Dogs are animals of integrity. We have much to learn from them.
Tag: Business
British Airways
I earnestly hope that we are not about to witness the crashing disappearance of what only a few years ago was one of Britain’s relatively few major world class businesses. It is said that those whom the Gods seek to destroy they first make mad, and the intention of BA cabin staff to launch a strike over the busy Christmas period would seem to be a clear sign of insanity.
US still struggling to find a proper health care solution
We’ve all heard this definition of insanity: doing the same thing over and over again but expecting a different result.
Here, in a nutshell, is the insanity of the current U.S. health care debate:
But how difficult can it be for Boeing to make yet another new aircraft? The answer depends on how different the 787 aircraft is from anything the company has built in the past. Some initial indication that is significantly different can be taken from its being named Dreamliner.
Perhaps the housing market is the best economic indicator?
As an economist, I am frequently asked for my predictions on when the economy is going to turn around. Have we reached the bottom? Have we begun to recover? Might we go into a second, perhaps more severe recession?
Those are tough questions to answer. Business cycles are notoriously difficult to predict. In fact, about the only thing we know for sure is that no two business cycles are alike. Each is unique in some significant way.
Changes in the housing market may be one of the most meaningful indicators of a recovery, because housing stability is such a fundamental indicator of how households are budgeting their income. 
Notice that I did not say that the level of homeownership was a useful indicator; instead, I look to changes in the housing market, either away from or toward an apparently sustainable and affordable supply of homes, for evidence of where in the business cycle the economy may be.
Despite record low mortgage rates and first-time home buyer credits, the U.S. housing market remains anemic. Rising foreclosures in several major metropolitan areas will keep housing prices low for some time to come.
The U.S. currently has about 1.7 million excess housing units available. Typically, about 1.3 million new households are formed in the U.S. per year. But with the unemployment rate topping 10%, new household formation will fall to about 1 million per year. If new home construction remains at its current level of about 600,000 units per year, it will take over 4 years (1.7 million/400,000) for the excess supply of housing to be absorbed and housing prices to recover.
Recovery rates will be much slower in some markets, such as in Florida, Nevada, and California, but I believe that the rest of the U.S. along with most other developed economies are looking at a three- to four-year period of time before housing and thus the overall levels of output return to their pre-recession levels.
The Dubai debt crisis raises fundamental questions.
Well done British banks ….. loads of loans built on sand … I suppose the words “conservative” and “prudent” didn’t get printed in the Banking Terminology dictionary?
So Britain, that Global Giant of the banking world, has half the dodgy loans? British banks are therefore as daft as the rest of the world put together? (Can someone check my maths!)
Oh, and why exactly were the banks lending money to SORDID DICTATORSHIPS? Would we have lent billions to Hitler’s Germany in 1937? What on earth happened to ETHICS in the financial world? I suppose lending to POOR countries who need it rather than the nasty, venal, corrupt dictatorships of the Middle East was right off the radar?
There is an obsession with the “Human Rights” of immigrants and others in Britain, but a complete and utter turning of blind eyes to the slavery going on in the Middle East, as if it doesn’t concern us because it’s in “another far-off country of which we know little”. (Neville Chamberlain’s shameful explanation of his inaction over Hitler’s annexation of the Sudetenland in Czechoslovakia in 1936.)
Sorry, but “No Man is an Island” …. we can’t sign the UN Declaration of Human Rights on the one hand and then blithely lend money (the PEOPLE’S money) to countries that are treating people so terribly.
I hope Dubai goes bankrupt and our cretinous banks with it so that we can start again with people’s banks that have a modicum of honour and decency and are prepared to invest in democracies, not insanely greedy property developments based on dictators’ idle fantasies.
It wasn’t much different with Sadaam Hussein, whatever you think of the invasion. This was a man who – just to take one example – gassed to death 5,000 innocent men, women and children in one single village alone. Yet countries in the “free world” were secretly queuing up to do deals with him. One British government MP even went there and shook his hand, the hand that consigned hundreds of thousands of people to a horrible death.
Ecology? Apart from anything else, Dubai’s carbon emissions are pro rata 250% higher than the US, so much power goes into air-conditioning and desalination. Once again, the left hand doesn’t know or care what the right hand is doing. A British minister tells us to stop eating meat to save the world while British banks simultaneously rush to finance a humongously-profligate and obscenely-elitist project in the desert.
I sometimes wonder if we really deserve to survive Global Warming. Will it be God’s way of cleansing the Earth of an aberrant experiment in free will?
By Chris Snuggs
As I was perusing the business press this morning, an article caught my eye: “That would make a great post!” I thought to myself. I continued reading through the rest of the articles, intending to go back to the one that piqued my interest to compose a comment. Of course, when I went back, I could not find it!
But in the process of looking for that particular paragraph, I noticed something troubling. Something that, should my students’ papers include the same, would bring their score down by a full letter grade, if not more.
Recently there was an event at which Bill Gates and Warren Buffett answered questions from students of the Columbia Business School in New York. I referred to the event recently when writing about Warren Buffett.
So why were these students interested in Messrs Gates and Buffett? It is, of course, because they are successful.
While different people define success in many different ways, we can be reasonably sure that, in the context of a business school, most of those business students would categorise Gates and Buffett as being among the most successful people alive.
So what did the students ask about? Well, of course, they asked about success! The questions were of two main types.
An example of how we really do own our lives.
We were invited to our friend’s 25th Wedding Anniversary on Saturday, 21st November.
It was in a local pub and they had invited many friends, some of whom we had not seen for many years.
One friend had started his own architect business, built it up over the last 10 years and, although he had lost a large amount of work because of the recession, things seemed to be picking up.
I mentioned that my work had dropped off dramatically since the summer. He said:
Well, Jon. You can make your own mind up what you do. You can either decide you’re going to go bankrupt or you can decide that you’re going to succeed – in spite of everything.
For some reason, that short conversation had a huge impact on me and I realised that it really is mind over matter and once we make our mind up about something, good or bad, it tends to happen.
By Jon Lavin
Pay and the Free Market
It came up again in conversation today: someone was offended and upset over the level of compensation of some senior executives in the U.S. economy. I have to admit I just do not understand the anger. And I have a fundamental lack of respect for the arguments that have been served up thus far in support of the position.
I have tried to resist drawing the conclusion that the anger is born of envy, but I am very close to throwing in the towel on that one. Why should we begrudge anyone who earns a healthy salary, especially in an economy that provides each of us the opportunity to aspire to the same?
Even if there were reasonable ways around the practical issues and costs associated with legislative caps on salaries — how to set them, who sets them, using what measures, what value judgements — it simply makes no sense. It is the antithesis of a competitive market economy where individuals have the incentive to learn, grow, work hard, and succeed. It ignores the role played by capitalism in creating a strong and vibrant private economy that provides endless opportunities for all who want to put in the hours and the effort to succeed.
U.S. corporate governance rules provide the framework for determining the compensation for senior executives, and it works remarkably well. Each shareholder, or owner of the company, gets one vote on material issues such as reorganization. The Board of Directors is responsible for hiring and firing senior management on behalf of the shareholders. If the shareholders do not like the decisions of the board, including those that set the level and form of compensation for senior management, they have at least two, very effective choices. They can either sell their shares in the company or they can vote to replace the board members. The board can take several steps if, after negotiating the compensation package for senior management, the executive fails to perform. The board can withhold the bonus, renegotiate the terms of the contract, or fire the executive. Then the long, mostly objective arm of the competitive labor market will determine the market-clearing value for the skills and experience of the recently fired executive.
One thing I’ve never quite understood is why the market doesn’t seem to exact more punishment on senior executives who run their companies into the ground. Maybe there is an old boys network that looks out for ex-executives; maybe my observations are biased; maybe I notice only those cases where failed executives rise again. But it’s an empirical question, in any case; we can gather data on the issue and study it objectively.
Regardless of the conclusions of such an analysis, however, decisions about executive compensation must remain in the labor market where your ability to produce economic value still reigns supreme over your ability to curry votes and political favor.
By Sherry Jarrell
Never give up is so much more than just a cliché.
Regular readers will know that fellow LfD author, John Lewis, has been posting regularly on the subject of remarkable people. I have found them inspiring, to the extent that I’m going to depart from my usual safe area of economics and tell a personal story. It’s a story of family dynamics, the power of sibling bonds and why hope and trust in the future, especially for young people, is so, so important. I have called my story the Power of Words.
—–oooOOOooo—–
I can hear it like it was yesterday, resonating in my head, crowding out the doubts and negative thoughts, filling my mind with possibilities: yes, I CAN do it!
I was in my junior year of college and had no idea what I was going to do with my life. It was becoming quite a burden.
Because I had always been good in school, i.e., the “smart one,” everyone had expected so much of me when I went to school. I really envied my older sister; she had always been the pretty one, the popular one, the one who got invited to the prom by not one, but three young men.
And, it seemed to me at the time, she was so lucky because no one expected her to go out and conquer the world after high school. She didn’t go to college; she went to secretarial school and studied to become an airline attendant instead.
I envied her in every way possible! But at least I had something: I was “the smart one,” or so I thought! Years later, my sister went back to school to study psychology. She earned a 4.0 [four straight ‘A’s. Ed] and was invited to continue on to earn her Ph.D. I’ll be darned if she wasn’t the smart one, too! And she is a wonderful and thoughtful person to boot! But I digress.
Learning from Dogs 