Group items tagged

Businesses have had at least 25 to 30 years near complete certainty -- certainty that they will pay lower and lower taxes, that they' will face less and less regulation, that they can outsource to their hearts' content (which when it does produce savings, comes at a loss of control, increased business system rigidity, and loss of critical know how). They have also been certain that unions will be weak to powerless, that states and municipalities will give them huge subsidies to relocate, that boards of directors will put top executives on the up escalator for more and more compensation because director pay benefits from this cozy collusion, that the financial markets will always look to short term earnings no matter how dodgy the accounting, that the accounting firms will provide plenty of cover, that the SEC will never investigate anything more serious than insider trading (Enron being the exception that proved the rule). So this haranguing about certainty simply reveals how warped big commerce has become in the US. Top management of supposedly capitalist enterprises want a high degree of certainty in their own profits and pay. Rather than earn their returns the old fashioned way, by serving customers well, by innovating, by expanding into new markets, their 'certainty' amounts to being paid handsomely for doing things that carry no risk. But since risk and uncertainty are inherent to the human condition, what they instead have engaged in is a massive scheme of risk transfer, of increasing rewards to themselves to the long term detriment of their enterprises and ultimately society as a whole.

While we all are facing the pinch of economic uncertainty there are some positive signs that are slowly emerging. Although in my mind, we are not out of the woods yet. In this part of the world, there have been interesting developments in India's and China's economy. On the other side of the world, it is the legal battle that SEC (U.S. Securities and Exchange Commission) has been having with white collar crimes. Let me share my views as to why this is something we as CFOs should be focused on and why it might have implications on your business here.

The Big Money economy is booming. According to a new Commerce Department report, third-quarter profits of American businesses rose at an annual record-breaking $1.659 trillion - besting even the boom year of 2006 (in nominal dollars). Profits have soared for seven consecutive quarters now, matching or beating their fastest pace in history. Executive pay is linked to profits, so top pay is soaring as well. Higher profits are also translating into the nice gains in the stock market, which is a boon to everyone with lots of financial assets. And Wall Street is back. Bonuses on the Street are expected to rise about 5 percent this year, according to a survey by compensation consultants Johnson Associates Inc. But nothing is trickling down to the Average Worker economy. Job growth is still anemic. At October's rate of only 50,000 new private-sector jobs, unemployment won't get down to pre-recession levels for twenty years. And almost half of October's new jobs were in temporary help.

The Size of the Bank Bailout: $29 Trillion

Wall Street Isn't Winning - It's Cheating The two-tiered justice system: an illustration 9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon  The due-process-free assassination of U.S. citizens is now reality The Quiet Coup "the finance industry has effectively captured our government" What OWS is about + data behind the movement Data privacy is now extinct in the U.S. "The problem that confronts us is that every living system in the biosphere is in decline and the rate of decline is accelerating. There isn't one peer-reviewed scientific article that's been published in the last 20 years that contradicts that statement. Living systems are coral reefs. They're our climatic stability, forest cover, the oceans themselves, aquifers, water, the conditions of the soil, biodiversity. They go on and on as they get more specific. But the fact is, there isn't one living system that is stable or is improving. And those living systems provide the basis for all life." The 1% are the very best destroyers of wealth the world has ever seen The prison industry in the United States: big business or a new form of slavery? How the GOP Became the Party of the Rich: The inside story of how the Republicans abandoned the poor and the middle class to pursue their relentless agenda of tax cuts for the wealthiest one percent

In the past, I have talked about risk-aware culture and Enterprise Risk but have not so far talked about a risk that is part of the business. In the same vein without taking that risk companies can't survive. This situation becomes a reality as soon as a company or a lender issues credit or lends money.Now as a CFO, this is a difficult balance to strike as credit risk is linked more to potential bankruptcy of a customer. So do you say no to a potential transaction because the financial metrics of a customer are weak or do you take the current benefits associated with the transaction to be executed and hope that bankruptcy situation doesn't arise?

Economics: I'm going to discuss trillions of dollars in a moment. As an economics teacher, I understand numbers this large are extremely difficult to imagine. If you are among the majority with this difficulty, I recommend that you follow the expert testimony that paints the picture, and know that success in this area of public education transformation that unleashes trillions of our dollars for human creative capacity in unimaginable power is sufficient to end the current economic crisis. This is the longest section of my briefing. If you tire in reading, please consider that at trillions of dollars of annual public benefits, you literally have nothing more valuable to do than understand the following facts and ideas. Harvard's Linda Bilmes co-authored a paper with Nobel Prize winner Joseph Stiglitz estimating the long-term costs of current US wars at now $3 to $5 trillion ($30-$50,000 per US household of $50,000/year income), with total debt increase since 2001 of over $10 trillion. Remember, as demonstrated by the evidence disclosed by our own government, all the reasons Americans were told to go to war were known to be lies as they were told and applicable law proves these wars Orwellian unlawful. Just down the Charles River from Harvard, MIT's Simon Johnson (and former Chief Economist of the International Monetary Fund) describes our economy being lead by gambling oligarchs who have captured government as in banana republics (his words), and might plunge the US into an economy worse than the Great Depression. From his article under the telling title, The Quiet Coup: "Elite business interests-financiers, in the case of the U.S.-played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The govern

The doctrine of limited liability raises questions about businesses' responsibility for the environmental, social or financial costs of their activities. Tony Curzon Price reflects on the issue in the context of a London conference, and interviews two expert participants.

China is busy turning the global challenge of climate change into a national opportunity, but it needs another decade to advance its technology to the point where superior manufacturing and lower costs will secure its dominance of the clean-tech sector. By giving China more time to develop its capacity while neglecting our own, America is not just losing the clean-tech race, it's forfeiting it.

The Portuguese government Thursday followed Spain's lead in agreeing with the main opposition party on more austerity measures to cut the deficit faster than planned, to 4.6 percent of gross domestic product next year from 9.4 percent last year.

The prominent economist explains why the model of the financial supermarket is a disaster, and why it's so dangerous that Wall Street is back to business as usual.

Interest rates are rising in the long term. Businesses will have to adapt, while governments must prevent an era of creeping financial protectionism.

The double dip of this crisis is upon us. The latest data agree: the housing market has been in full double-dip mode for five months as home prices keep declining. The foreclosure disaster keeps increasing the combination of homeless families and empty homes. Think capitalist efficiency. Unemployment rose back above 9 % again. The average length of unemployment is now 39.7 weeks, the longest since these records began in 1948. Investments by businesses are decelerating and governments keep dropping workers. 

(interview with a Swiss banker  done in Mosсow 30.05.2011)  Q: Can you tell us something about your involvement in the Swiss banking business?A: I have worked for Swiss banks for many years. I was designated as one of the top directors of one of the biggest Swiss banks. During my work I was involved in the payment, in the direct payment in cash to a person who killed the president of a foreign country. I was in the meeting where it was decided to give this cash money to the killer. This gave me dramatic headaches and troubled my conscience. It was not the only case that was really bad but it was the worst. It was a payment instruction on order of a foreign secret service written by hand giving the order to pay a certain amount to a person who killed the top leader of a foreign country. And it was not the only case. We received several such hand written letters coming from foreign secret services giving the order to payout cash from secret accounts to fund revolutions or for the killing of people. I can confirm what John Perkins has written in his book "Confessions of an Economic Hit Man". There really exists just a system and Swiss banks are involved in such cases.

The fundamental problem that much of the world faces today is that investors are overreacting to debt-to-GDP ratios, fearful of some magic threshold, and demanding fiscal-austerity programs too soon. They are asking governments to cut expenditure while their economies are still vulnerable. Households are running scared, so they cut expenditures as well, and businesses are being dissuaded from borrowing to finance capital expenditures. The lesson is simple: We should worry less about debt ratios and thresholds, and more about our inability to see these indicators for the artificial - and often irrelevant - constructs that they are.

Extortion Politics: Why Won't American Business Stop the GOP From Threatening to Blow Up the Economy?