Best comments 2013 (part 2)

1. China's cash crunch threatens Shadow Banking shock - Telegraph 24 Dec 2013

The repo has descended to 5.4% today after central bank injected liquidity into the system. The liquidity in the market is abundant, especially for larger banks, but the lending is dismal. A slowing economy results in slower credit growth that banks play fast and loose, circumscribed by prudent lending.

Larger banks usually chime with larger customers basically are state enterprises, are not doing well as it is now, whereas small medium enterprises(SMEs) are duds, fraught with vestige of lending money due to poor credit quality that large banks are reluctant to make lending which restricting credit growth.

The ramification is those need cash the most (SMEs) are running short of cash, A cash crunch came thick and fast is just a replay of past episode few months ago. it also means that there is no effective solution to resolve the hitch despite the Chinese government loosen the grip to allow smaller private banks beginning lending business afoot  to SMEs.

            In the end, credit quality is an overarching factor, whatever the size of the bank, It is               primal that banks are in for a profitable business. Chinese businesses must learn to                    weather good times and bad. There should be chapter 11 like bankruptcy law for                      insolvent companies in no time to reorganize and restructuring trouble businesses out              of the pickle to protect not only debtors but stakeholders. The problem lies in the                       execution.

2. China sends warplanes into air defense zone - Chicago Sun-Times 29 Nov 2013

The tension is now heightening. the idea of air defence zone was folly that China now can't withdraw, neither can it back away from execution due to lose face and is mortified by domestic opprobrium for no action to uphold their claim  which  results in they can only harden their stance.

I t was also folly in the sense that the Adiz(Air defence identification zone) helped their foe to push the US to the frontline, in direct Sino-US confrontation, and the chances to flare up warfare due to miscalculation is all time high.

It benefits only to the rightist Japanese they anticipate anxiously the US to protect their Diaoyu / Senkaku Island’s sovereignty, and now China has escalated the tension by giving itself lesser leeway to maneuver diplomatically. Both the US and China are in a dire strait at the altar to fight for few rocks at a no win situation and the balance go the other way only benefit the rightist Japanese.

            The Adiz also serves as writing on the war to China’s neighboring countries and the                  world that a rising China will not always be peaceful.

3. China creates 'air-defence zone'

China always claims its rising as peaceful, but others smell rat. The Chinese president Xi Jinping reassured the world that the country would not pursue hegemony. But watch what they do is a much reliable evidence than he said.

Immediately after China’s self-proclaimed "air-defence zone", It truly put the America in a fix, the tension between the two super powers escalated. Despite the protests by the US, Japan and South Korea, China is bizarre in testing their brinkmanship perceptibly to check what the reaction by the concerned parties. It simply can ignore a litany of protests, because this is rather a weak challenge to their legitimacy. As year go by, the territorial disputes becomes fait accompli--a legitimate claim.

The shrewd Chinese wields its economic clouts to tame dissidents. South Korea is the weakest in the link due to its close economic tie and its proximity with China. Though an ally of the US, it probably will not adopt a confrontation stance toward China. It also depends much on China to influence the wayward North Korea.

The Japanese Prime Minister Shinzo Abe is a tough nut to crack. There is no denial about the Chinese territorial ambition. To my mind, the Chinese does not want to escalate the Diaoyu / Senkaku-shotō Island, so long as the Japanese admits the island is in dispute and does nothing about it; the Chinese would probably leave it as it is until they are growing into strength in time to come. Shinzo Abe is eager to show in no uncertain terms about Japanese’s sovereignty about the island, if such is the situation that leaves China with no choice if they want to pursue the same claim.

The “air defence zone” probably put the US in the worst possible choice, as conflicts easily flare up if China adopt a harden stance. The US will be in direct confrontation with China, which China also try to eschew going war with the US, but when the nationalism overshadows cool mind in China will force the government to make a hard choice the more, anything can happen. And to the US, if the US dares not to confront China, it would probably lose its leadership in Asia Pacific region when its claim of AP is pivotal is a fantastic talk, so, the probability to go for war is still good.

Amidst quarrel and squabble, the only solution for direct clash is back to negotiation table. Each party must concede a well grooved pattern that there is a grey area in strife-torn East China sea where no party should assert sovereignty. Suffice it to say that leave it as status quo for the time being is the optimal choice.

4.China hard landing is likely: Andy Xie Caixin Online Finance plus 22 Nov 2013

It is probably hyperbole that on the verge of hard landing is impending.

Le Keqiang is probably not in the least fear of adopting bold steps to forge ahead financial reforms, and is willing to experiment new ideas, such as that of Shanghai economic special zone.

In the midst of any reforms, not only in China, reformer encounters exogenous and endogenous impediments, such as that mentioned in the article:  carried trade, if it happens in relatively advanced financial market like that of Japan, it goes without saying that there bounds to be hordes of speculators looking for higher yield opportunities in a quasi-capital control country, like China.

Non-performing loans and shadow banking are unpalatable wild cards, usually prevailing under depressed or undeveloped economy and housing market. This phenomenon also happens in Europe. The Chinese government is cognizant of the housing sluts in derelict in some cities. They are testing water to find a right balance in between healthy property market growth and the suppression of speculative housing activities.

 To my mind, the crux to nip in the bud, eradicating housing bubble risk is to control land sales and cater for more subsidized public housing to allay lower rung’s crying need of housing demand, The odd thing is, land sales, to say the least , are the source of the housing bubble and the major source of local government income. The Chinese government must bear the mantle to learn from past lessons.

5.Chinese business investors flock to UK - FT.com | UK Business 18 November 2013

It can be good news and bad news for the UK. This stupendous progress  at the back of high public and private debts, tenaciously attracting foreign investments will bring sustainable growth to the country by using foreign funds. Over and above, foreign direct investments also help to lower unemployment.

The flip side is Chinese entrepreneurs (except those receiving higher education abroad) are blindsided by having little knowledge about the razzle-dazzle Western business and regulatory environment.

They will encounter rifts in terms of unconscionable culture shock, and intensive and cacophonous conflicts if they resort to deeply grooved habits and using boilerplate business skills acquired at home to run their foreign businesses, will cast a pall to their foreign ambition. It behooves that both sides need to, especially the Chinese side, in no small part,  to gradually adapt to variegated changes by learning the rope.

All that said, a quicker way, come hell or high way,  will be giving foreign managers carte-blanche and for them taking a back seat, it is an inopportune time to be on their own until they are through the gamut of the whole operation then consider weaning off.

6. The ECB’s Asset Quality Review: Are Banks Doing Their Homework? 7 November 2013

It is evident that the current prostrate large banks in Eurozone are undercapitalized. Why local governments take a respite acted supinely? It is because big banks assets usually larger than those of the governments, and there is no clear demarcation to garner the needed funding in between government and banking sector.

And now, most Eurozone countries are heavily in debt, let alone have the ability to rake up funds to recapitalize their banks in any endeavors. According to the economist, even France and Germany's large banks can’t elude the fact of undercapitalization. There is no qualm that many of the big banks will fail the review, but the question is not the review, but where (ECB, Germany, IMF or public tender?) to marshal the needed funds? Without recapitalization, Eurozone’s  recovery is hanging in the balance! 

7.Senate Passes Bill to End Fiscal Impasse  17 Oct 2013

The outcome is now a prosaic stagnation; all are back to the bargaining table, a circuitous round back to the original point. The merit is it eluded a deleterious head-on default in the nick of time. According to Financial Times, the treasury’s computer system cannot prioritize payments to international creditors, so presumably, heading to a default was inevitable, and now budget talk deadline defers to another showdown four months ahead, and no one knows whether it continues to boondoggle repeating the same episode, the out of whack political system consuming enormous energy but yielding no results and only kicking the can down the road.

I mentioned in my previous comment, a two party system (bipartisan) unwilling to compromise only leading to a big crash than a political solution. The strategy to elicit constructive checks and balances between parties diminishes. I read many comments from LinkedIn’s group subscribers; it appears that many Americans still value checks and balances. The crux of the problem of the current system now is it hampers political progress. You may blame the Republican Party for all the havocs, but deep in the skin it is the ideologically divided Americans is the center of the issues.

How to break through the current political stalemate, I think a new centrist political party may be a way forward to progress the political agendas. They are neither red nor blue, say purple. The purple party will pursue a center approach. Their targeted competing political territories will be at swing states where neither red nor blue is predominant. Ideally they capture all the seats of swing states, which resulting neither one party can command the majority vote in the house, In order to pass the bills, red or blue must coalesce the center party and move their stance toward the center than to the extreme, making it easier to break the political gridlock that is the primary purpose of the existence of the center party.

But now, who is willing to come to the fore playing this role? 

8. US government shutdown: lessons in leadership Executive suite 11 October 2013

The recent development is the Republican offered to lift the debt ceiling temporarily for six weeks to facilitate the budget talk, but the Whitehouse rejected the offer, insisting to open the government and lift the debt ceiling first before talk can begin.

It would be hard for the Republican to accept a frizzled out and stop the farce if open the government ostensibly means approving the budget without any haggling, the talk after approval carries very weak negotiating power, and it is hard for them to accept this deal, and may be the standoff continues and everything is back to square. One solution to the stalemate is partial approval to let talk continue and temporary open the government to give further negotiation a chance.

There are mooted wild guess about there will be no default on payment obligation among some observers and Republicans, because tax revenues continue to pour in and the government can prioritize what to pay first. There are some truths in them, but no one knows the veracity of actual cashflow position more than Jack Lew. There are several determinants unknown to us:

1.      The quantity of tax revenues flow in and conserve for the next big payouts, and the consistency and predictability of tax revenues flow. This part usually is uncertain and unpredictable.

2.      The quantity of essential payments: this part usually is certain and fixed. Non-essential payments either deferred or whittled away.

Even the government will not default on bond payment due; we can imagine the treasury will be operating in a constricted manner tantamount to an austerity.

To break the gridlock, both sides must disabuse to manifest flexibility and readily to see from the other party perspectives. The purpose of Republican’s offer is not to yield to Mr. Obama’s demand, but switch their firepower to budget negotiation, lifting debt ceiling is a minnow (I have explained in the previous comment); we can foresee there will be a harrowing hard bargain. The Whitehouse‘s rejection also means now turning the table around, the Republican is emboldened to vociferously use this for a haranguer that the president turned down the offer, it is he culpable not them pugnacious. So, it is imperative to find middle ground to resolve the conflict stymies the progress rather than balked at the status quo resulting unruly calamity causing disarray.

9. Markets are betting that the U.S. Debt ceiling will be finally raised before the 17th of October. But imagine the opposite! CFO 8 October 2013

It is a political brinkmanship that each side refuses to budge, stuck in the cul-de-sac that expecting the other side to chicken out of the political stalemate. In the latest edition, a joke in the economist wrote” To a wondering world, the recriminations missed the point. When you are brawling on the edge of a cliff, the big question is not “Who is right?”, but “What the hell are you doing on the edge of a cliff?”

It is not facetious, in my previous comment; I said the pressure was on the Republican side. Majority of the Americans cannot condone the republican rancorous politics using Obama care to hold their President hostage, Even though they don’t fully endorse with the healthcare policy.

it is a lose/lose situation, Mr Obama cannot sit tight to wait for the Republican yield to his request. It is the Administration that runs the country, not the Congress. If the Republican stick to their gun let all fail together. The outcome can be irreparable. It is the Administration to clean up the leftover, so, it is a lose/lose situation. The American people do not want to see the country in a dicey state, expecting the administration to lead and in control of the whole situation; implementing damage control to minimize the risk of worst possible outcome.

Since both sides are stonewalling, it is imperative to have mitigator schmoozing seeking breakthrough to the gridlock, and it is achievable as many Republican congressmen do not endorse the idea of tying the budget or debt ceiling to Obama care. Now it is only face savings on both sides that is the issue, a bearable concession would be able to break the ice and ensure the matter not scuppered. The Vice President Mr Joe Biden is an ideal candidate as mitigator, a wise and canny politician with abundant political capital in his bag. There is no qualm he can achieve the task.

In fact there is no need to set a debt ceiling, because it is repeating the task of formulating the budget. Debt ceiling is a level doesn't say anything good or bad. It is the gradual decline of debt level is the primary concern, and budget cut already performing the task of debt reduction. The whole idea of budget is to ensure you are prudent enough not to spend more than what you earn. Beside quantitative target, there should be qualitative goal if you want to be constructive to ensure that certain level of spending must gear toward generating future revenues. Not just haggling of what to cut what to spend that frequently mire into political wrangling. (Republican wants to increase Defence budget whereas Democrats want to increase social welfare.)It is the consensus of strategic intent that is crucial to build into budget formulation. Since the debate of budget has already done the job, why debt ceiling must be there? 

10.This shutdown may push the parties to come up with an agreement on the debt, and that would be a good thing. bit.ly/1hfpNda  Chief Financial Officer 2 October 2013

It is a sad episode that bipartisan interminable rancor in a morass finding innocent civil servants victimized (taking no pay leave). If shutdown may push both parties to reach agreement, it won’t evolve by keeping feisty to the current bane. What is causing the gridlock is neither side has the attitude of compromising, and the refusal of either party to see each other stance.

Of course now the pressure is on the Republican side, on the part of bad publicity. Forget about the tea party put muck out of thin air, the feckless younger Republican congressmen may be of the view that the harder they push to topple Obama care, the greater they get the ground support from their own territory. But for neither blue nor red territories, bad publicity will gravitate more seats toward the Democrats, if they are unyielding. According to later survey, majority of Americans do not want Republican congressmen use budget approval as weapon to postpone Obama care. Which only to prove it is wrong strategy that it does not play out constructively as expected for each party to counter check the others if neither side wish to compromise. 

Republican should see Mr. Obama will take his healthcare reform as a signature piece during his presidency. Any move to eradicate this achievement will encounter strong resistance. Mr. Obama also must not over ebullient, there are shortfalls in the newly born healthcare policy rickety that need to refine.

According to Wall Street Journal, temporary employment business is booming, because companies are skittish about bringing on permanent hires to keep employees to below 50 level to get round Obama care’s magic number. If Mr. Obama is open his health care system for refinement and offers continue dialogue, in exchange for the Republican’s support.

If worse comes to worst, Republican has nothing to win for prolonged shutdown, overdone pre-election bluster only see them losing more seats next year; this will be a stepping stone to come to term with Mr. Obama for those non-extremist Republicans to compromise, support the budget and lift debt ceiling (why it should be there at all to consume so much energy year in year out, after all.).

11  Give Jobs a Chance nytimes.com by Paul Krugman CFO 17 September 2013

My line of thought does not go along with Mr. Paul Krugman.

First, it is felicitous to taper if Fed found open market operation was no longer as effective. There is no reason to continue the futile effort to flux the market with excess monies that no longer stimulate derisory demand; Bernanke’s experiments can only speak of one truth that monetary policy can only do so much. And highlight an important lesson that monetary policy can only be effective if there is resurgence of corporeal demands. A surfeit of monies can be counterproductive in driving economic growth.

Second, the easing policy keeps the interest rate low has already revived the housing market, there is no need to keep interest rate low for prolong period of time to induce an effervescent housing market, tapering is to correct the market to its fundamental.

Third, there is no concrete evidence to adduce that there is strong correlation

between easy monies and job growth. 

I am discomfited by Mr. Krugman recent article that he lamented it was the quantities of the monies not swingeing enough that obstructs job growth. If there is strong corporeal demand, it would be sensitive to money supply growth. It is elusive by increasing further money supply that can’t make any wonder. He should consider other factors are at play which weakens the demand, such as rickety global economic recovery, government budget sequestration and austerity measures in Eurozone, and nascent private sector growth.  All these are projecting a low growth, low consumption environment; the buck, as it were, stop there; there is nothing easy money can do about.

12. US, Russian Naval Deployment Near Syria - Update 10 September 2013

A sigh of relief, there is an optimal option now that proposed by Russian foreign minister that for Syria to surrender the chemical weapons. According to news, Mr. Obama is keen to pursue diplomatic solution. In my last comment, I suggested not rushing into war; the reason was the process of gathering evidence was incomplete.

Though the president has the authority to wage war but could fell into the trap of Mr. George W. Bush’s footstep. With hindsight, many US allies carefully drafted using the words of “strong response against the regime” few stop short of explicitly supported military option (Most probably concerned about the prohibitions of UN charters).

To my surprise, Mr. Obama opted for congress’s authorization. This move is risky indeed, because the perspectives of viewing the incident amongst the white house, the senates, and the lower house, the differences can be widely apart, especially the lower house, their votes are driven by ground sentiments, and about 60 % of American against intervention, That will ensnare Mr. Obama in an awkward position, because the president can’t on the one hand seeks authorization, and on the other ignore the Americans’ wish not to be heady for war. This was why David Cameron opted out.

The dilemma is now solved by the new option for Syria to surrender Chemical weapons, why I see this as an optimal solution for the president;

First, it gives the president a stepping stone to go with the view of the majority Americans.

Second, the objective is to stop the proliferation of chemical use, and the West was trying hard the UN security option but to no avail, because the Security Council was “held hostage” by some members. In fact, the Security Council is badly needed to reform to facilitate decision making rather than being obstructed by unanimous agreement. Mr. Ban ki-moon fails to restructure the council to facilitate majority-voting.

Third, some say military strike fizzles out, the president’s cachet and US leadership in the Middle East are at stake. That is wrong mindset, We should measure against outcome not means. Military action is only the last option, there was a war strategy in ancient China by Sun-zi “不战而屈人之兵” It literally means “winning the battle without going for war is top choice.” the ultimate objective was to stop chemical weapon use not just flexing muscle. In fact, it was the president shows his mettle by garnering international support that puts Russia and Syria in hot soup to seek viable option.

Fourth, as to where and how many weapons that Syria possesses is a matter of intelligence, the US can up the stake by asking Syria and the rebels to sign treaty not to proliferate chemical weapons, this is to stop any future use. According to some magazine, the purpose of Syria chemical weapons accumulation was to counter the threat of Israel. Involving in the Middle East ethnic conflicts is meaningless; using military option to solve these conflicts is pointless. Not one to mince words, the only solution to Middle East issues is soft power that boils down to two words, “trust” and “tolerance”. This also applies to the relationship between Israel and Arab countries.

13.Syria intervention plan fueled by oil interests, not chemical weapon... theguardian.com 5 September 2013

The statement sounds familiar, there was a time during the Iraq war, the Chinese media clamored about the ultimate motive of US’s Iraq war intervention was germane to devouring the abundant oil supplies in Iraq. With hindsight, who benefits now the most from the supply of oil from Iraq? It is China. It is absurd to speculate Syria military intervention plan was fuelled by oil and gas interests. Without proffering ground troops in Syria and securing domination in the politics of the rebel parties, there is very little influence in exploiting energy advantage. Judging from the portend of current mayhems in the Middle East's geo-political conflicts, the speculation is crassly unfounded.

14.The Triumph of Parliament – Telegraph Blogs 31 August 2013

It is too early to celebrate the triumph of the thirty vote’s majority. I think it was a wrong precedent in the past that clouds the right decision now. It was the ex-US president George W Bush and   ex-British Prime Minister Tony Blair without concrete evidence of "chemical weapon of massive destruction" that impugn the credibility of the subsequent just war against a crime that was pernicious; the vile effect is to sway the public confidence that it is "a lie of wolf come again"

However, all is not gone. The UN inspectors can play a crucial role now as independent party to testify whether it is a fact or lie. There is no hurry to rush to wallop Assad by missile attack in fear of letting him scot-free, think of something more effective to cripple the regime, and first and foremost, for any troop going to war, there must be a overwhelming purpose that people will convince it is just a holy war. a vivid video image will have explosive impact to say everything than a thousand words of any persuasion.

15.60% Of Americans Oppose US Involvement In Syria, Only 9% Support... 26 August 2013

It is not a simple black and white issue. I believe the Whitehouse has taken into account the pros and cons of direct intervention, of course, also the view of the Americans. 

The Whitehouse weighs against ethical belief against non-intervention, the strong opposition stance of Russia, the chances of quick win, the connection of the rebels with Al-Qaeda, the solidarity among the rebels, the credibility of rebels to lead the country and the nature of conflicts in the civil war are also the concerns, and ultimately, how the world look upon the America as a credible world leader to manage peace,

16.Radioactive Leaks in Japan Prompt Call for Overseas Help  bloomberg.com  21 August 2013

Woefully, the Japanese at Fukushima suffered another onslaught in a rash. 

First, it is the underestimation of the risks of deploying nuclear energy untoward into disarray, and also the lacking of readiness undermine to meaningful response to any kind of unruly nuclear crisis.

Probably there was too little successful precedence to follow, to say the least. The consequences are baleful to human lives and damage to the environment.

It is now clear that the price to pay for technical incompetence is egregiously large. There is also an element of staid Japanese politics into play as to how to manage a crisis to allay public worries leaving the mayhem.

Best comments in 2013

1. Henkel CEO Sees No Short-Term Catalyst for Europe Rebound (Broomberg.com) 15 July 2013

I was puzzled by the news whether this is the watershed of Eurozone recovery or just a hyperbole and I had the answers from today's paper. It was said the big brothers in the Eurozone, Germany and France led the recovery, and according to the paper, increase in internal consumption and public spending were the reasons for the tepid growth for Germany and France. And now Bromberg's article pointing to emerging market demand (Primarily Russia and China) is also part and parcel. Southern Europe was wrought by the baleful effects of austerity package throttling the recovery. It is not clear the strength of this recovery or just an euphoric. Time will prove it.

Dear Henrique, yes, Hope and wish sometimes are surreal. Even the German Chancellor Dr Merkel admitted the road to recovery is still far-flung. But there are signs of green shoots no matter how fragile they are which are supported by domestic consumption, public spending and investment, in the case of Germany, and also according to the Bloomberg's article you posted external demand. It can't be just surmise. There is bedrock to support that nascent recovery.  I reiterate, larger economies lead the recovery has spill-over effects to the southern European countries. That spill-over effect which I believe will give a boost to the southern economies. The direction of strategy will be centered on restructuring and growth.

2.  When giants slow down (The Economist Article)

It is not their glory days in the past is now over, the exponential growth of BRIC was nested on the booming opulent economies and also their mutual dependency. Some were basically commodity driven. The bashing of the heydays are over is hyperbolic. The biggest vulnerability is BRIC are saddled in the clunky intransigent economic system perpetuate their less dynamism, particularly not precocious enough to respond to exogenous tidal waves which precipitating their downfall. So, their progress either ineptitude to adjust and mire in stagnation; or has mettle to take the gauntlet wade through constant economic reform, readjusting to find fit. Their growth is an undulating path.

3.UPDATE 2-Portugal's BES reports loss as bad debts jump 26 July 2013

Europe banks are plagued with a host of inveterate problems. First and foremost is poor business growth: current recession, hitherto, resulting fewer lending and higher non-performing loans is a renowned fact; Second is banks' undercapitalization, the sector is large, has too little capital, especially after undergoing Basel 3 implementation that exacerbates lending activities to withstand the heavy odds of improving business environment; Third, it is lack of viable long term business model to make sustainable profit. Of course, for southern Europe, each has their own banking problems, like Spain is inflicted by mortgage problems, but they bear the same engrained root causes.

4.China manufacturing gauge hits 11-month low: HSBC 23 July 2013

As spoken before, the global economy to achieve sustainable growth, large economies must expand internal consumption. We pinch the hope on the US and China to lead the world’s economic growth. If China's growth falters, it will be hard to assuage the burden for the US alone to make the growth wonder forging ahead. It is paradoxical that in order to restructure the economy, China allows its growth to lose momentum that is dangerous move. China must realise the magnitude by looking into bigger picture, not only their own. A faster growth economy not only epitomises better chances of ameliorating the world economy, but also as a quid pro quo in turn benefit the Chinese economy as a whole.

There are two ways of looking at it . One is inveterate past years efforts to rise as a pivotal financial centre. Another is fortune. But tide ebbs and flows, it is hard to maintain if conditions of competition are equal.

5.China Wealth Eluding Foreigners as Equities Earn 1% for 20 Years 15 July 2013

The kernel of truth of buying Chinese stock at your peril are two folds: One is earning quality, the Balance Sheet shows company holds billion Yuans of cash in hand, but you cannot ascertain this cash is in existence as of Balance Sheet date; Second, is corporate governance, like what is mentioned in the article; there is no checks and balances, the nefarious CEO is the owner and also majority shareholder runs roughshod over and at the expense of other investors.

6.Bill Gates once remarked: “I will always choose a lazy person to do a hard job, because he will find an easy way to do it.” Do you agree? 10 July 2013

I am just doing the opposite. I know my diligence will payoff sometime.

There are things you can't go by shortcut that is a fait accompli. I can’t see how to cobber together in between laziness going for shortcut and creativity. A lazy person reluctant to spend extra efforts emasculate mind boggling activities, it will eventually being mired into self-imposed circle. It behooves that only getting out of what boxed you by breaking new path can you spark creativity.

I hardly write twice in a discussion. I heard shouting and hubbub clamoring which prompt me to clarify my poorly understood message. In management parlance, we are urged to simplify process, product design. It was once a fad and now there are still followers. In real life, simplicity will hardly fulfill the vagaries change of customer satisfaction. Companies are scrambling to strike a balance in between standardization and customization.

In real life, I tried sometimes to approach problem easy way out but to no avail. I need to go a whole hog to comprehend the nuance. Though I did not achieve efficiency, I learnt the full gamut of the problem than by way of shortcut.  That was what I meant “Thing you can’t go by shortcut.” My many years’ real life experiences affirm this.

As a boss, Bill Gates can hire any attributes of employee he likes. A lazy person will certainly find easy way of doing thing; the assertion does not mention a lazy person will be more creative than others. I am also can’t find synonym in between lazy and smart. It is grossly imprecise in use of word, too loose. In my more than fifteen years research into creativity and reading quite a few books about this subject. None has ever mentioned that. There is neither empirical evidence to support a lazy person is smarter. If lazy meant to be loosely use to say: a relax circumstance is conducive to creativity which is also not true, on the altar of tense circumstances also spark creativity.

I relate my experience with Microsoft; brook the least insidiously, but not exactly bashing. I gave feedback to how time consuming it was to use one of its Microsoft Word function to type a message. I hinted the same message could be completed in less than a quarter of my time using my Handphone software, because Handphone software preempt for next words use. My feedback fell into deaf ear(no change, no feedback). It was probably too many “lazy employees” being hired; they found one easy way out, but never forget to dish out new version with skimpy change of bits and bobs to earn next rent.

7.Is There A Long Term Unemployment Crisis?: TOP LEADERS/ EXECUTIVES - CXO/ CEO/ CIO/ COO/ CFO/ President/ VP/ AVP/ Director/ Head/ Managers TOP LEADERS/ EXECUTIVES - CXO/ CEO/ CIO/ COO/ CFO/ President/... 3 July 2013 

Having unemployed all these years, I found the real problems are how executive search companies and employers hardwired prejudice toward those unemployed? Will the unemployed be given the second chance to get back to the work force, or making selection from those already in employment and leaving those unemployed becomes long term unemployed and underemployed?

The reality works against us: most employers shun people who are unemployed for various reasons. One is there is a big pool of candidate to choose from, they prefer to give opportunity to those are still working, second, they are not sure whether your skills are up-to-date. Third, whether you are still vigorous and active and ready to adapt to life change? And as time passed, it becomes a paradigm to reject unemployed right away.

For executive search firm even worse, they basically work for client rather than candidate. It is hard if not impossible to table to their client an unemployed for the position. The exceptions are: when they seek candidate with unique industry experience, or client lays down very harsh searching requirements, hard to find candidates or taking advantage of you by denigrating you to a more junior position to show to their client they got them cheap and good candidate. Of course, I declined because I deliver value and not a commodity.

Don't panic, recruiters, if certain skills don't fit, those unemployed, I think, are keen to pick up the necessary skills to keep the ball rolling, No one is born to know certain skills, they must have come through training from class room or on the job, the keys are attitude and passion to the job. If this problem is not solved, not only unemployment is rising, but also entrenched. It is a waste of talent and the scarcity of human resources.

I know the mindset of discrimination is rife and engrained and changes cannot be any time soon. Enactment and public education go to the full hog are the most essential remedies. Enactment may not impinge on stopping recruiters continue doing so, or tackling its root cause, but you can’t ignore it blithely, it serves as a forceful message to correct some of the inequity on moral high ground that the job seekers suffer travails have no fault of their own.

8 .Golden Era Fades for China’s Banks as Crunch Raises Default Risk 2 July 2013

You can view the current banking maelstrom as a stress test that the Chinese government engineered a switch from idle fund and non-performing loans in the banking system to invest in quality assets in order to correct longstanding asset mismatch problems. It is more than a grain of truth that it seems most banks failed the test badly.

9 .On one hand, economics is a sure thing. But on the other hand... Doubts raised about conclusions to landmark study re debt / growth. http://ht.ly/k8ZMc #sbfiTOP LEADERS/ EXECUTIVES - CXO/ CEO/ CIO/ COO/ CFO/ President/... 19 April 2013

Great article! Charles. It hits the one-sided austerity proponents on the head of the nail.

There is no specific threshold measure in between debt/growth is palatable as a single universal guide. Political leaders need to dovetail local conditions empirically, test the water themselves to find the right balance that suits them best. This balance is where good enough for policy maker lowers their debt level but not to strangle the economy till in dire straits.  Closely watch investment, consumption and employment data to determine the optimal size of government‘s output, and strike the right balance to keep the arduous economic restructuring humming.

On the growth side of the equation, 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 stimulus to world economy. By this, Investment, consumption and government spending are creating that corporeal demand.

Can monetary policy spur growth? Well, there is faintest hope for monetary policy in a last ditch to be effective if there is no resurgence of corporeal demands. A surfeit of monies by money printing can be counterproductive in driving economic growth.

Each element of Investment, consumption and government spending has to be considered taking in stride. Under high debt environment, foreign direct investment is a faster way without dramatic increasing mounting debts and government spending to deleverage, saving own scarce resources, it helps to decrease unemployment measurably and improve tax collections.  To attract foreign direct investment, first, it is to slash bureaucracy and loosen the regulatory shackles, on the altar of an all-out battle to woo potential investors.

Government spending is guided by national strategy. A strategy is a blueprint of economic plans.  Where will the country go from here? What are the country strengths and competencies? A nation strategy will guide the direction of spending, charting the course, galvanize resources towards infrastructure or R & D spending, set the framework for a country future success. The spending will generate value for years to come. It will not be a white elephant or build bridge to nowhere. The government spending is the balance of private investment, internal consumption and foreign direct investments.

Lesson from the austerity-stricken Eurozone tell a sobering story that without economic sustaining growth, all hell break loose, any restructuring efforts are futile. Even the one-upmanship Germany seems predominantly hell-bent on austerity package for the Eurozone, eschewing growth efforts as derisory, she cannot stay scot-free from wide- spread malady, and the vile effects are now boomerang, facing dark cloud over her head that rating agency will downgrade her credit rating. It is a telltale sign that no one can live alone without the connectivity of global network. Eschewing growth, the writing is on the wall. 

Growth is to counter the downward spiral effect which stultifies Eurozone recovery, guiding the economy into a low gear rehabilitating mode. Over time, the reviving economy gains traction, sustaining world economic growth.

10  Krugman's reality: Austerity hasn't work & intellectual justification is proven flawed. How to justify now? http://ht.ly/kdQuu #sbfi  21 April 2013

Thank you for introducing Mr. Paul Krugman’s article, it gives me a chance to read in details Harvard’s economists “Growth in a Time of Debt”, Washington post’s “Debt reduction hawks and doves” and also Mr. Krugman’s canonical view. It also gives me a chance to delve into the depth of the topic I discussed yesterday. I am not academia, and have little interest in econometric modeling. That may be my shortcomings to see the full gamut of the issues in discussion.

The calamitous moment of no specific threshold does not mean it is not safe at one level; it creates snafus only when behavioral factor comes into play, and the frothy bubble keeps blowing until it gets out of hand whether the debt levels are at 70 or 90% of GDP. That is the dangerous part, and it occurs all the times. It is better to be on the safe side to trim debt level disarmingly nobody is wary it is not safe.

Another point is the correlation between high debt and economic performance. A correlation between high debt and mediocre or poor economic performance is a ring of truth, because the important element for economic growth-the money being siphoned to reduce debts than go the full hog for productive use that undercut economic growth. So the theory goes, in my previous comment I mentioned about guiding the economy into a low gear rehabilitating mode. But I agree with Krugman’s punch line that the other way round is true that poor economic performance can lead to high debt.

The final point is whether to slash social program is a right decision, Mr. Krugman’s view is cryptic. Unless all and sundry, tax residents in US are willing to support social program by paying higher tax which is reminiscent of an article I read from local paper published by New York Times. Why American hate to pay tax, the authors said one reason is that it’s not easy for people to see how taxes provide benefits. Much to the chagrin, if none is willing to support the program, then probably some programs need to be curtailed or circumscribed to the bare essentials. Clamor adjustment to adapt like this no less will cause pain.

11.Jobless Youth: Europe's Hollow Efforts to Save a Lost Generation -... 21 May 2013

At its worst, I do not want to brush-off summarily the merits of German education system; that is why, in a bare minimum, the US is now tinkering with the change of its current education system the German way. I am wary that such homily approach may be out of whack, putting the cart before the horse. I want to mention some points sound raucous, may not resonate well with the German leaders

First, it is the deep recession in the Eurozone that impedes the job creation, not impending economic restructuring was the culprit. It helps little to change the education system while the countries still mire in the stagnant economies. So, first come first,it is growth that creating job, not the job mismatch.

Second, the southern economies not all are industrialized as what the German does. So, the southern countries must no less than intrepid to determine for them a surefire way where their trains are leading, the education system is only doing supporting the train direction.

Third, it is probably to reform the abhorrent hiring practice to give equal opportunities to the younger generation rather than practically Neanderthal to attribute the problem solely to education, and you can see the effects quicker.

12.Big four accounting firms PwC, Deloitte, KPMG, E&Y back in consulting business - The Economic Times Finance Plus 3 May 2013

It is unfortunate indeed if past misdeed is claw back. The reason to lop off other business arms in large accounting firm is to brook the least insidious threats of loss of auditor's independence. And now this fact receives lukewarm support.

I recently involved in a legal dispute with a brokering firm. The judiciary organization is not formally part of the country legal system. I lost the case because that judiciary body primary source of income is derived from financial institution's funding who has vested interest in the case? How that judicial body is to maintain independent if its lifeline is depending on the defense?

May be we have forgotten the lesson how Enron caused the demise of Arthur Andersen. Consulting is ludicrous business that is the bloodhound rapacious instinct. But does the governance body have the supervision mechanism in place to extenuate the vile effects of a convulsive crisis erupted in future or simply dodge the problem?

13.Why Europe’s Response to the Cyprus Crisis Has Been Ineffectual buff.ly CFO network 29 March 2013

The trepidation of inherent crisis was not short of being reported since the eruption of Eurozone crisis. The financial world knew that the crumbling Cypriot banks were pumped unconscionably full of Greek sovereign bonds that needed write-off.

The inaction probably was: Cyprus was a tiny country, less than half a percent of the euro area GDP, and the banking problem may not be systemic, and there were more imperative issues at hand for EU leaders. The crux of ineffectual is more political in nature. On the liabilities side of banks’ balance sheet are the Russian depositors monies which the EU thought are money laundering. And the biggest lender, Germany will be holding election this year, the political leader does not want to be held hostage to play congenial rescuer’s role to agitate voters.

It is a tragedy for small country like Cyprus to impose tax on big depositors holding more than 100,000 Euros to fund the ailing banks which requires approximately €10.8 billion. The move will probably cripple banking sector for the years to come. The tax haven for attracting enormous stash from big depositors is tarnished for deposit insurance guarantee is now a sham. Big depositors would probably seek out safe haven outside Eurozone. Deposit is the lifeblood for commercial banking, without large depositors will enfeeble banking sector, there will be limited businesses can do.

Ordinary Cypriot people will probably not very much hard-hit by the deposit tax, only the capital control and ensuing austerity package will have major impact. In the past 30 years, the economy has shifted from agriculture to light manufacturing and services. The services sector, including tourism, contributes almost 80% to GDP and employs more than 70% of the labor force. Industry and construction account for approximately one-fifth of GDP and labor, while agriculture is responsible for 2.1% of GDP and 8.5% of the labor force. Potatoes and citrus are the principal export crops. Looking forward, the Cypriots may have to stump up for rising tax revenues to cover budget deficit and borrowings.

What the profound truths from Cyprus lessons are:

One, It is a tragedy of the lack of banking supervision for the feckless bankers in risk reduction of bank portfolios;

Two, there will be loss of confidence by big depositors in Eurozone that Deposit insurance - a sure guarantee is pulverized. Breaking trust will come home to roost.

Three, using safe haven to attract international funds can be backfire, Cyprus is a case in point: can’t get the best of both world, saddled with lousy option. Cyprus sought EU and Russia for aids getting disparaging cold shoulders are examples of political reality.

Fourth all that said, the solidarity of Eurozone is rather fragile, especially the austerity measures make it difficult to hardwire for the peripheral countries in southern Europe. world, saddled with lousy option. Cyprus sought EU and Russia for aids getting disparaging cold shoulders are examples of political reality. 

14.Spain’s economy, not yet the new Germany Finance Plus 14 March 2013

At first blush, on the way a la Germany’s Success is impertinent. The most renowned Spaniard company in the world is Zara, in textile industry. Zara’s distinctive advantage is to fast emulate the latest fashion design and reconfigure their supply chain to facilitate speed delivery to the middle end market. Odds are that, Spain industry sector contributes only about 27% of GDP and service sector about 70%. Spain is the biggest producer in the world of olive oil and biggest producer in Europe of lemons, strawberries and oranges.

If I were Spain's leader, I would strengthen Spain’s comparative advantage than playing catching up something which the success is seemingly far-flung. Rome was not built in one day. The competency needs ineluctable probably a decade or more to take shade, by then, Germany was probably moving far ahead. Spain will find itself benighted in a chimera, playing the catch-up game and can’t see where the apogee. Presently, the most promising automotive player in Spain is SEAT, a subsidiary of the Volkswagen Group. Volkswagen is still not in the forefront among the global automotive players. Sharpen on what the country does best will position Spain competitively in the international arena and I think it is a success.

Dream big and be optimistic about future is good, but be realistic. Getting the economic engine humming is of paramount importance now, the low hanging fruits, such as tourism industry which contributes about 11 % of GDP is a good starting point to saddle with kicking start job growth and economic growth. Chasten living to fit the budget straitjacket in order to turn around the economy is an illusion. It is ardently provincial, ignoring the linkage in between economic growth and job growth, only enfeeble the economy. All that said, if Spain cannot get this first step in order, wart and all, it will suss out, a dream is a dream.

15.Tips from Germany on Economic Recovery TOP LEADERS/ EXECUTIVES - CXO/ CEO/ CIO/ COO/ CFO/ President/... 11 March 2013

It is deleterious to copy Germany’s system wholesale, as the two countries are in two stark business cultures. The Germany’s success is grounded on a tripartite business system, evince a middle road in between Socialist and Capitalist systems where workers are not retrenched as liberal as in the US.

Unlike in the US, where feckless employers to prepare for any eventualities start to lay off workers to protect lucrative profits when they sense business climate is bad. German prudent layoff practice gives them an edge over technical knowledge continuity. The German is based on Hartz concept to reform labor system which allows worker to work part-time in bad times.

There is no absolute good or bad, a profound truth of the two systems.  Early retrenchment gives American businesses the flexibility to survive better at the expense of the public sector and the employees. The public sector will pick up the tab for taking care of the unemployed from then on by providing unemployment benefits; and private sector is also passing the buck of other social problems to the government.

The German system is engineering based to invent state-of-the-art industrial products. It is true that their educational system provide the basis for the success of industrial excellence. American system provides individualistic success, emphasizes personal achievement. In other words, engineering based German system relies on immense support of their educational system and sagacious business practices to spur Germany to become today’s manufacturing powerhouse. And the US must know what to covet to suit her best, not on a whim.

16.The Dilemma of Older Applicants for Positions Executive suite 8 March 2013

It is hard though not impossible to change the mindset of the hirers. Ageism is ubiquitous. How to debunk the myths of age discrimination? There is an interesting findings let share together.

Myths about Older Workers

Myth 1: You can't teach an old dog new tricks          

Reality: Studies show only negligible loss of cognitive function of people under 70. While older workers take longer to absorb completely new material, their better study attitudes and accumulated experience lower training costs. The fastest growing group of Internet users is people over 50.

Myth 2: Training older workers is a lost investment because they will not stay on the job for long.

Reality: The future work life of an employee over 50 usually exceeds the life of new technology for which the workers are trained.

Myth 3: Older workers are not as productive as younger workers.

Reality: Overall productivity does not decline as a function of age. Productivity can actually rise due to greater worker accuracy, dependability, and capacity to make better on the spot judgments. Older workers' production rates are steadier than other age groups.

Myth 4: Older workers are less flexible and adaptable.

Reality: Older workers are just as adaptable once they understand the reason for changes. They are more likely to ask why, because they have often seen past changes in processes and procedures abandoned in midstream when they didn't bring expected rewards quickly enough.

Myth 5:  Older workers are not as creative or innovative.

Reality: General intelligence levels are the same as younger workers. Eighty percent of the most workable and worthwhile new production ideas are produced by employees over 40 years old.

Myth 6: Older workers cost more than hiring younger workers.

Reality: While workers with tenure are entitled to more vacation time and pension costs related to number of years worked, replacing workers is not cost free. Aetna Insurance Company did a study of this issue and discovered these factors added 93 percent to the first year's salary of new employees.

Myth 7: Benefit and accident costs are higher for older workers.

Reality: Total sick days per year of older workers are lower than other age groups because they have fewer acute illness and sporadic sick days. While individual older workers' health, disability and life insurance costs do rise slowly with age, they are offset by lower costs due to fewer dependents. Overall, fringe benefits costs stay the same as a percent­ age of salary for all age groups. Older workers take fewer risks in accident prone situations and statistically have lower accident rates than other age groups.

Source: American Business and Older Employees, AARP, Washington, DC, 2000. Bureau of Labor Statistics.  Downloaded from www.seniors4hire.org/ myths_olderworkers.pdf

17.Misplaced concerns about central-bank independence | vox CFO 24 Feb 2013

The role of a central bank is to conduct monetary policy to influence interest rate, inflation and economic growth. Central bank is a government’s bank; its primary duty is through deliberate actions to influence the condition of the economy.

Why central bank needs independence? It was said to prevent political leader to rig personal gain by controlling the Fed. Imagine a Congress or president who could order the Fed to print new money to finance a government budget deficit. A good example is Shinzo Abe announced a 2 % inflation target requiring central bank print money to the hilt to reflate the economy. The Japanese central bank palpably lost independence. Despite the orthodox disparaging opprobrium, crying foul of unconscionable of central bank losing its independence, is that egregiously bad? I ask. I wish to view from different perspectives.

Japan has been expanding its monetary supply without much success; the latest “talk down the yen approach” gives advantage to their export-based economy. The yen fell measurably, hovering around 95 yen to a dollar now. Whether it will reflate the economy yet to know but the impact speaks for itself, evidenced by the buoyant stock market.

A stronger Japanese economy will strengthen global economic recovery. A prostrate Japan economy will hobble the preponderant structural reform. Printing money is easy, quantitative easing was originated from Japan after all; structural reform takes pain, the odyssey of structural reform cuts across political and interested parties’ hindrance which mires the Japan economy for decades without any prominent success. The frequent changes of political landscape, particularly in Japan which is factional, rife with political tussles make new leader last not more than one year at the helm, the frequent changes of leadership has the pernicious effects to derail and also stymie reform efforts.

An immutable central bank kicking the can, guards only price stability is ineptly dodge the problem. Central Bank should look at larger picture, as I mentioned earlier, the role of central bank is to take deliberate actions to conduct monetary policy to influence the condition of the economy. The orthodox central bank advocates for price stability can only saddle the Japan economy this far. Does this stagnant economy bereft of hope is what the Japanese want? And is the independent status sacrosanct? I think the quiescent Japanese central bank needs new thinking.

The most innovative central banker thus far is Ben Bernanke; though many cursed him for fanning the inflation around the world without any proven results for his quantitative easing’s operation. He is a Republican, but many Republicans brook the least, think he is bought, losing his independence. Had the Republican candidate Mitt Romney won the last presidential election, he could be replaced at once. To me, Mr. Bernanke is a proactive central banker; history will enshrine his innovative ideas of open market operations amidst some of controversial rescue efforts waiting for vindication.

History is evolving; the incumbent of central bank must take the gauntlet to confront the utmost unknown. On this ground, Bernanke’s experiments were phenomenal deserve credit though the results do not cut the mustard, that only speak of one truth that monetary policy can only do so much. And highlight an important lesson that monetary policy can only be effective if there is resurgence of corporeal demands. A surfeit of monies can be counterproductive in driving economic growth.

And now the Fed needs contingency plans to project into the future in different scenarios as to the ambivalence of timing of exit, taking into account the full gamut of fermenting issues, such as budget sequestration and the possible deep cut of entitlements, how it will weaken the economy and the conditions of the incipient economic recovery, the inveterate risk of inflation and high interest rate rearing its head going forward, in contrast to the central bank’s own prognosis of the veracity of the economy and the trepidation of too late to reduce the bloated Fed's balance sheet that takes times to dispose of assets; to determine the right time of exit.

There is no absolute central bank’s independence. Even in the US, as the result of resignations and expired terms, some US presidents have gotten to appoint a majority of board members, and they are likely to have selected individuals whose viewpoints would support their own political agenda.

The Fed was created by the US congress. Fed governors are aware that their powers can be changed by congress. Congressmen have been quick to point this out to Fed boards whose actions are inconsistent with the direction of the political leadership. But so far Congress has relied more on threats than the actual changes. Mindful of Congress’s power, however, the chairman of the Board of governors makes frequent appearance on Capitol Hill, to maintain a good working relationship, and keeps good contacts with the executive branch as well. So the Fed relative independence is achieved by threading the fine line between too cozy to the administration resulting serious bouts of inflation brought about by continuously expansive monetary policy and their prognosis of the veracity of the economy. It is no easy task.

The independence of Central Bank can also be strengthened by the right organization culture. Central bank is a government’s bank. It must work with the executive to exhibit its independence rather than subservient to the politicians’ personal needs. The Politician’s belief and philosophy largely influence the relationship between the executive function and the central bank. The real conundrum in the US is the party’s philosophy carries the day; the central bank must work with different cultures of the politicians, which is the challenge. The crux of a successful central banker is to work with politician on the altar of achieving economic success and not to hamper it, vehemently adamant about independence.

18. Krugman offers explanation of hypocrisy re debt ceiling and fight over raising it. Losers get another round? http://ht.ly/gJ5bo #sbfi  CEO/CIO 13 Jan 2013

The question is not whether to raise debt ceiling, GOP's intention is to use it as a weapon to cut entitlements. That is why voted for the budget to raise tax; they resorted to the second round to demand much more to compensate for tax increase which they thought they sacrificed their core but did not get the same in return for spending cut.

I think the most constructive way is not to entirely brush-off GOP lowering spending, but to come to terms what should and should not be cut and the rationale behind them. If there is consensus, I think is a great achievement, a big step leap forward, just like some GOP forsook their bulwark of tax increase. Democrats can do the same, what we look for is, at some point, there is convergence of opinion, and not more divergence in the house.

Charles, you have the point, and I totally agree with you. However, in a tough negotiation stance, one party may leverage negotiation tactic they think have an upper hand. From several sources (papers and magazines) give me an impression that few Republicans will not raise debt ceiling, but they want more cut in entitlements.

Political brinkmanship will not go away, Charles. It was a sad experience for Mr. Obama in the last debt ceiling negotiation.

The last episode is reminiscent of a comment I posted last year of negotiation tactic-time pressure immediately after the negotiation; I wrote “The Debt ceiling snafus is a political game where the Republican was shrewd negotiator. And the Democrat was inapt at negotiation. The Obama administration had a bigger stake; they couldn't afford to be irresponsible to let the operation discontinuing. Republican has a skin in the game; anyone familiar with negotiation skills knows the tactic of time pressure. When the deadline draws near, the one with the bigger stake feels the pressure ascending tremendously. This was what the fractious Republican played, they refused to hunker down. Eventually, at eleven hour, Mr. Obama administration yielded to the requests of the Republican and Tea party, no tax increase and bigger cut.” Subsequently, it was said in the newspaper that Mr. Boehner thought he struck a deal with the Democrat would get the endorsement of his peer Republicans, when came to voting, The Republican in the congress backed away. I do not know how true the news was. At that time Mr. Obama was lame duck after losing majority control in the house to the Republican.

And now the tide has made a turn, after Mr. Obama gained victory in the second term, according to some political analysts; The Economists wrote on December 15 2012: “some Republicans have suggested giving up fight on tax rates, and instead insisting on entitlement cuts as the price of raising the debt ceiling which the Treasury is expected to hit in February or March. But the Democrats consider that an empty threat; if the Republican don’t want to be blamed for a recession-inducing rise in tax rate, they certainly do not want to be held responsible for over possible default.”

Charles, you can see the political dynamics here. There are many Americans, like you, hope the administration will get the budget deficit in order. They expect the leader resolutely tackle the looming financial crisis if budget deficit will be running out of hand one day. The gridlocks are by how much and at what time span and what to cut? There are ideological differences here. I am wary there will be quick solutions to iron out differences in such a short negotiation period.

                   

The primary consideration is not wasting too much time with fertile outcome, but makes the administration more effective in delivering. I mentioned trading of cores in the past is just to make reaching a solution easy in negotiation. Another is to reciprocate, so that both sides gain trust in each other. I also mentioned in the past playing time smoothing factor. Some big issue, like healthcare, can take a long-term view to revamp the system by inviting both parties to find a breakthrough solution. There is no quick answer to such a big issue. Mr. Obama needs to coalesce at least the less extreme Republicans to make him more effective.

19.UK House of Commons debate on corporate tax avoidance - Whats your opinion? PROACTIVE ACCOUNTANTS 25 Jan 2013

It is a complex issue indeed. Tax avoidance is part and parcel of tax planning writing into the tax law, or bilateral agreement under tax treaty.

The crux of the issue is similar terms are ubiquitous and tax concessions drafted to take accounts of economics issues. And the big fours are the craft masters of seeking legally tax reduction for their clients to earn their keeps.

From social perspective, it seems that the opulent entities enjoy the benefits provided, but do not pay their fair share in terms of revenues in return.

But a country cannot live in vacuum; other countries are also offering the same or even more favorable terms to attract foreign investments. A case in point is now Starbucks is in volition to offer to pay millions pounds additional tax to appease outburst of anger of the UK citizens for avoiding tax, but they acted within UK tax law and it is baleful, a pyrrhic victory to UK to act unilaterally in the eyes of other foreign investors; Especially UK badly needs foreign direct investment now to boost her lackluster economy and lower high unemployment.

Unless the tax environment changes, UK is able to garner the support of other developed countries constricted by revenue problems, act in concert on the altar to hobble giving any tax concessions in future, that again is a very complex issue and an undulating path.

11.The Existential Threat to Europe: Mass Unemployment Executive Suite 11 Jan 2013

The looming great depression is due to deleterious effect of austerity package and the gamut of European region devoid of growth. The European leader chastens living to fit the budget straitjacket in order to turn around the European economy is an illusion. They ignore the linkage in between economic growth and job growth.

Of course, there is light in the tunnel now. With the economic powerhouse US and China on the road of recovery, there is a chance for exogenous growth. It belies the fact that China and US (MNCs) also depend 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.

20. Gretchen Morgenson offers wish list of corporate and regulator accountability. Make them do the right thing or pay? CEO/ CIO/COE/COO/CFO/Head/VP/ Director/President Level 26-12-2012

I think the possible reason why regulators don't take individual accountable for misdeeds is governed in the company Law. In company law, the legal personality of corporation is stipulated to treat the corporation as a separate legal entity. In other words, as the company’s agents act within their apparent authority, the company, as their principal, will be bound to the third party. So to speak, the company is bound for any wrongdoing by its agents within their apparent authority.

 The company of course can seek recourse if there is clear evidence of negligence on the agent part. I do agree with the author that direct punishment can have direct impact to change agents’ behavior. The company should change its agents if they not work in the interest of the company and the shareholders.

Charles, I cannot agree more with you that lifting the corporate veil to expose the agents, preceding cases abound, and the law enforcers save no efforts to take the transgressors to task under criminal law, even right up to the corporate captain reining at the helm.

I am writing about direct intervention and more rules. I am not a staunch supporter of Adam Smith; the cogent reasons are: rule must be succinct, so that people can follow. Law to facilitate direct intervention is only feasible when just you said “piercing the corporate veil” is warranted.  If I were the lawmaker, I will consider the followings:

1. What happens now? What is the context of the case in point? Which part of the system broke down? What are the underpinning factors resulting the present system cannot cope with the corporate fiasco.

2. What are the apparent alternatives, writing more rules, waving big hammer, Will they help?

To me, the essence of promulgating new law serves as last line of defense for the common good; it hobbles heinous acts, tells prospective transgressor culpable where the line is drawn? It fixes the loophole and addresses the system failure, such as SOX (Company’s internal control system and corporate governance) and Dodd-Frank Act (Bank industry failure in 2008).

In other words, it is management by exception, more of context specific. Though opprobrium attributes the high costs of implementing SOX, the fact is there are fewer financial shenanigans reported now than was previously. Rule is telling, using punishment ask to toe the line, to restrain behavior that is baleful to the public at large. It serves for the common good.

To make a real change to corporate scene is to remake ethic as a keystone of corporate culture comes to the fore, especially for Wall Street Companies. It should be a prominent cornerstone for corporate governance. It is not mere good internal control system; it is a positive value system that the corporate should adhere to.

A positive value system is more than pursuing fabulous wealth; it assumes social responsibilities, not only takes, but also gives back to the society. Such as Philanthropists, Bill Gate and Warren Buffet. It recognizes there are many paths define success in life, not by pecuniary mean. It respects and recognizes each member’s contribution, regardless which role you play. It empowers frontline employees to make instant decision, sharing profit to recognize their contributions.

If more corporates remake their culture to include positive value, embrace business ethics; I think it manifests not far from an elegant society.

21. FASB proposed rules accelerates reserves for loan losses, requiring earlier recognition. Banks don't lose enough? http://ht.ly/ghA6q #sbfi  CEO/ CIO/COE/COO/CFO/Head/VP/ Director/President Level 

It is a contradicting world. It all depends on which side of the fence you lean on.

The accounting concept requires entities to adopt prudent concept to recognize foreseeable loss to reflect the true value of the assets. It is akin to Fair Value Accounting which is touted as to reflect the market value in an orderly transaction. Bank is quick to capture the loan value when assets’ value rises and defers recognition impending loss that requires assets written down. Standard setting process is a political tussle.

On the other side of the fence is the standard setter, its duty is to protect public interest, as the public does not have insider information about the true State of affairs of their investment. The standard setter’s task is to make the process transparent. Fair Value Accounting gives a snap shot of instant value which reflects the changes. In the case in point is the diminution in value of loan loss. Market immediately discounts the value to reflect the true worth of equity.

The shortcoming of Fair Value Accounting is under volatile market condition, the reverberation of precipitous fluctuation of value confuses the investor where the actual value lies. Many critics bellyache it is a turkey basically on this issue. But, to me, this also conveys information about the true picture of the current uncertain market. It is palatable, not real travesty. You can’t have the cake and eat it too! Does it better than the hidebound view of having the opaque historical information that stultifies everyone keeping investor in the dark?

Fair Value is impregnable!

22.A Chinese passport that make its neighbors angry | INS Global Consulting Asia Job career ,networking 12 Dec 2012

Let analyse the impact of China’s abruptly including disputed territories in the map of new passport.

First, it helps one iota of the outcome to strengthen China’s claim for disputed territories as sovereignty. A controversial map on the passport does not attest as an evidence for legitimate claim as palatable in court; only demonstrates the party assertion of the claim and creating snafus of gerrymandering, no legal binding on both sides.

Second, it arouses suspicion of their neighbours that China has the sincerity to resolve the territories disputes; the act only escalates tension as brandishing. Especially, China insisted on bilateral talk on sovereignty issues, both are disparities in size, Beijing certainly can leverage their economic and military might to tame the dissidents. This passport episode only confirms their expansionary ambition, and their sermon of “will not be a hegemony forever” is now broken, no one trust what they say, and only believe in what they do.

Third, it causes great inconvenience for Chinese citizen travelling to countries with territories in dispute. It becomes a childish act on both sides that the disputing countries only stamp visa on the paper they issue. Visa is a tool to serve Chinese citizen going overseas, now becomes indelicate, so repugnant and inconvenient due to political wrangles with no clear advantage for either side.  

Fourth, the much more salient feature is the resolve of disputing countries to coalesce with the US on the crusade to balance the power in the region has become even more imperative; as Asean’s solidarity is weakened by members’ self-interest and Chinese divisive tactics. In years to come, AP becomes pivotal to US, we will see more wrestles of both superpowers in the region.

23.Employers who limit themselves to candidates with "Industry Experience" should look at Louis Gerstner's move from CEO of RJR to CEO of IBM. Executive Suite 6 December 2012

To some, it may be an abhorrent dogma to look for candidate with “industry experience”, in my job search experience; the recruiter keeps running the same old groove, I rarely come across “candidate without relevant experience may also be considered”. Search firms even fastidiously exclude candidate without the relevant experience, because their rice bowl is at stake. I think the main reason boils down to quick payback from the new recruit, saving training costs on the early part of learning curve. Realistically, the recruiter is not short of candidates with relevant industry experience, why they want to take the risk to take someone afresh?

On the other hand, no one is inborn with industry experience; they must have started that relevant industry experience, somewhere, sometime; if the access to gain relevant experience on the job is blocked, there are two consequences: One, the searching of talent is limited to only a pool of available candidates, and it soon can be dried-up, depending on the demand, Second, the cost of hiring will go up to compensate for the scarcity of resources.

In the country where I live, only the public sector doesn’t give a hoot, disregard prior experience, but they fall short in another dogma: scrupulously chasing for candidate with highest paper qualification, such as candidate with first-class honor degree will be favorably considered, they tantamount candidate with higher degree will do a better job.

This kind of freakish hidebound dogma (for candidate with “industry experience”) will stay for recruiter seeking for quick return on investment; Of course, there are exceptions, such as candidate is so unique with brilliant track record, or candidate possesses much sought-after skills that the company badly needed. There are CEOs at rarefied level without relevant industry experience were appointed for the jobs. The salient point is, of course, it is incumbent on the company to have a blend of candidates with and without industry experience, and invest in them in long-term.

24. Euro zone economy falls deeper than expected into recession CFO, 15 Feb 2013

The uptick in buoyant sentiment, especially for Germany, and soon to France, is not a happenstance, largely due to exogenous factors. It is the Neanderthal policy wonk audaciously pursuing for one-sided austerity package, is inimical, without concurrently also boosting growth, doomed to fail. That was borne out by the evidence of what happened in the final quarter of 2012.

Germany is an export-based economy. The revival of Chinese economy will see more consumption of their products that is where the optimism lies. The Chinese economy is now turn the corner and gaining traction, especially for export sector, tapping the strength of US consumption. So long as the two powerhouses fledging recovery continue to gain traction going forward, there are hopes to pull the Eurozone out of present doldrums.

As what I suggested in the past, “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 high debt countries attract foreign direct investments to enliven their economies, cater for much needed stimulus to the world economy.”

Germany can play such a role a bare minimum in the Eurozone by increasing their consumption to the hilt, resulting “spilling effects” to other peripheral Eurozone countries, and the people in Eurozone can see light in the tunnel.

25. Accountant's don't need to be qualified! - Whats your opinion? Proactive accountant 18 Feb 2013

The scope of Head of Finance in Accounting Department has changed, more than just number crunching. More and more, companies are looking to their financial expert to act as business partners with operations managers and to dramatically reduce accounting and finance costs.

 A new set of core competencies that define how the accounting and finance function performs, which include:

1. Strong analytic focus on the business's drivers of success and operational strategies

2. Control achieved through process design

3. Deep knowledge of the business

4. Flexibility and a broad business perspective

5. Clarity in communication

The Head of Finance position spends only between 10 to 20 percent of her time on fiduciary reporting and the rest of her time should be spent partnering with business operations executives in value-adding decision making for the business.

It is conveniently for employer who call the shot to recruit Head of Finance, to determine whether the candidate to be qualified or not. My encounters for most unqualified Head of Finance crossed path from Corporate Finance sector. Many are holding MBA, or Business administration, CFA, Degree in Corporate Finance. Many CEOs or bosses, they are keener to M & A and IPO would like to take candidates with Corporate Finance background as CFO. Of course, under the CFO, there are qualified accountants who are familiar with number crunching role take the position as controller. The CFO's focus is on Balance sheet.

I would prefer an accountant to be qualified, at least not being looked down by underlings for not knowing her stuff.