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February 28, 2006
The Real Reason behind Barriers to Cross-Border Deals
"Nations Rebuild Barriers to Deals," says the New York Times headline today. The headline should read "Western Nations Rebuild Barriers to Deals," as the article is entirely about federal governments in Europe and the United States.
I was drawn to these short lines:
The rising urge to protect national interests has deeper roots than just a desire to protect national interests, some experts in the field say.
"An overseas owner may not have the same kind of approach as a domestic one," Mr. [Julian] Franks [of the London Business School] said.
I haven't a clue what that weak-kneed response to the question means, so let me give you the real answer: the fear of loss of power on the part of elected federal officials.
They are afraid that Dubai World Ports won’t feel as beholden to them as an American company might. That’s one reason—-unstated—-that this particular UAE company will be dragged through the Washington mud until they pay enough homage and pledge the fealty which politicians will demand.
My view sounds cynical. It’s actually recognition of reality.
Read this related post for additional thoughts on politicians’ fear of loss of power in a era of increased globalization, and then let’s all set back and watch. I suspect the endgame of the Dubai Ports story will be either a show of ring kissing, after a tortured series of hearings, or a outright Congressional rejection of the deal followed by a withdrawal of the deal.
We’ll see if I’m right.
Posted by John at 11:56 PM | Comments (0) | TrackBackChronic Disease a Particular Problem in Thailand
We recently posted on the epidemic of chronic disease (heart disease, diabetes, strokes, and cancer) in Asia; chronic disease is expected to surpass infectious disease as Asia’s number one killer in just a few years, according to the World Health Organization.
Thailand is already there, unfortunately. In 2002, 59% of all Thai deaths were due to chronic disease, according to this press account.
Posted by John at 8:41 AM | Comments (0) | TrackBackYour Comments are Welcome, But. . .
Spam is not just an email problem. It’s become a blog problem, too. That’s why I have to pre-approve all comments before they get posted.
I love feedback, positive or negative. I like to be challenged; it's good for me.
At the same time, I’m not going to allow some of the trash which my blog gets pinged with to appear in comments or trackbacks. (It’s really amazing how many people care about how my ability to keep my wife happy and whether I’m wearing a cheap Rolex at the time.)
Please, give me your comments. If you do, however, you’ll experience a slight delay until they get posted. That’s the unfortunate part of having a spam-filled blogosphere.
Posted by John at 8:34 AM | Comments (0) | TrackBackAfrican American Buying Power to Top $1 Trillion by 2010
According to independent studies by the Selig Center for Economic Growth and Packaged Facts, African American buying power will reach around $1 trillion by 2010, up from about $761 billion currently.
Posted by John at 5:17 AM | Comments (0) | TrackBackSelig attributed the gains to better employment opportunities, particularly since the number of black-owned businesses has grown four times faster than the number of all U.S. firms, per the U.S. Census. The number of African Americans attaining high school diplomas increased 10% between 1993 and 2003, the largest gain reported for any group. Also, the median age for the black population is 30.2 years, meaning larger proportions are entering the work force or are graduating from entry-level jobs while smaller numbers are retiring. . . .
"Having roughly the same purchasing power as Hispanics, African Americans tend to be left behind when it comes to marketing and advertising because Hispanics are expected to have more rapid population growth," said Don Montuori, Packaged Facts publisher. "Marketers would be wise, however, to tap into the African American segments that outpace their Hispanic counterparts, such as those with incomes greater than $50,000, owner-occupied households, married-couple families and African American women—all sectors which offer huge potential in the consumer goods markets."
Even Atlanta Sushi Restaurant Owners Want to Move to Chengdu
Speaking of Chengdu, I was at dinner last night with three officials from Sichuan Province who have been studying and observing economic development in Georgia over the last six months.
They are extremely bright individuals with superb insight. I’m not sure that there was one thing I told them last night which, truth be told, they really didn’t already know for themselves. By the way, I can only dream about my skills in Chinese equaling their abilities in English.
The future of Sichuan Province is bright, judging by the quality of the people, like these three gentlemen, as representative of others I've met.
We had dinner at a Japanese restaurant, and the owner was delighted to find out my guests were from Chengdu. She was born in the city and moved away when she was very young. She visited a few years ago, and now wants to retire there!
Posted by John at 5:13 AM | Comments (0) | TrackBackChengdu: Top Emerging Global City
Chengdu tops Forbes’ list of emerging global cities, no surprise to me or to Tidbits readers. The city is cited for its quality of life, lower wages relative to coastal China, and its growing technology base, anchored by such western companies as Motorola, Microsoft, and Intel.
Forbes’ criteria for inclusion in the list include receptive local governments, a rapidly growing consumer class, ample land for development.
Other cities selected include Toulouse, France; Pune, India; Warsaw, Poland; Abu Dhabi, UAE; Curitiba, Brazil; and Tripoli, Libya.
Posted by John at 4:45 AM | Comments (0) | TrackBackQuote of the Day for Tuesday, February 28, 2006
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February 27, 2006
One Bank’s Crocodile Tears over Sarbanes-Oxley
Footnoted.org is a blog all investors in publicly-traded equities should pay attention to; Michelle Leder does a terrific job at proving the devil is indeed in the details. The details, in this case, are the footnotes and generally ignored SEC filings of public companies.
I was particularly amused by her highlighting of the case of Sound Financial, which recently announced it was being acquired by Hudson City Bancorp. In one press account, the cost of Sarbanes-Oxley compliance was cited as the "biggest enemy" of small banks like Sound Financial. In Sound Financial’s case, the amount cited was $500,000.
Seemingly while the bank was being shopped, executives of Sound Financial found the time and money to be able to overhaul employment agreements, benefit plans, and retirement plans and agreements for top officers and directors. The 8-K filing revealing these changes, dated December 8, 2005, contained the term "change of control" 95 times, Leder notes.
Sound Financial announced its sale just two months later. We’ll never know the answer to the question, but I wonder how much shareholder wealth got deducted from Hudson City’s purchase price because of the economics behind that December 8-K filing?
Posted by John at 6:18 AM | Comments (1) | TrackBackIncreasing Prosperity is Killing Asia
Chronic diseases such as heart disease, strokes, and cancer are destined to surpass infectious diseases as Asia’s number one killer, says the World Health Organization:
"There is not one country, one community left untouched by cancer, stroke, heart disease or respiratory disease," Dr. Catherine Le Gales-Camus, the WHO's assistant director general for noncommunicable diseases. . .
For the Asia-Pacific region, there is more reason to worry at the deaths linked to chronic ailments, she warned, since over 70 percent of the people who will die in the next 10 years from such diseases will be from this region. That amounts to 270 million deaths from 53 countries in the region out of an estimated 388 million deaths globally by 2015. [Emphasis mine]
The estimated global toll due to health-related deaths in 2005 offers sufficient reason for the public health community to raise the alarm. Of the nearly 58 million deaths from all causes the last year, it was projected that chronic diseases would account for 35 million deaths worldwide.
These numbers -- 17.5 million deaths due to cardiovascular disease, 7.5 million deaths due to cancer and 4.05 million deaths due to chronic respiratory diseases -- tower over the annual death toll in 2005 from the three widely known major infectious diseases. The latter includes 2.8 million deaths due to HIV/AIDS, 1.6 million deaths due to tuberculosis and 883,000 deaths due to malaria.
In some Asian countries, according to the WHO, the death toll from chronic diseases account for nearly 50 percent of annual cases, such as in Bhutan, Bangladesh, Pakistan and India. While in other countries the toll is higher, such as Indonesia having over 60 percent of its citizens dying due to chronic diseases and for China, Iran, Fiji, and Brunei the annual figure accounting for over 70 percent of the deaths.
"This growing epidemic has substantial macro-economic impact on the economies of the region," says Kim Hak-Su, executive secretary of ESCAP. "Countries in the region, such as China, India and the Russian Federation, could forego billions of dollars in national income over the next 10 years as a result of chronic diseases." [Emphasis mine]
According to the article, China and India have devoted 2.2% and 1.3%, respectively, of their GDP to public health. Japan and Australia are at 6.5%.
Posted by John at 5:41 AM | Comments (0) | TrackBackDubai Ports: Don't Let the Lizard Brain Take Over
Bloomberg's Amity Shlaes sets the Dubai Ports debate--with some humor--in the context of a battle between the nation's collective lizard brain and its cerebral cortex:
"Wars bring out the inner lizard in people. And the longer the war, the more powerful the lizard."
Read Shlaes' entire commentary; a tidbit doesn't do it justice.
Posted by John at 5:12 AM | Comments (0) | TrackBackYour iPod is You
Psychology Today points to research which finds that a person’s taste in music is an accurate predictor of their personality.
Maybe one day soon job applicants will be handing their iPods over for inspection:
Posted by John at 4:43 AM | Comments (2) | TrackBackSmart Sounds: Fans of jazz, classical and other "complex" music typically have above-average IQ scores.
Easy Listeners: Fans of country and Top 40 hits tend to be more conventional, honest and conservative compared with fans of other genres. "People who like country and pop might be more simpleminded, and that's not necessarily bad," says [Cambridge psychologist Jason] Rentfrow. "They just avoid making things unnecessarily complex."
Drama Queens: Compared with other music fans, opera aficionados are three times more likely to endorse suicide as a solution to family dishonor, says Steven Stack, a psychologist at Wayne State University in Michigan. Don't blame Madame Butterfly. Stack says dramatic personalities are drawn to opera, not influenced by it.
Parental Advisory: Parents often worry that music—whether it's Elvis or Eminem—promotes sexual or aggressive behavior in teens. Rentfrow's work has found no direct link. In fact, fans of gangsta rap or heavy metal are often more timid and shy than other kids, he says.
Boom Town: Extroverts gravitate to music with a heavy bass line, according to a Northeast Louisiana University study.
Brain Invasion: Whether you can study or work efficiently while listening to music may depend on how outgoing you are. Background music can help extroverts focus, but tends to torment introverts.
Peak Performance: It may work for Rocky Balboa, but music doesn't always pump up athletes. Motivational music can give weightlifters an edge. Runners, however, don't move farther or faster with the help of motivational music.
Motormouths: Fans of energetic music like dance and soul are more likely to impulsively blurt out their thoughts, compared with fans of other styles.
Quote of the Day for Monday, February 27, 2006
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February 26, 2006
Don Knotts, RIP
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Here’s a vignette of that genius, from BarneyFife.com:
Barney: Nice guys finish last. I know, I went through it. Little Vickie Harms. I wasn't no bigger than Opie. I met her over by the ice cream parlor. Stepped outside one day with my raspberry snow cone, there she was. She just stopped me cold. Head to foot, I was just clammy all over. I knew it was love. Icy chills just run all over me.
Andy: Sounds to me more like your show cone was leaking.
Barney: Boy I sure did like her.
Andy: She didn't like you back, huh?
Barney: Oh well no, it wasn't that so much. I don't know. It was mostly her stuck up attitude.
Andy: Yeah?
Barney: She used to walk around in long curls and print dresses and patented leather shoes and her nose up in the air. Boy she really thought she was hot stuff.
Andy: Why?
Barney: Oh her Daddy was in the civil service. Boy if I knew then what I know now. She used to do one thing that really used to burn me up.
Andy: What was that.
Barney: Well you know how I like snow cones...
Andy: Raspberry.
Barney: Right. Well there wasn't a day went by that I didn't offer that girl a bite of my snow cone. You know what she used to do every single time?
Andy: What?
Barney: She used to bite off the end, sip out all the syrup, and leave me with nothing but the ice.
Andy: The ice?
Barney: Yeah, the ice.
Andy: That's terrible.
Barney: Yeah.
Andy: Today you'd know different.
Barney: Oh are you kidding. Listen if I had a date with Vickie Harms today, and I got myself all shaved, and I went over to her house with my snow cone, you know what I'd do?
Andy: What?
Barney: The minute she opened that door, I bite off the end of the cone, sip out the syrup, and hand her the ice. What do you think of that?
Andy: Well I'll tell you the truth, Barn. If I was Vickie Harms and a thirty-five year old man come up to my house with a snow cone in his hand, I wouldn't even answer the door.
Thanks for all the laughs, Don. Rest in peace.
Posted by John at 10:15 PM | Comments (0) | TrackBackA Reality Show from Guatemala I'd Love to See
The Apprentice, Donald Trump’s ego vehicle, holds zero interest for me. (OK, less than zero.) I would love to see, however, a new Guatemalan reality show which the Washington Post’s Marcela Sanchez reports on:
Posted by John at 8:57 PM | Comments (0) | TrackBackAs reality shows go, Guatemala's "Desafio 10" would seem destined to be a flop: 10 strangers live in a house for two weeks where they study basic accounting, marketing and customer service. Cameras roll, the young men become friends, some go into business together.
Pretty boring stuff until you realize the 10 participants are former members of some of the most infamous gangs in the Americas -- Mara Salvatrucha, 18th Street, White Fence and North Hollywood. These are the guys that "everybody wants dead or in jail," said Harold Sibaja, the show's creator. . . .
Carlos Zuniga, Guatemalan business leader and mentor to five of the 10, was once convinced, as most Guatemalans are, that the gang problem can only be solved by law enforcement. Through his participation in the show, however, he came to believe that most of the gang members are in fact victims of poverty, abuse and abandonment, and that Guatemalan businessmen can no longer afford to be seen as "soulless with no social conscience." . . .
During the taping, the 10 participants were divided into two groups, each given the task of starting a small business. One group opened a shoeshine and shoe repair shop that has began seeing some success, thanks to its prime location in one of the largest office buildings in Guatemala City. The other group, Zuniga's, chose to start a car wash. While the car wash business has been slower, both Zuniga and Sibaja are convinced that will quickly change once the show airs. Initially all participants wore masks to hide their identities during the taping. But as the days went on all but two took them off. Perez, who was one of the last to remove his mask, said it was fear that kept him wearing it longer. But suddenly he said he got sick of the mask as he realized that "I don't need to be hiding, I am not a criminal no more."
Quote of the Day for Sunday, February 26, 2006
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February 25, 2006
A Legitimate Question Behind the Dubai/U.S. Ports Deal
Dr. John Rutledge, whose blog is a regular reading stop for me, points to where the true focus of questions regarding the Dubai World Ports purchase should rest:
. . . the real story is that Dubai and Singapore, heavily influenced by China, were the only bidders for this company. Congress should be asking why there aren't any American firms bidding for this company. I don't have a problem with calling for more information. Transparency is a good idea. But that’s not what the critics are calling for; they're saying we don't want to sell this to Arabs.
We ought to be focusing on the capital. Five years ago, 46% of the world market cap was in America. Today it's 38%. Why are there no U.S. bidders? It's because we have policies that drive capital offshore. Other countries have policies that attract capital. If we don't change our policies, we'd better get used to foreign investors owning our ports and other things. We need to drive policy, not second guess deals. The results will have terrible consequences for U.S.-Arab relations, obviously. But it’s important to note that since Iraq, stock and land prices in the Persian Gulf have tripled. The increased stability due to the U.S. military presence has effectively increased the duration of land by increasing the length of time investors are going to own it. That money has got to go somewhere and it's getting allocated into the Helmsley building in New York, ports, and other projects. These are big investors now. If you drive them away, you're going to drive the dollar down and the stock market down with it. We live by the golden rule – whoever has the gold gets to rule. We need to focus on keeping and attracting capital into the U.S.
Part of the reason behind the U.S. decline in share of world market cap is the significant performance of emerging markets, and not just in the Middle East. Their stock markets are performing well, in part, because of continued moves to more market-driven economies.
The United States cannot take its benign environment for capital for granted. We must focus on treating capital well. If we do, we will not only attract it from foreign investors but continue to build it within our own borders.
Posted by John at 10:28 AM | Comments (0) | TrackBackActual Port Operators on the Dubai World Ports Deal
The Chicago Tribune found several port experts--people who are actually involved in running ports--who offered opinions on whether the Dubai World Ports deal is a security risk. (No members of Congress were quoted):
Posted by John at 4:57 AM | Comments (0) | TrackBack"There has been a lot of hyperventilated rhetoric," said Bill McLaughlin, a spokesman for the Philadelphia Regional Port Authority, one of six U.S. ports to host a P&O terminal. The others are New York, New Orleans, Baltimore, Miami and Newark, N.J.
"It seemed like there is too much of a big deal being made" of the Dubai deal, agreed Sean Duffy, general manager of the New Orleans-based Steamship Association of Louisiana, a trade group for maritime companies. "I don't see it as potential security breach.". . .
Some experts said that the biggest maritime security threat isn't at the dock but at factories and warehouses that could be located thousands of miles away. That is where the metal cargo containers being shipped to the United States are loaded and locked before crossing the oceans.
"The real issue is not so much what comes into the country, but where it starts," said Harlan Ullman, a senior adviser on national security at the Center for Strategic and International Studies, a think tank in Washington, D.C.
Security concerns shouldn't be an issue in the Dubai deal, Ullman said, because terminal operators like P&O and Dubai are relative bit players in port security.
"It doesn't make any difference" if they are owned by Americans, Europeans or Arabs, he said.
Ullman said politicians are responding to the post-9/11 fears of their constituents, which are "understandable but emotional." Still, a lot of the criticism has been hyperbolic, implying that U.S. ports were being taken over, he said.
Quote of the Day for Saturday, February 25, 2006
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February 24, 2006
Ominous Implications in Congressional Behaviour Over the Dubai Ports World "Controversy"
The U.S. Congress really needs its rest this weekend; they all must be exhausted with all the political football they’ve been playing this week over the Dubai Ports World "controversy."
It’s a vivid reminder of what one friend of mine, a former elected official, was referring to when he told me in a recent conversation that most politics is "smoke and mirrors." Calling this particular manufactured outrage "smoke and mirrors," however, is actually insulting to both smoke and mirrors.
Besides the xenophobia, one of the particular messages the behavior our elected representatives sends the rest of the world is that our rules for all Arabs are different than for everyone else. The New York Times’ David Brooks eloquently makes the point:
. . . The strongest argument the fundamentalists have is that they are engaged in a holy war against the racist West, which imposes one set of harsh rules on Arabs and another set of rules on everybody else. Now comes a group of politicians to prove them gloriously right.
God must love Hamas and Moktada al-Sadr. He has given them the America First brigades of Capitol Hill. God must love the folks at Al Jazeera. They won't have to work to stoke resentments this week. All the garbage they need will be spewing forth from press conferences and photo ops on C-Span and CNN.
Anyone, even a native-born, white business owner like me, should be fearful of the implications of the attitudes exhibited by politicians in both parties this week. The message delivered by this Congress amounts to the following:
If we can make expedient political points by attacking your business, your background, or your ethnicity, we’ll do it and not even think twice about it. It doesn’t matter if you followed U.S. law. We'll hang you.
Finally, the Lex op-ed column in the Financial Times makes a similar point:
Posted by John at 11:37 PM | Comments (0) | TrackBack[Any inadequacies in the U.S. government’s vetting process of Dubai Ports World takeover of P&O] helps explain, but does not excuse, the apparent willingness of many politicians to change the law retroactively. Such a prospect should send shivers down the spines of lawmakers with any respect for private property rights. It would also leave US companies with the thankless task of explaining why similar steps might be objectionable in places such as Russia or Nigeria.
This battle is no longer over a few port operations probably only worth a couple of hundred million pounds on a standalone basis. Instead, it is swiftly turning into a test case of US commitment to the principles on which it has long lectured the world.
More on Today's Quote from Steve Jobs
Today's quote from Steve Jobs is lifted from his Commencement address at Stanford University, delivered on June 12, 2005. We've pointed to it once before; if you missed it, you really should take the time to read it. It's a masterpiece.
Posted by John at 10:46 PM | Comments (0) | TrackBackQuote of the Day for Friday, February 24, 2006
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February 23, 2006
Toyota’s Victory: Harnassing the Value of Line Employees
Gary Hamel, writing in the Harvard Business Review, offers a cautionary tale what’s behind Toyota’s dismantling of Detroit over the last three decades. The bottom line? Toyota listens to and values its line workers; Detroit values its staff:
Posted by John at 10:18 PM | Comments (0) | TrackBackWhy has it taken America’s automobile manufacturers so long to narrow their efficiency gap with Toyota? In large part, because it took Detroit more than 20 years to ferret out the radical management principle at the heart of Toyota’s capacity for relentless improvement. Unlike its Western rivals, Toyota has long believed that first-line employees can be more than cogs in a soulless manufacturing machine; they can be problem solvers, innovators, and change agents. While American companies relied on staff experts to come up with process improvements, Toyota gave every employee the skills, the tools, and the permission to solve problems as they arose and to head off new problems before they occurred. The result: Year after year, Toyota has been able to get more out of its people than its competitors have been able to get out of theirs. Such is the power of management orthodoxy that it was only after American carmakers had exhausted every other explanation for Toyota’s success – an undervalued yen, a docile workforce, Japanese culture, superior automation – that they were finally able to admit that Toyota’s real advantage was its ability to harness the intellect of “ordinary” employees. As this example illustrates, management orthodoxies are often so deeply ingrained in executive thinking that they are practically unassailable. The more unconventional the principle underlying a management innovation, the longer it will take the competitors to respond. In some cases, the head-scratching can go on for decades.
Quote of the Day for Thursday, February 23, 2006
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February 22, 2006
A Great Leadership Quote on Responsibility
"By leadership I mean taking complete responsibility for an organization's well-being and growth and changing it for the better. Real leadership is not about prestige, power, or status. It is about responsibility."
(Robert L. Joss, dean, Stanford Graduate School of Business)
(Thanks to the Fast Company blog for the pointer.)
Posted by John at 9:31 PM | Comments (0) | TrackBackThe Prosperity of Spanish Multinationals Who've Embraced a Global Economy
Knowledge@Wharton has an interesting article (reg. required) on the rise of the Spanish multinationals:
In addition to financial institutions like Santander and Banco Bilbao Vizcaya Argentaria (BBVA), global Spanish firms include Telefónica, the world's fourth-largest telecommunications provider and the largest in Latin America; Repsol YPF, the ninth-largest oil company, and Iberdrola, an electrical utility that is the world's largest operator of wind generators. "Be mindful of the fact that Spain is a very small country," says Guillén, a native of Spain who began researching The Rise of Multinationals in 1993. "It is hardly 2% of global GDP. It is quite remarkable that these large firms are among the top 10 or 20 in their industries in the world."
The advance of the Spanish multinationals was triggered by Spain's entrance into the European Union in 1986. Until that point in the 1980s, notes Guillén, Spain was a protected country that operated outside the global economy. Since about 1980, firms in Spain have undergone a process of change, including deregulation, privatization, enhanced competition and increasing exposure to imports and inward foreign investment. "My prediction was that as the country opened up, some companies would go bust and others would get acquired," explains Guillén. "But if you believe in the dynamics of the market, other companies would react and do well. That is what has happened."
Spain is now among the top ten largest foreign direct investors in the world. As this article points out, this investment activity has largely been confined to Europe and Latin America. Spanish companies are really only beginning in North America and for all practical purposes haven’t started in Asia.
Posted by John at 8:51 PM | Comments (0) | TrackBackA Thoughtful Comment from One of the Quiet Ones
A rather quiet lady who works at one of our portfolio companies, whose youth might also cause one to ignore her, gave me a wonderful pearl of wisdom earlier this week:
"Our future is hiding in our daily routine."
I don’t know where she got this quote, or came up with it herself, but it has caused me to do a lot of thinking this week, about my company and those we have invested our money and time in.
As one who climbs under the hood of companies daily, I can tell you that sometimes they strike me as nothing but a bowl of spaghetti-like details. More often than not, it’s how those details are managed which determines success or failure. The big-picture strategy which sounds good in presentations to the outside world isn’t the real driver.
By the way, isn’t it usually the case that true wisdom comes from the unobtrusive and the unrecognized members of an organization? The problem is listening to them over the din caused by those with runoff of the mouth. It’s an associated lesson for me this week.
Posted by John at 8:24 PM | Comments (0) | TrackBackOur 1000th Post Online---and More to Come
Heritage Tidbits has now been online just over one year and this post is number 1,000.
As all our old friends know, Tidbits was delivered by email exclusively before we went to an online blog format. By my reckoning, we made another 2,400 or so posts by email prior to going on the Internet last February.
Both old and new friends: thanks for your continued interest. Please keep your comments coming, and feel free to let us know how we can improve.
Posted by John at 5:00 AM | Comments (0) | TrackBackQuote of the Day for Wednesday, February 22, 2006
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February 21, 2006
The Assumed Negative Impact of 100+ Life Expectancies
A Stanford professor postulates that the retirement age will have to be raised to 85 to counter the effects of anti-aging therapies which, by 2050, are likely to raise life expectancies well north of 100.
This trend will place a burden on the economy if the retirement age remains at 65, according to this study. The big assumption is the part about "if the retirement age remains at 65."
The boomer generation, on the whole, shows little signs of permanently disappearing on the back nine or at the beach. Anecdotally, I see boomers "retiring" to pursuits which are contributors to economic growth and development. I can’t even count how many "retired" 50-, 60-, and 70-somethings I’ve talked to in the last year who are bored and want to "stay active" or "get reconnected" in an engaging undertaking.
Posted by John at 9:46 PM | Comments (0) | TrackBackWaffle House to Accept Credit Cards
Waffle House has announced that they will accept credit cards in all their 700-plus company-owned stores, after half a century as a cash-only business.
Vice President Walt Ehmer joked that the company wanted to make sure credit cards were here to stay before deciding to accept them.
As a lover of the Yellow Mansion, I’m wary. What’s next, table cloths and candlelight?
Posted by John at 6:12 AM | Comments (0) | TrackBackBankers: Please Stop the Phony Whining About Wal-Mart
I’m about to make some bankers mad.
I am sick of listening to bankers complain about Wal-Mart getting into the banking business.
It’s anti-consumer and it’s anti-business. It’s anti-innovation. It’s phony whining, particularly when the very same bankers complain because they can’t offer the insurance, securities, or other non-banking products and services they’d like to.
Wal-Mart, as this Chicago Tribune article explains, wants a Utah-based charter called an industrial loan company (ILC). This charter allows for limited loan-making and deposit-taking functions, with deposits covered by FDIC insurance and therefore regulatory supervision.
It doesn’t matter than companies such as General Motors, General Electric, BMW, Volkswagen, and Pitney-Bowes already own industrial banks. Even one of Wal-Mart’s fiercest retailing competitors, Target, has a ILC charter. (Follow any of those links and you'll go directly to those companies' banking offerings.) In fact, more than 50 such banks are currently in operation in Utah and California.
It also doesn’t matter that the total asset size of all ILCs is only about $140 billion, according to FDIC statistics.
Only $140 billion, you say?
By comparison, FDIC statistics show that the banking industry as a whole has over $10 trillion in assets. The profitability on those assets is about 1.3%, so the entire banking industry is earning, on an annual basis, an amount roughly equal to the entire size of all industrial banks combined. About 95% of all banks are profitable.
In other words, this industry is hardly threatened by allowing a little more competition, even from a company the size of Wal-Mart.
Most community banks aren’t even in the business of dealing with consumers anymore. Most of them are oriented to small and medium-sized businesses.
Moreover, those businesses better have some real-estate collateral, or they’re unlikely to get a loan. The balance sheets of most community banks are chock full of real estate loans or loans backed by real estate collateral. (That’s its own source of worry, but that’s another subject.)
Most small banks do not have a mortgage company and don’t offer their own credit cards. What retail products they offer in this regard are actually offered on behalf of some larger upstream financial institution, and the community bank takes a small fee for selling the product.
As United Community Bank’s Jimmy Tallent noted in a recent conversation I had with him, business follows bankers. If a company gets the right banking talent, customers follow. While banking is subject to market forces in pricing of loans and deposits, at a certain point customers value a relationship with an individual.
That’s why community banks as a whole are thriving, even in the face of competition from banks like Bank of America, which boasts better than $1 trillion of assets. Community banks are emphasizing personal, efficient service, not the lowest price.
If low prices are the sum total of their competitive offering, then Bank of America will put them out of business before Wal-Mart even gets the chance.
Speaking of Bank of America, I was a young bank analyst when NCNB, then under $10 billion in assets and confined to North Carolina, gained entry to Florida through loophole.
You should have heard the wailing and screaming from small banks in Florida; you would have thought the devil himself had received a banking charter and had hired Joseph Stalin as a Senior Vice President.
In the quarter of a century since what is now Bank of America has been operating in Florida, they’ve made several sizeable acquisitions and now control $70 billion in deposits out of $340 billion statewide. Additionally, Wachovia has about $62 billion in Florida deposits, and SunTrust controls about $34 billion. That’s almost 50% of the FDIC-insured deposits in the entire state.
At the same time, the health of Florida’s community banks have never been better. Moreover, even the most junk-infested small banks in Florida, when they seek to sell, seem to command prices (that I believe, anyway) are ridiculous.
It’s pretty hard for anybody who really knows the facts about banking industry fundamentals to get worked up about Wal-Mart getting a limited banking charter and the effect such a move will have on community banks.
As one informed observer who knows the truth, I'm sick of hearing the whining.
Posted by John at 5:27 AM | Comments (0) | TrackBackQuote of the Day for Tuesday, February 21, 2006
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February 20, 2006
Telemundo’s Don Browne on Hispanic Market Opportunities
Don Browne, President of Telemundo, offered his own perspective in a New York Times interview on Univision’s possible sale, but more important, a look at bigger opportunity in Hispanic media in general:
Q. Warner Brothers and CBS recently decided to focus their two broadcast networks, WB and UPN, on a younger, minority market. What does that mean for the general television landscape?
A. I think it's interesting. I think the business is consolidating. I think it reinforces, again, that we are involved with a very dynamic audience that is growing and evolving and is attractive to everyone. Everyone is trying to figure out how to get the Spanish-language audience. But it's not so much the Spanish language, it's much more about culture: How do we bring relevance into our product to attract this audience?
Q. But advertisers aren't yet paying a premium for this audience.
A. But I think that's the beauty of our business. Advertisers are — it's like a giant that's waking up. I think that advertisers are starting to realize the giant is the U.S. Hispanic population, which is growing dramatically. And I think as they begin to get a sense of the power of that consumer block, we're going to see an acceleration of that general market dollar coming very aggressively into the Spanish-language world.
Q. Isn't part of the problem that advertisers have tended to see the audience as a lower-end market?
A. I just think it's not necessarily lower end, but lack of awareness of how you market to them. Again, what happened four years ago, when G.E. and NBC bought Telemundo, I think it really sent a significant signal to the marketplace that this is a really important market. I think the fact that Univision is for sale and the buyers that are being mentioned are significant players, I think this is the type of news that will stimulate the general market advertiser to accelerate their dollars into our marketplace.
Browne is exactly right. While Hispanic media advertising is growing faster than the overall market, it is still being restrained both by an underestimation of Hispanic buying power and a lack of understanding of the Hispanic market.
Quite simply, Hispanic media advertising dollars are rising at an above-average rate, but they could be growing even faster.
Posted by John at 5:44 AM | Comments (0) | TrackBackThe Future Rests With the World’s Youth, and They’re in Yemen
Writing in The Australian, Mark Steyn gives a very interesting demographic perspective on the world. The future rests not in the hands of European countries, but Pakistan, Yemen, and, Steyn argues, North America and Australia if they will accept the surplus which will become the world’s immigrants.
A tidbit follows, but read the entire, quite thoughtful editorial:
Demography doesn't explain everything but it accounts for a good 90 per cent. The "who" is the best indicator of the what-where-when-and-why. Go on, pick a subject. Will Japan's economy return to the heady days of the 1980s when US businesses cowered in terror? Answer: No. Japan is exactly the same as it was in its heyday except for one fact: it stopped breeding and its population aged. Will China be the hyperpower of the 21st century? Answer: No. Its population will get old before it gets rich.
Check back with me in a century and we'll see who's right on that one. But here's one we know the answer to: Why is this newspaper published in the language of a tiny island on the other side of the earth? Why does Australia have an English Queen, English common law, English institutions? Because England was the first nation to conquer infant mortality.
By 1820 medical progress had so transformed British life that half the population was under the age of 15. Britain had the manpower to take, hold, settle and administer huge chunks of real estate around the planet. Had, say, China or Russia been first to overcome childhood mortality, the modern world would be very different.
What country today has half of its population under the age of 15? Italy has 14 per cent, the UK 18 per cent, Australia 20 per cent - and Saudi Arabia has 39 per cent, Pakistan 40 per cent and Yemen 47 per cent. Little Yemen, like little Britain 200 years ago, will send its surplus youth around the world - one way or another. . . .
. . . Australia, like the US, is genuinely multicultural, at least in the sense that its immigration is not from a single overwhelming source. The remorseless transformation of Eutopia into Eurabia is already prompting the Dutch to abandon their country in record numbers, for Canada and New Zealand.
In the years ahead, North America and Australia will have the pick of European talent and a chance to learn the lessons of its self-extinction, as they apply to abortion and much else.
In the '70s and '80, Muslims had children - those self-detonating Islamists in London and Gaza and Bali are a literal baby boom - while westerners took all those silly books about overpopulation seriously. A people that won't multiply can't go forth or go anywhere. Those who do will shape the world we live in.
(Thanks to Arts & Letters Daily for the pointer.)
Posted by John at 5:22 AM | Comments (0) | TrackBackStarbucks and Caribou Will Love This One
According to a new study, coffee is the number one source of cell-protecting anti-oxidants in the U.S. diet.
I feel better already.
Posted by John at 5:01 AM | Comments (0) | TrackBackQuote of the Day for Monday, February 20, 2006
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February 19, 2006
Peruvian Farmers Using Podcasts to Improve Production
From the BBC:
. . . UK charity Practical Action has married old and new technology to podcast twice-monthly updates to eight information centres in the Cajamarca region.
These telecentres, many of which are run on solar power, automatically download the programmes onto CDs to rebroadcast them on local radio stations.
The charity has found it effective to distribute audio material to local people, who prefer listening in their own dialect to being sent the written word.
Each area within Cajamarca is sent information relevant to them.
In Chanta Alta, the podcasts concentrate on cattle-raising husbandry and on dairy production.
In nearby Chilete, podcasts are being used to give tips to farmers who have no experience of growing grapes.
Practical Action's team leader in Peru, Cecilia Fernandez Morales, told the BBC's Go Digital programme that managers are now training local people to make their own podcasts. . . .
(Thanks to Smart Mobs for the pointer.)
Posted by John at 1:00 PM | Comments (0) | TrackBackHispanics Value Education
For those that need a study to believe that Hispanics value education, here it is.
It explains why the education, level of job skills, and income levels of this demographic will continue to rise faster than "expected."
Posted by John at 11:56 AM | Comments (0) | TrackBackChina and the United States "Natural Allies"
In this country we are bombarded by so many media reports on "what China is thinking and saying" as if China is one individual whose motives, either benign or malicious, are easy to determine.highlig
Such a view of China is blisteringly ignorant. A similarly uninformed notion would be implying you know what the United States is thinking because of what the President (of whatever party) says, or even worse, listening to some camera-loving U.S. Congressman or Senator.
It’s why I’ve highlighted issues of visa restrictions and exchange programs, because it’s important for U.S. and Chinese citizens to experience each other directly and form opinions based on first hand experience, unfiltered by government and media "experts."
In that vein, I ran across the following bulletin board posting from a China Daily reader advocating the position that China and the United States should be "natural allies." Based solely on my own experience visiting China and hosting Chinese here, this post is fairly representative of how most Chinese I’ve spoken to feel about the United States (and Japan and Taiwan).
I’m no expert on China, but I’ve visited more than the average American (five times, with several trips likely this year) and I’ve hosted numerous Chinese here in the U.S.
With all that said, here’s the opinion of one Chinese citizen which strikes me as fairly representative of most Chinese that I’ve spent time with:
Posted by John at 8:40 AM | Comments (0) | TrackBackChina and the United States should have been natural allies, because we fought together in the battle fronts, and sent the Japanese Imperial Army back to their islands, after their hands were full with American and Chinese bloods. Many in China over-joyed when your two a-bombs shortened the grisly war, and forced the Japan Emperor to surrender before justice. A few Japanese scholars asked me in Tokyo last spring that what do you think of Americans? I said to their face: Wonderful people! Many in important posts in China are all American college educated, and naturally we like that place.
Chinese pronunciation of the United States of America, is "mei-guo", meaning "Beautiful Country".
However, your politicians and quite a number of people in America are living under the shadow of "political ideology". Yes, Taiwan is a democracy, but that doesn't mean China under one-party leadership has no future. It can make wonders and miracles, so long the leadership listen to the wise-men advice, and take the majority of its people's interest at heart, I mean, at heart! And, we are not planning any attack on Taiwan to quicken territorial integration, we are not fools to ruin our own brothers and sisters there. China has put forward the most flexible plan for peaceful unity: Taiwan could keep its democracy, its troops, its system, everything could be kept intact, except the authorities there admit to one-China.
With regard to protecting democracy, I found the White House is somewhat of "hypocrite". Among your allies, is Singapore a democracy? is Pakistan a democracy? is Saudi Arabia a democracy? And, Chavez is majority elected, why is he a prick in your eyes?
So, my suggestion for the White House: 1.3 billion people calling USA "Beautiful Country" isn't your adversary. Selling weapons to Taiwan DEFINITELY hurts our feelings!
Chinese people respect friendship, and tend to reciprocate good with good, what Confucius enshrined in our blood. We two peoples have a lot to learn and rely on each other.
China’s Coastal Employers Look West for Workers
Because of a shortage of skilled workers, employers along the Yangtze River Delta are opening recruiting and training centers for workers in central and western China.
An estimated two-thirds of small to medium sized enterprises in this coastal region of China are experiencing a shortage of skilled workers.
Worker shortages (and rising labor costs) are nothing new for the Yangtze River Delta, and we've discussed here and here.
Posted by John at 8:04 AM | Comments (0) | TrackBackQuote of the Day for Sunday, February 19, 2006
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February 18, 2006
Europe’s Vicious Cycle
Writing on Cato Unbound, Timothy Smith offers a cogent analysis of why Europe continues to stagnate. I encourage you to consume it in its entirety; a tidbit follows:
Western European labor leaders and intellectuals tend to see the world in black and white terms: the market is uniformly inhumane, in need of taming by wise politicians. But the state is inherently good and wise, by definition an instrument of "solidarity." There are no shades of gray and no place for paradox. The idea that a bit more job insecurity would lead to more job creation is simply unacceptable in Old Europe (but the Danes and the Finns have accepted this and that's why they are in better economic shape). The notion of "creative destruction" would strike most denizens of Old Europe as a bizarre right-wing American concept, even as the concept plays itself out every day in any successful capitalist economy—from the USA to Sweden. Intellectuals have only got time for the pain; they never speak of the gains from trade. Unlike their Swedish and Danish counterparts, the French Socialist party cannot countenance the idea that private sector job creation might be the solution to the country's woes: all efforts have focused on building up the state sector, which further taxes the private sector. And the vicious circle goes on and on. Until this circle is broken, Western Europe will continue to stagnate.
(Thanks to Marginal Revolution for the pointer.)
Posted by John at 9:09 PM | Comments (0) | TrackBackSt. Louis and Sacramento: "Flooding Disasters Waiting to Happen"
St. Louis and Sacramento are at risk of flooding disasters because of rivers prone to overflow, inadequate levees and development in areas prone to flooding.
Posted by John at 8:53 PM | Comments (0) | TrackBackPast efforts to prevent flooding, such as building levees, have made the risks greater, said Nicholas Pinter of Southern Illinois University.
"It encouraged development in areas that were previously cornfield," Pinter said. "But it also physically makes the flooding process worse."
He said studies had shown Mississippi River levees had driven potential flood levels 10 feet to 12 feet (up to 4 meters) higher than what they were before.
A perfect example of what can go wrong was the 1993 Mississippi Flood, considered the most devastating single flood in U.S. history.
Heavy rainfall overwhelmed the Mississippi and its tributaries, flooding 17,000 square miles of land in nine states, killing 50 people and causing $15 billion in damage, according to Norbert Schwartz of the Federal Emergency Management Agency's mitigation program.
The St. Louis area was badly hit but Adolphus Busch, chairman of the Great Rivers Habitat Alliance, said that more than 14,000 acres of floodplain land in the region has been developed since then.
"By 1997-1998 we started to see huge, wholesale developments again going on out there," Busch said.
But perhaps a worse risk exists in California's Sacramento-San Joaquin Delta, said Jeffrey Mount of the University of California, Davis.
He predicts a 2-in-3 probability of a catastrophic levee failure over the next 50 years in the 700,000-acre (280,000-hectare) estuary that makes up the delta.
"In California we know we have two kinds of levees -- those that have failed and those that will fail," Mount said.
He said the ground was subsiding and sea levels rising, compounded by "the wild card in California, seismicity, which can undo this system in a heartbeat."
"So you have a policy vacuum, and what rushes into a policy vacuum in California because of land prices? Urbanization. We are reinventing Katrina all over again."
After a Few Jammed Days . . .
. . .I'm back with time to spent here.
Posted by John at 8:41 PM | Comments (0) | TrackBackQuote of the Day for Saturday, February 18, 2006
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