Monday, July 30, 2007

Bank of Ireland's Wealth of the Nation Report 2007: Tough Times in Japan - the Wealthiest Nation on Earth

Katsuaki Watanabe, President, Toyota Motor Corporation

Bank of Ireland Private Banking published its annual Wealth of the Nation Report today which shows that Ireland is second only to Japan in the league of the wealthiest nations on earth.

For those who would in this grim summer of rain, cast a jaundiced eye on the glad tidings of an increase of 10% in the number of Irish millionaires (excluding principal private residence), consider the lot of the wealthiest nation - Japan.

Japan's national statistics office reported on March 2nd that inflation was zero in January, signalling the struggle to end a decade of deflation.

Core consumer prices, which exclude fresh food, were unchanged from a year earlier, the statistics bureau said.

Earnings fell the most in more than two years, according to a separate report, signalling the difficulties that the Bank of Japan has in raising its key interest rate from the lowest in the world at 0.5%.Wages fell 1.4% in January, the biggest fall since June 2004, the Labour Ministry said.

A recent Japanese Cabinet Office survey showed that people felt a high level of anxiety about their daily lives, the highest angst level recorded since the poll began nearly 40 years ago despite a recovery in the economy.

Japan's economy has grown for 60 consecutive months, the longest period of growth in the post-war era. While unemployment has fallen from 5.4% in 2002 to 4.1% at the end of 2006, wages have not moved. Statistics published by the Ministry of Health, Labour and Welfare show that the average Japanese made $2,881 a month in 2002. For most of 2006, the average monthly wage was only $2,749.

Japanese companies have kept wages in check in part by shifting more work to part-time employees, who now constitute over 33% of Japan's workforce, up from 20% in 1992.

The corporate sector has had the longest run of quarterly profit increases in 36 years, according to the Ministry of Finance. Earnings from operations rose over 12% in the financial year ending March 31, 2007, according to Nomura Research Institute, basing its estimate on the Nomura 400 index of the nation's largest companies.

Companies have not paid much heed to the pleas of Prime Minister Shinzo Abe to pass on more of their profits in wages. Instead, they are investing in new factories and upgrading equipment after a decade-long economic stagnation that followed the bursting of the bubble economy of the late 1980s.

Toyota raised its wages last March by a monthly average of €6.


The squeeze on earnings is having an impact on consumer spending which accounts for about half the Japanese economy.

Toyota overtook General Motors as the world's biggest car maker in the first quarter of 2007 but it's home market is more than in the doldrums.

Toyota sales boost came from overseas markets in particular North America as Japan posted the lowest car sales in the twelve months to March 2007, since 1977.

Japan's vehicle sales fell for a 21st consecutive month, led by Nissan Motor and Toyota Motor.

Sales of cars, trucks and buses, excluding minicars, fell 12.6 percent to 487,738 vehicles in March from a year earlier, the Japan Automobile Dealers Association said in early April. Nissan's sales fell 16%, while Toyota's dropped 12%.

The wealthiest nation but some fun place to be for many layers in the economic pyramid!

Tuesday, July 24, 2007

Top Fund Manager Pours Scorn on the Grab-all Superearners at the top of the US Economic Pyramid

Source: PIMCO Bonds

An FT/Harris poll published on Monday shows that popular backlash against globalisation and the leaders of the world's largest companies is sweeping all rich countries.

Large majorities of people in the US and across Europe want higher taxation for the rich to counter a widespread belief that rewards are unjustified.

Supporting the view that globalisation is an overwhelmingly negative force, citizens of rich countries are looking to government to cushion the blows they perceive have come from the
liberalisation of their economies to trade with emerging countries.

US chief executive officers are regarded as unethical and overpaid, according to most Americans surveyed in a Bloomberg/LA Times poll in June.

More than six in 10 people surveyed say CEOs are ``not too ethical'' or ``not ethical at all,'' versus 33% who call them ``mostly ethical.''

An overwhelming majority, more than eight in 10, say executives are paid too much. At the same time, Americans remain upbeat about the state of the economy.

Bloomberg News says that lingering antagonism toward the boardroom set could mean that Democrats, who have been leery of being labeled anti- business in the past, may be emboldened in efforts to curb executive compensation and tighten financial regulation.

The House of Representatives in April approved a measure to give shareholders more say on how top executives are paid. A similar bill is working its way through the Senate.

Bill Gross, who runs one of the largest specialty fixed income managers in the world, with more than $687 billion in assets under management and has been termed "the nation's most prominent bond investor" by the New York Times, lets rip in his August newsletter about hedge fund and equity fund managers who currently pay a 15% tax rate on most of their income because fees are treated as capital and not income.

Gross writes: What pretense to assert, as did Kenneth Griffin, recipient last year of more than $1 billion in compensation as manager of the Citadel Investment Group, that "the (current) income distribution has to stand. If the tax became too high, as a matter of principle I would not be working this hard." Right. In the same breath he tells, Louis Uchitelle of The New York Times that the get-rich crowd "soon discover that wealth is not a particularly satisfying outcome." The team at Citadel, he claims, "loves the problems they work on and the challenges inherent to their business."

Oh what a delicate/tangled web we weave sir. Far better to admit, as has Warren Buffett, that the tax rates of the wealthiest Americans average nearly 15% while those of their salaried and therefore less incented assistants just outside their offices are nearly twice that. Far better to recognize, as does Chart 1, that only twice before during the last century has such a high percentage of national income (5%) gone to the top .01% of American families.

So when is enough, enough? Bill Gross asks.

"Now is the time, long overdue in fact, to admit that for the rich, for the mega-rich of this country, that enough is never enough, and it is therefore incumbent upon government to rectify today's imbalances," he says.

US superearners take lion's share of productivity gains

Top 25 hedge fund earners raked in more than $14 billion in fees in 2006 - equivalent to the GDP of Jordan or Uruguay

Saturday, July 21, 2007

Forty Years on from San Francisco's Summer of Love and Challenge to Conventional Prejudice in UK

Forty years ago, it was the Summer of Love in San Francisco and the anthem of the hippie generation San Francisco (Be Sure to Wear Flowers in Your Hair), which had been released in May 1967 for the famous Monterey Pop Festival that was held a month later, was making waves.

John Phillips of The Mamas and the Papas is reported to have taken 20 minutes to write the following lyrics for the song, that was sung by fellow-group member Scott McKenzie.

" If you're going to San Francisco,
be sure to wear some flowers in your hair...
If you're going to San Francisco,
Summertime will be a love-in there."

Every revolution has its positives and negatives and the verdict on this one must be overwhelmingly positive.

What should be considered is that the difference between now and the pre-1960's is that most sexual activity today is consensual. We also know from life in Ireland and elsewhere that many societies then, were more grim organised hypocrisies than they are today.

Scott McKenzie singing San Francisco at the Monterey Pop Festival 1967

The sixties were also marked by challenges to long-held prejudices and this month marks the fortieth anniversary of the legalisation of gay sex in Britain. It took us Irish another twenty-seven years to make that advance.

In Harper Lee's To Kill a Mocking Bird, which was published in 1962, lawyer Atticus Finch says to his daughter Scout: If you just learn a single trick, Scout, you'll get along a lot better with all kinds of folks. You never really understand a person until you consider things from his point of view... Until you climb inside of his skin and walk around in it.

American writer James Baldwin (1924-1987) left racist White America for France in the late 1940's and returned in 1957 as the civil rights movement was gaining strength. He took an active part in it but he was a victim of another prejudice that did not have colour boundaries.

Baldwin was both black and gay and reaction both within and outside the civil rights movement to his books Giovanni's Room (1956) and Another Country (1962) drew criticism.

He was rejected as a speaker at the renowned civil rights march in Washington D.C. in 1963 when Martin Luther King delivered his I have a dream speech.

In 1968, Eldridge Cleaver, then a member of the Black Panther Party, asserted that the novel Another Country, illustrated Baldwin's ''agonizing, total hatred of blacks.''

Baldwin had neither chose the colour of his skin or sexuality but not everyone was given to taking Atticus Finch's advice.

This week is the fortieth anniversary of the reform that legalised gay sex - in private between consenting adults over 21. Sue Cameron wrote in the Financial Times last week that before then gay people were often the victims of authority at its worst - narrow, oppressive and vindictive.

Tory Lord Hailsham, later lord chancellor, likened gay sex to heroin addiction and in the 1950s the then home secretary, Sir David Maxwell Fyfe, promised to rid England of homosexuality entirely.

"You might as well try to get rid of the common cold," was the response of film star Rex Harrison, who was Maxwell Fyfe's brother-in-law. Yet that did not stop the establishment trying and the fifties was a grim decade for gays.

Alan Turing (1912-1954), the brilliant scientist, who was chiefly responsible for breaking the German Enigma code during the Second World War, an achievement that helped save Britain from defeat in the dark days of 1941, was convicted in 1952 of acts of gross indecency after admitting to a sexual relationship with a man in Manchester.

Dr. Turing was placed on probation and required to undergo hormone therapy. He died after eating an apple laced with cyanide in 1954.

Turing is today credited with creating the blueprint for the modern computer.

In the 1965 essay, The American Dream and the American Negro, James Baldwin wrote that as a child, "It comes as a great shock to see Gary Cooper killing off the Indians and, although you are rooting for Gary Cooper, that the Indians are you."

Four decades on, in some parts of the world at least, while far from dead, prejudice is in retreat.

Irish writer Colm Tóibín's 2001 essay: The Henry James of Harlem: James Baldwin's struggles

Time Magazine Cover - - May 17, 1963: Read the Cover Story

Tuesday, July 17, 2007

Profile in Courage: John McCain

In 1954-55 John Fitzgerald Kennedy a freshman US Senator from Massachusetts, wrote a book profiling eight of his historical Senatorial colleagues, such men as John Quincy Adams, Sam Houston, and Robert A. Taft. Instead of focusing on their storied careers, John F. Kennedy chose to illustrate their acts of integrity, when they stood alone against tremendous political and social pressure for what they felt was right.

The profiled senators crossed party lines and/or defied the public opinion of their constituents to do what they felt was right and suffered severe criticism and losses in popularity because of their actions.

The book, which was published in early 1956 and won a coveted Pulitzer Prize, was claimed to have been written when Kennedy was laid low by back trouble, but it has been suggested that it was largely written by Kennedy aide Theodore Sorenson.

More important than who was responsible for writing the book, is the claim that Kennedy used his back trouble to avoid voting in the 1954 censure motion in respect of fellow Irish-American Senator Joseph McCarthy, who was admired for his stand against "communists," by Kennedy's father Joseph. McCarthy was the godfather of the first child of JFK's brother, Robert Kennedy.

As Kennedy proved himself, brave senators who preceded him and succeeded him are scarce.

One of the latter is Senator John McCain.

List of senators profiled in Profiles in Courage from Wikipedia:
It is a rare politician who doesn't bend with the wind and the more common feature is the individual who erases what were accepted by the public as passionately held positions to achieve power. Irish Green Party leader John Gormley is an excellent illustration of this.

More often than not, the brave politician pays a big price for honesty and courage.
Senator John McCain's campaign for the US Presidency is imploding.

McCain has strongly criticised the Bush Administration's execution of the war in Iraq and as a past victim of torture, has also lambasted the tacit support of the Administration for torture of prisoners.

His son has joined the armed services as he did.

It would have been easier to join those who are calling for an early withdrawal from Iraq because of political expediency rather than principle.

As a recent Financial Times editorial noted: Sadly, the finest men do not always make the most successful politicians.

Senator Joseph Raymond McCarthy: The Implosion of an Irish American Demagogue

The Rise and Fall of an Irish-American Bully

Monday, July 16, 2007

Housing Affordability - The Contrast between Britain and Germany

Britain's new Prime Minister Gordon Brown last week promised that 3m more homes would be built in the UK by 2020. ­Surplus public-sector land would be used for house-building, local councils would be given greater freedom, and incentives, to encourage building and planning rules would be streamlined, all while protecting “greenbelt” land.

Germany builds about 350,000 houses annually compared with the UK's output of 160,000-190,000 and houses are much more affordable.

There were 93,000 housing units built in Ireland in 2006.

In Switzerland where there is a high degree of decentralisation and cantons have significant tax raising powers, real house prices haven't increased since 1970!

Traditionally, it has suited Labour controlled city councils to keep population in the large UK urban areas while the Tories have restricted building in the countryside.

On this week's BBC Politics Show...

Some of us feel a quiet satisfaction in knowing that, on paper at least, the roof over our heads is making us rich.

The extraordinary rise in house prices over the last few years has made millionaires of some quite ordinary families. And anybody who invested in bricks and mortar some time ago can afford to feel smug. But what about our children?

In our heart of hearts, most of us aren't really comfortable with the idea that young people starting out in life, with good but not specially well-paid jobs, have little chance of placing a foot on the bottom rung of the housing ladder. It means people have to commute further, live in overcrowded accommodation, put strain on families and harm the labour market flexibility.

Failing foundations?

Most experts say the real reason for the upward pressure on house prices is the simple economics of supply and demand. Family breakdown, longer life expectancy and immigration contribute to 230,000 new households being formed in England alone every year. But we're only building around 160,000 new homes.

Too many people chasing too few houses equals price rises. Why can't we get this right? Other countries have rising populations, but most of our European neighbours seem to manage to match housing supply to demand. Why can they solve the problem, when we can't? Paola Buonadonna reports from Germany.
BBC Politics Show - Housing Contrasts: Germany and Britain

Sunday, July 15, 2007

Planet John Gormley and Hypocrisy

John Gormley, Minister for the Environment, Heritage and Local Government

John Gormley, the new Minister for the Environment is either disingenuous or actually believes that Green Party members are already disillusioned by the decision to drink the soup from the Early Bird Menu and go into government by jettisoning many key recent positions.

Gormley wrote in his blog on Friday, July 13th: I had hoped to use this weekend to canvass for the leadership. Unfortunately, I’ve discovered that many members have voted already. In most cases they have voted for Patricia thinking that I had it in the bag. It’s called safe seat syndrome and I know all about it from the General Election. Unless I can get those who have not bothered to vote yet to vote for me, Patricia will be Green Party leader on Tuesday next.

In the Sunday Tribune, Diarmuid Doyle writes in an analysis of John Gormley's Planet Bertie address to the Green Party's annual convention last February and says in relation to Gormley's self-projection in the media since becoming a minister: why would anybody want to present people with constant reminders of how much you had sold out in order to be just another political patsy on the plains of Planet Bertie?

It's hardly surprising that cynicism about politicians is so rife.

I understand that politics and governance is often an issue of compromise. But in Gormely's Planet Bertie address, it's not really about policy issues but values.

This was the man who lambasted Michael McDowell for not holding Bertie Ahern to account and whatever can be said about McDowell, the word hypocrite does not come to mind.

Based on John Gormley's own words, he is possibly the greatest hypocrite in Irish politics:

On Planet Bertie you can sign blank cheques because everyone does it, apparently. On Planet Bertie you can spend the average industrial wage on make-up. On Planet Bertie you can get loans from people that you don't have to pay back. On Planet Bertie you can save €50,000, without a bank account. And on Planet Bertie, climate change doesn't exist. All that stuff is made up by Trevor Sargent.

On Planet Bertie there's a strange cult called Fianna Fáil, a type of religion without vision or values; and every year in August they go on their annual pilgrimage to one of their sacred sites, the tent at the Galway races, where they pay homage to their gods and the gods bestow them with gifts for doing their bidding.

Oh yes, it's a strange place Planet Bertie. So strange and so alien to our sensibilities, that it's a planet that we Greens would like to avoid. For let there be no doubt, we want Fianna Fáil and the PDs out of Government.

The Green Party wants high standards in high places; not because we are particularly virtuous, but because strong ethical standards improve the quality of our democracy. We do it because we recognise that there are now three Governments in this country: the permanent Government, which is the civil service; the present Government, if you can call it that, consisting of the PDs and Fianna Fáil; and the real Government which are the gods in the Ballybrit tent. These people have inordinate influence on how our country is governed.

The gods will be back at the fund-raising Fianna Fáil tent at the Galway Races in Ballbrit from July 30th.

But in reality we won't be guaranteeing anything unless we're in government. We want to be in government. We see ourselves as a party of government but, we are also an unusual Party in that we are a Party of conviction with conviction politicians.

Prospective coalition partners need to know this. If they are into power for power's sake, or if it is just about gimmicks and hype, then they should think again about knocking on our door. But if they are serious about providing a better society then they will find in the Green Party dynamic dependable people who want to provide this society with better leadership.

I cannot bear the thought of another five years in Opposition. In the early years of this Party we talked about changing the values of society, changing the mindset. We talked about the need for a paradigm shift and sometimes when I look across at the Government benches I ask myself a deeply disturbing question. How would Dick Roche and Martin Cullen and Tom Parlon shift a paradigm? Possibly with a JCB and without planning permission.

The gombeenism has to end, my friends.

The Green Party have nominated jobs for two journalists to represent them in the Government Information Service.

It's about time that other journalists force John Gormley to say what he actually still believes and what was spoof from the start.

Conviction politics?

Saturday, July 07, 2007

When "Depression" Sounded less Frightening than "Panic" or "Crisis"

President Herbert Hoover in the Oval Office with Theodore Joslin, 1932 - US National Archives, Herbert Hoover Presidential Library and Museum, West Branch, Iowa

William Manchester (1922 – 2004), author of popular biographies on Winston Churchill and Douglas MacArthur and the controversial chronicler of President Kennedy's assassination, had his book The Glory and the Dream: A Narrative History of America 1932-1974, published in 1974.

It's an excellent read and presents a sense of the times starting with the Depression, through extensive use of contemporaneous newspaper and magazine reports, combined with sharp analysis.

Here is a sample on President Herbert Hoover:

Riffling through Hoover's papers, one sometimes has the strange feeling that the President looked upon the Depression as a public relations problem -- that he believed the nightmare would go away if only the image of American business could be polished up and set in the right light.

Faith was an end in itself; "lack of business confidence" was a cardinal sin. Hoover's first reaction to the slump which followed the Crash had been to treat it as a psychological phenomenon. He himself had chosen the word "Depression" because it sounded less frightening than "panic" or "crisis."

In December 1929 he declared that "conditions are fundamentally sound." Three months later he said the worst would be over in sixty days; at the end of May he predicted that the economy would be back to normal in the autumn; in June the market broke sharply, yet he told a delegation which called to plead for a public works project, "Gentleman, you have come sixty days too late. The Depression is over."

Already his forecasts were bring flung back to him by critics, but in his December 2, 1930, message to Congress -- a lame duck Republican Congress; the Democrats had just swept the off-year elections -- he said that "the fundamental strength of the economy is unimpaired."

At about the same time the International Apple Shippers Association, faced with a surplus of apples, decided to sell them on credit to jobless men for resale at a nickel each. Overnight there were shivering apple sellers everywhere.

Asked about them, Hoover replied, "Many people have left their jobs for the more profitable one of selling apples."

Reporters were caustic, and the President was stung. By now he was beginning to show signs of the most ominous trait of embattled Presidents; as his secretary Theodore Joslin was to note in his memoirs, Hoover was beginning to regard some criticism "as unpatriotic."

Nevertheless, he persevered, pondering new ways of waging psychological warfare. "What this country needs," he told Christopher Morley, "is a great poem." To singer Rudy Vallee, he said in the Spring of 1932, "If you can write a song that will make people forget the Depression, I will give you a medal."

Vallee did not get a medal but released a record of the song Brother, can you spare a dime? which was also recorded by Bing Crosby and became the anthem of the times.

The following is an extract from Theodore Joslin's diary, written in the dying days of the Hoover Administration, when the banking system was collapsing across the United States. :

Monday, Feb. 27, 1933

The Commercial did open this morning and although I felt unpatriotic in doing so, I drew out most of the money in my checking account and had Rowena come in and withdraw her savings account. And I told the President what I had done.

"Don't hoard it, Ted," was his only comment. "Put it in another bank that is safe. I would suggest the Riggs. It is the most liquid."

But I am "hoarding" temporarily. No bank is really liquid today and won't be until this panic is over. The daily hoarding figures from the Treasury are ghastly. That of yesterday was $165,000,000 bring the total to in excess of $2,200,000,000.

I had a conference with Charles Scribner this noon and may be able to arrange for the publication of a book on the last four years. The President inquired most anxiously as to all the details of our conversation and expressed the hope we could reach an agreement. "I shall think you could give Scribner's a good book," he remarked. "I hope it will work out."

The final entry for the diary is March 3, 1933, the day before Franklin D. Roosevelt was sworn into office. The final line quotes the President (described by Joslin as “angry and depressed,” ) saying “'We are at the end of our string.’”

On Sunday March 5, 1933, a day after his inauguration, President Roosevelt began the first full day of his dramatic inaugural 100 Days, by issuing an order closing every bank in the country for four days.

Harry Truman who became President on the death of FDR in April 1945, said that it's a recession when your neighbour loses his job; it's a depression when you lose yours!

Monday, July 02, 2007

Justin Timberlake, Paris Hilton and Maurice Hilleman

Dr. Maurice Hilleman (1919-2005)
Singer Justin Timberlake was in Dublin last week-end and attracted big crowds for two concerts.

I had heard of the said gentlemen because my daughter used be a fan of Britney Spears when the latter touted her virginity and love of God as badges of honour or good marketing for the impressionable teens.

Timberlake had a liaison with Spears at one stage and when it was over, with the God-veneration days behind her, she dismissed Timberlake by raising the small finger of her right hand in the air. The once proud virgin had taken to her new role with some seriousness.

Timberlake is in Europe with his "FutureLoveSexSounds" tour. In the Swedish city of Gothenburg, he treated his adoring fans with contempt but it didn't affect his pulling appeal in Dublin and they weren't all star-struck teens.

When in Gothenburg, a little girl asked if she could take a picture of him, he replied with a sarcastic grin, if she wanted him to juggle as well. Needless to say, he refused the little girl.

Then, when he returned to the hotel, there was a group of teenage fans waiting for him. Timberlake refused to be photographed. One Swedish boy rightly called him a "fuckface". The American singer responded: "Go fuck yourself!"

Back in his room, the 26-year-old rushed to the balcony of his hotel room and accompanied by a woman, used the high vantage point to throw everything but the kitchen sink down at them. He dumped strawberries and cherries and emptied plastic bottles filled with water. Then he is reported to have spat down on his fans.

The fans in Gothenburg may have been little more than impressionable children but there is no shortage of idiot adults in modern society who would find their lives pretty empty if they weren't groupies of one celebrity or other.

Many of the targets of the veneration, have nothing of substance to their credit.
In Hollywood, the leading practitioners of the genre, grab as much as the most reviled capitalist but when the star is fading, there is nothing more sought after than to be appointed to be a UNICEF Humanitarian Ambassador.

Celebrity has replaced religion for many people, even while the factors that have always sustained religions will always exist. In times past in Europe, when life was "nasty, brutish and short," people were sustained on the hope of a better life to come. In advanced consumer societies like the US, the death of community is drawing people to mega-churches where they can share an experience with others searching for something other than the inanities of trash television and a celebrity culture that worships people who parrot lines written by others while for example the name of American Maurice Hilleman, a man credited with saving more lives than any other scientist in the past century, means nothing.

Hilleman died in 2005 and during his work life, developed some 40 vaccines, among them for measles, hepatitis A and B, chickenpox, meningitis and pneumonia. He developed the one-shot vaccine that can prevent several diseases, such as MMR (measles, mumps and rubella).

Some of Hilleman's vaccine's are still used today.

It's a bimbo like Paris Hilton rather than people like Maurice Hilleman get the attention and the mainstream media like RTE, the Irish public broadcasting service and the BBC join the media circus in fear of losing an audience.

So due credit to anchor Mika Brzezinski on MSNBC last week when she objected to the news being led by Paris Hilton's release from prison.

Mika Emilie Leonia Brzezinski refused to anchor a Paris Hilton news report. Brezinski, is co-host of MSNBC's morning program Morning Joe. Her fellow anchors played the roles of jerks, on the show.