Eldon-Online

Open Doors - A Cautionary Tale

Once the door is open it becomes hard to close again.

Hong Kong has never been the most generous place on earth if you want a handout! And I for one, in general, have no problem with that concept. There are far too many people we read about in other parts of the world who expect to live on handouts from the Government, as if it is an "entitlement" and this needs to be kept under control. BUT, there are always genuine and deserving exceptions. You can and should be prepared to assist those who are not so fortunate as you. Humanitarian acts, although sadly even these are often open to abuse, should be the basis on which we live.

We also need to live in a world where we are prepared to open our doors to others, but with appropriate safeguards for our own people, although this too can eventually become a sore point for local residents. In Hong Kong, for example, there were concerns raised about the growing numbers of Vietnamese Boat People we took in during the 1970s and 1980s. A humanitarian act to be sure, but it lead to violence. Today, we have a burning issue over the cost of accommodation. Properties here have been bought up by people from Mainland China for whom cost seems to be less of an issue for them as it provides perhaps a “bolt-hole” in a different location to their own. We now have hospital beds being booked in advance by Mainland mothers-to-be because they want their children to be born in Hong Kong. But this makes maternity beds scarce for Hong Kong residents.

The trade off, if there is one and despite the negatives of our “open door”, is that many businesses in Hong Kong would not have survived unless Mainland Chinese had not been allowed over the border to come and support the Hong Kong economy, by spending money here.

So, open the doors appropriately by all means, but maintain the controls so that the ability of people to obtain an unfair advantage over the local population is at least kept in check. 

Okay, by now with and with some justification you may be saying, where is all this leading? Well, to a cautionary tale for other countries, including Hong Kong.

It was, quite simply, a newspaper headline that caught my eye from the United Kingdom that read, "You're a soft touch" “There’s no chance we’re leaving. British benefits give me and my daughter a good life.” 

The Lithuanian lady concerned is receiving HK$3,400 a week in benefits (not including a fully furnished two bedroom apartment - free). She lives well, and spends her money on designer clothing and other luxuries. And even she admittedly finds the system "strange", although she did think that the benefits should include paying for a nanny to look after her daughter.

To me, that's nuts. No wonder that people in Britain are deserting the main political parties, and giving more time to fringe parties like the United Kingdom Independence Party (UKIP). A party fiercely opposed to the European Union or rather, the UK's membership of it, because it is EU laws that allow this sort of benefit abuse to happen.  And it therefore does become an "entitlement". One of the trends in our world today is this growing sense of "you owe me", without the "me" making any contribution whatsoever. In fact it is better for some people to be on "benefits" in Britain, than working. And somewhere, some time, a line is going to be drawn that will make people unhappy. 

But the door is open. Try closing it now!

It Takes Balls.

I should apologise for a slightly ribald start to the year but hey, one can only be conservative (with a small "c" of course) for so long. Rather like some Conservatives (with a big "C") in Britain who have also decided you can only be a Conservative for so long! Yes, you definitely need to break out once in a while.

So, what prompted my Blog title this week? It was a snippet, for want of a better expression, which caught my eye in a magazine explaining that apparently castration could extend men's lives? It seems, from a study of historical genealogical records, that eunuchs tended to live 14 to 19 years longer than other men! Thus, if the punishment proposed as being appropriate to some bankers in the aftermath of the global financial meltdown had been carried out, you might have had them living longer - but at least they might not have had the - well, balls - to go back to their previous ways!  

I am referring of course to the ability of the global Investment Banking community - reviled only 5 years ago for creating the global financial crisis, and who are now clawing their way back to a level of "respectability". Or are they?

Howard Wynn, in his excellent Lai See column in the South China Morning Post was quick to remind readers earlier this week that proprietary trading by investment banks is supposed to have been banned under the Volcker Rule. But it's not applicable to Goldman Sachs it seems, who have established a new unit known as Multi-Strategy Investing, which does ... proprietary trading. And back to the past we go.

So why are the investment banks getting away with it? Because the so-called high street banks are taking all the flak. And why are they getting the flak? Because they are the ones that deal with the man in the street and not in the atmospheric heights of big swinging corporate deals. They therefore attract the attention of the media, the public, the vote-seeking politicians - and the regulators of course, while the investment bankers deal in esoteric products that no one understands - or so it seems.

But there we are - all that rant from the merits or otherwise of castration, when I really wanted to talk about regulators and regulation.

Another year is behind us, and the financial services industry is still wondering what is happening with new regulations - both in the formulation of them, the implementation, the overlapping, and particularly the cost. There appears to be a lack of coordination in the policies of regulators, governments and central banks, none of which is helpful.

In the meantime business is being stifled. Lending and investment is reduced, economic growth is inhibited, and the bankers still get blamed. But what do you expect with these mixed messages? Governments desperately want economic growth ... and austerity. Banks are pressed to increase their capital ... and lend more.

And then there are the warnings. The IMF is concerned that ... five years on ... a safer global financial system is far from reality. And warnings from those great escape artists, the rating agencies, who have somehow escaped severe censure for their major role in the global financial crisis, who say they are sceptical about specific regulations.

Yes, on paper there seems to be some progress, but there is precious little consensus in practice. So what can we expect in the months (and years) ahead?

In mid-October 2012 the leaders of the European Union agreed to work towards the creation of a single banking supervisor overseeing around 6,000 banks in 17 euro countries ... and saying that the necessary legislation could be in place within weeks! The resulting Single Supervisory Mechanism would be up and running this year, 2013. If it is I will have to start believing in fairies!

Perhaps we will see the finalisation of Dodd-Frank. At the last count it ran to 8,800 pages of new rules in the USA - and estimates suggest that is only about 35% complete. So that doesn't look so imminent either.

And if you add it all up:

Dodd-Frank, Volcker Rules, the EU super supervisor, the Vickers Report plus Twin Peaks regulation in the UK, Basel III, the related unintended consquences and the extra-territorial implications it totals  ... yes, you guessed it, continued uncertainty! And that's only where the regulators are concerned. Regulators who are in many cases in the driving seat of the industry, thanks to the legislators, while being aided and abetted by the media who sense there is an opportunity to jump on the bandwagon.

But think about this! It ain't gonna change. As an industry you can try to fight against it or you can accept it as the new reality for the industry. You can see it as an opportunity to better understand regulatory expectations. To seek guidance when the rule setting agencies and regultors seem to differ in their approach. And as an opportunity to anticipate regulatory trends quicker. I think the best option is clear - even if you think it is all balls!  

 

 

2012 - Where Did It Go?

Whoosh!! Where the heck did that go ... I wonder how many people have said to themselves "I can't believe where this year went".

I know I vividly remember a few years ago - on my 21st birthday actually - a lady saying to me "enjoy this one David, each year will get faster from now on!" I have to now accept that the advice, dismissed at the time as the ramblings of a mad and aged 36 year old, was spot on. And there are few people I have met who would disagree with the concept.

The world around us is getting faster, and we are suffering as a result. So I had a think about why this might be the case, and came up with some answers. Now I accept they might not be the right ones - but they suited my simple mind. It's all our fault!

When I started working on the international circuit, much of our mail was sent by sea so it arrived, and we had a while to deal with it before the ship called in on its return journey. With the advent of the telex machine, things started to move a little faster, but you had to spend some time in coding or decoding messages, especially if they were orders to pay someone. Telephone calls to the Head Office of your company were often put into a queue - or you could book a call a day or so in advance through the local telephone company or Cable and Wireless. If you wanted information on a particular subject - any subject - you could try an encyclopedia or an almanac. If you were lucky you might actually find someone who knew the answer, or go off to the local bookshop to find out if there was a book on the subject.

Life therefore was leisurely, in many ways, although it brought different stresses and strains from those in existence today. People had to use their initiative, live in conditions that were normal for the time but would be considered a hardship today, make judgement calls which could go horribly wrong, and most importantly be accountable for what they did. But as each year progressed, communications got faster. Travel got faster. Instant gratificaction became the goal.

Fast forward to today, and what do we see? Pub quizzes where people surreptitiously have their iPhones under the table to look up answers they never bothered to learn. People in restaurants enjoying each others company:

It was Einstein, I believe who said "I fear the day when the technology overlaps with our humanity. The world will only have a generation of idiots."

No wonder the world is moving faster than ever. We want an answer? It is usually in the palm of our hand - and don't get me wrong, in some cases that's a good thing! But you get the answer and you move on to the next thing. And so the world speeds up - faster and faster, and the years go by similarly faster. Even parenting is likely to succumb:

Quite!

So, the mystery of why our years seem to go faster and faster is resolved by the fact that as we develop and fine tune our skills, the world around us becomes impatient and hurried. Lunches and dinners are taken on the run, not at the table. The pressures are different. We are on call - unless we find the off button on our devices, which seems to be an affliction affecting many - 24/7. If we are not responding to the call from the office we are using (anti) social networks to have "conversations" with people we don't really know. We tweet 140 characters to let people know we are going to the bathroom. No wonder we live in a faster and faster world - and we only have ourselves to blame.

Have a happy 2013, and enjoy it because it will soon be gone!