Year: 2010

Merkel Suffers Greek Bailout Backlash

I told you so!

From the BBC…

German Chancellor Angela Merkel’s party and its coalition allies have been defeated in regional elections in North Rhine-Westphalia.

North Rhine-Westphalia, Germany

German Chancellor Merkel appears to have lost the state vote in NRW and may see her control of parliament reduced or eliminated. It’s her own fault.

Germany and in particular NRW (the industrial powerhouse of Germany) are in a serious economic situation with enforced cuts left, right and centre and yet she has loaned (aka given) billions to feckless, idle, corrupt and shambolic Greece.

The Germans have had to tighten their belts and are still paying vast sums to bring East Germany up to speed, yet Merkel feels she can fritter away her people’s money to “save the euro“. It won’t save Greece or the euro.

The Greeks fully deserve to go bankrupt and are incapable of complying with the degree of “cuts” the Germans are demanding. Other European countries will lose money if Greece defaults. Tough.

Better to suffer a one-off loss than an endless shelling-out into a black hole. No bailout of Greece, Portugal, Spain, Ireland or Britain. Did the PEOPLE of ANY of the rest of EU countries have ANY say in this at all?

It seems the French pushed hard for a bailout. What a coincidence that some of their insurance companies have invested heavily in Greece. TOO BAD. Greece’s problems have been well-known for years; which moron poured billions into their black-hole, retire-at-53, inherit-your-sister’s-pension, go-to-work-if-you-feel-like-it economy?

And the Greeks? They seem to feel it is the fault of the REST of us that they have to make cuts. Was a reality check ever more fully needed? Sadly, but inevitably, there will be social breakdown in Greece from which something new will emerge. What that is, one cannot say, but I do not believe it can include membership of the Euro.

The Brussels Overlords think differently. Their little Euro brainchild must be saved at all costs. But they are all personally very well off and have no problems with money, unlike the majority of their constituents thanks to the despicable fraud perpetrated on them by the banks under the appallingly-negligent supervision of a multitude of governments.

I have written about Greece several times in recent weeks since to me it is a symbol of the combination of arrogance and utter folly of many of Europe’s governments – and in particular Brussels – who have overspent wildly, who have allowed their banks to make fraudulent loans and have imposed an ever-increasing burden of bureaucracy, Human rights, paperwork and regulations on the peoples of Europe.

How we are supposed to compete effectively when we A) price ourselves out of the market and B) wildly overspend is a mystery.

Has Europe now to prepare itself for a long period of decline and retrenchment in living standards as Asia maintains its inexorable growth and raw materials rocket in price? I fear so, but it’ll be the ordinary people bearing the brunt of all this, not the increasingly-remote politicians in national governments and Brussels.

Greece is a warning for the rest of us. There is no law that says we cannot go the same way. The UK and France in particular have bloated, feather-bedded public sectors. The chickens always come home to roost, and they are now flocking rapidly towards the hen-house.

By Chris Snuggs

Jessica is Home!

Young Australian, Jessica Watson, is home safe and sound.

(Circumstances required that I had to prepare this Post well ahead of the confirmation that Jessica is back and as it happens, the chances are that when Jessica made it past the Sydney Heads finish line I was onboard a flight from Los Angeles to London.)

05-May-2010

The youngest person to sail around the world solo, non-stop and unassisted, 16 year old Australian Jessica Watson, is expected to complete her historic voyage, arriving back in Sydney to a hero’s welcome on Saturday 15 May.

Jessica left Sydney on 18 October 2009 and has so far overcome every challenge that Mother Nature has thrown at her to achieve her goal.

Jessica needs to cross the finish line at Sydney Heads to officially complete her voyage.  She will then cruise down Sydney Harbour before disembarking at Sydney Opera House.

It is anticipated that Jessica will cross the finish line at approximately 11:30am and arrive at the Sydney Opera House around 12.30pm, the first time she will have set foot on land in almost seven months.

Readers of Learning from Dogs will know that we recognised Jessica’s brave and courageous voyage in a Post published on November 12th, 2009.

Soon memories such as this:

With the drogue trailing behind Ella's Pink Lady shaking off one wave with the next 10m monster coming up behind!

will be a thing of the past!

Our Post of last November is re-published below.

Read the original Post

The Dust Settles

Who dares, Wins!

The new British Conservative & Liberal-Democrat Cabinet

I can’t remember a more momentous week in British politics. It seemed silly to comment as events unfolded so swiftly – one would have risked being out of date before finishing the article – but it is perhaps time to summarize what has happened:

  • The outcome was in retrospect the best possible, even if none of the parties might think of it that way.
  • We have a stable government locked into a coalition that commands a large majority in the House of Commons and a considerable majority of the popular vote. Nobody can deny this coalition “the right to govern”, whichever way you regard the statistics.
  • The country’s finances are in a terrible mess and a stable government was essential to put things right and recover confidence.
  • Yes, there will be strains and stresses in each party, but both have now invested so much in this that  neither can afford to rock the  boat and risk another general election to let Labour back in under a new and more charismatic leader.
  • Both parties have shown a spirit of compromise and both have had to ditch some of their cherished (and more wacky) policies.
  • “First Past the Post” has taken a lot of stick and it seems the time of electoral reform has arrived. The Lib-Dems have a firm commitment to a referendum on the Alternative Vote (not optimal, but an improvement) plus other essential elements – long-delayed by the previous Labour dinosaur – such as fixed term parliaments, a redistribution of votes per constituency and a reduced number of MPs.
  • The country has seemed fragmented and divided in recent years, with much bitterness and a sense of drift and failure. The coalition has brought fresh hope, though it is born in very difficult times. But as a coalition it is perhaps better-placed than one single party to make the very difficult decisions needed. A single party would have had to make the same decisions but with the risk of losing a vote in the HOC and a lurch to the other side to start all over again.
  • The wretched previous government is gone. The most pleasing aspect of this is that those architects of spin and PR, the unelected Lord Mandelson and the unelectable Alistair Campbell, have seen their stars not only wane but disappear into a black hole. Their last-ditch attempt to stagger on in a Lib-Lab coalition was effectively torpedoed by their own back-benchers and party Grandees, who found the whole process undignified. It is indeed the end of Noo Labour, and few will regret its passing.
  • Last but not least, the Labour Party survives, whereas there was a time when it seemed it might be humiliated and destroyed. The extent of the defeat could not be spun – even if Mandelson et al had a go at it – but it survives as an essential part of the British political scene. Moreover, though Brown rightly had to go, he was not humiliated either and was able to depart with grace and dignity. One is far from sad to see him retire to the back benches, but the bad feeling that anything worse might have produced has been avoided.

The change has been momentous. Politics is unpredictable, so who can tell if this bold experiment will work. But “Who dares, Wins”, and they should have the best wishes of all who love their country.

By Chris Snuggs

Elliot’s schooling – Sir Ken’s view

Sir Ken Robinson’s view

I plan to have my final post on education finished very soon.  However, with my last week of finals and papers at the undergraduate level (which is finally over!) constantly hoarding my time, I have not yet quite been able to truly decide on which side I plan to end up.

My instinct tells me that the costs of the US schooling system far outweigh its benefits, but I feel I must be sure that this is truly a case that can be supported with logic and not simply my own biases coming through.

However, while I continue to ponder, I thought that readers might find this video interesting.  It’s a different take on the nature of institutionalized schooling than is often seen.  It’s on the longer side — approximately 20 minutes long — but I definitely think it is worth a watch for anyone pursuing a clear and well thought-out perspective on education, and it’s actually quite humorous and entertaining.

The video is of a presentation by Sir Ken Robinson, an internationally recognized leader in the development of innovation and human resources.  His thesis statement is as follows:

My contention is that creativity is as important in education as literacy, and we should treat it with the same status.

I hope the Learning From Dogs community enjoys this video.  Upon my return from celebrating my college graduation in Charleston, I plan to present my final finding on whether the costs or the benefits of schooling in the United States outweighs the other.

By Elliot Engstrom

Maybe, just maybe – again!

Day One for the new Prime Minister and his team has been good!

Less than 24 hours ago, I mused that maybe David Cameron and Nick Clegg represented something that the UK badly needs – a real positive change in Governing the country.

Spring shoot 1

Matthew Parris

Matthew Parris is an experienced reporter, columnist and a one-time Conservative Member of Parliament.  Here’s what he said to the BBC a short while ago (at the time of writing this Post).

“I ought to be cynical, I ought to be saying it’s all going to end in tears, but I just sense something good and genuine in the air and it just might work,”

“You almost have a sense of two men staging a coup against the British political system,”

Spring shoot 2

It’s almost unknown for the Governor of the Bank of England to comment on political matters.  The current Governor, Mervyn King, was recorded saying this today.

By Paul Handover

I am scared!

Guest author, Per Kurowski, on a rather sobering topic!

I do not know what worse, the arrogance of the regulators thinking they can squeeze out the risk in banking by imposing different and completely arbitrary capital requirements based on the opinions of some few human fallible credit rating agencies, or their childish innocence not knowing this creates systemic risks of gigantic proportions.

What I do know is that an amazing number of intelligent people have fallen for this absurd and extremely dangerous regulatory paradigm. Honestly… I am truly scared!

How could I not be with regulators who can authorize banks to leverage up 62.5 to 1 on public debts like Greece’s while at the same time placing a 12.5 to 1 ceiling on the lending to the small businesses and entrepreneurs whom we depend so much on for our jobs.

Better hope they don't need funding!

All those financial and regulatory experts who kept mum when they should have spoken out on the financial crisis about to happen are now, quite effectively, circling their wagons in order to promote the myth that no one knew. False many did! In order to benefit from the lessons we must learn, they should not be allowed to succeed.

On October 19, 2004, as an Executive Director of the World Bank (2002-2004) I presented a written formal statement at the Board and that included the following:

We [I] believe that much of the world’s financial markets are currently being dangerously overstretched through an exaggerated reliance on intrinsically weak financial models that are based on very short series of statistical evidence and very doubtful volatility assumptions.

And I was no investment banker, nor a regulator, nor an investor, and so to me it is clear that all of them, had they done their job right, should have known… and that this crisis should have been nipped in the bud much earlier, as

Per Kurowski

the real explosion in truly bad mortgages took off in 2004, when the SEC in April delegated the setting of the capital requirements for the investment banks to the Basel Committee, and the G10 in June approved Basel II.

In order to understand it all don’t follow the money… follow the AAAs.  In case you missed “The Financial Crisis explained to dummies, non-experts and financial regulators” you can read it here.

By Per Kurowski

PS. I have put up a document that resumes most of what I said before and during my term as an Executive Director.

Maybe, just maybe ….

… David Cameron and Nick Clegg represent real positive change for the UK.

Another amazing day for British politics as Gordon Brown tendered his resignation to Her Majesty Queen Elizabeth II and in less than an hour the Queen asked David Cameron if he would form a Government.

That wonderful unwritten constitution dealing with a change of Prime Minister in such a beautiful and dignified manner.

Nick Clegg

All I want to say is that these two men have my prayers and best wishes for delivering what so many millions want – a better and fairer way of running a modern democracy.

Rt Hon David Cameron

By Paul Handover

“Wild” Swing in the Dow Jones?

Market Swings are Normal…nay…Desirable!

Roller coaster?

Just to try to help put stock market swings into perspective, consider this:

  • the 347.8 point fall in the Dow Jones Industrial Average last week, from 10868.12 at the start of the trading day on Thursday, May 6, 2010 to 10520.32 at the close of trading, can be COMPLETELY explained by an increase in the perceived cost of capital from 12% to 12.23%.
  • do the math.  Using the constant dividend growth model, a very simplified model of the market value of equity, or Market Value = Current Dividend/(cost of equity capital – dividend growth rate), and assuming a long-term average cost of U.S. equity capital of 12% and average growth rate of 5%, we find that the opening level of 10868.12 = 760.77/(.12 -.05), and the closing level of 10520.32= 760.77/(.1223 -.05).
  • I think it is entirely possible that the chaos in Greece and surrounding nations, and the interconnections between worldwide supplies of liquidity and financial capital, that an increase in the perceived risk and uncertainty of the returns to equity from 12% per year to 12.23% per year makes perfect sense.
  • The market’s are working.  Market participants, from the individual investor using on-line trading at 2:00 in the morning from their living room to the most sophisticated computerized large-scale institutional trader, understands that a borrower’s ability to pay back its investors depends on the real productivity and growth of private industry, whether the borrower is a company or a country.

by Sherry Jarrell

Learning from You!

A change to the Blog

Learning from Dogs published its first Post on July 15th last year.  Since then we have published another 549!

As you will know our standard pattern is to publish two Posts each working day and one per day over the week-ends, some 50 Posts each month.

Since the start of 2010 we have been running at over a 1,000 readers each week, and now regularly have over 2,000 readers a week.  It’s a great vote of thanks for all the hard work put in by the authors.  Thank you, dear reader!

Now this week I have to return to the UK until early June and that is going to make it much more difficult for me to spend time every day being Chief Cook & Bottlewasher for the Blog.

Thus, during this period, we will have to relax the target to publish two Posts every working day.  Hopefully, we will be able to maintain a single Post each day.

However, what would be valuable is to hear just how your own interest in Learning from Dogs would be influenced, if at all, if we were to continue the lower number of Posts (i.e. one a day) after my return in June.

Any feedback, good or bad, will be welcome and much appreciated.  Either by leaving a comment or by emailing the Blog at learningfromdogs (at) gmail (dot) com

Thank you.

The Fourteenth Banker

What interesting times we live in.

Came across a relatively new Blog with the title The Fourteenth Banker.  Caught my eye because of the similarity to the book written by Simon Johnson and James Kwak of Baseline Scenario fame.  Here’s an extract from the ‘About’ piece of this new Blog.

In response to the comments of folks in the Congress and oversight regimes, I have created this blog as a home for bankers who need to speak out and do not have a central clearinghouse or a safe place to do so.     Big banks now treat their employees like property, bought and owned.     Typically employees must subject themselves to all sorts of potential sanctions, forfeitures of compensation, clawbacks and even lawsuits if they speak in ways we often have thought were protected speech.   I am not talking about revealing confidential customer or proprietary information, I am talking about simply commenting on a company, management philosophy, making general observations or raising concerns.     It makes one appreciate unions even if not historically supportive of unions.   At least management and labor can have a debate.    Not so in today’s large banks.    Gag orders are written in the most intimidating way, included in Codes of Ethics, attached to incentive plans, posted on the company home pages.     We should ask ourselves, what is the big secret?

Do support the Blog by calling by.  Here’s a taste of what they are writing about:

Lying at Leyman

What is a million between friends?

Read this piece from Bloomberg Businessweek How Much Did Lehman CEO Dick Fuld Really Make?

This can only be called what it is. Delusion. Delusion about self, society, morality, values and anything else you can name. These are symptoms of a grave illness which is too common among those in power. In fact, the illness may be the requisite to power.

By Paul Handover