2008 - the tipping point ??

Let's get started in new year with some excerpts from an excellent article "How much is $38 Billion ??" recently published by Eric Fry from "The Rude Awakening" Newsletter.

Facts :

• As we end year 2007, Wall Street's five largest brokerage firms will dole out a new-record $38 billion in year-end bonuses.
• "Shareholders in the securities industry are having their worst year since 2002," Bloomberg News observes, "losing $74 billion of their equity."

  Check the stock performance of these companies to see how they well (or worse !) they did (GS, MER, MS, LEH, BSC) . Now you decide what in the world would deserve such a bonus payout !!

• As recently as ten years ago, the bonus pool for New York City's finance-company employees totaled less than 90% of the net income of NYSE brokerage firms. Today, the relative size of the bonus pool has doubled to about 180% of net income....

Now you know where to find a job for yourself, or if you are too old (like me!) to start a new career, at least you know where to look for putting your Kids to work !

Ok, let's see "How much is $38 billion?" in real perspective..

1. $38 billion is three times more money than the entire world spent on humanitarian aid last year.
2. $38 billion is twice the sum necessary to provide basic health care to every child in the world, and three times the sum necessary to provide clean drinking water to every child in the world.
3. $38 billion is seven times more than the annual budget of the National Cancer Institute (NCI), America's principal agency for cancer research.
4. And here is the kicker .. it is more money than Wall Street's five largest brokerage firms – combined – earned during the last 12 months. $38 billion is also more than the combined earnings of these five firms during all of 2004 AND 2005.

On the same token, let's compare it to some of annual world expenditures.

Did you know the world spends every year..

• $59 billion on golf ,
• $118 billion on wine,
• $794 billion either waging war or preparing to wage war.

"The world in arms is not spending money alone. It is spending the sweat of its labourers, the genius of its scientists, the hopes of its children...this is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of fire." - quote from President Dwight Eisenhower

Finally as Eric Fry puts it beautifully... The stewards of public companies do not deserve mega-million bonuses. Not once, not twice, not ever. They are the EMPLOYEES of public companies that are OWNED by the shareholders. They are not the lords of their domain with the right to tax the productivity of the shareholder/serfs. The era of the overpaid corporate stewards is corrupting and crippling American dynamism. Excessive compensation schemes like this only help to legitimize extreme socio-economic disparities. As such, these schemes work to squander the nation's collective "sweat," "genius," and "hopes"...just like warfare.

Kudos Wallstreet, I like where we are going .. Happy new year 2008 !!

Signinig off...

Happy Planet Index

Quote "The Happy Planet Index (HPI) is an innovative new measure that shows the ecological efficiency with which human well-being is delivered. This website introduces a measure of something more fundamental. It addresses the relative success or failure of countries in supporting good life for their citizens, whilst repecting the environmental resource limits upon which our lives depend. " (end-quote)

Now where would a developed country like US should stand on Happiness Index ? Top 10, or 50, ... no, at 150 ! (yes, at one hundred fifty ), now that compared to developing countries like Mexico at 38, China at 31, India at 61, Cuba at 6 (?). Now if that seems surreal, and doesn't feel right ! you should spend sometime on this http://www.happyplanetindex.org/introduction.htm.

Ofcourse, the rankings are not that important, but interesting is that this seem to highlight an important takeaway that "Happiness doesn't always necessarily correlate directly to the Wealth". I like their published global manifest as quoted from the nef website

Global Manifest of Top 10 list for a happier plant :

1. Eradicate extreme poverty and hunger.
Increasing social disparity systematically undermines opportunities for people in extreme poverty to build good lives for themselves and their families. There is an urgent need to redesign our global systems to more equitably distribute the things people rely on for their day-to-day livelihoods, for example: income, and access to land, food and other resources.
2. Improve healthcare.
The World Health Organization estimates that everyone in the world could be provided with a good level of basic healthcare for just $43 per person, per year.
3. Relieve debt.
4. Shift values. value systems that emphasise individualism and material consumption are detrimental to well-being,
5. Support meaningful lives.
6. Empower people and promote good governance.
7. Identify environmental limits and design economic policy to work within them.
8. Design systems for sustainable consumption and production.
9. Work to tackle climate change.
10. Measure what matters.

Surprise ?? As recent economist survey points out, the emerging world now accounts for over half of global economic output, measured in purchasing-power parity (which allows for lower prices in poorer countries). Many economists prefer to measure GDP using current exchange rates (which put the emerging world's proportion closer to 30%). But even on this basis the newcomers accounted for well over half of the growth in global output last year. And a barrage of statistics shows economic power shifting away from the “developed” economies (basically North America, western Europe, Japan and Australasia) towards emerging ones, especially in Asia. Developing countries chew up over half of the world's energy and hold most of its foreign-exchange reserves. Their share of exports has jumped from 20% in 1970 to 43% today. And, although Africa still lags behind, the growth is fairly broadly spread: they may be the most talked about, yet Brazil, Russia, India and China account for only two-fifths of emerging-world output....

Interesting Perpsective - not necessarily I agree with !!

Development should mean more than survival

....... Those who truly believe in development should be guided by a simple maxim: Only what is good enough for us in the developed world will do for those in the developing world. We have access to cars, clean water, electricity, the internet, roads and telephones, and so should they. Everyone should enjoy the benefits of living in a modern industrialised economy.

This is the only realistic way to deal with the scourge of 'natural disasters' such as the tsunami, and other problems linked to economic scarcity. Life is about more than mere survival......

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Daniel Ben-Ami is the author of Cowardly Capitalism: The Myth of the Global Financial Casino, John Wiley and Sons, 2001

http://www.spiked-online.com/Printable/0000000CA883.htm

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Though I agree with the above article that the basic infrastucture is absolutely essential for development, but what that relevant infrastructure should be is not to be necessarily guided by what has worked well elsewhere. This typical bi-polarization of world into developed or developing is immature, and going so far is to say that we should have a world that look exactly same as west is preposterous !!

Did UN respond to my post ??

DEVELOPMENT GOALS NOT UTOPIAN, BUT EMINENTLY ACHIEVABLE, SECRETARY-GENERAL

SAYS AT LAUNCH OF MILLENNIUM PROJECT REPORT

......
http://www.un.org/News/Press/docs/2005/sgsm9678.doc.htm