibly be drawn is an outright neglect of the SEC's regulatory functions. It would amount to a total dereliction of duty and a fragrant violation of the principles of due care and diligence on the part of the US regulatory authorities. My theoretical conjecture in this respect would be tragic if proven true. I must not speculate further until the case has been heard in court. However, with Madoff's guilty plea to all 11 charges that carry a total maximum sentence of 150 years' imprisonment the details may never be officially known except through a congressional hearing. I strongly support this move to see what lessons could be learned for the benefit of the financial regulators and in the public interest.
The third possible logical inference is the worst case scenario. And that is the existing regulatory procedures are totally inadequate to detect even the most simple kind of fraudulent scheme. This is not likely to be the case which reflects on the higher possibility of possible corruption and collusion. In any event, a public inquiry seems to be the best move to restore public confidence in the regulatory system through further enlightenment from the circumstances of this tragic case. Madoff has be nicked named " the Jewish T- Bill ". T- Bill stands for US Treasury bills meaning his investment policy has been so secured and reliable. If T-Bill could be faked what could happen to the whole US financial system ? This is again one of my rhetorical questions that does not require a response.
JKHC.
The Financial Tsunami ( FT ) - The Way Forward ( 14 ) - The Day of Reckoning is at Hand !
http://www.nytimes.com/2009/03/12/business/12crime.html?th&emc=th
The above news headline from today's New York Times brings encouraging news that the US Justice Department is getting tough with mortgage fraud. Reportedly, a few dozen mortgage brokers, bankers and officers of some financial institutions have been booked to face court in the near future to demonstrate the determination of the Obama administration to exercise zero tolerance on mortgage fraud. This is really welcomed news. Apart from deterring future perpetrators from proceeding to their evil ways this will also uplift the morale of the general public who feel a deep sense of betrayal by the black sheep of the financial sector.
However, I must voice my earnest hope that this is only the beginning of the reckoning process because those have been prosecuted are really the small flies. The Wall Street black sheep of the highest ranks are the real culprits of the present global disaster. These cunning lot with their devilish helpers in the legal profession are experts in manipulation through the grey areas of the law. To prosecute and successfully convicting these financial criminals are the true litmus test for the efficiency and tanacity of the Obama administration. This is one battle that the Obama administration cannot afford to lose.
I am working on a concise summary of all the effective measures I have proposed to combat the FT put forward by me in my blog thus far. This will be the highlight of my next blog which should hopefully see the light in the very near future. In any event, my summary of proposed measures to counteract the devastation of the FT must be systematically set out before the start of the G20 summit in April.
JKHC.
The above news headline from today's New York Times brings encouraging news that the US Justice Department is getting tough with mortgage fraud. Reportedly, a few dozen mortgage brokers, bankers and officers of some financial institutions have been booked to face court in the near future to demonstrate the determination of the Obama administration to exercise zero tolerance on mortgage fraud. This is really welcomed news. Apart from deterring future perpetrators from proceeding to their evil ways this will also uplift the morale of the general public who feel a deep sense of betrayal by the black sheep of the financial sector.
However, I must voice my earnest hope that this is only the beginning of the reckoning process because those have been prosecuted are really the small flies. The Wall Street black sheep of the highest ranks are the real culprits of the present global disaster. These cunning lot with their devilish helpers in the legal profession are experts in manipulation through the grey areas of the law. To prosecute and successfully convicting these financial criminals are the true litmus test for the efficiency and tanacity of the Obama administration. This is one battle that the Obama administration cannot afford to lose.
I am working on a concise summary of all the effective measures I have proposed to combat the FT put forward by me in my blog thus far. This will be the highlight of my next blog which should hopefully see the light in the very near future. In any event, my summary of proposed measures to counteract the devastation of the FT must be systematically set out before the start of the G20 summit in April.
JKHC.
Saturday, March 7, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 13 ) - Thundery Cloud Before the Storm
http://www.nytimes.com/2009/03/07/business/economy/07jobs.html?th&emc=th
The above link to today's headline in the New York Times points to a thundery cloud on the global economic horizon that could easily lead to a devastating tempest. The current unemployment rate in USA has reached a staggering 8.1 % the worst in 47 years. It rightly said that the whole economic scene is about to change in the biggest economic system of the world. On top of the fact that GM is at the brink of a total collapse with the potential loss of hundreds of thousand of jobs there is now the possibility of huge corporations withdrawing from some of their traditional lines of trade permanently, again resulting in the same catastrophic loss of jobs.
Everyone in the financial circle is correct in appealing for bigger spending but so far the main emphasis of the call has been on the Government to raise a bigger rescue package. This is a lob-sided call because most governments of countries operating on a market economy ( the capitalistic system ) generally account for only 15 % or thereabouts of the GDP. In any event, it will be labeled socialistic if the government budget reaches 20 % or more of GDP. Let us say there is a drop of 10 % in total consumer spending due to the FT. This will mean a 8.5 % drop in GDP ( being 10 % of 85 % of private sector spending in GDP ). It will take an increase of 56% of government spending to make up the short fall ( 8.5 / 15 ). Even if this is done the increase will partly be spent in infrastructure projects that are not directly consumer or retail spending. Thus, the consumer sector will not immediately get the confidence boost. There will only be a delayed consumer spending effect through the marginal propensity to spend ( the % income that will be spent at a given income level ) and its subsequent multiplier effect on the actual increase in consumer spending. At this point of our crisis , consumer confidence especially those who still have the savings to spend is of top priority. To hit the nail on the head, what I am saying is that we cannot depend on the Government alone to do the job of rescuing the tumbling economy.
So, what am I recommending ? Well , it is simply this. I am appealing to the well off sector of society to keep up their normal spending pattern. If you usually change to a new car every 4 years or upgrade your computer equipment in 3 keep to your original schedule. If your wealth has been drastically reduced by say, 50 % as a result of the FT what was actually hurt is not your ability to survive financially but a badly wounded pride and a sense of betrayal. I honestly do not believe that people have to change their spending schedule simply because their wealth has been reduced from say, US$10 million to US$5 million. Besides, one cannot know for certain when heaven calls or one's health can always keep up its level 5 to 10 years down the road. Without the intention of spreading a pessimistic view, this is your truly's private guess of the possible duration of the present crisis. Money is stored up value which is not yours until it is spent.
My second recommendation is to suggest to governments not to finance the rescue package by taking the seemingly easy way out - simply by printing more money. This is morally dubious and could possibly lead down the path to a becoming a fifth rate country. The fact that the US$ is still stable despite all her economic woes is mainly due to the situation that too many people and countries are holding US$ denominated assets both for investment and as a reserve currency. No people would like to see the US$ depreciate in value to their own detriment. People are not fools as the great President Lincoln wisely said :- " You can only fool most people some of the time but you can definitely not fool all the people all the time ! " If this money printing trend goes on people will ultimately find another haven or reserve currency one of these days.
What to do then with the much needed funds for the Government's urgent economic rescue package ? I think the short and sweet answer is to issue FT rescue bonds which must be promoted like WWII war bonds for we are, indeed, fighting a financial war of an enormous magnitude. It is high time that the well off sector of society and, indeed, every patriotic citizen should share in this rescue burden in whatever way they can contribute. Besides, your Government will guarantee the repayment of such interest bearing bonds. It is also a good opportunity for civic duty education. As all the theoretical justification and implementation mechanism are already in place this is the fastest way to channel savings into investment and create employment with the related boost to consumer confidence.
It is time for immediate action both by Governments and the responsible citizen. Further delays will spell certain global disaster and a second gigantic wave from the unabated FT. As for yours truly, I am planning my usual holidays with the possibility of a side trip to the UK for a get together of amateur astronomers of the Galaxy Zoo community. What is the Galaxy Zoo ? Please refer to the Web Encyclopedia - WIKIPEDIA ( click on link below ) and see my astronomy research in my personal website by clicking on the ( green coloured title of any one of my blog postings ). Please act on my above recommendations now, both Uncle Sam & citizens of the home of the brave before it is too late !!!
( http://en.wikipedia.org/wiki/Galaxy_Zoo )
JKHC.
The above link to today's headline in the New York Times points to a thundery cloud on the global economic horizon that could easily lead to a devastating tempest. The current unemployment rate in USA has reached a staggering 8.1 % the worst in 47 years. It rightly said that the whole economic scene is about to change in the biggest economic system of the world. On top of the fact that GM is at the brink of a total collapse with the potential loss of hundreds of thousand of jobs there is now the possibility of huge corporations withdrawing from some of their traditional lines of trade permanently, again resulting in the same catastrophic loss of jobs.
Everyone in the financial circle is correct in appealing for bigger spending but so far the main emphasis of the call has been on the Government to raise a bigger rescue package. This is a lob-sided call because most governments of countries operating on a market economy ( the capitalistic system ) generally account for only 15 % or thereabouts of the GDP. In any event, it will be labeled socialistic if the government budget reaches 20 % or more of GDP. Let us say there is a drop of 10 % in total consumer spending due to the FT. This will mean a 8.5 % drop in GDP ( being 10 % of 85 % of private sector spending in GDP ). It will take an increase of 56% of government spending to make up the short fall ( 8.5 / 15 ). Even if this is done the increase will partly be spent in infrastructure projects that are not directly consumer or retail spending. Thus, the consumer sector will not immediately get the confidence boost. There will only be a delayed consumer spending effect through the marginal propensity to spend ( the % income that will be spent at a given income level ) and its subsequent multiplier effect on the actual increase in consumer spending. At this point of our crisis , consumer confidence especially those who still have the savings to spend is of top priority. To hit the nail on the head, what I am saying is that we cannot depend on the Government alone to do the job of rescuing the tumbling economy.
So, what am I recommending ? Well , it is simply this. I am appealing to the well off sector of society to keep up their normal spending pattern. If you usually change to a new car every 4 years or upgrade your computer equipment in 3 keep to your original schedule. If your wealth has been drastically reduced by say, 50 % as a result of the FT what was actually hurt is not your ability to survive financially but a badly wounded pride and a sense of betrayal. I honestly do not believe that people have to change their spending schedule simply because their wealth has been reduced from say, US$10 million to US$5 million. Besides, one cannot know for certain when heaven calls or one's health can always keep up its level 5 to 10 years down the road. Without the intention of spreading a pessimistic view, this is your truly's private guess of the possible duration of the present crisis. Money is stored up value which is not yours until it is spent.
My second recommendation is to suggest to governments not to finance the rescue package by taking the seemingly easy way out - simply by printing more money. This is morally dubious and could possibly lead down the path to a becoming a fifth rate country. The fact that the US$ is still stable despite all her economic woes is mainly due to the situation that too many people and countries are holding US$ denominated assets both for investment and as a reserve currency. No people would like to see the US$ depreciate in value to their own detriment. People are not fools as the great President Lincoln wisely said :- " You can only fool most people some of the time but you can definitely not fool all the people all the time ! " If this money printing trend goes on people will ultimately find another haven or reserve currency one of these days.
What to do then with the much needed funds for the Government's urgent economic rescue package ? I think the short and sweet answer is to issue FT rescue bonds which must be promoted like WWII war bonds for we are, indeed, fighting a financial war of an enormous magnitude. It is high time that the well off sector of society and, indeed, every patriotic citizen should share in this rescue burden in whatever way they can contribute. Besides, your Government will guarantee the repayment of such interest bearing bonds. It is also a good opportunity for civic duty education. As all the theoretical justification and implementation mechanism are already in place this is the fastest way to channel savings into investment and create employment with the related boost to consumer confidence.
It is time for immediate action both by Governments and the responsible citizen. Further delays will spell certain global disaster and a second gigantic wave from the unabated FT. As for yours truly, I am planning my usual holidays with the possibility of a side trip to the UK for a get together of amateur astronomers of the Galaxy Zoo community. What is the Galaxy Zoo ? Please refer to the Web Encyclopedia - WIKIPEDIA ( click on link below ) and see my astronomy research in my personal website by clicking on the ( green coloured title of any one of my blog postings ). Please act on my above recommendations now, both Uncle Sam & citizens of the home of the brave before it is too late !!!
( http://en.wikipedia.org/wiki/Galaxy_Zoo )
JKHC.
Thursday, February 26, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 12 ) - Enough is Enough !!!
CEO ! Oh , CEO ! Where is your conscience ?
After loads and loads of scandalous corporate practices having been unearthed in the USA, Australia has also come under the unwanted limelight of corporate scandalous practices. The Australian corporation, PACIFIC BRANDS has just been accused of excessively remunerating the CEO and other top management corporate officials. After announcing a plan to lay off 1,800 workers it has been revealed that the CEO has trebled her annual salary from some A$ 600,000 to over A$ 1.8 million. Human greed has no bounds or is unlimited, a concept condemned by the fundamental principle of market economics or capitalism. If resources were unlimited there would not have been any need for economics, a discipline cater for the efficient distribution and consumption of economic resources. Yet the leaders and vanguards of capitalism such as CEOs of huge corporations resort to a motto like " sky is the limit " when it comes to their own remuneration and self interest. They always say that let the best person win. Let the top dogs earn whatever amount possible if the corporate profit ( or even losses ) can sustain their greed to fill their piggy bank. The silly defense provided by PACIFIC BRANDS in this incident is that the previous CEO had drawn A$3.6 million in salary per annum so the existing " generous " CEO is giving the corporation and its shareholders a dirt cheap bargain by drawing A$1.8 million. Should the shareholders and employees not pass a motion of thanks to the CEO in the annual general meeting of shareholders, then ? It is as if the murderer who has killed one person is innocent because other murderers have killed plenty more. " C'MON " as the Australian star tennis player, Lleyton Hewitt very often shouts. What do you take us for - suckers ?
Of course, another strong argument put forward by CEOs and their likes is that only the best remunerative package can attract the best talents to head the corporation. Some talent ! I must admit they are the best lot to rip the shareholders and their workers off to their selfish personal advantage. Where is your conscience ? I ask again. I think I am qualified to say something about scandalous corporate practices as I used to make my living in auditing and management & tax consultancy for 30 odd years before my retirement in 2006.
There is yet another strong and seemingly unassailable argument put forward by CEOs and their likes in defense of their ridiculously excessive remuneration package. It is legal and they acted within their rights provided by the law. Ah, ha, a very clever, logical and most importantly LEGAL argument but sorry, no dice ! If the law is inadequate to protect the public interest against greedy little creatures society must change the law into a more just and effective set of corporation laws. I will venture to propose some legal improvements to allow more effective regulation of corporate malpractices in my next blog. Yours truly as a voter who cast my vote for Kevin Rudd in the last Australian Federal election I have the right to appeal to the Rudd Government to do something about this less than ideal situation especially in the wakes of the FT. To feed one's own personal vice of GREED by creating unemployment at such a critical time of financial turmoil is a heartless, despicable and treacherous crime against society !
The argument of getting the best talent by unlimited amount of pecuniary reward is flawed. It will only attract the most greedy of the wolf pack which we can do better without. We want our corporate leaders to be clean, honest and they should be people with a social conscience. Such candidates are seldom seen on the corporate scene anywhere precisely because our present " sky is the limit " principle in remunerating corporate custodians is dead wrong in principle. It will not be an unwise move to place a cap on top management remunerative package as a matter of law. I will put forward my own suggestion in upcoming blogs. Obama is doing it to US corporations receiving the rescue package. Why can't this be extended, may be, to a less stringent degree to corporations in general ? ( There is no need for an answer to a rhetorical question, is there ? .... yet another rhetorical question !!!)
The other important issue which is relevant to all legal matters including corporate law is the manipulations by black sheep corporate custodians in the grey areas of the law to fatten their own pockets. This can be remedied by better legislation and developing a more balanced sense of value by steering away from the purely materialistic outlook on life. Australia should be well placed to achieve this grand moral goal having regards to the community spirit so eminently demonstrated by the tremendous support from the public in the recent bushfire appeal to assist victims of the tragedy.
If the reader is interested in knowing more about the pitfalls in the working of corporations in general please access my article on the basic working principles of economics and finance entitled :- " 2008 Financial & Economic Tsunami - An Overview for the Lay Person " highlighted on the navigation bar in my website by clicking on the ( green coloured ) title of this blog or any other blog in this FORUM.
See you all in my next blog on my suggestions on exercising an effective control over corporations.
Yours truly,
JKHC.
After loads and loads of scandalous corporate practices having been unearthed in the USA, Australia has also come under the unwanted limelight of corporate scandalous practices. The Australian corporation, PACIFIC BRANDS has just been accused of excessively remunerating the CEO and other top management corporate officials. After announcing a plan to lay off 1,800 workers it has been revealed that the CEO has trebled her annual salary from some A$ 600,000 to over A$ 1.8 million. Human greed has no bounds or is unlimited, a concept condemned by the fundamental principle of market economics or capitalism. If resources were unlimited there would not have been any need for economics, a discipline cater for the efficient distribution and consumption of economic resources. Yet the leaders and vanguards of capitalism such as CEOs of huge corporations resort to a motto like " sky is the limit " when it comes to their own remuneration and self interest. They always say that let the best person win. Let the top dogs earn whatever amount possible if the corporate profit ( or even losses ) can sustain their greed to fill their piggy bank. The silly defense provided by PACIFIC BRANDS in this incident is that the previous CEO had drawn A$3.6 million in salary per annum so the existing " generous " CEO is giving the corporation and its shareholders a dirt cheap bargain by drawing A$1.8 million. Should the shareholders and employees not pass a motion of thanks to the CEO in the annual general meeting of shareholders, then ? It is as if the murderer who has killed one person is innocent because other murderers have killed plenty more. " C'MON " as the Australian star tennis player, Lleyton Hewitt very often shouts. What do you take us for - suckers ?
Of course, another strong argument put forward by CEOs and their likes is that only the best remunerative package can attract the best talents to head the corporation. Some talent ! I must admit they are the best lot to rip the shareholders and their workers off to their selfish personal advantage. Where is your conscience ? I ask again. I think I am qualified to say something about scandalous corporate practices as I used to make my living in auditing and management & tax consultancy for 30 odd years before my retirement in 2006.
There is yet another strong and seemingly unassailable argument put forward by CEOs and their likes in defense of their ridiculously excessive remuneration package. It is legal and they acted within their rights provided by the law. Ah, ha, a very clever, logical and most importantly LEGAL argument but sorry, no dice ! If the law is inadequate to protect the public interest against greedy little creatures society must change the law into a more just and effective set of corporation laws. I will venture to propose some legal improvements to allow more effective regulation of corporate malpractices in my next blog. Yours truly as a voter who cast my vote for Kevin Rudd in the last Australian Federal election I have the right to appeal to the Rudd Government to do something about this less than ideal situation especially in the wakes of the FT. To feed one's own personal vice of GREED by creating unemployment at such a critical time of financial turmoil is a heartless, despicable and treacherous crime against society !
The argument of getting the best talent by unlimited amount of pecuniary reward is flawed. It will only attract the most greedy of the wolf pack which we can do better without. We want our corporate leaders to be clean, honest and they should be people with a social conscience. Such candidates are seldom seen on the corporate scene anywhere precisely because our present " sky is the limit " principle in remunerating corporate custodians is dead wrong in principle. It will not be an unwise move to place a cap on top management remunerative package as a matter of law. I will put forward my own suggestion in upcoming blogs. Obama is doing it to US corporations receiving the rescue package. Why can't this be extended, may be, to a less stringent degree to corporations in general ? ( There is no need for an answer to a rhetorical question, is there ? .... yet another rhetorical question !!!)
The other important issue which is relevant to all legal matters including corporate law is the manipulations by black sheep corporate custodians in the grey areas of the law to fatten their own pockets. This can be remedied by better legislation and developing a more balanced sense of value by steering away from the purely materialistic outlook on life. Australia should be well placed to achieve this grand moral goal having regards to the community spirit so eminently demonstrated by the tremendous support from the public in the recent bushfire appeal to assist victims of the tragedy.
If the reader is interested in knowing more about the pitfalls in the working of corporations in general please access my article on the basic working principles of economics and finance entitled :- " 2008 Financial & Economic Tsunami - An Overview for the Lay Person " highlighted on the navigation bar in my website by clicking on the ( green coloured ) title of this blog or any other blog in this FORUM.
See you all in my next blog on my suggestions on exercising an effective control over corporations.
Yours truly,
JKHC.
Saturday, February 21, 2009
The Financial Tsunami ( FT) - The Way Forward ( 11 ) - Mastering the Mad Dog ? Madoff
After the uncovering of what I called the MAD DOG AFFAIR involving over US$ 80 billion in alleged financial fraud we are again confronted by the further bad news of the STANDFORD alleged financial irregularities involving his small banking chain. Notwithstanding the small size of Stanford's banks the psychological blow on consumer confidence is not at all minor. The scandal has severely affected banking operations in South American ( Venezuela, etc. ) and there are also rumours of instability in the EU banking system as well. The latter development is especially worrying because it may lead to the collapse of the whole EU monetary system which is up to now still holding up reasonably well. If the worst should be proven true a second gigantic wave of the FT is poised to strike with even more devastating power because the delicate financial systems in EU countries have already been weakened by the first wave from the FT.
Unless we can master the MAD DOG and the like no complete recovery for the tattered global financial system is possible. There appears to be a lot of possibilities for collusion and even corruption involved because many big banks and financial houses are victims despite their usual prudence. Why haven't professional auditing practices and verification procedures detect the alleged fraud much earlier ? This big question has a huge bearing on the effectiveness of our regulatory system regarding the financial institutions. Are there gross negligence and even collusion involved at different stages of the whole MAD DOG scenario ?
Apart from the stricter enforcement of more effective financial regulations there is also the concern about the best way to avoid grey areas in the financial laws & regulations from being manipulated to the advantage of the greed of MAD DOG operators and the like. The ultimate solution has to be, as I said in earlier blogs, the attainment of a generally accepted but less materialistic value system in which pure financial rewards on efforts are not the sole motivating factor. Perhaps the raising of over A$ 120 million by private charities alone within a matter of 10 days of the Victorian Black Saturday ( 7th February, 2009 ) Bushfire disaster despite the FT will bring a positive message on the value of and the need to have a less materialistic value system for the global village.
JKHC.
Unless we can master the MAD DOG and the like no complete recovery for the tattered global financial system is possible. There appears to be a lot of possibilities for collusion and even corruption involved because many big banks and financial houses are victims despite their usual prudence. Why haven't professional auditing practices and verification procedures detect the alleged fraud much earlier ? This big question has a huge bearing on the effectiveness of our regulatory system regarding the financial institutions. Are there gross negligence and even collusion involved at different stages of the whole MAD DOG scenario ?
Apart from the stricter enforcement of more effective financial regulations there is also the concern about the best way to avoid grey areas in the financial laws & regulations from being manipulated to the advantage of the greed of MAD DOG operators and the like. The ultimate solution has to be, as I said in earlier blogs, the attainment of a generally accepted but less materialistic value system in which pure financial rewards on efforts are not the sole motivating factor. Perhaps the raising of over A$ 120 million by private charities alone within a matter of 10 days of the Victorian Black Saturday ( 7th February, 2009 ) Bushfire disaster despite the FT will bring a positive message on the value of and the need to have a less materialistic value system for the global village.
JKHC.
Wednesday, February 18, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 10 ) - Homing on Homes
One of Obama's wisest moves on his rescue package so far has just been unveiled. A home rescue fund of US$ 275 billion will be set aside to help refinance the home mortgages of up to 9 million " responsible homeowners " to allow them to stay in their house and avoid foreclosure by banks. Those who lost their speculative investments through greed and misjudgment at the peak of the property bubble in the USA will not be included in the rescue package and so will those who bought beyond their means. This is a fair condition in applying precious and limited taxpayers' funds.
Economically speaking, the logical thing to do is to let people bear the consequences of their own economic decisions. If they had bought at the wrong time let them lose their homes and stay in rented property. However, strict economic principles may be too harsh on the ordinary citizens who acted honestly and spent within their means. Speculators and greedy opportunists apart, most honest and hard working folks are mostly victims of an impersonal capitalistic system run wild. Sometimes, pure logic and dogmatic adherence to rigid economic principles are not user friendly. Take for example. We are in the desert with only a limited supply of precious water and there is a millionaire among the travellers. According to the strict operation of the sacred economic law of supply and demand the millionaire can bid the highest price and so is theorectically capable of getting all the water for himself to save his own life. However, common human decency and generally accepted moral standards will dictate a fair rationing of the precious and limited water supply. That is where the enlightened form of capitalism should come in. No single consideration or working principle relating to any public issue should dominate relevant decisions on the matter.
Economic considerations aside, the psychological effects on boosting the morale and confidence of the general population through such a home rescue package are bound to be far reaching to the point of arresting the rapid decline of consumer confidence. This will in turn produce its desired economic stimulus in terms of consumer spending especially from those who still have savings that are horded because of a gloomy economic outlook. So, it can be easily seen that everything is inter-related in all human affairs and, hence, my personal motto of " ONLY CONNECT " borrowed from the famous and beloved British novelist - E. M. Forster - in his revered novel Howards End.
Three cheers for Obama for landing an effective punch on the Financial Tsunami. This is just a start but hopefully it will be a good start for all global citizens' sake.
JKHC.
Economically speaking, the logical thing to do is to let people bear the consequences of their own economic decisions. If they had bought at the wrong time let them lose their homes and stay in rented property. However, strict economic principles may be too harsh on the ordinary citizens who acted honestly and spent within their means. Speculators and greedy opportunists apart, most honest and hard working folks are mostly victims of an impersonal capitalistic system run wild. Sometimes, pure logic and dogmatic adherence to rigid economic principles are not user friendly. Take for example. We are in the desert with only a limited supply of precious water and there is a millionaire among the travellers. According to the strict operation of the sacred economic law of supply and demand the millionaire can bid the highest price and so is theorectically capable of getting all the water for himself to save his own life. However, common human decency and generally accepted moral standards will dictate a fair rationing of the precious and limited water supply. That is where the enlightened form of capitalism should come in. No single consideration or working principle relating to any public issue should dominate relevant decisions on the matter.
Economic considerations aside, the psychological effects on boosting the morale and confidence of the general population through such a home rescue package are bound to be far reaching to the point of arresting the rapid decline of consumer confidence. This will in turn produce its desired economic stimulus in terms of consumer spending especially from those who still have savings that are horded because of a gloomy economic outlook. So, it can be easily seen that everything is inter-related in all human affairs and, hence, my personal motto of " ONLY CONNECT " borrowed from the famous and beloved British novelist - E. M. Forster - in his revered novel Howards End.
Three cheers for Obama for landing an effective punch on the Financial Tsunami. This is just a start but hopefully it will be a good start for all global citizens' sake.
JKHC.
Saturday, February 14, 2009
A Long & Arduous Road to Recovery
It has been a week since that fateful Black Saturday Victoria Bushfire Storm of 7th February, 2009 which has tragically become the worst national disaster in Australian history. To date, 181 citizens are confirmed dead and many are still missing. It is feared that the death toll could climb to 300 or more. The only silver lining that lingers in the horizon which may provide some comfort to fire victims who have lost their loved ones and everything else is the overwhelming response from the public to the appeal for donation of much needed funds for the rescue of fire victims. So far, the donations have topped A$ 92 million from the private sector alone. To the victims, I express my deepest sympathy and send you all this message :- " You'll Never Walk Alone ! "
Very appropriately, a Royal Commission ( similar to a Congressional hearing in the USA ) will be conducted to examine all facts & circumstances relating to this national tragedy and to make useful recommendations accordingly. From my discussions with fire victims and their friends I have come to the following conclusions about some positive steps that, in my humble opinion, can be implemented to lessen the impact of any future bushfires.
Firstly, country residents must be educated to learn more about bushfire to get themselves prepared for all contingencies. In particular, when to evacuate despite their will to defend their homes. Many of the victims such as the 100 plus fatalities in Marysville were burnt to death in their cars when they were outrun by the raging fire. It was simply a tragic case of a late evacuation. Fanned by over 50 km per hour gale force winds the fire storm outrun their cars in which the victims were severely hindered by thick smoke or blocked by fallen & burning trees. Many victims had sadly misjudged the ferocity of the fire storm and their own ability to defend their home against the overwhelming fury of mother nature.
Secondly, there should be some statute law to allow the emergency services ( the police, CFA - Country Fire Authority ) to order a forced evacuation like the USA. Understandably, people are strongly attached to their homes but it is not logical to ask people to make up their own minds on emotional issues such as this. Despite the difficulty of implementation it is about time that the Australian people should re-think their present practices that have proven fatal to so many in the Black Saturday Bushfire Storm.
Thirdly, building laws must also be updated to provide for the compulsory construction of underground fire escape bunkers for those who are too late to escape the inferno. Based on first hand experience from surviving victims ( such as the those related to the video link attached at the end of this blog which was produced by me ) the fire storm will pass in a few minutes after burning out all its fuel such as trees, shrubs and houses in your location. In the case of my friend's neighbours, the couple were wise enough with their construction knowledge to have used fire retardant materials for the interior of their burnt down home. They were at one point trapped inside their slowly burning house ( slowly because of the fire retardant materials ) while their house was surrounded by the raging ring of fire which burnt out the environment within a matter of a few minutes. Had their own house burnt at the same rate as the exterior fire storm they would have perished for sure. These are useful and expensive lessons to be learnt from this tragedy of grand scale. Fire victims commented that compared to the Ash Wednesday Bushfire ( also in Victoria ) in 1983 that killed 75 people the one week old Black Saturday Bushfire Storm is like hell on earth as opposed to a BBQ in the backyard for the former.
Fourth, a Federal Member of Parliament who is an engineer rightly pointed out that the wooden cross bars of electricity transmission posts must be replaced by steel once to prevent country fires from occurring due to a short circuit. A substantial percentage of over 10 % of bushfires are caused by this problem. The Australian Government must act to rectify this problem and must do so quickly as soon as the findings of the Royal Commission are published.
Fifth, I as well as many others think the the decade long protracted drought is a major contributing factor to this national tragedy. Everything is so dry that trees and shrubs will ignite on the slightest spark be it from thunder & lightening or arsonists. The northern part of Australia falls in the tropics with torrential rain every year. It is high time the Commonwealth Government should seriously co-ordinate with the efforts of State Governments to consider constructing aqua ducts to transfer now wasted tropical rain water in the north of the country to the dry south and south west. There are, of course, numerous complicated issues involved but this will be part of the ultimate solution to our perennial drought due to global warming. The present piece meal and expensive measure of using desalination plants which are inefficient, not cost effective and create more green house gas is not a long term viable solution. Such huge infrastructure project would ideally form part of the Financial Tsunami rescue package that will also justify national borrowing because it will have endless enduring future benefits for the good of all future generations of citizens.
Let us pray and lend our support to the bushfire victims on their long & arduous road to full recovery if that is ever possible.
JKHC.
http://www.youtube.com/watch?v=eXtf983QyWg&feature=channel_page
http://www.youtube.com/watch?v=PGaXBZVMLZA&feature=channel_page
Very appropriately, a Royal Commission ( similar to a Congressional hearing in the USA ) will be conducted to examine all facts & circumstances relating to this national tragedy and to make useful recommendations accordingly. From my discussions with fire victims and their friends I have come to the following conclusions about some positive steps that, in my humble opinion, can be implemented to lessen the impact of any future bushfires.
Firstly, country residents must be educated to learn more about bushfire to get themselves prepared for all contingencies. In particular, when to evacuate despite their will to defend their homes. Many of the victims such as the 100 plus fatalities in Marysville were burnt to death in their cars when they were outrun by the raging fire. It was simply a tragic case of a late evacuation. Fanned by over 50 km per hour gale force winds the fire storm outrun their cars in which the victims were severely hindered by thick smoke or blocked by fallen & burning trees. Many victims had sadly misjudged the ferocity of the fire storm and their own ability to defend their home against the overwhelming fury of mother nature.
Secondly, there should be some statute law to allow the emergency services ( the police, CFA - Country Fire Authority ) to order a forced evacuation like the USA. Understandably, people are strongly attached to their homes but it is not logical to ask people to make up their own minds on emotional issues such as this. Despite the difficulty of implementation it is about time that the Australian people should re-think their present practices that have proven fatal to so many in the Black Saturday Bushfire Storm.
Thirdly, building laws must also be updated to provide for the compulsory construction of underground fire escape bunkers for those who are too late to escape the inferno. Based on first hand experience from surviving victims ( such as the those related to the video link attached at the end of this blog which was produced by me ) the fire storm will pass in a few minutes after burning out all its fuel such as trees, shrubs and houses in your location. In the case of my friend's neighbours, the couple were wise enough with their construction knowledge to have used fire retardant materials for the interior of their burnt down home. They were at one point trapped inside their slowly burning house ( slowly because of the fire retardant materials ) while their house was surrounded by the raging ring of fire which burnt out the environment within a matter of a few minutes. Had their own house burnt at the same rate as the exterior fire storm they would have perished for sure. These are useful and expensive lessons to be learnt from this tragedy of grand scale. Fire victims commented that compared to the Ash Wednesday Bushfire ( also in Victoria ) in 1983 that killed 75 people the one week old Black Saturday Bushfire Storm is like hell on earth as opposed to a BBQ in the backyard for the former.
Fourth, a Federal Member of Parliament who is an engineer rightly pointed out that the wooden cross bars of electricity transmission posts must be replaced by steel once to prevent country fires from occurring due to a short circuit. A substantial percentage of over 10 % of bushfires are caused by this problem. The Australian Government must act to rectify this problem and must do so quickly as soon as the findings of the Royal Commission are published.
Fifth, I as well as many others think the the decade long protracted drought is a major contributing factor to this national tragedy. Everything is so dry that trees and shrubs will ignite on the slightest spark be it from thunder & lightening or arsonists. The northern part of Australia falls in the tropics with torrential rain every year. It is high time the Commonwealth Government should seriously co-ordinate with the efforts of State Governments to consider constructing aqua ducts to transfer now wasted tropical rain water in the north of the country to the dry south and south west. There are, of course, numerous complicated issues involved but this will be part of the ultimate solution to our perennial drought due to global warming. The present piece meal and expensive measure of using desalination plants which are inefficient, not cost effective and create more green house gas is not a long term viable solution. Such huge infrastructure project would ideally form part of the Financial Tsunami rescue package that will also justify national borrowing because it will have endless enduring future benefits for the good of all future generations of citizens.
Let us pray and lend our support to the bushfire victims on their long & arduous road to full recovery if that is ever possible.
JKHC.
http://www.youtube.com/watch?v=eXtf983QyWg&feature=channel_page
http://www.youtube.com/watch?v=PGaXBZVMLZA&feature=channel_page
Monday, February 9, 2009
A Day of Mourning for Australia Especially the Residents of the State of Victoria
From the start of the fatal bush fire in country Victoria on 7th February the devastation bush fire storm has killed 131 of my fellow citizens most of whom were trying desperately to save their own home just 50 km. east of the State Capital - Melbourne where I live with my family.
Let us pause for a moment in silence to pay our respects to those brave souls who lost their life in defense of their sweet home and livelihood. Many of us may think that the victims could have escaped with their lives if they were not so attached to their material possessions. This is both an after the facts assessment and a purely logical view without taking human feelings and emotion into consideration. Many of the victims were husbands and fathers who first evacuated their loved ones to safety and then returned to their own house to defend their home and protect the interests of their family. To these brave and dedicated souls I offer my profound admiration and my deepest heartfelt condolences to their families.
I have been in Australia since 1997 ( though travelling a lot overseas on business ). I realize that the Australian way may sometimes baffle the foreigners. You may call the Aussie thinking simple or even naive but, in fact, there is very often a profound sense of heroism and unmaterialistic ( my own coined term ) touch about it. Similar in some ways to Canadians many Australians have fought in foreign conflicts and given up their lives for other nations when Aussies believe in the cause for which they are fighting. Aussies ( and Kiwis - New Zealanders ) fought courageously and showed a profound sense of mateship ( or simply fellowship and solidarity ) in Gallipoli in 1915 ( where the ANZAC tradition started ) and in famous WWII battles like the RATS of Tobruk in North Africa along side the Allied forces. Aussies though seen as simple and even unambitious by some are, in fact, good materials for doubling as the vanguards for the enlightened capitalism I so strongly advocate to save the global village form all future financial tsunami. It is a more balanced and much less materialistic value system that most Aussies hold dear to their hearts.
A simple example would illustrate my point. It was from my own personal experience. About 3 years ago I and my family were holidaying in a resort town called Lakes Entrance in North Eastern Victoria. We were in desperate need of a pencil to play the game of bingo held in the lounge of the restaurant where we stopped by for coffee in the early evening. I went to the bookshop next to the restaurant to buy some. All the pencils for sale there were packaged in boxes of a dozen but when the shop owner realized that my purpose was for a game of bingo she just opened up one sealed box of pencil and gave me one for free. I have never had that happen to me in any holiday resort any where in the world. I offered to pay for the whole box but the owner simply said that she will be giving away the rest to her neighbour's children for their classes. She insisted that I should get the pencil for free because I am a tourist supporting the local industry. The value of the pencil is negligible but the friendly attitude is impressive. Ultimately, the motive was to be nice to tourists which may be commercially oriented but she is not the one directly benefited by our visit at that particular moment in time.
Coming back to the bush fire tragedy, heroism is commendable but blind zeal should not be encouraged. Already, the State Premier has announced that a Royal Commission will be set up to investigate and make recommendations on the present tragic incident. The main consideration is to make it compulsory for residents to follow orders for evacuation from the police and the fire authority in times of a bush fire. At present they cannot force the residents to leave unless a state of emergency is declared in which case martial law would be in force. That is the reason why the State Government is not willing to resort to declaring a state of emergency. Anyway, it is a right step forward to appoint a Royal Commission.
Finally, the mateship and solidarity of other fellow citizens are also highly commendable. Already the call for a fundraiser has been answered by a total donation of some 6 million ( Australian currency ) from the private sector. One will realize that this is a tremendous response having regards to the financial tsunami and the generally cash strapped position of the general population. Second hand clothing and domestic appliance stores are common here. Although the basic welfare is quite satisfactory for all citizens extra cash is hard to come by because of the high tax system.
Last but not least, I must salute the emergency services here especially the CFA ( Country Fire Authority ) the majority members of which are volunteers. One will feel ashamed in Australia if he or she is not engaged in some form of voluntary service to society. That was the reason why the Sydney Olympics back in 2000 was the most profitable Game in terms of surplus revenue.
I sincerely hope that the heart warming assistance from fellow Aussies will help make the pains of the survivors who have lost some of their loved ones less unbearable.
JKHC.
( N.B. Donation from the private sector now stands at an amazing A$ 110 million as of Feb. 20 but sadly the death toll has also risen to 208 )
Let us pause for a moment in silence to pay our respects to those brave souls who lost their life in defense of their sweet home and livelihood. Many of us may think that the victims could have escaped with their lives if they were not so attached to their material possessions. This is both an after the facts assessment and a purely logical view without taking human feelings and emotion into consideration. Many of the victims were husbands and fathers who first evacuated their loved ones to safety and then returned to their own house to defend their home and protect the interests of their family. To these brave and dedicated souls I offer my profound admiration and my deepest heartfelt condolences to their families.
I have been in Australia since 1997 ( though travelling a lot overseas on business ). I realize that the Australian way may sometimes baffle the foreigners. You may call the Aussie thinking simple or even naive but, in fact, there is very often a profound sense of heroism and unmaterialistic ( my own coined term ) touch about it. Similar in some ways to Canadians many Australians have fought in foreign conflicts and given up their lives for other nations when Aussies believe in the cause for which they are fighting. Aussies ( and Kiwis - New Zealanders ) fought courageously and showed a profound sense of mateship ( or simply fellowship and solidarity ) in Gallipoli in 1915 ( where the ANZAC tradition started ) and in famous WWII battles like the RATS of Tobruk in North Africa along side the Allied forces. Aussies though seen as simple and even unambitious by some are, in fact, good materials for doubling as the vanguards for the enlightened capitalism I so strongly advocate to save the global village form all future financial tsunami. It is a more balanced and much less materialistic value system that most Aussies hold dear to their hearts.
A simple example would illustrate my point. It was from my own personal experience. About 3 years ago I and my family were holidaying in a resort town called Lakes Entrance in North Eastern Victoria. We were in desperate need of a pencil to play the game of bingo held in the lounge of the restaurant where we stopped by for coffee in the early evening. I went to the bookshop next to the restaurant to buy some. All the pencils for sale there were packaged in boxes of a dozen but when the shop owner realized that my purpose was for a game of bingo she just opened up one sealed box of pencil and gave me one for free. I have never had that happen to me in any holiday resort any where in the world. I offered to pay for the whole box but the owner simply said that she will be giving away the rest to her neighbour's children for their classes. She insisted that I should get the pencil for free because I am a tourist supporting the local industry. The value of the pencil is negligible but the friendly attitude is impressive. Ultimately, the motive was to be nice to tourists which may be commercially oriented but she is not the one directly benefited by our visit at that particular moment in time.
Coming back to the bush fire tragedy, heroism is commendable but blind zeal should not be encouraged. Already, the State Premier has announced that a Royal Commission will be set up to investigate and make recommendations on the present tragic incident. The main consideration is to make it compulsory for residents to follow orders for evacuation from the police and the fire authority in times of a bush fire. At present they cannot force the residents to leave unless a state of emergency is declared in which case martial law would be in force. That is the reason why the State Government is not willing to resort to declaring a state of emergency. Anyway, it is a right step forward to appoint a Royal Commission.
Finally, the mateship and solidarity of other fellow citizens are also highly commendable. Already the call for a fundraiser has been answered by a total donation of some 6 million ( Australian currency ) from the private sector. One will realize that this is a tremendous response having regards to the financial tsunami and the generally cash strapped position of the general population. Second hand clothing and domestic appliance stores are common here. Although the basic welfare is quite satisfactory for all citizens extra cash is hard to come by because of the high tax system.
Last but not least, I must salute the emergency services here especially the CFA ( Country Fire Authority ) the majority members of which are volunteers. One will feel ashamed in Australia if he or she is not engaged in some form of voluntary service to society. That was the reason why the Sydney Olympics back in 2000 was the most profitable Game in terms of surplus revenue.
I sincerely hope that the heart warming assistance from fellow Aussies will help make the pains of the survivors who have lost some of their loved ones less unbearable.
JKHC.
( N.B. Donation from the private sector now stands at an amazing A$ 110 million as of Feb. 20 but sadly the death toll has also risen to 208 )
Friday, February 6, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 9 ) - Caps off to the Captain
The hero of last month's lucky escape for everyone on board US Airways Flight 1549 that forced landed in the Hudson River of NYC, Captain Chesley Sullenberger is exemplary among his peers. It was his professionalism and nerve of steel that were the main factors behind that miraculous escape for everyone. Of course, luck is always a dominant player as usual. I raise my hat to this real American hero who had made a critical difference at the hour of near disaster. Had every high ranking Wall Street executive possessed his qualities we would not be in our present predicament.
I haven't got the slightest doubt that all Wall Street gurus are tip top professionals but where had their professional skills been applied to ? The most important thing that would make the difference between a hero and a villain is not simply skill but a sense of duty and his sense of dedication to his fellow citizens. If one is to choose between skill and honour the latter has to be the better bet especially with regard to key financial institutions where integrity and a high moral standard are the only safeguard for public interest. No written law can effectively prevent the CEO of a giant corporation from benefiting from insider dealing based on sensitive information privy to the top management. Therefore, a basic change in the value system in a capitalistic society is badly needed.
Instead of measuring people's success solely in terms of dollars and cents thus creating a lob-sided sense of value we should look to other qualitative factors such as how the environment is protected by a particular measure or how large is the proportion of the population that has been benefited by that measure. More attention must be paid to our younger generation in fostering their healthy sense of value. For example, the reward for getting good grades at school need not be monetary or materialistic in nature. The promise of a family trip or other more cultural rewards such as attending concert together could in the long run change the value of the younger generation. Down under where yours truly have my adopted home. The financially disadvantaged kids here need not fear that they will be totally ignored by other attractive young teenagers. If they surf well or have a good sense of humour there are endless opportunities to find a partner for life. Of course, the American way may find them not ambitious enough or they may even be considered as losers. But who could have imagined before 2008 that those who have failed the world most badly would be the ambitious and high flying Wall Street achievers. Everything has its time and place. Some issues take time to resolve or evolve to full maturity. The " instant noodle " culture or instant result ( at the expense of fairness or morality ) attitude can never stand the test of time. Chasing economic efficiency at the expense of moral efficacy has proven to be costly for the whole global village. We must think twice about keeping to the outdated " sky is the limit " view for remunerating or motivating people in the enlightened form of capitalism that would be a fundamental solution to prevent any more future FT. A balanced value system is the best safeguard against such disasters with a healthy financial regulatory system acting as a second line of defense.
So, let us hope and pray that all future key custodians of key financial institutions on Wall Street are like the real American hero, Captain Sullenberger who is a person of high professionalism with a nerve of steel in time of crisis because he puts honour before everything else including his own life and limb not to say the pathetic vice of greed. If the black sheep of Wall street were honourable they would have surrendered all their loots to their government to be used as part of the FT rescue package. Isn't it the honourable and right thing to do to make up for your mistakes by doing reparation ?
JKHC.
I haven't got the slightest doubt that all Wall Street gurus are tip top professionals but where had their professional skills been applied to ? The most important thing that would make the difference between a hero and a villain is not simply skill but a sense of duty and his sense of dedication to his fellow citizens. If one is to choose between skill and honour the latter has to be the better bet especially with regard to key financial institutions where integrity and a high moral standard are the only safeguard for public interest. No written law can effectively prevent the CEO of a giant corporation from benefiting from insider dealing based on sensitive information privy to the top management. Therefore, a basic change in the value system in a capitalistic society is badly needed.
Instead of measuring people's success solely in terms of dollars and cents thus creating a lob-sided sense of value we should look to other qualitative factors such as how the environment is protected by a particular measure or how large is the proportion of the population that has been benefited by that measure. More attention must be paid to our younger generation in fostering their healthy sense of value. For example, the reward for getting good grades at school need not be monetary or materialistic in nature. The promise of a family trip or other more cultural rewards such as attending concert together could in the long run change the value of the younger generation. Down under where yours truly have my adopted home. The financially disadvantaged kids here need not fear that they will be totally ignored by other attractive young teenagers. If they surf well or have a good sense of humour there are endless opportunities to find a partner for life. Of course, the American way may find them not ambitious enough or they may even be considered as losers. But who could have imagined before 2008 that those who have failed the world most badly would be the ambitious and high flying Wall Street achievers. Everything has its time and place. Some issues take time to resolve or evolve to full maturity. The " instant noodle " culture or instant result ( at the expense of fairness or morality ) attitude can never stand the test of time. Chasing economic efficiency at the expense of moral efficacy has proven to be costly for the whole global village. We must think twice about keeping to the outdated " sky is the limit " view for remunerating or motivating people in the enlightened form of capitalism that would be a fundamental solution to prevent any more future FT. A balanced value system is the best safeguard against such disasters with a healthy financial regulatory system acting as a second line of defense.
So, let us hope and pray that all future key custodians of key financial institutions on Wall Street are like the real American hero, Captain Sullenberger who is a person of high professionalism with a nerve of steel in time of crisis because he puts honour before everything else including his own life and limb not to say the pathetic vice of greed. If the black sheep of Wall street were honourable they would have surrendered all their loots to their government to be used as part of the FT rescue package. Isn't it the honourable and right thing to do to make up for your mistakes by doing reparation ?
JKHC.
Thursday, February 5, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 8 ) - COMFORTING CORPORATE CAP
The New York Times has just reported that the Obama administration is imposing a maximum limit of US$ 500,000 for all high ranking executives of corporations which receive government benefits under the FT rescue package. However, this policy does not apply to the 350 institutions already rescued prior to this announcement of new policies. It is the first piece of good news for the new administration after some embarrassing bungles. It is, indeed, a COMFORTING CORPORATE CAP.
It has been suggested that because of this new limitation on corporate executives' remuneration some corporations intending to apply for the government rescue package may think twice before submitting their applications. This is good news if proven to be true. In the worst scenarios these marginally functioning institutions may fail without government aid but it is an economically sensible thing to allow inefficient entities to pass on so that a new leaf can be turned to cut them loose from past blunders. Sometimes, the worry about the resultant unemployment created by failed enterprises is blown out of proportion. Please do not misunderstand my intention. I am not happy to see more people becoming unemployed. There are bound to be more efficient owners coming in to buy the existing corporate structure with the related market share in that particular line of trade. New owners must be required to make the best possible arrangement with the existing work force and reduce lay offs to the barest minimum. A new start may not be a bad thing for some industries like the US motor industry to rid them of cumbersome labour contracts and other investment decision bungles.
Obama seems to be a bit apologetic about this new policy by reassuring the business world that there is no intention on the part of the US Government to curb personal efforts or create disincentives for successful business persons within the US market framework. If the report on the reluctance of marginal corporations to apply for the rescue package on account of the new cap on corporate executive remuneration is true it will imply that the high ranking executives are still intoxicated by the corporate piggy bank tradition of excessive remuneration. Not to be allowed to rip off the corporation of which they are custodians will piss them off. It would also mean that the traditional capitalistic concept of " SKY IS THE LIMIT " is still very much alive and kicking. As I have advocated in The Way Forward ( 3 ) - And Justice for ALL ! - there is no such thing as without limits. Such a concept is against the very basic principle of economics. If there are no limits to our resources there would be no need to have the discipline of economics to carry out the most efficient allocation and utilization of our imaginary unlimited amount of resources. Since resources are scarce and have limits in terms of availability so must corporate executive remuneration which is a factor ( or cost ) of production.
More open discussions must be conducted by the public on how to set a cap on corporate executive remuneration beyond a certain maximum amount for all corporations. Not just for those benefited by the FT rescue package. Such a cap may vary from one industry to another depending on particular circumstances but the cap must meet at least two criteria. Firstly, it must not be too low to discourage capable hands from running key industries. On the other hand, a reasonable cap must be set to do away with the traditional capitalistic concept of encouraging endless greed. The ideal thing is to introduce such a cap sooner rather than later. Anyway, it is high time for the public discussion on such a cap to start to allow for adequate input and consultation. Using the right size for a COMFORTABLE CORPORATE CAP will make everyone look economically smart.
JKHC.
It has been suggested that because of this new limitation on corporate executives' remuneration some corporations intending to apply for the government rescue package may think twice before submitting their applications. This is good news if proven to be true. In the worst scenarios these marginally functioning institutions may fail without government aid but it is an economically sensible thing to allow inefficient entities to pass on so that a new leaf can be turned to cut them loose from past blunders. Sometimes, the worry about the resultant unemployment created by failed enterprises is blown out of proportion. Please do not misunderstand my intention. I am not happy to see more people becoming unemployed. There are bound to be more efficient owners coming in to buy the existing corporate structure with the related market share in that particular line of trade. New owners must be required to make the best possible arrangement with the existing work force and reduce lay offs to the barest minimum. A new start may not be a bad thing for some industries like the US motor industry to rid them of cumbersome labour contracts and other investment decision bungles.
Obama seems to be a bit apologetic about this new policy by reassuring the business world that there is no intention on the part of the US Government to curb personal efforts or create disincentives for successful business persons within the US market framework. If the report on the reluctance of marginal corporations to apply for the rescue package on account of the new cap on corporate executive remuneration is true it will imply that the high ranking executives are still intoxicated by the corporate piggy bank tradition of excessive remuneration. Not to be allowed to rip off the corporation of which they are custodians will piss them off. It would also mean that the traditional capitalistic concept of " SKY IS THE LIMIT " is still very much alive and kicking. As I have advocated in The Way Forward ( 3 ) - And Justice for ALL ! - there is no such thing as without limits. Such a concept is against the very basic principle of economics. If there are no limits to our resources there would be no need to have the discipline of economics to carry out the most efficient allocation and utilization of our imaginary unlimited amount of resources. Since resources are scarce and have limits in terms of availability so must corporate executive remuneration which is a factor ( or cost ) of production.
More open discussions must be conducted by the public on how to set a cap on corporate executive remuneration beyond a certain maximum amount for all corporations. Not just for those benefited by the FT rescue package. Such a cap may vary from one industry to another depending on particular circumstances but the cap must meet at least two criteria. Firstly, it must not be too low to discourage capable hands from running key industries. On the other hand, a reasonable cap must be set to do away with the traditional capitalistic concept of encouraging endless greed. The ideal thing is to introduce such a cap sooner rather than later. Anyway, it is high time for the public discussion on such a cap to start to allow for adequate input and consultation. Using the right size for a COMFORTABLE CORPORATE CAP will make everyone look economically smart.
JKHC.
Tuesday, February 3, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 7 ) - Don't put your wrong foot forward.
Somethings you do not ever want them to come true. In the majorities of cases, the worst scenario will materialize out of all our fears. This is known as Murphy's Law in science. I was talking about the P word or Protectionism in The Way Forward ( 5 ) and the dark clouds have already gathered on the horizon of international trade fast. Apart from the currency manipulation accusation against China the US Government FT rescue package due to be put to the US Congress will specify that all government aided enterprises must buy from local US suppliers for the purposes of their trade. This is an undisguised act of protection. Already the EU has threatened to bring the US Government to the WTO for arbitration on the issue. A serious international trade dispute is in the making. Should a full blown international trade conflict occur the anticipated world economic recovery period could be stretched to a decade or even longer. This is unthinkable !
The US conditional FT rescue package will certainly win the hearts of US voters but is it really a good strategy in the long run ? It is an unqualified NO ! If every country falls back upon the P word to protect employment in their our country at the expense of free trade and economic efficiency the world economy will become a shrinking loaf of bread as a result of multilateral trade retaliations. This is the worst possible scenario that could come to pass. You see, being a world leader will come at a cost, sometimes a painful one. It means exactly what the term LEADER implies. There are obligations attached to the honour of being the world's leading nation. She must take the lead to do the right thing with the related sacrifices not just rhetoric. It can hardly be disputed that the origin of the FT can be traced back to the dubious behaviour of the black sheep on Wall Street. It is high time and a good chance to show the world that USA means what she has committed herself to do in Obama's inaugural speech :- " USA is a friend to everyone in the world." Taking a step towards the P word can hardly be seen as world friendly. So, think twice before you leap. Your tarnished image is already in dire need of a good polishing. Please do not start the FT rescue mission by putting your wrong foot forward. To push ahead in this wrong direction will be tantamount to creating another disaster on top of the already devastating FT. It will be the same as throwing petrol into an open furnace. Common sense must prevail !
JKHC.
The US conditional FT rescue package will certainly win the hearts of US voters but is it really a good strategy in the long run ? It is an unqualified NO ! If every country falls back upon the P word to protect employment in their our country at the expense of free trade and economic efficiency the world economy will become a shrinking loaf of bread as a result of multilateral trade retaliations. This is the worst possible scenario that could come to pass. You see, being a world leader will come at a cost, sometimes a painful one. It means exactly what the term LEADER implies. There are obligations attached to the honour of being the world's leading nation. She must take the lead to do the right thing with the related sacrifices not just rhetoric. It can hardly be disputed that the origin of the FT can be traced back to the dubious behaviour of the black sheep on Wall Street. It is high time and a good chance to show the world that USA means what she has committed herself to do in Obama's inaugural speech :- " USA is a friend to everyone in the world." Taking a step towards the P word can hardly be seen as world friendly. So, think twice before you leap. Your tarnished image is already in dire need of a good polishing. Please do not start the FT rescue mission by putting your wrong foot forward. To push ahead in this wrong direction will be tantamount to creating another disaster on top of the already devastating FT. It will be the same as throwing petrol into an open furnace. Common sense must prevail !
JKHC.
Monday, February 2, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 6 ) - Beat FT at its own game, with FT Bonds
Extraordinary times call for extraordinary measures but not at the expense of fundamental human rights ( at the legal level ) and decency ( in the moral arena ). It is not at all an exaggeration to say that we are fighting another world war, albeit a financial one. In a war, not just the government but every responsible citizen must get involved. This is the sacred mission of any person with a sense of duty and basic human decency. I am not advocating a declaration of a state of emergency to allow government access to all economic resources which bureaucrats and dictators would jump with joy. I am simply proposing to beat FT at its own game by the issue of FT FIGHTING BONDS ( FTFB ) either by the government or through some public agency closely monitored by law and the government. All repayments on maturity must be guaranteed by government because it is a national debt for the benefit of all. Let us discuss the pros and cons of my crazy proposal.
Firstly, for the pros it has been done many times before but only this time the bonds are issued to fight a genuine and devastating financial war. All blueprints on the set up, administration and monitoring ( with publication of annual independent audit reports, etc. ) are readily available. Therefore, it will take a very short period of time to implement. The time element is vital in a fire fighting operation as in the present scenario. Secondly, it will provide much needed funds for the government's rescue efforts - far, far better than the undesirable and morally dubious emergency measure of printing more money. The last measure is a certain and fast track leading to degeneration into a fifth class nation. Thirdly, promoting the sale of FTFB will serve the ideal purpose of re-educating the public on their civic sense of duty and thus will hopefully lead to a new and enlightened sense of value - the enlightened capitalism I am strongly advocating. Fourth, the concept should be easily sold to the public because of its dependable and historical reputation. Fifth, it is a healthy way to channel saving ( or hoarding at this point ) back to investment in infrastructure that has enduring benefits for all future generations. This is the least our present generation can do to sweeten the bitter fruits produced by those black sheep among our own generation. They have messed it up badly for all of us and for all future generations. How can you black sheep sleep at night or face your own kids after what you have done ?
Let us not be carried away by the above pros of my humble suggestion on FTFB. The obvious cons or disadvantages are not few. Firstly, more bureaucratic ( which means more red tapes and waste in administrative costs ) structures will be put in place. Secondly, it is not equitable friendly because the interest paid on FTFB will mostly go to the well off sections of society who can spare the cash to buy the bonds. It is just the same in the case of the disadvantages of national debt ( please see the appropriate section in my FT paper by hitting the above blog title to reach my website ). Thirdly, a lot of promotion will be necessary at this gloomy time to persuade people to buy FTFB but an appeal to their patriotism might help. To fight the FT is as urgent as fighting terrorism at this point in world history because we have all been mortally hurt by financial terrorists. Fourth, it can give some totalitarian regimes another excuse to further exploit their citizens but that is a sad fact of life with such despicable regimes. The same criticism can be leveled at all public projects when such regimes are involved. Fifth, as always with rescue packages it will take a lot of arguments to settle the priority in spending the FTFB funds. This is just a general issue with all public spending.
The above humble contraption of mine is by no means perfect. That is the whole point of setting up my forum. This is also the beauty and importance of the basic human rights of expression. More heads are always better than one walnut head like mine. Please comment and criticize my reasoning so that we may learn from one another and hopefully do our insignificant part to fight this war against the FT. As a wise Chinese saying goes :- " When you add more stuff into boiling water it will eventually become something substantial and sustaining like porridge ! "
Firstly, for the pros it has been done many times before but only this time the bonds are issued to fight a genuine and devastating financial war. All blueprints on the set up, administration and monitoring ( with publication of annual independent audit reports, etc. ) are readily available. Therefore, it will take a very short period of time to implement. The time element is vital in a fire fighting operation as in the present scenario. Secondly, it will provide much needed funds for the government's rescue efforts - far, far better than the undesirable and morally dubious emergency measure of printing more money. The last measure is a certain and fast track leading to degeneration into a fifth class nation. Thirdly, promoting the sale of FTFB will serve the ideal purpose of re-educating the public on their civic sense of duty and thus will hopefully lead to a new and enlightened sense of value - the enlightened capitalism I am strongly advocating. Fourth, the concept should be easily sold to the public because of its dependable and historical reputation. Fifth, it is a healthy way to channel saving ( or hoarding at this point ) back to investment in infrastructure that has enduring benefits for all future generations. This is the least our present generation can do to sweeten the bitter fruits produced by those black sheep among our own generation. They have messed it up badly for all of us and for all future generations. How can you black sheep sleep at night or face your own kids after what you have done ?
Let us not be carried away by the above pros of my humble suggestion on FTFB. The obvious cons or disadvantages are not few. Firstly, more bureaucratic ( which means more red tapes and waste in administrative costs ) structures will be put in place. Secondly, it is not equitable friendly because the interest paid on FTFB will mostly go to the well off sections of society who can spare the cash to buy the bonds. It is just the same in the case of the disadvantages of national debt ( please see the appropriate section in my FT paper by hitting the above blog title to reach my website ). Thirdly, a lot of promotion will be necessary at this gloomy time to persuade people to buy FTFB but an appeal to their patriotism might help. To fight the FT is as urgent as fighting terrorism at this point in world history because we have all been mortally hurt by financial terrorists. Fourth, it can give some totalitarian regimes another excuse to further exploit their citizens but that is a sad fact of life with such despicable regimes. The same criticism can be leveled at all public projects when such regimes are involved. Fifth, as always with rescue packages it will take a lot of arguments to settle the priority in spending the FTFB funds. This is just a general issue with all public spending.
The above humble contraption of mine is by no means perfect. That is the whole point of setting up my forum. This is also the beauty and importance of the basic human rights of expression. More heads are always better than one walnut head like mine. Please comment and criticize my reasoning so that we may learn from one another and hopefully do our insignificant part to fight this war against the FT. As a wise Chinese saying goes :- " When you add more stuff into boiling water it will eventually become something substantial and sustaining like porridge ! "
Sunday, February 1, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 5 ) - Protection Points the way to Public Poverty
I have mentioned in my article on the FT ( in the conclusion section on page 57 - please hit on the blog title above to reach my website and article ) that should trade Protectionism again raises its ugly head our present crisis could be prolonged to an unacceptable length of time. The P word must be avoided at all costs.
Unfortunately, there appears to be ominous signs of its revival. The Obama economic team has directly accused China of manipulating her currency, the RMB, to gain trade advantages. This is a bad move in that it is both badly timed from the global perspective and it is souring the much needed co-operative atmosphere among all nations to combat the FT in good faith and in unison. Even verbal confrontation at the time of a coordinated fight against the FT is counter productive as well as a distraction from the issue at hand. As the usual case in all human affairs it is misleading and mostly invalid to point to a single cause in the occurrence of any unhappy event. The simple reason for this is the complicated interactions and feedback loops created in all multilateral dealings that make a one-to-one or cause effect analysis quite impossible. Therefore, it is to everyone's advantage to avoid engaging in such a dangerous move especially at the present critical moment. Most global citizens are placing a lot of hope on the historic Obama administration in changing for the better. So, please heed the right advice and ignore the bad ones. With such a high profile announcement it may even create the wrong impression at the start of the Obama administration. I sincerely hope that the accusation concerning currency manipulation is not the prelude to trade retaliation.
On a more positive note, countries with huge trade surpluses like China should utilize her reserves to buy capital or investment items such as passenger aircraft from USA ( as wisely suggested by one of my friends ). Already China is making the right moves in putting forward rebuilding plans for last year's earthquake devastation in the Sichuan Province. The suggestion to buy from USA is not just a move to prop up the US market. It will go much further to help revitalize US consumer confidence that will in turn increase demand for consumer items in which China specializes. It may sound silly to make your customers rich so that they can afford to buy more from you. This is exactly what is actually happening under the proper working of the market economy. The theoretically ideal international trade position between two countries is an exact balance in their mutual trade accounts. This is because the surplus country like China is actually under-utilizing her purchasing power. To buy more capital goods means to acquire a greater potential for future economic growth. On the other hand the deficit country like USA will be faced with a lot of problems related to deficit financing. Thus, it will be seen that the surplus country is always in a better position in terms of control and having more options.
While advocating a theoretical balance of payment position in international trade it is also important to realize that there must be some trade reserve in reality and save it for a rainy day. However, the appropriate amount of reserve is open to question. There is a school of thought that suggests an amount of reserve equal to 18 months of projected recurrent government spending is appropriate. There are no hard and fast rules. The right amount depends entirely on the needs and circumstances of individual countries. The amount of any reserve usually appears to be huge and idle in good times and very often looks inadequate when disasters strike. There are endless factors to consider because of the endless human needs. That is why an apt definition of the discipline of economics is said to be :- " The study of how people meet their unlimited needs by limited means."
On the international front, we should realize the ultimate goal of globalization for a complete free flow of economic resources, human resources and ideas. Only when this ideal position is achieved will the existing global resources be most efficiently utilized. This will help us in our fight against the FT. The only way to attain the above goal is to open up markets and trade on an equal footing for all countries. Politicians will always be under pressure from voters to protect the narrow national interest by imposing trade barriers to protect local employment. Therefore, it is a touch stone or litmus test for leaders of any country in assessing the scope of his or her vision and strength of leadership to see if he or she can do the right thing under heavy political pressure and severe criticism based solely on national interest. It is a defining line between becoming a great statesman and simply remaining as a petty politician.
The amount of appropriate trade reserve to be maintained as a prudent move is open to deliberation but the evils of trade Protectionism and political Isolationism are beyond dispute.
History has time and again taught us by painful lessons such as the Second World War that such undesirable policies will lead to tragic consequences on a global scale. The evils such policies generate must be done away with for good.
The leader of a country may win over voters through trade Protectionism but he or she will ultimately falter because it is a certainty that PROTECTION points the way TO PUBLIC POVERTY. So, we must prevent Protectionism from raising its ugly head again ever.
JKHC.
Unfortunately, there appears to be ominous signs of its revival. The Obama economic team has directly accused China of manipulating her currency, the RMB, to gain trade advantages. This is a bad move in that it is both badly timed from the global perspective and it is souring the much needed co-operative atmosphere among all nations to combat the FT in good faith and in unison. Even verbal confrontation at the time of a coordinated fight against the FT is counter productive as well as a distraction from the issue at hand. As the usual case in all human affairs it is misleading and mostly invalid to point to a single cause in the occurrence of any unhappy event. The simple reason for this is the complicated interactions and feedback loops created in all multilateral dealings that make a one-to-one or cause effect analysis quite impossible. Therefore, it is to everyone's advantage to avoid engaging in such a dangerous move especially at the present critical moment. Most global citizens are placing a lot of hope on the historic Obama administration in changing for the better. So, please heed the right advice and ignore the bad ones. With such a high profile announcement it may even create the wrong impression at the start of the Obama administration. I sincerely hope that the accusation concerning currency manipulation is not the prelude to trade retaliation.
On a more positive note, countries with huge trade surpluses like China should utilize her reserves to buy capital or investment items such as passenger aircraft from USA ( as wisely suggested by one of my friends ). Already China is making the right moves in putting forward rebuilding plans for last year's earthquake devastation in the Sichuan Province. The suggestion to buy from USA is not just a move to prop up the US market. It will go much further to help revitalize US consumer confidence that will in turn increase demand for consumer items in which China specializes. It may sound silly to make your customers rich so that they can afford to buy more from you. This is exactly what is actually happening under the proper working of the market economy. The theoretically ideal international trade position between two countries is an exact balance in their mutual trade accounts. This is because the surplus country like China is actually under-utilizing her purchasing power. To buy more capital goods means to acquire a greater potential for future economic growth. On the other hand the deficit country like USA will be faced with a lot of problems related to deficit financing. Thus, it will be seen that the surplus country is always in a better position in terms of control and having more options.
While advocating a theoretical balance of payment position in international trade it is also important to realize that there must be some trade reserve in reality and save it for a rainy day. However, the appropriate amount of reserve is open to question. There is a school of thought that suggests an amount of reserve equal to 18 months of projected recurrent government spending is appropriate. There are no hard and fast rules. The right amount depends entirely on the needs and circumstances of individual countries. The amount of any reserve usually appears to be huge and idle in good times and very often looks inadequate when disasters strike. There are endless factors to consider because of the endless human needs. That is why an apt definition of the discipline of economics is said to be :- " The study of how people meet their unlimited needs by limited means."
On the international front, we should realize the ultimate goal of globalization for a complete free flow of economic resources, human resources and ideas. Only when this ideal position is achieved will the existing global resources be most efficiently utilized. This will help us in our fight against the FT. The only way to attain the above goal is to open up markets and trade on an equal footing for all countries. Politicians will always be under pressure from voters to protect the narrow national interest by imposing trade barriers to protect local employment. Therefore, it is a touch stone or litmus test for leaders of any country in assessing the scope of his or her vision and strength of leadership to see if he or she can do the right thing under heavy political pressure and severe criticism based solely on national interest. It is a defining line between becoming a great statesman and simply remaining as a petty politician.
The amount of appropriate trade reserve to be maintained as a prudent move is open to deliberation but the evils of trade Protectionism and political Isolationism are beyond dispute.
History has time and again taught us by painful lessons such as the Second World War that such undesirable policies will lead to tragic consequences on a global scale. The evils such policies generate must be done away with for good.
The leader of a country may win over voters through trade Protectionism but he or she will ultimately falter because it is a certainty that PROTECTION points the way TO PUBLIC POVERTY. So, we must prevent Protectionism from raising its ugly head again ever.
JKHC.
Saturday, January 31, 2009
The Financial Tsunami ( FT ) - The Way forward ( 4 ) - Confidence is everything in economics and without it there is nothing !!!
In my humble opinion, the soundest possible advice at this stage of the FT aftermath is the famous saying by one of the most beloved Presidents of the USA - Franklin D. Roosevelt during his speech on the 2nd day of July, 1932 ( The Great Depression years ) :- " The only thing we have to fear is fear itself . "
One of my doctor friends said this about his cancer patients. Most cancer patients die of fear. Then there are those who die of anger ( My God, why me ? ...XYZ ... ( censored ) ). The third most common type of cancer casualties die from medical treatment ( with unwanted side effects from ultra potent drugs ) or maltreatment when they look to all sorts of unspeakable alternative therapies. This may be my friend's outrageous attempt to relieve himself and his colleagues of professional responsibility yet his reasoning makes a lot of sense.
The key word and only relevant word in managing the economy is CONFIDENCE - consumer confidence to be more accurate. The global financial system experienced a total meltdown at the height of the FT last year. The sole cause of this meltdown is a total loss of CONFIDENCE in the financial system due to dubious practices of the black sheep of the financial world. A wave of panic swept across the whole world. Fear as everyone can see is the worst enemy of CONFIDENCE because the latter is a very elusive entity. Everyone knows that all financial institutions have to utilize our deposited funds to make a profit so that we can get interest income from our deposited funds. There is always insufficient funds to meet the withdrawal by 100% of the depositors. Yet when everyone has confidence in the financial system nobody will care to queue up for a withdrawal.
At this point of the FT aftermath the only way out for all of us is to stick together through thick and thin as if we were all members of the same family. As a matter of fact, we all are anonymous and insignificant members of the global village and none is immune from any global catastrophe. So, we must take this kind of attitude just as in the vital issue of environmental protection.
No amount of reduction of the bank lending interest rate will revitalize our world economy if no one has any confidence in the money we use or in the financial system itself. It sounds so simple and yet why is it not possible to regain much needed consumer confidence at this point ? The simple answer can be found in a sociological concept called CONTINGENCY DECISION MAKING. To ignore the technical jargon this simply means our decisions are not independently made by ourselves but our decisions actually depend on the interaction of our own opinions and what we perceive to be the opinions of other people. It is just like a mutual guessing game in which everyone tries to guess what everyone else is guessing the right answer to be. Yet there is no absolutely correct answer to start with. The final outcome depends entirely on the tuck-of-war between optimists and pessimists and how these two categories win over the undecided majority to their side. ( Interested readers may like to view page 110 of my book - The Universe - on erratic investor behaviour in Chapter ( vi ) on the science of networks by hitting the above blog title to reach my website .)
The generally accepted thinking is that no one wants to make a fool out of himself by buying a house ( or anything for that matter ) at a higher price when it could be bought at lower one in a falling market. So, it becomes a self fulfilling prophecy. It is not a matter of the money but of FACE. We must not be seen as a fool or an idiot. There are very few people who are fools or running bulls ( how I wish there were one in the stock market ) like me by dishing out so-called wise predictions and suggestions and by sticking my neck out to be chopped off when I am proven wrong. The safest way seems to be to jump on the band wagon when an established trend is up and running. This way there can only be gains and no risk of any loss or damage to our pockets or pride. The only trouble is that someone must start the band wagon rolling by giving it a huge push. When one has seen some 25 % of the whole universe ( the portion of the observable universe covered by the SDSS digital sky survey database which is the subject of the Galaxy Zoo project - please hit this blog title above to reach my website which includes my astronomy research in the project ) it makes very little difference if I am called a fool or not in the grand scheme of the universe so long as I have the satisfaction of knowing that I am doing the right thing. Furthermore, I may even gain some reputation if by chance my predictions come true. At this point I would make a sincere invitation to the readers to watch and listen to my self performed music video of the song - " You'll Never Walk Alone " - from the great musical " CAROUSEL " on my YouTube channel at the home page of my website. The link to my website is embedded in the title of this blog. Just hit on the blog title above to reach my website. The lyrics of the song have some inspirational references appropriate to our present predicament.
If I did buy a new home at a higher price on hindsight I will simply chalk it up to experience and comfort myself by telling yours truly that I might not have bought the same one I like at any lower price as some else could have beat me in purchasing it first when the price becomes dirt cheap. Again, as said in my earlier blog - The Way Forward ( 3 ), it is more blessed to be the spender.
So, let us regain our collective CONFIDENCE by being the leaders in our CONFIDENCE BAND WAGON push. Counteract the bad effects of the CONTINGENCY DECISION MAKING process. Stick our necks out once in a while in the comfort of knowing that we are in a way minor heroes who made sacrifices for the great and noble cause of rebuilding CONSUMER CONFIDENCE. Who knows ? We may even land ourselves on some real good bargains whatever the product or service of your choice may be . Having a healthy sense of humour will go a long way in weathering any storm including the devastating FT.
So, let us heed the advice of the great FDR and boost our mutual confidence by FIGHTING FEAR FACE TO FACE. Be a rash running bull like me once in a while. The Ox or Bull ( if you prefer ) is the most auspicious animal symbol of the new lunar Year of the Ox ( if you believe in that kind of a thing ) that commenced on 26th of January, 2009 and will end some time in early February of 2010. I sincerely hope and pray that the global economy will be right on track to a full economic recovery by then though the present signs indicate that it may take a little while longer ( hoping that my predictions are wrong! ). May I wish everyone a healthy and peaceful Year of the Ox . Do substitute CHEERS for FEAR !
JKHC.
One of my doctor friends said this about his cancer patients. Most cancer patients die of fear. Then there are those who die of anger ( My God, why me ? ...XYZ ... ( censored ) ). The third most common type of cancer casualties die from medical treatment ( with unwanted side effects from ultra potent drugs ) or maltreatment when they look to all sorts of unspeakable alternative therapies. This may be my friend's outrageous attempt to relieve himself and his colleagues of professional responsibility yet his reasoning makes a lot of sense.
The key word and only relevant word in managing the economy is CONFIDENCE - consumer confidence to be more accurate. The global financial system experienced a total meltdown at the height of the FT last year. The sole cause of this meltdown is a total loss of CONFIDENCE in the financial system due to dubious practices of the black sheep of the financial world. A wave of panic swept across the whole world. Fear as everyone can see is the worst enemy of CONFIDENCE because the latter is a very elusive entity. Everyone knows that all financial institutions have to utilize our deposited funds to make a profit so that we can get interest income from our deposited funds. There is always insufficient funds to meet the withdrawal by 100% of the depositors. Yet when everyone has confidence in the financial system nobody will care to queue up for a withdrawal.
At this point of the FT aftermath the only way out for all of us is to stick together through thick and thin as if we were all members of the same family. As a matter of fact, we all are anonymous and insignificant members of the global village and none is immune from any global catastrophe. So, we must take this kind of attitude just as in the vital issue of environmental protection.
No amount of reduction of the bank lending interest rate will revitalize our world economy if no one has any confidence in the money we use or in the financial system itself. It sounds so simple and yet why is it not possible to regain much needed consumer confidence at this point ? The simple answer can be found in a sociological concept called CONTINGENCY DECISION MAKING. To ignore the technical jargon this simply means our decisions are not independently made by ourselves but our decisions actually depend on the interaction of our own opinions and what we perceive to be the opinions of other people. It is just like a mutual guessing game in which everyone tries to guess what everyone else is guessing the right answer to be. Yet there is no absolutely correct answer to start with. The final outcome depends entirely on the tuck-of-war between optimists and pessimists and how these two categories win over the undecided majority to their side. ( Interested readers may like to view page 110 of my book - The Universe - on erratic investor behaviour in Chapter ( vi ) on the science of networks by hitting the above blog title to reach my website .)
The generally accepted thinking is that no one wants to make a fool out of himself by buying a house ( or anything for that matter ) at a higher price when it could be bought at lower one in a falling market. So, it becomes a self fulfilling prophecy. It is not a matter of the money but of FACE. We must not be seen as a fool or an idiot. There are very few people who are fools or running bulls ( how I wish there were one in the stock market ) like me by dishing out so-called wise predictions and suggestions and by sticking my neck out to be chopped off when I am proven wrong. The safest way seems to be to jump on the band wagon when an established trend is up and running. This way there can only be gains and no risk of any loss or damage to our pockets or pride. The only trouble is that someone must start the band wagon rolling by giving it a huge push. When one has seen some 25 % of the whole universe ( the portion of the observable universe covered by the SDSS digital sky survey database which is the subject of the Galaxy Zoo project - please hit this blog title above to reach my website which includes my astronomy research in the project ) it makes very little difference if I am called a fool or not in the grand scheme of the universe so long as I have the satisfaction of knowing that I am doing the right thing. Furthermore, I may even gain some reputation if by chance my predictions come true. At this point I would make a sincere invitation to the readers to watch and listen to my self performed music video of the song - " You'll Never Walk Alone " - from the great musical " CAROUSEL " on my YouTube channel at the home page of my website. The link to my website is embedded in the title of this blog. Just hit on the blog title above to reach my website. The lyrics of the song have some inspirational references appropriate to our present predicament.
If I did buy a new home at a higher price on hindsight I will simply chalk it up to experience and comfort myself by telling yours truly that I might not have bought the same one I like at any lower price as some else could have beat me in purchasing it first when the price becomes dirt cheap. Again, as said in my earlier blog - The Way Forward ( 3 ), it is more blessed to be the spender.
So, let us regain our collective CONFIDENCE by being the leaders in our CONFIDENCE BAND WAGON push. Counteract the bad effects of the CONTINGENCY DECISION MAKING process. Stick our necks out once in a while in the comfort of knowing that we are in a way minor heroes who made sacrifices for the great and noble cause of rebuilding CONSUMER CONFIDENCE. Who knows ? We may even land ourselves on some real good bargains whatever the product or service of your choice may be . Having a healthy sense of humour will go a long way in weathering any storm including the devastating FT.
So, let us heed the advice of the great FDR and boost our mutual confidence by FIGHTING FEAR FACE TO FACE. Be a rash running bull like me once in a while. The Ox or Bull ( if you prefer ) is the most auspicious animal symbol of the new lunar Year of the Ox ( if you believe in that kind of a thing ) that commenced on 26th of January, 2009 and will end some time in early February of 2010. I sincerely hope and pray that the global economy will be right on track to a full economic recovery by then though the present signs indicate that it may take a little while longer ( hoping that my predictions are wrong! ). May I wish everyone a healthy and peaceful Year of the Ox . Do substitute CHEERS for FEAR !
JKHC.
Friday, January 30, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 3 ) - And justice for ALL !
The US President has just condemned the exorbitant remuneration paid to the Wall Street financial gurus as SHAMEFUL. The collective amounts paid to high ranking executives of Wall Street financial institutions for their disastrous performance in 2008 came to an unbelievable total of 18.4 billion. This has highlighted the worst possible display of human greed. Human beings will line their own pockets to the total disregard of the dire consequences on the public well being. Now, everyone will suffer the painful fruits of their greed. It is about time that high ranking corporate executives are held accountable for their despicable callousness. This is not revenge but the right way forward with a view to recovering the huge portion of the overpayment for the purpose of mopping up the aftermath of the FT. Investigating each and every CEO and their buddies will send a strong message that such irresponsible behaviour is not longer tolerated by society. If they get huge bonuses for the fat years why should they not be held accountable for the mess they have created for all of us ? They must now publicly justify in a satisfactory manner the manifestly excessive remuneration they have paid themselves.
There is a legally set limit for the minimum wage in many countries. Why should there not be a maximum limit for corporate executives ? Better still, all high ranking corporate executives should be required by law to publicly justify the remuneration they have received as part of the annual auditing process. You see there is some folly in the traditional belief that the " sky is the limit " concept to attract the best candidate for the CEO of public corporations. The possibility of endless remuneration will simply motivate endless greed not endless efforts as expected. This is the dark side of human nature which has been sadly overlooked in the naive form of capitalism. Furthermore, the grand argument ( no doubt put forward by the cunning corporate executives themselves ) that the management's first duty is to maximize shareholders' profits is no longer tenable because the black sheep of the corporate hierarchy are those who have benefited most under the disguise of this seemingly selfless goal. While the hierarchy lay off their employees at the slightest sign of economic recession they continue to draw their excessive remuneration regardless and have the cheek to order new 40 million dollar corporate jets like the Citi Group. Luckily, the watchful Obama and his new team call a stop to it.
I am not advocating a return to the socialist or welfare system. I am simply asking for a more enlightened form of capitalism supported by a democratic system. If I were the CEO of a public corporation employing some 4 million people worldwide I would have been more motivated by a sense of mission to society and my fellow global citizens in keeping up their welfare than any amount of money over and above say, US$ 5,000,000. Yes, I am as greedy as everyone else but as a human being who is supposed to be the cream of all creations I can and must control the dark side of my human nature. It is pathetic to be motivated solely by money or its misplaced symbolic indication of success. There are numerous higher goals to be achieved. Don't diminish your own importance. Nor should you overlook your potential to do good. So, I am proposing a revolutionary measure. Impose a maximum limit on the amount of remuneration that can be paid to corporate executives. This will not only reduce the temptation to let our greed run wild. It will also attract the right type of more enlightened corporate executives to hold those important and influential positions in society. The most fundamental way to overhaul our present flawed economic system is, of course, to educate everyone especially the younger generation to steer away from the materially inclined social values to a more balanced value system.
To the black sheep of the corporate world - your day of reckoning is at hand !
JKHC.
There is a legally set limit for the minimum wage in many countries. Why should there not be a maximum limit for corporate executives ? Better still, all high ranking corporate executives should be required by law to publicly justify the remuneration they have received as part of the annual auditing process. You see there is some folly in the traditional belief that the " sky is the limit " concept to attract the best candidate for the CEO of public corporations. The possibility of endless remuneration will simply motivate endless greed not endless efforts as expected. This is the dark side of human nature which has been sadly overlooked in the naive form of capitalism. Furthermore, the grand argument ( no doubt put forward by the cunning corporate executives themselves ) that the management's first duty is to maximize shareholders' profits is no longer tenable because the black sheep of the corporate hierarchy are those who have benefited most under the disguise of this seemingly selfless goal. While the hierarchy lay off their employees at the slightest sign of economic recession they continue to draw their excessive remuneration regardless and have the cheek to order new 40 million dollar corporate jets like the Citi Group. Luckily, the watchful Obama and his new team call a stop to it.
I am not advocating a return to the socialist or welfare system. I am simply asking for a more enlightened form of capitalism supported by a democratic system. If I were the CEO of a public corporation employing some 4 million people worldwide I would have been more motivated by a sense of mission to society and my fellow global citizens in keeping up their welfare than any amount of money over and above say, US$ 5,000,000. Yes, I am as greedy as everyone else but as a human being who is supposed to be the cream of all creations I can and must control the dark side of my human nature. It is pathetic to be motivated solely by money or its misplaced symbolic indication of success. There are numerous higher goals to be achieved. Don't diminish your own importance. Nor should you overlook your potential to do good. So, I am proposing a revolutionary measure. Impose a maximum limit on the amount of remuneration that can be paid to corporate executives. This will not only reduce the temptation to let our greed run wild. It will also attract the right type of more enlightened corporate executives to hold those important and influential positions in society. The most fundamental way to overhaul our present flawed economic system is, of course, to educate everyone especially the younger generation to steer away from the materially inclined social values to a more balanced value system.
To the black sheep of the corporate world - your day of reckoning is at hand !
JKHC.
Thursday, January 29, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 2 ) - It is more blessed to be the Spender than the Scrooge.
The FT has developed into a catastrophe of such an epic proportion that the world's governments alone cannot revive the global economy to her healthy old self without the help of their citizens. Those who can still afford to spend must do so to save the world including themselves from falling into the endless abyss of a chronic economic depression. It really hurts to have, say 30 % or even 50 % of our wealth evapourated overnight but it will hurt even more should the world economy tail spin into a vortex of downward and unstoppable vicious circle of deflation.
Money is just paper or an I OWE YOU ( IOU ) given to you by the issuing authority. It means nothing until your hard earn dollars are SPENT ! Besides, you cannot take a single cent with you to heaven or hell if your number is up. Furthermore, money is always losing its real value by the day. You can never tell for certain when your health will catch up with you although we all wish we could stay healthy, happy and alive forever. For the rich and famous like most of you what real difference does it make to have 5 million out of, say 10 million evapourated except the temporary frustration of being taken for a ride by the high ranking crooks in the financial market.
I am certainly not advising everyone to be extravagant and wasteful with your money. What I do seriously urge you ( especially the really rich and privileged section of society ) to do is to keep to your original spending plans such as changing your car every 5 years or your video equipments and computer hardware every 2. Your travelling plans should not be held back simply because your financial pride has taken a beating. Do whatever you like ( subject to all natural and just human laws ) and as you have planned before the FT and refuse to be rendered unhappy by the financial terrorists and criminals who must be brought to justice ASAP to restore confidence in our financial system. After all, no one can guarantee that he or she will be as fit as a fiddle same time next year. I 've got to run. I have promised to take my wife out for a sumptuous seafood dinner to prop up the economy. Who will listen to my jabbering next time if yours truly never does what he advises others to do. Be the SAVIOUR of the world - be a SPENDER and not the SCROOGE. Cheers for now !
JKHC.
Money is just paper or an I OWE YOU ( IOU ) given to you by the issuing authority. It means nothing until your hard earn dollars are SPENT ! Besides, you cannot take a single cent with you to heaven or hell if your number is up. Furthermore, money is always losing its real value by the day. You can never tell for certain when your health will catch up with you although we all wish we could stay healthy, happy and alive forever. For the rich and famous like most of you what real difference does it make to have 5 million out of, say 10 million evapourated except the temporary frustration of being taken for a ride by the high ranking crooks in the financial market.
I am certainly not advising everyone to be extravagant and wasteful with your money. What I do seriously urge you ( especially the really rich and privileged section of society ) to do is to keep to your original spending plans such as changing your car every 5 years or your video equipments and computer hardware every 2. Your travelling plans should not be held back simply because your financial pride has taken a beating. Do whatever you like ( subject to all natural and just human laws ) and as you have planned before the FT and refuse to be rendered unhappy by the financial terrorists and criminals who must be brought to justice ASAP to restore confidence in our financial system. After all, no one can guarantee that he or she will be as fit as a fiddle same time next year. I 've got to run. I have promised to take my wife out for a sumptuous seafood dinner to prop up the economy. Who will listen to my jabbering next time if yours truly never does what he advises others to do. Be the SAVIOUR of the world - be a SPENDER and not the SCROOGE. Cheers for now !
JKHC.
Wednesday, January 28, 2009
The Financial Tsunami ( FT ) - The Way Forward ( 1 ) - He ain't heavy, he is my brother !
Regardless of our background everyone of us is affected by the FT to varying degree. It is a good time to take stock of the market or capitalistic system on which our economy is run. Some form of enlightenment is badly needed. I seriously think that the financial meltdown is the result of a financial laissez faire policy just as it was at the beginning of the inhumane industrial revolution in Europe in the 18th century. The original savage and unscrupulous form of raw capitalism that had led to imperialism was aptly superseded by the more enlightened form of market economy made possible by among other things democracy, education, a fair legal system, freedom of the press and equal opportunity for all.
The way forward after the devastation of the FT as I see it will be both painful and arduous. The first step in my humble opinion is for us to rough it out together. We must carry one another through the storm with reasonable sacrifice. Employers should only consider laying off employees after effecting a general across the board cut in wages with the upper management bearing a higher percentage cut. Once a wave of lay offs have taken effect the economic confidence of the general population will be totally eroded thus resulting in stark panic followed by a downward vicious circle of spending contractions. This should not and cannot happen or there will be a repeat of the Great Depression of the 1930s.
JKHC.
The way forward after the devastation of the FT as I see it will be both painful and arduous. The first step in my humble opinion is for us to rough it out together. We must carry one another through the storm with reasonable sacrifice. Employers should only consider laying off employees after effecting a general across the board cut in wages with the upper management bearing a higher percentage cut. Once a wave of lay offs have taken effect the economic confidence of the general population will be totally eroded thus resulting in stark panic followed by a downward vicious circle of spending contractions. This should not and cannot happen or there will be a repeat of the Great Depression of the 1930s.
JKHC.
Let all of us start expressing our views freely
Thanks to the web we can now all freely express our views on anything and at any time. Let us boldly but with discipline ( as gauged by generally accepted standards of morality and humanity ) exercise our basic human right of responsible expression. This is a tall order but I do hereby pledge my dedication to this high ideal which is the pillar of democracy.
This is also my earnest wish for all global citizens who subscribe and aspire to the ideal of a free and democratic society in this - my first post - at the inauguration of my first solo blog herewith.
Just one point of information before we start to exercise our basic human right of expression. THE LINK to my personal website - JKHC LIFE STYLE is embedded in every blog title in this FORUM. Please feel free to browse my website from time to time by hitting on any blog title. You may be surprised to see what you can find there. I sincerely thank you all for your kind support and contribution in advance.
JKHC.
This is also my earnest wish for all global citizens who subscribe and aspire to the ideal of a free and democratic society in this - my first post - at the inauguration of my first solo blog herewith.
Just one point of information before we start to exercise our basic human right of expression. THE LINK to my personal website - JKHC LIFE STYLE is embedded in every blog title in this FORUM. Please feel free to browse my website from time to time by hitting on any blog title. You may be surprised to see what you can find there. I sincerely thank you all for your kind support and contribution in advance.
JKHC.
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