Best comments in 2012

1.Opening positions have been laid out by both sides on how to avoid fiscal cliff. Let the games begin? http://ht.ly/fbg8c #sbfi CEO/ CIO/COE/COO/CFO/Head/VP/ Director/President Level 11-11-2012

It is hard if not impossible to overcome the financial cliff, if both party refuse to budge on the trade-off and there will be no deal. The crux to move the deal is to make the negotiation transparent under the spotlight to the public. After all, the house and the administration are accountable to the public, with the public surveillance; there will be no secret move. This incentivizes both parties to make calculated move, call for moral probity to prevent inducing electorate repugnant and nettlesome, and being labeled brazen stumbling block, hobble to reach a sensible solution. One large hindrance last year was to make Mr. Obama ineffective, so that he would lose the election game, but now it is over; GOP hardliners may lay new hurdles ahead, for sure, there will be no plain sail or obeisant Republicans.

Besides indulged in the political game; the real impasse is resulting from stark chasm in ideologies which both parties fastidiously cling to; where GOP advocates cross the board tax cut and Democrats want to tax the rich. Republican believes in small government to trim public administration costs, increases defense spending, cut entitlements, restructure the healthcare system. By so doing, the Republican believe will stop the deep malaise and the budget deficit will turn the corner.

I am a nonbeliever of tax cut will increase tax revenue due to increase in investment and employment. But it seems you can’t change the ingrained waffles in the battleground. And you can’t have the cake and eat it too. It would be lucky to prevent the economic Armageddon if Republican and the Democrat are willing to concede some of their core ideologies in exchange for their top most priorities.

The ultimate purpose is: after taking plus and minus factors of a welter of the budget items will result in a net surplus, the administration will need to do sand table exercise to quantify the items in ballpark term (but in no qualm is credible); what the financial impacts likely will be for particular item and how does it link to the bigger picture (The qualitative considerations)?  Since the Republican ideologies are crystal clear to the administration, the same exercise is also done on the Republican side. The administration will then have a good grasp of their priorities. What are they prepared to trade and which would worsen the deficits and should not trade.

You can just keep running the same old groove! Be more flexible to concede and it is always carp diem to play on the time factor to smooth the hitches; such as the healthcare costs in the long run probably not sustainable, constant review and radical reform the sector to ensure it is a reasonable portion of the budget and affordable  to all Americans are of paramount importance. This plays on the time smoothing factor.

Once the gridlock is broken, it would be much easier to acclimate and contain the debt ceiling problem

.2. In Singapore, people are usually impressed by those who work long hours. I am not. Don’t fool yourself: less is more. Asia Jobs, Careers and Networking 1 Nov 2012

In Singapore, now, more than at any other time, that the government stresses work life balance. My trade required me to survive the gauntlet of long work hours is a fait accompli.

Harkening back, this was what my boss told me on the first day to work. I needed to clock up a bare minimum of thirteen hours a day to justify my pay. My boss even got his assistant to carry out surveillance to ensure I didn't go back before nine. I had to work on Saturday and Sunday once in a month just to catch up the deadline to the hilt. I was entrusted and also badgered to key the secret numbers on the door device to open the door that drove me nut; I had to arrive in office earlier than other colleagues just to open the door, and the last one to leave, around nine, also for the secret numbers. I felt bored to death and ensnared in the work with no choice but to abide the practice of what my peers in the trade adhered to.

In my view, my boss should measure my output than the amount of time I stayed in the office. He should emphasize the quality of the outcome of my work to judge whether I worth the salt. To my dismay, I worked in an US MNC with the wrong work culture that held no currency. In retrospect, my boss got every cent worth out of my contribution. What was horrendous, at my presence, he showed off to his business friend how he got me for a pittance, a real value for money. I felt bedevilled  disgusted of the unpalatable gibberish on the spot.

Work life balance improves productivity of work, because the worker is given time to divert to other interests to reduce stress and recharge, hence enhances productivity. The work culture must emphasize performance than be a wonk. That boils down to the organization philosophy what is the essence of sagacious management resulting good work practice. Bad work practice comes home to roost.

3. Hard Skills vs. Soft Skills (The recruiter network) 31 Oct 2012

To begin, a concise definition in between hard skills and soft skills need straighten out for discussion to be meaningful.

Laconically, the consensus definition about hard skills is occupational to perform certain type of task or activities. Hard skills are easy to observe, specific, and trainable such as job skills like accounting, finance, programing etc. To be good at hard skills needs IQ, the left brain logical center. Hard skills can be learnt by attending educational institution or book reading. In hard skills, rules always stay the same regardless of which company, circumstance or people you work with.

Soft skills are people skills, behavioral, which relates to a person ability to interact effectively. Soft skills are personality driven. It usually associates with EQ, the cluster of personal traits, social graces, communication, language, personal habits, friendliness, and optimism that characterize relationships with other people. In soft skills, rules changes depending on the company culture and people you work with.

Which is important to a leader’s success? My view is it is circumstantial. At times, hard skills rank primary, and soft skills are secondary. Other times, soft skills are primary and hard skills secondary. Let me illustrate by a real life example, how a highly paid CEO lacking the essential hard skill was reviled by the public, ousted from power and fell from grace.

A public transport company's CEO, who is ignorant of risk management, encountered her greatest test in her business career. One of the trains broke down without light and air in the cabin; passengers were hemmed in excruciating situation. A pregnant woman was frail and had difficulty in breathing; one passenger took the initiative to break the glass to let air flowing into the cabin from tunnel. The company did not realize how severe the situation was that reverberated and piqued the public, the public’s opprobrium heaped on her requesting the CEO to step-down. The CEO apologized and resigned.

What this relates to our discussion? The problem is there were no risk management procedures in place. The company did not have all round enterprise risk management evaluation. Such train breakdown is an operation risk bound to occur, there must be procedures detailing how employee should respond when situation exacerbates into a convulsive crisis. At what circumstances, the crisis mode must be activated; for example, if the electricity cut-off for more than ten minutes, that will trigger safety measures to evacuate passengers to emergency exit. It is a painful hard skill she did not learn, that cost her millions dollar job. If she had the risk management skill, she would have responded to the crisis better. This is where hard skills were primary and soft skills were secondary.

During the crisis, incessant communication with the passengers came to the fore. If hard skills were absent, soft skills ascended to primary. However, the train driver’s ineptitude lacked the EQ and communication skills that was the bereft of hope.

Skillset is a lifelong learning process, whether it is hard or soft.  I am still learning and improving along in my career. Some say senior leader does not need to horn their hard skills because they have exceptional soft skills, their wisdom to maneuver political landscape in an organization bestrides the company. That is half true. 

The vicissitude of business world demands business leader to be equally good at both. For example change management which requires business leader to galvanize the support from various factions of different interests in the course of change process. That draws on soft skills. Business leader needs to keep up to technology progress, such as leveraging social media as a marketing tool to facilitate sales growth, which is a hard skill. When times come, you are equipped with the right skills to tackle different new problems at different circumstances.

Snizhana, Thank you for your comment.

Integrity is an exhibit of behavior. Learning soft skills is the approach towards that desirable behavior.   Integrity is to behave ethically. Most research concur that environmental factor exerts significant influence in our integrity. I learned ethics in professional examination- code of conduct, and later in CPA firm that how partners carried out duties by observing guideline. The right culture is of paramount importance in the organization help to promote exhibit the right behavior. 

I recently read a book, written by a psychology professor, titled “The (Honest) truth about dishonesty” by Dan Ariely. He experimented why there is no black and white, as human being, to behave honestly. Most of us fall into the grey category. Especially on trivial matters, we are less than upright. That show we have two facets in us. Of course, those are academic exercises. I believe we are confined to behave more ethically in a setting emphasizes the right behavior. We feel guilty if we transgress.

4. Compelling proof that tax cuts do not create job from Laura Tyspn & Owen Zidar. GOP should find another excuse? http://ht.ly/eBxdd #sbfi CEO/ CIO/COE/COO/CFO/Head/VP/ Director/President Level - Senior...

I am all for the assertion that tax cuts do not stimulate more job creation.

My view on tax is neutral, to increase or cut tax basically is situation warranted. It is impregnable that if you have budget deficit, I can’t think of alternatives other than to increase tax rate to improve tax collection or to postpone tax hike and be more tolerant of budget deficit, awaiting the economy fully recovered.

I am leery the whole idea of tax cut and I think it is specious, obfuscate reality and stretch to a great length of credulity indeed. So to say for tax cut on individual: Use your common sense, which you believe is the reality that the consumer is impinged on hearing the tax cut's news, the department stores are responded with more consumers who are willing to spend more because they are wealthier another $100 dollars than yesterday, or you think most of them are impervious? I see no conclusive empirical evidence to support the assertion that tax cuts do improve consumption; it is just practically difficult to substantiate the assertion that there is a change in consumer behavior.

Dickering on higher bracket individual income tax payers is flabby, even there is a few percentage tax rate increases, and the impact on total tax revenue collection is insignificant, because the number who pay higher tax is relatively small. No one likes to pay more tax, we are all self-centered, politician has to ineluctably redistribute the increase based on fairness, but there is no absolute fairness and only relative fairness. And tax should not be only one way up or down, it should fall when the budget returns to surplus and after account for future expansion and contingency.

The theory of supply-side economists’ tax cut on company tax is even fallible and untenable. I live in a country cut company tax rigorously and it becomes one of the tax competitive countries in the world.

In my twenty years' professional career, during the budget days, none of the CEOs asked me to work out how much tax savings for the tax cut pronounced. There are two possible reasons. One, The CEOs were laymen in taxation. Two, they were disenchanted, the amount was pretty paltry not worth attention. Especially when the economy is frailed or slips into recession, most companies are either incurring losses or making few crumb of profit. If company incurs tax losses, there is no tax liability; what benefit can derive from tax cut?

Even a company makes a small tax adjusted profit, For example, an amount of $30,000, a 1 or 2 % tax cut work out only few hundred bucks. How this few hundred bucks make the wonder to improve economic growth; boost investment (adding new plant and equipment) and employment (adding new hire)? Probably the savings is going to be part of the CEO big bonuses. I impugn and better to leave this hoary old joke and cliché to class room teaching.

Politicians are also quick to lower business tax in order to improve competitiveness, and leaving a cinch to make up the shortfall by increasing other taxes, such as value added tax. They pontificate uncompetitive tax rate will result in business moving overseas, creating unemployment problems due to more plant closures. The fact is cut tax does not prevent businesses moving overseas.

In reality, business leader does not assess their investment based on tax rate alone. There are a host of factors under consideration including the purpose of investment (such as company just wants to have easy access to R & D in advanced country.). Even a country has higher tax rate, but it plays its ace on other factors, such as infrastructure, education, better business opportunities, better market potential etc., it can still be the choice of investment.

According to Wall Street Journal's report, many of the listed companies are making profit, it is unwise to give away tax revenue by cutting tax or give tax relief to profitable companies when you have a large budget deficit. Tax relief should be given to ailing companies to facilitate healing, a good example is payroll tax, if companies incurred adjusted tax loss, and have no tax liability but may have to pay payroll tax. Full refund will allow healing and alleviate burden. Business makes Capital expenditure decision on business outlook. Giving tax relief to plant and equipment to boost economy is tantamount to putting the cart before the horse.

5.  Is it more important for a great leader to be better at listening to others or communicating their vision?

A great leader with listening ears does not preclude her to communicate her vision. It shouldn't be an either-or thesis which belies the fact that a vision is not a top-down ritualistic paean. A great leader would incorporate voice from the ground in setting up her vision. In the interactive process, leader is in touch of the reality, knows her shortfalls, and when and how to educate followers for a better vision when need arises.

Leader is in touch of the reality, exchanges mindsets, refrained from my way pointing to the high road and is the only way. Then leader and follower will share a common vision: the purpose, the direction, what challenges are they facing ahead, and how together they resolve them. A great leader leads by acknowledging her shortcomings in vision, there is nothing shameful about it.

There is time follower may not fully appreciate a great vision which as a whole benefit the organization, a great leader will show patience to transform the mindsets of the followers, this education process to iron out discordant vision may be long and winding, no mean feat. The nub hinging on leader must ensure they are always in the same page, so that they have common understanding; Great leader enlightens followers all the way to visualize better, canvasses for the support hither and thither. In the course, great leader will achieve buy-in of her vision.

6. Lower growth in China not necessarily a bad thing: economist Jobs Connect Asia 1 October 2012

I beg to have disparate view.

A stronger growth in China is much anticipated .A structural transformation of economy takes times to accomplish. A stronger growth is not unbecoming; it does not preclude China economic restructuring. 

But the crux of the current global economic problem is devoid of demand and monetary policy is not functioning as anticipated. It becomes an apocalyptic warning that large economies must strive to expand internal consumption and investments cater for much needed audacious stimulus to world economy.

China can epitomize a pivotal role to reflate demand that will give a seminal boost to domestic and global economy.

7.  QE3 targets mortgage bond buying intended to spur job growth in housing sector. Is this something we can build on? http://ht.ly/dHZtY #sbfi 16 September 2012 CEO/ CIO/COE/COO/CFO/Head/VP/ Director/President Level -...

With regard to QE3, Fed assumed there was strong correlation between increase in money supply and job growth. The kernel of the truth is that link is rather weak; especially under the big picture of current global economic environment and the deleveraging process in US and her major trading partners. It has yet a cogent and conclusive proof, and I impugn that US’s economic recovery ascribable to QE’s strong boost.  I might be wrong; the upside of QE as a magic elixir is rather limited, but it downright spurs inflation in other regions inflicted the agony. (Of which has had proven, an irrefutable fact, not a mere wild guess; oil and commodity prices surged upon Fed’s QE pronouncement).

8. Opinion from China People's Daily offers perspective from the other side. How to turn rhetoric into progress? http://ht.ly/drEZU #sbfi

The Sino-US’s tie is entangled in a much more complex web than the article elaborated. Both sides contributed to the discords in bilateral tie. The discords are not devastating, but the inveterate differences will engender conflicts.

First, it is the US foreign military policy shifted to AP region; it has taken into accounts the hypothetical enemy during military confrontation. It is palpable that China is the hypothetical enemy. The shrewd Chinese knew this, judging from their beleaguered position from US allies. That hardened their stance in South China Sea, that strategic aisle becomes crucial for importing strategic materials during wartime.

Their rabid allegation of South China Sea territorial boundary is based on Kau Line (U shape Line) following their definition of China’s territory: all the territories of the People's Republic of China, including the Chinese mainland and offshore islands and the mainland and offshore island separated from the high seas of Taiwan and its surrounding islands, the Penghu Islands, the Dongsha Islands, Xisha, Zhongsha Islands, the Nansha Islands and other islands belonging to China.

Their rapid military build-up in recent year manifests contemplation that they may be at war with the US one day, and they are eager to showcase their military might. Of course tension flared-up at South China Sea and along East Sea will not result in pulling US or China waging war against each other. Both sides are loath to act precipitately, spend unnecessary resources against each other for no apparent advantage.

The beleaguered China hankered to gang up with Russia to confront possible military threat. It is illustrated by how China jibed with Russia at Security Council veto sanction against Syria. They are ally now partly due to historically ideological confluence, and partly because of the international reality.

Of course, the conflict, not restricted to scrum at international arena, it also reflects chink in ideology, economic and social aspects.  The Sino-US relationship is not egregious foe, neither will they walk together, but they are intertwined in many facets that sometimes they are forced to work together, at least for the foreseeable future.

9. Singapore workers less loyal to firms: Survey(Executive Suite) 26 Aug 2012

It may be true, but there are several reasons behind it:

First, there are firms who are devoid of cultivating an organization culture that is conducive. There is no sense of purpose and mission and impelled to complete tasks that are parochial they can’t see the gamut of task significance.

Second, the newer generation set different priorities in life. Understanding their goal and priorities are of paramount importance to keep them more than just to increase few hundred bucks.

Third, there are quite a few of new employees fail to adapt to new environment and companies fail to mentor new employees making them keep trying new one, merry-go-round; perpetuate them keep job hopping never succeed to set foot in any new employers.

Forth, Human resources failed to analyze reasons for quick employee’s turnaround, and adopt remedial actions, such as using exit interview to gather information. Human Resources fail to research competitive market salary information, and advise management to adjust accordingly that infuriate some employees. Human Resources fail to hire more mature workers which they are more stable in their career life.

There are myriad of reasons that people jump ship.  What is paramount is Human Resources are saddled to peel through seeing the causes, and rev up corrective actions. Bashing does not solve any problems. Remember, for any relationship to endure you need to reciprocate.

10. What’s more important:- people or money? to a start-up company CEO/CIO/COE 23 July 2012

It is a putative response that you need both resources in any start-up. Which is more important is the corollary of the scarcity of the resources available to you and circumstantiality. If you have abundant of capital to cater for the demanding cash burn rate for a predetermined budgeted period of time, then propensity is skewed towards people.

People usually are not critical under present business environment, such as in the US that the unemployment rate is high up at 8.2%, but talent is.  Talent is scarce and more critical, you need the sort of talent to complement your competency, act as evil advocate to question your business assumptions and propositions.

Talent offers you nifty ideas when you are in a quandary to decide whether to go ahead or throw in the tower to call it quit come on the heels of business wilted after the predetermined trial period. At this decisive moment, the stalemate to continue to give more time for customer acceptance or redirect resources for better use is not an easy decision indeed if you are deeply involved in the business process. At this juncture, it is palpable that talent is important, because you need judicious advice.

The people issue is important only during the incipient start-up as to how you calibrate people into a coherent whole to advance your business, it is imminent once again you need talent.

     If you have depleted your cash reserve and can’t resolve a princely sum of funding       issue, then, even talent is a minnow.

11.  .How to handle "you're overqualified!" in interviews? Ever had to cope with this situation? Read more and share your experience! (Finance Plus) 14 July 2012

There is no easy solution to the problem. I recently read an article on LinkedIn, the author suggested two ways. One was lateral move; another was to strike a deal with the prospective employer for faster promotion; moving to a lower position was a clever move if you were moving to a bigger company with better prospect, the author thought.

I see this overqualified issue quite differently. Why after all there is an overqualified issue? It is because there are more job applicants than the jobs. It is because the job applicant is eager to sacrifice to eke a living. It is because you are unemployed that you think it would be a faster way to get back to the workforce. You are shorn yourself deep to give the prospective employer a clear advantage, pay less for more.

Does it solve the problem? It doesn’t. It is an unpalatable choice to both parties. To the candidate, it is a move causing psychological imbalance, the motivation is to fulfill her basic needs, rather than earn a prospect with the company. There is a tainted mark in your career history that prospective employers or search firm put a question mark on your capability in the future you make a downward move unless you can provide a satisfactory answer. Don’t forget they have a pool of candidates to choose from. You are setting up yourself to satiate now at the expense of your future. To the company, the talented candidate would probably not feel motivated to perform well, because she feels bored by the easy job, her capability is underutilized. So, why recruit an overqualified candidate in the first place?

Ideally, a company with a fair culture should give every candidate a fair chance, whether she is employed or not, young or old. It is how the company matches the candidate to the long term human resource strategy.  Equal opportunity is the mantra, an ethic for any human resources management. But it seems such a company is quite few and remote, at least whimsical in my career life.

And life must go on, I am not bedeviled of how people see me as desperate, it is exactly the predicament. I slot my application for every opportunity that appears to be good fit. I don’t have the luxury of being choosy and hope the luck will work things out. And this is not a laughing matter because I am up against the headwind in the job search that nothing falls into my lap and the fly by the seat approach only need one to pick me up and I am there. My approach looks Neanderthal and out of whack, but that is natural for everyone to live their life. I would like to hear any elixir, a sure fire way that offer a shortcut to get a job. It is borne out by my job search experience that there is none.

Harkening back to the issue, it boils down to the fact that we are all hemmed in to the paradigm that we conform and assume it is a right practice. Everyone does things this way, what is the problem? To change the paradigm is insuperable, an uphill task and it takes time.

12. .Why You Shouldn't Take a Counteroffer - On Careers (usnews.com) Finance & Accounting   9 July 2012

There is no right or wrong answer as to whether you should take a counteroffer though I read many career books advised not to look back.

It depends on the organization culture and how the new job meant to you and why you want to look for greener pasture elsewhere? You should look beyond pecuniary reason when considering counteroffer.

In my past experience, as long as I tendered my resignation letter, the management team immediately drew line with me, because I was no longer part of their team. This happens frequently in owner-run companies and competitive culture organization.

Not all counteroffers have inimical impacts endanger your prospect with the departing company, as what the theory goes that the perception of your loyalty now being cast in doubt. I see this kind of trust and loyalty as fragile, it belies the fact that in contemporary world job security is no longer a guarantee. The mutual trust factor is precarious; your career can at any time takes a dicey twist just like what happened to me.

The article suggested that the company may pretend to give counteroffer in order to give them more time to find a replacement or in situation you are indispensable for a big project which is underway. These are disparate views; few unscrupulous companies would conduct foul play. The point is when there is counteroffer; it means you have the value to the company. If you are deadwood, probably the employer would be quick to wish you Good-bye.

      You need to ponder over the pros and cons of accepting the offer and the uncertain factors                     with the new company and the inspiring reasons why you chose to jump ship. Your relationship with the departing company should be amicable, so that in the course of time it can withstand reference check by prospective employer. There certainly your lot is at stake, you need to take certain calculated risk whichever option is taken. You shouldn't regret if you are judicious enough to give each option serious contemplation.

13.     5 Tips On How To Change Horrible Bosses  (CFO) 13 June 2012

The tips are useful. It is hard though not impossible to change a boss, lest breaking your own rice bowl. Most of the time, it is the organization culture that exacerbates the temperament of bosses. In my experience, large, hierarchical structure usually facilitates top-down, listen to order, task oriented working culture that influents bosses behaving in a particular way. Family owned business’s bosses have the similar kind of temperament, partly they are overworking, and also they are leading in the frontline, a take charge type of Alpha leadership.

Handling with difficult bosses requires a lot of tactics. A commonly used tactic I learned from my subordinate is watching the boss’s mood. Early in the morning, when she arrives in the office, watch for non-verbal signs whether it is a rainy day. Hunker down avoiding irking her in close contact to let her to have her space if she is not as gregarious as her usual self. Acknowledging that everyone has a bad day, happen she is your boss.

A downright egregious difficult boss, you need to keep your cool when facing confrontation, always practice emphatic listening by summarizing what she has said to demonstrate that I heard you, this will lessen the heated moment, and you prepare your own case, telling her matter of factly. If both of you can’t control a slew of your wayward emotion most of the time, and you think she is culpable, ; it is better to refresh your resume. It is even destructive, if you rake up the past, just find your green pasture elsewhere.

14. How do you show your feelings when you disagree with your boss?(CEO,CIO) 3 June 2012

You need a lot of tact. I learnt this from some painful experiences.

Keep your head cool and refrain from escalating arguments by Counting to five or even ten, if the dispute is explosive. Do your homework; make sure the fact is on your side. Most bosses respect fact in a heated argument.

Don't need to be meek if you disagree. Leave your view open that is what you are worth for.

You need a second thought for your insistence, sometimes bosses have panorama view not sharing with you, it happens all the time. Your hard-headed mindset only agitates her, that is why make sure the fact is on your side (do your homework) is of paramount importance.


15. Some companies succeed where many fail. ExecuNet CMO Tony Vlahos believes the ones that tell the best stories win. Do you agree? What else sets great companies apart? Executive Suite 2 April 2012

Work done on Research into successful companies has been rife for quite a while. It evokes the times I first read “In search of excellence” by Tom Peter and Robert Waterman, I immersed myself into canonical management books many years ago. Then there came the best seller books from Jim Collin and Jerry I. Porras’s “Built to last” and Jim’s other ground breaking book “Good to great” and also numerous other books ,such as Peter Drucker on high performing companies.

Even I don’t see many companies fail or prostrated, some companies do have stupendous success than others. Great companies have a sense of purpose; this is usually what SMEs devoid of. With purpose that gives you mission, vision and direction. You congregate and maneuver the organization resources to focus and align to achieve that purpose. It motivates human resources and facilitates performance management.

Besides purpose, other attributes encompass strong leadership that has the unwavering resolve to steer the company to the right direction, sharper core competencies to achieve the quality of product and services that the customer wants; be nimble and agile for quicker sense and response to uncertainties and changes in the market.

Culture matters too. The litmus test for a professional culture is whether it emphasizes trust, empowerment, and spirit of best in class, open dialogue, reward sharing, strong core value and good business ethics. Good culture cultivates a sense of belonging; the quid pro quo is to spearhead to be an excellent company. Leader sets the tone and motivates the change for a better culture.

16, Why other companies muddle through lacking the success of great companies?

My own experience tells me that size and industry concentration matter. Majority of the successful companies are large companies. They are run by professional manager, though not infallible------professional manager is clouded by agency problem, but they are chosen from the best; whereas family-own companies depend on the quality of the owners, there are pros and cons to it, owners are entrepreneurs and their predilections are willing to take risk and smell profit like bloodhound.

In my observation, unlike the professional manager, they lack the necessary hard skills cobber together to run the companies that limit the far they can go. Even they can hire professional manager assisting them to run the company; professional manager is fettered to make critical decision, it is the boss looks over her shoulder call the shots. Manager dithers in invidious position to flesh out her own idea and is less willing to take responsibility and prefers to listen to order that hampers the value creation process. So, unable to manage professionally the jarring relationship with the manager becomes masochistic to the owners which blunt the impact of their business success. This, very often, has the impacts on SMEs and family-owned companies.

Another factor that affects successful companies to adopt best practices is industry concentration. Market concentration demands companies to marshal resources to achieve greater innovation and unyieldingly adopt a breakthrough strategy, an ineluctable choice to outflank in competition. Change becomes grindingly a necessary process to adapt to market environment. Best practice becomes a beacon enabling a company to achieve competitive advantage. The change culture is no mean feats; it gives the company a renewed life moving forward that separates successful from other not so successful ones.

The Euro Crisis (Published in LinkedIn discussion group)

1. Spanish borrowing costs get relief but banks remain under pressure. Will Euro bank reform provide direct infusion? http://ht.ly/dLeaY #sbfi  Executive suite 23 September 2012

In anticipating Eurozone banking reform, we need to learn the word "patience". We have yet to know how the latest changes will pan out eventually. But they have made some important strides.

One is ECB will purchase unlimited amount of bonds of ailing countries; But there will be string attached, that is a bank supervision body set up for surveillance work. That changes substantially the structure and power of ECB.

These are positive steps. Lowering borrowing costs will be congenial to ameliorate the current crisis. It strengthens the governance in a prostrate and slovenly Eurozone. It is unknown how the Eurozone countries will react to losing some sovereignty. However, strong governance will curb feckless countries talk the talk, but can’t walk the walk; the move will help the early recovery of Euro zone.

2. Spanish bonds sold for record 7.18%, an unsustainable level that deepens crisis. How to restore market confidence? http://ht.ly/bFM9q #sbfi (CEO,COOCFO) 25 June 2012

The spike of bond yield shows the bank recapitalization in a wrong way. It reflects the risk premium of the dangerously high government debts to GDP (Spain’s public debt to GDP has raised to 80.1% since 2007, if adding another 100 billion loans, debt level goes up to 90 to 100%). Its resolve to tackle banking woes; country in deep recession; regional government funding drying up; and high unemployment all add up and exacerbates the economic crisis that worsening the assessment.

Three Remedies are thoughts to restore market confidence:

1. recapitalization: After external audit and stress test, there should have an estimated amount for injected fund, as what I mentioned in my previous comment, it should come from EFSF or ECB direct lending, rather through government borrowing, cutting out insidious close symbiosis between government and banking systems, preventing private debt becomes public pain. I read a piece of Reuter news today, Mrs. Merkel refused to loan direct to banks, if Germany couldn’t monitor utilization of their taxpayer’s money. Spain should learn to let private bank to shoulder the burden, and giving lender to safeguard their lending money.

It has been in my mind whether US bailout their banks was a success in 2008 financial crisis. It is mixed. In one way, it averted a full-blown financial crisis. In the other way, the bailout became a moral hazard; it rescued unappreciative beasts that lobbied legislators to dodge the passage of law, such as the Dodd-Frank's "Volcker Rule". Banks taken the advantage of the bailout, lobbied in the guise of “free market economy” to move away hindrance impeding them making more money.

What was worse, bank’s executives were so keen to get rid of the portion they were hemmed in owing to the government, unencumber them to revert to the old days paying them swingeing compensation. They disposed-off assets; it was not clear whether with the shareholder value in mind or feeding self- interest. So, while the Spaniard shouted why Spanish government lavished advantage to bailout bank? I sympathized with them. It created grossly egregious social injustice when ordeals of many living below subsistence level struggled to live their lives. American system provided the incentive fast enough to return the bailout funds but also satiated the capricious banker’s appetite.

We always adopt a putative utilitarian view to prevent cataclysmic consequences. Letting banks fail is not an option and is inimical if the contagion becomes systemic, the temptation to bailout is strong when the economy is in dire straits; those are why bank’s fiscal rectitude is at all-time important, and regulation is a way to stow bank to adhere to fiscal discipline, judiciously taking calculated risk only within bank’s capacity, refrain to act recklessly resulting financial woes.

2. Tackle head-on non-performing loan. It is estimated that troubled real estate asset amounting to € 184 billion, and is centered on Bankia. In my previous comment, I mentioned “The solution to the imminent banking crisis is to strengthen bank’s governance. Letting banks unencumbered by mortgage loans start a clean slate afresh by cordoning and purchasing all non-performing assets in one portfolio, governed by an entity (similar to bad bank); so as to lift the unconscionably low market confidence (resolving problems like banks have adequately injected fund and made bad loan provisions), and that the lifeblood of the economy starts working again.” This is an important step that cannot afford dilly-dally attitude.

3. Promoting growth initiatives: Up till now, there is litany of debate with disparate views among the European leaders as to how to stimulate the economies of Euro zone to promote growth, and have no consensus view. I read some interesting articles, saying that from 2007 to 2011, Spanish government spending as a percentage of GDP has increased by 4.4%, more than double the equivalent measure in Germany, however, the spending has bungled, it does not resulting in lifting the wilting economy. Another article stresses why infrastructure spending is not effective to stimulate economy in Europe.

Promoting growth does not necessary pouring monies to build roads or bridges bither and yon to nowhere. It is all about country economic strategy. Where you want to go from here? How the strategic projects promote economic prosperity in the future and creating jobs. So, countries in Euro-zone should have their blueprints of economic plans and start working from there.  Leaders in Euro zone should coordinate their efforts of member countries to make use of existing capabilities and infrastructure to promote growth, such as pan-southern Europe tourism promotion. Some strategic projects will take time to bear fruits, but approach like this can easily see immediate effects.

3.Economist magazine points all eyes onto Angela. Can Merkel come around to lead a consensus rescue and save Euro? http://ht.ly/bwko3 #sbfi CEO/CIO/COE/COO   16 June 2012

It is a political game.

The stalemate originated from different ideologies, political interests in the stake of the game. The ideologies stem from the German adheres to the “not to bailout” principle, let the creditors fail and bear the loss, this is in congruent to the treaty, their constitution.

Second, is the possible political backlash, most Germans are of the view that to use their hard-earned money to rescue the profligate southern members is the greatest sin. Mrs. Merkel’s reticence must have taken these into consideration.

Of course media accused of German banks’ reckless lending originated the woes and Greece should not be admitted at all to the Eurozone. The German is culpable to clean-up the mess. There are some truths to this shortsightedness from hindsight. They (The German) were long of ambition short of calculated risks.

Mrs. Merkel is the proponent of “More Europe”, “More politically integrated Europe” which will strengthen her leadership, but other member countries are reluctant to surrender sovereignty. They want more money injected to their ailing economies, not a hand into their internal affairs. The German is reluctant to open the money spigot if members do not demonstrate they are committed, and where is the pit to satiate the voracious appetite? These are the fears any sane lender should have. A diverse interest group limits the way how it responds to crisis.

She disparaged the idea of Eurobond, in her view would serve as disincentive to continue reform. The larger issue probably is it jeopardizes Germany guarded credit rating; the ramification probably will be political backlash, too big a cost that she rejected vehemently. The deposit insurance I think is an easier part, the cost is negligible, and it serves as backstop for bank runs. If there were none, probably there will be no costs.

The nub of the problem is to align diverse interest, and it requires member of the countries to trade their priority of interests for better good. A recommended idea is to form a crisis management team nominated from member countries to meet more regularly to discuss urgent tasks. It resembles some kind of shadow cabinet or quintessence for future greater Political Union. A crisis management team will respond with alacrity to the vicissitudes of the crisis. The decision will be binding to all member states to get faster results (such as how to coordinate member states to achieve faster growth). It is the sine quo non for any crisis management.


4.  The euro crisis: How to save Spain (Finance club) 4 June 2012

The comment above was posted in this group before; I posted again because I thought it was still relevant to proceed apace going forward. I am writing now for the teetering on the brink and fermenting liquidity banking crisis.

The financial world is rife with great uncertainty in a funk. It goes without saying because there is no transparency as to how Spain secures the source of funding (EFSF or ECB?) and by how much to inject into the banking system that currently hang in the balance. Spain is the fourth largest economy in Eurozone that carries weight; the unknown factors escalated the financial risk, epitomized by accelerated interest rate on government bond to 6.45%.

The banking crisis is not as sophisticated as the Subprime crisis in the US, although they are same in way that there are big holes in banks’ balance sheet due to falling assets price (falling value of real estate mortgage and holding of government bonds for Spain’s banks). Difference in ways that The US was self-funding (by printing monies) and banking crisis was exacerbated by subpar slapdash lending practices and sophisticated synthetic financial instruments (such as CDOs).

The perennial problem of Spain’s banking system is characterized by insidious close symbiosis between government and banking systems. The banks are mangled to purchase government bonds if funds are available from ECU which clouts out funds channeled to business sector to pursue economic growth. It becomes an unruly vicious cycle: weak public finance is causing funds being channeled to government for firefighting own use rather than inject into the economy for more productive use to boost business growth,

The solution to the imminent banking crisis is to strengthen bank’s governance. Letting banks unencumbered by mortgage loans start a clean slate afresh by cordoning and purchasing all non-performing assets in one portfolio, governed by an entity; so as to lift the unconscionably low market confidence (resolving problems like banks have made adequate fund and bad loan provisions)that the lifeblood of the economy starts working again. This will require an audit of banks’ balance sheet to determine amount needed for injection.

The funds required for running public service are judgment call, ineluctable either from tax revenues, selling unutilized, and loss making public assets or issue of government bonds selling to ECB. The litmus test is a break out of the vicious cycle enigma to restore confidence and stop the self-perpetuating banking problems.

5."Spanish austerity continues as recession deepens and interest rates climb. How long will Berlin keep pushing? http://ht.ly/akA5S #sbfi" CEO/ CIO/COE/COO/CFO/Head/VP/ Director/President Level - Senior Leadership Group       20 April 2012 CFO network  finance plus 28 April 2012 Finance club 29 April 2012 Execu Net 4 May  http://www.linkedin.com/e/-vo80fz-h19gkdg9-5w/vaq/108763676/93469/77471489/view_disc/?hs=false&tok=0iRycuehwxvBc1

Spain's debt problems stemmed from prior to the 2008 financial crisis, Massive property bubbles prior to the financial crisis to 2009 lifted property price by 80% that made Spanish rushing for fabulous wealth created by the property market. Labor costs rose at all-time high, eradicated their competitiveness within the Eurozone. Household debt exceeded disposable income. For a long time to come, it is a prolonged deleveraging process, but if the right policy options are chosen, it can be less painful and shorten the recovery period.

To curb the present crisis, Spain needs a two pronged strategy.

One is economic reforms which include banking reforms on non-performing assets derived from previous crisis. The real estate sector follows the business cycle, ebb and flow. The glut is difficult to clear under such an adverse environment. Even the nascent recovery in the US, the housing market is still lagging behind the general economy. The quicker way is to loosen foreigner property ownership.

The deleterious effects of austerity package in the Euro arena ostensibly to rescue the economies, making condition worse, it is hard if not impossible to attract investors due to the trough is still invisible, investor are caught in the devil and the deep blue sea; So are the bulwarks of restrictive labor laws,  cartel industry structure and planning restrictions. Structural reform to curtail bureaucracy and labor market rigidness will help to attract foreign investors.

Competitiveness is by no mean for wages to race to the bottom. Wages must compensate for sustainable living standards in accordance to economic capability. The wages in Real Madrid do not have to level with Dongguan’s workers in China, so long as Spain is able to achieve productivity gain; or second, it offers distinctive products and services that customers are willing to pay for higher wages and also company making a profit, such as Zara, its distinctive advantage is to fast emulate the latest fashion design and reconfigure their supply chain to facilitate speed delivery to the middle end market. Spain needs more Zara types of competitive businesses.

The second prong of strategy is to lift the economic growth.

Under high debt environment, foreign investment is a faster way to deleverage without using your own scarce resources, it helps to decrease unemployment measurably and improve tax collections. That is enough to get Spain back on track. Unfortunately, the shackles of regulations and rigid labor market may be the Achilles heel hard to allay fears in foreign investors.

With the fortitude toward adversity and unswerving determination will see no trouble in next to unassailable.

6.Why Germany Should Leave the Eurozone (Finance club) 17 April 2012

To me, Germany to leave the Eurozone is the worst choice. Eurozone needs a leader for the crisis. Germany is a natural leader. They are large in size, thrifty, efficient and have the wherewithal. The current nature of the crisis resonates measurably Germany is a perfect match of leader choice.

The crux of the problem is the approach towards handling the crisis and the stark different culture between the rich North and the poor south, apart from the imbalance in the Eurozone.

The conservative German has gone through the hyperinflation after printing money in the 1920s, which erected a very strong discipline culture themselves, which is also reflected in this crisis about the ECB roles according to constitution as the independent central bank and whether it should bailout the ailing southern countries. They are the staunch believer that disciplined control of money supply and inflation were of paramount importance to achieve a stable currency, providing safe haven for investment. Their miracle of success after World War II exemplifies in their conviction that they are cocksure the similar formula will work for the Eurozone this time round.

The problem is much more complex than it takes, the chink cultural divide between the conscientious German and the laissez-faire southern peers, they can’t see eye to eye. Grate on the nerve is the strident German’s boss around ruffle a few feather and them, the southern brother is hemmed in living a constricted life. That makes implementing reforms an uphill task. It is a painful reform process to demand their southern counterparts to cut wages, reduce government spending to get the house in order. The German needs a congruent strategy to coax the belligerent south to go along with them rather using money as big stick. The reform package devoid of growth factor is the most critical Achilles heel; undercutting the reform, resulting in baleful negative spiraling effects, exacerbating the debt level and enhancing the chances of defaults.

If Germany were to leave Eurozone, the growing chances of Eurozone dissolving cannot be ignored. That will be calamitous, bout of financial shock causing the financial market into mayhem. It does not benefit Germany either. The strong deutschmark will send the export economy into a tailspin, shaken their industry structure and Germany may have to follow the foot path of Japan. The benefit to Germany is no longer it has to subsidize the southern Europe. Which country will lead the Eurozone after Germany exit? France or Italy? Will they be the better candidate to lead the Eurozone than Germany? The most likely scenario is a dissipating Eurozone.

Judging from political climate in the Eurozone and the financial capability of Spain, it is very unlikely they will leave Eurozone in the near future. It is the political figure of Spain who evaluates their choices and determines where they go.

As to Germany's attitude towards their southern counterparts, I have mentioned in my previous comment.

7. Great article by The Economist! Germany’s model to rescue the Euro zone is quixotic, doomed to fail in the end due to devoid of growth. Their dependence on BRICs for growth is not reliable and deleterious. It belies the fact that China is also depending on Europe for growth, if that growth factor wilts, the impact will blunt its demand, and in the end all sink together.

The kernel of truth is for low debt countries and large economies in their endeavors to expand internal consumption and high debt countries attract foreign direct investments to enliven the economies.  (CEO,COO, CFO)14 April 2012

8. (Finance plus)(CFO) Spain's debt problems stemmed from 2008 financial crisis, there is no short cut in deleveraging process, but if the right policy options are chosen, it can be less painful and shorten the recovery period.

To curb the present crisis, Spain needs a two pronged strategy. One is economic reforms which include banking reforms on non-performing assets derived from previous crisis. The real estate sector follows the business cycle, ebb and flow. The glut is difficult to clear under such an adverse environment. Especially, the deleterious effects of austerity package in the Euro arena ostensibly to rescue the economies, but making condition worse, it is hard if not impossible to attract investors; so the second prong of strategy is to lift the economic growth.

Greece mires into recession for four years and still can’t see light in the tunnel, the fluff is no economic growth, paucity of new sources of income to alleviate debt burden. Compared with Greece, Spain is in better shape in terms of competitiveness. Probably structural reform to curtail bureaucracy and labor market rigidness will help to attract foreign investors.

Under high debt environment, foreign investment is a faster way to deleverage without using your own scarce resources, it helps to decrease unemployment measurably and improve tax collections. That is enough to get Spain back on track. Unfortunately, the regulations and rigid labor market may be the Achilles heel, making foreign investment not conducive.

It may not be the best solution, but certainly a cogent solution to alleviate Spain problems.

Nowhere did I mentioned in my comment about bailing out, I mentioned foreign direct investments. As to bailing out, it is about what choices you have, much less about your wish, Greece is a case in point. Your comment also confuses me between austerity and spending cut.

9. I am not writing for the prize. Chaos and uncertainties will create snafus, rattle and reverberate the market in the initial change. I don’t have panacea how to stop that happen. The crux is: Does it solve the matter than to dodge the problems? It boils down to the following questions:

What is the economic reality in the Eurozone? Do debt-ridden countries adopt their own currencies not making any economic sense? What makes the solutions more efficient in a convulsive situation? Does the prize to pay for outweigh the benefits?

Till now, no one can envision what will happen and do calculation on costs and benefits in exact sense. It is all logic and hunch to solidify the belief what is the right way. But I am all for the idea of preplanning contingent measures, so that implementers will not be caught in dire straits. Countries adopt their own currencies do not need to leave Eurozone. Euro is still the world currency and the major currency in Eurozone. The relaxation is for the sake of expediency. It is not bereft of hope in Eurozone and life will still go on if they hell-bent to choose the status quo option but sufferers struggle harder and longer against intransigent currency strangulation.  (Finance club)

10. In fact, the French president Nicolas Sarkozy two speed economies in Euro zone may be a practical solution to tackle uneven development in Northern and Southern economies. For political reason, the wealthier Northern Economies are parochial; only reluctantly extend their limited assistance. That is the reason prolong and exacerbate the current crisis, because investors see no end in sight which dampen their fragile confidence, brooking the least for bigger compensation for higher risks, that debilitates the worsening debt crisis, making crisis control  unmanageable.

To curb the present crisis, they need a two pronged strategy. One is swift and determined decision making that is workable in current environment to calm the market. Restructure loan in such a way that will be fully recovered will make lenders own volition to lend easier. If the lending is in commercial terms, private lenders would reticent and shun making loan if there is high risk of defaulting or eventually to write off their lending, they demand higher return and that does not help crisis stricken countries to recover, only making the whole episode uncontrollable.

Convert partial or whole private loans to under European Financial Stability Facility by negotiating with the banks will concentrate risk under one portfolio rather than scattering among countries. Countries' banking systems can start with a clean slate. The loan structure has to be a mix of rollover plus fresh loan in the initial period; because it is the hardest time when economic reform begins. Lengthen the time table of repayment and a hiatus to frozen repayment plan for a fixed period of time and tie future debt lending to fixed schedules of economic reform will give lenders more confidence in subsequent lending. Private loans do not have this flexibility.

Second, Economic reform is an undulating path. The aim of economic reform is to regain competitiveness. Besides fiscal discipline, finding sources of economic growth is also of paramount importance, because it gives light to lenders the needed assurance that everything is on course.

If the prostrate borrowing countries are allowed to use their currencies, such as Drachma for Greece, Lira for Italy, the recovery will be shorter; it will be baleful intransigently stick to only one currency thwarting the borrowers’ economic self-adjustments, and increasing uncertainties.(Finance club)

11. Since saviour is difficult to come by, it is the watershed that the EU may want to rethink some innovative solutions. It may not have to stick to practices in the commercial world. Because haircut effectively means transfer of money from one country to another for free. The lender would be loathing if they have to write off their hard earn money for another country’s extravagance for no commercial advantage. So, restructure the loan in such a way that will be fully recovered will make the lenders more willingly offer assistance.

Economic reform is an undulating path. The loan structure has to be a mix of rollover plus fresh loan in the initial period; because it is the hardest time when economic reform begins and during this period the risk of default is the highest. Lengthen the time table of repayment and a hiatus to frozen repayment plan for a fixed period of time and tie future debt lending to fixed schedules of economic reform will give lenders more confidence in subsequent lending.

The aim of economic reform is to regain competitiveness. Besides fiscal discipline, finding sources of economic growth, overhaul tax system, curb corruptions and tax evasions and curtail clunky social welfare system all come to the fore. The progress will give lender the needed assurance that everything is on course. If the prostrate borrowing countries are allowed to use their currencies, such as Drachma for Greece, the recovery will be shorter; it will be baleful intransigently stick to one currency thwarting the borrowers’ economic self-adjustments, and increase uncertainties.(Finance club)

12. Going forward, in no small part, government sector spending cut will most likely worsen the economic outlook due to weaker private and public sectors (the vagaries of changes, such as dimming world economy, weaker consumer confidence and higher unemployment rate will take a heavy toll on major economies). They do not mesh well with unalloyed economic growth theory. 

And if the wobbled China and Germanys’ economy continue slowing; so, where are the bright spots that play the pivotal role to lift the world economy from floundering further? It is a tall order. I am skeptic that those economists predicted the second half of this year, the so-called impregnable world economy will fare better.