Eldon-Online

"No!" - A Word Less Frequently Heard.

"...in England's green and pleasant land" - and Britain, in summer sunshine, is a hard place to beat for scenery, fresh air and that sense of history that has never quite been captured by other, even more ancient, civilisations. Of course, the fact it is particularly green this year is due in no small measure to the inordinate amount of rain that has fallen during the summer, but I am less certain what has happened to some aspects of the "pleasant" part of the William Blake song.

It seems that Britain has suffered a number of serious setbacks in its basic "make-up" when you read headlines that indicate the country has fallen victim to a spate of gun crime, particularly among teenagers. (While the highlighted article starts with a comment on a recent event, the statistics that follow are scary). When you read that a law-abiding citizen was shot dead because he asked some people, politely, to stop smoking in a non-smoking area. Other example include news that provides a glimpse of one of today's role models (so they tell me), Pete Doherty - former boyfriend of Kate Moss - who is allowed to walk free - yet again after escaping sentencing for drug related offences. Together with him, the troubled singer Amy Winehouse, the antics of Paris Hilton and Britney Spears elsewhere, and a series of British Government ministers who have admitted to smoking weed, no wonder the impressionable teens in Britain think that "beating the rap" is legitimate.

From a different corner, comes news of a woman in Britain who suddenly discovered that she had gained GBP135,000 in her bank account; unexpected and unexplained - and so she spent it! She was convicted of theft, and now awaits sentencing. It is not my place to comment on the case, but this seems inherently correct.

What surprised me though was the attitude of many people interviewed after the event. I heard people saying that something similar had happened to them, and they had returned the money to the bank - but that they were shocked when the bank did not "reward" them for their honesty. Have we become so morally bankrupt that we now have to expect a reward for doing what is morally correct? Or, bizarrely in my view, are seriously contemplating some form of payment to children to "encourage" their attendance at school? 
The list goes on...and who gets the blame?

Usually the finger gets pointed at the Government. But surely what has been created in Britain, and perhaps other "developed"(?) countries, has been the result of parents abdicating responsibility for their children's upbringing, being in some cases "scared" of their children - and not using a word like "No!" because in our morally sensitive society, saying "No!" creates negative feelings in a child's development.

The creation of an environment that protects a child against any kind of ill-treatment is welcomed, but just allowing children to do what they want is seriously at the other end of the scale. It puts at risk the moral fibre of the country - a set of standards by which we should live. While countries in Asia continue to try and improve their moral standards, Britain will not necessarily be the best model to follow in the future.

I generalise. Of course I do, but if the level of serious teen crime continues to rise, if the standards of education fall (despite apparent record increases in exam results this year), if the role models escape censure, and if we don't learn to say "No!" a little more frequently, William Blake's song might have to refer just to "...a green land" - that is if they haven't actually set fire to it!

Made in China

Oh dear, and they were doing so well!!

The news this last week of goods made in China being recalled for safety considerations in both the UK and the USA highlights either an unfortunate (and unacceptable) lapse of common sense by the manufacturing community in China or an unsavoury (and equally unacceptable) attempt to darken China's name for political expediency.

"Charitably" I tend to the former view because I think the repercussions of a politically induced trade war will be further reaching than any "invisible hands" might imagine.

What worries me about the substandard goods is the danger of a return to the era of the 1950s and 1960s where, to quote one well written website "Throughout the West, the labels “Made in Hong Kong” or “Empire Made” (often the same thing), became bywords for cheap and shoddy goods."

I don't want to point fingers, as I don't have precise knowledge today, but I am aware that some Hong Kong manufacturers certainly used to make toys for the US market, and for the names mentioned. Hopefully this is an aberration and will be resolved soon - with China getting back to concentrating on quality, quality and quality. Believe me, there are still manufacturers alive and well in South East Asia who will be just waiting to pick up orders if the US and European buyers decide it is time to hedge their order books and, despite a slight increase in costs, be sure of their quality.

What I don't understand is why a company like Mattel, which orders many goods from China, doesn't have its own safety and quality inspectors on site - or if they do, what went wrong?

Mattel has acted quickly and, hopefully, without any follow-on repercussions but they cannot afford another lapse. Neither can China.

The implications for FDI flows into China have to be considered carefully - poor quality factories/manufacturers will not attract investment dollars.

Message for investors and buyers - know whom you are dealing with and seek out the best advice.

Sell in May and Go Away

... personally, I waited until July before I went away, hence the recent absence of activity on the blog, but I wonder how many people today rue the fact they ignored the old investors tale to "sell in May" - coined in the UK sometime in the 17th Century. And note the date of the snippet, in 2005. Were we worried then?
Despite its prophetic nature, the adage has consistently demonstrated its soundness, but whatever reasons our ancestors had for discovering such wisdom, it seems there are some fundamental reasons for the "difficult" stock market conditions that exist right now.
The impact on the financial markets of the sub prime business in the USA has been undeniable. But then, I also think the headlong frenzy towards the listing of "A" and "H" shares on the Shanghai and Hong Kong exchanges has also had a part to play.
From a former "vantage point", I was supportive of the acquisition by HSBC of Household Finance in the USA - a major player in the sub-prime market. The customer profile in existence at the time of the purchase was reasonably solid "Middle-America"; a category type with which the Bank, steeped in a long history of successfully lending to small businesses and individuals in Asia - with all the attendant riskes, had a degree of familiarity. However, if those riskier borrowers are not subject to enforceable controls and if the lenders are not alert, things will go wrong. Hindsight? I don't think so. The dangers of relaxing the lending criteria were there for all to see - and the bundling up of those lower quality mortgages into saleable packages - so eagerly taken up by the investor community, just serves as a reminder of caveat emptor. So, are we having fun blaming the US sub-prime market? - well, it seems a whole lot better than accepting any blame ourselves for being greedy!
And I mentioned China stocks - are they realy anything to do with the problem? In my opinion, yes. I have long warned against the China-stock frenzy - to the point of being extremely boring. My concerns? - an investing public that was unsophisticated and that would be the last to get out of the market - with substantial (at least for them) losses. I couldn't fault the public for wanting a "piece of the action", but I did think it was going to end in tears. The market, in my opinion, has been looking for an excuse to cool down - and it found it, without having to point the finger at itself. How good is that?
There are some very nervous people in the Asia markets right now, markets that have probably over-reacted as is often the case. But I think that once the sick feeling in the bottom of the stomach dissipates over the weekend, with the FTSE and the NYSE showing signs of recovery this Friday, next week will bring some relief. As long as you can afford to hang on, do so. As we have witnessed so many times before, over decades, it is only a matter of time before the cycle moves on and round. In fact I think I shall be looking for some bargain buys first thing on Monday.

"Cabin Crew Prepare For Take Off..It May Be Bumpy."

For those of us who fly regularly to and in China, last week's report (SCMP - 3 August) about Air China and China Eastern each losing a slot at Beijing as "punishment" for weather-related flight delays since June at Beijing Capital International Airport, has a rather sinister ring to it. According to The China News Service, The General Administration of Civil Aviation of China said its investigation into delayed flights was aimed at ensuring good service for next year's Olympics.
In the absence of any further elaboration or explanation on the reasons why the delays occurred, one might conclude that a pilot may no longer have the final say in whether his flight goes or not. If the airport authorities decide in their infinite wisdom that actually it's a good day for flying, off you go or you will be punished for prudence.
I have had my fair share of bumpy rides during a flight and, on one occasion, even had one sitting on a plane on the ground, when the pilot decided it was unsafe to fly. But I have always taken comfort from knowing that sitting up at the front of the aircraft was a team of people who had as much interest in getting safely to their destination as I had.
Let's hope the airlines concerned still give their flight crew the final say, make their policy known domestically and internationally, and they should be the ones who reap the benefits. And also hope that the authorities either provide more information, or leave it to the professionals.