Category Archives: History Today

Security Ideas for Strategic Planning

Was just reading interesting article on protective security measures by Scott Stewart in Stratfor. Turns out there are many similarities to Strategic Planning.

Author was in business of providing protective services to government officials, religious figures, royalty, business executives and ultra luxury individuals.

Professional protective security people certainly understand weapons and self defense. They realize that if they have to rely on these they actually have failed to do their job. True protective service entails anticipating situations and being prepared for them in advance to avoid confrontations. When confrontation is probable, goal is to structure confrontation on terms the protective service experts dictate.

Action is always faster than reaction. Just watch a football game. Proactive approaches involve “excellent situational awareness, thorough logistics planning, good security assessments, careful trip and individual site security advances, liaisons with counterparts and strict operational security. Protection teams can also employ powerful tools such as protective intelligence investigations, threat and psychological assessments of people with an unusual interest in the protectee, and countersurveillance detection teams.”

Leaders use the same approach when doing their strategic planning, whether it’s to address an emergency or a surprise in business, or to do the annual strategic plan, or long term plan based on business outlooks years out.

It’s already June, are you hitting your strategic plan for first half of year? What adjustments are necessary for second half of 2016? What are your plans for 2017 if economy holds strong? Starts to soften? Either nationally or just in your market or,selective market segments?

Ending Federal Deficit-Buffet’s Solution

Warren Buffet recently had excellent quote about the debt ceiling during an interview on CNBC:

“I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”

U.S. Dollar Is Gaining Like It’s the 1980s. Is That Good or Bad?

Read interesting article on Bloomberg over the weekend, written by Chikako Mogi and Shigeki Nozawa.

We know the dollar is strong, but the global financial markets are lacking a cohesive direction.

1985 US Treasury Secretary Jim Baker introduced the Plaza Accord. By persuading Japan, Germany, France and UK to join in a coordinated plan to weaken the dollar. The dollar was to strong, which adversely affected US exports.

Then and Now

In 1980’s US had the leadership and strength of purpose to develop the Plaza Accord which benefited the US and the rest of the world. Today, while the Fed is in a position to raise rates, it is hesitant to do so. Makoto Utsumi was minister at Japanese embassy at time of Plaza Accord (and now chairman of global advisory board for Tokai Tokyo Financial Holdings Inc.) Today, “The common understanding for the need for policy cooperation shared at the Plaza Accord is lost and it’s not clear where the true leadership is in each country or in the world.”

International Monetary Fund reports that global imbalances were hindering global growth. There is a Group of 20 foreign countries which meets to address slowing Chinese economy. Their meeting ended without any concrete policy on how to proceed. There is serious lack of coordination or agreement on how to proceed to avoid an economic disruption.

Why? The Plaza Accord came about because of long established relationships between treasury officials of various countries. Those relationships take years to develop and don’t exist in the world today.

It’s understandable that the G-20 meetings lack agreed upon decisions. Getting 20 countries headed in the same economic direction is like herding cats. There are just to many countries involved to expect agreement.

That leaves it up to the G-7 countries. This group of countries  has worked together in the past to return currency markets to an orderly balance. But it is expecting a lot that the G-7 countries can accomplish what they did in the past. 30 years ago they controlled 50% of world’s GDP. Today they only control 34%.

So What Should We Expect?

-The Fed to keep interest rates low longer than expected. That does not mean the Fed won’t raise rates within next few months…but it is unlikely Fed will raise rates much. Fed goal is to protect US economy.

-Unfortunately, there does not appear to be the leadership necessary to coordinate a world wide economic policy that can benefit majority.

-That means, in the US, we can expect the stock market to continue the current trend of ups and downs.

-Fed in the past had plan and policy telegraphed well in advance. That enable companies and countries to plan 2-3 years ahead…instead of current 2-3 months.

Most important take away for all of us?

Two points

-In all things people, companies, and countries, need to be looking ahead 2-3 years.  We all need to be evaluating short-term in relation to longer term plans, except in dire emergencies.  Is it hard to do? Not really. Only question is if we are disciplined enough.

-The importance of establishing  long term relationships. Personally and in business.

 

Here is link to entire article on Bloomberg. .

Theodore Roosevelt’s Ideas on Immigration

Theodore Roosevelt’s ideas on Immigrants and being an AMERICAN in 1907.

‘In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the person’s becoming in every facet an American, and nothing but an American…There can be no divided allegiance here. Any man who says he is an American, but something else also, isn’t an American at all. We have room for but one flag, the American flag… We have room for but one language here, and that is the English language.. And we have room for but one sole loyalty and that is a loyalty to the American people.’
Theodore Roosevelt 1907

Recent article on immigration on LinkedIn got me thinking about  immigration issues around the world. Immigrants trying to force their way into Europe, but not anywhere in Europe, to the countries with the best jobs. Syrians and other immigrants from Africa just trying to get out. Closer to home,  illegal immigrants coming across from Mexico, many with criminal past or criminal intents. Many from  other countries that are just using Mexico as a conduit into US.

Countries are trying a “one size fits all” approach to immigration. It’s not working.
Appears there are 3 immigrant issues:

-Those desperate to save their own lives and lives of their children from despots. These people, for most part, would take any jobs, and probably do anything to assimilate into the country they go to. These groups are from all walks of life, uneducated and unskilled to highly educated and highly skilled.

-Very selfish immigrants looking to improve their lives who demand that country they immigrate to meet their demands and adapt to their cultures. They don’t expect or want to learn language of their host country, may not want to adapt their religious practices to the customs of their host country, and some want to bring their own legal system with them instead of adapting to their host country.

-Immigrants looking for hand outs from country they move to. Without any real interest in the country they are immigrating to and without any intent of adapting to assimilate.

Foreign governments also are taking three approaches

-There are despotic governments that are just trying to eliminate certain ethnic types to “purify” their country. For political and/or religious grounds.

-Countries where the government simply can’t function well enough to take care of all the population. Some are well meaning. Most of these countries, are just struggling to stay in power and are spending lot of their economic resources trying to “keep the lid on” internal uprisings.

-Still other governments are interested in exporting the criminal element in their societies. Or exporting terrorism.

Countries facing a large influx of immigrants need 3 approaches as well. One immigration policy doesn’t fit all situations.

-Immigrants fleeing for their lives need to be assimilated. Those immigrants also need to be carefully screened to assure they are not criminals in their own countries or terrorists or religious extremists unwilling to adapt to host country. These immigrants must be willing to learn the language of their host country, agree to follow the host countries laws, and agree to take the jobs that are suitable for them. They need to be disbursed within a country, that means they can’t form mini cultures within their host country. That also means the host countries have to work hard to enable the people to assimilate as painlessly as possible.

-Immigrants looking for free ride, or to impose their culture in their host country need to be deported back to their country of origin. That means countries need to adopt standards that let them deport people for up to several years. Most immigrants are smart enough to tell host country anything the host country wants to hear, to get in. Agenda of these immigrants may not surface for months or years. When those agendas come out the immigrants must be dealt with.

-Immigrants that foment unrest in their host countries need to be dealt with very harshly. At very least they need to be deported and not allowed to visit the host country…ever again. If, after deportation, they sneak back in, they need to be dealt with using strong corporal punishment. They have already demonstrated their country of origin can’t keep them in. They have already demonstrated they don’t care about their host country.

No country is rich enough to accept all immigrants who want to come.

Each country needs to come to grips with this. As rich as world thinks US is, we can’t assimilate millions of immigrants who don’t speak English, when majority lack education or skills to perform jobs we need done. Majority of immigrants need at least a few years to adapt to their host country. Countries of the world, including US, don’t have the financial reserves to accommodate all the people who want to immigrate. Most countries are already facing financial difficulties taking care of their own citizens who need help. Each country has an obligation to take care of their own citizens before helping others.That’s harsh, but it is an economic fact of life.

Politicians of the world, wake up. The world is way to complex. Countries can no longer afford “one size fits all” policies.

 

 

Remind Your Political Representatives

Our elected representatives have forgotten some basics. Following is very simple. If you agree, pass them along to your representatives. You can be sure those looking for handouts are continually contacting elected representatives. Time for rest of us to stop nodding our heads and start to speak up.

“No society ever thrived because it had a large and growing class of parasites living off those who produce.”

There are those that truly can’t care for themselves should receive help. That was the original intent of these programs.  Anyone on welfare or getting food stamps, housing assistance, etc. should be required to work 20 hours a week on public assistance projects. I suspect the first to step forward will be the people with disabilities. Most of them understand what they could do to contribute to their own welfare and they want to contribute.

We need to stop calling all public assistance programs  ‘Entitlements’.  Welfare, Food Stamps, etc., etc., are not entitlements. They are tax-payer funded handouts.

Social security and veterans benefits are ‘Entitlements’ because the people receiving them are entitled to them. They were earned and paid for by the recipients.

Let your elected officials know you understand the difference between ‘hand outs’ and ‘entitlements.’ Do they? Pin them down. What are they going to actually do?

Fed Policy is Destroying or Crippling Whole Industries

Just read interesting article on role the Federal Reserve (Fed) in US and their counterparts in other countries are impacting business negatively.

We all know that cranking up the  printing presses creates money out of thin air. That’s  normally, inflationary, which is why politicians like it. Politicians love to spend money. If politicians think they might have to pay it back they want to pay it back with cheaper dollars.

Printing money drives down the cost of capital. Low cost capital encourages companies to expand faster than economic need dictates…think about all the money invested in the oil and gas industries in recent years. Production in US has doubled in the last 6 years…but demand has not doubled.

Creating wealth in the past always started with saving money. Governments are trying to change that with the printing press. It’s working on the mass population.

Now individuals, businesses, and countries can borrow money and make purchases with very little down. They don’t even need the assets to “back” the money they have borrowed. Money creation, done relatively slowly, creates inflation. Done very rapidly, like the world is experiencing now, and money creation can be deflationary before it becomes inflationary.

When the cost to borrow money is almost nothing, it encourages speculation. Today, most major corporations have plenty of working capital to invest, but are they investing it wisely? Or just spending money? Even stock buybacks can be costly if companies are buying their own stock at inflated prices.

Interest rates used to be set based on actual demand for capital. Now they appear to be based on the whim of the Fed and other governments.

Fed has Created at Least 2 Financial Market Bubbles

First is the above mentioned capital that has flowed into gas and oil industries. $5 trillion in last decade, most financed with junk bonds and spent by relatively small, Texas based, oil and gas companies. This is primary reason Texas has created as many new jobs as the rest of the country combined.

Today, these smaller companies are feeling the effect of lower gas prices. It is starting to spill over to the larger oil and gas companies.  Chevron lost over $2 BB in oil and gas operations last quarter. Last time it saw loss like this was 20 years ago.

Share buy back programs coupled with sharply lower oil and gas prices are having serious impact on these companies. Oil and gas companies either have to borrow more or reduce dividends or share buybacks. Either will cause a drop in share prices.

Second, Fed’s easy money policy has greatly increased subprime auto lending. Almost  the same as the subprime lending in housing market 10 years ago. People bought houses they couldn’t afford. Now they are buying vehicles they can’t afford. When bubbles burst, assets lose value…a lot of value..value that takes years to recover. Some is never recovered.

One company has $26 BB in outstanding auto loans, $21 billion of which are subprime.  And that’s  just one of several companies with billions in subprime auto loans. Moody’s expects 27% of these subprime auto loans to default. That effectively wipes out the projected profit margins.

Combine greedy lenders with irresponsible buyers and it’s a recipe with serious repercussions.

The housing subprime crisis occurred when people lost jobs and the stock market lost lot of value in 2008. Today stock market is close to all time high and employment is rising. Even average incomes are increasing…yet, loan defaults are high already.

Something is badly wrong in the underwriting and funding of new car loans.

What’s It All Mean?

Right now everything is good. When auto loans can’t be repaid, or oil and gas companies can’t repay loans we will have deflation short term.  I will start to reduce prices on both new and used cars. It will likely also reduce demand for gas.

When defaults occur credit dries up quickly…for consumers or businesses.

Fleet sales by auto manufactures to rental car companies account for 25% of new car sales. Rental companies dispose of vehicles within 1-2 years. As people default on their auto loans the auto manufactures, rental car companies, used vehicle sales, and those holding the loans will all be negatively affected.

Is All of this Just Conjecture?

No. January 2015 inflation hit negative territory…deflation.  (Measure used was Consumer Price Index including food and energy.) By June we had barely climbed out of negative territory.

The Fed’s printing press policies rather than creating instant inflation are creating deflation in select industries and creating deflationary conditions in others.

How about the rest of the world? Europe is in deflation, Japan spent couple decades in deflation. Asia saw deflation in 2013 and is now facing deflation again.

Practical Solution

None of us can impact the government. Each of us, as individuals, or companies, can increase savings and reduce or re-structure debt. Restructure leases and contracts, whether on buildings, equipment, with vendors, cell phones, or internet services.

Quote of the Day-Aug. 25, 2015

” Readers are plentiful, thinkers are rare.”
 Harriett Martineau

Often cited as the first female sociologist, she was an English social theorist and Whig writer. 1801-1876.

Martineau wrote many books and a multitude of essays from a sociological, holistic, religious, domestic, and perhaps most controversially, feminine perspective. She earned enough to be supported entirely by her writing, a rare feat for a woman in the Victorian era. Princess Victoria (later queen) enjoyed reading Martineau’s publications.

Martineau said of her own approach to writing: “when one studies a society, one must focus on all its aspects, including key political, religious, and social institutions”. She believed a thorough societal analysis was necessary to understand women’s status under men. Martineau introduced feminist sociological perspectives into her writing on otherwise overlooked issues such as marriage, children, domestic and religious life, and race relations.-Wikipedia

Quote of the Day-Aug. 25, 2015

 “When prosperity comes, do not use all of it.”
Confucious

Chinese teacher, editor, politician, and philosopher from 551 BC – 479 BC. His philosophy emphasized personal and governmental morality, correctness of social relationships, justice and sincerity.  His thoughts developed into a system known as Confucianism. He is credited with an early version of the Golden Rule-Wikipedia

Capitalism and You

Recent Pew poll indicated only 52% of Americans have a favorable view of capitalism.

Yet, according to United Nations, poverty has declined more in last 50 years than in the previous 500 years. Adjusted for inflation, incomes have tripled in last 50 years.

Human beings, technology combined with capital markets create a problem solving machine that enables the decline in poverty.

Free market system has a severe branding problem.

John Mackey, founder and CEO of Whole Foods  has written excellent book, Conscious Capitalism.  He points out four values of business:

1. Business is good because it creates value.
2. Business is ethical because it is based on voluntary exchange.
3. Business is noble. It can elevate our existence as high as our talents will take us.
4. Business is heroic because it lifts people out of poverty and creates prosperity.

Capitalism is about meeting people’s wants and needs.

Each of us in business need to start branding capitalism positively by reinforcing the above points with our employees and with social contacts we meet.