Life As It Goes By

A few days ago, Japan Finance minister reassured the position of the US dollar in the world by giving it Japan’s endorsement. It openly states that Japanese yen is not a candidate for the USD replacement. Remaining contenders are Euros, Yuan (unlikely too, as the Chinese has proposed a “basket” approach, rather than a single currency approach) and Special Drawing Rights, SDR from the IMF.

Question is  which one of the above carries the weight that the US dollar holds. It is true that the US currency has devalued though current trading value doesn’t truly represent that (those betting against or for dollar must be having lots of fun now). Having defeated the gold and slowly changing from paper to plastics or electrons, the US dollar has a presence which no other contender do have. As I learn from my ex-boss, history always play a part on the current development. All the constraints we see now could be the effects of the past. The US currency has deep roots.

To replace it, its rivals shall have to begin from the roots. The reason why you can use US dollar in  places where there is no access to the local currency, is because the huge foreign reserves of the US currency worldwide. The person who takes the USD from you can easily find someone else to exchange something for him. In a sense, it’s like gold.

Not only that, many things are priced in USD. One notable example is oil. It is almost impossible to value the current price of oil. If it is to correctly represent its worth, the price of oil will be too expensive for everyone and immediately, another round of world inflation will occur.

It is not possible to replace US dollars in one day. One has to prepare enough pulp or bakelite for the world consumption. Maybe the EU has such capabilities. However, they are not really united on this front. Till today, it still amazes me to see the existence of European Union. Who would have imagined that the colonial powers have gathered and cooperated, after seeing the centuries of wars among them. Have they lost their desire to dominate the world? It’s really hard to say. One thing is for sure though. Too many minds together can be as constructive, and as destructive as they can be.  Adding to that, are the diverse cultural background and historical contraints.

What about Yuan? China has been the topic of the new millennium. It is like it has been away for the past millennium. Its growth is envied by all though typical for all developing countries. The uniqueness about China is its ability to produce, not just for its own billion of consumers but also for the other billions in the rest of the world. Its value proposition is undeniably the best around the world at the moment. However, despite its actual age, China is still relatively young as an economical power. There are still many stages for it to reach before it fulfills its potential and matures. By this, I mean, when the China economy sneezes a bit and the whole world’s economy shakes. Then, the yuan and China are ready.

Having set such a difficult condition, it appears that there is no contenders that can really qualify and we are back to the same spot. We may need more than just a major change. A change that may take decades. Is it worth it? But if we were to keep status quo, we are devaluing our own money in relation to the current world currency of US. If we set appropriate values for our monies, we will face widespread inflation. It seems out of the 2 options, the first is a safer approach. Just like the choice taken by the Japanese minister… The Americans have promised that there won’t be a repeat of the financial system failure we just witnessed. I am thinking how long will this be? End of President Obama’s term? A decade? 2 or 3? The next generation will forget about this naturally and the effects for this time around is not as catastrophic (so who will remember this hard).

I know I know. I am kinda’ late in talking about this piece of news: President Obama awarded the Nobel Peace Prize as announced on 9th October 2009. Double happiness for the president, now that the healthcare bill has been passed through as well (not surprisingly to know). There were mixed reactions around the world on President’s winning of the Prize. There seemed to be 205 nominees for this award in this year (according to some Google search results). I really like the facts from the Wikipedia’s write-up. So if it’s true, President Obama not only becomes the first U.S. president who is a black by race, but also the first to win a Nobel Prize in his first year of term. I can offer my congratulations, sincerely.

Yet, I think there is still more to offer from the Nobel Prize winner. Let’s not forget that we are still in the early stages of a big change coming. As we begin to see the big plans being laid by the US government, we have to step up and move the implementation forward in order to see the effects of the change. There is no guarantee on the effects. There got to be good and bad ones: a mixture to be exact. It’s only the strength of which will topple the balance on the whole. Early victories for the Obama administration don’t warant total victory. All’s well that ends well.

The world is watching closely for sure. Now, many countries are starting to bet big on the few big things the Americans are on: energy, financial reform and healthcare. Not that they are the first to enforce these, they can provide the momentum much needed and perhaps the technical prowess required for the job. It’s true that more nations are giving or having international problems such as nuke threat, terrorism and natural disasters. This isn’t very much different from what we have with any other US presidents.

A couple of weeks (actually a month now… when published) ago, I came across this interesting, NY Times article,  “Roosevelt: The Great Divider“, by Jean Edward Smith. I have a mixed feeling for the author’s thoughts. I can sense his desperation in convincing President Obama to follow the steps of President Roosevelt, one of the greatest leader ever (if not, comparable to George Washington and Abraham Lincoln, in my opinion), to execute the health reforms. I agree with him that the healthcare reform that Mr Obama is pushing now is something worthy of a serious consideration. We all know that medical bills (in future) are one of the reasons why we buy health insurance. Since we no longer can fully trust insurance companies after this financial crisis, it’s time to re-think why we need to pay huge medical bills. Another explanation is, of course, less and less people can afford the insurance for even basic coverage. It is such a high regard Jean had for President Obama that he tried to draw line between Obama and Roosevelt, not charismatic Clinton or Reagan.

I was actually rushing for an article before 4th July this year to review team Obama’s efforts so far but I couldn’t find sufficient strong points to complete the task. The financial bailout funds worked like wonders (though the decision behind which companies to be saved remains debatable). The energy reform creates a whole, new momentum to the industry and something that the rest of the world do look up to. Legal reforms such as equal pay bill and tobacco bill can be seen on and off. This is really the first time the Republicans manage to put a halt on team Obama’s reforms (thanks to Bush). This is pretty attributed by the same factors that kept everyone of us so disturbed in the beginning of the year. Stock markets have almost recovered in most parts of the world. World trade is also picking up pace. However, the people who voted for the Democrats last November are still jobless. They seem to be the last problem that the government would want to solve.

At the same time, there are already accusations that the culture of team Obama tends to be a corrupted one. The number of reviews rose sharply to 405. There used to be a balance between the 5 stars and 1 star reviews but now the general poll shows that most people are on the side of the author. And yet there is still no one who would stand out to deny all these. If silence were to be the chosen way to deal with this, then 2 totally different outcomes would be expected. At the moment, the moment of truth seems to be with the accusations.

However, the 1,000 page Health Reform Bill (sorry, I have not read it) is built on a fundamental “feel good” intention. It is a solution to existing problems. So, there can’t be anything seriously wrong at the root. Perhaps like what the Republicans debated, the fine prints or inflexible details given in the Bill are indeed questionable. It is not my job to proceed with these arguments. My take is this: health costs are always on the rise; doctors and qualified nurses are always in short supply; new and more illnesses will surface. So, suppressing these costs while meeting the demand is a noble idea. Implementation is definitely many times tougher than the plan itself. This is very different from the financial crisis. By dumping a huge sum of funds to flood the areas in drought, you can save the fishes and vegetation. The healthcare problems, I feel, deserve a different approach.

I have seen protestors in the news expressing that their health should be their concern, not the government’s. I beg to differ. The government looks after the whole range of people, not just the capable ones. Basically, we can divide them into 3 sections: low, middle and high. If it is a money problem, then those in the high end will have no issue. As for the middle class, it pretty much depends on their own makings. Though they can be as independent, there remain some others who are reliant on the government support. Without question, those in the low end are pretty much in the focus of this reform. Of course, the bill is also targeted at the middle class who are the majority. Not only that, it takes care of another urgent problem of developed nations: aging. Baby boomers are living longer with more healthcare needs. If the young is not enough to support 1 or 2 of their elders, it will be the responsibility of the government. This is a tricky issue for everyone. I can only think of technological or medical breakthrough as a way out (this could be where the funds will go).

In the end, it takes me 2 to 3 weeks to complete this article (could be outdated now). I can imagine the amount of debates, brainstorming, experiences, and “expert” opinions required on this topic. It’s never easy to keep doing something that has failed again and again. Going back each time will be harder. Good luck!

Perhaps it’s time to mark down the problems we face today around the world. Someone or me can pick these up later and analyze what has happened from now to then.

I would like to group them in 3 categories. I call them: the problem of global warming, the problem of mutation of bacteria, or healthcare simply, and the problem of greed.

Global warming is caused by the harmful CO2 gases that we the human created to damage the ozone layer. It is also caused by the widespread deforestation that we have done. The replacement rate for the trees that convert the CO2 to oxygen is much slower than the rate that we take them off the surface of the Earth. Effects of the global warming are huge. Melting of icebergs at the poles (North and South) rises the sea level and reduces the arable land area for not just humans, but the innocent animals. Weather has become more unpredictable as the nature adapts to the change in ozone layer. Tectonic movements are as usual until a relationship between them and the sea level or weather is found. Another effect is the rising temperature. This in turn results in fewer species among the animal and plant. As for the humans, more energy is required to keep us cool and a vicious cycle has been created.

My dentist friend once told me that the rate at which bacteria or the micro organism mutates would one day exceed the rate at which human can create anti-bodies or vaccines. I saw similar articles on the papers and believed this to be the fact. In recent years, we humans are troubled by pandemics, related to influenza. It is still unclear the actual causes of these. I feel that we, humans, play a big part in this. The way we feed the animals, pass the sickness to them or do tests on them have an impact. We have created mad cow diseases, bird flu, swine flu (not this time though) and etc. The real victims are the animals themselves. They themselves have not the ability to build immunity to such diseases. Every time I see a bird or monkey picking the food we leave behind, I wonder if how their body “system” will react to such food, especially artificial or chemically produced ones. It’s not their fault really. In their world, the basic rule is:  the fittest survives. They have to feed on anything they can find. They have adapted well so far, as I can see. There are no more trees where they can build nests (not to say communities) with. Instead, they find holes or make use of exterior design of buildings. These are just 2 (still many others there) types of animals we are talking about here. Anyway, the point is we must be reminded of the fact that it’s a matter of time when a pandemic will hit us really hard. So, think hard on how we can stop this…

Lastly, I would like to continue to rub salt on the recent Financial Crisis wounds. This is pretty much attributed by the thing we called greed. I think it might have begun many years ago when the Forbes’s published the World’s Richest list. I remembered myself following the list every year. At the start, it was a mixed feeling of amazement and admiration. As the top list didn’t change much for a while, more details had to be covered in the publication and this helped me (in fact, everyone of us) to understand better how these guys got there. It did change part of  me then. Suddenly, it struck me that I can follow the same steps and be like them. So, I embarked on a long journey to realize the dream of being rich. Yes, I tried and tried, but I only become older and further away from that dream. I know of friends who are in better position but they are still like me, a great, great distance away from those guys in the list. I realize I am sharing a common dream with a lot of people out there. I am not sure if I have a problem, thinking in this way. I am only know that I always wanted more and more the next time. Perhaps it’s just the nature of human race. I have no idea how I can cure this problem of mine (or anyone) or whether such problem can ever be solved.

Today happens to be 9/9/09 which sounds like 999 or the universal emergency telephone number. Maybe it’s about time for the world to call for help.

Recently, I have been put into a position to make some tough decisions. Though I have yet made any, I try to recall all that I have learnt from my business school not too long ago. It was there when I was reminded of the word “decision”.

The meaning of the word is clear and straightforward. It’s not difficult to draw a reference or give an example. Since young, we are already trained to make decisions: what color or food we liked, what subjects to take up and which vacation to go. Some of them (decisions) were easy. Some were really tough; even until today I still have no clue of how to decide. Then, there is this issue of right and wrong decisions. The only way to judge is to see what is the outcome of the decision. If there is no outcome or it’s impossible for you to find out, then you would be kept in the dark forever.

Let’s say you know the outcome. It does not guarantee that a judgement can be made. Especially when your decision plays only a small part of the overall outcome. Even if your decision is a bad one, the result might still be the same. Sometimes, the outcome came too late before you could learn from that bad decision and avoid making the same mistakes. This could also be that the decision has to be reached in a short period of time, even in split seconds.

Factors that affect decision making can be: emotions, pressure,impact of the decision,  knowledge & experience. There could be more but I personally feel these are the more critical ones. There is a common belief if you are emotional, you can make a good decision. You always need to be calm first. If you are under pressure to make a good decision, naturally your decision might be skewed, depending on the type of pressure. Example, if you are under the pressure of time, you would most likely pick a decision that will buy you more time (not scientifically proven, at least to my knowledge). If you face peer pressure, you might succumb to their demands and make a decision based on that.

On the other hand, if the impact of your decision matters little, you would probably decide without a second thought. If it turns out to be a bad decision, it is highly possible that you have overlooked the impact of this decision. Knowledge plays a part too. An acceptable example would be in workplace. If you are told to decide, say …, the color of the product. You can then make a decision based on your knowledge of your customers. You may debate that it’s instincts but I still prefer to use the word, “knowledge” because it’s similar to how you would explain to your colleagues on your “instincts”: you just “know” it. Of course, some of that decision may come from your past experience with the customers. Knowledge and experience are 2 different things though they are connected. Just like concepts and practical applications.

Back to school, I think of 3 approaches. There might just 2. You’ll decide. One concept I can remember is the multiple criteria decision making. You are supposed to list all the criteria for that decision and grade them with weightage and probability. A score for each criterion is produced as graded. This then gives a clear picture of which path is desirable . I know I have simplified the model here (there should be steps before such as creating paths for each criterion, so that a tree diagram can be visualized with the options for the decision as endpoints) but the gist of the model is to allow the decision maker to be unaffected by emotions or pressure. There might still be some pressure coming from your peers on giving scores to each criterion but at least knowledge and experience can be used to debate or qualify the scores (assuming there is no dominant power in the group).

Another model comes from the IT industry. Ever heard of dashboards? Yes, you put metrics all over your company operations and connect them to your company IT infrastructure, so that the executive on top can grab a snapshot of the company anytime and anywhere he or she wants it. Due to the accuracy and clarify of the figures and numbers, a better decision can be made at the executive desk. This no doubt comes at a price: it’s expensive to build up such systems and take a long time to fine-tune and improve. Conceptually, it should be the way to go for all companies.

Lastly, we learnt about a tool called scenario planning. Though it is more commonly used for strategy making, I feel it can be applied in decision making. Depending on the impact of the decision, you make scale scenario planning accordingly. Fundamentally, the tool is used to help you to understand the issues and uncertainties involved. They might be too much for you to handle. So, you should forget about them for a while. Keep them at surface level. Now, try to go by another approach. Think about what are the main forces that drive these issues or uncertainties. Then, try to group them so that you have less problems to dealt with. Then, consider carefully which has the highest impact and plausbility. You should be interested in the 2 groups that has the highest impact and the lowest possibility of happening. Then, you can formulate 3-4 scenarios based on the contents of these 2 groups. You can plan for the worst scenarios and something normal (not a must), so that you can be prepared for the worst condition and check whether what happens next is close to any scenario. If you are lost somewhere along the way, that’s fine. It’s not something easy and you need a lot of focus and probably assistance from the professionals. It’s not really rocket science. It’s a way to structure your thoughts and make use of your knowledge and experience in the industry and society. The projection can be for 5 to even 15 years. More could overkill. Some companies do a new exercise after every 5 years. Anyway, to make an important decision in a not too short time, you can try to shorten the process. The main point, I think, is  to prepare yourself for the worst scenario and lay the path down in your head to check if things are really going the way you predicted and then decide how you can act at each juncture.

If all these sound more troubles for you, then don’t sweat it. Just forget about everything. Gut feelings, as Jack Welch would tell you, prove to be effective as well. It is equally important that you have guts in the end to execute your decisions (not really linked with gut feelings) and to live on the consequences of your decisions. So don’t procrastinate, make some decisions (apply to me as well)!

If you had bought and sold shares of AIG and Citigroup over the past year,you would not have expected their prices nowadays. Still a distance away from their prime (especially Citigroup), the 2 highly debated stocks have now shifted the bar from SELL to HOLD and now to BUY. Those who had ridden through the high and low deserve to earn a medal or some recognition, at the very least for the confidence they have shown in their choice. They gambled well, almost winning at the very last. Big winners, however, are those who have anticipated these early this year and were busying snapping up the shares.

So you see, this is a true game of fear and confidence. Forget about the fundamentals. Forget about the numbers on the balance sheet. Just remember guts. If you dare to bet against the majority, you stand a really big chance to win it all. And what does this make you? A more daring wagerer which is what the US government is trying to groom now. Here is how you should go about it. Set up a financial institution now (be patient with the gambling first). Obtain government funds to provide loans to those who need it. Be it consumers who need to pay their monthly installments or businesses which need some cash to tide over this crisis. Make some decent gains from the difference in interest. Use this gain to make investments such as buying AIG shares, foreclosures and smaller companies. Do it in a big way just like how you would gamble. When you run out of funds, request from the government and fill it back up again. Post the decent gains in your balance sheet and write-off whatever loss you have gambled away. Remember, just keep a huge turnover figure. Make sure the figure is really huge and grows at an amazing rate. The goal is to be so huge that the government can’t let you fail. Then, they will pool in more funds. Of course, they may take your CEOs away and limit your bonuses. Sit back and relax. The gambles you have made should pay in time to come and they should grow greater than what the government had put into your company. Then, you pocket the remaining (with nothing down in the first place, how’s that?).

No matter how well the politicians play the role of regulators, they still look like idiots when dealing with financial or economic matters. You can’t really blame them; it’s just not their cup of tea. They do share something in common: the guts to gamble big. Team Obama, banging on the success of their earlier policies, is pushing more reforms such as the health care and only to be seriously challenged by the Republicans this time. The fact about how the budget deficit will blow up into previously unreachable level provides enough brake power. From the economic point of view, the only government income are derived from taxes (maybe now from the investments they have made in “national” companies). In any form, taxes are unlikely to appeal to people. It’s like taking the freedom of a soul. However, there is not too much good in printing tons and tons of money without taking income of any form. Some of the states are already suffering from their poor budget management. Raising taxes might be the only way out for some of them. Let’s face it. The government is now sucked dry by the financial sector of the economy.

Again, it’s a question of fear and confidence. If you are confident, you would forsee that businesses would pick up and stock market would hit through the roof again. Then, the income and capital gain taxes would bring in the necessary income for the government. This is perhaps why the stock market has to be as where it is now. Hope is what everyone wants. But the truth is financial sector is not the whole of the economy. It’s just a part of it. Stock market, according to some, is a good indicator of the performance of the economy. A more accurate prediction were to consider the performance of housing sector as well as unemployment rate. Anyway, current performance shown in the stock market received much help from the ailing government. This is perhaps where the fear sets in. If the government had spent on its budget on the financial sector, where can they find the budget to spend on the other sectors? Cutting on expenses in other budgets would help much. What is gone is gone. The TARP funds were meant to avert the Great Depression. The remaining funds (God knows how much) have to be divided among the rest of the economy, as well as the “must-have” expenses such as defense (or war, in this case) and education. This leads to the most feared question, will the government go bankrupt? How do we define that? A few governments have bankrupted before (usually because they can’t repay the loans or government bonds issued) and there are always a limit set to where they feel they can’t go on anymore. What would be the limit in the case of the US government? Definitely, it has to be more than trillions of dollars. Otherwise, they would be bankrupt by now.

Oil and housing prices threaten to rise now that investors with profit on hand (from the stock market) are scavenging around for better, sound investments. The world is actually quite limited though. If it’s not the stock, bond or housing markets, it got to be the commodities. Everyone is so desperate that they would go for anything. Recently, the cheese in Parma like wine in France would be traded. It was told from the newscaster that it is for the benefits of the both sides. And what exactly are the 2 sides? The producers and traders. Yup, you get it right. It’s not you or me, the bloody consumers or tax payers who save the asses of these traders. So this is how they pay back to us: pushing the prices of commodities to the limit, making our lives tougher with high inflation.  What would the government do about this? Or what did they do in the last 2 years? Nothing. Nothing for us. So, please tell me, how can I feel confident at all?

Change is coming and it’s uncertain that who would really benefit from it. We are still learning to adapt to it now. Just like how we saw personnel being questioned by Senators publicly, even in front of the television. Tough questions were being thrown at the “defendants” (if I may call them that) and answers were given. At the end, no actions are required. It’s for the better understanding of the situation and hopefully we can all learn from these painful experiences. You want to know what do I think of this? Complete waste of time. I am not catching another of this anymore. Unless I am hooked again with the reality shows, it’s out of the question for sure. What did it mean when Mr Bernake said he hated the decision to save the “Too Big to Fail” companies and he had done so to prevent a systematic risk from occurring? If the only person who can make the decision felt it that way, what else can we do as commoners? Yes, we should think of ways to help those in finance sector. Without them, we can’t survive. I don’t see any traders paying for my meals or offering me jobs. Instead, I have to thank them for not taking these away from me. I think the Fed is the biggest systematic risk and my greatest fear. It doesn’t want to protect the consumers like us. Instead, it is working with the wealthy to enslave us. With this, I rest my case as this game is too much for me.

Last week, I saw the last moments of 2 ladies who had seen 8 decades of the world in their own parts. One of them, I have only known for about a year or two while the other, since my birth. It’s definitely not the first funeral of a relative that I have to “go” through (my mum passed away about 9 years ago). Due to my family’s religion, I had to “perform” my last respects to my elder, one of which was to stay up whole night to watch over the coffin. I don’t mind all that actually. I had done more tedious ones before. It gave me a time off, to reflect my life so far.

Sad to say, it kinda looks like a family gathering which could be quite stressful at times. Seeing how well your peers do can sometimes put you under great pressure. There are so many things to ask for in life:marriage, child/children, career and health. When you are at certain level of these things, those who have been there, done that would be the next level of things. It seems like they expect me to catch up with them in no time. Anyway, it’s a good opportunity to keep check with what I do have and what I don’t.

It also acts as a motivator as well. It reminds me what I still have to fight for in life. Goals are clearer now. I know I am behind for some of these stuff but luckily I am ahead in some others. I begin to think life is pretty much like the computer games I played to kill time (or those online games in Facebook which my wife uses to compete with her friends). In some games I got to make the high scores and in some others I was beaten up badly. Of course, I enjoyed those that I can play well with and dreaded those that I can’t. But in life, sometimes, you don’t have the choice to play only the games you do well in. You are forced to play the losing games as well. Those who win all deserve to be there. For others like me, we try to keep afloat by winning more than we lose. Finally, there remain those who don’t take the games seriously. They just take the thrills of the game play and ignore the results. In the end, they would the bite of the results but they would keep better,detailed memories (all-time winners tend to forget their victories fast).

I can’t judge if the grandmas of mine and my wife’s had played theirs well. Results are however great. They had 4 generations in the family tree. I doubt I can achieve this myself. Probably I can live up to see my grandchildren but not their children.

They did not go alone. Typhoon Morakot, earthquakes in India and Japan and the virulent H1N1 flu had taken many others along. We might have misread the warning of the eclipse that had occurred not long ago. Old wisdom spoke of incoming catastrophes upon the sights of eclipse.

And now, I would like to pay my very last respects to them.