November 28, 2006

Too well tuned?

Sir, Stefan Stern in “The supply chains that could bind unsuspecting managers”, November 28, argues that when everyone strives to be lean and efficient this could on a global scale create greater risks and vulnerability. He is right though it extends to much more than supply chains.

Martial arts legend Bruce Lee, who died at the age of only 32 is an example of how an organism could be in such a highly tuned and perfect condition that it could not resist a small external shock if the rumors that his death were caused by some sort of aspirin are true. In the same vein companies nowadays, pressured by the stock market’s expectations for the next quarterly results; the latest theories in corporate finance as to how squeeze out the last drop in results; and, perhaps, even some bit of creative accounting, might be so well-tuned (no little reserve fat left) that they would not be able to withstand any minor recession.

PS. Whenever I expose this theory, I can see in my wife’s eyes that she believes this is just my preparing an excuse for my growing—ok, grown—midline.

November 13, 2006

Iraq needs mercenaries for peace

Sir, as Venezuelans know so well, it is impossible to build a real democracy upon abundant oil. Democracy is about creating a level playing field, and, therefore, if you want a real chance at democracy in an oil-rich land like Iraq, you need first to distribute their oil revenues equally among all their citizens. For Iraq, distributing their oil revenues upfront, in cash, would carry a special significance since not only would it help to solve the problem of their oil being located only in some parts of the country, but it would also foster an additional bond of national identity among all the Iraqis, be they Sunnis, Shiites, or Kurds. The possibility for each citizen to receive perhaps a couple of thousand dollars a year would promote interest in reaching normality. The World Bank could be the perfect candidate to help implement a very transparent sharing of the oil revenues for Iraq.

In a world where so frequently mercenaries are used for wars, why don’t we help Iraq contract their own citizens, using their own money, to be mercenaries for peace?

November 09, 2006

European blindness

Sir, you must excuse me using Philip Stephens’ (November 3) “A bitter crop from our failure to tend to global warming” for a somewhat different discussion but when he says that “Europeans . . . are beyond rational calculation: bad for George W. Bush by definition must be good for everyone else” that must be exactly the reason for which many Europeans have not distanced themselves completely from a Hugo Chavez, who has positioned himself as a big time Bush foe, and have been turning a blind eye on issues such like that in a notoriously divided country the Congress of Venezuela has 167 members in favor of Chavez, and none, zero, zilch, of those who differ with him. I said a “somewhat different discussion” because in fact, with respect to global warming, they have also wanted to ignore that petrol is sold domestically in Venezuela for about three euro cents per liter and thereby producing runaway consumption and the transfer of about 10% of it GDP from the poor to those who have cars. Indeed, how hatred can make you blind!

November 08, 2006

What discount rate should be applied to analyze the benefits of the unborn?

Sir, Nicholas Stern, in order to tell us that the “Gains from greenhouse action outweigh the costs” (November 8) had also to argue that “we cannot avoid the ethical issues involved in allocations between generations” so that he could be allowed to use the low discount factors that validates his cost-benefit analysis. When so coincidentally FT´s front page that very same day carried the story on “Big Four firms in call to switch to real-time reporting” this really helps to illustrate the conflicts between the short terms results we all expect and the long term actions the world needs.

Recently I read a small publication titled “Faiths and the environment” that spoke about some pioneering work supported by the World Bank aimed to furthering whatever links could exist between those two and since given that religious groups are in fact one of the very few driving forces behind helping us to take a longer perspective on issues they could by prioritizing more the environment really assist us in lowering the high discount rates that prevail out there.

The second thought picks up on what Stern says about “the needs of future generations should be represented in decision-making” which reminds us of the urgent need to get some more real representation of the young and perhaps even the unborn into our democracies… and I mean before they are completely taken over by the baby boomers.

November 03, 2006

Long and short position abuses frequently come hand in hand

Sir, in your “Do not sell us short”, November 3, you correctly argue that we should not identify the abuse of false bad news with the mechanism of the short sale. Usually we do not react to it the same but false good news that inflate the value of a stock is exactly as much an abuse than bad news that deflates it and often both long and short positions abuses come hand in hand.

Distribute the gains but also try to avoid their concentration

Sir, in your “Politicians must focus on middle America” November 3, you identify other causes for the stagnation of their real income than the migrant or foreign worker, such as “the rise of winners take all markets” and for which you should be commanded. You then suggest (to democrats) that we need to be very careful not killing off globalization, as it generates many benefits but also (to republicans) that we need to redistribute the benefits better from winners to losers, through higher taxes. Given that the market value of many public services franchises and of the “winners-take-all-markets” are in some cases so extraordinary high that it proves the absence of a real regulator, may we also suggest that some more efforts are invested in avoiding the concentration of those profits that you suggest to afterward tax.

November 01, 2006

Though that could also be good news

Sir, Richard Lambert scares us with his news about how “Too many people are tuning out of the news” November 1, until we reflect upon the sad fact that in some cases that could in fact be good news, given the very low quality of some of the news.

A compelling case for the right actions

Sir, we should really wait for next weeks conclusion to Martin Wolf’s “A compelling case for action to avoid a climatic catastrophe”, November 1, but meanwhile we should point out the fact that the more compelling the case is, the more should be the need to take the correct actions. Until now, unfortunately, much of what is being done in this field seems more like having to do with peddling commercial solutions than with solving the real problems. For example all that money that with good and decent motivations is invested in hybrid cars, would do much more to avoid a climatic catastrophe if invested in other ways.

For regulation in a world without borders you need minds without borders

Sir Walt Lukken writing about “Exchange regulation in a world without borders” November 1, correctly concludes that “Individual regulators, no matter how big, do not have the resources to monitor properly an entire global market” but then recommends that “They must enlist the expertise of other regulators with similarly high standards” which sounds like the creation of the coalition of the overrun. Instead we believe that a complete and very humble rethinking of what can and should be regulated in a global world that does not necessarily equate high standards with the right standards, is a much better place to start but, for that to occur, you will need to bring in a new generation of regulators that are not so stuck in their current geographic framework

If reforming democracies, don´t forget the young

Sir, Deanne Julius and John Gault opine that “American democracy needs reform”, November 1, and though we agree with their recipes, especially the term limits, we wonder whether they carry sufficient punch to bring about that revival of democracy that seems to be needed, not only in America, to capture the attention and the compromise of the quite disenfranchised younger generations. Some of us believe for instance that there is now an urgent need to introduce a much more direct representation for the young to balance out for the baby-boomers.