meek-investor

All rise and applaud the magnificent Kim Yu-Na. Kim who ? You could be forgiven for asking that if you aren’t into winter sports. But if you have been following the Vancouver Winter Olympics, you cannot , but be mesmerized by the story of the wonderful Kim. Kim Yu-Na is arguably the most famous athlete in South Korea. All of 19 years old, she’s dubbed “Queen Yu-Na” and is a superstar in her country. She was the overwhelming favourite to win the women's figure skating event in the Olympics. A nation’s hopes was riding on her shoulders – South Korea had never won anything in the Winter Olympics apart from speedskating. They are having a great Olympics, winning well beyond their expectations, and their Queen was their brightest hope. But her long time rival Mao Asada of Japan was a formidable threat. And the emotions and the crowd were with Joannie Rochette, the Canadian, who lost her mother only a couple of days before. This is an event where America has traditionally dominated – n...

I was sorting through some of my father’s belonging recently and came across the 1941 souvenir edition of the Honolulu Star-Bulletin (Jan 8, 1941), “The March of Hawaii.” Its lead story was the reorganization and strengthening of the Pacific Fleet and the appointment of Admiral H.E. Kimmel to head it. My father acquired the paper while stationed in Hawaii with the Army Air Corps. Eleven months later the U.S. was at war, with Kimmel taking heat for having the bulk of his capital ships anchored in Pearl Harbor during the Japanese attack. I was reminded of the find this week while reading the news that Gannett has agreed to sell the Honolulu Advertiser to the Star-Bulletin . The two have a 130-year history of competition, somewhat muffled until they escaped their relatively difficult marriage in a joint operating agreement between 1960s and the millennium. Now the smaller paper is buying the bigger paper, if it can comply with or skirt antitrust provisions. We are now in the last throes...

If you have followed the Toyota story, the latest twist of Toyota’s Chairman, Akio Toyoda being called to “depose” before the United States Congressional Committee, shows that the US politicians just don’t get it. “Surely if Congress can be here, so can you," Congressman Darrell Issa of California said in an electronic letter to Toyoda. Separately, he said he would "fully support" subpoenaing Toyoda, which means compelling him to appear. Behave like this and then wonder why the US is disliked so much elsewhere !! To his credit, Toyoda-san chose to appear in person. He was subject to typical bullying and rudeness by pompous Congressmen, who were of course making political capital. Toyoda-san handled it with much grace and typical Japanese politeness. Grace and politeness are alien concepts to US Congressmen. While Toyota is facing huge recalls and much business trouble, the key is that they have done nothing breaking the law. The “outrage” by the US Congress is all abou...

How do you price services which are very exclusive and for which there is no possibility of a real market ? Is there some such thing as a “fair price” or is that concept an oxymoron ? Does public opinion on what constitutes “excessive” have any role to play ? Should pricing have any relation to cost at all ? Not easy questions to answer. Welcome to the world of investment banking. The case that triggers this post is a legal suit filed by JP Morgan on Consolidated Minerals (ignore who they are for the purpose of this issue), in an Australian court. The case relates to the acquisition of Consolidated Minerals, a mining company, by Palmary for A$ 1.3 bn. JP Morgan was Consolidated Minerals' advisor in the acquisition. But the new owner, Palmary has a dispute on what fees must be paid by them to JP Morgan. Palmary believes that JP Morgan’s fees should be A$ 7m. JP Morgan believes it should be A$ 50m. Hence the dispute. Its extremely rare for investment banking fees to be brought to co...

Hu nian kuai le; or as they say in Guangdong, Kung hei fat choi. It’s the end of the spring festival holiday in China. After a week of festivities, millions of people are wending their way back to work. Come Monday, and life will be back to the routine. The overwhelming feeling is akin to a schoolgirl having to go back to school after the summer vacation. It is rather a strange feeling being in Guangzhou during this period. It's my third spring festival in China and I still haven’t got over this strangeness. For Guangzhou is half empty at this period as everybody who’s from elsewhere in China goes back home for the new year celebrations. This period sees the largest human migration in the world. Some 200 million people leave their place of work and go home for the festival. As China is full of migrant labour who have come from for work, this number balloons every year. Imagine the challenge of transporting 200 million people in a week. And then a week later transporting them back. ...

One of the largest job creators in the world is, well, you. You don’t need to necessarily work for somebody else – you can work for yourself. Millions do. Entrepreneurship is truly a magic bullet to overcome unemployment. Entrepreneurship is a long and complicated word. It hints at some grandiose big startup ; it doesn’t need to be. The largest number of entrepreneurs run an organization of 1 – themselves. It’s the corner shopkeeper, the street trader, the plumber, the carpenter, the doctor, the taxi driver, who are truly the greatest of entrepreneurs. They don’t moan about unemployment. They don’t demand 6 weeks of holidays a year. They don’t demand travel privileges in first class. They just work hard and earn their own living. Entrepreneurship need not necessarily need huge capital. It doesn’t need breakthrough ideas. It doesn’t need a MBA. It however needs commitment, guts, hard work, luck and some breaks. I’ll tell you the story of an entrepreneur I know. He comes from Bihar, o...

Build and they’ll come. Economists hate this phrase. They won’t come; they say. Maybe not to the land of the politician who said "Drill baby, drill" and to whom the title of this post owes apologies to. But in most parts of the world, they will indeed come. Infrastructure development is surely the policy area where most countries have performed poorly in. In developing countries it is because of lack of prioritisation (wasteful subsidies are considered more important) and rampant corruption. In developed countries – it is the NIMBY problem – do it anywhere, but not in my backyard. Everywhere infrastructure has been allowed to dramatically deteriorate (witness America’s airports, Britain’s M25, California’s power cuts, …..) Two stellar exceptions – Britain in the colonies in the early twentieth century and China of today. That a robust infrastructure is fundamental for economic growth is well known. But I argue here for infrastructure building as a great way of creating jobs....

That’s the title of the book written by Jack Fingleton, for me the greatest cricket writer who ever lived. Its about the famous post war series, which was Don Bradman’s last series ever, when he led the 1948 Aussies, arguably the greatest test team of all. So a visit to the home of Don Bradman, is a form of pilgrimage to a cricket lover. I was in Adelaide last week and did something which I rarely do in business travel – took an evening off to go to the Adelaide Oval to see Australia play West Indies in a one dayer. The Adelaide Oval is one of prettiest cricket grounds in the world. Not the barbed wire coliseums that you see in India. Not even the huge gargantuan monument that is the MCG (Melbourne Cricket Ground for the cricket uninitiated). A small pretty ground where you can roll on the grass near the sight screen and watch a lazy day’s cricket. It was a day night match and I could only go after the end of one innings. But then summer evenings are long in Adelaide and it was more li...

Education is key to development – it would be hard to dispute this simplistic truism. But what education ? Primary ? Secondary ? Institutions of high learning ? What ? This post argues for vocational training being the single biggest priority. There is no doubt that universal primary education has to be a basic human right, and a basic human responsibility. But I would place vocational training a shade above even that. For vocational training ensures people have jobs. Ensures that they have a little more wealth. And when they have that they would themselves ensure that their children receive the best primary education they can find, and afford. Both China and India do a lot in the field of vocational training. Training people to be machine operators, welders, plumbers, carpenters, nurses, technicians – there are scores and scores of professions where , with a little training, people, who are otherwise unemployable, can find a job. These don’t need a very high basic education for it to ...

Every government in the world says one of its biggest priorities is to create jobs. And yet, very often, they do precisely the opposite. Governments, and policy makers, do not normally get it as to how to create jobs. A shining exception is China – no government in the world comes even remotely close to China when it comes to job creation. How should governments stimulate job creation. By helping in all of the areas covered in this series – by favouring the manufacturing industry, by not adding burdens on to labour cost, by not putting insurmountable barriers to labour flexibility, by creating the right skilled work force, by investing in infrastructure, etc etc. But governments can directly aid employment too. Here’s (again of doubtful practicality) some prescriptions. Firstly reduce incentives based on investment and increase incentives based on employment. Remove capital subsidies, investment subsidies, and shift to employment subsidies. Base tax holidays on employment, not investm...

Exactly a year ago a “young” man, I know, made his first blog post – not knowing where it will lead him to, but start, he did. He was, and is, an oddity – in a media which is inhabited by young people, for he is, let us say, skewing the age profile. Today he sheds the rookie tag and becomes a sophomore. But why blog ? Some do it because its the “in” thing to do. Some do because they have an opinion and want to express it. Some do because they love to write. Some do because they want to connect up with other people. A little of each of this was behind his attempt to write. But it was also for him, a way to read more – for to write, you have to read. How has a full year of blogging been, I asked ? A wonderful experience, he says. For he has met some incredible people, who he has never seen in real life , but have become close friends. If you had asked him sometime ago as to whether this was possible, he would have looked at you as if you are a little weird – why would you want to traw...

In China, when you are employed, you get a fixed term contract. Usually 2 years or 3 years. Even if you are a manager. Even if you are a very senior manager. There is no “endless” employment agreement. And this is ostensibly a communist state. It is not a complete coincidence that in the last 20 years, China has created jobs in the manufacturing sector for some 200 million people. This blogger might prattle on like an Ayn Rand and is unapolegetically a capitalist. Yet, in his heart, he is a bleeding socialist. Witness the almost pathological aversion to layoffs, as posted here , here and here . BUT …… One of the biggest myths behind unions and governments “protecting” jobs is that they protect jobs. They don’t. What they actually do is cosset the privileged few and make vulnerable the underprivileged many. The employer simply does not take on “permanent” workers and instead takes on temps, or contractors or part timers or whatever. These get no security of employment, they are often...

One of the most amazing consequences of the recession over the last two years is that, for the first time, employees are willing to accept pay cuts, or even zero pay for periods of time, in order to retain their jobs. Labour has realised (the unpleasant truth) that just like any other factor of production, there is an equilibrium price. Go above it and business will be killed. Its much better to have low pay than no pay. High pay and constant increases are not an automatic entitlement. This post is primarily for the developed economies where cost of labour is high. Because this has been accepted as a given, manufacturing has inexorably moved to the east, notably China. So the developed world has accepted, without challenge, that their costs will be high and therefore they can do nothing about jobs going away. Such a defeatist attitude is unbecoming of the great innovative cultures they are. Any cost, even labour cost, can , and should, be controlled to keep manufacturing jobs from goin...

Manufacturing sector is the key to creating jobs. Not agriculture. Not services. Agriculture employs a lot of people , especially in developing countries, but cannot create more jobs. Land is finite. Agricultural development will be primarily in improving productivity and output ; not in expansion of jobs. In this sector, policy must focus on efficiency; not on job creation. The services sector is sexy, but not a massive creator of jobs. For all the growth of the Indian IT industry, the number of direct jobs it has created is probably 1 million. Add the indirect employment and you probably can get 5 million. That is a drop in the ocean of the employment challenge in India. So from a policy perspective, this sector needs to be left free, facilitated to grow, and encouraged, but with limited policy intervention. The sector that can really boost jobs on scale is manufacturing. This is where policy initiatives must be most active. What sort of policy initiatives ? Some thoughts, equally ap...

The struggle to control prices of digital content sold online continues, with producers and distributors battling over prices for downloads of books and music. In the latest skirmish, Amazon removed Macmillan books from its website after the company protested that online retail was using monopoly power to force publishers to accept prices no higher than $9.99. Macmillan and other publishers have now signed distribution deals with Apple that allows them to price downloads at $12.99 and $14.99. Producers, of course, want higher prices because they produce higher revenue and better profits. The struggle to control prices is not unique to the online environment. In the offline world, producers of books, magazines, CDs, and DVDs have long struggled to gain limited shelf space because there is a large oversupply of products and retailers’ have selection preferences for popular, rapidly selling products. Large national and retailers have also used their bargaining power to push wholesale and...

Every nation is battling with this problem – how to create jobs for its people. Growth is all fine, but without jobs, there cannot be real progress. The problem with much of capitalism and economic development in the last decade has been that job creation has lagged behind growth. By definition, this leads to inequality, resentment and ultimately a backlash. The recession last year exacerbated the problem through significant job losses, especially in the developed world. The single most important economic challenge for nations is job creation. Being unemployed is one of the most demeaning of situations for any human being. A lot of the world’s ills can be attributed to joblessness. Create full employment and hunger will largely go away, terrorism will subside, lifespans will increase, the quality of life will transform and the world will be an altogether nicer place. But how ? A problem everybody has grappled with for a long time. Some thought socialism was the answer – only to be prov...