Wednesday, March 31, 2010

There are many kinds of speculation

I see that U.S. Home Prices are rising.

The S&P/Case-Shiller 20-city Composite Index, indictes that U.S. home prices rose for the eighth consecutive month in January 2010 - on a seasonally adjusted basis, by 0.3% month-to-month.

But what was actually expected was a 0.3% decline!

Why was a decline expected? Because of all the housing sector data in recent months, including home sales which show declines ranging from slight to notable.

So why the confounding rise, albeit marginal, in house prices?

Simple: house sellers are putting prices up to test the willingness of buyers to pay more.

Just what I too would do if I had one or more houses to sell.

In fact, all offer prices are a kind of speculation....

But some kinds of speculation are harmless or even beneficial, whereas other kinds of speculation harm the market. Sphere: Related Content

Wednesday, March 24, 2010

The Reminimbi is BOTH undervalued and overvalued

China's tragedy is twofold.

The first fact is that China's currency is undervalued from a global perspective and it is therefore coming under increasing pressure to revalue it (upwards). As the undervaluation is deliberate (in order to make exports cheaper), the international pressure is understandable. Whether international pressure is going to succeed is a different matter. It may not even be appropriate for the pressure to succeed, given the following.

The second fact, however, is that China's currency is overvalued from a domestic perspective. The Remnimbi's purchasing power inside China is weak (i.e. there is a huge amount of inflation that is disguised or hidden).

So should the Remnimbi revalue or devalue? In fact, it needs to do both. But the Chinese government cannot afford to do either. If it revalues its currency externally, its exports will become more expensive and therefore reduce, becoming perhaps the straw that breaks its back. Meanwhile, the nakedness of the Chinese emperor will become clear to all as its balance of trade suddenly swings to the red in the next few weeks. The elaborate game that China has been playing to make its exports appear larger than they are, will be exposed.

On the other hand, if China moves to bring the value of its currency into line with internal reality, its own people will find that the illusion so carefully maintained will disappear. As a result, China could find its already-great internal pressures growing intolerable.

As such contradictions come home to roost, pray for China's leaders. The decisions they are making right now will make the difference for China's future - and the world's. Sphere: Related Content

Tuesday, March 23, 2010

His Holiness the Pope, to business leaders in Rome

Apparently, the Pope recently addressed the business leaders of Rome. In his address to them, which my computer calculates as being just under 1100 words in English translation, I do not once see the word "corruption", I do not once see the word "honesty", I do not once see the words "compliance with the law" or "accurate submission of tax returns". Nor do I see any reference to the kind of politics there is in Italy. I do not even see any mention of the Mafia. Sphere: Related Content

Saturday, March 20, 2010

Open Letter to The Economist magazine

SIR - It is most interesting to read your report of the research by Dr Lammers and Dr Galinsky (The psychology of power, Jan 21st 2010). Their findings are the more powerful because they fit everyday observation and commonsense understanding.

If one strips away the evolutionary and academic jargon, it is clear that when individuals emerge to positions of leadership, they have one of only two possible explanations to themselves of what has happened to them.

Some leaders actually believe that they have somehow deserved to get to positions of leadership because of their own abilities and exertions - and therefore tend to abuse their power to benefit themselves (and perhaps a small circle around them).

Other leaders really believe that though their abilities and exertions were essential, they have got to positions of power primarily because of luck, destiny or God - and therefore tend to handle their power responsibly.

This reinforces a suspicion that some of us have: that the rise of power-abuse in the West since the 80s is intimately related to loss of belief in God and the rise of belief in philosophies such as those propounded at a sophisticated level by Friedrich Wilhelm Nietzsche and retailed at a fictional level by Ayn Rand.

Naturally, the above discussion tells us nothing about the objective validity of theism or Randism. But the discussion may throw some light on whether theism or Randism is socially more useful.

Professor Prabhu Guptara
William Carey University
Shillong, India Sphere: Related Content

The Zermatt Summit

Do you wish that there could be substantial discussion which could lead to a more humane and environmentally responsible form of globalization?

That is actually the purpose of the first-ever Zermatt Summit, which will address the major economic and ethical issues raised by globalization (the disconnect between the world of high finance and the real economy; the economy itself is not serving the common good as it fails to properly serve the dignity of individual citizens; and, at an individual level, difficult ethical dilemmas emerge which are almost impossible to resolve).

Expected are representatives of academia, business, government, non-governmental agencies (NGOs), trade unionists, performing artists....

Discussion will focus on how the processes of globalization can be changed to serve the common good - exploring and formulating a roadmap of how to navigate the challenges currently facing mankind and help create a better world.

The idea is that people need to be placed at the centre of the globalization process, so that the world of high finance can serve the economy, while the economy serves the common good, and the common good cares for the people, enhancing the prospects of poorer and socially marginalised groups.

For the individual to be able to reach his or her full potential, he or she must be able to blossom within a society which supports the family, community and enterprise in an inclusive political structure. The broader challenge is for a wider realisation of the responsibility of the individual within society and vice-versa.

The manifest failure of economists and politicians to anticipate the recent financial crisis can not be understood without considering the underlying failure to take into account the impact on the individual of the driving process of global capital. Obstacles to creating a better world will remain until you and I play a more significant role in the process of globalization.
The notion of Common good

The rapid process of globalization makes it an even greater challenge to balance the needs of human beings whether they are material, spiritual or emotional with those of society at large. Under these circumstances, using terms such as the ‘common good’ could be very helpful in defining new rules. Implicit in the common good is a full respect for both the individual and collective interests of society while at the same time asking the individual to demand less for herself or himself, and to concentrate more on serving the community.

So the Zermatt Summit will focus on the respective roles and responsibilities of institutions and individuals from the perspective of furthering the common good.

More than that, the three days will be devoted to forming concrete and practical recommendations.

After the Summit has been completed, the Advisory Board, made up of senior business leaders and experts, will formulate recommendations from the Summit, which will be widely published. A progress update on how these recommendations are being adopted worldwide will be presented at the following Summit.

The programme is:

Thursday June 3, 2010

14.00 - 17.00 Welcome and registration

16.30 - 17.00
Welcome address by Christopher Wasserman - President of the Zermatt Summit Foundation

17.00 - 17.30 Piano concert

18.30 - 19.30 Welcome Reception


Day 2
Friday June 4, 2010

09.00 - 09.45 Welcome Address
The world crisis and the change of paradigm by Prof. Philippe de Woot Restoring the Ethical and Political Dimension of the Corporation:
Rebalancing Entrepreneurship, Leadership and Corporate Statesmanship

09.45 - 11.00 Keynote Address 1.1 (Plenary session)
• Revisiting the corporate raison d’être

Keynote Address 1.2 (Plenary session)
• Entrepreneurship and the economic progress

11.00 - 11.30 Coffee break

11.30 - 13.00 Roundtable 1 (Plenary session)
• Finance to serve entrepreneurship and economic progress

13.00 - 14.30 Lunch

14.30 - 15.15 Keynote Address 2 (Plenary session)
• Back to ethics, towards a responsible leadership

15.15 - 15.30 Coffee break

15.30 - 16.30 Workshop 2*
• The responsible supply chain
• The responsible consumption
• Developing responsible leaders

16.30 - 16.45 Coffee break

16.45 - 17.15 Reporting back from workshop (Plenary session)

17.15 - 18.45 Roundtable 2 (Plenary session)
• Ethics and corporate responsibility: Economy to serve
the Common Good

18.45 - 19.00 Break

19.00 - 20.00 World premiere viewing of the film
«Doing Virtuous Business»

20.00 Departure for the «Swiss Night»
(return by 24.00)


Day 3
Saturday June 5, 2010

09.00 - 09.45 Keynote Address 3 (Plenary session)
• Corporate Statesmanship and Common Good

09.45 - 10.00 Coffee-break

10.00 - 11.00 Workshop 3*
• Business and the political debate
• Multi stakeholders initiatives
• Partnering with NGOs and civil society

11.00 - 11.15 Coffee-break
11.15 - 11.30 Reporting back from workshop (Plenary session)

11.30 - 13.00 Roundtable 3 (Plenary session)
• Corporate Statesmanship and Common good: Common Good to serve the person

13.00 - 14.30 Lunch

14.30 - 15.15 Keynote Address 4 (Plenary session)
• Changing hearts and minds: the role of spirituality

15.15 - 15.45 Coffee break

15.45 - 17.15 Roundtable 4 (Plenary session)
Changing hearts and minds

17.15 - 17.45 Concluding Summary:
Towards a new corporate culture
by Prof. Henri-Claude de Bettignies - CEIBS

18.00 End of the Summit
Farewell cocktails

The Zermatt Summit Foundation has been declared a foundation of public interest at both a federal level in Switzerland and at the cantonal level in Valais.

The Board Members are:

• Christopher Wasserman, President
President, Terolab Surface Group
President, Ecophilos Foundation

• Nicolas Michel, Vice President
Professor of International Law at the
Geneva Graduate Institute of International
and Development Studies. Former Deputy
General Secretary for legal affairs of the UN

• H.I. and R.H. Archduke Rudolf of Austria,
of Hapsburg-Lorraine
Founder and Managing Director of Triple A
Gestion S.A.

• Father Nicolas Buttet
Founder and Moderator of the Eucharistein
Fraternity, Founder of Philanthropos
European Institute

• Jean-René Fournier
Member of the Federal States Council (Swiss
Parliament). Former President of the Valais

• Theodore Roosevelt Malloch
Chairman and CEO of The Roosevelt Group

• Antonin Pujos
Non-executive director, Adviser
Chairman of the Research Club of the French
Institute of Directors (IFA)

The Foundation's Advisory Board consists of:

• Henri-Claude de Bettignies (Chairman)
Distinguished Professor of Globally Responsible Leadership at the China Europe International Business School Shanghai (CEIBS) AVIVA Chair Emeritus Professor of Leadership and Responsibilty Emeritus Professor of Asian Business and Comparative Management at INSEAD Director of CEDRE (Centre for the Study of Development and Responsibility)

• Elizabeth Sombard
Founder and President Résonnance Foundation

• Philippe de Woot
Professor Emeritus of the Catholic University Louvain
Holder of a PhD in Law and Economic Sciences
Harvard Faculty Associate

• Guido Palazzo
Professor of Business Ethics at HEC University of Lausanne

• Jean Staune
Founder and General Secretary of the Interdisciplinary University of Paris. Professor in Philosophy of Sciences at the MBA of the Ecole des Hautes Etudes Commerciales (HEC) Director of the collection “The Time of Science” at Fayard Editions

Partner institutions of the Summit include, in no particular order:

Ecophilos (

Entreprise et Progres (

The China Europe International Business School (

The Yale Center for Faith and Culture (

Oxford's Institute for Religion and Society in Asia (

The Globally Responsible Leadership Initiative (

Transforming Business, the University of Cambridge, UK (

BTW Transforming Business (TB) is co-ordinated by Dr Peter Heslam, Dr Flint McGlaughlin, Dr Rick Goossen, and John Kay and has the benefit of a number of distinguished patrons and advisers, some of whom are listed below.

TB addresses, not surprisingly, research questions that are close to the heart of the Zermatt Summit, such as:

How can the creative forces of free enterprise be effectively applied to the most pressing social, economic, and moral challenge of our time: the elimination of poverty?

How can we best instill and nurture vision, motivation, and values-led entrepreneurial aspirations, especially in young people?

What impact do relational, moral, and spiritual intelligence have on business solutions to poverty?

What is the connection between business success and institutional, spiritual, relational and moral values?

How can competition best foster creativity and innovation?

TB's Patrons and Advisers include:

Prof Helen Alford (Pontifical University, Rome)
Ben Andradi (Servista)
Prof Alan Barrell (Cambridge entrepreneur and academic)
Matthew Bishop (The Economist)
Prof Philip Booth (Institute of Economic Affairs)
Paul Chandler (Traidcraft)
Dr Stephen Copp (Bournemouth University)
Dr Catherine Cowley (Heythrop College, London University)
Prof John Dunning (Reading University)
Anthony Farr (Allan Gray Orbis Foundation)
Larry Farrell (Farrell International)
Prof Ram Gidoomal CBE (Syntel)
Dr Alan Gillespie (Ulster Bank)
Lord Brian Griffiths (Goldman Sachs)
Stephen Green (HSBC)
Dr David Hillson (Risk Doctor)
Dr Kurt Hoffman (Shell Foundation)
Prof Sir John Houghton (Victoria Institute)
Lord Geoffrey Howe (former Chancellor of the Exchequer)
Prof David Jackman (London Financial Academy)
Prof Peter Johnson (Durham University)
Prof Graeme Leach (Institute of Directors)
Prof Jack Mahoney (London University)
Clive Mather (Tearfund)
Dr David Miller (Yale)
Charles Miller Smith (Scottish Power)
Mark McAllister (Fairfield Energy)
Sir Mark Moody-Stuart (Anglo American)
Prof Geoff Moore (Durham Business School)
Sir Jeremy Morse (Lloyds)
Prof Michael Naughton (St Thomas University)
Prof Simon Peyton-Jones (Microsoft)
Dr Jennifer Roback Morse (Acton Institute)
Prof Theodore Roosevelt Malloch (Yale)
Dr Vinay Samuel (Institute for Development Research)
Lynne Sedgemore, CBE (Centre for Excellence in Leadership)
Prof Max Stackhouse (Princeton)
Sir Christopher Wates (Wates Group)
Sir John Whitmore (Performance Consulting)
Prof Paul Williams (DTZ and Regent College)
Prof John Wood, CBE (Imperial College, London University)
Prof Michael Woolcock (Harvard/World Bank)

ends Sphere: Related Content

A new credit card scam

On the Karmayog Yahoogroup, details have just been posted of aa new credit card scam

"This one is pretty slick since they provide YOU with all the information, except the one piece they want.

"Note, the callers do not ask for your card number; they already have it....

"One of our employees was called on Wednesday from 'VISA', and I was called on Thursday from 'Master Card'.

"The scam works like this:

Caller: 'This is (name), and I'm calling from the Security and Fraud Department at VISA. My Badge number is 12460. You r card has been flagged for an unusual purchase pattern, and I'm calling to verify. This would be on your VISA card which was issued by (name of bank). Did you purchase an Anti-Telemarketing Device for $497.99 from a Marketing company based in ... ?'

"When you say 'No', the caller continues with, 'Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from $297 to $497, just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (gives you your address), is that correct?'

"You say 'yes'. The caller continues - 'I will be starting a Fraud investigation. If you have any questions, you should call the 1- 800 number listed on the back of your card (1-800 -VISA) and ask for Security.'

"You will need to refer to this Control Number. The caller then gives you a 6 digit number. 'Do you need me to read it again?'

"Here's the IMPORTANT part on how the scam works.

"The caller then says, 'I need to verify you are in possession of your card'. He'll ask you to 'turn your card over and look for some numbers'. There are 7 numbers; the first 4 are part of your card number, the next 3 are the security Numbers that verify you are the possessor of the card. These are the numbers you sometimes use to make Internet purchases to prove you have the card. The caller will ask you to read the 3 numbers to him. After you tell the caller the 3 numbers, he'll say, 'That is correct, I just needed to verify that the card has not been lost or stolen, and that you still have your card. Do you have any other questions?' After you say No, the caller then thanks you and states, 'Don't hesitate to call back if you do, and hangs up.

"You actually say very little, and they never ask for or tell you the Card number. But after we were called on Wednesday, we called back within 20 minutes to ask a question.. Are we glad we did! The *real* VISA Security Department told us it was a scam and in the last 15 minutes a new purchase of $497..99 was charged to our card.

Long story - short - we made a real fraud report and closed the VISA account. VISA is reissuing us a new number. What the scammers want is the 3-digit PIN number on the back of the card, don't give it to them. Instead, tell them you'll call VISA or Master card directly for verification of their conversation. The real VISA told us that they will never ask for anything on the card as they already know the information since they issued the card! If you give the scammers your 3 Digit PIN Number, you think you're receiving a credit. However, by the time you get your statement you'll see charges for purchases you didn't make, and by then it's almost too late and/or more difficult to actually file a fraud report.

What makes this more remarkable is that on Thursday, I got a call from a 'Jason Richardson of Master Card' with a word-for-word repeat of the VISA scam. This time I didn't let him finish. I hung up! We filed a police report, as instructed by VISA. The police said they are taking several of these reports daily! They also urged us to tell everybody we know that this Scam is happening. "
ends Sphere: Related Content

Facebook overtakes Google, so....?

At the start of 2008, the percentage of website traffic that resorted to Google was just under 6%, while the percentage of website traffic that resorted to Facebook was around 1%.

The interesting thing is that, as website traffic continued to explode, the percentage of the traffic that resorted to Google barely moved: perhaps it is something like 7% today. Meanwhile, Facebook continued to increase its market share, till it overtook Google a couple of weeks ago.

What possible explanations might be suggested for these facts?

1. More and more people are using the web as a quick and easy way to upload pictures and the like, than are using the web to look for information.

2. As the proportion of web users who use search engines to look for information declines, Google has been unsuccessful in keeping its lead over rival search engines such as Clusty. Sphere: Related Content

Economists on Financial Reform proposals

The National Association for Business Economics' latest semi-annual Economic Policy Survey of its members (mostly private-sector economists), conducted between February 4 and February 22 this year, has just been released:

* Fifty-four percent feel that creating such an agency would not impair safety and soundness regulation; 25 percent believe it would be detrimental

* Forty-three percent of respondents indicate that a consumer financial protection agency would not impair access to credit while 39 percent believe it would.

* Fifty-seven percent believe that barring depository institutions from proprietary
trading and hedge fund operations will reduce systemic risk to the financial sector; 34% believe that it will not

* Fifty-nine percent believe that imposing size restrictions on these companies would not be an effective means of addressing the Too-Big-To-Fail issue. It would have been most interesting if the survey had followed this up with a question to this 59%: what do they believe WOULD be an effective way of addressing the Too-Big-To-Fail issue? Sphere: Related Content

Friday, March 19, 2010

Non-Muslims in Pakistan

The Pakistani Embassy in at least one country is refusing to renew Passports for citizens who are not Muslims, asking them to convert to Islam before the Passport can be renewed.

This naturally makes it impossible for non-Muslim Pakistanis to remain abroad or to travel abroad.

I have not been in touch with any Pakistani official about this matter, as I do not know any Pakistani officials in the country concerned.

But if I was to get in touch, I would expect them to issue a routine denial, as that is not the image of "tolerant Islam" and "multicultural Pakistan" that Pakistan probably wishes to project.

However, experiences are experiences. I am retailing above the experience of someone I know personally.

To counter it persuasively (at least so far as I am concerned), Pakistani authorities would need to produce some facts rather than a mere denial.

What kinds of facts? Perhaps the figures regarding how many Passports of non-Muslims have in fact been renewed in the last year. Sphere: Related Content

Saturday, March 13, 2010

March Madness

March Madness is a disease apparently specific to the USA, and specific further to the time-slot March 14 and March 19.

What happens in the USA during these dates? That's when activity surrounding the NCAA basketball tournament is at its height.

What is the NCAA? The National Collegiate Athletic Association.

So does that mean the Association affiliates only colleges? Yes.

Why does the whole nation suffer from "March Madness" because of a basketball championship in which only colleges can participate? That's a good question to ask Americans. I haven't yet received a satisfactory answer....

Is there any other country in the world where a similar "madness" grips an entire nation because some young people choose to leap up and down a marked court, throwing a round bit of leather filled with air? Well, truth to tell, I can't think of any.

So what symptoms does "march madness" display? Never having been in the USA during those months (I haven't actually visited the USA that often, and when I have it has, with one exception, always either for conferences or to give one or more lectures, so I don't speak from first-hand observation), I can only tell you that apparently nearly every worker participates in gambling on the results organised within the office; all the gossip focuses on the matches, teams and players; and everyone is obsessed with watching videos of the matches.

A company called Challenger, Gray & Christmas, Inc. (which describes itself as the USA's "first, oldest and premier outplacement consulting organization") has calculated the "business cost" of the Madness. By "business cost" it means all the salaries paid by employers but not used by employees for the purpose for which they are employed.

What is the "business cost" according to Challenger, Gray and Christmas? $1.8 billion.

That's an impressive figure.

In that calculation, I wonder if they factored in the BENEFITS to the businesses from the team-feeling that is built up by all the gossip, the joint-watching of matches and videos, and so on? Sphere: Related Content

Monday, March 01, 2010

Experiences in Los Angeles last week

If one has a rental car, check what time they allow you to return it, instead of simply assuming on the basis of logic that the relevant office will be open!

Our flight was at 0615 but the rental car office did not open till 0500...

Not only did we miss out on an hour of sleep that we could have had, we were panic-stricken at the possibility of missing the flight. Though the security guard at the office told us he'd been there 11 years and there had never been a problem, that was not much comfort to us as HE was not the person who would have heard about it if someone had missed a flight!

Still, we could not do anything about it

We did think that we'd drive to the Terminal, check in first and then return the car.

But we were defeated by the absence of road signs to the Terminal from the Car Rental Area - the road signs are otherwise plentiful and clear all across California!

So we consoled ourselves with a tea and pancakes at the Dennys nearby....where a helpful fellow-customer pointed the directions to a gas satation where we could fill up the car tank - the TomTom refused to show us any gas stations in that vicinity!

Having eventually returned the car, the shuttle got us efficiently to the Terminal, so we were quite shocked when the machine check-ins told us that it was too late to check in for the flight

the ladies at the baggage-drop counters indicated that we should check in further to our left, but as we rushed in that direction we could see nothing that looked like check in counters, so we asked the man just a bit further along who was checking paassports, but he just pointed us back in the direction of the machine terminals and seemed to have no idea of what we wanted or needed - his job was to check paassports and he knew about that but apparently not anything so exotic as passengers wanting to check in without using machine terminals

When we did find the check-in counters (further along from the man at Passport Control), the lady there was efficient and helpful and we were able to proceed without problems.... Sphere: Related Content

How bad is the recession in the USA?

At a diner in LA, a fellow customer mentions that he is a security guard but has been out of work for 8 months

Someone I meet somwhere in southern California last week says his parents house was woth 210K before the recession and is now worth maybe 90K

at one of my lectures, someone says that everyone in the US personally knows at least one person in financial difficulty because the have been laid off or have lost money in business: "It has never been so bad in living momory: Our parents used to tell us about conditions like this during the 30s, but we've never experienced anything like this till now" Sphere: Related Content

Ethics at banks and investment funds

Someone who has recently completed his PhD on a topic related with this broad field writes to me as follows:

"Though I was able to graduate, the story of my dissertation is largely the story of research that never took place.... I approached (more than two dozen) banks and investment funds with a proposal to do ethics related research, and was consistently turned down. In my dissertation defense, I compared myself to a fly trying to get through a glass windowpane, (but) the financial world remained forever on the other side."

The parentheses above are mine.

As far as I can work out, his research started at the height of the boom, and he persisted with his efforts to do the research till well after the bust.

Was the refusal of the banks and funds to co-operate with the research mere cussedness, or did the banks and funds know that they should not be letting any research get done on the ethics in their companies? Sphere: Related Content