OK America, so what are we going to do about it?

Friday 10 July, 2020

At the risk of overstepping my bounds, I suggest Black Lives Matter is not thinking big enough.  Obviously racial violence against African-Americans inflicted by the police is a deadly problem, but in many ways, it’s simply a reflection of roles in society.  African Americans are not the political or  economic equal of European-Americans in the U.S., so these senseless killings just reflect those inequalities.  Black leadership needs to construct a plan to build bigger economic and political power bases. 

I endorse peaceful protests.  George Floyd’s murder is just one in a number of senseless racially-induced tragedies.   I was in New York when Eric Garner was strangled to death on Staten Island.  There were protests then too, but apparently nothing has changed. Protests are not enough unless they result in real change.  Leaders know protesters are pissed off, but they need to know what to do to change things. 

I offer a few proposals we need to implement to start making changes now: 

  • Change election day from Tuesdays to Saturdays.    Government cannot be representative of its people if only a small percentage of people vote.  Participation is driven by availability.  Tuesday is a workday, and so for hourly-wage earners, they have to give up work time to vote, which provides a financial disincentive not to vote.  We can eliminate this disincentive by moving our voting day to Saturday. 
  • The biggest shame in my mind is that America claims to be the land of opportunity, but the chances to take advantages of those opportunities are not fair.  There aren’t the same opportunities to get a good education, which is the basis of most opportunity.  We need to change our funding for education.  It’s ridiculous that such disparities exist between school districts within a few scant miles.  Dedicating local property taxes to fund education isn’t fair when it results in such disparities. We need to elevate funding to the county or state level, because it’s not working at the local level. 
  • African Americans need to generate wealth accumulation to compete with European-Americans.  The top 1% doesn’t work: they invest, which takes advantage of financial to continue to increase their wealth at greater rates than wage inflation.  It’s this wealth accumulation that also leads to political clout.  Investing and entrepreneurship are the fastest ways to generate income quickly.  Black markets are significant in the U.S., so the possibility to sell in volume exists.  Again, education is required to activate these accelerators. 

I abhor racism.  I taught at Chicago State University (CSU), a HBCU for 3 years.  I learned what it’s like to be in the minority and it was not comfortable.  I was discriminated against and I was not happy with that, but I understood it.  At the same time, my some of my students at CSU inspired me like no others.  Students of mine at CSU were single parents working full-time jobs going to school full-and part-time: no school where I’ve taught came close to the percentage of students doing that.  I even had a few students who blew me away when they let me know they were pursuing their international business (the courses I taught) dreams by going to live and work abroad. 

Maybe I’m expecting too much.  My suggestions are by no means sufficient to solve our racism problem.  We just need to get things started with concrete actions that will bring tangible results, and if we can move in that direction and create some momentum and at least elevate this to the point where we’ll continue to pay attention to this over time, I’ll have done a small bit of good. 


another senseless killing…stop the madness!

Saturday 22 June, 2019

I didn’t know Lola Gulomova well before she was shot and killed by her estranged husband Jason Rieff. She worked across the hall and increasingly came over to our office to encourage co-workers to apply for rarely-available positions.  Her death also upsets me a lot because they left 2 daughters who are now fucked-up for life.  At first I was bewildered, trying to understand how any human being could commit such a heinous crime, but I finally figured out that Jason was sick, and therefore it’s impossible to make any sense out of this.  No one in their right mind, could have done this, so my only conclusion can be that he was mentally ill, and there can be no rational explanation that explains what he did.  Now I’m still angry, sad, and confused, but want to try to do something to bring a a little bit of good from this horrible tragedy.

So to prevent this from happening again, we need 2 things:

  1. gun control
  2. more resources to address mental health issues

This was clearly a gun-enabled killing.  In other words, if it weren’t so easy to access a gun, both of these people   would still be alive today.  These stats pretty much sum up the gun problem:

  • The U.S. gun homicide rate is 25 times that of other high-income countries.
  • Women in the U.S. are 21 times more likely to be killed with a gun than women in other high-income countries.

These stats are an embarrassment when compared with the rest of the world, and there is no justification for them.  Anyone who justifies gun ownership by saying incidents like this are just collateral damage, or that more guns to defend oneself are the solution are misguided.  Fewer guns are the answer, not more guns.  I’m a Make Love, Not War kind of guy, but that doesn’t make me any weaker than many testosterone-infused gun-owners with an inflated sense of themselves because they’re packin’ heat.  Maybe Jason was a hunter, or Lola had the gun to defend herself and he turned it on her.  Maybe this was an accident, but she was shot multiple times, so I really don’t think so.  They both had high-level government security clearances, so I can understand how they were able to get a gun, but that simply means we need more checks and balances.  People who are going through a divorce shouldn’t be granted a gun permit, especially given the statistics cited above.  Guns are quick, easy, and efficient killing machines, which are great for winning wars, but horrible in homes.  I realize nothing can bring Lola back, but if there is anything positive to come out of this, please make a contribution to stop this senseless violence and get a few guns off of our streets.

I don’t think anyone saw this coming, which means Jason must have kept his mental illness carefully hidden.  Regardless, someone failed to recognize the severity of the problem and do something about it.  Personally I object to how people with mental illnesses are portrayed in the media.  Billy Bob Thornton was ultimately another mentally-ill killer in Slingblade.  Jack Nicholson was a sick obsessive-compulsive who drew lots of laughs in As Good as It Gets.  The only movie I can recollect that presented mental illness in a compassionate way was A Beautiful Mind, which portrayed John Forbes Nash, Jr. as a sick, brilliant, and ultimately positive person, and contributing member of society.  When the media jumps to the conclusion that every killer is mentally ill, it leads people to believe that the reverse is true too, i.e., that the mentally ill are dangerous threats to society.  My knowledge and experience leads me to the opposite conclusion, that the mentally ill are much more victims of violence than perpetrators of it.  They feel helpless, with little or no control over their own lives, which either leads them to lash out, or be taken advantage of.  The National Alliance on Mental Illness is trying to help.  I urge you to make a contribution so that we can provide better mental health treatment to address the root of these problems, rather than letting them fester until they boil up and result in incidents like this.

Thus when I say “Stop the Madness” I mean it literally as well as figuratively.  Devote more resources to fight mental illness, which will ultimately stop the madness…and get the guns off the streets to stop the madness of gun-stoked domestic violence.  This whole thing still makes me feel like Peter Finch as Howard Beale in the classic film Network

when he said,

I want you to get MAD! All I know is that first you’ve got to get mad. [shouting] You’ve got to say: ‘I’m a human being, god-dammit! My life has value!’  I want you to get up right now and go to the window. Open it, and stick your head out, and yell: I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!  Go to your windows. Open them and stick your head out and yell – ‘I’m as mad as hell and I’m not gonna take this anymore!’ Things have got to change. But first, you’ve gotta get mad!…You’ve got to say, I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!  But first, get up out of your chairs, open the window, stick your head out, and yell, and say it: I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!”

I  hope that somehow, some way, this will save someone from the same fate.  No change means we accept the status quo, and that’s not acceptable.  I realize I won’t change the world, but if this takes one gun off the street or someone makes one donation to devote more money to improve mental health, I’ll have made at least a small difference.

RIP Lola.  Make a contribution here to support her daughters

A special thanks goes out to my sister Carol Muth, who provided the gun control info and pointed out that this shooting occurred on National Gun Violence Awareness Day.


triathlons in Rio

Monday 14 May, 2018

Now that I may have completed my last triathlon in Brazil yesterday, I think it’s time to file my race report for the race I’ve done the most times in my life.  I’ll try and be as objective as possible and not get too emotional about it.

Finding triathlons here has not been easy.  I have not found a centralized resource like trifind etc., so I’ve had to search for triathlons in different cities where I think they might take place.  Sao Paulo is bigger, so there are more races there, but I haven’t wanted to travel that far to race.  There are a number of places that I think would be great triathlon venues, like Buzios, Niteroi, and Petropolis, and many of them held races when Brazil was in major growth mode.  But when the economy crashed in 2015, they all disappeared.  Consequently, I’ve ended up doing the same race 8 times.

I’ve also looked for & found 30 triathlon clubs in the greater metropolitan Rio area, but found none that offer anything remotely social.  All the clubs here offer are different training regimens, usually early a.m. before the bad guys come out, & nothing more.  It makes me appreciate the Chicago Triathlon Club so much-the mix of workouts & social interaction I thought was great.  Maybe the Brazilians are so social on an ongoing basis, they don’t feel the need to be social with triathlon-buds.

Registering for a tri here is quite a bit more arduous than in the U.S.  It’s not until this year the race I’ve done even accepted credit cards, & they were so skeptical of foreigners, they had to call me to verify my identification before they accepted me into the race.  I’m not sure that a foreigner can even register for a race here because they require data that only locals possess (CPF number).

In their defense, packet pickup is just as much of a pain as it is with many other races.  I’ve had to drive 45 minutes-1 hour out to Recreio to pick up my race packet in about 2 minutes.  One race done at the same venue but put together by another organizer had packet pick-up at a sporting goods store only 1/2-way out there, so that was an improvement.

Getting to the race became a challenge when my GPS kept sending me back to a road that was closed for the race over & over again.  Because the street signs don’t actually contain the names of the streets, (they just point you in the general direction…Centro, Recreio, Barra, etc.), I’ve driven around in circles and had to show up late for races after they started because I went crazy getting lost the morning of a race. Now I know how to find my way there, but that’s just because I learned by trial & (lots of) error.

The transition area is pretty well situated, with numbered slots for all of the participants.  It’s on a bumpy cobblestone parking lot, but that’s workable.  You aren’t allowed to leave your bag with your bike, so you’re required to check in your bag with everything you won’t be using for the race.

Open water swims in the Atlantic Ocean leave you open to lots of variability.  The swim in the race I’ve done in Recreio takes place on either side of a peninsula: races have been on both sides.  On either side, at some point you end up swimming into the sun, which makes sighting much more difficult.  Yesterday the surf was the strongest it’s ever been, and thus I had my slowest swim ever, 28:40 for 750 meters.  I was thrown around like a rag-doll in the waves coming in & out near the shore-normally I take 10 minutes less than that.

The bike is flat, right along the shore, 20K for the sprint.  The only potential difficulty is the wind.  Yesterday it was at my back going out & in my face on the way back in.  My 1st half time was normal, 22 mins, but I lost about 6 minutes coming back, so my bike was slow too.

The run is flat & along the shore too, out & back for 5K.  My time was a little slow, but not as slow as I thought I’d be.  I’ve developed a parameniscal cyst on my left knee, which is a result of a slightly torn cartilage in my knee, so I knew I wouldn’t match prior running times.

Here’s where I need to divulge, for the 1st time in my tri-career, I was dq’ed.  My most egregious infraction was running on the grass next to the road for the run.  Apparently if I had asked permission before the race to save my knees by running on the grass, I would have been OK, but after doing this the 7 previous time, I didn’t know if was an issue.  I was also busted for 3 other indiscretions, but I’m still not sure what they were.  Between the bike and the run, they actually made me wait 1:30 in the penalty box, just as if I were in an ice hockey game.  Before the race, I was asked to remove the rack on the back of my bike when it was deemed a safety hazard if someone fell on it, but because no one had tools for me to remove it, I was granted an exemption.

Everyone gets a medal, and race winners even get prize money.  As an age-grouper, it’s been even more competitive here.  In the U.S., I usually come in in the upper 1/2 of my age group-here I usually come in near the bottom.  That’s OK, as long as I don’t lose too much time.  Until this race, I haven’t.  Post-race nutrition consists of a lot of fruits, bananas, watermelon, oranges.

On the whole, I’ve enjoyed my triathlons here.  I would just liked to have been able to do a wider variety of races.


demonstrations in LDC’s

Monday 1 May, 2017

I had my 1st “international incident” experience Friday night, & it left a deep impression. I was locked up in the consulate & forbidden to leave because it was too dangerous for me to go home. After finally finding my way home, I realized our security people were not kidding-this was serious, & they were correct for not allowing me out in it.

What happened was, the PT, or Workers Party (Partida dos Trabalhadores) planned a general strike on Friday to protest the imposition of 2 new laws: 1 to OK the outsourcing of work that had not been allowed in the past that will give Brazilian businesses the flexibility to contract out even core activities of their businesses, if they so choose, which was forbidden in the past; & 2. to change to the terms of the pension/social security system to eliminate benefits for some retirees, which are simply financially unsustainable. For example, judges, the military, & other public officials are given pensions covering up to 80% of their wages that can be transferred to remaining spouses and handed down to descendants for generations, which will end up costing the Brazilian government money that it can’t afford to pay in the future.

As I was sitting in my office @ ~5:30 p.m. surveying the evening’s musical choices, 1 of the marines came in & told me to check with their guard station before I leave. I thought that a little odd because I was never told to do that before. When I went to leave @ 6, I was summarily told that I was not allowed to leave, that it was too dangerous for me to leave the building @ that time. They showed me the footage from 1 of the security cameras that displayed some tires that had been set on fire outside the consulate. I returned to my office thinking, “These guys are paranoid.” I had walked past some demonstrations around Cinelandia in the past, & they were no threat to me, or anyone, as far as I could tell. I assumed this 1 would be no different. In the next hour I could smell the stench of the burning tires and heard what sounded like small bombs going off. When I returned to try to leave @ 7, I was told it still wasn’t safe enough to go out, so I went back to my office for another hour. I tried to leave again @ 8, but was still told “No go.” Then @ 8:15, they made an announcement that we were free to go.

What I encountered outside the consulate’s door was breathtaking. The windows to the banks Bradesco & Caixa had been smashed, & I’m told thieves had tried to steal the cash from the ATM’s. The metro stop @ Cinelandia was closed, so I had to walk to the next station @ Gloria, about a 20 minute walk away. As I approached Sala Cecilia Morrelles, a nice venue where I’d seen a number of concerts, I came across 9 burned out buses which had been set on fire. Walking a little bit further down the street, a few trucks filled with military police drove by, guns @ the ready, prepared to aim & shoot. When I finally got the Gloria station, my eyes started burning & I couldn’t breath because of tear gas that remained in the air. I realize it sounds trite to say “Tear gas is nasty stuff,” but you can’t realize how nasty it is until you experience it. Like when I visited the concentration camps when I was in Poland 20 years ago, it’s the smell that leaves as deep an impression on any of the senses…it’s inescapable.

Lesson learned: when the security guys say “sit tight” listen to them.  While they may seem overly protective at times, they know the risks & are only looking out for our own safety.

For more details check here http://www.bbc.com/news/world-latin-america-39753849


awe-inspiring paralympic athletes

Monday 12 September, 2016

I checked out the women’s paralympic triathlon & couldn’t help but write about it. These women are so inspirational, they are beyond description, but I’ll give it a try. I’ve done a lot of sprint triathlons in my day, but I haven’t overcome a fraction of what these women have. What I saw today blew me away.

Let’s start with the swim. The 1st race was for women who are physically challenged, so swimming with 1 arm or 1 leg is difficult, but do-able. The tough part is getting in & out of the water, so they had helpers get racers to their prosthetics coming out of the water. The 2nd race was for blind racers, so they had to do the whole race, swim included, tethered to a guide. That has got to be tough.

Then they move to the bike. This portion probably has the fewest differences between Olympic & Paralympic athletes for the physically-challenged. However, the blind racers rode on tandem bikes, so a strong guide could be a big advantage.

In the run, we get to the hard part. We have a long way to go to get prosthetics to work well. I don’t know how Oscar Pretorius did it-the prosthetics these women used didn’t allow them to run anything like a normal runner. Their gaits were very unbalanced, which puts lots of strain on the leg that does function normally. The breakdown over time must be very difficult to deal with & they must suffer from overuse injuries galore.

There was 1 runner who stuck out to me: Rakel Mateo Uriarte of Spain. She came in dead last @ 1:40:33-the distances were shortened from the “Olympic” distance, so this was essentially a sprint triathlon-but she was still a winner to me because she was the only athlete who had the impairment she did. The International Triathlon Union says she was in an accident in 2001 which left her left leg paralyzed.  She hadn’t participated in triathlon before her accident, but picked it up to keep moving. I didn’t see her come out of the water on the swim, but the result of her challenge was that she couldn’t pedal the bike with both legs, which meant she had to pedal the whole race with just her right leg.  To top it off, she did the whole run on crutches…& she did the race in about the same time I do my sprint triathlons.  Granted I’m a slow old man, but completing races with her challenges blows my mind.  The mental fortitude this woman must have must be incredible.  I can’t imagine the strength & endurance she must have to complete these races.

The USA did well.  American Grace Norman won the PT4 race.  The Americans swept the PT2 race, with Alyssa Seely winning the gold, Hailey Danisewicz taking the silver, & Melissa Stockwell bringing home the bronze.  The PT5 race was a heartbreaker for American Elizabeth Baker, who came so close to earning a medal, but just fell short, literally. She came out of the water 6th, then moved up to 4th on the bike.  Then on the run, with 100 meters to go, she had pulled into 3rd place, primed for a bronze medal, but then the Brit Melissa Reid overtook her, when Elizabeth unceremoniously fell, sealing her 4th place finish in the race, after Reid.  She might not have known that Reid was catching up on her.  She couldn’t see her because she’s blind, but I would bet her guide was keeping her fully informed along the way.  My heart goes out to her, & falling was the final indignity, but their exciting finish got the most applause of the day.

I realize these paralympic races are fodder for platitudes, but in this case, I think the praise is warranted.  I do these races, so I know how hard they are.  I can recognize the difficulties they must overcome to compete at the level they do.  These women have inspired me & I’ll keep their challenges in mind when I start to bitch & moan about my next race almost a month from now in October.


my $.02 on Rio2016

Monday 22 August, 2016

Now that the Rio2016 Olympics are done & the Olympians & fans are heading home, it’s time to reflect on how it worked out for Rio de Janeiro. When I arrived in Rio a year ago, the prognostications were not good. The Globo newspaper media empire spelled out 5 Grand (large) Obstacles:

  1. Metro/subway-the new subway line which was being built to provide transportation to & from the Olympic park was planned for completion only a month before the games were to begin, a small window to correct problems, if required. Then a few months ago, that window was further reduced to just 5 days before the Olympics start, making any last minute changes of any consequence impossible. Remarkably, the subway opened, took passengers to the events, & was little problem @ all.
  2. H2O-much has been made of the quality of the water in the lagoon and Guanabarra Bay where the rowing & sailing events were held, respectively. The goal was to clean 80% of the water by the time the games begin, but sanitation only advanced to clean 50% of the waste being dumped into the water supply. That’s much more than was in the past, but short of the goal of 80%. I only read of 1 Belgian Olympic sailor who became ill after falling in & possibly ingesting some water, hardly an epidemic, & arguably within statistical norms. While the water quality is still @ an unacceptable level, it didn’t result in any calamities @ the Olympics.
  3. 4, & 5 Stadia for cycling, rowing, & track & field: were behind schedule, but completed on time without incident.

Since that article was published, a few other issues arose which impacted Rio2016 significantly:

  • zika virus: despite not rising to the levels of recent past epidemics & being out-of-season by the time the Olympics arrived, zika was deemed a threat to the health of all who dared to come to Brazil to watch the games live. There was no outbreak & zika seemed to be a non-issue during the games.
  • political crisis: President Dilma Rousseff was impeached, which created lots of political stability & the threat of uprisings, etc. during the Olympics. While Brazil will continue to be in a holding pattern until a new president is elected in 2018, there have been no major repercussions from this calamity.
  • economic crisis: as a result of the political crisis, Brazil’s economy has taken a nose dive, as indicated by a fall in the currency, the Real, of 30% in 6 months, from R$3.2/US$ to R$4.1/$US. investment has fallen, & unemployment has spiked. This made financing the completion of the projects for the games questionable, but again, all venues were completed on time.

True to form, the Brazilians pulled it off, by cramming @ the last minute, but they got it done.  The question is “What will be the long-term outcome of the Rio2016 Olympic games?”  Will Rio become another economic success propelled by the Olympics, like Barcelona & Seoul, or create a lot of white elephants, as in Beijing or Montreal, or even worse, lead to an economic downfall, as has been hypothesized about Athens, Greece.  London took the Olympic opportunity to rehabilitate an underdeveloped part of town to rejuvenate it & make that area a desirable place to live.  When I lived in Munich, they left the Olympic housing as residences for college students.  Rio will leave a different legacy.  While the subway extension & rejuvenation of the Praca Maua port area will benefit all of the population, the Olympic village is being converted into luxury condominiums for sale to the highest bidder.  Many of the venues were temporary structures, probably being deconstructed already as we speak.  The economic development organization of the Rio city government, Rio Negocios, held a series of events highlighting different industries in & around Rio, but I think they were probably disappointed with the international level of interest in their events.  The aftermath of the 2014 World Cup does not bode well.  New stadia now stand empty & a number of infrastructure projects were never completed, in some cases creating risks with what does remain.

I enjoyed being in Rio while the games were taking place: see pix:

…& I hope that Rio recognizes many positive benefits as a result of hosting the games.  I’m just skeptical that enough change will have taken place for the rest of the world to appreciate what a beautiful place this can be.


Where is the global market heading?

Monday 17 November, 2014

Nouriel Roubini, a professor @ the NYU Stern School of Business presided over Keiko Tashiro, the Chairperson/CEO of Daiwa Capital Markets America Holdings, Inc. to discuss this topic @ the Japan Society in New York.

It’s been an anemic recovery, & the only change has been the decelerating growth in the emerging markets.  The question is how strong & resilient will they be?  The recovery has been so anemic because the crisis was brought on by extreme leverage.  The fiscal stimulus that was implemented to combat it has led to an accumulation of debt that will take 5-10 years to de-leverage.  Emerging markets need robust growth of 5% , not 1-2 1/2 % less their debt.

To get 1-2% stronger growth in the industrialized countries, we need:

  • fiscal consolidation, except in Japan
  • advance de-leveraging to create better balance sheets with lower debt ratios
  • lower risk probabilities by keeping the Euro together, not falling off any fiscal cliffs, avoiding conflicts, etc.
  • keep low inflation, as the velocity of money has collapsed as stocks are in search of markets.  There is still slack in the employment market, so there is no wage inflation.  Central banks can be less conventional.  The Fed won’t start tapering until 3-4 years from now.
  • Japan needs to create a virtuous cycle with structural reforms, which should be a gradual process.  There is a risk with monetary easing in asset inflation creating a bubble.  The central bank has been able to keep bubbles @ bay by keeping inflation & interest rates low for now.

Emerging markets are devaluing their currencies to spur growth.  Internally, macroeconomic policies are granting excessive credit.  State capitalism causes them to move away from free markets.  The most fragile are China, India, South Africa, & Turkey.  With elections, growth falls.  Now the risks are much lower because of less currency mismatches, debt ratios are better, & Argentina, Venezuela, & Ukraine are now the problems.  China’s hard or soft landing is fragile.  Fixed investment is too low as is consumption.  Banks have made too many bad loans.  They’re lowering risks, but it’s open to question as to whether they can implement changes quickly enough.  Growth is decelerating from 7% to 6 %.


European economic update

Tuesday 30 September, 2014

The European American Chamber of Commerce organized an economic update which featured James Bullard, CEO/President of the St. Louis Federal Reserve Bank, Nicolas Veron, Visiting Fellow @ the Peterson Institute for International Economics & Co-founder/Senior Fellow @ Bruegel. The panel was moderated by Sassan Ghahramani, President/Ceo of SGH Macro Advisors.

Bullard stated 3% growth should be achievable for the US in 2014.  Unemployment of 6.6% is still too high, but the Fed won’t start raising interest rates until unemployment falls below 6.5% or inflation rises above 2%.  Normal unemployment will drive a more normal interest rate policy.

Veron maintained that the issue today is not what the central banks do, rather it’s which countries have the most dysfunctional political processes.  The EU crisis continues to test financial systems & architectures.  The tests for EU institutions need to be redefined.  Watch for EU parliamentary elections to see if citizens are dissatisfied & how the European Central Bank (ECB) is transforming EU banking, which will hopefully create an opportunity for trust to return to the system.

Panel Q&A

Because we work with seasonally-adjusted data, the weather does not affect risk, but we have no model to evaluate this past year’s weather, so it’s OK to be suspicious.  This hasn’t received enough attention.

The reduction to 6.6% unemployment is a dramatic reduction unexpectedly soon, so now we must adjust our thinking.  Labor force participation is a long standing trend of long-term structural decline.  The drop in unemployment is a good sign & was faster than anticipated, & is remarkable in an economy that’s only growing @ 2% per year.  It’s a result of state decisions, not data conditions.  Interest rates won’t move until unemployment has moved well beyond the threshold of 6%.  Normalization of policy dictates that qualitative policy & judgement shouldn’t be tied to a particular number.

The 2012 contagion was a result of a combination of factors.  Banking union is becoming more important.  Political evolution in Germany is key, not to allow any country exit the Euro.  If there is deterioration, the ECB will act.  There are no immediate legal developments, but the relationship between Germany & Europe counts. Germany’s jurisdiction over the German Bundesbank affects the ECB’s ability to work.  The Bundesbank has been clumsy in attacking the ECB’s autonomy, & thus the ECB won, while the Bundesbank lost.  The constitutional court was smarter in trying to avoid frontal conflict.

The Fed pursued the policies of the 7 faces of  peril & was the biggest advocate for flow.  It worked well with more analysis of interest rate policy.  Quantitative easing is a powerful tool & moved markets, so now we can taper back to normal.  We won’t see a normal economy until we raise interest rates.  The committee doesn’t address specific issues of quantitative easing.  The Fed will raise interest rates fairly quickly.  The alternative is to stay @ 0% longer & lift faster.  Global interest rates are still low & this is expected to continue.  Inflation is still a puzzle & wildcard, & could force the ECB’s hand.

There is still much disenchantment in the non-German Eurozones.  Germany imposes it’s decisions on others, but Germany is still pro-Euro & pro-integration.  Other countries have different foci (focuses?).  Spain is not all skeptical, but separatism sentiments continue in Catalonia.

Politically, although there are more anti-system parties as mainstream parties decline, not all Europeans are anti-EU & anti-Euro.  Not everything can be seen through the Euro lens.  Cooperation is changing as policy makers are getting more defensive.


Venezuelan update

Wednesday 24 September, 2014

I attended this event @ the Council of the Americas awhile ago on Venezuela’s economy. The panel consisted of Alehjandro Arreaza, economist @ Barclays, Aaron Freedman, VP/Sr. Credit Office @ Moody’s, & Francisco Rodriguez, Director & Sr. Economist @ Bank of America/Merrill Lynch, & moderator Christopher Sabatini, Sr. Director @ Americas Society/Council of the Americas.

Generally, inflation is leading to devaluation of the currency, which leads to inconsistent fiscal policy. The exchange rate is unsustainable. They need to change course, but can’t devalue. The exchange rate subsidy doesn’t help their constituents-it just gives fiscal rents to importers. Inflation is up because they are just printing money instead of devaluing the currency. There are arbitrage opportunities with devaluation while the politicians get richer. The problem is as import prices go up, demand goes down, to there is no politically expedient solution.

The government also doesn’t recognize the magnitude of the level of debt. Declining oil prices make things difficult for Venezuela. They must address these imbalances.

It’s tough to get money out of Venezuela these days. There is a black market, but that’s dicey. Auto makers there have fallen off a cliff. Unfortunately companies can no longer repatriate profits & pay for imports. Strategic & essential industries can get preferential access to currency.

Another problem is with an overvalued currency, you can’t tell which are bad imports. The system is impossible to administer. The exchange rate is limited to maintain control, like in Cuba.

There is a difference between a low income economy like Cuba’s, & Venezuela. Macroeconomic distortion has simply led to financial disintermediation. They must address all imbalances-devaluation is not enough. Venezuela won’t necessarily default-that probability is only 10%, but they are suffering a death by 1000 cuts. If the price of oil destabilizes, watch out. Oil production has declined, but it’s unsure if they’ve reached the bottom. Consumption is up, but that’s distorted.

Despite a devaluation a year ago, nothing happened. It’s not likely to get better. Capital flight is $20M/year. They need a more flexible exchange rate system.

Venezuela is rated 1 notch below Argentina in credit ratings. Both have balance of payments problems. Venezuela is more combustible.

How long this can go on is a political & economic question. Regulation is no good in a volatile economy. Argentina tried & failed. Another problem is you can’t increase spending after a devaluation.


do big sporting events really help local economies?

Thursday 8 May, 2014

I checked out this event sponsored by NYU’s Sports & Society’s department @ the School for Continuing & Professional Studies “The Lasting Impact of Sports Greatest Events.” The panel contained a veritable who’s who: Lisa Baird, CMO of the US Olympic Committee; Greg Ballard, mayor of Indianapolis-“amateur capital of the US; Greg Carey, sports finance specialist @ Goldman Sachs; Richard Florida, author of “Who’s your City?”; Kevin Hallinan, SVP of security of Major League Baseball, Constantine Kontokosta, of the NYU Center for Urban Science & Progress; Mary Pilon, New York Times sports reporter; David Rousseau, who sits on the Salt River Project board in Arizona.  The panel was moderated by Arthur Miller, Chair of the Sports & Sociey department @ NYU.

Indianapolis used sports to build the city into the capital of amateur sports in America, in which the citizens have a great sense of pride.  Rockpoint analysis determined the General Fund Effect was $40M.  Phoenix feels it’s getting an amazing reward from similar investments. These things bring prestige, like luring a major symphony orchestra.

The motivations for these things have changed, to achieve global city status.  The 1984 Olympics in LA made it an economic development game, but now the temporary economic impact doesn’t justify the long-term investment any longer.  The question is the impact on infrastructure.  Sports have become an excuse to do what should already be done.  For example, after the Olympics, what are they going to do with the bobsled run in Sochi?  There is little talk of what happens afterwards.

The Olympics are all about the athletes.  Sebastian Coe left a legacy in London, having built up the west side & put the para-Olympics on the map.  He’s created social good, while the economic impact hasn’t been measured yet.

There is a lot of ego involved, & differences between who embraces sports & those who do not.  The downside can be displacement.  These projects have to be about more than the game because stadia (stadiums) now cost a lot more:  San Francisco’s cost $1.3B.  Now security is primary & drives up costs, as Atlanta’s Olympics proves.  Terrorism & gay rights could have been issues in Sochi.  The Dept. of State was assuming safety would prevail.

Goldman Sachs actually invests in sports infrastructure & is bullish about this business, but admits these are not always good investments for cities.  The key is whether the investments are in good or bad infrastructure & whether it’s public or private investment.  Rio is building lots of infrastructure for it’s Olympics, but it’s been disaffecting & the security challenges will be unbelievable.   Public safety & public works are the highest priorities.  Cities must look @ expanding their tax bases & the opportunity costs of making other comparable investments.  Indianapolis did it right.

Baseball’s world series is a nightmare for security because the sites aren’t known until a few days before the series starts.  When Pres. Bush attended a game, an extra umpire was actually a Secret Service man. At the 1st Mets game after 9/11, there was a line almost all the way to Manhattan to get in & all the fans said “Thanks for being safe.”  The Super Bowl in New York attracted lots of prostitution, which reflects the best/worst, good/bad these events bring out.  There is a distinct relationship between the Super Bowl & sex traffic.

The economic benefit of the Super Bowl being held in New York/New Jersey was estimated to be $600M, but is actually complete BS.  The hotels are normally only @ 50% capacity, but were full for that week, but there is also a crowding out effect of others who stay away, called displacement tourism.  Theatre attendance is down 20%.  The merchants on Super Bowl Blvd. were dying.  Super Bowls are better held in warm climates, although Minnesota is getting 1.

There is a developmental economics aspect to all this.  Rio is building infrastructure which is building capacity.  The downside is the IOC requires moral obligations, but the city may be stuck with the bill.  Athens is still paying the debt for their Olympics.  Montreal just paid off their debt for the 1976 Olympics.

Sponsors get involved for different reasons, such as branding, ROI, relationships developed as long-term investments, i.e. Coke has been an Olympics sponsor since 1928.  LA changed the model when it was the 1st Olympics to show a profit in 1984, but even it had very few high-priced sponsors.  To stage sustainable games is a tough task.

Different games have left different legacies.  Barcelona used the Olympics as a tool.  Seoul, Sydney, & Montreal had a plan, but the Athens Olympics may have started the crisis there.  It’s definitely not 1 size fits all.

Arizona had to pay the NFL $30M in obligations to get the Super Bowl, which was paid by local corporations.  They will sell their local competitive advantages; good weather & a positive business climate.  But there are unintended consequences too.  To magnify the legacy:

  • you must know who you are
  • focus on branding (London was the 1st games where every country had at least 1 woman on each team)
  • security partnerships help
  • share lessons learned
  • get away from gigantism




doing business in South Africa

Friday 18 April, 2014

The Greater New York Chamber of Commerce in conjunction with the South African Consulate General hosted “Doing Business in South Africa” @ the South African consulate.

Consul General George Monyeymangene introduced Simon Barber, the US country manager for Brand South Africa, which promotes the country of South Africa as a brand. He works with stakeholders both inside & outside of government to craft a value proposition for South Africa.  South Africa is celebrating 20 years since it’s 1st open & free election.  The South African brand is embodied by Madiba, or Nelson Mandela, who exudes the essence of Ubuntu, among other things, looking out for the collective good.  In the last 20 years:

  • GDP has grown from $136B to $335B
  • inflation has fallen from 14% to 6%
  • employment has grown from 9M to 14M
  • reserves have risen from $4B to $50B
  • the LSM (Living Standard Measure) has increased from 13M to 23.5M
  • electricity has gone from serving 58% to 95% of the population
  • water grew from being available to 61% to 73% of South Africans.

Additionally, South Africa has:

  • politically stable democracy
  • free media
  • independent central bank
  • high tax compliance.

According to the World Enterprise Fund Global Competitiveness Index, South Africa ranks:

  • #1 in auditing standards
  • #1 in securities regulations
  • #2 in financial services
  • #3 in banking
  • #3 in minority shareholders

On the down side, it ranks

  • #120 as a favorite
  • #116 in terms of imposing a burden.

Former treasury minister Trevor Manuel agreed with & adopted a National Development Plan written by Goldman Sachs.

The keynote address was offered by Frank Savage, Wall St. financier & CEO of Savage Holdings, who offered the perspective of an institutional investor.  He was early to enter South Africa in 1994 when he created a $125M fund there which earned 39.4% ROE.  He met Nelson Mandela with US Secretary of Commerce Ron Brown.  Although income inequality, education, & unemployment are problems, he remains optimistic.  The African National Congress has selected Ramiposa, a successful entrepreneur, which brings the party credibility & speaks volumes about their intentions.  The government has responded well to the Goldman Sachs report.  It’s well-balanced, but tough.  They must focus on difficult social problems.  Only15% participates in the formal economy, which leaves growth on the table.  All of Africa needs South Africa to reach it’s potential.  Civil unrest & instability can’t happen.  They need to rededicate themselves to their original principles & ideals.  He feels comfortable investing in South Africa.  Foreign Direct Investment magazine named South Africa the country of the future.


  • South Africa will aim to protect it’s unique culture.
  • A free trade agreement is bringing together a market of 600M in Africa.
  • There is a plan to establish, promote, & implement Special Export Zones.
  • The ANC is not all powerful, as there are 3 tiers & power is shared among them.  It’s power is evolving & maturing as competitors are moving out of the ANC.
  • Infrastructure development is the driver of economic development.  The Infrastructure Coordinating Committee seeks to plot it’s future.

US-China-Japan trilateral relations

Friday 4 April, 2014

I attended this event organized by the Japan Society;  The US-Japan-China triangle: building a path to trilateral cooperation which featured a panel discussion with Gerald Curtis of Columbia U., Jia Qingguo of Peking U., Alan Romberg of the Henry L. Stimson Center, & Yoshihide Soeya of the Woodrow Wilson International Center for Scholars & Keio U.  The panel was moderated by Donald Zagoria of the National Committee on American Foreign Policy.  I arrived late & missed Jia’s talk.

Soeya put today’s situation in historical context.  In 1971-2, China asserted itself while Japan avoided the issue.  During the 1980’s, Japan invested in China to modernize the country.  Deng Xiaoping then made courageous reforms.  Recently Japan’s Abe made an exception in visiting the Yaksun Islands.  In an interview in the  June-July issue of Foreign Affairs, he said it was not a big deal & that they were entitled to a right of self-defense, exerting a nationalistic tendency.  But he can’t carry out this policy with his current agenda.

Romberg called trilateral cooperation wildly unrealistic, & perhaps impossible.  There is no resolve to manage the dynamics.  China & the US have positive & negative effects which offset each other.  Their external behavior is erratic;  while they seek peace, they will also respond if challenged.  Aggression is in the eye of the beholder.  Japan is skeptical of China’s methods.  The US-China relationship is broader & deeper.  Their national interests differ.  For example, China sees the US & Japan as limiting the opportunities to bring China’s poor out of poverty.  There are no prospects for peace if these problems can’t be resolved.  Talks should lie ahead, but won’t.  Abe won’t visit the shrine again as PM.  The US seeks to lower the heat, but won’t mediate.  US/Japan alliances are alive & well.

Curtis addressed 4 issues:

  1. The islands are a dominant issue in Chinese/Japanese relations.  No 1 wants to go to war, but accidents do happen.  Japan must recognize the dispute & be willing to talk.  The Chinese must withdraw during such talks.  There seems to be no resolution because neither side expresses a willingness to compromise.
  2. China is conducting a nonsensical propaganda campaign against Abe, but that may be backfiring.  Both sides need to back off.
  3. Yaksuni is a sensitive issue.  Abe’s visit was not in the national interest.  Visiting the shrine resulted in sending a political message.  The hope is Abe will get this over with & foster better relations.
  4. After America’s pivot to Asia, we are stronger, but relatively smaller.  Obama is weak & doesn’t support Japan-the republicans do.  The world & the US have changed & we can’t go back to the way the world existed before.

Panel Q&A

If Japan acknowledges the Sekuka Isles, they can at least start negotiations.  Japan wants China to reduce it’s patrols in the area.  The solution could be the transfer of property rights by both of them.  The fishery agreement between the 2 is a recognized issue & related.  China will continue to assert itself until stopped.

Open Q&A

Japan is different from Germany after World War II in that the Japanese never apologized for the atrocities they inflicted on others, while the Germans did.

There is a poisoned atmosphere between China & Japan, which isn’t surprising.  They need to solve these problems to build trust.

Transferring property rights to the UN is not an option because that would be viewed as surrender, which is unacceptable.


China takes the reins…of APEC

Friday 28 March, 2014

The Asia Society organized this event APEC Briefing 2013-14: China Takes the Reins & I was there to attend.  The moderator Tom Nagorski was a no-show, but otherwise everyone else made it.  China’s year of taking over the reins of APEC has been anticipated because each change brings new priorities & potentially new partnerships.

Robert Wang brought the US diplomatic perspective.  Strong new Chinese leadership wants to work closely with the US.  They have 3 priorities:

  1. regulate economic integration
  2. promote innovative development
  3. strengthen connectivity & infrastructure development

They held a 1-day symposium & wanted to discuss all 75 regional/free-trade agreements (FTA’s), how to work together, & FTAP, an FTA of the Asia/Pacific.

Ann Weeks of Underwriters Labs (UL) brought a standards orientation to the proceedings, which affects 80% of all trade as technical regulations have replace tariffs while improving public safety.  UL serves 65K manufacturers in 100 countries, of which 21 are in APEC.  40% of UL’s revenues come from outside the US.  They focus increasingly on food safety & green buildings.

Peter Petri zoomed in on the TransPacific Partnership (TPP), which includes APEC+China, the 12 countries which are in negotiations now to weave together the architecture of Latin America together with the Asia Pacific.  This is a crucial year to put this trade bill up for a vote.  There could be big benefits to both America & Asian economies as they create a template for future agreements.   China has held conferences on TPP but is not currently in negotiations.  This is generally changing, as China has changed lots of positions in the last 6 months.  The main issue is regional economic integration.  APEC is now just a forum to discuss issues-participants aren’t yet ready to make commitments, which can still play a useful role in negotiations, sharing, joint projects, etc. making TPP & FTAP now much more realistic.

Curtis Chin addressed how involved Barack Obama should be in this process.  He is on a large stage, but should he have left during the shutdown?  It matters, but not that much, since no major decisions were made.  No 1 event matters among many.  Abe was welcomed with open arms, but the engagement of the US is key.  How will China address the media?

  • each host determines the capacity
  • China’s focus is on supply chains with the goal of reducing costs by 25% by 2015
  • they are doing peer reviews for fossil fuels
  • they’ve set a goal to double renewables by 2030

Open Q&A

  • Clinton raised this to the Head of State level
  • China has been flexible in dealing with other APEC countries:  they’ve listened & changed.
  • Lots of work has been done on HR development issues to address labor rights-it’s been a sea change.
  • Work groups have been formed around small businesses, health, & food security
  • China will actually hold an anti-bribery conference together with the OECD to enforce a code of ethics.
  • Social media freedom is not yet a focus-it’s only being addressed on a bilateral basis.  The focus is still on building out internet infrastructure.
  • TPP is down to landing zones, so they’re getting close, but since it requires trade promotion authority, there could be repercussions if fast track authority is not granted.  TPP is already absorbing rules on labor & the environment.



cool japan strategy

Monday 24 March, 2014

I attended this event @ the Japan Society, “The ‘Cool Japan’ strategy:  sharing the unique culture of Japan with the world” featuring Tomoni Inada, the minister in charge of the strategy.  “Cool Japan” is a phrase used to describe Japanese commodities, contents, & cultural products that are considered “cool” by non-Japanese people.  It features films & TV programs, characters like Hello Kitty, video games, & fashion items.  The Japanese contents market is flat or shrinking.  A low % (3%) of Japanese contents revenue comes from overseas.  Japan seeks to increase the # of visitors to Japan from 10M in 2013 to 30M in 2030.

Until now, cooperation has been insufficient.  It is vital to work together to convey the appeal of Japan’s outstanding culture & products to the world & turn these into an engine of economic growth.  Inada was appointed a cabinet level ministerial position to implement this strategy & head up the Cool Japan Promotion Council.  The council has 7 private sector members, such as a lyricist, critic, & designer.  A subcommittee was formed to more effectively convey Japan’s culture from young people’s perspective.

An action plan has been created to move this forward with these action items:

  • promote cooperation among food, fashion, manufacturing, & contents sectors
  • utilize the Cool Japan fund of $485M public sector funds & $97M private funds
  • promotion by prime minister
  • encourage broad participation of Japanese people

In June, 2013 the strategy was rebranded @ the highest levels of government as a national strategy called the “Japan Revitalization strategy:  Japan is back.”  It includes food, sake, fashion, manufacturing, contents, & traditional culture.  The 1st event where this was implemented was @ the Tokyo International conference on African development (TICAD), which was attended by African heads of state.  It was also introduced @ the Tokyo Crazy Kawaii in Paris in September, 2013.  There is also a regional approach to promote boxed-lunch (Bento) culture & traditional textile art (nishijin-ori).

Design is being highlighted in porcelain, lacquer, digital signage, fashion, castles, & sky trees.

my $02:  Japan needs to start promoting this strategy online.  When I searched for it, very little relevant information showed up.


Greek banking & tourism

Tuesday 18 February, 2014

I attended a Greek Investor Forum & learned some interesting things sitting in on sessions on banking & travel/tourism.

BANKING:  The Hellenic Financial Stability Fund has committed €40B of which €26B has been used, with a €10B buffer, which has increased investor confidence.

Banks are setting up functions to deal with non-performing loans,, but GDP must start growing 1.5-2% again.  NPL’s typically peak 1 year after the economy starts growing, which should be next year.  There is still work to be done on consolidation as this is already 1 of the most concentrated markets.  There is lots of movement in the pace of consolidation.  Regulatory reform is coming to all of Europe, not just Greece.

Recapitalization has been implemented successfully, but is that compatible with Europe?  They are ahead of others in consolidation,  taking steps to attract investment, & on track to become solid.  Non-performing loan resolution is important.  The question is to sell or rehabilitate?  This sector can perform well in the future, but it’s still far from over.

Eurobank is taking advantage of agreement with the troika (IMF, World Bank, ECB) to raise further private capital, & actually rolling this out as we speak.  Nowhere else in the EU is there such concentration.  They are optimistic that the worst is over.  Workouts accelerate as the economy improves.  Margins are widening as concentration increases & funding costs fall.

Foreign ownership is an issue.   There is no short term-a few foreigners are excited.  Institutional & portfolio investment is up.  Banking is like fashion in that it always moves in cycles.  The focus is on local-there are few global players.  The most interest is from funds.  European financial investors are interested in assets, but only when there are no constraints, which is resulting in the 1st wave of interest.  There is large & growing interest from institutional investors.  In times of great change, it’s difficult to spread out new regulations, & there are penalties for doing that. Many see changes in the regulatory structure.  Citi never left Greece.  International banks paid a heavy price.  No new entrants are seen in the forseeable future.

Greece must fully stabilize & the risks be normalized.  There is little interest in the next 2 years-Greece is no different from other stressed banks/economies.  It’s not just the stigma-it’s relative to the the regulations today.  They need to install their own national regulator.  But there is still no true bank union. There is still no M&A activity because of regulatory uncertainty.  Assessing risks, returns, values today, & valuations are impossible.   Sensitivity to buying above book values is still limited.  Greek banks trade @ a premium to book value.

In the mid-90’s Greek banks followed clients overseas, to Turkey, & elsewhere.  Now they are de-leveraging by selling non-Greek assets, but they want to keep footholds in growth, like Spain in Latin America.

There is a reluctance to write off loans.  They run a portfolio of loan exposures, use auctions to sell minority stakes, & manage/support non-performing loans to de-risk investments.  Growth is needed for a turnaround, but they don’t want to price assets @ $.50 on the $.  Better workouts are being done on the wholesale side.  With a recovery, owners will put more money into their own businesses.  Tax legislation has an impact on strategic defaults too.  Those who can pay should.  This all requires systematically viable solutions, but they are coming out of enormous stress.

TRAVEL & TOURISM:  McKinsey updated a 2 year old study found that international arrivals to Greece stagnated while travel spending per capita fell, while @ the same time these doubled in Turkey.  In 2013, travel & tourism arrivals were up 11%, comprised 17% of GDP, & 19% of employment & added 30K jobs because stability returned.  In the next 10 years, Greece should return to become a Top 10 destination.  This requires a plan.  The target is to reach 22-24M tourists by 2022 by 3.5% faster than the global growth rate.  They need to extend & smooth the tourism period, diversify the product, eliminate the seasonal disadvantage, so that they offer more than just sea & sun.

Greece has 6 core products:

  1. sun/beach
  2. nautical
  3. city break/Athens
  4. medical tourism (to neighbors)
  5. cultural/religious
  6. MICE-conferences

They need to revitalize cultural offerings by segmenting & targeting.  They will extend museum hours & raise prices.  Golf & 2nd homes will be emphasized.  Transport & connectivity should grow with airport infrastructure & local airlines.  Investors require stability, fair tax treatment, & transparency.  The state tourism organization will get a state-of-the-art website.  An aggregator platform will be built.  Municipal destinations will develop their own brands.

Air transport needs to be overhauled.  It must be functional, well-managed, & dedicated to the region.  Infrastructure will be privatized & upgraded.  They can no longer rely on a government budget.  The Greek carriers are too small, so they must consolidate, as Aegean & Olympic have now joined, but they’re still only 1/3 the size of Portugal.  Greece has the lowest % of incoming carriers.  The quality is good, but they’re too small.  They are expanding in 2013-2014, & not just in Athens.


deutsche Frauen in der Technik

Tuesday 28 January, 2014

I checked out this event last month “Engaging Women in STEM: Perspectives from the United States and Germany,” which was sponsored by the German Center for Research & Innovation in the German consulate just across from the UN in New York. Apparently they are streaming this as long as it stays up, so I’ll just provide highlights here.

The bottom line benefit to women getting involved in STEM (Science, Technology, Engineering, Math) is that women think differently, & these disciplines could use new lines of thought.  We need disruptive ideas & more of those come from more diversity, just as we need to do a better job of translating basic research into better applied research, & then developing that into market-ready products.

Despite the Apollo effect of Kennedy’s increase in NASA’s budget resulting in more PhD’s, mostly men, it’s telling, & perhaps disappointing, that the 1st woman in space came from the USSR.

Germany’s German Aerospace Center (DLR) is the German equivalent of America’s NASA, plus energy, transport, & security.  It has a budget of 1.8B € for 32 institutes on 16 sites.  They’ve provided equal opportunities for women for the last 10 years, in which women have taken 30% of all positions, & a division to keep watch over this since 2008, & a Chief Diversity Officer who sits on the Board of Directors.

BrainGate2 was cited as a good example.

In addition to commonly-accepted mentoring by senior leaders of aspiring junior level employees, perhaps we should consider reversing the hierarchy & have juniors mentor the seniors on new technologies with which they are more familiar.

Many things are changing which should encourage women to get more involved in STEM, such as changing demographics, traditional gender roles, reconciling work & home life, a skilled worker shortage, increasing cultural diversity, & last but not least, legislation.  The potential benefits of changes in policy are increased opportunities for women, employers being viewed as more attractive workplaces, & organizations simply becoming more creative.  Structure follows strategy, so a key is changing the mindset to balance reality with innovation.  Women are underrepresented in STEM for societal, individual, & organizational reasons.  There are implementation, responsibility, & cultural issues.  Vicious circles which enforce unwritten laws or codes from dominant insiders conspire to keep women down.  Commitment to change & including all stakeholders are critical success factors.

Women have a great societal impact on engineering.  Their diversity leads to increased creativity, which encourages innovation.  Role models, mentoring, networking, non-profit associations, & starting early all encourage women in this direction.  i2e or innovation, invention, & entrepreneurship should keep students from getting distracted.  The Urban Assembly is a good example of an organization which has promoted women in this area. (The CEO of my 1st employer Xerox, Ursala Burns, is a graduate of Brooklyn Poly) The bottom line is we must change the mindset of society to make a change in this direction.

Panel Q&A

A girls-only robotics lab reached the same results as boys, but with a different approach.  Girls ask “why?”, while the boys simply break it down or destroy it to understand it.

Open Q&A

There is no magic formula, although the necessity is clear.  We need an Artemis effect for women, just as we had an Apollo effect for men.

60% of medical students are female.  German women are successful in civil engineering, but no women sit on the board of DLR.  Although other women were offered the opportunity, the panel still consisted of 2 men & 1 woman.

Women in STEM is similar to women in finance.  Families must be made compatible with work.  Women with children should no longer be stigmatized.  We need an attitudinal shift.  STEM participation is too low for both men & women.  Secondary education must be revamped.

We had this same discussion in 1978.  Women drop out of these areas early.  We need to be honest with ourselves.

Does society really value STEM?  We need to change child care so that women can come back to their jobs.  Change will come when men care for their kids.  Daughters need to ask “What can I do with technology?”  There are many piecemeal solutions @ the policy level.


check czech tech

Tuesday 21 January, 2014

Last month I attended this event hosted by Czech Invest: Transatlantic Technology Transfer.  6 organizations made presentations, which are highlighted here:

  1. Central European Institute of Technology is an EU funded project/Center of Excellence which focuses on material & life sciences & advanced materials.  It’s comprised of 6 partners, 4 universities & 2 research institutes.  They pursue 6 research programs with 557 researchers in 61 research groups.  They have 9 core facilities funded with a 210M € budget.  It was founded in 2011 & scheduled to end in 2015.  Other foreign partners include VIB, EMBC, Imperial College-London, CTH-Zurich, TU-Wien, & AIT.  They want to attract US students & have taken on 14 new PhD students since 2013.
  2. Meopta.com was founded as an optics company in 1933 & recently opened a high-end clean room assembly & distribution facility on Long Island, & is now 90% privately held.  Most of the manufacturing is done in the Czech Republic.  They produce 850 optical & mechanical products for industrial & military applications & sports optics, such as products for aviation, semiconductors, digital projectors, binoculars, & riflescopes.  Their Czech R&D center for product engineering houses 75 scientists, 2/3 of which have PhD’s.  Their best current opportunity is with the DSIA-Defense & Security Industry Association of the Czech Republic.
  3. Cambridge Innovation Center is expanding to St. Louis, Missouri because they think that is the location with the most potential upside.
  4. Massachusetts Global Partners actually complements the Cambridge Innovation Center with their Enter Mass.-Supercluster Program.  They train/mentor/coach firms on GoToMarket strategies, technology transfer, & matchmaking. Their Czech Accelerator program offers 6 month sessions for 3 companies/session.  These started in July, 2011, so they are now in session #5.  Oscar Tech, CNS, Cathedral Software, & VentureCafe.net have come out of this program.
  5. Oscar Technologies was founded in June, 2012 in the Czech Accelerator & has expanded to Silicon Valley.  Their prototype tablet for the elderly was completed in May, 2013.  It has a meal calendar & other programs useful for the aged, & allows them to be managed remotely in Google Play.  They serve customers in 3 countries with 12 employees & are looking for distribution, advisers, investors, & a senior living facility for a pilot program.
  6. Czech Wine Imports-OK, so they’re not a tech firm, but they made a welcomed contribution to the evening’s festivities.  They feature Moravian wines from 45K acres, which produce 60M gallons.  They’ve won 78 medals & earned 25 of the top 1000 wines by Klub Sommelier.

what can industrialized world learn from emerging markets?

Thursday 10 October, 2013

The other night I attended this event Research Meets Practice – Turnaround: Third World Lessons for First World Growth with Peter Blair Henry presented by the Social Enterprise program @ Columbia business school. Ironically, Henry is the dean of the Stern business school @ NYU. As an economist, he uses the stock market as the barometer of success & applies how the markets react to policy changes to decide whether or not the policies are successful. His premise is the industrialized world can learn from emerging markets in this context. Most recently, the economic policy question has been “When should the Fed taper interest rates?” Rising American interest rates led to volatility in emerging markets. But then the narrative changed with the publication of a study which revealed that 75% of economic growth will come from emerging markets by 2025. Paul Krugman’s setting of diminished expectations has led to a 0-sum mentality, but growth is not a 0-sum game.

Henry offers 3 lessons from emerging economies to industrialized nations.

  1. Impose discipline, not as a means of fiscal austerity, rather as a structured commitment to a pragmatic growth strategy which values a whole nation over the interests of any particular set of individuals. In 1965, during a meeting in Seoul to solve the debt crisis of that time, a program for sustained growth was proposed which became known as the Washington Consensus, which consisted of 10 policy prescriptions countries should follow to lead them out of economic crises. These were not well-received by 3rd world countries @ the time, as they resented being told what to do by 1st world countries. Joseph Stiglitz called this a massive failure, but there are differing points of view. Taking a closer look @ how stock markets define discipline & show what creates value, in recent economic history there have been 81 instances when fiscal austerity was imposed to bring down high inflation. The stock market went up 60% when high inflation was brought under control, but if inflation was moderate or lower, the stock market went down 30% when austerity measures took hold. So if inflation is 2-3% now, does imposing fiscal austerity make sense? Chile offers a good example of counter intuitively saving during a surplus . They saved when they had a budget surplus from earnings on copper exports, while in the US we returned our late 1990’s surpluses to taxpayers with the early Y2K tax cuts.
  2. Leaders must exhibit a clear commitment to a change in direction. Barbados in 1992 offers the best example here. Their currency was fixed to the US$. There was a financial crisis & the IMF suggested de-linking from the US$ & devaluing the currency to bring down inflation. The government proposed a 9% across the board wage cut would accomplish the same thing with better consequences, i.e. cut their costs to make their exports more competitive. In negotiations, the unions ultimately agreed, but then 30K of the 250K population protested, & the country was coming apart @ the seams. The unions then agreed to link wage increases to increases in productivity & keep the wage cuts. The stock market recovered nicely. Leadership was kicked out of office, but agreed that was a small price to pay for the recovery.
  3. Work to rebuild the trust deficit. Emerging markets had to gain the trust of the developed world. Now the leading economies need to earn back the trust of the growth economies. The BRICS countries generate 21% of world GDP, but only get 11% of the votes of the World Bank(WB). The WB agreed to shift 2 votes to emerging markets, but this still hasn’t happened yet as a result of 0-sum thinking, which leads to a lack of trust. The proposal of the creation of a BRICS development bank is symptomatic of the lack of trust between emerging & industrialized leaders.

By using discipline, clarity, & building trust as fast-growing economies have offers good lessons for the rest of the world to learn from.


  • Making good on IMF & World Bank reforms would do a lot to ameliorate the trust deficit. Symbolism matters & sends strong signals.
  • It’s much easier for small economies to change quickly. India is another matter. Brazil is an alternative. Brazil suffered from hyperinflation in 1994. Who would have thought they’d come this far in the last 20 years. The difference is leadership.
  • More customized solutions than the Washington consensus are required for growth. Shades of gray are OK.
  • Take a long view. Short cuts draw blood. Don’t advocate policies that are good for companies, but bad for society as a whole-that’s not sustainable. Business moves @ the speed of trust.
  • The EU has deepened their recession by implementing fiscal austerity policies. The IMF has said this is the wrong approach.
  • Abundant natural resources cover a lot of ills in places like Russia. Re: debt relief in Africa, how much of their success is due to management vs. the medicine that was imposed? Henry’s suggestions apply in these cases as well to maximize long term sustainability.

business opportunities in Saudi Arabia

Thursday 8 August, 2013

I attended this event, Business Opportunities in Saudi Arabia (SA), http://export.gov/newyork/newyorkcityexportassistancecenter/te/le/index.asp sponsored & organized by our office, the New York US Export Assistance Center.  It featured Ed Burton, Pres.-CEO of the US-Saudi Arabian Business Council, & Amer Kayani, Minister Counselor for Commercial affairs @ the US embassy in Riyadh.  The event was co-sponsored by Anchin, Block, & Anchin LLP Accountants & Advisors (ABAAA), & The Business Council for International Understanding (BCIU).

Laurence Feibel of ABAAA opened with a thrilling discussion on international taxation.  He told of how an exporter can drop his tax rate from 39.6% paid on commissions to intermediaries to 20% which can be issued as dividends.  Feibel then moved on to the topic of the day, “Apple rules,” moving portable income offshore to avoid taxes.  The 1st question is what’s portable & what’s not, which is somewhat transitory.  The goal is to earn profits in low tax jurisdictions.  There are places you can go where you are eligible for tax deferrals, & to be taxed later as dividends rather than income.

Ed Burton provided an introduction to SA’s economy, which has a GDP of $781B with 6.8% growth, 4.6% inflation, & 3.6% debt/GDP, resulting in a disposable income of $24,859/person.  Looking closer @ foreign trade, SA has $747B in net foreign assets, exports $396B & imports $129B. SA has a population of 29B of which 59% is younger than 30.  To put SA in context, it’s rated 18th in terms of competitive economies by the World Economic Forum & #22 in terms of doing business by the World Bank.

Specifically to the US-SA relationship, SA is the 2nd biggest supplier of oil, 20th largest export destination,  7th largest importer, with $73.8B in bilateral trade with the US.  Big companies are making large injections of foreign direct investment in SA, such as Dow’s $20B joint venture with Aramco, & GE investing $1B.  35% of these investments are made via joint ventures.

When entering the SA market, it’s important to commit to the market, whether it be through direct exports, through a Saudi agent, or with a legal presence.  Build relationships over time, & get good legal & financial counsel.  To build fruitful partnerships, gather local knowledge through boots on the ground to get access to local decision-makers.  Locals feel most comfortable buying from other locals, but you don’t have to necessarily grant them exclusive rights to sell your products there.  Different partners have different needs.  When investing in SA, 100% ownership is OK, but hold real estate for 5 years to take advantage of corporate tax rates of 20%.  In trade, take advantage of GAFTA.

Amer Kayani took it from there to extrapolate on specific opportunities by industry in SA.  But before that he warned that it does take 18-24 months to build a business relationship in SA, so patience is required.  Governement spending is $1500B to create jobs for unemployed youth.  72K SA students study each year in the US & each spends $80K/year.  Here are specific industries where opportunities lie & a few comments for each:

  • Construction-285 civil projects with $260B open to bid in design
  • Religious tourism-for a transportation revamp & to build 53K rooms in Mecca & Medina
  • Defense-30% of the budget; Raytheon is working on a $600M command control communications computer, naval expansion & Royal Guard projects as well
  • Health care-increase beds/1000 population from 2.2 to 3.5 for 120 hospitals for $18B
  • ICT-13M internet subscribers, which is ~50% penetration & 1.8 cell phones/person.  The biggest security threat in the Middle East is cyber-terrorism.
  • Oil & gas-opportunities with Aramco downstream, & in petrochemicals too
  • Power-SA needs 30gW of power by 2020 which will require $80-100B investment, & $28B for 13 gW in 3 years.  The renewable energy goal is $.05/gW by 2032 & $.04/gW for solar.
  • Transportation-investing $24B for a national rail network & $110B for airport expansion
  • H2O-SA residents are the 3rd largest consumers of H2O per capita in the world, desalination is the strategy to build 30 plants for $14B in the next 15 years.

In sum, there are no more lump sum or cost + contracts, & no more working remotely in SA from Dubai or Bharain.  Find reputable partners over multiple visits.


  • How long a project lasts or decision takes depends on the partner.
  • In procurement, it’s important to get involved in the process early to have input into the RFP.
  • Even getting lists of opportunities makes it too late-you need to find proactive partners who can guide you beforehand.
  • Financial services are well-regulated;  SA is opening the SA stock exchange to foreigners in the next 18 months.

economics of Tunisia

Friday 28 June, 2013

While in Washington DC, I attended this event The Role of Economics in Democratic Transitions: The Case of Tunisia, which featured Mondher Ben Ayed & Larry Diamond @ the Legatum Institute.  While the title highlighted the link between economics & democracy, the focus of Ben Ayed was clearly on economics.  Tunisia’s macroeconomic fundamentals are strong:  5% growth, deficit 3%, 3% inflation, debt/GDP of 40%, 80% literacy & 5% of the population studying @ universities.  Tunisia is 1 of the best states in the region for women, who comprise 62% of all pharmacists.

So then what went wrong?  Mostly, it’s been the fact that Tunisia was run by a dictator with no opposition.  There are also huge disparities between the coast & interior.  800K are unemployed, which means only new employment comes from growth because Tunisia in not rich in natural resources.  The country needs 7-8% growth to absorb new employees.  75K become unemployed each year @ only 5% growth.  Corruption in the former leader’s family was also a problem.

After the revolution, the transition influenced the economy:

  • insecurity rose
  • law enforcement disintegrated as officers fled
  • the army was trusted & held the country together
  • criminals were cut loose & crime rose
  • the population asked for the return of security forces, which returned are now @ just about full capacity

This wreaked havoc a number of ways:

  • violence erupted
  • sit-ins & strikes started social movements
  • this wreaked havoc on investment
  • foreign currency reserves fell

5 governments which all lacked legitimacy held power over the next 1 1/2 years.  The lack of a constitution led to no visibility to investors, so reforms were required.  Corrupt capitalists were tied to the old system-40 were banned from foreign travel.  The result was damaging the role of businessperson as a role model.  Political parties agreed to turn the page.  Unions were strong, in the French tradition, which led to salary increases from 6 to 10B dinars in 2-3 years.  Subsidies increased 4.4B dinars in 2 years.  The budget went up, but costs increasing more than revenues led to a deficit of 6.5%.  The revolution came @ a bad time, as Europe, with which Tunisia has a free-trade-agreement, was slipping into recession.  The Libyan war hurt Tunisia:  an influx of 1M Libyans with 150K cars contributed to inflation when they consumed lots of subsidized gas.  There was less prosperity which was stressful for the government.  Tunisia’s future depends on Libya, despite the arms smuggled from the latter to the former.

Politicians realized they needed to bring stability to attract investment, which requires reform, but that’s painful.  Tunisia could be the 1st successful example of successful democracy in the Arab world, as it holds elections @ the end of the year.  The international community should help fight terrorism by providing financing & foreign direct investment during this transition.

1 0n 1 discussion with Larry Diamond:

  • Tunisia is no longer a sultanistic economy, but political reform requires economic reform too.  An independent judiciary is required for growth & investment.  Good governance fights corruption.  The free market is not in jeopardy as they seek to raise revenues by lowering tax rates, but collecting them from a wider base.
  • The nature of subsidies are changing.  They’re still 40% for fuel, but they are changing from generalized to more specific, to support tourism, for example.
  • It’s hard to create entrepreneurs in Tunisia.  Only 1 in 20 succeed.  They can’t wait for another economic class to develop, but they need entrepreneurship to stimulate the economy.  While it will take years to deal with transitional justice, the economy can’t wait.  Entrepreneurs need to be good role models.  200K unemployed are seeking government jobs because of the negative image of businesspeople.
  • New laws & their enforcement are needed to control corruption into the future, which is now worse than before.

Open Q&A

The interior is not poor:  marble is exported around the world.  Rich agriculture has vast potential, but it hasn’t been developed because of lack of infrastructure & investment.

Protests in Turkey have galvanized secular forces, but otherwise have had little other effects.

Since the 1970’s Tunisia has introduced free markets;

  • the culture already exists
  • the public sector employs 500K while the private sector employs 2.5M
  • privatization has been occurring since the 1990’s
  • people are generally happy with the results
  • Tunis has a  strong business community

The US, France, & Turkey are helping beef up security.  Infrastructure still relies on international financing, i.e. $5B in loans.  The US gave bank guarantees in 2011, but not since then.

Relations with Libya is at the heart of current discussions.  That these countries are complementary is obvious & Tunisia understands Libya’s strategic importance.  A new investment code gives Libyans the same rights as Tunisians.  Economic integration could lead to coordinating economic policy & subsidies, fighting smuggling, & better security & border control.



future of the g20 & IMF?

Monday 24 June, 2013

I checked out this event @ the Woodrow Wilson International Center in Washington DC Savior or Achilles’ Hell of International Markets: the G20, IMF, & the global financial crisis presented by Chris Legg, former executive director the Australia & Pacific constituency @ the IMF.  (We walked in a few minutes late, but don’t think we missed too much).

Chris opened with a brief history of the Bretton Woods agreement & explained how inertia has delayed changes in how IMF quotas have evolved over time, keeping the industrialized world overrepresented while the emerging markets are underrepresented.  The IMF is a rules based system that was designed for a different world to facilitate trade & not capital flows.  It uses soft terms with few obligations to create a stable system of exchange rates & prohibit exchange rate manipulation.  In it’s quest for political leadership, the role of the US is changing while the economic reality is changing as high growth rates lead to increased influence of Asia & China.

On the eve of the financial crisis, there was a misalignment between the voice & representation of the IMF.  The subsequent track record raised the following questions:

  • should there be financial sector reform?  interventions differ
  • should the IMF reform? it would be a grand reform
  • how should surveillance & policy change? it’s rules vs. ownership
  • What about governance reform? it’s been piecemeal
  • Should they be policemen or advisors?
  • Were they asleep @ the wheel which allowed the financial crisis to occur?  imbalances should have been addressed
  • Are stronger rules needed? no
  • Is improved political ownership needed?

Better analysis is needed to break down silos, but better reports is not the same as political ownership.  The G20 Mutual Assessment Process (MAP) provides a framework for growth.  It created a relationship with the fund, as uncomfortable but complementary partners & allows them to leverage technology capital, eliminate sensitivities, & allow emerging market economies (EME’s) to hedge their bets.

2010 brought fund governance reform with a shift in the quota & voting shares which resulted in a shift in power from Europe to the EME’s.  But there has been no progress as an open transparent process has been held hostage to the current share structure.  There is defeatism & division among the EME’s.  Strengthening of the political leadership & ownership has been stymied by the EME’s which are suspicious of the dysfunctional board.  Realignment of the executive board has been demanded but failed to deliver as the EME’s have been frustrated.  There has been a quota realignment with a 5% shift to the EME’s which is yet to be delivered.  It took a 1.35% “haircut” of the shares of industrialized nations as central & south america fell while China & Brazil gained.  There has been a proposal for a quota formula review, which would be a function of GDP, but that has been kicked down the road.  Unfortunately there is no incentive for long-term cooperation.  Although there is pressure on fund resources, even as EME’s assume creditor roles, no new leaders have emerged.

In the post-2009 world:

  • successes have not been implemented
  • reform has met skepticism
  • leadership has been elusive
  • rules have not led to political consensus
  • policy cooperation has made the G20 fragile

The IMF has been in protracted transition, but as the US has been compromised, it is still indispensable.  The future path is not clear, but nothing is inevitable.  Europe has weakened as China challenges.  The BRICS are still a work-in-progress.  The G20 remains essential, but may have too many deliverables as it needs to balance ambition with pragmatism.  It’s values have been tarnished by the crisis, but inertia is the bigger problem.


There is cautious optimism about Greece, although there are no strong messages either.  Not being able to change exchange rates leads to difficulties.

Australians provide pragmatic approaches & workable solutions to compromise as it assumes leadership of the G20 next year.

The EME’s are cautious & conservative, but  there is no waiting for better governance.  They are too simplistic on ownership, while there are still domestic sensitivities which makes it easier for them to accept their consequences.

The IMF provides a dialogue among all of it’s members about exchange rates.  It promotes stability by adjustment, but it’s methodology is easy to debate.  They offer policies that are consistent for long-term growth but need more rigorouts opposition.


Silk Road conference focus on Kazahkstan

Thursday 30 May, 2013

Harry Lepinske & the Central Asian Productivity Center sponsored another Silk Road conference & Harry asked me to fill in as a moderator of a panel discussion on Kazahkstan (KZ), so the focus of this post is on that subject.  Dauren Kabiyev, the chief economist @ the embassy of KZ, provided an overview of the country.  GDP/per capita has increased by a factor of 16 to $12,000/year.  Foreign trade has increased to $120B/year.  It’s top 5 export products are oil, gas, minerals, agriculture, & metals.  It’s foreign reserves consist of $90B in gold & foreign currencies gained in its national oil fund.  KZ moved up to #49 in the “Doing Business” rankings & #68 in the Index of economic freedom.  KZ has the world’s 9th largest pool of oil & gas, & is the largest landlocked country in the world.  It is diversifying to increase its growth of renewables, which is attracting foreign investment.

Nick Pribus, a business consultant from Chicago, brought Foodmaster to KZ.  He 1st went to Moscow in 1992, & then KZ in 1993 when he worked in real estate.  His model then was:  buy real estate; sell real estate; repeat.  Then in 2008 he moved into the 5 stages of grief:

  1. denial that the crisis of 2008 didn’t exist
  2. anger through 2009
  3. bargaining in 2010 @ the expense of everything else
  4. depression in 2011
  5. & finally, the comeback with undiscovered opportunities in 2012.

His contention is KZ offers the best opportunities because of its uniqueness & it’s much easier to work there because of its people, who are open, smart, & unlike many others in the region, look for win/win situations.  Foreign investors don’t understand KZ-they don’t want 200 page legal documents:  they want to resolve problems over dinner with a good relationship.  They are not politicians for sale;  they are pragmatic & straightforward.  KZ is #2 in the world behind Australia based on arable land & #3 in oil & gas on a per capita basis.  Beef from KZ is in much the same position as was sea bass from Chile years ago.

Attorney Alex Nisengolts from Chicago talked about “Opening a business in KZ.” Doing business in Kazakhstan (final) – Alex Nisengolts 17 May 2013 Early in his law career a mentor suggested he focus on KZ & since he met his wife there in 1994, he has built his career & family there since then.  KZ has changed dramatically in the past few years with strong GDP growth of 5-7%.  The middle class has grown by a factor of 8 in purchasing power parity terms.  Poverty has been reduced from 46% of the population to 5% resulting in many new consumers entering the market.  Investors have 3 options:

  1. open a representative office
  2. open a branch
  3. open an LLC/joint stock company

To set-up a business, you need the appropriate documents & a license.  The currency is convertible @ the rate of 151 Tenge/US$.  Big transactions must be cleared by the national bank.  Transfer pricing must be done @ arm’s length.  Labor is employee friendly, as hiring is not @ will.  Work permits for ex-pats are limited to 30% of management & 10% of professional & skilled workers.  Taxes are low with a corporate tax rate of 20% & personal income tax rate of 10%.  Dividends & capital gains can be tax exempt.  Tax residency rules are similar to those in the U.S.  You must negotiate with the tax authorities on issues of permanent establishment & the location of management.  Legislation changes frequently, so you must do robust tax & legal planning.  Do your due diligence, comply with the law, & avoid tax havens.


  • KZ is working on joining the WTO ASAP & the US supports this.  Politicians & administrators are accessible, so get good local partners.  Don’t just show up to sell-build relationships.
  • Metals, & oil & gas constitute 85% of KZ’s natural resources, but they are committed to reducing this proportion to 60% in the next 5-6 years.
  • Their oil fund was founded in 2000 & modeled after Norway’s program to the tune of $15B from a banking account from their oil surplus.  It makes annual transfers to social programs & invests in government bonds, hedge funds, & PE funds.
  • The best US travel connections to KZ  are via Amsterdam & English is acceptable as the language of business in cosmopolitan Almaty.
  • Opportunities are in retail & industry, as KZ needs equipment.  Shopping malls are attractive, but the economy is not as scalable as in China.  To take advantage of all the arable land, don’t buy land, rather invest in viable businesses-there are many inputs & outputs which still aren’t there.  Special Export Zones & rapid depreciation are other opportunities.
  • The central Asian customs union of which KZ is a member provides access to 170M consumers. KZ is getting financial help from the US & the World Bank.

Google CEO on global technology

Wednesday 22 May, 2013

Eric Schmidt, former Google CEO, together with Jared Cohen, director of Google Ideas, has written a book, The New Digital Age, Reshaping the future of People, Nations, & Business, about how technology is affecting global business. He was in Chicago to talk with the Chicago Council on Global Affairs about it.

He started investigating the role of technology in Iraq around Thanksgiving & found they used their mobile devices to keep up to date on how their families are doing amidst all the chaos as cameras on cell towers watch IED’s go in the ground. The technology has empowered citizens for the greater good. 5B people will be accessing the internet for the 1st time in the next 5-10 years, many of them via mobile devices. These people will be bearing witness to great changes in societies. This is epitomized by the battle between governments which want to be big brother to their citizens & citizens that use the internet to report on what governments are doing. Citizens are pressing governments to change. Mubarek turned off the internet in Egypt for 4 1/2 days but was ultimately overthrown. In Afghanistan, it was only when the Taliban took the Afghan’s phones that they fought back to retrieve them. Fisherman in coastal Asia use SMS messages to keep their fish fresh in the water. Schoolgirls use Google maps to avoid bandits on the way to school. North Korea is the worst example of lack of a technology strategy. They have crossing guards on large boulevards with no cars as well as no conception of YouTube or even the internet.

Talk of technology policy results in silo’d conversations. China & the US are ostensibly allies in the physical world, while virtual enemies in the online world. Google Earth in Iran happens to depict the Middle East with no Israel.

The 1st shots of war will be shot in cyberspace in the future. There will be more munitions & noise, but fewer deaths.

Terrorists have leveraged technology in the past, but access to the internet also gives extremists reasons to doubt their leaders too. If we had the internet 20 years ago, perhaps we could have avoided the genocides in Rwanda.

Living life online will have implications even before some children are born.  Women in Saudi Arabia have been endangered by information that has been posted online.  A girl was killed as an honor killing because of what she submitted in an online chat session.

China is the world’s biggest computer hacker-we should assume this is a permanent state.  It’s important to realize that most technology infrastructure is not yet built:  the question becomes “Will that look more like the US or China?”  Thankfully American values are embedded in the internet.

In Myanmar/Burma, mobile communications is fueling a democracy, while the internet doesn’t work there.  It felt like East Germany after the wall fell, but there are no incentives for those in power to give up power.  They’re considering a bill to limit press freedom.  The constitution guarantees 25% of the seats in government to the military, which has little tolerance for the 35% of the population that are minorities.

Cell phones contributing to the media leads to more citizen journalism.  The traditional media will continue its role of verification & analysis, & perhaps help figure out which Twitter feeds to trust (& get over America’s obsession with celebrities).


Personal privacy is still protected on the internet because we can’t lose that trust, no human sees private data, & there are incentives for companies to protect data.

Technology can lead to reductions in unemployment with improvements in education.  The next 5B internet users will be using smart phones to access information which should lead to improvements in their critical thinking.

Google has not become too big & powerful because it was founded on strong principles & that culture will not change.

Unfortunately there is no systematic way to deal with author’s rights.  Books published before 1920 are OK.  50% of the sales of their book are digital & 50% are in hardcopy.

Schmidt defended former Google employee/present Yahoo President Marisa Miller’s edict to ban working from home.  Virtual halogen images of people simply do not get the same results or output as when people work physically together.

Teachers are actually becoming more important along with the digitization of education rather than less, so the human element is not being lost in digitization.  Students are learning to make fact-based arguments rather than emotionally-based ones.  In the 30 countries that they visited, they saw a number of educational disasters, but we need to focus on education to compete with Asians.

Digital architecture & infrastructure is changing as data moves to the cloud & access is enabled through handhelds & tablets.


South African sourcing from China

Tuesday 30 April, 2013

The Durban Chamber of Commerce hosted a presentation by Cardinal Global Trading Ltd (CGT) on trade with China, which turned out to be a commercial for their China Trade Services.  CGT works with South African firms to source products from China.  They claim to be able to help their clients avoid the “hidden costs” of enabling a supply chain which includes China.

Here’s their presentation: China Trade Service Presentation Business in China does not take place in isolation.  The emergence of the BRICS consortium puts this into context, & now provides an opportunity to exploit.  Foreign products flooded the South African market in the 1990’s after apartheid fell.  Surprisingly the government did not erect any protectionist barriers to cheap foreign imports, so the flow proceeded unimpeded.

CGT has a sales office in Durban & it’s operations office is in Beijing.  Their role is to validate Chinese manufacturers, ship products, clear customs, & provide delivery to your desired doorstep.  They mitigate the risk of doing business with Chinese firms by doing extensive onsite quality inspections, & management, production facilities, & container load checks.  They make sure their clients do business in a legally sound way, verifying export licenses, etc.  Their staff is fluent in English & Mandarin Chinese in China.  They’ve found that potential suppliers in China are rebellious if they are hiding something, while those who have nothing to hide are much more open.  Shipping is their biggest problem, i.e. the client in South Africa ordered 1 thing, & something else was delivered.  To rectify these situations, they check every step of the way.

CGT was founded in 2007 when they brokered the sale of manganese from Zambia to China.  In 2010 they brokered manganese ore & chrome from South Africa to China.  Other products they’ve dealt with thus far are industrial products, such as grinding rods, belts, chemicals, agricultural goods, textiles, paint, gloves, etc.

The biggest reasons to work with CGT are:  they are on the ground in China, offer a quality solution, & are a turnkey operation.  In the future they plan to enter markets such as India, Taiwan, VietNam, & Malaysia, & export products back into China as well.  Their commission fees run 3-7% with a 30% deposit & 70% due upon shipment via letters of credit.  CGT can work with companies without an importer code because they can use their own.  Minimum order size is 1 container load.  Lead time for them is 7-10 weeks.  Their focus is specifically on serving the needs of customers in/around Durban & the province of KwaZuluNatal.

•    Alibaba.com does not do the groundwork that CGT does.  Their access is limited to a certain extent.  In many cases, the 1st internet order is OK.  Then after trust is established, the 2nd order disappears.
•    Exclusivity depends on the product.  CGT works with different factories for different clients.
•    In the event of a problem, CGT will compensate/credit clients up to 100% of the value of a defective transaction.
•    Quality control inspectors ensure standardized products.
•    CGT works with the best freight forwarders & you can get competitive quotes from them.


Violence in South Africa

Tuesday 23 April, 2013

Violence is 1 of those things about which a lot is written in the media, but people don’t necessarily pay much attention to it because they become desensitized to it over time.  News reports about blood spilled in conflicts far away evoke far less emotion than when our own blood is spilled close to home.  In that vein, (pardon the pun), I wanted to write about a few personal experiences that have happened here in South Africa.

Within a span of a couple weeks the 1st month I arrived in Durban in January, 2013, I was told of 3 incidents which really made me step back & question the wisdom of coming here.  Let me describe each of them.  1st, a colleague related to me how her son was accosted in the front yard of his house.  A guy brandishing a gun robbed him of his laptop, which was sitting in the car.  Shots were fired, but only @ the ground.  The police are supposedly using the shell casings to try to find the perpetrator, but I haven’t heard anything since then about whether or not he’s been caught.  My colleague informed me that her son lives in a rough neighborhood, so this type of thing is not all too uncommon, yet they both were still visibly shaken, had to take time off work, & have seen counselors to deal with the emotional trauma.

In the next week or 2, we were informed that 1 of our colleagues in the office had died.  She had rented a mini-bus taxi & driver to take a trip out of the city.  A wheel from the mini-bus taxi came off on the expressway, flipped over, & she was killed.  Her husband & children incurred serious injuries.  We have not been told if the driver or mini-bus taxi company will be found culpable for any responsibility in her death.

A few weeks later, I was told by our quality assurance person that we need to develop a policy for when exam papers “disappear.”  Apparently what happened was; the car that was transporting exam papers was car-jacked with the exam papers in the back seat.  The person who was driving the car was not physically harmed.    To my knowledge, neither the car nor the exam papers have been seen since.

Finally, I’m not too proud to confess that I was the victim of a bit of violence here in South Africa.  I took a long weekend trip to Johannesburg Easter weekend.  A few hours after I arrived, I went looking for a jazz bar called BassLine in NewTown the evening of Good Friday.  When I started roaming this somewhat seedy neighborhood, the sun was still up.  By the time I had given up finding it, it had become dark.  As I was heading back to the train alone on the Nelson Mandela Bridge @ ~7:30 p.m., a guy walked up next to me & muttered something unintelligible.  He then went ballistic on me, rifling through my pockets & demanded that I give him my phone, cash, watch, etc.  When I didn’t produce these items fast enough, he cocked & put a gun to my head & threatened to blow my brains out.  I informed him I wasn’t ready to die yet, so I gave him all that he requested.  He then gave me a fairly strong blow to the side of the head with the butt of his gun & headed back to his seedy neighborhood.  I was kind of dazed & headed in the direction of the train station as quickly as I could.

Needless to say, I’m thankful to still be alive.  I was also lucky that he didn’t take my credit card, bank card, train card, & keys, because without any of those, I would have been screwed. The thing that he got that I missed the most is my prescription glasses.  I couldn’t read much the whole rest of the long weekend.  I spoke with a colleague from Jo’burg who informed me, it might not have been a real gun.  I questioned whether or not it was actually loaded.  However these questions are irrelevant.  The bottom line is, it’s not worth the risk to find out if either of those are true or not.  Guns give small/weak people a lot of power, so I am now an avowed gun control advocate.  Obviously I was in the wrong place @ the wrong time:  my guide book advised being in this neighborhood after dark, but it was Good Friday, it wasn’t late, & I thought I was invincible.  Nothing like this had ever happened to me before.  I’ve learned my lesson.  I will now follow what these guide books say & I will avoid dangerous areas when told.  I’ve wandered through dangerous neighborhoods in Chicago & other places & come through unscathed.  Now I won’t risk it.

There are dangerous areas in Detroit, Chicago, Oakland, New York, DC,…this could have happened anywhere.  However in South Africa, it’s even more pervasive.  I’m constantly warned to leave work well before dark because it’s not safe to be downtown after dark.  A colleague has given me a ride home after work to keep me out of harm’s way.  Businesses have acquiesced to the level of crime.  Busy malls close @ 5 or 6 p.m.  because people no longer feel safe on the streets @ that time.  Granted, the streets of Chicago aren’t bustling after dark most of the year, but many stores are still open & I do feel for the most part safe, even after dark.  South Africa can be a dangerous place, not unlike other places in the world.  Beware & watch your step.  Don’t fall prey to what I did.  Be safe & secure wherever you go.  You take these things more seriously when they happen to you personally.



South Africa-China Investment Cooperation seminar

Tuesday 16 April, 2013

On the day of the BRICS summit, the trade & investment arm (TIKZN) of the government of KwaZuluNatal (KZN) held a South Africa-China Investment Cooperation seminar, which was attended by about 120 representatives from China & South Africa (SA).  MC Desmond Golding, of KZN Economic development & tourism, kicked off by noting that SA contains 11 hubs of interest to Chinese companies, & that there is interest in ports & airports too.  MEC Mabuyakhulu, provincial minister of economic development & tourism of SA,  indicated that there are 18 ASDA investment projects in KZN worth R240B in among other things, renewable energy & electricity.  The city of Durban is building a bridge across Durban harbor.  Durban together with Richards Bay handles 80% of the shipping of SA’s exports & imports.  KZN’s vision 2030 plan makes the province the gateway to Africa.

Chen Jian, Vice Minister of Commerce of the PRC confirmed their 2010 comprehensive strategic partnership.  China is SA’s trading partner while SA is China’s biggest trade partner in Africa.  He proposed 4 suggestions:

  1. Strengthen cooperation by introducing new products to 1 another as China wants to import more from SA.
  2. Industrial cooperation-SA is good @ manufacturing appliances & agriculture, so they should cooperate deeply in manufacturing
  3. Create a platform for exchange-of people, customs, & cultures
  4. Strengthen mechanisms-with more trade & investment agreements

A surprisingly familiar face showed up to make a presentation.  Charles Manuel, former trade commissioner for South Africa to Chicago, made a presentation on Investment opportunities in SA, specifically in KZN.  At present, China  is the #1 investor in SA, primarily in minerals.  They are seeking to increase the procurement of SA products & services.  The area provides a gateway to global shipping routes which offer access to 200M consumers.  In 2010, SA had 6M internet users.  Africa is changing:  of it’s 54 countries, 35 are now democracies.  There were only 8 democracies on the continent in 1991.  These countries are becoming more attractive according to an Ernst & Young 2011 survey.  SA is Africa’s only UN Security Council member.  SA is in the top 5 countries for cell phone coverage.  In emerging markets, SA has the #2 financial sector, & the $2 business tax rate.  SA is ranked #35 of 183 countries in ease of doing business & #1 in ease of getting credit.  It’s #10 in terms of protecting investors.  The government’s goal is to create 5M jobs to get the unemployment rate down to 15%.  China is SA’s #1 export & import destination.  Opportunities lie in the green economy & renewable energies, which are projected to reach 40% by 2020.  R350B is being invested in upgrading infrastructure.  Automotive is SA’s flagship industry while film & media offer strong incentives.  SA is becoming a business process outsourcing destination.

Liu Dianxun, of China’s investment promotion agency, said many famous state-owned enterprises & private companies are included in the visiting delegation.  China is constructing a 4G mobile network.  China offers 31 economic development zones & has signed 88 memorada of understanding, including a declaration of intent with SA

Zamo Gwala of TIKZN told us more about KZN, which has a population of 10M, 1/3 of which is in Durban.  KZN is 20% of the population & accounts for 17% of the GDP of SA.  Manufacturing leads @ 20%, followed by financial services @ 18%.  Their growth strategy is to create industrial economic hubs with a focus on maritime & tourism.  The plan is to dig out Durban’s port so that it can handle 20M TEU’s (T equivalent units) & make Richards Bay a deep sea port.  It’s also in the plans to build a new city to surround the new  international airport, which will be connected to the existing city & Pietermaritzburg with a monorail.  Other opportunities exist in R&D, renewable energies, & agricultural processing.  Their hope is to also add value to the minerals that are extracted & exported.  The old airport is being turned into an automobile supply park.  600km of coastline are waiting to be developed into entertainment venues & resorts.

An integrated logistics firm with operations in Durban, Transnet Ports SA, made a presentation/commercial, on their take on SA’s role in the future of Africa.  A Chinese health care firm Time Medical Systems, made a presentation on their medical imaging solutions for the developing world.

Here are the participating Chinese companies which have website URL’s:


BRICS Business Forum in South Africa

Tuesday 9 April, 2013

I slipped into the BRICS Business Forum in Durban, South Africa (SA) the day before the momentous signing day of the BRICS Summit.  The business forum obviously had much more of a business focus than the ceremonial summit, so that was time much better spent for me.  It looked like there were about 2500 attendees, which was supposedly ½ of those attending all BRICS events.

I arrived a few minutes late to a talk being given by SA’s Minister of Trade & Industry, Rob Davis.  He emphasized how much SA must industrialize & encourage development of a  services-based economy, including information technology services.  Davis pointed out that despite that fact that SA does not have the large domestic markets the other BRICS countries do, SA offers access to many other countries in Africa, partially through it’s membership in trade blocs, SAFTA, SADC, & EAC, which are supposedly doing more than just reducing tariff barriers.  SA is seeking partnerships to strengthen its production activities.

The Brazilian Minister of Foreign Trade let us know that Brazil will host the BRICS summit again next year & that Brazil has the largest population of Africans outside of Africa.

Russia’s economic minister spoke, but it was in Russian & my simultaneous translation device was not working correctly.

The Chairman of India’s Chamber of Commerce & Industry, a very influential organization in India, & minister of commerce & industry, Annan Sharma was up next.  He noted the connections between India & SA by making us aware of Mahatma Gandhi’s travels to Durban & Peitermaritzburg.  India is working on a pan-African e-network project which is linking key universities & hospitals.  The project is a gift from the government of India.  To contribute to institution & capacity building, India has welcomed 50K students into its schools. It is forming 17 institutions in Africa, including the Indian-African Institute of Foreign Trade, which will institutionalize the framework for trade & investment.

China’s vice-minister of commerce spoke in Chinese with a bad simultaneous translator again, but I was able to decipher that he made 4 propositions:

  1. Strengthen the international trade & economic order with macroeconomic policies, complete the Doha round of negotiations of the WTO, & safeguard developmental rights.
  2. Direct & focus on cooperation among BRICS countries to maximize their competitive advantages
  3. Intensify investment & promotion
  4. Promote finance, IT, the environment, & SME’s.

BRICS-Africa panel with panelists from Brazil, India, & SA.  SA led off by informing us that SA has the world’s largest radio telescope, which is probing the outer edges of the universe.  It can undo 3k 15” satellite dishes & is 50X more sensitive than it’s nearest competitor.  This provides opportunities in research of high-level technologies & in construction of satellite dishes in SA.  China & India are already members of this 10 member-country international project.

Brazil has been investing in biofuels for 40 years & has the most flexible-fuel cars.  Agrobusiness is huge in Brazil & Brazil leads in the trade of ethanol.  Sudan has implemented Brazilian technology in this area.  This is an example of a positive approach to international cooperation.  The Brazil space agency has experience in working with the Chinese & is offering imaging technologies to SA.  They suggest the way to keep fuel prices low is to focus on clean fuel, simplify complex tax structures, & keep the price of ethanol below that of oil.

India seeks deeper engagement with BRICS countries & believes the key to success is the transfer of technologies.  African countries hold 50% of the world’s resources (I’m not sure which 1’s) & an environment with a free flow of people, goods, & services needs to be created.  India has the workers with construction skills & training-it’s industrialization level is 42%.

CNBC hosted a debate, but it might not have aired yet-here is all I could find  http://www.cnbc.com/id/15840232/?video=3000157571&play=1

The afternoon was completed by an infrastructure breakout panel & the signing of a number of Memoranda of Understanding.  The panel jumped right in to explain how BRICS can help the rest of the continent of Africa.  They’ve invested 4 trillion South African Rand, are working on a World Economic Forum project in Ethiopia, & encourage a focus on localization.

LinkAfrica hired consultants from the US, Terabit consulting, to do a study on fiber optics & the last mile terrestrial connections in Africa.  They signed an MOU with other BRICS countries for foreign trade to create communications on a south-south basis with no northern hubs.  This gets access for BRICS countries to 21 countries in Africa.  Their plan is to build data centers with access to the cloud in Africa.

Brazil’s representative indicated they’ve been in Africa since 1983 & are now active in 14 countries on the continent.  His take was we need to improve the infrastructure network to feed the world.  They are doing that by investing $445B by 2015.

Russia’s Renwa Group has been working in South Africa for 7 years.  Their constraint is in infrastructure in ports.  Their costs double when they must ship their goods 200km from Port Elizabeth to Durban’s port; transportation costs are double their extraction costs.  South Africa’s electricity monopoly is ineffective because electricity costs have risen to 12% of their Gross Margin, & forecasted to become 16% in the next 5 years.

India’s representative indicated that South Africa is India’s 4th largest trading partner.  The Delhi-Mumbai corridor will have $100B invested in it in the next 20 years as 400M people will be moving there in the same time frame.  They are investing $1Trillion in the next 5 years. & seeking $500B from investors right  now.  They privatized their airports 10 years ago, & now they are some of the best in the world.  They are investing in infrastructure funds in a big way.

China’s representative from ZTE was hindered by bad simultaneous translation again.

Pardon the lack of detail in specifics on the speakers, etc.  I tried to snag a program with an agenda but couldn’t pull it off.  I asked the organizers but the bureaucrats have been unresponsive.


rules of origin for South Africa trade agreements

Wednesday 27 February, 2013

The Durban Chamber of Commerce hosted a seminar on rules of origin, which specified how products are treated for export/import purposes by countries which have various trade agreements (RTA’s-regional trade agreements).  The event was sponsored by SGS, a French company which facilitates trade in Africa by serving governments & non-governmental organizations (NGO’s) with import verification, trade, & aid efficiency programs.

The meat of the program was presented by Nathi Cazes of the South African Revenue Service, (SARS-not the disease).  SARS administers the trade agreements in which South Africa participates.  We discussed primarily agreements with the EU & EFTA that were initiated in 2000 & now encompass 27 & 8 countries respectively, & SADC, agreed upon in 2008 & accounts for 12 countries.  Countries are divided by how their products are treated for tax purposes, either non-preferential, upon which tariffs, quotas, duties are imposed, or preferential, which receive preferential treatment with lower or no tariffs, quotas, &/or duties.  South Africa also adheres to internationally-recognized General System of Preferences with the EU since 2004, Norway, Turkey, Russia, & Switzerland 2004-08.  South Africa also benefits from the AGOA act passed by the United States government, which provides preferential tariffs for African textiles entering the US.  Due to competitive pressures, the number of countries participating in some of these agreements is declining.

Proof of origin is required for products exported directly from member countries.  It’s important to determine if they were “wholly obtained” & “significantly worked.”  The rules of origin criteria are as follows:

  • Origin status- Origin verification can take 3 months with SADC, but up to as many as 10 months with other organizations.
  • Cumulation
  • Minimal operations
  • General tolerance rule- There are different value tolerances for agreements with different regions:  SADC 15%, EU & EFTA 15%, Turkey 5%, Norway 5%, & Russia 50%.
  • Direct transport
  • Proof of origin- Documentary evidence must be translated.
  • Approved exporter-  Approved exporters must make a minimum of 12 shipments per year to gain approval as approved exporters.

A value-added test & ex-works costs & prices are used to determine origin criteria.    Some processes which do not confer origins, such as packaging, dilution, & assembly, are addressed in other RTA’s. Minerals, vegetables, & livestock are considered wholly-produced goods.    SARS regulates the certificate of origin process whereby, for example, forms must be returned to customs.  It’s the responsibility of the exporters & importers to assure that their documentation is complete before sending it to customs & SARS.

There was a problem in shipments to Zimbabwe recently where customs officials suspected the illegal importation of good from China embedded in other shipments, so they opened every single box to inspect for these goods.  Needless to say, it provided a major discouragement to shipping to Zimbabwe.

The South African government is working on agreements between the EU & Eastern African Countries (EAC) & potentially with the BRICS nations, Brazil, Russia, India, & China.

Like my 1st sales manager @ Xerox used to say, “There are 2 sides to every business:  they’re either sales promotion or sales prevention.”  All of this paperwork to document the origins of products is clearly a bureaucratic, but necessary, exercise in sales prevention.  On the other hand, some of these sales would not even be possible without these agreements, so I guess it depends on how you look @ it.  Obviously minimizing the requirements makes it as smooth as possible.  I asked how automated these processes are & was told they are, but I’m a skeptic in that area.


Rural electrification in South Africa

Wednesday 20 February, 2013

Those crazy krauts are @ it again.  The German-South African Chamber of Commerce put on a seminar on rural electrification here in Durban, South Africa, so I sat in on as many sessions as I could.  Most of the content seemed to be provided by Renewables Academy.  This was a comprehensive 4 ½ day seminar, covering photovoltaic (PV) systems, solar resources, cells, modules; batteries & energy storage; electronics, installations, wiring, fuses, loads, applications; off-grid system design & sizing; hydropower systems, & project design.  The featured speakers were Peter Adelmann & Ivan Karau Kisembo.

There are a number of off-grid PV applications:

  • Solar home systems (SHS)
  • Clinics, schools,
  • Rural businesses
  • Tourism
  • Solar water pumping
  • Telecom, 2-way radio
  • Street lighting & signs
  • Back-up
  • Mini-grids
  • Small portable appliances

There are also many different configurations of PV systems:

  • Off-grid & tied to the grid
  • Off-grid wind powered & grid-tied wind powered
  • PV-only off-grid
  • Wind-only off-grid
  • Hybrid off-grid
  • Pico & micro-hydro off-grid
  • Ac- & dc-coupled micro-grids
  • grid-tied PV & wind

It’s important to choose the correct pv module to match the system type.  Modules for off-grid & grid-tied are not usually the same.  Mistakes can be expensive.

Photo-voltaic modules & arrays can be mounted many ways off-grid:

  • Roof
  • Free standing-ground & flat roof
  • Pole
  • Tracks
  • BIPV (building integrated PV)
  • PV slates & tiles

Mounting structures can be made locally out of steel or wood, & aluminum is easy to work with, but expensive.

Batteries can compose 70-80% of the cost of a PV system, so battery management is a key factor.  Charge controllers in off-grid PV systems protect the battery from being overcharged & overdischarging.

Lighting & small appliances are some of the most desirable uses for off-grid PV systems.  Computers, refrigerators, & hvac use too much energy to make sense for off-grid applications.  Adelmann found 100% of rural residents in Ethiopia charged their cell-phones & listened to radios, 30% watched TV, & none used dishwashers or washing machines.  (There they have ample hydroelectric energy-energy distribution is the problem.)  LED’s offer less light, but use little energy.  Incandescents use far more than low-energy bulbs.  Fluorescents last 5-10,000 hours while halogens are cheaper than fluorescents, but not recommended.  How lights are installed can make a big difference in energy consumption.  Areas should be lit with the appropriate level of light & light only areas that require lighting.  Reflectors multiply light.  Avoid wall lights generally as less efficient.

DC appliances, such as lights, tv’s, 2-way radios, fridges, & pumps,  are designed to be run on batteries & are generally more efficient than AC equivalents.  Although DC appliances are more expensive & not easy to find, some mobile home & boating suppliers stock them.  Adelmann worked on a solar project in western China with Shell Solar.  They hired a Chinese company to do the installation.  The Chinese firm then sold the users big TV’s that were big power consumers which overloaded the system, resulting in the project being called a disaster.  People will connect whatever they can to the system, which ruins the reputation of solar energy.

Solar water pumping can be expensive.  Making the borehole can cost more than the PV system.  These are generally more suitable for humans & animals than for crop irrigation.  Mechanical wind pumps are used in South Africa extensively.

Site surveys for off-grid systems are available from renac.  Designing & sizing off-grid PV systems involves the following:

  • Determining the exact energy/power requirements
  • Obtaining information on irradiation @ location
  • Determining output of PV array
  • AC or DC or both?
  • Charge controller?
  • Inverter?
  • Battery type & size
  • DC cable sizes/voltage drop

To plan for sustainable systems that will have a long life, i.e. longer than the 1st battery bank, take into consideration technical, financial, & organizational issues.  Many systems in developing countries, major markets for off-grid systems, last no longer than the original battery bank.  Trying to replace or compete with the grid can be problematic.  According to Mark Hankins of African Solar Designs in Kenya, small PV systems fail for both technical & social reasons:


  • Poor design for
  • Quick sales
  • Lack of thought about system use
  • Poor sizing-too small
  • Lack of money to buy a complete system
  • Poor installation
  • Poorly matched components


  • Lack of plan for energy balance
  • Poor consumer understanding of technology-appliances, batteries, inverters
  • Load creep

He compares small PV systems with electricity from the grid this way:

Small pv system Grid electricity
Power sources multiple Single
Limits many None
Voltage drop possible None
Appliances Select carefully Use any
Energy management necessary Not needed

Here are some best practices for small hydro-electric power construction:

  • Avoid bends in pipe to prevent water velocity loss
  • Use anchors for support @ bends
  • Be sensitive to regional environmental authorities for, e.g. fish migration
  • Pay attention to all these risks:  completion, technological, operations/maintenance, market/distribution, resource, regulatory framework, country, interest, inflation risks
  • Test pipes to the maximum to assure they won’t burst & harm the environment
  • Take all this into account in the design stage

Here are some online resources

sizing tools

commercial systems

solar pumping

renewable energy software

Although the country of Malawi provides a free solar system if a family plants 200 trees, Adelmann’s main thrust was that rural electrification should be left to the private sector in South Africa.  The problem is not that people can’t /won’t pay:  the proliferation of cell-phones proves that.  Many consumers now pay more for energy for less service, for example, for kerosene.  The next issue will be productive use, i.e. how to enable those in the countryside to make money, which requires much higher productivity.  We must improve the countryside to fend off urbanization, but South Africa has no commercial farming.


South Africa @ Africa Cup of Nations Tournament

Tuesday 5 February, 2013

It was a big weekend for sports here in South Africa(SA), as SA is the host country for the Africa Cup of Nations “futbol” Tournament.  Durban is 1 of the venues, along with Johannesberg, Cape Town, etc., but Durban is the host for the group with the home country of South Africa.  I’ve attended 2 games & thought I’d describe the differences between attending major sporting events in South Africa & elsewhere from a business perspective.

1st of all, tickets weren’t readily available online.  You have to go to the local Spar supermarket to buy them, although the colleague who got tickets for me went to 2 other places, but couldn’t get them because their printers broke.  I understand there was a pre-sales period to acquire tickets, but I’m not sure how much of a manual or automated process it was.

Sponsors include some of the usual suspects, such as Orange-the wireless network provider, Pepsi & Doritos, Samsung, Standard Bank, & a few I haven’t seen before, Nàsuba express-a French language provider of debit & credit cards, Pan Atlantic ( I search for it & find nothing & their logo is on the AFCON website, there is no link), &  a real interesting 1 IFD Kapital, a Russian financial services firm-how/why they got there, I’ll never know.  If I were a sponsor, I’d be a bit upset-they don’t seem to be getting much for their money.  There is ample signage @ the stadium, but I don’t see much more.  I’m not watching on TV, but maybe they’re getting more publicity there.

Moses Mabhida Stadium is a cool place to watch a game.  The seats are covered, but it’s open air, so the players might get rained on, while the fans don’t.  There is actually a ride you can take up to the top, & I believe they do bungee-jumping from there as well.  I’ll let you know if/when I take the plunge, or just the ride.

Not much seems to be sold @ the games.  Tickets are relatively inexpensive, $10-12/ticket, but this is Africa, so that’s to be expected.  There are concesion stands which sell the standard food & drink, some which also sell beer.  It’s fairly inexpensive, $2.50 for a beer, 1/2 that for a soda. However there are no programs being sold & no vendors going out to the seats hawking their wares.

My colleagues told me these were some of the most exciting games seen here in a long, long time.  The crowd was buzzing for the last 1st round game against Morocco, because a win or tie got SA to the playoff rounds.  Morocco went up 1-0 in the 1st 11 minutes of the 1st 1/2.  SA tied it up before 1/2-time.  Morocco went up again with 20 minutes to play, while SA evened up again a few minutes later.  Horns were blasting the whole time.  I was told these were the biggest games for the national team in Durban for decades.  Bafana Bafana, the nickname given to the SA national futbol team as a term of endearment which means “the boys,” didn’t play in Durban the last time SA hosted the Cup of Nations tournament in 1996, when they won it all.  A big part of the buzz was because of how the boys came back.  It was an exciting evening.

Bafana Bafana advanced to the 1/4-final against Mali Saturday night @ 20:30.  Rather than starting out slowly as they did against Morocco, they stormed out quickly & took a 1-0 lead.  Unfortunately, they could not keep up the pace, & allowed Mali to tie it up in the 2nd 1/2.  Extra time went scoreless & Mali ended up winning on penalty kicks 3-1.  It was an unceremonious end to the season for SA.  Given what’s going on in Mali, maybe it’s kind of cool that fans can rally around thier futbol team.  There only seemed to be a few dozen fans @ the game.  They will play Nigeria in the semi-final in Durban-I wonder how full the stadium will be, now that the home team is no longer playing.  The final will be in Johannesberg on Sunday.


European PGA Tour comes to South Africa

Tuesday 15 January, 2013

The European Professional Golf Association Tour came to South Africa to host the Volvo Golf Champions tournament @ the Durban Country Club (DCC), called the most prestigious professional golf tournament in South Africa by the DCC president.  In checking it out while teaching @ Regent Business School in Durban, my plan was to evaluate the economic impact of the tournament, but little information appears to be available, so I’ll just wing it & take a look @ the event from a business perspective.

By the global #’s:  1st of all, Volvo, the prime sponsor, awarded €2M as the total prize fund, no small sum for a 4-day tournament, €350K of which went to the winner, native son Louis Oosthuizen, €225K to 2nd place, €130K for 3rd, €110K to fourth, & so on down.  Golfers from 17 countries participated, all champions of @ least 1 tournament the previous year or 10 in their careers, on a tour with tournaments in 27 different countries, fully 1/3 of which are not in Europe, (including the US), which says to me the European tour is no longer restricted to Europe by any means.  In 1 way it’s not surprising that a South African won for a couple reasons:  South Africa led the field with 6 golfers playing @ home, &; only South Africans have won European Tour events when hosted @ DCC.  As to which country produces the best golfers, again not surprising given it’s history, Scotland sent 4 golfers to the tournament, while Spain sent 3, & Denmark, Ireland, Northern Ireland, England, & Italy all sent 2.  France, Thailand, India, Belgium, Sweden, Wales, Portugal, Austria, & Germany all sent lone representatives.  Names of golfers who played in the tournament many Americans might recognize include Ernie Els, Darren Clarke, Retief Goosen, Padraig Harrington, Colin Montgomery, & Jose Maria Olazabal.

Sponsorship:  …is rampant everywhere you look, from the giant billboards & Volvo cars & trucks posted all over the course to attract the attention of TV cameras, to logos on the players clothes, bags, wherever.  Sponsor KwaZulu Natal province of South Africa named Retief Goosen as it’s global ambassador @ the tournament. IMG hosted & sponsored the event for the 1st time.

Pricing:  the event seemed relatively inexpensive in American terms with a ~$15 general admission price, yet the course did not seem that crowded.  A throng of 100’s followed home boy Louis Oosthuizen as he closed a 5 shot gap in the last round, but few other golfers attracted much of a crowd.

Product development:  I was surprised to see that amount of change & innovation in much of the equipment the pros use these days.  New materials in club heads & shafts was apparent.  Few wear traditional golf shoes, with many wearing what looked like regular athletic shoes, although that might have been because the course was somewhat soggy from rain during the tournament.

Technology:  I was also surprised to see the use of old-fashioned manually-updated leader boards.  I was under the impression that all of this had been digitized so that updates would show automatically on electronic leader boards.

athletes?:  As 1 who has completed 70+ sprint triathlons, when I look @ these pro golfers, I just laugh in terms of their athleticism.  The walrus, Craig Stadler, epitomizes the athleticism of golfers.  I understand that the hand-eye coordination, strong mental focus,  & to a small degree, strength play a role in success on the golf course, but this kind of athlete doesn’t compare with the aerobic or strength of many other athletes.

Economic impact:  These guys pop in for a week to win millions of €’s, but how much does that help the local economy?  The winners take their winnings home with them, so that doesn’t help much, although local authorities may impose income taxes on earnings here.  The organizer, IMG, earned their fees, & there may be local taxes paid on those earnings.  The players & organizers rent out hotel rooms & maybe rent cars while they’re here, so that’s a small impact.  I didn’t see that many out-of-towners traveled to Durban to see the tournament, so that impact seems minimal.  Caddies may be based locally & take home as much as 10% of their players earnings, so 10% of €2M is €200K, & since some are local, they would be earning & spending those earnings locally. That could be a sizable impact if they are indeed locally-based.  In looking @ the different stakeholders & who wins & loses, the players who all earn @ least €22K for a week’s work, clearly are winners.  The sponsors who get lots of coverage probably win, depending on how much they spend as opposed to the amount of recognition they gain.  Viewers are probably happy with an exciting tournament.  Golfers watching the tournament would probably benefit if there were some way for them to learn more about how to improve their games.  Durban & the province of KwaZulu Natal should benefit from positive association of a well-run tournament.  The organizers hire a small number of workers for the week, so there is a minor employment effect.  On the whole, I’m sure these tournaments are good for the businesses of the stakeholders named here.  I do question how much the local economy benefits from holding the tournament here.


German wind conference

Thursday 20 December, 2012

The German American Chamber of Commerce of the Midwest hosted a Wind Energy Business Conference with a focus on supply chain & service industries.  Nico Heinemen, of the Federal Ministry of Economics & Technology, greeted everyone & provided the 20 year history of wind energy in Germany & how the German government has supported it’s development.  They had 4 objectives:  1.  disseminate expertise 2. advance renewable energies  3.  boost the wind energy market  4.  provide comprehensive support for German companies.  60% found partners & they reduced the cost of entering the market by 30%.

Janos Buechner, of Energiewaechter, added that an additional aim was knowledge transfer.  His organization sponsors trips to Germany for research which lead to pilot projects.  In reaction to the Fukishima disaster, Germany will eliminate nuclear power by 2022.  72% of energy is used to simply heat space, so more R&D is needed on energy storage, efficiency, & grid expansion.  12.5% of energy consumed is of renewable energy, wind provides 2%, biomass 8.4%.  Renewables are 20% of the electricity market.  The benefits of more wind energy are less fossil fuels & more jobs.  40% of owners/investors in renewable energies are private individuals, 11% are farmers.  93% of Germans want an intensified energy turnaround.

Tom Lange, Policy Advisor to the German Wind Energy Association (DWEA), noted that DWEA is the largest wind association in the world with 20K members.  Cumulatively by 2012, the German wind industry has provided 30,016.47 MW of power with 22K wind turbines.  Germany has an installed capacity of 29K MW;  Spain is next in Europe with 22K MW, & then France @ 7K MW.  In 2012, Germany had 102K jobs in the wind sector.  Germany has led a big media campaign for wind energy & creating new standards for grid expansion & storage.  Europe has a pilot grid, but needs a common EU energy policy.  Improvements in wind-turbine technology have resulted in turbines growing from 100m high which produce 600kw of power in 1995 to 180m which produce 2K kw of power now.  German expertise leads in forecasting in complex terrains like forests, using new materials, technology integration, & test facilities.  Challenges in offshore wind production are logistics, cable connections, grid expansion, & financing.  The outlook for wind energy depends on Germany’s 2013 elections &  common EU wind energy growth decrease.

Dr. Nancy Dahlke, of Key Wind Energy, discussed operations & maintenance (O&M) of wind farms in Europe.  The main difference is inthe costs between being reactive to solve problems or using reliability-based service which seeks to eliminate problems before they occur.   Condition-based maintenance requires CMS, a Condition Monitoring System.  The best is to combine a reliability-based system with CMS.  Siemens earns the highest grades for service & Enercon the worst.  Full maintenance contracts are being required by banks.  Costs vary by manufacturer.  An energy information/distribution center provides status reports, scheduling of maintenance tasks.  All this requires highly-qualified staff, so it helps to minimize employee turnover.  This increases predictability & accuracy.  Wind farm operators are becoming energy traders.  As quality requirements increase, maintenance is becoming more important than repair.

Luke Lewandowski, of Make Consulting, offered an overview of the American wind energy market.  The long-term policy outlook is unclear while macroeconomic trends create headwinds.  Services markets are optimistic.  Comprehensive tax reform is expected soon.  Growth is supported by renewable energy standards programs.  2007-2012 were big building years.  A new comprehensive energy policy is needed.   2-5 year warranties which have been driving the market are set to expire.  As the installed base grows, it slows growth.  As the serviceable market grows, so does competition.  The US market can be divided into 3 segments with advantages & disadvantages for each:  2011->2016

  1. 1. independent service providers 16%->12%
  2. 2. turbine OEM’s (GE, Siemens) 48%->42%
  3. 3.  self-performers 36%->46%

For all, financial & technical risks must be balanced.  Wind service business models evolve into hybrids of those just mentioned.  The largest US owners favor self-performance service.  It’s the owners who are learning service that are driving warranties.  Overcapacity is driving OEM’s to diversify & focus on O&M.  Turbine OEM’s are serving warranty extensions.

Kimberley Smith informed us that Acciona Energy works in 13 countries on 5 continents with 225 wind farms, 6K wind turbines.  They’ve achieved this by using a global multi-sourcing strategy.  The US challenge is how to excel when going from a Boom market to a Gloom market.  Supply chain management points to increasing globalization over localization, systems overcoming tiers, & necessitating industrial standards.

Martin Lubahn, of Winergy Drive Systems, let us know US content in wind turbines is 70%.  Growth in Canada & Latin America are offsetting weakness in the American market as service’s importance grows.  Supply chain management requires 90% uptime in North America & ISO 9001 certification.  The life cycle of services logically leads to a focus on costs.  Should a town provide service?  What about spare parts & quality assurance, & reporting?  Decreasing visibility, investment & reaction time come @ the same time as increasing volatility & currency risk in the industry.

The following German companies also made presentations:

  • Rewitec GmbH
  • cmc gmbh
  • Directtech global GmbH
  • windigo GmbH
  • Saarteco GmbH
  • Trendelkamp Technologie GmbH