tag:blogger.com,1999:blog-65466424163469583102024-03-13T22:24:57.851-07:00The State of AffairsForeign affairs, politics, business and a slice of life. Written by Symfonie Capital CEO Michael SonenshineAnonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6546642416346958310.post-83103681976808155072016-11-16T11:16:00.000-08:002016-11-16T11:16:17.797-08:00The Importance of Being Electoral<br />
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<em><a href="https://3.bp.blogspot.com/-hTd_jrMD85U/WCyvOahi3WI/AAAAAAAAAxI/ENMzpMbN3KgkizGekul_Dg1MztHZUZlHQCLcB/s1600/Electoral_map_2012-2020.svg.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="246" src="https://3.bp.blogspot.com/-hTd_jrMD85U/WCyvOahi3WI/AAAAAAAAAxI/ENMzpMbN3KgkizGekul_Dg1MztHZUZlHQCLcB/s400/Electoral_map_2012-2020.svg.png" width="400" /></a></em></div>
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<em>What??? Hillary Clinton had a majority but still lost? It may seem unbelievable and unfair, but really....it's as fair as it's been for more than 200 years.</em><br />
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<h3>
A Visit to Electoral Land</h3>
<br />
For those of you who need a quick US civics lesson I'll give you the long story short. In the US Electoral system, voters don't choose the President and Vice President directly. Instead, they vote for Electors who gather in each state (the first Monday after the second Wednesday in December) to cast their ballots for President and Vice President.<br />
<br />
Each State is assigned a number of Electors equal to that State's number of Congressional representatives plus two, being the number of Senators. Presently there are 538 Electors nationwide. The number change every 10 years as the US Census measures the national population and demographic.<br />
In the early days of the US electors were not chosen by popular vote. In most states the Electors were chosen by the state legislatures. Clearly this meant there could a wide gap between who the people wanted for President who was actually.<br />
<br />
Over time this all changed and by 1870 all states had gone to a where the Electors are actually chosen by the people so that in practice, the Electors are really proxies for the people. What makes the Electoral college system unique is that instead of simply counting the nationwide totals, the state by state totals are counted. It's not enough for a candidate to win big in a handful of large states. Instead, a candidate must win across a wide spectrum of the electorate in several states.<br />
<h3>
Electoral Implications</h3>
<strong>A small swing in a handful of states seem to decide the elections. </strong>This may appear to be the case, but that's only when the elections are really really close. We've see the colors of the electoral map change dramatically in a short space of time. In 1964 the entire map was blue. In 1972 the entire map was red. Whenever an election is close, by definition a small percentage of the population decides the race.<br />
<br />
<strong>The system forces candidates to address people across the country.</strong> If polling were nationwide a candidate could theoretically sweep regions with large populations and win the nation-wide vote. This would basically leave rural America at risk of being ignored.<br />
<br />
<strong>The marginal balance shifts to smaller states.</strong> In a national wide system a candidate could win heavily in a few heavily populated states and in the process ignore voters in less populated states.<br />
<br />
<strong>Population and demographic changes are taken into account over time.</strong> Look at California, for example. For many years the state accounted for less than 5% of the Electoral College. Over the last few decades the population has increased sharply and now California is more than 10% of the Electoral College. Similarly, Texas and Florida have become more important in recent years. New York, on the other hand is less important than it used to be.<br />
<br />
<strong>Minority matters. </strong>The election we've just witnessed is a case in point. It rarely happens, but from time to time a candidate wins enough states to obtain a victory in the Electoral College. Democracy is not about 51 people getting their way all the time and 49 people always losing. If year after year 49 people lost while 51 won over time the 49 would lose faith in the system. They could become effectively disenfranchised and systematically abused. From time to time the minority needs a break! They need to get their turn at the helm for the good of the greater whole. Much as I don't like Donald Trump, maybe, just maybe, he'll really fight for the minority that elected him and America will really be better. Or maybe he'll turn out to be a disappointment and a disaster. If so, then so. At least the minority can't argue they didn't have a chance.<br />
<br />
<strong>States have rights. </strong>America is one nation, but one nation composed of 50 individual, sovereign states, each of whom can determine its own affairs. If the people of Maine want to divide their Electors proportionally instead of winner take all, that's their choice. If the people of Alaska want to legally bind their Electors to vote according the will the of the majority, that's there business and their right.<br />
<br />
<strong>The College Provides A Safety Valve. </strong>There are 21 states at the moment where Electors can break from the popular will. Almost never do Electors vote as anything other than a proxy for the results of the electorate. But maybe, there will be a day when we will thank ourselves that possibility of Electors overriding the electorate exists.<br />
<br />
At the end of the day, bizarre as it may seem, the Electoral College makes sense and serves America well. The Founders of America were deeply suspicious not only of central authority, but also of the madness of a crowd. The naive interpretation of democracy is majority rules. But majority rules can very easily mean majority dictates, majority is tyranny. Letting the minority win from time to time is maybe the price to pay for a stable democracy.<br />
<br />
The other thing the Founders were afraid of was the possibility an election could be somehow manipulated so that the Presidency was not won but stolen. In those days the system was particularly vulnerable to the possibility that one or a few states could spoil the process and produced lopsided results on a national level.<br />
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Today the problem still exists, but the root cause is different. Make no mistake here the possibility of national elections being hijacked is just as real if not more in the 21st century as it was in the 18th century. We live in an age where sound bytes matter far more than serious reflection. We live in an age where masses of people can be swayed by an increasingly powerful media able to propagate ideas and spin them virally in a few clicks.<br />
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The crowd has a life of its own and the crowd is far more connected to each other than ever before. One day the crowd will turn into a stampede. When this happens, it will be really comforting to know there exists the possibility for one last bastion of sanity, a few souls, a few Electors in a few states who are brave enough and courageous enough to put forward their conscience and change the balance before it is too late.<br />
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On the back of Donald Trump's election there have been calls for a change in the system. Those calls emanate from the frustration that democracy didn't deliver the result they wanted. When that happens they are naive enough to believe the problem was that the majority didn't win, so therefore democracy lost. I submit differently. I submit democracy won.<br />
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We may not all like the result. But rest assured, our system and the checks and balances we put on executive power mean the as a nation we are far strong than any one person in any one office, even if that office is the Oval Office.<br />
<br />
I'll be a conservative stick in the mud, habit driven toad and take my chance with the Electoral College.<br />
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<em>Michael Sonenshine is CEO of </em><a href="http://www.symfoniecapital.com/" target="_blank"><em>Symfonie Capital LLC</em></a><em>. He manages the </em><a href="http://www.symvest.com/lendingfund/" target="_blank"><em>Symfonie Lending Fund</em></a><em>, </em><a href="http://symvest.com/prereg/angel-fund/" target="_blank"><em>Symfonie Angel Ventures</em></a><em> and the </em><a href="http://www.symcredit.com/" target="_blank"><em>SymCredit P2P Lending</em></a><em> Platform.</em><br />
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<br />Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0tag:blogger.com,1999:blog-6546642416346958310.post-14232243545824553442016-11-15T21:10:00.001-08:002016-11-15T21:10:18.004-08:00Trump's First Appointment Stirs Controversy<a class="trigger trigger-likes-modal" href="https://www.linkedin.com/pulse/donald-trump-just-poured-bunch-goodwill-down-drain-michael-sonenshine?trk=pulse_spock-articles#"><span class="count count-likes"></span></a><div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-XJeonni_g8A/WCvlwmagfFI/AAAAAAAAAw4/o8AUOBJpFnI9uQn_1Rk2IzWiwIXyhrq3wCLcB/s1600/Bannon.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="265" src="https://4.bp.blogspot.com/-XJeonni_g8A/WCvlwmagfFI/AAAAAAAAAw4/o8AUOBJpFnI9uQn_1Rk2IzWiwIXyhrq3wCLcB/s400/Bannon.jpg" width="400" /></a></div>
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<em> Photo courtesy Kirk Irwin / Getty Images</em></div>
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<em>Donald Trump's appointment of Stephen Kevin ("Steve") Bannon as Chief Strategist and Senior Counsel has met widespread criticism. But it may also turn out to have been an incredibly savy and smart move. We shall see.</em><br />
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Donald Trump the candidate was at times deplorable, nasty and
vindictive. His tune changed completely last week and many people had
hoped that really the rhetoric was gone and Donald Trump had
reconciliation in store. He insisted he would be the president for all
the people, saying it was time to for America to bind its wounds.<br />
<br />
All the good will he may have earned over the last few days has
probably just gone out the window. His appointment of Steve Bannon
brings someone into the White House who is the darling of the
"alt-right", a loose collection of far right political groups. Mr.
Bannon has earned a reputation not only for his extremist views, but
also for brass knuckle, nasty politics, back stabbing, double dealing,
dirty tricks that stoke fear and mistrust in Washington. If the
President elect somehow feels he needs a person at his side who can
threaten political opposition through the use of right wing media
channels, he must feel awfully weak and vulnerable.<br />
<h3>
Delve into the detail. This can be an incredibly smart choice.</h3>
As worrisome as the appointment can be, it is possible this is a
politically smart, sophisticated and savvy choice. Steve Bannon
obviously has the tools at his finger tips to influence opinion among
the significant portion of the electorate that voted Mr. Trump into
office. Potentially in four years their support will be needed again.
Also in just 12 months time mid-term congressional elections will loom
on the horizon. The House of Representative and one-third of the Senate
run for election every two years.<br />
<br />
Yet if Donald Trump wants a successful presidency, and we must
believe he does, he must address political and economic realities that
may lead him to make very different decisions and adopt very different
policies than he promised on the campaign trail. In fact, he might
struggle to get much of his agenda through the current Congress and his
Supreme Court appointments may have to be more moderate than his
supporters would prefer.<br />
<br />
Reality might be that Donald Trump needs Steve Bannon not to defend
from the left, but to defend from the right. Steve Bannon built a
career on his ability to sell ideas to the far right. The counterpart to
Steve Bannon on the left is David Brock, founder of <a href="http://www.mediamatters.org/" rel="nofollow noopener" target="_blank">Media Matters for America</a>. According to political columnist <a href="http://en.wikipedia.org/wiki/Joshua_Green_%28journalist%29" rel="nofollow noopener" target="_blank">Joshua Green</a>, Brock’s attitude toward Bannon "isn’t enmity toward an ideological opponent, <a href="http://www.bloomberg.com/politics/graphics/2015-steve-bannon/" rel="nofollow noopener" target="_blank">as I'd expected,</a> but rather a curiosity and professional respect for the tradecraft Bannon demonstrated in advancing the <em>Clinton Cash</em> narrative."<br />
<h3>
Who is Steve Bannon?</h3>
Since 2012 Mr. Bannon was the Executive Chairman of conservative news and media website <a href="http://www.breitbart.com/" rel="nofollow noopener" target="_blank">Breitbart.com. </a> He was named to that job following the sudden death of Breitbart's founder <a href="http://en.wikipedia.org/wiki/Andrew_Breitbart" rel="nofollow noopener" target="_blank">Andrew Breitbart.</a><br />
<br />
Mr. Breitbart was an American journalist who was among a generation
of writers developing internet based news media websites including <a href="http://en.wikipedia.org/wiki/The_Huffington_Post" rel="nofollow noopener" target="_blank"><em>The Huffington Post</em></a> and <a href="http://www.drudgereport.com/" rel="nofollow noopener" target="_blank"><em>The Drudge Report. </em></a>
Journalists such as Nick Gillespie and Conor Friedersdorf have credited
Breitbart with bringing new voices to debates about politics and
culture. Breitbart developed itself as a conservative, sometimes
right-wing counterpoint to the mainstream media.<br />
<br />
<strong>In October of 2015 political columnist Joshua Green posted a commentary on </strong><a href="http://www.bloomberg.com/politics/graphics/2015-steve-bannon/" rel="nofollow noopener" target="_blank"><strong>Bloomberg Businessweek</strong></a><strong> calling Stephen Bannon one of the most dangerous political operatives in America.</strong> The article focused on Mr. Bannon's stewardship of Breitbart, Mr. Bannon's work as founder of the non-profit <a href="http://en.wikipedia.org/wiki/Government_Accountability_Institute" rel="nofollow noopener" target="_blank">Government Accountability Institute (GAI)</a>, and the tactics Mr. Bannon uses to discredit his political opponents both on the left and on the right.<br />
<br />
Ben Shapiro, who left Brietbart in March 2016 after nearly four
years as editor-at-large of Breitbart.com, wrote recently in the <a href="http://www.dailywire.com/news/8441/i-know-trumps-new-campaign-chairman-steve-bannon-ben-shapiro" rel="nofollow noopener" target="_blank">Daily Wire</a>
"Bannon....turned Breitbart into his personal domain, making himself a
regularly bylined columnist (certainly rare for a major media company)
and installing himself as a radio host on Breitbart Radio on Sirius
XM....he used his role as Breitbart CEO to turn the outlet into Trump
Pravda, creating a stepping stone to close connection with Trump."<br />
<br />
According to Politico.com writer Hada Gold as CEO of Breitbart,
Bannon regularly ordered subordinates to write stories that supported
his allies and tore down adversaries.<br />
<br />
In various news media accounts former employees accused Breitbart executive chairman <a href="http://en.wikipedia.org/wiki/Stephen_Bannon" rel="nofollow noopener" target="_blank">Stephen Bannon</a> of having "turned a website founded on anti-authoritarian grounds into a de facto propaganda outlet for Mr. Trump."<br />
<h2>
Here are 8 things you should know about Steve Bannon:</h2>
<h4>
1. He graduated from <a href="http://en.wikipedia.org/wiki/Virginia_Tech" rel="nofollow noopener" target="_blank">Virginia Tech</a> in 1976 and holds a <a href="http://en.wikipedia.org/wiki/Master%27s_degree" rel="nofollow noopener" target="_blank">master's degree</a> in National Security Studies from <a href="http://en.wikipedia.org/wiki/Georgetown_University" rel="nofollow noopener" target="_blank">Georgetown University</a>.</h4>
<h4>
2. He was an officer in the <a href="http://en.wikipedia.org/wiki/United_States_Navy" rel="nofollow noopener" target="_blank">United States Navy</a>, serving on the <a href="http://en.wikipedia.org/wiki/USS_Paul_F._Foster_%28DD-964%29" rel="nofollow noopener" target="_blank">USS <em>Paul F. Foster</em> (DD-964)</a> as a <a href="http://en.wikipedia.org/wiki/Surface_warfare" rel="nofollow noopener" target="_blank">Surface Warfare Officer</a> in the <a href="http://en.wikipedia.org/wiki/United_States_Pacific_Fleet" rel="nofollow noopener" target="_blank">Pacific Fleet</a>.</h4>
<h4>
3. He holds an MBA from Harvard Univeristy, having graduated withhonors (<em>cum laude).</em></h4>
<h4>
4. He built a career as an investment banker with Goldman Sachs
and then founded his own boutique M&A firm, Bannon & Co, which
specialised in the media and entertainment industry. </h4>
Through Bannon & Co., Mr. Bannon negotiated the sale of <a href="http://en.wikipedia.org/wiki/Castle_Rock_Entertainment" rel="nofollow noopener" target="_blank">Castle Rock Entertainment</a> to <a href="http://en.wikipedia.org/wiki/Ted_Turner" rel="nofollow noopener" target="_blank">Ted Turner</a>. As payment, Bannon & Co. accepted a stake in five television shows, including <a href="http://en.wikipedia.org/wiki/Seinfeld" rel="nofollow noopener" target="_blank"><em>Seinfeld</em></a>. <a href="http://en.wikipedia.org/wiki/Soci%C3%A9t%C3%A9_G%C3%A9n%C3%A9rale" rel="nofollow noopener" target="_blank">Société Générale</a> purchased Bannon & Co. in 1998.<br />
<h4>
5. He was an executive producer in Hollywood.</h4>
He has executive produced several feature films and worked with
notable with actors such as Sean Penn, Anthony Hopkins, Val Kilmer and
Ed Harris. He's also written, produced and directed several political
documentaries. Notable among them are <a href="http://en.wikipedia.org/wiki/Fire_from_the_Heartland:_The_Awakening_of_the_Conservative_Woman" rel="nofollow noopener" target="_blank"><em>Fire from the Heartland: The Awakening of the Conservative Woman</em></a><em>, </em><a href="http://en.wikipedia.org/wiki/The_Undefeated_%282011_film%29" rel="nofollow noopener" target="_blank"><em>The Undefeated</em></a><em> (</em>account of the career of Sarah Pallin), <a href="http://www.thehopeandthechange.com/" rel="nofollow noopener" target="_blank"><em>The Hope & the Change</em></a>(about Democrats and Independents from across America who supported Obama in 2008 and were ultimately disappointed).<br />
<h4>
6. He was Chairman and CEO of right-wing conservative web-site Breitbart.com </h4>
Under Mr. Bannon's leadership Breitbart.com flourished and
developed following among far-right conservative groups, also known as
the "alt-right." Content and commentary were posted on the site that
drew criticism as being white-supremecist, anti-semitic, and bigoted.<br />
<br />
According to <a href="http://www.dailywire.com/news/8441/i-know-trumps-new-campaign-chairman-steve-bannon-ben-shapiro" rel="nofollow noopener" target="_blank">Ben Shapiro</a>,
former editor-at-large of Breitbart.com "I quit Breitbart News when it
became clear to me that they had decided that loyalty to Donald Trump
outweighed loyalty to their own employees....he has shaped the company
into Trump’s personal Pravda…Bannon turned Breitbart into his personal
domain, making himself a regularly bylined columnist (certainly rare for
a major media company) and installing himself as a radio host on
Breitbart Radio on Sirius XM. Finally, he used his role as Breitbart CEO
to turn the outlet into Trump Pravda, creating a stepping stone to
close connection with Trump. " <br />
<h4>
7. He is the co-founder and executive chairman of the <a href="http://en.wikipedia.org/wiki/Government_Accountability_Institute" rel="nofollow noopener" target="_blank">Government Accountability Institute (GAI)</a></h4>
GAI is a non-profit organisation that specialises in deep forensic
analysis and inveIstigative journalism of public figures. According to
GAI findings have been used in books written and sold commercially by
GAI executives a network of media partners.<br />
<br />
Writing about GAI for <a href="http://www.bloomberg.com/politics/graphics/2015-steve-bannon/" rel="nofollow noopener" target="_blank">Bloomberg Businessweek</a>
Joshua Green says GAI "is set up more like a Hollywood movie studio
than a think tank. The creative mind through which all its research
flows and is disseminated belongs to a beaming young Floridian named
Wynton Hall, a celebrity ghostwriter who’s penned 18 books, six of them <em>New York Times</em> best-sellers, including Trump’s <em>Time to Get Tough</em>.
Hall’s job is to transform dry think-tank research into vivid,
viral-ready political dramas that can be unleashed on a set schedule,
like summer blockbusters. “We work very long and hard to build a
narrative, storyboarding it out months in advance,” he says. “I’m big on
this: We’re not going public until we have something so tantalizing
that any editor at a serious publication would be an idiot to pass it up
and give a competitor the scoop. ”<br />
<br />
It's worth noting that Mr. Bannon is open
about the purpose of GAI and its commercial uses. GAI is not so
concerned about finding scandal or highlighting political hypocracy in
any particular corner. Rather, it is concerned about providing the
factual and investigate basis for journalists, and then finding the best
(i.e. most profitable) way to put that story out to the public. <br />
<h4>
8. He targeted the political demise of House Speaker Paul Ryan and other Republicans</h4>
<h4>
</h4>
According the political news website <a href="http://thehill.com/blogs/ballot-box/presidential-races/300445-exclusive-trump-campaign-ceo-wanted-to-destroy-ryan" rel="nofollow noopener" target="_blank">TheHill.com</a>
in December 2015, weeks after Ryan became Speaker, Bannon wrote in an
internal Breitbart email obtained by The Hill that the “long game” for
his news site was for Ryan to be “gone” by the spring.<br />
<br />
The curious thing about this is that in the same breath that
President elect Trump announced Mr. Bannon's appointment, he appointed
Reince Priebus to the Chief of Staff position. Mr. Priebus is the Chair
of the Republican National Committee. Importantly, he is the former
chairman of the <a href="http://en.wikipedia.org/wiki/Republican_Party_of_Wisconsin" rel="nofollow noopener" target="_blank">Republican Party of Wisconsin</a>, where he is credited with helping to bring nationally known figures such as <a href="http://en.wikipedia.org/wiki/Paul_Ryan" rel="nofollow noopener" target="_blank">Paul Ryan</a>, <a href="http://en.wikipedia.org/wiki/Speaker_of_the_United_States_House_of_Representatives" rel="nofollow noopener" target="_blank">Speaker of the House</a>, and <a href="http://en.wikipedia.org/wiki/Scott_Walker_%28politician%29" rel="nofollow noopener" target="_blank">Scott Walker</a>, <a href="http://en.wikipedia.org/wiki/Governor_of_Wisconsin" rel="nofollow noopener" target="_blank">Governor of Wisconsin</a>, into power on the state level and prominence on the national stage.<br />
<br />
So in the same breath Mr. Trump brought one of Paul Ryan's
political opponents, he brought in one of Mr. Ryan's long time political
allies.<br />
<br />
We can expect one of two outcomes - either a political fight will
get shelved and people will professionally focus on serious issues of
government or the White House will be an place filled with mistrust
animosity, and Machiavellian style politics. <br />
<h3>
The Bottom Line on Bannon</h3>
Steve Bannon is a controversial figure who caters to right wing
groups that espouse racist, sexist views that many Americans find
offensive and appalling. He's also been highly critical of the
Republican party as well as the main stream media in general.<br />
<br />
Critics also say the appointment of Mr. Bannon flies in the face of
Mr. Trump's recent statements that he wants to heal the divide in
America. They say that Mr. Bannon reflects the politcs of hatred that
fueled Mr. Trump's campaign.<br />
<br />
The even more sinister view is that Mr. Bannon will bring
Nixon-style dirty trick's tactics back into the White House amounted to
an abuse of presidential power. We shouldn't forget that Mr. Bannon is
as much a business man as he is a political opinion maker. It's hard to
imagine Mr. Bannon is not likely to find plenty of ways to use his new
posting to his advantage, politically and economically.<br />
<br />
On the other hand, there's something we can find reassuring in the
appointment of Mr. Bannon. Mr. Trump can credit Steve Bannon in part for
helping him win the election. Isn't it better to have the guy Mr. Trump
is indebted to in plain view rather than lurking in some dark alley?<br />
<br />
Having Mr. Bannon in the White House actually makes him less of a
threat because he will clearly be under scrutiny and can be more easily
publicly confronted.<br />
<br />
It also possible that Steve Bannon's job is not to threaten
President Trump's opponents either on the left or with the Republican
party, but instead to sell President Trump's policies to the group of
supporters most likely to be disappointed.<br />
<br />
The appointment of Mr. Bannon highlights one of the beauties of an
open society where there is freedom of speech and freedom the press. The
alternative to free speech and free press is to drive opposing and
hateful views underground and behind closed doors where they can fester
and where they can haunt us where and when we least expect. I'd much
rather know who my opponents are so I can confront them and defend
myself than live in fear about what hides in places I can't see.<br />
<br />
Breitbart senior editor and political author <a href="http://en.wikipedia.org/wiki/Peter_Schweizer" rel="nofollow noopener" target="_blank">Peter Schweizer</a> points out that political corruption and cronyism exists throughout the political spectrum. In 2016 he authored <em>Clinton Cash: </em><a href="https://www.blogger.com/null" rel="nofollow noopener" target="_blank"><em>T</em></a><a href="https://www.blogger.com/null" rel="nofollow noopener" target="_blank"><em>he Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich</em></a>,. Just a few months earlier in the fall of 2015 he authored an e-book <a href="http://www.bloomberg.com/politics/articles/2015-10-20/new-peter-schweizer-e-book-questions-jeb-bush-s-earnings" rel="nofollow noopener" target="_blank"><em>Bush Bucks: How Public Service and Corporation Helped Make Jeb Rich</em></a>.<br />
<br />
“To me, Washington, D.C., is a little bit like professional
wrestling,” he told Joshua Green. “When I was growing up in Seattle, I’d turn on
Channel 13, the public-access station, and watch wrestling. At first I
thought, ‘Man, these guys hate each other because they’re beating the
crap out of each other.’ But I eventually realized they’re actually
business partners.”<br />
<br />
My father, may he rest in peace, always told me "the truth lies
somewhere in the middle." One terrorist is another man's freedom
fighter. What worries me most about Steve Bannon is that the White House
of 2017 will begin to look like the White House of 1972 and that
Capital Hill will see visit the days of the McCarthy hearings or that we
are likely to see a repeat of the Clarence Thomas / Anita Hill saga
brought little and cost much.<br />
<br />
What gives me hope is the notion that Steve Bannon will find the
language and tools to generate support for a President Trump who finds
support on both sides of the aisle and negotiates compromises that take
America forward.<br />
<br />
For me the issue not that Hillary would have been better, but that
even if his intentions are good, Donald Trump's White House will come to
represent the worst of America. In these difficult days we can't afford
politcal theatre and a media circus organised by people who profit not
matter what the outcome. Sadly, I struggle to see anything redeeming or
decent in this appointment.<br />
<br />
<em>Michael Sonenshine is CEO of </em><a href="http://www.symfoniecapital.com/" rel="nofollow noopener" target="_blank"><em>Symfonie Capital.com</em></a>.</div>
</article>Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0tag:blogger.com,1999:blog-6546642416346958310.post-53859353689963391072016-11-12T12:26:00.000-08:002016-11-12T13:02:40.993-08:005 Take-Aways from Trump's Election<div class="separator" style="clear: both; text-align: center;">
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<br />
Like many political observers I was surprised by Donald Trump's
victory. I didn't expect him to win the Republican primary to begin
with. So in the coming weeks I'll be buying the first beer for a few of
my friends who rated the Donald's prospects of winning higher than I
did.<br />
<br />
Not only was I wrong about Mr. Trump's victory, I was also wrong
about the outcome of the Brexit referendum this past June. Being wrong
twice on such big event leaves me wondering what I've misunderstood or
underestimated.<br />
<br />
As a credit analyst and investment manager I also have to wonder
how this event will impact the global economy in the months and years
ahead.<br />
<br />
For the record, I didn't vote for the Donald. I voted for the
Hillary. Growing up in New York I followed his career and grew to
dislike his business style, how successful his business was.<br />
<br />
I detested his campaign rhetoric. The words that come to mind are
vulgar, sexist, racist and arrogant. Personality aside, I also believe
he doesn't have the skill set I want in a President.<br />
<br />
Having said this, I believe he is intelligent and practical. What
he lacks in experience he can compensate for in his selection of staff
and cabinet. He leans toward economic liberalism and less government
intervention and regulation.<br />
<br />
My guess is that his policies and his cabinet will reflect these
general principles. If this happens America's economy will continue to
improve and the lives of many Americans will be better.<br />
<br />
I am optimistic he will bring smart, capable policy advisors and
cabinet members into the administration, manage them well, listen with
respect to Senate and House members on both sides of the aisle, he
stands a good chance to take the country in a good direction.<br />
<br />
Hopefully he will conduct himself differently, better, as a
president than as real estate developer and as a political candidate.
I'd love to see him succeed as a president and do great things for
America.<br />
<br />
My fear is that we'll have an embarrassment in the White House who
represents the worst things America can be rather than the best and
makes decisions that turn America into a country filled with hate,
violence, racism, sexism and everything else I heard come out of his
mouth on the campaign trail.<br />
<br />
I'll be happy to settle for a neutral, boring, neither good nor
bad, President Trump whose presidency goes down in history as
unremarkable.<br />
<br />
I've come to the view that neither of the victory of Brexit or the
election of Trump reflects some fundamental paradigm shift in the way
our world will function in the months and years ahead.<br />
<br />
This is not to
say we should ignore them. Rather, we should put them in perspective for
what they are - clear signs that a rising proportion of the electorate
rightly or wrongly fees disenfranchised, unheard, frightened and
distrustful.<br />
<br />
The victories of Donald Trump in the US and the Brexit campaign in
the UK reflect the ability of politicians to tap into that sentiment and
amplify its voice. In an open, democratic society these sort of
victories are healthy. They encourage debate and they force policy
makers to listen more closely to the needs of the population.<br />
<br />
With this in mind, I highly 5 take-aways we can draw from Donald Trump's victory.<br />
<h3>
Take-Away Number 1 - Spending More Doesn't Win Elections</h3>
Recent campaign filings show spending on Hillary Clinton's campaign
was nearly US$700 mn, nearly 2.5 times the $250 mn. Donald Trump spent.
Consider the failed campaigns of Donald Trump's Republic rivals. Jeb
Bush's campaign spending was nearly $150 mn and he was one of the first
to drop off the campaign trail. Other big spenders were Florida senator
Marco Rubio ($150 mn) Ted Cruz ($130 mn) and Dr. Ben Carson ($80 mn).<br />
<br />
Candidates can plaster the walls with posters and flood the
airwaves with commercials incessantly but the law of diminishing returns
is immutable. Preaching to the converted offers little value. People
grow tired of hearing the message and start tuning it out.<br />
<h3>
Take-Away Number 2 - There's a Big Gulf Between Rhetoric and Reality</h3>
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Politicians compete not only by selling their view to the
electorate, but also by saying things the electorate wants to hear.
Campaigns are political theatre. After the election is over the winners
face the very real task of governing and confronting realities.<br />
<br />
During the campaign many politicians cast Donald Trump as a
villain. He faced harsh criticism from within his own party and at times
the exchanges became vituperative and personnel. It was a disgusting
and vulgar chapter in America's political history.<br />
<br />
Now we face a new world. The election is over. The Republicans who
control the House and Senate have a legislative agenda. Whatever
legislation they propose must be acceptable to the President and vice
versa.<br />
<br />
The Republicans have a majority of just 1 in the Senate. Whatever
Mr. Trump said about Washington on the campaign trail, he will have to
work with his fellow politicians, be they Republican or Democrat or his
presidency will be weak and ineffective and he'll spend much of the next
four years convincing the electorate to send different politicians to
Washington.<br />
<h3>
Take-Away 3 - Trade Policy With a Big Stick</h3>
Trade and foreign policy are the areas where a president's
influence and powers are greatest. Mr. Trump has been an outspoken
critic of NAFTA and similar free trade agreements. He sees such deals as
an attack on US jobs and one of the reasons for the decline of
manufacturing in the US.<br />
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When President Trump sits down to seriously study the history of
free trade agreements he will see that the North American Free Trade
Agreement (NAFTA), signed by President Clinton was negotiated
principally by the elder President George H.W. Bush and that when the
deal passed in Congress it enjoyed wide spread bi-partisan support.
Historically the Republican party has been the advocate of free trade.<br />
<br />
He'll also find that since the passage of NAFTA nearly 25 years ago
the US has entered into 20 other free trade agreements under the
administrations of the younger President George W. Bush and the outgoing
President Obama.<br />
<br />
He'll be pleased to know that the <a href="http://ustr.gov/" rel="nofollow noopener" target="_blank">Office of the Trade Representative </a>has
evolved over the years to the point where it works on trade issues in
as cooperation with 19 other Federal Agencies. It has offices around the
world with a staff of 200 and 28 advisory committees taking input from
more than 700 private sector citizens. Depending on how you look at it
OTR either provides the real serious infrastructure needed to implement
and administer trade agreements or it is a beehive of lobbyists and
special interest groups.<br />
<br />
Most importantly, when President Trump sits down to think about
America's trading policies he'll quickly realise that trade policy has
winners and losers on both sides of the fence and in both camps. It's
easy to point a finger and look at how many jobs left the US. But that's
only part of the story.<br />
<br />
Another part of the story is that many of those jobs might have
left the US in any case, free trade agreement or not. Also, many of the
goods that Americans purchase cost less than they would otherwise in the
absence of a trade agreement. Finally, no discussion about the merits
of trade agreements is complete without looking at the jobs that are
created, the services that are exported and the earnings of the people
that fill those jobs.<br />
Conventional wisdom is that NAFTA's days are now numbered and that
the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and
Investment Partnership (TTIP) will not go forward.<br />
<br />
Nothing can further from the truth! More likely what will happen is
that Mr. Trump will quickly come to understand who in America loses and
who in America wins from each trade agreement. He'll look at how many
jobs can be created, how many jobs are likely to be lost. He'll look at
which industries are likely to suffer and which industries are likely to
prosper. He'll look at which goods and services are likely to be more
expensive and which are likely to be less expensive. He'll also
understand that he will have to work with those winners and losers in
the years to ahead and he'll calculate the impact all around including
that cost or gain to his presidency.<br />
<br />
He'll have some long, tough negotiations with his trade
counterparts, which probably is a good thing. There will be political
theatre and strong statements from abroad as well as from the
President's domestic critics.<br />
Behind the scenes there will be negotiating, more winners and
losers. One of Donald Trumps greatest strengths is that he well
understands negotiating processes, he understand how to posture and how
to present the positions.<br />
<br />
In the end, he'll probably win some concessions, not as many as
he'd like, but some anyhow. Until we get closer to the reality how much
the net gains will be and who in America will win and who will lose is
difficult to say. In the end we may have the status quo.<br />
<br />
The Donald we saw on the campaign trail painted with an incredibly
broad brush. All those jobs left America for reasons for more complex
and far more varied than NAFTA. Many of those jobs would have left with
or without a trade deal. Even if they had stayed, the cost might have
higher prices for those goods - transfers of wealth from consumers to
businesses. Or the factories that stayed might not have been able to
compete at all without tax breaks and government support - transfers of
wealth from the public purse to to private business - the sort of stuff
Republicans except when they are on the receiving end.<br />
<br />
The key take-away from the election of Donald Trump is that we are
likely to see more criticism of the raft of trade agreements, followed
by tough, but firm negotiations aimed at actually getting to a deal
Donald Trump can present as a winning deal.<br />
<br />
NAFTA, TTIP, TPP and the others should not be presumed dead.
Rather, they should be more appropriately thought of as patients waiting
to see the doctor and opportunities for President Trump to succeed.
Interestingly TTIP comes with a potentially interesting kettle of fish.
The EU will want to find a way to get to yes on TTIP at the same time as
the UK, on the verge of exiting the EU, potentially, will want to
develop a trading agreement.<br />
<br />
<h3>
Take-Away 4 - Wave Goodbye to ObamaCare? Not so fast!</h3>
President Trump has promised to "repeal and replace" the Affordable
Care Act (ACA), also known as ObamaCare. This act was passed at a time
when the Democrats controlled the house and Senate and could pass the
act without any Republican support. Since that day, whatever the merits
and the good intentions of the act are, it has become a source of
contention between both parties and a symbol of the divisiveness and
lack of bipartisan initiative in America.<br />
<br />
Here we are back to the rhetoric versus the reality. Donald Trump's
rhetoric was to repeal and replace. Reality is that repeal without
something at the ready to replace could create much bigger problems. A
more likely outcome is that either the existing act will be amended or
the repeal and then the replacement will happen practically the same
day.<br />
<br />
Millions of Americans now have healthcare access as a result of the
Affordable Care Act (ACA). Repeal without replacement for sure imposes
cost on those millions of now insured people, many of may be among his
supporters. Repeal without replacement also means all the rest of the
insureds will bear cost in terms of higher premiums. Repeal without
replacement will force hospitals and insurance companies to bear the
cost of treating the uninsureds. Repeal without replacement will be a
mess!<br />
<br />
What I hope is that Congress will change its ugly ways, find a
bi-partisan solution to fix the ills of the ACA and make things better
in America all around. Whether that is done an amendment or repeal and
replace is irrelevant and unimportant.<br />
<br />
America spends 17% of GDP on healthcare, nearly 2X what many other
countries around the world spend. I don't know whether we should blame
doctors, hospitals, insurance companies, pharmaceutical companies,
lawyers, regulators or the fact that so many Americans are uninsured or
underinsured. It's a collective and complex problem. Fixing the problem
means there will be winners and losers, all whom have strong lobbying
ability and influence in Washington.<br />
<br />
Frankly speaking, I'm not a healthcare expert. What I can say with
certainty is that my wife and I are insured in the Czech Republic. I've
seen the kind of care we and our friends and my employees get in the
Czech Republic and elsewhere in Europe. I've seen the value we get for
our healthcare spend and I can honestly say I'd much rather get sick in
Prague than in New York.<br />
<br />
Even our dog gets state of the art medical care for a fraction of what it would cost in the United States!<br />
<h3>
Take-Away 5 - Nothing Really Changed on the American Political Landscape</h3>
Donald Trump's victory defied conventional wisdom. He ran as an
outsider within the Republican Party and spent far less than his rivals.
He is socially quite liberal compared to his rivals. His rhetoric was
highly offensive to any reasonable person. And yet, the electorate
clearly forgave him for all of that.<br />
<br />
During the campaign he laid claim to having begun a political
movement. It's hard to argue he really has changed anything in America.
He rightly recognised that his best chance at getting elected was to
present himself as an agent of change, a person who would challenge the
status quo and restore something that seems have been lost in amid the
complexities of a changing society. That message resounded loudly on the
electorate.<br />
<br />
It's important to realise the America of today is much different
than the America we saw several decades ago. The population is
increasingly rapidly. It's estimated that over the next 30 years
population will grow by nearly 40% from present levels. Population
growth is fastest in the cities and there is a consistent migration to
the south and south west. Many towns twenty years ago were quiet
villages where everyone knew each other. America today is far more
culturally and ethnically diverse than it has been in the past and this
trend looks set to continue.<br />
<br />
Sheila Suess Kennedy, J.D., Professor of Law and Public Policy in
the School of Public and Environmental Affairs at Indiana University
Purdue University at Indianapolis, wrote eloquently about this issue in a
post on <i>inequality.org</i>. She pointed to American inequality,
the diminishing numbers of people who can be categorized as middle
class, and the widening gap between wealthy Americans and everyone else
and said that progressives (She blogs at www.sheilakennedy.net)<br />
<br />
America is still the world's largest manufacturer, with output
exceed that of China and India combined. Still, at least one in every
six manufacturing jobs has left the country since 2000. Because
population tends to concentrate around manufacturing facilities, this
change has scarred many communities. Retraining is far easier said than
done. The landscape of rural America is filled with people that have
been left behind in world that changed around them.<br />
<br />
The collapse of the financial sector in the wake of the sub-prime
mortgage crises exacerbated the problems. Drive through many cities and
towns in America and you'll see homes boarded up that were repossessed.
You'll see urban decay. You'll see gang violence. You'll see a
communities and police that don't trust each other. Add to this mix
terrorism, and a global refugee crisis.<br />
<br />
It's therefore no wonder a large portion of the electorate sits up
and takes notice when a Donald Trump comes to town, speak to them in
terms they understand, points to their fears and insecurities and offers
them a solution. They feel Washington has abandoned them and they are
probably not far from the truth. Getting things done in Washington for
the good of the country is a tall order when Congress votes along party
lines and it seems nothing gets done at all.<br />
<br />
Irrespective of whether or not Donald Trump really can deliver,
nearly half the electorate is ready to listen and desperate enough to
give him the chance.<br />
<br />
Looking at the electoral maps and the election results over the
last few decades, there is little evidence than anything really changed
in the American political landscape at least since 2000, other than the arrival of savy
marketer adept at making his case in the media. Bill Clinton and Ronald Reagan changed the political map far more than many of their predecessors and certainly more than their successors. Note the following:<br />
<ul>
<li>Donald Trump didn't have a majority of the popular vote. In fact, Hillary Clinton polled 48.5% to Donald Trump's 47.9%. </li>
</ul>
<ul>
<li>Nearly all the states that voted Democratic in the last several elections voted strongly for Hillary Clinton. </li>
</ul>
<ul>
<li>Donald Trump's victory came from very thin victories in 3 states he managed to swing - Michigan, Wisconsin and Pennsylvania. </li>
</ul>
<ul>
<li>It's arguable that Donald Trump's victory can be attributed to a
strategic failure on the part of the Clinton camp. While Trump was
wrapping up his campaign in Michigan, Wisconsin and Pennsylvania Hillary
Clinton was holding rallies in Florida and North Carolina, both states
that have large Republican populations and where she lost by wide
margins.</li>
</ul>
<ul>
<li>Barrack Obama won with significantly strong majorities in both of
his campaigns. The electoral map was similar to what it was this year,
except that Mr. Obama captured Florida, Michigan and Wisconsin,
Pennsylvania and Iowa. </li>
</ul>
<ul>
<li>George Bush defeated Al Gore in 2000. Like Donald Trump, Mr. Bush
lost the popular vote by a slim margin. Unlike Mr. Trump George Bush
won in Colorado and New Hampshire and lost in Michigan, Wisconsin and
Pennsylvania.</li>
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<b>2016 - Trump vs. Clinton</b> </div>
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<b>2012 - Obama vs. Romney</b> </div>
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<b>2008 - Obama vs. McCain</b></div>
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<b>2000 - Bush vs. Gore</b></div>
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<b>1992 - Clinton vs. Bush</b></div>
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<i>(Clinton won states that no Democrat had won since Carter was elected in 1976)</i><b> </b></div>
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<span id="goog_1439733575"></span><span id="goog_1439733576"></span><br /></div>
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<b>1984 - Ronald Reagan vs. Walter Mondale</b></div>
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<b> </b> </div>
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<b>1976 - Carter vs. Ford</b></div>
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<h2>
Big Strategy Lesson!!!!!</h2>
<ul>
<li>Fight the battles you are likely to win rather than those you are
likely to lose. If Hillary had focused on Michigan and Pennsylvania she
might have been headed to the White House.</li>
</ul>
<br />
<ul>
<li>While you are off trying to capture new ground, you may find your opponent has breached your defenses and cost you the war.</li>
</ul>
A week before the election an article ran in the <a href="http://www.theatlantic.com/politics/archive/2016/11/trump-clinton-electoral-college/506306/" rel="nofollow noopener" target="_blank">Atlantic Magazine</a>
addressing this very issue. Hillary Clinton's spending was highest in
Ohio, North Carolina and Florida. These were states she either wanted to
win or believed she could win. She couldn't have been more wrong!
Donald Trump won those state with thin, but comfortable margins.<br />
<br />
Her spending was lowest and her campaign stops fewest in the states
she really needed to win - in particular, Wisconsin, Michigan,
Pennsylvania. These three states gave Donald Trump 46 electoral votes
and the presidency. Yet his margins in these states were in all cases
less than 1%.<br />
<br />
In a genuinely insightful and well written piece, <a href="http://www.theatlantic.com/politics/archive/2016/11/trump-clinton-electoral-college/506306/" rel="nofollow noopener" target="_blank"><i>Is Trump Outflanking Hillary Clinton</i></a>, <a href="http://www.theatlantic.com/author/ronald-brownstein/" rel="nofollow noopener" target="_blank">Ronald Brownstein</a>
pointed out the Hillary Clinton was spending time in states that were
Republican leaning rather than in states that were traditionally
Democratic but could be lost if Donald Trump managed to appeal to
marginalised voters who believed the Democratic nominee was out of touch
with them.<br />
<br />
I'm not a political strategist by training. I'm a credit analyst and an investment manager. At the <a href="http://www.simon.rochester.edu/" rel="nofollow noopener" target="_blank">William E. Simon Graduate School of Business</a>
I read many case studies about corporate strategy that drew attention
to these similar principles business. Hindsight is always 20/20. It's
easy to play Monday morning quarterback and second guess the Clinton
campaign strategy.<br />
<br />
The Clinton camp underestimated the strength and appeal of Donald
Trump's message, which above all played on people's economic and social
fears. Some historians are may look back and say this was just the way
the cookie crumbled and that her team miscalculated or was unlucky.
Others will be more critical. They will look back and say that candidate
herself was just too arrogant and too out of touch with her
constituency in states that she really should not have lost.<br />
<br />
<div class="slate-resizable-image-embed slate-image-embed__resize-left" data-imgsrc="https://media.licdn.com/mpr/mpr/AAEAAQAAAAAAAAezAAAAJDhiYmJjNWYyLTk1MTYtNDVjNi04NzY5LWIyZTI2NDRmYTNkNw.jpg">
</div>
Hillary Clinton's loss is especially ironic, considering that her
husband, Bill Clinton, when running to oust incumbent George H.W. Bush
in 1992 said the reason he will win the White House in 1992 is because
his campaign was focused on the one thing that mattered most to the rank
and file electorate in America - the economy. <i> </i><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-ClUb9Aqx77U/WCd6H8aQF9I/AAAAAAAAAwo/A4piV7yAUTotHiOLOApewAAmlowOFBpPwCLcB/s1600/Its-the-economy-stupid-pin-Clinton.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://1.bp.blogspot.com/-ClUb9Aqx77U/WCd6H8aQF9I/AAAAAAAAAwo/A4piV7yAUTotHiOLOApewAAmlowOFBpPwCLcB/s1600/Its-the-economy-stupid-pin-Clinton.jpg" /></a></div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
<i>(Graphic courtesy, inequality.org)</i></div>
<div style="text-align: center;">
<br /></div>
<i>Michael Sonenshine is CEO of </i><a href="http://www.symfoniecapital.com/" rel="nofollow noopener" target="_blank"><i>Symfonie Capital</i></a><i> LLC. He manages the </i><a href="http://symvest.com/" rel="nofollow noopener" target="_blank"><i>Symfonie Lending Fund</i></a><i>, </i><a href="http://symvest.com/" rel="nofollow noopener" target="_blank"><i>Symfonie Angel Fund</i></a><i> and the SymCredit P2P lending platform.</i><br />
<br />
<br /></div>
Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0Prague, Czech Republic48.458351882808657 20.039062527.443753882808657 -21.2695315 69.472949882808649 61.3476565tag:blogger.com,1999:blog-6546642416346958310.post-51899723134049303752016-08-15T11:48:00.001-07:002016-08-15T11:48:18.136-07:00Central Bank Follies - QE, Negative Interest Rates and Regulatory Capital<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-dSQwVI7bUks/V7INleGKIDI/AAAAAAAAAvk/PS3ZxHe2HiwmNEHakoj-pQJBk00Lp2zDgCLcB/s1600/cbfightsfire.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://4.bp.blogspot.com/-dSQwVI7bUks/V7INleGKIDI/AAAAAAAAAvk/PS3ZxHe2HiwmNEHakoj-pQJBk00Lp2zDgCLcB/s1600/cbfightsfire.jpg" /></a></div>
<br /><br />
<em>This post is long. It is a compilation of posts on each topic. I'll get to the bottom line up front.</em><br />
<article class="pulse-article" data-li-main-content="" id="pulse-article-content" itemscope="" itemtype="http://schema.org/NewsArticle" tabindex="-1"><div class="prose" itemprop="articleBody">
<ul>
<li><em>Quantitative Easing (QE) keeps banks liquid, but does little
else for the broad economy. If anything, it incentivises banks to buy
government bonds (and soon to be high grade corporates) rather than
focus on core lending activity. </em></li>
</ul>
<ul>
<li><em>Sub-normal and now negative interest rates distort asset prices. Investors are crowded out of low-risk assets and crowded in to higher risk assets, all the while reducing their reward / risk ratio.</em></li>
</ul>
<ul>
<li><em>Faced with compressed interest rate spreads banks resort to
broad based fees. This is a regressive tax on people and businesses who
can least afford it and have little or no alternative.</em></li>
</ul>
<ul>
<li><em>Continual rounds of QE and interest rate cuts undermine the
economy by transmitting negativity and pessimism. If people and
businesses are continually afraid of the next looming financial crises
they are more likely to reduce spending and reduce investment.</em></li>
</ul>
<ul>
<li><em>Increased drive on the part of central banks to raise banking
capital adequacy ratios reduces the overall capital available for banks
to lend encourages banks to lend to an increasingly narrow segment of
businesses and consumers, ironically, those who need credit least.</em><em> </em></li>
</ul>
<ul>
<li><em>Risk weighting capital toward collateralised and secured
loans forces banks to focus on the credit backstop rather than credit
fundamental. Any smart lender should put the ability and willingness of a
borrower to pay ahead of the collateral the lender offers. Collateral
is merely a backstop and when projects fail, the collateral is often a
poor backstop at best.</em><em> </em></li>
</ul>
<ul>
<li><em>Reduction in risk taking by banks must be accompanied by
support and encouragement for the emergence of alternative lenders -
i.e. the P2P lending industry ( sorry if that's a self-interested view,
but even if I weren't a P2P lender and if I didn't run a P2P lending
fund I'd still feel the same....really!).</em></li>
</ul>
</div>
<div class="prose" itemprop="articleBody">
<strong>Now for the Meat and Potatoes</strong><br />
<br />
I'm not a macro economist by training, so take what I say here with
a grain of salt. Still, you don't have to be a rocket scientist to
realise that something is wrong in Frankfurt, Washington, Tokyo and
London.<br />
They say the road to hell is paved with good intentions. Central
bankers in fact have good intentions. They see themselves as the
guardians of the stability and security of our financial system and in
this respect they are not far from the truth.<br />
<br />
Mark Carney, governor of the Bank of England, recently remarked
that monetary policy has certain limitations. Central banks can help
economies cope with economic shocks that disrupt the financial system.
By adopting sound monetary policies Central Banks create the foundation
that underpins money as a medium of exchange.<br />
<br />
So why is it that central bankers around the world seem to be
continuously inventing new tools and techniques to jump start the
world's economies? Is it possible that we've reached the point where
the doctors are over-medicating the patient?<br />
<br />
Is it not possible that in their rush to help central banks are now
doing more harm than good? Have we reached the point where monetary
policy is producing absurd and perverse outcomes?<br />
<br />
It's harder to be the player than the fan, but the more I look at
the direction central bank policy around the world has taken, the more I
fear the policy ship has gone dangerously off course.<br />
<br />
The trends I find most worrying are zero and sub-zero interest
rates, the constant effort to push liquidity into the financial markets
and the obsession with bank capital requirements. Let's take them one
at a time.<br />
<br />
<strong>The Obsession with Bank Capital</strong><br />
<br />
We are nearly a decade after the onset of the sub-prime mortgage
sector that is commonly looked upon as the trigger for one of the
world's greatest banking crises since the Great Depression of the 1930s.<br />
<br />
Policy makers around the world had little choice but to bailout the
banking system. The bailouts meant firstly that banks received
infusions of fresh capital. Secondly the inherent riskiness of banking
generally was subjected to intense scrutiny. The conclusion of policy
makers was that banks should be significantly deleveraged. Third, the
overall riskiness of bank lending came into question and the inescapable
answer was that banks should redefine the way they look at risk so that
going forward they make less risky loans.<br />
<br />
Of course, with more capital and less leverage banks are much more
resilient in the face of loan losses. But at the same time the emphasis
on reducing the perceived riskiness of bank lending actually undermines
efforts to reignite global economic growth.<br />
<br />
The relentless focus on bank capital has has changed the character
of bank lending and in ways detrimental to the global economic
recovery. Risk weighted capital requirements set out by regulators
force banks to emphasise relatively low interest rate secured loans in
their product mix at the expense of higher interest rate unsecured
loans. Also what's changed is loan to value rates. Regulations and
capital requirements have reduced the amount of bank lending available
on a project by project basis.<br />
<br />
In principle there is nothing wrong with a lender preferring to
make one type of loan over another. But systematically, in their rush
to improve the stated financial condition of the banking sector central
banks have given banks incentives to turn a blind eye to credit worthy
projects and left wide swatches of the economy underfunded and
underleveraged. Ironically, the losers are companies that operate in
some of the world's fastest growing and most profitable sectors. Let's
look at some examples before we move on.<br />
<br />
The software, retail, engineering and design sectors share one
thing in common. Mostly they are asset poor and hence collateral poor.
They require capital to fund inventory and labor for a period until
they receive full value for the goods and services they sell. The
faster the sales growth, the more capital they need. When sales turn
down the cycle works in reverse. They reduce inventory and labor
purchases so working capital needs decline and for a period of time they
become highly cash generative. They may be strong companies, well run,
highly cash generative. Yet systematically their access to bank
capital is constrained. The result is that many companies are less
profitable than they could be and many banks leave profitable lending
opportunities on the table.<br />
<br />
Many SME's fall into the same credit trap. SME's are the back bone
of the global economy. SME's are owned by small groups of private
shareholders, often families. They live from their businesses, so they
draw income, leaving little in the way of retained earnings. We can see
many examples of highly credit worthy, cash generating businesses whose
access to bank lending is constrained only because bank lending models
focus on balance sheet metrics rather than cash generation. The result
again is that many SME's are capital constrained and underfunded and
banks leave profit opportunities on the table.<br />
<br />
Ironically, many SME's fail not because they have bad businesses,
but because they don't have the working capital to meet demands of
growth nor the working capital to whether cyclical fluctuations. But
for access to more credit when they most need it, otherwise good
businesses with good prospects are forced to shutter their doors. Who
suffers? Their trade creditors, many of whom may depend on bank
financing and their owners, many of whom are the retail mortgage
customers banks so happily accept.<br />
<br />
So when business turns down the so-called safe mortgage backed
loans central bankers seem to relish turn unexpectedly bad. The banking
sector can whether the storm, perhaps. But the real economy, where real
people put real bread on their tables each day, is far from secure.<br />
<br />
I'll leave the topic of bank capital and and secured lending with
one more thought. Collateral and credit quality don't go hand in hand.
We can find many examples of asset rich companies whose cash flows dry
up either because business turned down or the project just didn't work
out. When this happens banks are stuck with assets that are not
working, not productive and worth not nearly as much as they would be
otherwise.<br />
<br />
<strong>The Myth of Quantitative Easing</strong><br />
<br />
The purpose of quantitative easing is to enable the financial
sector to withstand the impact of economic downturn by ensuring banks
have ample liquidity to service their creditors. Let's not forget that
banks are creditors far more than equity holders. They live and die
from their ability to borrow money.<br />
<br />
Quantitative easing means the Central Banks put cheap money into
the hands of banks. In exchange they pledge or give securities to the
Central Banks, depending on whether the Central Bank is buying the
security outright or just lending money to the banks.<br />
<br />
It's not practical for banks to transfer loans made to borrowers to
the Central Bank, so banks instead give government bonds, and now
corporate bonds to the Central Bank. Really all that is happening is a
transfer of the balance sheet from the banking sector to the Central
Bank.<br />
<br />
Banks might make more loans with all the cash they get from the
Central Bank except for the fact the Central Bank demands banks have
more capital and demands banks put constraints on the types of loans
they make. I've yet to see hard evidence that quantitative easing
translates into real growth in bank lending.<br />
Much of the benefit from quantitative easing in terms of liquidity
to lend is offset by the loss of lending capital brought about by the
relentless drive to shore up bank capital bases and shift risk weighted
capital toward collateral based lending.<br />
<br />
There's another distortion brought about by quantitative easing in
the form of the impact on bank profitability. Banks used to make money
by borrowing from depositors and lending out to borrowers. Banks made
money obviously by making good loans first and foremost. Second, when
loans turned sour, banks protected their investment by actually helping
their borrowers through a difficult time if that was what was called
for. Regulation around non-performing loans and the implication off
non-performing loans on bank balance sheets has changed this dynamic.
Banks are far less willing and far less able to restructure loans,
either proactively or reactively.<br />
<br />
So how do banks make money now? First, they make only the
so-called safe, collateralised, low risk loans. Interest spread
compression drives a big hole through bank profitability, especially
when banks are blessed with all the brick and mortar and legacy
infrastructure.<br />
<br />
Faced with the double whammy of interest spread compression and
overall loan volume banks charge depositors and borrowers higher fixed
fees. Depositors bear an increasingly big fee burden for the fact they
have no choice but to keep their money in the banking system. They pay
transaction fees, account fees, overdraft fees, and any other fee banks
can dream up. Inevitably the people that are burdened with those fees
are the people who can least afford to pay those fees. Bigger customers
get fee discounts. Bigger customers don't go overdrawn. Bigger
customers transact larger amounts of money so fees are minimal in
comparison to their transaction size.<br />
<br />
The second way banks make money is by investing in assets they can
readily sell to the Central Banks. Many of the losses from the Greek
debt crisis were avoided within the banking sector because the Central
Bank and the European Investment Fund became the last resort buyer of
all that Greek debt. The ECB balance sheet is awash with Italian,
Spanish, Portugese debt and French debt. This is not because Italy,
Spain, Portugal and France are bad countries, but rather because it just
so happens their is more of their debt available for the ECB to buy
than say Czech or Slovak or even German debt.<br />
<br />
Without challenging their skills and knowledge as a central banker,
is it not ironic the most recent ECB presidents were from Italy and
France, two of the European countries with the highest amount of
government debt outstanding relative to GDP?<br />
<br />
Whether it's Washington, Tokyo, London or Frankfurt the story is
the same. The banking sector's profitability is inexctricably tied to
its ability to buy government bonds and sell them or pledge them to the
central bank.<br />
<br />
We are coming to the end of this rope. Interest rates on most
government debt in Europe is near zero or sub-zero. Think about that!
It cost an investor money to loan buy government debt. The ECB is
losing money every time it buys another Bund. Who is on the other side
of that transaction? The man in the street? The average ordinary
citizen? A hedge fund?<br />
<br />
Look again. The other side of that transaction is filled with
banks that survived because they were too big to fail so the taxpayers
bailed them out. The other side of that transaction is filled with
banks under marching orders to build or rebuild their equity bases. The
other side of that transaction is filled with banks that make more and
more money charging fees rather than making as many loans to as many
good borrowers as they can find, collateral or no collateral.<br />
<br />
So where do we go next? Many central banks are running out of
government debt to buy. So now they start with corporate debt. Of
course, the corporate debt they buy will be only investment grade rated,
at least for now. This is nothing short of a transfer of wealth from
the high yield borrowers to the investment grade borrowers. Again,
another swath of the economy is left wanting while banks service an
increasingly narrow segment of the economy.<br />
<br />
What's really worrisome is that when economies turn down investment
grade debt often becomes high yield or junk debt. Corporates have gone
bankrupt simply because rating changes collapsed their capital
structures. Enron was investment grade debt until....Lehman was A rated
until...AIG was A rated until....And yet, central bankers around that
world have brought us to the point where all this A rated paper will
find its way to the central bank balance sheet and long before the
wheels come off.<br />
<br />
The inescapable conclusion here is that QE does far less for the
economy than central bankers tell us it will do. Furthermore, QE is
fundamentally distorting risk and capital market pricing.<br />
<br />
<strong>Negative Interest Rates - The Ultimate Perversion</strong><br />
<br />
We've reached the realm of absurdity. Negative interest rates
means savers get penalised and borrowers get paid. Yet that is what is
happening. Bank fees are a form of negative interest rates Banks
charge their depositors for opening and maintaining bank accounts. Who
pays this tax? The smallest savers of course! The people who can least
afford this cost. Yet this is where the world has come to.<br />
<br />
When I was growing up many many moons ago interest rates were
double digits and banks faced regulations capping the interest rate they
could pay for deposits. Banks were tripping over themselves to get
depositors. Practically every month my parents got a toaster or a
clock, a microwave oven or any other kind of appliance simply because
they took a maturing certificate of deposit and moved it from one bank
to another. If you walked into a bank to open a deposit you were
greeted as if you'd just gave life to the dead.<br />
Today? You open an account and the first thing you are presented
with is all of the money you will pay to the bank who is borrowing your
money so that it can buy government bonds that yield next to nothing and
place them with the central bank.<br />
<br />
The ECB was the first Central Bank to setup this distortion. Tokyo
followed suit. London and Washington wonder if they are next and say
they hope not. Yet if things keep going the way they are going, we will
see negative rates in the US and the UK.<br />
<br />
The second distortion created by sub-normal and negative rates is
the price of risk. Faced with essentially a worthless risk-free asset
class investors extend inevitably into more riskier instruments than
they might otherwise. As the hunt for yield feeds on itself yield
curves compress. Investors move further out into commodities and
equities and the relationship between volatility, return and yield
unravels. Projects that might otherwise offer high returns that reflect
their genuine risk offer returns that hide the true inherent
riskiness. This leads to sub-par investment returns in the medium term
and is effectively a tax on the economy.<br />
<br />
What of the equity markets? They continue to hit all time highs.
But this too is an illusion at best. Asset prices are driven by money
supply. In a world of quantitative easing and sub-normal central risk,
money supply increases, forcing asset prices higher. When interest
rates start their inevitable march to higher level inflated asset prices
will of course collapse.<br />
<br />
<strong>The Conundrum of Low Inflation</strong><br />
<br />
Central banks point to low inflation and low GDP growth and say
that as a consequence monetary policy will remain relatively loose.
The argument they put forth is that by lowering interest rates they will
encourage businesses to borrow and generate savings for existing
borrowers.<br />
<br />
The benefit of interest saved, they argue, will be plowed back into
the economy in the form of either further investment or consumption.<br />
<br />
What central bankers seem to forget is that borrowing for business
and consumer mortgage is more like a step function than a question of
0.25%. The base rate can be zero or 1 or 2 or even 5 and so long as
there are profitable projects, business will borrow. Of course there
comes a point where the marginal increase in borrowing rates results in a
sharp fall-off in borrowing. Call that the elasticity of demand for
borrowing.<br />
The second issue central bankers don't often recognise is the
impact of their actions on consumer and business confidence in the
economy. We are trained to think that hikes in interest rates occur
because the economy is strong and perhaps at risk of overheating, and
declines in interest rates occur because the economy is getting worse.<br />
<br />
The paradox is that the more central bankers lower rates, the more
they transmit pessimism and distorted asset prices into the economy.
Central bankers - if you are listening - here is the message:<br />
<ul>
<li>Business want to borrow and often pay in excess of 10% even when base rates are zero! </li>
</ul>
<ul>
<li>The lower rates go, the more pessimism there is in the economy,
the more frightened business become, the more risk averse banks become. </li>
</ul>
<ul>
<li>Low interest rates compress bank earnings and force them to
charge higher fees, which is a regressive tax on consumers and
businesses. </li>
</ul>
<ul>
<li>The small extra savings consumers and businesses make when rates
go down doesn't get pumped back into spending and investment, especially
when the savings occur amid bearish economy outlook and the negative
signal of a rate cut. </li>
</ul>
<ul>
<li>The appetite of consumers and businesses to spend and invest at
any given moment or any given short interval in time is finite. It is,
in fact, a step function driven by the lifespan of the acquired asset
and purchasing power. The interest cost, if any, attached to the
purchase is marginal.</li>
</ul>
<strong>The Take Aways</strong><br />
<br />
Years from now economists will look back and marvel at the tendency
of central bankers to over-medicate in the wake of the financial crises
that began in 2008. In fact, they will blame central bank policy for
delaying the recovery. Why?<br />
<ul>
<li>The obsession with bank capital requirements has reduced the overall level of capital available for lending. </li>
</ul>
<ul>
<li>The obsession with bank capital requirements and the concept of
risk weighting loans skews bank lending to a narrow segment of
businesses and consumers. </li>
</ul>
<ul>
<li>The window of opportunity is to expand capital availability by
encouraging the development of alternative P2P lenders. Governments
around the world should be doing everything they can to encourage and
foster the development of P2P lending as an asset class. Britain does
this successfully, and this is one reason why the British economy was
doing relatively well prior to the idiocy of Brexit. </li>
</ul>
<ul>
<li>Quantitative easing furthers distortions in asset prices.
Natural investor for safe, long term, fixed rate assets are crowded out
of safe assets and crowded into risky assets by the ever expanding
balance sheet of the central bank. When that bubble burst, the results
will be ugly. </li>
</ul>
<ul>
<li>Quantitative easing It doesn't necessarily increase the appetite
of banks to lend. In fact, it gives the banks overweighted incentive to
invest in only those assets they can sell or pledge to the central
bank.</li>
</ul>
<ul>
<li>Interest rate cuts have only marginal impact on real economic
activity. In fact, each successive encourages businesses and consumers
to delay purchase decisions, either out of fear that things will get or
worse or out of the expectation that interest rates will fall further. </li>
</ul>
<ul>
<li>Interest rate cuts encourage lenders to look for floating rate
rather than fixed rate loans. The lack of supply of long term fixed
rate loans means when interest rates begin to rise wealth is transferred
from borrower to lender or in the case of banks - from borrower to
equity holder of a large borrower. </li>
</ul>
<ul>
<li>If central banks want to encourage economic growth then they need
to lead a return to normalcy with a signal of confidence. They need to
start raising interest rates. This will start a virtuous cycle of
increasing bank profitability and give savers more incentive and more
confidence to invest. </li>
</ul>
<ul>
<li>An environment of rising rates will encourage businesses to
invest. First they will be encouraged by the optimism and confidence of
the central bank. Second, amid expectations that rates will continue
rising they will want to capture the benefit of low interest rates.
Finally, rising interest rates will feed into rising output prices,
which will in turn generate increased profitability and therefore higher
government tax revenues. Rising output prices and risking
profitability will encourage hiring and raise labor prices, which
obviously will help consumers. </li>
</ul>
<ul>
<li>Rising interest rates will reduce the banks' incentive to rely on fee income and therefore remove essentially a regressive tax.</li>
</ul>
<em>Bottom line: For years central banks have been
over-medicating. Improved bank capital adequacy must be accompanied by
the robust development of alternative lending solutions that are not
constrained by need for collateral but focus instead on fundamental
credit worthiness - willingness and ability to pay. The trend toward
lower interest rates clearly is unsustainable. Quantitative easing is
creating asset bubbles and further exacerbating distortion of bank
incentive to make real loans rather than buy securities. The longer this
goes on, the harder it will be for all of us.</em><br />
<b><em> </em></b><br />
<b>
</b><strong><a href="https://cz.linkedin.com/in/symfoniecapital" target="_blank">Michael Sonenshine</a> is CEO of <a href="https://www.symfoniecapital.com/" rel="nofollow" target="_blank">Symfonie Capital</a>. He runs the <a href="http://symvest.com/prereg/angel-fund/" rel="nofollow" target="_blank">Symfonie Angel Fund</a>, the Symfonie P2P Lending Fund and the <a href="https://www.symcredit.com/" rel="nofollow" target="_blank">SymCredit </a>P2P lending platform. For more info contact msonenshine@symfoniecapital.com.</strong><br />
<b>
</b><br />
<br /></div>
</article>Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0Prague, Czech Republic50.0755381 14.4378004999999849.749331100000006 13.79235349999998 50.4017451 15.083247499999981tag:blogger.com,1999:blog-6546642416346958310.post-8823095920243247512016-06-09T09:13:00.000-07:002016-06-09T09:13:27.077-07:00Trump's Nomination is Not a Done Deal<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-aYndX3TDV9s/V1mVRjNIv-I/AAAAAAAAAuk/_K0_V2YqkrIxl3UvMFUGGn_Oa4JK1RBNACLcB/s1600/gettyimages-527325438.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" src="https://2.bp.blogspot.com/-aYndX3TDV9s/V1mVRjNIv-I/AAAAAAAAAuk/_K0_V2YqkrIxl3UvMFUGGn_Oa4JK1RBNACLcB/s320/gettyimages-527325438.jpg" width="320" /></a></div>
<em>I'm not a political pundit. I'm an investment manager. Don't
take what I say here as anything more than one man's view. As always, I
welcome comments and criticism.</em><br />
<br />
Let's get a few things
straight. First, I'm not a supporter of Donald Trump. Second, I'm
still eating a piece of humble pie after my post earlier this year when I
said I didn't think he would win the nomination. Third, I continue to
believe that even if he really gets the nomination, he won't win the
general election.<br />
<br />
Let's leave the general election to one side.
There is about a six week window between now and the Republican
convention. A lot can happen now and then. Even so, I'll stick my neck
out a bit further and say here that much can go wrong for Mr. Trump when
delegates assemble in late July. Here's what to look for.<br />
<br />
<strong>A Chorus of Un-Endorsements</strong><br />
Senator
Mark Kirk, a Republican from Illinois, was one of the first, if not the
first, to step forward and say that after reconsidering his view, he's
come to the conclusion that Mr. Trump is unfit to be President. Take
that in context, however. Mr. Kirk is from a state that tends to vote
for Democrats. He holds the Senate seat that was vacated by Barrack
Obama.<br />
<br />
Still, Mr. Kirk is not alone. More than a dozen Senate
Republican's have been critical of Mr. Trump especially after last
week. Mr. Trump came under heavy fire after criticising a Federal Court
judge on the basis of the judge's Mexican heritage.<br />
<br />
While we're
on the subject of judges, let's get one thing straight. Judges don't
just make up rules arbitrarily. They don't run cases on whim or by the
seat of their pants. Being a judge is serious business. I know this
because I come from a family of lawyers and because the course of an
international career has introduced me to legal systems not only the US
but in several European countries.<br />
<br />
In any functioning democratic
system Judges are guided by a set of clearly written rules and legal
precedents. Judges write lengthy comments that cite the legal reasoning
behind their opinions. Potentially any ruling they make can be
questioned an appealed in a higher court. Mr. Trump's comment about the
judge serves only to show how little respect Mr. Trump has for the
judicial system and the intellect and professional quality it takes to
become a judge, especially a federal court judge. That alone makes me
wonder how good a job Mr. Trump will do when it comes to interviewing
and selecting future Federal Court judges.<br />
<br />
Senator Kirk is hardly
alone in retreating from his pledge to support Mr. Trump if he
eventually wins the nomination. In the wake of Mr. Trump's criticism of
the judge, Republican Senator Lindsey Graham of South Carolina said
"This is the most un-American thing from a politician since Joe
McCarthy. If anybody was looking for an off-ramp, this is probably it.
There’ll come a time when the love of country will trump hatred of
Hillary.”<br />
<br />
<strong>Politicians Running for Cover</strong><br />
<br />
In
presidential elections the "coat-tail" effect is often talked about.
The coat-tail refers to the tendency of voters to vote for an entire
slate of candidates, including the presidential candidate and all those
in the same party. When a candidate has long coat tails the slate of
candidates tends to do well.<br />
<br />
Judging by the number of Republicans
either speaking out against Mr. Trump or distancing themselves from him
there is evidently a strong feeling among Republican that Mr. Trump will
have difficulty at the ballot box. Particularly those Republicans who
are at risk of losing in the general election want to avoid the
possibility that Mr. Trump will be a liability rather than an asset.<br />
<br />
<strong>The Labyrinth of Convention Rules</strong><br />
<br />
A
few days before the Republican convention starts 112 delegates will
gather to determine the final rules for how the convention will
operate. Literally, they set the rules of the game. The rules must
then be approved by the full convention before the nominating process
can begin.<br />
<br />
Donald Trump's first problem actually began long before
he even declared himself a candidate. The delegates to the convention
are largely composed of party leaders, many of whom worked tirelessly
for other candidates. These delegates are bound to support Mr. Trump on
the first round of balloting, but they aren't bound to select a package
of rules that will not allow at least a challenge to the first round of
balloting.<br />
<br />
Mr. Trump's second problem began when he started
winning primaries with his populist rhetoric and divisive language he
created plenty of enemies within his own party. He may have won the
popular votes, but he is far from popular within the party. Many senior
and influential Republicans have said they would not attend the
convention. That might be their publicly stated stance, but that
doesn't mean these people won't be working behind to scenes to set the
stage for a convention that does not finally approve Mr. Trump's
nomination.<br />
<br />
<strong>So Where Do We Go From Here?</strong><br />
<br />
The
next few weeks will be critical for Mr. Trump. The party can be as
much his friend as it can be his undoing. Mr. Trump needs to mend
fences and adopt a tone and protocol that demonstrates he will not be a
liability in the general election. In short, he needs to lose his ego.
He needs to usher in an era of good will, make policy concessions and
adopt a tone and style that convinces the political establishment he can
be counted on and that he won't jeopardise their interests and their
candidacies in other elections.<br />
<br />
Mr. Trump should think seriously
about having not just a slice of humble pie, but a meal full of humble
pie. If, in the coming weeks, if Mr. Trump rebrands, himself,
ingratiates himself, takes on a more politically acceptable tone, and
makes a bridges a serious set of policy differences he has a good chance
of sailing through even choppy waters at the convention.<br />
<br />
If not,
he will most certainly face a serious challenge at the convention. Even
if he manages to overcome that challenge, the damage done would
probably ruin his chance to win the general election. The Republican
party line will read something like "Vote Republican even if you don't
vote for Trump."<br />
<br />
For those of you who want to read more, here's a selection of articles I found interesting.<br />
<br />
<a href="http://www.msnbc.com/msnbc/some-republicans-discuss-anti-trump-convention-coup"><em>http://www.msnbc.com/msnbc/some-republicans-discuss-anti-trump-convention-coup</em></a><br />
<em> </em><br />
<a href="http://www.vox.com/2016/3/24/11295380/republican-convention-rules-trump-delegates"><em>http://www.vox.com/2016/3/24/11295380/republican-convention-rules-trump-delegates</em></a><br />
<br />
<em><a data-mce-href="http://www.usnews.com/opinion/articles/2016-05-09/republicans-opposed-to-trump-should-skip-the-gop-convention-in-cleveland" href="http://www.usnews.com/opinion/articles/2016-05-09/republicans-opposed-to-trump-should-skip-the-gop-convention-in-cleveland" target="_blank">http://www.usnews.com/opinion/articles/2016-05-09/republicans-opposed-to-trump-should-skip-the-gop-convention-in-cleveland</a></em><br />
<em> </em><br />
<em><a data-mce-href="http://www.nytimes.com/2016/03/20/us/politics/donald-trump-republican-party.html?_r=0" href="http://www.nytimes.com/2016/03/20/us/politics/donald-trump-republican-party.html?_r=0" target="_blank">http://www.nytimes.com/2016/03/20/us/politics/donald-trump-republican-party.html?_r=0</a></em><br />
<em> </em><br />
<em><a data-mce-href="http://www.politicususa.com/2016/06/07/one-republicans-slowly-lining-opposition-donald-trump.html" href="http://www.politicususa.com/2016/06/07/one-republicans-slowly-lining-opposition-donald-trump.html" target="_blank">http://www.politicususa.com/2016/06/07/one-republicans-slowly-lining-opposition-donald-trump.html</a></em><br />
<em><a data-mce-href="http://www.wnd.com/2016/05/see-list-of-98-top-republicans-who-refuse-to-back-trump/" href="http://www.wnd.com/2016/05/see-list-of-98-top-republicans-who-refuse-to-back-trump/" target="_blank">http://www.wnd.com/2016/05/see-list-of-98-top-republicans-who-refuse-to-back-trump/</a></em><br />
<em> </em><br />
<a href="http://www.theguardian.com/us-news/2016/may/08/republican-party-unity-donald-trump-paul-ryan"><em>http://www.theguardian.com/us-news/2016/may/08/republican-party-unity-donald-trump-paul-ryan</em></a><br />
<em> </em><br />
<em>Questions? Comments? Write to me at msonenshine@symfoniecapital.com </em><br />
Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0tag:blogger.com,1999:blog-6546642416346958310.post-33901903793997055392016-03-05T14:00:00.000-08:002016-03-05T14:06:50.909-08:00Why Donald Trump Will Not Be the Next US President<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-l5vygj5UoMc/VttO1_vvr2I/AAAAAAAAAts/pMqby2VYpIU/s1600/trumpA.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="192" src="https://4.bp.blogspot.com/-l5vygj5UoMc/VttO1_vvr2I/AAAAAAAAAts/pMqby2VYpIU/s320/trumpA.jpg" width="320" /></a></div>
If you like maps, stick with me! The maps in this post tell nearly the whole story.<br />
<br />
<br />
Donald
Trump continues to make headlines as the Republic front runner for the
nomination. It's still early days, however and headlines don't say much
about the real picture. So let's look at the detail.<br />
<br />
About 35% of the delegate count has been awarded. Mr. Trump has not won a
majority in any state so far. Therefore the delegates are being awarded
proportionally.<br />
<br />
Mr. Trump has won 331 delegates as at 4 March. Marco Rubio and
Ted Cruz combined have 348 delegates (231 and 116 respectively). Another 38
have gone to Ohio Governor John Kasich (27), and Dr. Ben Carson (8) and former Florida Governor Jeb
Bush (3).<br />
<br />
So the headlines call Mr. Trump
the front runner. But the detail is that he has less than the najority. Mr. Trump is far from the winning the nomination by
that count. Moreover, a tide of opposition to him from within the Republican party is rising.<br />
<br />
If things continue to unfold like this, the winner
will be determined in August at the convention. With more than half the delegates pledged to other candidates and the anti-Trump lobby building, Mr. Trump is not likely to
get the nomination.<br />
<br />
The second reason Mr. Trump won't be the next
president is that even if he captured the Republican nomination he still
has to contend with Hillary Clinton or Bernie Sanders and political
realities underlying the electoral map of the US.<br />
<br />
For those of you
unfamiliar with the US election system it's worth noting that the US
President is not elected simply by majority across the country. We have
an electoral college system in which each state has a certain number of
votes, based on population. In theory a candidate can win with a
minority of the general population, but a majority in enough of the
large states.<br />
<br />
The electoral pattern in the US is that there are a
core of Western and Mid-Western states that practically always vote
Republican. There is also core of Eastern and Western States that have
been Democratic strongholds in the recent years. Then there are a few
swing states. Each of these is small on its own. Collectively they add
up to about 20% of the electoral vote.<br />
<br />
The plain truth is that in
the absence of widespread dissatisfaction with the current state of
affairs, the electorate generally prefers to stay the course. The rider
may change but the horse is the same.<br />
That's pretty much the case
in the US today. If anything the overall economy is improved from
where we were in 2012. The US dollar buys far
more across the globe than it did a few years ago. More people have
jobs today than in 2012. Socially we've seen a general relaxation of
attitudes on issues. All of this favors Democratic candidates.<br />
<br />
Since 1936 in the general election many
of the largest states have voted Democrat, except for years where there
was widespread dissatisfaction with the status quo. President
Eisenhower a Republican, won the 1952 and 1958 elections in nearly every
state.<br />
<br />
In 1960 young John F. Kennedy narrowly won the election
by swinging a few of the the larger states to his side, including Texas,
Pennsylvania and New York (together these 3 states are 25% of the
electoral college) Much of the country was behind Richard Nixon at the
time.<br />
<br />
In 1964 Lyndon Johnson, building on the legacy an President
Kennedy won practically every state across the country. Note however,
that Johnson lost 4 States in the South that had gone to Kennedy in
1960.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-ikgMTNt9XGE/VscdDhwUpBI/AAAAAAAAAs4/zPCkDoxCpCE/s1600/1960_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://3.bp.blogspot.com/-ikgMTNt9XGE/VscdDhwUpBI/AAAAAAAAAs4/zPCkDoxCpCE/s320/1960_large.png" width="320" /></a></div>
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-xl0yo7jhDJo/Vscb2dRcZzI/AAAAAAAAAso/0fciPG2V8kg/s1600/1964_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://3.bp.blogspot.com/-xl0yo7jhDJo/Vscb2dRcZzI/AAAAAAAAAso/0fciPG2V8kg/s320/1964_large.png" width="320" /></a></div>
<br />
In 1968, with widespread social discontent and a deeply unpopular
Vietnam war Richard Nixon swept the nation with a landslide election.
The solidly Republican states swung back to Nixon.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-Ijlw30ojRu8/Vsccfbbh4TI/AAAAAAAAAs0/aly66yIeXzQ/s1600/1968_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://4.bp.blogspot.com/-Ijlw30ojRu8/Vsccfbbh4TI/AAAAAAAAAs0/aly66yIeXzQ/s320/1968_large.png" width="320" /></a></div>
<br />
<br />
<br />
<br />
It was no surprise, however, after his presidency ended in shame and
scandal that Jimmy Carter was elected in 1976. His victory came in a
way similar to that of Kennedy, with about 15 states swinging out of
Republican hands. Those states were mainly in the South (Mr. Carter
was governor of Georgia) and the industrial Mid-West.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-U3X6ESvUdh4/Vscfd8dvOOI/AAAAAAAAAtE/3ENNcevX0Zg/s1600/1976_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://3.bp.blogspot.com/-U3X6ESvUdh4/Vscfd8dvOOI/AAAAAAAAAtE/3ENNcevX0Zg/s320/1976_large.png" width="320" /></a></div>
<br />
<br />
<br />
The Republicans regained control in 1980 and held the White House with
solid support across the entire country until 1992. The discontent was
so great after the Carter years that even the bulwark Democratic states
of the upper North-East swung into Republican hands. In the 1984 general election Democratic nominee Walter Mondale won only his home state of Minnesota. The Democratic victory in 1964 paled in comparison to the Republic victory 20 years later.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-drFYpgcU8rM/Vscb2cjoBWI/AAAAAAAAAso/NRYq5LwCd0s/s1600/1984_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://3.bp.blogspot.com/-drFYpgcU8rM/Vscb2cjoBWI/AAAAAAAAAso/NRYq5LwCd0s/s320/1984_large.png" width="320" /></a></div>
<br />
<br />
<br />
This was the situation until 1992, when President Bill Clinton swung
several of the large states back into the Democratic camp. He even won
in California and some Mid-Western States which had historically voted
Republican. Part of this result can be credited to the migration of many
people from the east coast to California. By 1992 California had grown
to 54 electoral votes from just 32 in 1960. Importantly, Bill Clinton, former Governor of Arkansas, carried some of the key swing states in the South and the mid-West.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-US8Xa8T8tNM/Vscb2Zl30RI/AAAAAAAAAso/ydMqayFm9FQ/s1600/1992_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://3.bp.blogspot.com/-US8Xa8T8tNM/Vscb2Zl30RI/AAAAAAAAAso/ydMqayFm9FQ/s320/1992_large.png" width="320" /></a></div>
<br />
The White House changed hands in 2000, when the younger George Bush beat
Massachusetts Governor Michael Dukakis. That election was hardly
decisive. Simply a handful of states swung back into the Republic
court. The Democrats carried the bulk of the North-East, the upper
Mid-West industrial belt and California. What changed were the South
and South-Eastern states that President Clinton had in his camp.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-I8C4iCxTFlA/Vscb2xJjxkI/AAAAAAAAAso/bDBvC-ZsNEY/s1600/2008_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://2.bp.blogspot.com/-I8C4iCxTFlA/Vscb2xJjxkI/AAAAAAAAAso/bDBvC-ZsNEY/s320/2008_large.png" width="320" /></a></div>
<br />
<br />
<br />
<br />
So what does the landscape look like now? Well, firstly, the 2012
elections came out pretty much the same as the 2008 election. President
Obama lost only the state of North Carolina. This pattern is typical for
an incumbent president, providing that president hasn't done anything
to alienate the population and provided the over economic and social
situation has not changed dramatically.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-fdSHsAaSHq4/Vscb3Im60aI/AAAAAAAAAso/AAP7-4FsxdY/s1600/2012_large.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="201" src="https://2.bp.blogspot.com/-fdSHsAaSHq4/Vscb3Im60aI/AAAAAAAAAso/AAP7-4FsxdY/s320/2012_large.png" width="320" /></a></div>
<br />
<br />
It's hard to imagine that were Mr. Trump the Republican nominee he
would win over the states that in the most recent elections supported
Mr. Obama and the Democrats.<br />
<br />
Judging by the evidence thus far much
of the Republican party overwhelmingly prefers other candidates. If
Mr. Trump managed to gain enough supporters going into the convention,
his majority would be at best slim. Many Republicans who dislike Mr.
Trump and hold relatively moderate views would be likely to select the
Democratic candidate, providing that candidate's platform and policies
were also centrist. This works well for Hillary Clinton, who has a strong base of support in southern states.<br />
<br />
So my guess is that Mr. Trump will not make it
as far as the Republican nomination to begin with, which is one of the
reasons why I ignore almost anything he says.<br />
<br />
Just for the record,
I'm a registered Democrat, though I don't always vote along party
lines. If Mr. Trump were the Republican nominee I would most certainly
not vote for him and if I were a Republican I would not be among those
voting for him.<br />
<br />
I hold no ill will toward Mr. Trump. He's made
himself a brilliant career in the real estate business. He is clearly
savy and smart. He understands well how to use the media to his
advantage. He's funded his campaign from his own pocket, which, of
course, is his democratic right and something to be respected.<br />
<br />
It's
a good thing that this large, colorful figure has come into the fray.
He's made people start seriously thinking about who should be the next
president and why. But at the end of the day, I think he won't win the
election. Frankly speaking, I find that a rather comforting thought.<br />
<br />
<i>Note - the maps above were selected from <a data-mce-href="http://www.270towin.com/historical-presidential-elections/" href="http://www.270towin.com/historical-presidential-elections/" target="_blank">http://www.270towin.com/historical-presidential-elections/</a>. Thank goodness for the internet! You can find practically anything for the asking.</i><br />
<br />
<br />
<br />
<br />
<br />Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com2tag:blogger.com,1999:blog-6546642416346958310.post-9879387307910097102016-01-03T10:49:00.001-08:002016-01-03T10:49:23.261-08:00One Small Step for Every Working Parent in 2016<div class="article-body" dir="ltr" itemprop="articleBody">
Around this time of the year lots of people write about New Year's
resolutions. I also notice a heavy dose of investment blogs about what
to do in the coming year.<br />
<br />
I'm not a parent, so take what I say here with a grain of salt and
accept my apologies if I am speaking out of line. On other hand, take
what I say here and generalise it. Cross out children and insert wife,
husband, partner, dog or goldfish and the same point comes across.<br />
<img class="left" data-loading-tracked="true" height="200" src="https://media.licdn.com/mpr/mpr/shrinknp_400_400/AAEAAQAAAAAAAARhAAAAJGM2YWQzZTk2LTlkZDUtNDk3Ni1hOWI1LTEzYTE3ZTljYTQ4Ng.jpg" width="200" />T<em>ake some time in the January quiet days and think about how you
can arrange your schedule so that you can make the space that you want
to make for your family, but especially the children. </em><br />
<br />
Taking stock is a natural and important thing to do in this life.
How can you possibly go where you want to go if you don't first answer
two questions - where do you want to go and what is the plan for getting
there.<br />
<br />
Steven Covey, author of <a href="https://www.stephencovey.com/7habits/7habits.php" rel="nofollow" target="_blank">7 Habits of Highly Effective People</a>,
put this concept across very well. He compared planning for the future
to building a garden shed or a house. A well constructed building must
start with a blue print or a drawing that serves as a reference point
or road map.<br />
<br />
In life you often get what you pay for. If you walk out into the
back yard with a hammer and nails and start putting pieces of wood
together ad-hoc, more than likely you'll wind up and a shed that looks
ad-hoc. If, on the other hand, you start with a basic concept and create
some plan, chances are you'll think a little more about intended use,
form, and features and you'll buy the right amount of wood and the right
number of screws (I recommend screws when working with wood, not nails)
and you'll have a well proportioned, well built shed.<br />
<br />
Life is not so straight forward as Steven seems to say, but his
points are well taken and one of them stands out in my mind as being
really appropriate and important to reflect on at the start of the New
Year.<br />
<br />
Steven talks a lot about setting priorities and putting the things
you are most about at the top of list. He continues to say that when
you set certain priorities and make an effort consistently to conduct
your life accordingly you'll wind up more in control about what you are
doing when and you'll generally command more respect in the process and
you'll naturally do more to organise yourself around these priorities.<br />
<br />
<a href="https://www.facebook.com/" rel="nofollow" target="_blank">Facebook</a>
is one of the tools I use to keep track of what my friends and stay in
touch. The internet made social networking possible and created a
paradigm shift in our fundamental ability to communicate (and
mis-communicate) with people. If used well it can enrich our lives
dramatically, especially when it makes sharing our experience and
maintaining contact with people we care about.<br />
<br />
I notice on Facebook how many of my friends post pictures of their
children and their wives and husbands and their dogs and cats. This is a
big contrast to <a href="https://www.linkedin.com/" target="_blank">Linkedin</a>,
where it seems nobody talks about anything other than economics,
finance, marketing and business. Often I look at a person's profile on
Facebook on that person's LinkedIn page and I wonder if they really are
the same person.<br />
<br />
First weekend in January is an excellent time for sitting down to do
at least some short term planing. Hence, its a good time for setting or
re-setting priorities. For many of us our family is among the highest
priorities.<br />
It may often seem like family has to take a back seat to career. But
in fact, family need not take a back seat. For that matter, career
need not take a back seat. Each must be balanced and taken into the
planning.<br />
<br />
So far all the working parents I have a suggestion. Use the quiet
time during then first few weeks in January to take a look at your
children's calendars. Remind yourself just when is the next school play
or concerts, when are baseball games and soccer games, when are the
important exams they need to be prepared for and what else is coming up
in the coming months that is important in their lives and by extension,
in your life.<img class="center" data-loading-tracked="true" height="383" src="https://media.licdn.com/mpr/mpr/shrinknp_400_400/AAEAAQAAAAAAAAchAAAAJDM0ZmEzOGM0LTI1MmQtNDg1OC1iZDU0LWU0NGY4NmVhN2M2Mg.jpg" width="383" /><br />
Then have a look at your work calendar, the business trips you may
have to take, the important presentations you need to deliver, the
marketing events or financial conferences you need to attend to and the
things you need to be prepared for.<br />
<br />
Finally, look at the intersections and identify things you can do so
that you can be at the school play or the baseball game or at home to
help your son or daughter prepare for the exam. Don't expect you'll be
able to arrange everything the way you want. Don't set high
expectations. Find just one or two events that you and your family
consider important and do everything you can to plan around those
events.<br />
Knowing what is important in life is just one part of what it takes
to create a good life. Another important part is organising yourself so
that you can experience, share and enjoy as much of what is important
as you can.<br />
<br />
<em><a href="http://www.michaelsonenshine.blogspot.cz/" rel="nofollow" target="_blank">Click here to see my State of Affairs column</a> if you want to read some more of what I write about how I see the world around us.</em><br />
<br />
<em>I normally write about Angel Investing and P2P Lending. To learn more about my <a href="http://symvest.com/en/prereg/angel-fund/" rel="nofollow" target="_blank">Angel Investment Fund click here</a>. To learn more about our <a href="http://p2p.symvest.com/products/" rel="nofollow" target="_blank">P2P Lending Fund click here</a>. </em><br />
</div>
Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0tag:blogger.com,1999:blog-6546642416346958310.post-21217196358892227792015-12-27T15:40:00.005-08:002015-12-27T15:53:04.168-08:00Who's In Charge of Pricing the Coffee???Pricing goods on the supermarket shelves is as much an art as it is a
science. More often than not the end result - a price, reflects the
logical outcome of all the input factors. From time to time, however we
get an output - a price that seems to defy logic. We can only conclude
one of two things - either our assumptions about the way the world
works need to be revisited or - there is just a quirk, an oddity, an
outlier.<br />
<br />
As an investment manager I'm trained to look for the outliers.
Buying or selling an outlier can make the difference between having
average performance and having above average or below average
performance.<br />
Finding the outlier makes a trip to the supermarket or shopping mall
more interesting and more fun. It's a bit of a hobby for me. Some
people spot planes and trains. Some people follow the minute details of
sports statistics. I follow prices.<br />
<br />
Our journey in search of the pricing outliers begins of course at the
manufacturer on the desk of the Product Manager. The Product Manager is
in charge of practically every element of brand and product
development, from the look and feel of the packaging, timing and
delivery of advertisements, wholesale pricing, promotional pricing and
finally, MSRP or manufacturer's suggested retail price.<br />
<br />
Whenever I go to the supermarket I pay attention to prices, in part
because, like every consumer, I want my hard earned dollars, koruna,
pounds, rubles and yen to go as far as they can. Aside from the
practical implications of smary buying, I'm always interested to finding
what I call pricing <a href="https://en.wikipedia.org/wiki/Idiosyncrasy" rel="nofollow" target="_blank">idiosyncrasies</a> - the quirks or departures from would seem to be the norm or logical progression.<br />
<br />
Lately the biggest quirk I've seen is in the instant coffee aisle. I
happen to shop in Prague very often. The local currency is the Czech
Koruna, so I'll reference my local currency. Also to be consistent we
will talk about 200g packages. Those of you in other countries can
substitute numbers proportionally. Makes no difference.<br />
<img class="left" data-loading-tracked="true" height="268" src="https://media.licdn.com/mpr/mpr/shrinknp_400_400/AAEAAQAAAAAAAAchAAAAJGQyOGU3YjFkLTFlZmMtNDM5OS05N2RlLWJmOTI0MGIyMmFkMw.jpg" width="188" />
<br />
When I am in the US I drink <a href="http://www.tasterschoice.com/products/default.aspx" rel="nofollow" target="_blank">Taster's Choice</a>. Here in the Czech Republic we don't have that brand. We have <a href="http://www.nescafe.com/" rel="nofollow" target="_blank">NesCafe</a>, which it so happens is a product of the same fine company that makes Taster's Choice.<br />
<br />
<br />
Pricing in the instant coffee aisle works something like this: the
stuff that tries to be something reminiscent of coffee sells for Kc 60.
Then the store brands sell for somewhere between Kc 75 and Kc 99.
Lidl, a local supermarket I shop in, sells a private label brand called <a href="https://www.google.cz/search?q=green+eclipse+coffee+Lidl&biw=1366&bih=639&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwibpaGR4vnJAhUC1BoKHaMoBLMQsAQIMQ" rel="nofollow" target="_blank">Green Eclipse</a> which is just wonderful. It sells for Kc 79 and sometimes it's on sale for Kc 69.<br />
<img class="left" data-loading-tracked="true" height="188" src="https://media.licdn.com/mpr/mpr/shrinknp_400_400/AAEAAQAAAAAAAAV0AAAAJDM1ZWEwYTdiLTYyODctNGY1YS04YzgyLWRmMzUzYzc1MGE5Mg.jpg" width="225" /><br />
I buy Green Eclipse because I like the taste, but also I especially
like the price. I the taste were lousy I wouldn't buy it. Life is too
short to drink bad coffee at any price. <br />
Between Kc79 and Kc 160, there is nearly nothing to speak of. It's
what I call the DMZ - the de-militarized zone. It is practically an
empty, barren wasteland.<br />
After that the mainline brands start. The major brands include <a href="https://www.jacobsdouweegberts.com/" rel="nofollow" target="_blank">Jacobs</a>, <a href="http://www.douwe-egberts.com/" rel="nofollow" target="_blank">Douwe Egberts,</a> <a href="https://www.tchibo.cz/tchibo-cz-kava-c37.html" rel="nofollow" target="_blank">Tchibo</a>
and Nescafe, with prices ranging from 159 to 259. Premium coffees,
including the "Gold" versions of the mainline brands, cost usually
between 199 and 259. The very top of line is <a href="https://www.tchibo.cz/tchibo-cz-kava-c37.html" rel="nofollow" target="_blank">Davidoff</a>, which prices at 390. It's sold in 100g packs at 199.<br />
<img class="center" data-loading-tracked="true" height="152" src="https://media.licdn.com/mpr/mpr/shrinknp_400_400/AAEAAQAAAAAAAAbTAAAAJDZkYzU1YjcwLWYwMWQtNGNmMy05MWNmLTg5ZjZmOGFjY2U2OA.jpg" width="330" /><br />
I
think the biggest indication that product managers are getting nervous
is when they develop brand line extensions and odd pack sizes. For
example, a number of brands have introduced "velvet" or finely ground
variations, are lower priced. Also some of the brands have pack sizes
of 95g, 180g and 190g. This makes direct price comparisons hard to make
and also enables them to meet price point targets.<br />
<br />
<b>Pricing Quirk Number 1 - A Range Big Enough to Drive a Truck Through</b><br />
Pricing variations in the coffee aisle are among the widest I can
find in the supermarket. Producers seem to believe that once the
consumer finds the right taste price sensitivity ends. What producers
seem to miss is propensity among consumers to substitute.<br />
<br />
I find it hard to believe I am really very different from the average
consumer. I like the taste of NesCafe. It's my favorite coffee except
for Taster's Choice. But it's not my favorite coffee at any price.<br />
For every jar of NesCafe or I can have at least two jars of the
Eclipse. NesCafe is among the less expensive of the mainline bands. For
some of the other brands the ratio is more like 3 jars of Eclipse or 1
and a half jars of NesCafe for 1 jar of the main brand.<br />
<br />
I just don't understand this pricing case. If coffees like Eclipse
are readily available, why should mainline brands be two, three, four
times more expensive. And why should such large price dispersions occur
within the mainline brands. Do people care so much about taste?
Shouldn't propensity to substitute be greater or is there something else
I am missing here? Consumers respond to the weekly supermarket sales
circulars and switch supermarkets at the drop of hat when they see
laundry detergent on sale. But once inside the market they don't care
about what they pay for coffee?<br />
<br />
<b>Pricing Quirk Number 2 - The De-militarised Zone in Pricing</b><br />
Between Kc 79 and Kc 159 the pickings are few and far between. My
guess is that the product manager doesn't have a lot of influence at
this level and the pricing battle shifts to the supermarkets. Pricing
managers in supermarkets well understand the behavior of consumers and
where the elasticity of demand can vary. Pricing managers also look at
gross margin - the the difference between what the price at the cash
register and the price from the manufacturer. Still - why should there
be this big gap in pricing 50% - 100% between the bargain brand and
the mainstream brands?<br />
<br />
<b>Pricing Quirk Number 3 - Putting the best value for money on sale</b><br />
Why should something that's already priced well go on sale? This
coffee is the best value for money! I hardly think the sales will
change much when it goes on sale. Demand is probably pretty inelastic
at that level. Makes no sense to me!<br />
<br />
And yet - incredible as it may seem, Eclipse sometimes goes on sale, with a big red sign pointing out the 10% discount.<br />
<br />
<b>Pricing Quirk Number 4 - Putting the Brands on Sale</b><br />
<img class="left" data-loading-tracked="true" height="200" src="https://media.licdn.com/mpr/mpr/shrinknp_400_400/AAEAAQAAAAAAAAVzAAAAJDI1ZmMxYmI0LTBhYTUtNGYwOC1iNDY4LWMwZDc3ZmNjOTBmYw.jpg" width="99" /><br />
From
time to time NesCafe runs a promotion. They price the 200g bottle down
to 119. This is still a hefty 50% premium to Eclipse, but a is a
healthy discount to the other main line brands. At that price my price
sensitivity goes out the window and the taste devil drives my decision.
I stock up. I'll by three or four at that price and keep them in my
pantry and draw down the stash until next sale comes around. Judging by
what I observe at the cash register, many other consumers are doing the
exact same as I do. When NesCafe is on sale it seems to just fly off
the shelves. <br />
I wonder - if NesCafe decided to change it's strategy to everyday low
pricing - say the Kc 129 level instead of the 179 or 199 level would
NesCafe's revenues go up or down? <br />
<br />
<b>Pricing Quirk 5 - Deep Discount Overkill</b><br />
This week and next NesCafe they are pricing at 79. They've actually
gone through the pricing DMZ and are going head to head with Green
Eclipse. I'm stocking up and how and judging by what I see in the
stores, even the twenty-four/seven neighborhood convenience store owners
are doing the same.<br />
I don't like to look a gift horse in the mouth. But I don't
understand why NesCafe felt the need go through the DMZ and go head to
head with the bargain brand. Leaving aside the velvet finely ground
products, The mainstream brand pricing starts at about 159 and the
bargain pricing ends at 99. A price point around 119 for the sale should
be more than sufficient to pick up market share from the main
competitors.<br />
<br />
<b>I Have More Questions than Answers - Don't You?</b><br />
I'll be interested to hear what my product manager and supermarket
executive friends have to say about the enigmas of coffee pricing. I
also will be interested to hear about other pricing idiosyncracies away
from the coffee aisle. E-mail me at <a href="https://www.blogger.com/null" rel="nofollow" target="_blank">msonenshine@symfoniecapital.com</a> if you have suggestions or comments.<br />
<i>I normally write about Angel Investing and P2P Lending. To learn more about my <a href="http://symvest.com/en/prereg/angel-fund/" rel="nofollow" target="_blank">Angel Investment Fund click here</a>. To learn more about our <a href="http://p2p.symvest.com/products/" rel="nofollow" target="_blank">P2P Lending Fund click here</a>. </i>Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0tag:blogger.com,1999:blog-6546642416346958310.post-65751846495653028282015-12-19T20:39:00.001-08:002015-12-21T16:03:46.365-08:00Franta, the Other Dog and Me<h2 style="text-align: center;">
</h2>
<div style="text-align: justify;">
<i>Warning! If you don't like dogs, I'm not sure you'll like what I write here. If you are a dog lover, as I am, you'll understand where I am coming from and where I am heading almost immediately.</i></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
The dog is a natural companion for the human race. I'm convinced that for as long a humans live on this planet, dogs will live side by side with them.<br />
<br />
I'm also convinced that dogs reflect our hearts and minds. When we are nervous our dogs are nervous. When we are relaxed our dogs are are relaxed. They instinctively like some people more than other people.<br />
<br />
Much has been written on the subject of dog behavior and in fact the <a href="http://www.naiaonline.org/articles/article/the-evolution-of-modern-day-dog-training#sthash.VP3A7kHE.dpbs" rel="nofollow" target="_blank">school of thought on dog training</a> has undergone a remarkable evolution. The old school of thought was based on negative ereinforcement. One example is the use of the choke chain collar. Pull the choke collar often and hard enough and the dog will start to behave differently so as to avoid the unpleasantry of the choke. <br />
<br />
Nowadays training is based on positive reinforcement and the dynamics of the relationship between the dog and the owner. The system is reward based. Reward desirable behavior with treats and praise. Save the special treats your dog loves only for special occasions and especially good behavior.<br />
<br />
Training also focuses on the handler. If you are nervous your dog will be nervous. If your dog runs on the neighbor's grass and barks at every passer-by on the street it's most certainly because the owner never taught the dog to do differently. I can't count the number of books I've read and TV shows I've watched where the lesson of the day was - "If you want to change the dog's behavior you must start with your own behavior."<br />
<br />
The other modern wisdom is that dogs are inherently pack animals. They look to us as our leaders and the will follow our cues. I think this is also true. But that theory has certain limits, and this is where my story begins and ends.<br />
<br />
Well - OK. Enough with training theories. I have a nasty habit when I write of leading my reader on a long and winding road until I reach the conclusion. This time I will do differently! I'll start with the end, go in a circle. <br />
<br />
<h3>
The End</h3>
My dog <a href="https://www.youtube.com/watch?v=n5jo7LuRDEI" target="_blank">Franta</a> was attacked! The other dog meant business. He was seriously angry. The story might have ended very badly. The other owner and I pulled the dogs apart. Both dogs walked away, largely unhurt.<br />
<br />
Franta was certainly the loser. I knew it and he knew it. But I kept a stiff upper lip. I remained calm and steadfast with an almost matter of fact, business as usual demeanor. I worried that if started coddling him and comforting him I would re-enforce Franta's feelings of nervousness and insecurity. The sooner we returned to business as usual, the better, I felt. I wanted him to just put it behind and move on.<br />
<br />
I didn't realise it until I got home, but he had five bites along his back and hind quarters. Poor Franta! When we got home he crawled under the table and basically stayed there for the rest of the day.<br />
<br />
To be on the safe side I took him to <a href="http://www.vetpoint.cz/index.html" target="_blank">Vetpoint</a>, our local vet. They give fantastic basic care at reasonable prices and are open long hours. Franta knows them well and stops there willingly during our daily walks. But still, a visit to the vet is not his favorite activity and this particular trip added immensely to his trauma. The vet took out an electric razor and removed some hair around each bite found. Franta was shaking with fear. Each bite was cleaned with topical disinfectant and that was clearly painless, for which I am thankful. Finally, Franta got an injection of a form of <a href="https://en.wikipedia.org/wiki/Enrofloxacin" target="_blank">enroxcil</a>, a broad spectrum antibiotic. He had an <a href="http://www.drugs.com/article/antibiotic-sideeffects-allergies-reactions.html" rel="nofollow" target="_blank">allergic reaction</a> to that and within an hour we were back at the vet to get an antihistimine. Again, more trauma for all concerned. My wife and I sat with Franta for the better part of 3 hours while the reaction subsided.<br />
<br />
<i><b>Warning!!! Don't treat <a href="http://www.pethealthnetwork.com/dog-health/dog-diseases-conditions-a-z/a-quick-guide-allergic-reactions-dogs" rel="nofollow" target="_blank">allergic reactions</a> to antibiotics lightly. They can in fact be fatal both in animals and in humans if you don't respond quickly enough with the right treatment. Never lose sight of this fact.</b></i><br />
<br />
Conventional wisdom is that when you start administering antibiotics you should continue the full course of dosage. If there is an infection the infection may return if the antibiotics are discontinued. If there is no infection, then no harm done by stopping the antibiotics. In Franta's case the topical areas around the bites looked kind of nasty. The vet suggested we return in 24 hours to reasses the situation.<br />
<br />
The next day Franta was looking and feeling better. We, did a bunch of our own independent research and called <a href="http://www.vetnemo.cz/" rel="nofollow" target="_blank">Vet|Nemo</a>, a specialist vet we go to when we need higher level care. The doctors at VetNemo invested in state-of-the-art technology. Once they treated a <a href="https://en.wikipedia.org/wiki/Corneal_ulcers_in_animals" rel="nofollow" target="_blank">scratched cornea</a> and removed a dirt particle on Franta's eye with a laser pen. Then they fitted him with a contact lens that we wore for two weeks without a problem. He was in and out the clinic in 15 minutes we paid something on the order of $100, which was a fraction of the the cost we would have paid had had we opted for anesthesia and a dull blade.<br />
<br />
We returned to our local vet for the followup the next day and opted to continue a course of antibiotics and this time the vet used a form of <a href="https://en.wikipedia.org/wiki/Amoxicillin" target="_blank">amoxicillin</a>. Franta tolerated that well and we continued a program of daily visits for the next seven days. Each visit set us back a whopping $5 and with each day Franta was better.<br />
<br />
<h3>
All's Well that Ends Well</h3>
<br />
Today Franta is right as rain. He still has a few of the battle scars, but pretty much they are healed. He is his normal, happy go lucky self. He's no less confident around other dogs, though he's a bit more...shall we say....respectful and even perhaps aloof.<br />
<br />
<br />
Franta and I are certainly wiser and more experienced. A lesson or two was learned the hard way. Are you curious? Read on!<br />
<br />
<h3>
The Beginning </h3>
This is Franta. He's a mut from the shelter, about 7 years old. I say he closest in appearance and temperment to a <a href="https://en.wikipedia.org/wiki/Small_M%C3%BCnsterl%C3%A4nder" rel="nofollow" target="_blank">Small Munsterlander.</a></div>
<div style="text-align: justify;">
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-AeGQlpOKPQ8/VlGStC6fCOI/AAAAAAAAAqU/pft7wWBcYiI/s1600/Photo0033.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="http://4.bp.blogspot.com/-AeGQlpOKPQ8/VlGStC6fCOI/AAAAAAAAAqU/pft7wWBcYiI/s200/Photo0033.jpg" width="150" /></a><a href="http://4.bp.blogspot.com/-QmCL5zwotIM/VlGS23JqDzI/AAAAAAAAAqo/y-J9YNd-sXw/s1600/Photo0035.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="200" src="http://4.bp.blogspot.com/-QmCL5zwotIM/VlGS23JqDzI/AAAAAAAAAqo/y-J9YNd-sXw/s200/Photo0035.jpg" width="150" /></a><a href="http://2.bp.blogspot.com/-MJ432WtfWck/VlGSxw7VXqI/AAAAAAAAAqg/n7xBOwKk2ec/s1600/Photo0036.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://2.bp.blogspot.com/-MJ432WtfWck/VlGSxw7VXqI/AAAAAAAAAqg/n7xBOwKk2ec/s200/Photo0036.jpg" width="150" /></a></div>
<br /></div>
<div style="text-align: justify;">
<div class="" style="clear: both; text-align: left;">
I'm not sure what the attacking dog is. It's not so relevant. On the other hand, this is not the first time another dog took a stab at Franta. Therefore, Franta tends to be careful around other dogs.<br />
<br />
He developed a strategy, thanks to my good training, I must say. If he encounters another dog on the street and it looks like the meeting will not go well he keeps a safe distance from the other dog. I also taught Franta the command - "Ignore" or "Run Away." When I tell Franta to Ignore and he is on leash he knows to quickly pass the other dog by and move on. If he is off leash and I tell him to Ignore or Run Away he keeps a safe distance from the other dog. Mostly he uses his own good instinct. I only give him the command if I want to express to him my own personal doubts.<br />
<br />
I also taught him the command "Kamaradit" or "Say Hello!" That tells Franta the other dog looks pretty harmless and he should greet nicely.</div>
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<br /></div>
<div class="" style="clear: both; text-align: left;">
Maybe it's not so important to me what kind of breed the attacking dog is, but Franta takes no chances. Like many other dogs he's had some unpleasant encounters along the way. In Franta's mind all brown labrador retrievers are to be avoided. Also on Franta's bad list are large black furry dogs and rotweiler/doberman combinations.</div>
<div class="" style="clear: both; text-align: left;">
<br /></div>
<div class="" style="clear: both; text-align: left;">
Franta likes to create his own brand of mischief that in fact I have tried hard to deter him from. He has a game I call "fence chase." The game goes something like this. Find a dog minding his own business in his own front yard. The fence of course is a safe barrier for both dogs, which is what Franta wants. I think usually Franta initiates the ensuing game of chase back and forth along the fence. I know it's a game for Franta, but I don't think the other dog always knows it's a game and certainly it's not a good recipe for a quiet peaceful day in the neighborhood.<br />
<br />
I've worked hard to get Franta to kick the fence chase habit. He's getting the message, but he is mischievious and OK I admit it....I have not trained him well enough.</div>
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<br /></div>
<div class="" style="clear: both; text-align: left;">
Once Franta and I were out walking in the neighborhood and he spotted one of his supposed fence chase playmates. Franta and I were out on a Sunday stroll and this dog, a German Shepherd, was, to Franta's surprise, not behind the fence, but also out on his Sunday afternoon stroll and also, I believe, off leash.<br />
<br />
Franta froze stifff and went into his hunting dog poise. He saw this dog maybe twenty or thirty meters away and Franta was staring in disbelief, tail up, body stretch out, focused on what lay ahead.<br />
<br />
Then Franta looked at me and started wimpering and took an immediate left up a side street. No doubt about it. Franta was not going to press his luck. Clearly, Franta had no interest in meeting this dog without the presence of a fence.</div>
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<br /></div>
<h3 class="" style="clear: both; text-align: left;">
The Middle</h3>
<div class="" style="clear: both; text-align: left;">
<a href="https://en.wikipedia.org/wiki/Prague" rel="nofollow" target="_blank">Prague</a> is full of dog lovers. They go to the park, their dogs meet, run around a play happily. Rarely if ever there is a bad outcome. One dog will growl or snarl at another and both will immediately keep their respectful distances. That's what the professionals call - socialisation. Dogs learn how to behave around other dogs by simply being around other dogs in an open space like a park. Often they develop a sort of commraderie, with one dog leading the way, sniffing out a trail, writing and reading what some people I know call p-mail and the other dog determined to sniff a p-mail or anything and everything that interested the first dog.</div>
<div class="" style="clear: both; text-align: left;">
<br /></div>
<div class="" style="clear: both; text-align: left;">
This is not the case in many other Czech towns, however. <a href="https://en.wikipedia.org/wiki/Brno" rel="nofollow" target="_blank">Brno</a>, a city to the south of Prague, has leash laws. Dog owners are expected to keep their dog on a leash. A dog may roam freely provided the dog wears a cage over the snout. This way nobody's dog will bite someone or someone else's dog.</div>
<div class="" style="clear: both; text-align: left;">
<br /></div>
<div class="" style="clear: both; text-align: left;">
The unfortunate result is that dogs are <a href="https://en.wikipedia.org/wiki/Socialization_of_animals" rel="nofollow" target="_blank">poorly socialised</a>. They are nervous whenever they approach another dog. The cage over their snout clearly doesn't boost their sense of security. I won't put a cage on Franta's snout if I let him walk free. I know Franta well enough to know he won't attack. If Franta were attacked I want Franta to be able to defend himself.<br />
<br />
If you walk your dog without a leash and snout cage and another dog owner sees you the person looks at you like you are some kind of anti-social, misbehaved outlaw. Which, in fact, in that situation you are.<br />
<br />
<h3>
So What Happened?</h3>
<br />
I think the the attaching dog looked something like this:<br />
<br />
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</div>
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<a href="http://2.bp.blogspot.com/-W70W6NWte0M/Vly7DBQ10hI/AAAAAAAAAq0/Jz_RcdCpB6I/s1600/images.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-W70W6NWte0M/Vly7DBQ10hI/AAAAAAAAAq0/Jz_RcdCpB6I/s1600/images.jpg" /></a></div>
<br />
Franta and I were having a pleasant, uneventful walk, when we spotted a newly built dog park. The soon to be attacker and his owner were enjoying the obstacle course. The dog was gleefully running up and down the ramp, jumping through the tire, following his owner's lead. Franta watched, seemingly fascinated.<br />
<br />
Franta looked at me as he approached the fence. "No," I told him. "Let's go." But by then it was too late. The other dog saw Franta and approached the fence, quite cautiously, in fact. From my point about five meters away, I saw what looked to be a polite, uneventful greeting any two dogs meeting outdoors might have.<br />
<br />
Then, suddenly, things took a big turn for the worse. Both dogs were barking and growling. And then it happened. The dog that looked so happy and care free in the park was practically drooling. He was barking ferociously and baring his teeth. Then, suddenly, he found the gap between the gate and the ground just large enough to crawl through.<br />
<br />
Before I could get there, he pounced on Franta. He was angry and Franta was clearly frightened. Franta didn't even try and engage the other dog. He turned an ran. And every time he ran the other dog ran after him and pounced on top of him.<br />
<br />
It's all sort of a blur now. I remember running toward the two dogs. I saw Franta running certainly toward me, then away from me, then toward me. And then the next thing I know both dogs were right in front of me. By that time the other owner had also joined the fray. He couldn't seem to catch either dog. Luckily I managed to grab the attacker by the scruff of his neck and pulled him off Franta, long enough for the other owner to take control off his dog.<br />
<br />
<h3>
The Calm After the Storm</h3>
Now apart, both dogs started to settle down almost immediately. I stood between Franta and the other dog like the referee at a boxing match. I created basically a no-dogs land - a buffer zone of about 3 meters between the two dogs.<br />
<br />
It's amazing how quickly dogs become calm when there is a meter or two of distance between them. The other owner apologised profusely. He was quite angry at his dog. He explained to me that his dog had been attacked in the past and was frightened and defensive around other dogs. I suppose this dog's idea of a good defense is to strike pre-emptively.<br />
<br />
I don't discount the possibility that Franta actually provoked the other dog through the fence. Franta may have thought his favorite fence chase game was about to start. He certainly hadn't expected the other dog would crawl under the fence and attack.<br />
<br />
Franta was visibly shaken but appeared otherwise unhurt. I
decided it was best we went home, which we did. It was only after we
got home that the reality of what happened began to set in.<br />
<br />
<h3>
Reality Sets In</h3>
Firstly I noticed Franta was bleeding - not a lot, but enough that I could find places where the other dog had gotten a hold of Franta and actually pierced the skin. Second, I realised how traumatic the experience was for Franta. He crawled under a table and wouldn't come out for the better part of the afternoon.<br />
<br />
My wife was furious with me. Franta means the world to her and I put her pride and joy, her friend, her good smart Franta into harms way. She tried to be as understanding and calm as possible, but I can tell she was seething. I think she'd be devastated if something terrible happened to him and I think she'd be even more devastated if that something were the direct result of my actions.<br />
<br />
Finally, when I told my wife what happened I realised how preventable the whole situation in fact was. It was a disaster waiting to happen, I should have seen it coming, and I should have, could have, avoided it.<br />
<br />
We were in Brno, a place where I know dogs generally are more nervous, less well socialised. There was Franta on one side of a fence and a nervous dog on the other side of the fence. Whenever Franta and I go for a walk in our neighborhood I make a point of keeping Franta from playing his fence game. Before he even can start to play that game I tell him No or a I walk him in a different direction. So what went wrong this time?<br />
<br />
<h3>
Situational Awareness</h3>
<br />
First, I didn't generalise the problem of the fences. In the neighborhood the fence is either accompanied by a hedge or constructed from wood planks that make it difficult for the dogs to actually see each other well. Also in the neighborhood there is no gap between the fence and the ground. I can't recall seeing a dog in our neighborhood escape from the yard. Homeowners in our neighborhood are especially alert to the possibility their dog will find a gap so any gaps are quickly repaired. Third, I didn't see the gap. If I saw the gap, I didn't expect the other dog would go on the offensive.<br />
<br />
In retrospect I now understand the problem. There's something that air-traffic controllers speak of called "situational awareness." <span class="_Tgc">This is the ability to
identify, process, and comprehend the critical elements of information
about what is happening to the team with regards to the mission. More
simply, it's knowing what is going on around you.</span> <br />
<br />
Air traffic controllers are trained to be alert to the relative positions of the aircraft in their space at all times. They never ignore the aircraft in their sector. They know where each aircraft is, but they are not tracking each and every aircraft per se. Instead, they are watching gaps. When they look at their screens they instantly know if the gap between two points of light is closing too quickly or not. In short, they understand and are sensitive to everything that is going on around them at all times.<br />
<br />
I'm a credit manager. I can spot a good credit from a bad credit a mile away. That's my job. That's what I do. So naturally, when I am doing my job I'm watching every gap. My success as a bond manager depends vitally not so much on spotting what is going right, but rather on being vigilant for what can go wrong and making the appropriate change of course.<br />
<br />
But when I go out with Franta I'm not so alert. Going out with Franta is something I do to relax, unwind, and take a break from looking at what can go wrong. And therein lies the problem.<br />
<br />
<h3>
The Morals of the Story </h3>
<i>When we take our blessings for granted, when we allow ourselves to become complacent, when we stop looking out at the world around us, we risk losing the things most dear to us and that make our lives most meaningful.</i><br />
<br />
Franta seems to have put the tragedy behind him. He's maybe a bit more careful around other dogs, but he enjoys meeting them - especially the females!<br />
<br />
Franta passed by two fences in our neighborhood last week when we were out on our walk. He didn't stop to play the chase game. Just goes to show you....<br />
<br />
<ul>
<li>Never reinforce a dog's sense of fear.</li>
</ul>
<ul>
<li>A fearful dog becomes an attacking dog or a neurotic dog who can't enjoy the pleasures of relating to his or hear own kind.</li>
</ul>
<ul>
<li>Don't get complacent or drop your guard when you are out walking with your dog! Enjoy the walk, yes, but don't lose sight of the situation around you.</li>
</ul>
<ul>
<li> Be proactive and present in life. Know where you are, what is happening around you and look out for what can happen next.</li>
</ul>
<ul>
<li>Stay calm. Use your head. Ask questions. Do some research. We live in a world where answers are far more available to us than ever before.</li>
</ul>
<ul>
<li>It's a dog eat dog world out there and we are all wearing dog biscuit underwear.....</li>
</ul>
<ul>
<li>Experience is a great teacher AND.....</li>
</ul>
<ul>
<li>You <b><i>can</i></b> teach an old dog new tricks.</li>
</ul>
</div>
</div>
Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0Prague, Czech Republic50.0755381 14.4378004999999849.749331100000006 13.79235349999998 50.4017451 15.083247499999981tag:blogger.com,1999:blog-6546642416346958310.post-15567266264933383072015-12-15T09:01:00.001-08:002015-12-21T16:15:52.547-08:00A Marshall Plan is Needed to Stop ISIS <div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-9JRD4TrLBO0/Vmur2Lji9QI/AAAAAAAAArY/zU7bi9EBs0c/s1600/Symfonie%2BJPG_WEB.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-9JRD4TrLBO0/Vmur2Lji9QI/AAAAAAAAArY/zU7bi9EBs0c/s1600/Symfonie%2BJPG_WEB.jpg" /></a></div>
<div style="text-align: left;">
<br /></div>
<br />
<br />
<h2 style="text-align: center;">
</h2>
<br />
<br />
The crusade of tough talk from world leaders continues, backed up by
air strikes and military advisors. The best we can hope for from this
fundamentally misguided and weak policy mix is illusory containment.<br />
<br />
What's needed is serious commitment from the international community
to restoring security and generating economic development in Syria, Iraq
and Afghanistan. Air strikes may be a good first step, but they offer
no real hope for the future and can do more harm than good unless
accompanied by real action on the ground.<br />
Air strikes destroy infrastructure and disrupt the local economy.
People living in areas affected by air strikes suffer from shortages in
food, electricity and running water. Send in enough bombs and people
eventually leave. They become refugees.<br />
<br />
Groups like ISIS thrive in the vacuum created by air strikes. They
prey on the fears and insecurities of the local population. They profit
from scarcity of basic goods leads to rationing and price gouging.
They are winners at the expense of the local population.<br />
<br />
The longer peace and security in Syria, Afghanistan and Iraq remain
elusive, the greater will be the cost to the rest of the world. Groups
such as ISIS are a cancer and a plague. A parasite dies when its host
dies. On the other hand, ISIS feeds on the ruins of everything it
destroys.<br />
<br />
Internationalists argue that basic respect for sovereign borders and
the rights of nations dictates that ground troops are not deployed. But
we are not talking about thriving stable states when we speak of Syria,
Iraq, Afghanistan and other countries in the middle-east. We are
talking about either failed states amid civil war or states existing
with at best a tenuous peace.<br />
<br />
The first step is to send in a large scalemultinational military
presence wherever ISIS and groups like ISIS proliferate. The
multinational force will recapture the lost ground and then guarantee
security.<br />
<br />
The second order of business is to win over the hearts and minds of
the population by investing the building and rebuilding of physical and
economic infrastructure, just as was done after World War II. This
Marshall style plan is critical because it will rebuild the torn fabric
of society and create a large base of the population with vested
interest in developing and maintaining the new order.<br />
<br />
We must not forget how much work indeed there is to be done. These
are countries where many of the population are without electricity,
running water, sewage treatment systems and reliable infrastructure.<br />
<br />
Without real capital injection and development of broad based economic
and political opportunity too many people are disenfranchised and
without vested interest in the society.<br />
<br />
Nobody can expect that capital and people will flow
back into the region without the full support of the international
community in assuring peace and stability and without economic programs
that create jobs, training and education.<br />
<br />
<div class="article-content">
<div class="article-body" dir="ltr" itemprop="articleBody">
Nothing of any good in this world comes without hard work and
meaningful commitment. Air strikes tough talk and a fragile peace are
simply not a winning formula. Until the world's leaders recognise this,
take practical decisions and tackle the problem head on, little will
change.</div>
</div>
<br />
<br />
<br />Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com1tag:blogger.com,1999:blog-6546642416346958310.post-67234930641574426142015-12-11T21:19:00.001-08:002015-12-20T15:24:45.888-08:00Google AdWords - A Marketing Must????<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-9JRD4TrLBO0/Vmur2Lji9QI/AAAAAAAAArU/a7-TvrL9JcM/s1600/Symfonie%2BJPG_WEB.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><br /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-XFK5g77G5VQ/Vmur8FsE5SI/AAAAAAAAArc/bTc1MEU5yjg/s1600/Symfonie%2BJPG.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="61" src="http://2.bp.blogspot.com/-XFK5g77G5VQ/Vmur8FsE5SI/AAAAAAAAArc/bTc1MEU5yjg/s200/Symfonie%2BJPG.jpg" width="200" /></a></div>
<br />
<br />
<br />
<br />
<br />
<h2 style="text-align: center;">
</h2>
<h3 style="text-align: center;">
<i>Maybe yes, maybe no. But don't underestimate it!</i></h3>
If any of you need an animated marketing video, get in touch with my friend, <a href="https://cz.linkedin.com/in/radimhladis" target="_blank">Radim Hladis</a>. He owns a company called <a href="https://www.playou.com/" rel="nofollow" target="_blank">Playou</a>. They create animated videos that are just spectacular!<br />
<br />
<div style="text-align: center;">
<img class="center" data-loading-tracked="true" height="252" src="https://media.licdn.com/mpr/mpr/shrinknp_800_800/AAEAAQAAAAAAAAchAAAAJDUwNWUwMDM5LTZjMGYtNGQ4Yi05N2FkLTRkZmQxMWZkNjdkMw.jpg" width="448" /> </div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: left;">
Radim,
like many of my friends, decided a few years ago that he wanted to do
his own thing....be his own boss....master of his own ship....captain of
his destiny. </div>
<div style="text-align: left;">
<br /></div>
So he started an IT service and support company catering to small and medium sized enterprises called <a href="https://www.caleum.com/" rel="nofollow" target="_blank">Caleum</a>.
IT services is a tough, competitive business and one that depends on
personal reputation and recommendations. Radim and his colleagues
worked tirelessly for three years to build a solid business.<br />
Radim enjoyed the IT business but wanted to do something more
creative.<br />
<br />
Eventually Radim sold the IT business to his colleagues and
headed for more colorful pastures. He started a marketing company
called "Big Family" to work with small and medium sized companies
designing web-based marketing and advertising campaigns.<br />
<br />
Radim found that animated videos were a particularly effective sales
and marketing tool and Big Family started providing them to clients. He
become particularly adept at designing and producing the videos. He
also discovered, somewhat to his surprise, demand for animated marketing
videos is increasing. He rebranded Big Family into Playou.<br />
<br />
Radim can talk at length about what makes a good animated video and
why his videos are particularly good. You can get some insight into his
philosophy if you see his blog about video productions <a href="http://www.playou.com/3-inspiring-video-productions/" rel="nofollow" target="_blank">produced by studios he has come to admire</a>.<br />
<br />
We'll get into the why's and wherefores about the appeal of animated
marketing videos some other time. Suffice to say for now that with a
combination of client referrals and targeted marketing campaigns Radim
has begun to develop a healthy growing business.<br />
<br />
<h3>
Keep Reading! We're just getting warmed up. </h3>
That's where I come in to the picture. Radim paid a surprise visit to our offices at <a href="https://www.symcredit.com/" rel="nofollow" target="_blank">SymCredit </a>recently.
Radim faces the typical problem that many entrepreneurs with growing
businesses face. Demand for his services is growing and he's had to
hire more staff. This places pressure on working capital, so Radim
wanted to learn more about how a P2P loan can help his business.<br />
<br />
Of course, I told Radim the truth, that he had knocked on the right
door and SymCredit would happily serve him should he decide a P2P loan
was right for him. Watch the SymCredit site and maybe you'll soon see
his loan listed :).<br />
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
<img class="center" data-loading-tracked="true" height="252" src="https://media.licdn.com/mpr/mpr/shrinknp_800_800/AAEAAQAAAAAAAAZXAAAAJGU4YzBjNTNkLTZjOWItNDQ5OS1iZjE2LWFhNDQ4ZDQxY2M0NQ.png" width="448" /></div>
<br />
Since Radim is a web-marketing expert I decided to pick his brain a
little and asked him about good ways to market. Radim told me - "<a href="http://www.google.com/intl/en/adwords/" rel="nofollow" target="_blank">Google Ad Words</a> is a must and being on page 1 of the search is even a bigger must!"<br />
<br />
<div class="center" style="text-align: center;">
<img class="center" data-loading-tracked="true" height="360" src="https://media.licdn.com/mpr/mpr/shrinknp_800_800/AAEAAQAAAAAAAAUpAAAAJGYzNGMzZTRkLTg3MjItNGM3OS04MjcxLTQ4Yzg1ZTdkMjIxMg.png" width="640" /></div>
<br />
How can that be? I wondered. To my naive thinking, pay-per-click
advertising campaigns surely result in<br />
many wasted dollars. Customers
who really are serious about finding a supplier will search past page
1. They'll also read online magazines and they'll gather references.<br />
<br />
Second in a village like the Czech Republic everyone seems to know
everyone and there are not so many video producers to choose from. The
better producers benefit from word of mouth - the best form of
advertising I think I know of.<br />
<br />
Third, isn't it better to develop a referral network? That's what doctors do. My friend <a href="https://www.prohealthcare.com/ViewDoctor.aspx?phid=202" rel="nofollow" target="_blank">David Wertheim</a>
is a pediatric allergist. He knows lots of general practitioners.
When one of them needs an allergist David's phone rings. David has
developed a reputation over the last 20 years of practice. His phone
rings often. David doesn't need to pay Google. Radim knows a lot of
marketing specialists who could send video business his way, so why
should Radim need to pay Google?<br />
<br />
Finally, the conspiracy theorist in the back of my mind tells me that
a savvy competitor (or worse....Google) can help you waste your money
by finding ways to inundate you with wasted clicks.<br />
<br />
My business is financial services. Specifically, I run an <a href="http://symvest.com/en/prereg/angel-fund/" rel="nofollow" target="_blank">Angel Investment Fund</a>, a <a href="http://p2p.symvest.com/lending-fund/" rel="nofollow" target="_blank">P2P Lending Fund</a>, a <a href="https://www.symcredit.com/" rel="nofollow" target="_blank">P2P Platform</a> and a c<a href="https://www.symfoniecapital.com/" rel="nofollow" target="_blank">orporate finance advisory business</a>.
Investing in my products is not like running down to the store to buy a
bottle of milk. When someone wants to invest in P2P Lending Fund will
they really just search Google to find me? Will paying to have more
people find me on Google really drive more business my way? Or will I
wind up paying for clicks and watching my <a href="https://en.wikipedia.org/wiki/Bounce_rate" rel="nofollow" target="_blank">bounce rate</a> on <a href="https://www.google.com/analytics/" rel="nofollow" target="_blank">Google analytics</a>
soar? Aren't my clients far more likely to find me because they read
my blogs or because they saw me speak at a conference or because they
saw me mentioned in a news article or because they found me in a product
focused database? Won't I propagate into Google naturally if my site
and products are mentioned on lots of other websites?<br />
Why should I spray and pray and pay for clicks I don't need when the clicks I need will find me anyhow?<br />
<br />
Radim tells me that as many as 50% of his clients find him after they
did on-line searches for video animation companies. He tells me that
his phone rings more often when he runs an on-line campaign, especially
using <a href="https://www.google.com/adwords/" rel="nofollow" target="_blank">AdWords. </a><br />
<br />
The most surprising thing I heard when Radim paid me his visit was
that he actually starts to get enquiry from the US market. Imagine
that! He's sitting in some small Moravian town and he gets enquiry from
the US. So Radim is starting to seriously consider investing in an
AdWords campaign aimed at the US market.<br />
<h3>
Rounding the Final Bend and Heading Home</h3>
<br />
Is Google a Marketing Must? I think the answer is....it depends on
the the product and service you sell and how your customers are likely
to find you and the decision process they are likely to go through
before buying your service. Probably the need for Google AdWords and
similar services is inversely related to market size and product
complexity.<br />
<br />
Investing is a highly personal business. Few people invest serious
money with someone they don't know. The bigger the investment, the more
serious thought they put in before making a decision. Advertising
needs to be highly targeted and coupled with publishing, word of mouth
recommendation and personal engagement. Paying for clicks and directed
search engine visibility is probably not so important as simply being in
the right place to meet the right people at the right time.<br />
<br />
Video production is less personal. There is a virtual crowd of video
production companies in the global space. Radim is a smart, talented
fellow, but he still has to compete to get noticed. Unlike the
investment space there aren't publications and databases dedicated to
ranking video producers and discussing their most recent quarterly
results. Radim probably needs to use powerful tools like Google
AdWords, banner ads and other ways to generate clicks.<br />
<br />
My conversation with Radim forced to do some serious thinking. I'm
not running out to start a Google AdWords campaign. But there is a lot
more to be said about how to e-market alternative investments smartly.
Stay tuned!<br />
<i>To find out more about Radim Hladis. <a href="https://cz.linkedin.com/in/radimhladis" target="_blank">Click here</a> or e-mail <a href="https://radim@playou.com/" rel="nofollow" target="_blank">radim@playou.com.</a></i><br />
<i>To learn more about my P2P Lending Fund or my Angel Fund, visit <a href="https://symvest.com/" rel="nofollow" target="_blank">symvest.com</a> or e-mail <a href="mailto:msonenshine@symfoniecapital.com">msonenshine@symfoniecapital.com</a>. </i>Anonymoushttp://www.blogger.com/profile/03440633024115316486noreply@blogger.com0tag:blogger.com,1999:blog-6546642416346958310.post-59931255899862509482015-11-19T16:30:00.000-08:002015-12-20T15:25:23.990-08:00ISIS and the European Refugee Crisis - What's to be DoneThose of you who know me know that I don't write about politics and foreign affairs very much. I usually stick to what I know best - P2P lending, credit, high yield bonds and angel investing. So take what I say here with a grain of salt.<br />
<br />
Watch out! I'm going to use broad brush strokes in this piece. I might make some generalisations and I might over-simplify many issues. Not everything I propose will be practical, nor politically correct. So please don't take offense. In this case we have to pay attention to the big picture.<br />
<br />
I saw Thomas Friedman on CNN a few days ago. He spoke on the topic of ISIS and he spoke in pretty broad terms. Speaking about the briggade of men from all corners of the world who join ISIS he said,<br />
<br />
"None of them had ever held job, power, or a girl's hand. And when you
put large numbers of young males together and you offer them a wife, yoTu
offer them a salary, and you offer them the ability to lorded over
somebody else, that is ISIS' value proposition."<br />
<br />
Wow! Talk about generalisations! I'll neither agree nor disagree with this statement. I have neither the statistical nor the empiracl evidence about that. Thomas probably speaks to more people about the testosterone levels, dating history and employment background of this new generation of radicalised fighters than I do.<br />
<br />
But, Thomas Friedman can speak in such broad terms, then I can also allw myself some leeway to depart from my training as an economist and historian. So I'll generalise and I'll make Mike's 18 point wishlist for a better world..<br />
<br />
<b>1. We must tackle the security threat.</b> ISIS, Al Qaeda and Taliban and any other organised group of radical Islamists are a threat to global stability and security. All of these groups are fundamentally dangerous. So long as they can operate on any scale, our collective global security is at risk.<br />
<br />
<b>2. We must commit real resources.</b> Air strikes, bombardments and focus on local opposition armies such as Iraqi Kurds are a strategies bound to fail. The only result will be more turbulence, more chaos, more refugees, more misery, more insecurity.<br />
<br />
<b>3. We must see the urgency.</b> Terrorist attrocities around the world will become more and more common place so long as these groups are able to function on any scale. If left unchecked, sooner or later one of them will succeed in obtaining, if they haven't already, weapons of mass destruction.<br />
<br />
<b>4. The international community must band together for sake of the greater good.</b> World leaders need to present a grand coalition of armed forces to root ISIS out of Syria and Iraq. The force must be overwhelmingly large. There are an estimated 30,000 ISIS fighers, spread out over a wide swath of territory in two countries. I'm not a military expert, but my own estimate is the international coalition is likely to have to number roughly 200,000 or more, similar to the size of the force needed to remove Sadaam Hussein from Iraq and to remove Taliban and Al Qaeda in Afghanistan.<br />
<br />
<b>5. The flow of money to and from ISIS and other terrorist organisations will be stopped. </b> If ISIS are earning $40 mn or more a month then they also must be spending that money somewhere. Security agencies around the world must co-ordinate with each other, find those who buy from ISIS and those who sell to ISIS and put those people out of business. <br />
<br />
<b>6. A serious war again ISIS won't last long. </b>Faced with a force of overwhelming, shocking size, ISIS will melt back into the civilian population.<b> </b> ISIS's fundamental flaw is that it can never keep the hearts and minds of the populations it rules at the barrel of a gun. The most radical among them will of course fight to the death. But the rest will fall away much like Nazis at the end of World War II. They will realise the error of their ways or they will throw off the yoke of tyranny misguided. ISIS will fade away like Prospero's spirits.<br />
<br />
<b>7. The real hard work will come in the aftermath and will continue for a generation or more. </b>Mark my words - it will take twenty or more years to rebuild the ruins left from the past two decades of war and strife in Afghanistan, Iraq, Syria and other war torn impoverished countries.<br />
<br />
<b>8. Tomas Friedman and the world's policy makers will see beyond the wall of angry young men.</b> Yes, among the latest generation of Al Qaeda, Taliban and ISIS fighter are angry young men. But the real root of the problem goes far beyond girlfriends and paychecks.<br />
<br />
<b>9. The international community will see the real problem is not religion but economics.</b> When President Bush led the US into Afghanistan and then into Iraq the television images I saw were startling. Twenty years later the story, sadly, hasn't changed much. These are countries where many of the population live in abysmal conditions. Much of the population has limited access to basics like running water and electricity. Education is at best a luxury. Unemployement is persistenently high. A small portion of the population controls the overwhelming majority of the wealth while the rest are disenfrancised. I call this the problem of houses, dogs, grass, parks and trees. <br />
<br />
<b>10. We won't need rocket scientists and nuclear physicists to fix this problem. </b>It's pretty simplistic, but to me self-evident. Disenfranchise enough people, force them to live in poverty and without education and they will turn to whatever demigogue that comes along with a fist full of dollars and promises of revenge. That's plain and simple.<br />
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<b>11. The path to a stable Middle East looks terribly complex, but is really simple.</b> The world and a new generation of political leaders must win back the hearts and minds of the people and set about the task of nation building, and in a way that gives every man, woman and child in the country a good reason to buy into the social contract. Look at Northern Ireland. It was a war zone until the Good Friday peace accords. Twenty years later Nothern Ireland is a completely different place. Few if any will trade what they have today for the war zone, misery and tears of the past.<br />
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<b>12.</b> <b>Revenge and revolution is not the only way forward. </b>Must Assad must go? Must there be strong, new leadership in Iraq? What about the fragile democracy in Afghanistan? The answer is I don't know. It depends on how enlightened, how humble, how visionary they become or if they are blinded by their own egos and prejudces. Countries like Pakstan and Ukraine suffer because nothing ever really changes. Government and the national resources get passed back and forth between a few groups of competiting interests who put each other in jail and unwind each other's deals. That cycle cannot be allowed to unfold in the Middle East. Instead a new generation of leaders must be bred in these countries and learn to put the interests of the population ahead of their own interests. They have to learn to share the wealth and to help the population create their own wealth. And they must receive international aid and support. Every man, woman and child, must see their basic rights and needs met and they must be able to see that somewhere in the distance there is hope. A strong middle and working class must emerge that has entrenched vested interest in the workings of the country.<br />
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<b>13. Europe must get to grips with the refugess crisis.</b> So long as the crisis of fear and destruction and criminalism of ISIS and other terrorist activities continues the tide of refugees will swell. But we shouldn't kid ourselves into thinking that when things settle down all these people will pick up their marbles and go back home, because they won't. The sooner Europe recognises that, the better.<br />
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<b>14. A key issue must be well understood. </b>There's a fundamental difference between refugees landing on Europe's shores in the 21st century and the tide of immigrants landing on America's shores in the late 19th and early 20th century. The immigrants to America, like my gradfather and my great grandfather, were strong, pratical hardy people who came to America seeking to build a new life and a better life. They came prepared, ready willing and able to sign onto the societal contract that if you work hard you can create opportunity or opportunity will find you. These immigrants sweated and toiled day and night to send their children to good schools and to get their children an education. They were willing to sacrifice for sake of a better future.<br />
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<b>15. Europe and the refugees must accept each other.</b> The tide of refugees coming into Europe are (generally speaking) wholly different. They are running away from brutality, violence and destruction. They come not necessarily with the hope that they can build a better life, but rather with the prayer that at least life will be peaceful. Two things must therefore happen. First, Europe must offer these people real hope. While the hard work of building and rebuilding the likes of Iraq and Syria and Yemen and Afghanistan continues, Europe must set the conditions in place for the refugees who choose to stay (assuming they are presented with a choice) to integrate into the fabric of European society, get their children an education, get jobs, contribute to the economy and realize their humanity. Like wise, these refugees must be presented with the basic proposition that if they buy into the society, and I repeat, buy into the the society, they will be accepted and eventually have the same opportunities as anyone else.<br />
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<b>16. Crisis breeds opportunity. </b>Many of Europe's leaders are thinking about the refugees as a problem rather than a challenge and an opportunity. The poor wretched mass of immigrants that washed onto American's shores went on to build schools, universities, hospitals, centers of culture and sport. Their children and grandchildren became today's political leaders. Look at the value these people and there decendants created! Europe needs to look at the refugees in a different light.<br />
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<b>17. Europe and the refugees learn to live with each other.</b> If the refugees think life in Europe will be easier they will be disillusioned, angry and frustrated. Life will not be easier for them. Sooner or later the benefits will run out, the handouts will stop and Europe will have a new class of poor disenfranchised people living in slums. So Europe must put opportunity on offer and be serious about it. Likewise, the refugees that stay must be convinced that hard work will pay off if not for them, but for their children and their grandchildren.<br />
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<b>18. I won't write about foreign affairs, regligion and politics.</b> I'll sleep well at night knowing that the world is a better place and my clients who invest their hard earned money into my Angel Fund and my Lending Fund can look forward to a future of security and prosperity.<br />
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So there you have it. The world will be dealing with the aftermath of disintegration, terrorism and failed states for years to come. Step 1 is to root out the terrorist organisations convincing force. Step 2 is to restore order and to rewrite the societal contract. Step 3 is to build, rebuild, and create hope. Nothing in this life comes easy without hard work.<br />
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<i>If you had fun reading this, see my blog on <a href="http://www.symfonieangel.blogspot.cz/" target="_blank">Angel Investing</a> and look for my blogs to come on <a href="http://symp2p.blogspot.cz/" target="_blank">P2P Investing.</a> Visit Symfonie on the web at<a href="http://www.symcredit.com/" target="_blank"> www.symcredit.com</a> <a href="http://www.symvest.com/">www.symvest.com</a> <a href="http://www.symfoniecapital.com./">www.symfoniecapital.com.</a></i><br />
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