Category: Uncategorized

EMF? No thanks ….

The politics of monetary funds

The EU Magic Pill

Will Europe snub the IMF and set up its own “Monetary Fund”. Is this yet another “magic pill” that is supposed to solve the sort of problems seen with Greece recently?

The proposed EMF would function as a European equivalent to the IMF; a lender of last resort to financially troubled eurozone governments to ensure the stability of the euro and global markets. Under the direction of the other members of the eurozone, the EMF would dictate fiscal policy to the offending government in return for a bailout.

Its main benefit would be to free the eurozone of the ‘outside’ involvement of the IMF and thus maintain confidence in the ability of Europe to set its own house in order.

(Quoted from here)

I like this bit: “dictate fiscal policy”. The Greeks seem unwilling to accept their own government’s dictates on fiscal policy, so why they would accept anyone else’s is a puzzle.

“maintain confidence in the ability of Europe to set its own house in order” is also very good spin. Just look the language! maintain; confidence;order – all such positive buzzwords.

In fact, what will DEEP DOWN, LONG TERM maintain confidence is doing the right things that you can afford, not lending ever vaster sums and putting a slick gloss on the conditions. “Conditions”? There’s a laugh! There were “conditions” put on Greece’s entry to the EU in the first place. Unfortunately, only lip-service was ever paid to them. Why should anyone believe it will be different in the future?

The last thing we need is yet another vast, Euro-Quango. The IMF is there if required, even if it is a bit tainted through being “international” and a bit too American for some people’s taste. What advantage (apart from vainglory) is there in Europe having its OWN Fund? And LENDING ever more money isn’t the answer; doing the right things IS. For this, you don’t need an EMF.

And what happens when (or is it if?) we get a sustained “boom”? The EMF is still there, doing nothing, waiting for the next BUST. All its highly-paid officials will still be paid for years on end to do nothing – another vast bureaucracy sucking our taxes up like some great cosmic, vacuum cleaner.

Still, if it does come to pass, think of all the extra taxpayer-funded jobs and power that will accrue to Brussels!   Thanks a bundle Greece. Thanks to your humungous over-spending, corruption and general lack of the right stuff we are ALL likely to be lumbered with yet another expensive European cash-gobbling monster institution round our necks.

By Chris Snuggs

The Hypocrisy of Cutting Waste

Cut Waste Later?  How about now?

I honestly cannot understand how President Obama can look the American people in the eye and tell them that Health Care reform will be paid for, in part, by finding savings and reducing fraud in Medicare over the next several years.

President Obama on Health Care Reform

If it is possible to operate Medicare more efficiently, why have we not done it already?  Why must doing it right wait for new programs and new legislation?  Why doesn’t Congress first prove to the American people that it can operate a program efficiently and then come back and ask for more?

Because it can’t, that’s why not.   The plain and simple truth is that it cannot do so now, and will not do so in the future.  So why are we letting our elected officials get away with such a charade?

I just don’t understand it.

By Sherry Jarrell

A useful reflection on the economic crisis.

Will this prove to be an accurate analysis of what happened?

Regular readers of Learning from Dogs will know that Yves Smith of Naked Capitalism is held in high regard by this author.  She was one of the authors mentioned in a recent Post titled Free Speech and then a little later on there was a Post from me specifically praising her.

Last Friday the US Business News Network, BNN, ran a piece which included Yves discussing her new book ECONNED.

Yves Smith - ECONNED

The reason for publishing this Post is that the video clip covering Yves contribution is a very clearly articulated account of how we got ourselves into this economic mess.  For those like this author who don’t really understand many of the sophisticated economic terms used widely elsewhere, this was a refreshing ‘tutorial’.

Do watch it – Yves is brought in around 3 min 45 secs.

By Paul Handover

Assumptions can be fun!

An old aviation theme has a wider message

In flying, mistakes have the power to inflict harm way beyond the immediate significance of the mistake.  Thus the flying community have created a whole load of sayings that serve constantly to remind all those charged with the safe transport of aircraft.  For example we have ‘If there’s any doubt, there’s no doubt‘.  Or ‘There are old pilots and bold pilots, but no old, bold pilots‘.  However the saying that underlines this story is ‘Never assume, always ask!’

Who is that in the LH seat?

His request approved, the CNN News photographer quickly used a cell phone to call the local airport to charter a flight. He was told a twin-engine plane would be waiting for him at the airport.

Arriving at the airfield, he spotted a plane warming up outside a hanger. He jumped in with his bag, slammed the door shut, and shouted, ‘Let’s go‘.

The pilot taxied out, swung the plane into the wind and took off.

Once in the air, the photographer instructed the pilot, ‘Fly over the valley and make low passes so I can take pictures of the fires on the hillsides.‘

‘Why?‘ asked the pilot.

‘Because I’m a photographer for CNN‘ , he responded, ‘and I need to get some close up shots.’

The pilot was strangely silent for a moment, finally he stammered, ‘So, what you’re telling me, is . . . You’re NOT my flight instructor?‘

By Bob Derham

Capitalism and The Daimler-Chrysler Saga: Part 2 of 3

In a new departure for Learning from Dogs, Sherry Jarrell publishes a three-part article on the Daimler-Chrysler merger.  Learning from Dogs is indebted to Professor Jarrell for both giving so freely of her time to the Blog and for sharing such erudite material.

Here is Part Two.  If you missed Part One then it is here.

What does the Daimler-Chrysler merger demonstrate in broader terms?

The 1998 Daimler-Chrysler  “merger of equals” was widely expected to realize both operating efficiencies and better access to international capital markets. Instead, when DCX incorporated it adopted German corporate governance standards.  U.S. institutional ownership in Chrysler was largely replaced by European banks that not only directly monitor the working capital financing of DCX but also may sit on its Management and Supervisory Boards.

Such superior access and corporate control created distinct advantages for large German institutional owners relative to minority owners; foreign shareholders in the U.S. found themselves among this minority group.  These advantages included the ability to: expropriate the private benefits of control from minority shareholders; share these benefits with management, effectively creating a collusion, and; profit from trading DCX shares with superior information.  As a result, minority owners priced their shares less aggressively – i.e., the bid-ask spread widened — to minimize their losses from transacting with controlling shareholders.  As their spread increased, U.S. minority shareholders’ trading costs rose and U.S. trading volume fell as it migrated to Germany, the relatively cheaper trading venue.

The Crossfire: first DCX combined product

The merger between Chrysler and Daimler and consequent changes in corporate governance create an ideal clinical study for isolating our hypothesis about the failure of the enhanced disclosure requirements to effectively compensate for lax corporate governance standards in protecting minority shareholders.

To test this hypothesis, we explored changes in the bid-ask spread that are associated with the change in corporate governance and the control over the flow of information about the Chrysler assets.  We look “inside” the trading mechanism that creates the observed transacted stock price, namely the bid-ask spread, to generate evidence on shifts in the quality and quantity of information available to minority versus controlling shareholders.  The bid-ask spread should grow as minority shareholders learn that traders on the other side of the spread possess superior information about the company, information which is linked to their majority control of the firm and its senior management compensation, asset disposition, and financing and risk-taking strategies.

We find that the decision to merge and become a German stock corporation significantly weakened the protection of minority shareholders, particularly prior owners of Chrysler assets, and led to their expropriation by controlling shareholders and principal creditors of the consolidated firm.  How? We find that the answer lies in the lack of protection afforded minority shareholders by the corporate governance structure of the newly combined DCX entity.

By Sherry Jarrell – Part Three continues tomorrow.

Identifying Bullshit in Science

Well founded suspicions of Sensationalised Science Reporting

Ben Goldacre

One of my daughters gave me a super Christmas present this year, the book  “Bad Science”, by Ben Goldacre.

This is a wonderful work and should be a set book for all “A” level schoolkids. There are chapters on:

  • Brain Gym
  • Homeopathy
  • the Placebo Effect
  • Mainstream Medicine
  • How the Media Promote the Public Misunderstanding of Science
  • Medical “trials”
  • the Pharmaceutical Companies
  • Bad Stats
  • Health Scares
  • the Media’s MMR Hoax

…. plus several others on various very rich charlatans in the field of alternative medicine and other areas. It also contains a concise and terrible account of the insanity of Thabo Mbeki’s nutty ideas on HIV and AIDS, which killed tens of thousands of people. Continue reading “Identifying Bullshit in Science” →

An interconnected world.

Bringing out the best in us.

As I visit some of my clients, I am becoming aware of an unusual phenomenon – I think some people are actually becoming less selfish. We are used to hearing stories of institutions reaching heights of greed and selfishness during this recession but not many that are about the other way round.

I don’t go to supermarkets very often because I’m usually out working when my wife goes but by a fluke, I kept her company recently. We have been trying to support the local farmer’s markets in the area but this is proving difficult as it’s much quicker to do a one-stop visit to a supermarket than lots of small visits since we both run our own businesses.

It is of course cheaper at the supermarket as they have systematically forced food prices down to a level that prohibits most small food producers from supplying them.

Anyway, I digress. In our local supermarket works an ex colleague and friend of mine. He was made redundant just over a year ago for the second time and decided that he would go for the stress-free, safe option. He used to organise procurement for a large, global communications company so he has his head screwed on around organising things. I guess the supermarket job means that he can just switch off away from work, something he could never do before.

I saw him with a large trolley, checking shelves and we stopped for a chat. He was fine and generally enjoying his work. He asked about mine and I mentioned that things were a bit tight at the moment. We got talking about how training is carried out at his work and how they work with developing employee’s interpersonal and communications skills. He mentioned that there was a new HR manager at the branch, or is it “in branch?”, and would I like an introduction as they were always recruiting new people and they needed training?

I was flabbergasted as we weren’t necessarily that good friends and he didn’t need to say or do anything but went out of his way to be helpful.

I have also noticed this phenomena in other companies from time to time, in the form of clients arranging meetings and spending time, something previously they really didn’t have time for. Maybe we get more of what we notice and by focusing on the positive, we attract more of the positive into our lives?

Is it because when the going gets really tough, for example, in times of national crisis or great hardship, that we remember that we are all interconnected?

By Jon Lavin

Son of Gaddhafi …..

Does international politics have to be this obtuse, to put it kindly?

Those that don’t follow the British Press closely may have missed the news that Peter Mandelson, the unelected Lord appointed to run Britain’s Trade and Industry Department, was guest at  a shooting party with the son of Muammar Gaddhafi .  Here’s how the Guardian Newspaper ran the start of the article:

Peter MandelsonThe Spectator has reported that Peter Mandelson joined Colonel Muammar Gaddafi’s son at a country house shooting party. Photograph: Shaun Curry/AFP/Getty ImagesHe [Mandelson] talked of being “intensely relaxed” about the filthy rich, and no one could say that Lord Mandelson doesn’t like their company. After twice facing criticism for consorting with billionaires in Corfu, it emerged tonight that the business secretary joined Colonel Muammar Gaddafi‘s son at a country house shooting party.

Mandelson and Saif al-Islam al-Gaddafi were guests at Lord Rothschild’s Waddesdon Manor in Buckinghamshire, the Spectator said. The magazine reported that Cherie Blair was also in attendance, although neither she nor Mandelson are reported to have taken part in the shoot.

Let us be clear about this. The Gaddhafi regime is the antithesis of what the free world believes in, namely a dictatorship that has ruled by iron fist for decades and was indeed part of the axis of evil.

Of course, it suddenly became non-evil overnight, mostly because it gave up (or appeared to give up) trying to develop a nuclear bomb.

Leaving aside the fact that making a bomb does not per se make you evil, (unless we are to consider that the US, France, Britain, Russia, Israel are “evil”, too) the point is that the regime has not changed in its fundamentals since the old black and white days of George Bush.

So once again, the question arises, why are western leaders cosying up to these scum?  This  is a strong word, but do we or do we not agree that dictators are scum? Evil people who deny basic freedoms to their peoples?

Do you know any benevolent dictators? White-bearded philosophers out of the Plato/ Solomon mould? I sure don’t …..

Of course, these scum regimes are all in the UN, even though I had thought that all members had to sign up to the Universal Charter of Human Rights. Apparently not, however, another piece of humungous hypocrisy.

The Gaddhafi regime is the same one that is guilty of numerous terrorist offences, including Lockerbie (though there is distinct murkiness surrounding the whole saga) and in Britain the shooting by a Libyan Embassy staff member of Yvonne Fletcher, a British policewoman, for which nobody has been brought to justice even though the British police are said to know who was responsible.

However, leaving aside the question of how to deal with nasty dictatorships (and is joining shooting parties with the heir apparent really the right way?) I am fascinated by the apparent idiocy of Lord Mandelson in associating with these people.

Exactly which segment of the British population – let alone American – is he going to try to sell this to? America may not interest him overmuch, but one imagines that he wishes to prolong his career in British politics. If so, he has a funny way of going about it.

His image will take an enormous bashing, and Mandelson is, or used to be, totally focused on image, spin, PR and “the message”. What message does the thought of him jollying along with the son of the dictator of an evil regime convey to us? Has the spin guru of the British Labour Party lost his rudder?

Of course, there could be a hidden (or rather obvious) agenda. It could all be to do with sshhhhh ……MONEY. Is he therefore working tirelessly against his conscience (and knowing this will do him great personal damage) in the  financial if not moral interests of the British people (who weren’t of course asked if they want their country cosying up to dictators) or could it be – oh Dear, are we being too cynical? – that he has a more personal interest in mind?

Does he deep down seek to become as rich as the man he helped to sell to the British public, Tony Blair himself, who incidentally is about to be embroiled in a potentially-devastating enquiry into the Iraq war?

And unfortunately, the news broke on the day after we discovered that Abdelbaset Ali al-Megrahi, found guilty of the Lockerbie bombing and released because he was dying, has in fact survived for three months with no apparent end in sight. Yes, only three months ago Gaddhafi bambino was helping to arrange the hero’s welcome that Megrahi received in Libya. As is well-known, Mandelson met Gaddhafi’s son one week before the alleged deal was done for Megrahi’s release, so they are old jet-set mates.

We believe in “freedom” and “democracy”, don’t we? We may have to share the planet with dictatorial scum, but do our representatives really have to grovel and sup with them?

It doesn’t feel good to be honest ….

By Chris Snuggs

The Future of the British National Health Service

Is Britain’s Health Service now terminally ill.

Near the end of November came more bad news from the British National Health Service, an institution that many Brits both love and hate at the same time.  The truth is that the NHS has simply become too big, too bureaucratic and is in many areas failing though over-regulation and poor management.

Not that it lacks managers of course;  I believe there are more managers per bed than in any other country of Europe.

Why is it that the more managers you have the worse the overall performance ends up? Too much working by committee and passing the buck for failure, perhaps?

It has to be broken up; vast organisations just don’t work. Smaller is beautiful. I feel confident the world will eventually understand this; already there are serious calls for the big banks to be split up after the credit fiasco and just recently we read about  calls for some of the big British supermarkets to be ‘smallered’. This is significant, coming from one of the “Neo-Conservative” gurus likely to have great influence in the next British government.

Have we passed through a period of worshipping size, power, takeovers, mergers, money, financial domination, vast stock options, fees for lawyers, obscene bonuses and instant gratification?

Economies of scale are one thing, but at some point other factors reduce their value to society as a whole. The bigger an institution of any kind the greater the possible abuse. And sadly, at some time or other there will be abuse, as we have seen so often.

The period of “Big is Beautiful” may be ending, and not before time.

By Chris Snuggs

It’s all about timing!

An adjustment to when Posts are published on Learning from Dogs.

The editor of this Blog lives in the American Mountain Time (MT) zone.  That is 7 hours behind GMT.  Posts have been scheduled to be published at 09:00 MT, which is 16:00 GMT.

It has now struck us that this is daft because for our American readers East of MT and our European readers the daily Posts appear either mid-morning or in the afternoon, even later during the Summer.

Thus with effect from Wednesday, 25th November Posts will be published at 22:00 MT the previous evening.

This will ensure that your daily Learning from Dogs Post will be waiting in your in-box, and available on the Blog website, at the start of your day. (Apologies to our readers down under!)

For those that haven’t done this, you can easily set up an email subscription (and just as easily cancel it) to the Posts thus ensuring that they are always available to read via your email account.  To do that, click here.