Written by Bloomberg
Wednesday, 19 May 2010 12:06
Wilmar International, the world’s biggest palm-oil trader, fell by the most in 18 months in Singapore trading after the Jakarta Globe said its parent was being investigated in Indonesia.
The parent faces a probe for possible tax fraud involving as much 3.6 trillion rupiah ($548 million), the Jakarta Globe said yesterday, citing documents provided by lawmaker Bambang Soesatyo. Wilmar said the tax claims by media reports, which it didn’t identify, were “untrue and unsubstantiated.”
“This is likely a misunderstanding between Wilmar and the tax authorities,” Credit Suisse Group AG analyst Tan Ting Min wrote in a report today. “We believe that Wilmar’s share price will underperform until the issue is cleared up, which could take months.” Tan downgraded the stock to “underperform” from “neutral.”
Wilmar fell as much as 8.7%, the worst drop since November 2008, to $5.65, and traded at $5.80 at 10:59 a.m. in Singapore. The decline of Singapore’s second-largest stock by market value helped dragged the benchmark index down 1.7%.
“The company is fully confident that its subsidiaries are and have at all times been in full compliance with all relevant Indonesian value-added tax laws,” Wilmar said in a statement yesterday to the Singapore exchange. Its units exported more than US$3 billion ($4.18 billion) worth of palm oil in the last three fiscal years, entitling them to claim 10% value-added tax paid on the cost of the sales, it said.
CHINESE CONCERNS
Wilmar is the largest exporter of palm oil from Indonesia. The company is also the biggest provider of cooking oil in China, with the nation accounting for 55% of sales last year.
“What is more detrimental is the reputational damage to the group,” an AmResearch Sdn. report said. “We wonder if the Chinese government would start scrutinizing Wilmar’s tax payments and accounts due to the allegations in Indonesia.”
CIMB Investment Bank Bhd. analyst Ivy Ng cut her 12-month target to $7.85 from $8.40 “to account for potential weak near-term sentiment” and as the earnings forecast could be reduced by 22% in the “worst-case scenario” of the company returning US$385 million to the government for tax refunds received in the past three years.
http://www.theedgesingapore.com/the-daily-edge/business/15899-wilmar-shares-fall-as-jakarta-globe-reports-tax-probe-update.html
Wednesday, 19 May 2010
A quick look at Berkshire Hathaway (18.5.2010)
5 Years Chart
1 Year Chart
A quick look at Berkshire Hathaway (18.5.2010)
http://spreadsheets.google.com/pub?key=t9N2GnBsVP0AVw8rAIxfDsw&output=html
Berkshire Hathaway vs 5108.KL
5 Years Chart
1 Year Chart
1 Year Chart
A quick look at Berkshire Hathaway (18.5.2010)
http://spreadsheets.google.com/pub?key=t9N2GnBsVP0AVw8rAIxfDsw&output=html
Berkshire Hathaway vs 5108.KL
5 Years Chart
1 Year Chart
Time to let the euro die
Time to let the euro die
May 18, 2010 - 7:10PM
The time for tough decisions is here. In the next few months, the members of the euro area will have to make a choice: create a genuine fiscal and political union or let the euro die a slow death.
The European Union now realizes the Greek crisis has revealed some major flaws in the common currency. There's no point trying to fudge it. The euro can only be rescued by a sweeping centralization of control over tax and spending.
There's just one snag: A single economic government for the euro area isn't going to work. The surrender of national sovereignty is too great. The timing is all wrong. And there is still no realistic mechanism for enforcing whatever new rules are made in Frankfurt or Brussels.
With every step that this crisis takes, the euro moves closer and closer to falling apart. In a few years, we'll be talking again about the deutsche mark, the franc and the peseta.
After dithering for too long, policy makers now recognize that the foundations of the euro weren't strong enough.
The Stability and Growth Pact, which limited budget deficits to 3 per cent of gross domestic product, didn't work. Greece was running fiscal gaps far larger than those during the good years, and plenty of other nations were as well once the global economy turned down. It became a massive free lunch.
Countries could spend like crazy and get their neighbors to bail them out. It was hard to see how the system could survive for long if those were the rules. Everyone had an incentive to do the spending. No one had any incentive to do the bailouts.
EU response
''The Commission proposes to reinforce decisively the economic governance in the European Union,'' the EU said in a statement last week. Member states will have to submit their national budgets to the EU for approval.
It isn't hard to see the implications of that.
''The sovereign-debt crisis could be acting as a catalyst for an ever closer union of European countries,'' Morgan Stanley said in a May 11 note to investors. ''The decisions taken this weekend first by European leaders and then by finance ministers mark a big leap towards a fiscal union in the euro area.''
A fiscal union - in which budgets and taxes are decided centrally - would fix the problem. Member states wouldn't be able to run up unaffordable deficits. When they ran into trouble, money could be diverted from the more successful states to the ones that needed help. That's how it works within countries. It is how the euro should work, too. But here's why it probably won't.
Three reasons
First, the surrender of sovereignty is too great. Countries signed up to a single currency. They didn't sign up for a single government. Once you lose control of fiscal policy, you stop being a nation, and you become a district. It is hard to believe that will ever survive referenda or national elections. It is hard enough to persuade taxpayers to subsidize regions in the same country. Persuading electorates to send their taxes to a central authority, without having any control over where it is spent, will prove impossible.
''The budget law is a matter of national parliaments,'' Guido Westerwelle, Germany's foreign minister, said last week. ''The European Commission doesn't determine the budget. That is the job of the German Bundestag, the national parliament.''
Second, the timing is wrong. For the next five years, the only thing governments will be serving up is pain. Deficits are out of control. Spending has to be cut. Creating any kind of fiscal union was going to be tough enough even in the boom years, when you could hand out lots of cash to build new schools and roads. It will be much tougher when spending is being cut. The EU will take control of national budgets at precisely the moment they get slashed. Does that sound popular? Not really.
Third, there still isn't an enforcement mechanism. The latest proposal is that all the national budgets get submitted to Brussels in advance. The EU will approve them, or it won't.
So what happens if a budget is rejected, and local politicians tell the EU to go take a hike? Euro police aren't about to storm member parliaments and cart politicians away in handcuffs. So far, all that has been proposed is a rewrite of the stability pact, but with some more forms to fill in, and a bit of snarling if you break the rules. It didn't work last time, so why should it work now?
The EU has come up with the only realistic solution to the crisis presented by Greece's mountain of debt. But it's still not going to work. And once that becomes clear, there will be only one option left: let the euro die.
(Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.)
Bloomberg News
May 18, 2010 - 7:10PM
The time for tough decisions is here. In the next few months, the members of the euro area will have to make a choice: create a genuine fiscal and political union or let the euro die a slow death.
The European Union now realizes the Greek crisis has revealed some major flaws in the common currency. There's no point trying to fudge it. The euro can only be rescued by a sweeping centralization of control over tax and spending.
There's just one snag: A single economic government for the euro area isn't going to work. The surrender of national sovereignty is too great. The timing is all wrong. And there is still no realistic mechanism for enforcing whatever new rules are made in Frankfurt or Brussels.
With every step that this crisis takes, the euro moves closer and closer to falling apart. In a few years, we'll be talking again about the deutsche mark, the franc and the peseta.
After dithering for too long, policy makers now recognize that the foundations of the euro weren't strong enough.
The Stability and Growth Pact, which limited budget deficits to 3 per cent of gross domestic product, didn't work. Greece was running fiscal gaps far larger than those during the good years, and plenty of other nations were as well once the global economy turned down. It became a massive free lunch.
Countries could spend like crazy and get their neighbors to bail them out. It was hard to see how the system could survive for long if those were the rules. Everyone had an incentive to do the spending. No one had any incentive to do the bailouts.
EU response
''The Commission proposes to reinforce decisively the economic governance in the European Union,'' the EU said in a statement last week. Member states will have to submit their national budgets to the EU for approval.
It isn't hard to see the implications of that.
''The sovereign-debt crisis could be acting as a catalyst for an ever closer union of European countries,'' Morgan Stanley said in a May 11 note to investors. ''The decisions taken this weekend first by European leaders and then by finance ministers mark a big leap towards a fiscal union in the euro area.''
A fiscal union - in which budgets and taxes are decided centrally - would fix the problem. Member states wouldn't be able to run up unaffordable deficits. When they ran into trouble, money could be diverted from the more successful states to the ones that needed help. That's how it works within countries. It is how the euro should work, too. But here's why it probably won't.
Three reasons
First, the surrender of sovereignty is too great. Countries signed up to a single currency. They didn't sign up for a single government. Once you lose control of fiscal policy, you stop being a nation, and you become a district. It is hard to believe that will ever survive referenda or national elections. It is hard enough to persuade taxpayers to subsidize regions in the same country. Persuading electorates to send their taxes to a central authority, without having any control over where it is spent, will prove impossible.
''The budget law is a matter of national parliaments,'' Guido Westerwelle, Germany's foreign minister, said last week. ''The European Commission doesn't determine the budget. That is the job of the German Bundestag, the national parliament.''
Second, the timing is wrong. For the next five years, the only thing governments will be serving up is pain. Deficits are out of control. Spending has to be cut. Creating any kind of fiscal union was going to be tough enough even in the boom years, when you could hand out lots of cash to build new schools and roads. It will be much tougher when spending is being cut. The EU will take control of national budgets at precisely the moment they get slashed. Does that sound popular? Not really.
Third, there still isn't an enforcement mechanism. The latest proposal is that all the national budgets get submitted to Brussels in advance. The EU will approve them, or it won't.
So what happens if a budget is rejected, and local politicians tell the EU to go take a hike? Euro police aren't about to storm member parliaments and cart politicians away in handcuffs. So far, all that has been proposed is a rewrite of the stability pact, but with some more forms to fill in, and a bit of snarling if you break the rules. It didn't work last time, so why should it work now?
The EU has come up with the only realistic solution to the crisis presented by Greece's mountain of debt. But it's still not going to work. And once that becomes clear, there will be only one option left: let the euro die.
(Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.)
Bloomberg News
German short-sell ban shocks markets
German short-sell ban shocks markets
May 19, 2010 - 6:59AM
Germany will temporarily ban naked short selling and naked credit-default swaps of euro-area government bonds at midnight after politicians blamed the practice for exacerbating the European debt crisis.
The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011, German financial regulator BaFin said today in an e-mailed statement. The step was needed because of "exceptional volatility" in euro-area bonds, the regulator said.
The move came as Chancellor Angela Merkel's coalition seeks to build momentum on financial-market regulation with lower- house lawmakers due to begin debating a bill tomorrow authorizing Germany's contribution to a $US1 trillion bailout plan to backstop the euro. US stocks fell and the euro dropped to $US1.2231, the lowest level since April 18, 2006, after the announcement.
"You cannot imagine what broke lose here after BaFin's announcement," Johan Kindermann, a capital markets lawyer at Simmons & Simmons in Frankfurt, said in an interview. "This will lead to an uproar in the markets tomorrow. Short-sellers will now, even tonight, try to close their positions at markets where they can still do so - if they find any possibilities left at all now."
Merkel, Sarkozy
Merkel and French President Nicolas Sarkozy have called for curbs on speculating with sovereign credit-default swaps. European Union Financial Services Commissioner Michel Barnier this week called for stricter disclosure requirements on the transactions.
Allianz SE, Deutsche Bank AG, Commerzbank AG, Deutsche Boerse AG, Deutsche Postbank AG, Muenchener Rueckversicherungs AG, Hannover Rueckversicherungs AG, Generali Deutschland Holding AG, MLP AG and Aareal Bank AG are covered by the short-selling ban.
"Massive" short-selling was leading to excessive price movements which "could endanger the stability of the entire financial system," BaFin said in the statement.
The European Union last month proposed that the Financial Stability Board, the group set up by the Group of 20 nations to monitor global financial trends, should "closely examine the role" of CDS on sovereign bond spreads. Merkel said earlier today that she will press the Group of 20 to bring in a financial transactions tax.
Merkel's 'Battle'
"In some ways, it's a battle of the politicians against the markets" and "I'm determined to win," Merkel said May 6. "The speculators are our adversaries."
Germany, along with the US and other EU nations, banned short selling of banks and insurance company shares at the height of the global financial crisis in 2008. The country still has rules requiring disclosure of net short positions of 0.2 per cent or more of outstanding shares of 10 separate companies.
The disclosure of the rules drew criticism from lawyers who said that they should have been announced well ahead of time.
"The way it's been announced is very irresponsible, and it's sent many market participants into panic mode," said Darren Fox, a regulator lawyer who advises hedge funds at Simmons & Simmons in London. "We thought regulators had learned their lessons from September 2008. Where is the market emergency that necessitates the introduction of an overnight ban?"
Short-selling is when hedge funds and other investors borrow shares they don't own and sell them in the hope their price will go down. If it does, they buy back the shares at the lower price, return them to their owner and pocket the difference.
Credit-default swaps are derivatives that pay the buyer face value if a borrower -- a country or a company -- defaults. In exchange, the swap seller gets the underlying securities or the cash equivalent. Traders in naked credit-default swaps buy insurance on bonds they don't own.
A basis point on a credit-default swap contract protecting $US10 million of debt from default for five years is equivalent to $US1000 a year.
Bloomberg
May 19, 2010 - 6:59AM
Germany will temporarily ban naked short selling and naked credit-default swaps of euro-area government bonds at midnight after politicians blamed the practice for exacerbating the European debt crisis.
The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011, German financial regulator BaFin said today in an e-mailed statement. The step was needed because of "exceptional volatility" in euro-area bonds, the regulator said.
The move came as Chancellor Angela Merkel's coalition seeks to build momentum on financial-market regulation with lower- house lawmakers due to begin debating a bill tomorrow authorizing Germany's contribution to a $US1 trillion bailout plan to backstop the euro. US stocks fell and the euro dropped to $US1.2231, the lowest level since April 18, 2006, after the announcement.
"You cannot imagine what broke lose here after BaFin's announcement," Johan Kindermann, a capital markets lawyer at Simmons & Simmons in Frankfurt, said in an interview. "This will lead to an uproar in the markets tomorrow. Short-sellers will now, even tonight, try to close their positions at markets where they can still do so - if they find any possibilities left at all now."
Merkel, Sarkozy
Merkel and French President Nicolas Sarkozy have called for curbs on speculating with sovereign credit-default swaps. European Union Financial Services Commissioner Michel Barnier this week called for stricter disclosure requirements on the transactions.
Allianz SE, Deutsche Bank AG, Commerzbank AG, Deutsche Boerse AG, Deutsche Postbank AG, Muenchener Rueckversicherungs AG, Hannover Rueckversicherungs AG, Generali Deutschland Holding AG, MLP AG and Aareal Bank AG are covered by the short-selling ban.
"Massive" short-selling was leading to excessive price movements which "could endanger the stability of the entire financial system," BaFin said in the statement.
The European Union last month proposed that the Financial Stability Board, the group set up by the Group of 20 nations to monitor global financial trends, should "closely examine the role" of CDS on sovereign bond spreads. Merkel said earlier today that she will press the Group of 20 to bring in a financial transactions tax.
Merkel's 'Battle'
"In some ways, it's a battle of the politicians against the markets" and "I'm determined to win," Merkel said May 6. "The speculators are our adversaries."
Germany, along with the US and other EU nations, banned short selling of banks and insurance company shares at the height of the global financial crisis in 2008. The country still has rules requiring disclosure of net short positions of 0.2 per cent or more of outstanding shares of 10 separate companies.
The disclosure of the rules drew criticism from lawyers who said that they should have been announced well ahead of time.
"The way it's been announced is very irresponsible, and it's sent many market participants into panic mode," said Darren Fox, a regulator lawyer who advises hedge funds at Simmons & Simmons in London. "We thought regulators had learned their lessons from September 2008. Where is the market emergency that necessitates the introduction of an overnight ban?"
Short-selling is when hedge funds and other investors borrow shares they don't own and sell them in the hope their price will go down. If it does, they buy back the shares at the lower price, return them to their owner and pocket the difference.
Credit-default swaps are derivatives that pay the buyer face value if a borrower -- a country or a company -- defaults. In exchange, the swap seller gets the underlying securities or the cash equivalent. Traders in naked credit-default swaps buy insurance on bonds they don't own.
A basis point on a credit-default swap contract protecting $US10 million of debt from default for five years is equivalent to $US1000 a year.
Bloomberg
New Australian migrant list will hit business
New migrant list will hit business
YUKO NARUSHIMA
May 18, 2010
Restaurant and Catering Australia chief John Hart says the changes will force some restaurants out of business.
THE catering and restaurant industry has hit back at new rules published this week halving the number of skilled migrant places available for chefs and cooks.
Some restaurants would go out of business and others be forced to shorten their trading hours without migrant labour, according to Restaurant and Catering Australia chief executive John Hart.
''It's a nonsense,'' he said. ''Despite every tourism minister in every state calling for chefs to be left on, they took them off. It seems absurd.''
He said the industry was already 3000 cooks short before the federal government halved the number of places for which independent skilled migrants could apply.
Immigration Minister Chris Evans said a trimmed list would draw higher calibre migrants and would stop anyone subverting migration rules by studying ''low-value'' education courses in Australia.
Other jobs dropped were hairdressers, acupuncturists, journalists and naturopaths. Nurses, accountants, teachers and engineers were retained.
The Australian Chamber of Commerce and Industry said the list struck a balance between the immediate and long-term skills needs of the country. Private educators, however, predicted more college closures, thousands of job losses and a flight of international students to other countries.
Chief executive of the Australian Council for Private Education and Training, Andrew Smith, said international students had been given inadequate advice.
''We have to be absolutely honest about what Australia has done over a number of years now, and that was to link immigration and education,'' he said.
''Students invested tens of thousands of dollars on the basis of a clear government policy. It's unfair to them that the rules have changed during their courses.''
A high Australian dollar and widely publicised attacks on Indian students had already affected international colleges, Mr Smith said. Just a 5 per cent slump in student numbers would lead to more than 6000 job losses and $700 million in lost revenue.
A hairdressing tutor for four years at a private college, Vicki Bartlett, said the changes penalised students who were learning the trade legitimately.
''It will weed out the ferals who are rorting the system,'' she said, but added that international students she knew had already paid fees to salons for the equipment they needed to complete unpaid work-experience hours.
''Some are working so hard and it's unfair to move the goalposts on them,'' she said.
One foreign-owned college she knew of had continued to collect course fees until the moment it collapsed, she said.
''It's appalling how these kids are being treated,'' Ms Bartlett said.
Students in India, who have had visa applications cancelled, have reported difficulty in reclaiming millions of dollars in pre-paid fees.
The body that decided on the new list, Skills Australia, will update the list annually. It is scheduled to publish in coming weeks its rationale for exclusions.
Source: The Age
YUKO NARUSHIMA
May 18, 2010
Restaurant and Catering Australia chief John Hart says the changes will force some restaurants out of business.
THE catering and restaurant industry has hit back at new rules published this week halving the number of skilled migrant places available for chefs and cooks.
Some restaurants would go out of business and others be forced to shorten their trading hours without migrant labour, according to Restaurant and Catering Australia chief executive John Hart.
''It's a nonsense,'' he said. ''Despite every tourism minister in every state calling for chefs to be left on, they took them off. It seems absurd.''
He said the industry was already 3000 cooks short before the federal government halved the number of places for which independent skilled migrants could apply.
Immigration Minister Chris Evans said a trimmed list would draw higher calibre migrants and would stop anyone subverting migration rules by studying ''low-value'' education courses in Australia.
Other jobs dropped were hairdressers, acupuncturists, journalists and naturopaths. Nurses, accountants, teachers and engineers were retained.
The Australian Chamber of Commerce and Industry said the list struck a balance between the immediate and long-term skills needs of the country. Private educators, however, predicted more college closures, thousands of job losses and a flight of international students to other countries.
Chief executive of the Australian Council for Private Education and Training, Andrew Smith, said international students had been given inadequate advice.
''We have to be absolutely honest about what Australia has done over a number of years now, and that was to link immigration and education,'' he said.
''Students invested tens of thousands of dollars on the basis of a clear government policy. It's unfair to them that the rules have changed during their courses.''
A high Australian dollar and widely publicised attacks on Indian students had already affected international colleges, Mr Smith said. Just a 5 per cent slump in student numbers would lead to more than 6000 job losses and $700 million in lost revenue.
A hairdressing tutor for four years at a private college, Vicki Bartlett, said the changes penalised students who were learning the trade legitimately.
''It will weed out the ferals who are rorting the system,'' she said, but added that international students she knew had already paid fees to salons for the equipment they needed to complete unpaid work-experience hours.
''Some are working so hard and it's unfair to move the goalposts on them,'' she said.
One foreign-owned college she knew of had continued to collect course fees until the moment it collapsed, she said.
''It's appalling how these kids are being treated,'' Ms Bartlett said.
Students in India, who have had visa applications cancelled, have reported difficulty in reclaiming millions of dollars in pre-paid fees.
The body that decided on the new list, Skills Australia, will update the list annually. It is scheduled to publish in coming weeks its rationale for exclusions.
Source: The Age
Not suitable for work: why businesses fail
Not suitable for work: why businesses fail
DAVID WILSON
May 13, 2010
Many small business owners struggle finding the right staff, says start-up strategist Jack Garson.
Everyone bungles sometimes. If you are lucky, you only make a few trivial mistakes that can easily be fixed, enabling you to regroup fast.
If not, especially in a volatile post-downturn economy, your small business might wind up in the crowded enterprise graveyard. The number that fail is pegged at between 50 and 80 per cent: proof how easy it is to lose direction, if any existed in the first place.
Often, entrepreneurs launch start-ups on a gut instinct basis, without gauging the market. Only after investing, do they realise the gravity of the mistake. Then, if the venture limps on, there are plenty more to make.
Learn about the worst and how to correct them. A cohort of experts sheds some light.
Six critical small business blunders and how to fix them
1. Blind hiring
Misfire: Assuming they are smart enough to delegate in the first place, many small business owners have trouble hiring the right person for the right role, says start-up strategist Jack Garson. Over-confident about their interviewing skills, they are disappointed by the result.
Fix: First, establish what traits beyond experience, training, and enthusiasm the role demands. Also grasp how the applicant will perform in the position - if you like with the help the Predictive Index (www.predictiveresults.com), which Garson claims raises the successful hiring ratio from 33 per cent to over 90 per cent: "a critical improvement for any company - small or large".
2. Fuzzy logic
Misfire: A fuzzy partnership can be disastrous, according to legal analyst Kim Wright (www.cuttingedgelaw.com). Wright has witnessed many entrepreneurs choose partners circumstantially then fail to hammer out an agreement. Both sides invest heavily. Then, pushed by pressure, they focus purely on work. When an issue emerges, stress and resentment kick in: "Both names are on the website and they can't sit in a room together," Wright says.
Fix: Knuckle down - nut out a set of agreements that factors in how conflicts will be resolved.
3. Slack attack
Misfire: The worst mistake is to get comfortable and coast along on cruise control, failing to challenge or continuously analyse each department, says business coach Chris Chapman.
Fix: Recruit web-based tools - for instance social networking platforms like LinkedIn. Free or cheap, they are easy to use with strong return on investment. No MBA or IT department needed.
4. Me me me
Misfire: "By far, the biggest small business mistake I see is that too frequently owners focus on what they do, what they want to do, why they're so great at what they do," says consultant Barry Maher (www.barrymaher.com).
Fix: "The way to fix this is every bit as obvious as the problem," Maher says. Businesses must become "customer-centric", focusing on the customer. "It's not about you. It's about them."
5. Marketing phobia
Misfire: Marketing is the Achilles heel of small businesses, according to business launch expert Karin Abarbanel (www.birthingtheelephant.com). Based on her interviews with entrepreneurs across a range of businesses, Abarbanel concludes that the worst mistake small business owners make is undervaluing marketing. "They take a 'build it and they will come' attitude that can seriously hamper their chances of success."
Fix: The thrust is to redefine marketing. Think of it as sharing your passion rather than selling.
6. Feast or famine
Misfire: Failure to "manage the pipeline" is the cardinal sin, according to project management expert Martin VanDerSchouw - a member of the US President's Business Advisory Council. "Many small business leaders get so wrapped up in trying to keep the business afloat today, they fail to think about tomorrow. In a tight economy, these pressures get even greater."
Fix: Look ahead. Spend an hour a day managing the business three to six months down the track.
Source: theage.com.au
DAVID WILSON
May 13, 2010
Many small business owners struggle finding the right staff, says start-up strategist Jack Garson.
Everyone bungles sometimes. If you are lucky, you only make a few trivial mistakes that can easily be fixed, enabling you to regroup fast.
If not, especially in a volatile post-downturn economy, your small business might wind up in the crowded enterprise graveyard. The number that fail is pegged at between 50 and 80 per cent: proof how easy it is to lose direction, if any existed in the first place.
Often, entrepreneurs launch start-ups on a gut instinct basis, without gauging the market. Only after investing, do they realise the gravity of the mistake. Then, if the venture limps on, there are plenty more to make.
Learn about the worst and how to correct them. A cohort of experts sheds some light.
Six critical small business blunders and how to fix them
1. Blind hiring
Misfire: Assuming they are smart enough to delegate in the first place, many small business owners have trouble hiring the right person for the right role, says start-up strategist Jack Garson. Over-confident about their interviewing skills, they are disappointed by the result.
Fix: First, establish what traits beyond experience, training, and enthusiasm the role demands. Also grasp how the applicant will perform in the position - if you like with the help the Predictive Index (www.predictiveresults.com), which Garson claims raises the successful hiring ratio from 33 per cent to over 90 per cent: "a critical improvement for any company - small or large".
2. Fuzzy logic
Misfire: A fuzzy partnership can be disastrous, according to legal analyst Kim Wright (www.cuttingedgelaw.com). Wright has witnessed many entrepreneurs choose partners circumstantially then fail to hammer out an agreement. Both sides invest heavily. Then, pushed by pressure, they focus purely on work. When an issue emerges, stress and resentment kick in: "Both names are on the website and they can't sit in a room together," Wright says.
Fix: Knuckle down - nut out a set of agreements that factors in how conflicts will be resolved.
3. Slack attack
Misfire: The worst mistake is to get comfortable and coast along on cruise control, failing to challenge or continuously analyse each department, says business coach Chris Chapman.
Fix: Recruit web-based tools - for instance social networking platforms like LinkedIn. Free or cheap, they are easy to use with strong return on investment. No MBA or IT department needed.
4. Me me me
Misfire: "By far, the biggest small business mistake I see is that too frequently owners focus on what they do, what they want to do, why they're so great at what they do," says consultant Barry Maher (www.barrymaher.com).
Fix: "The way to fix this is every bit as obvious as the problem," Maher says. Businesses must become "customer-centric", focusing on the customer. "It's not about you. It's about them."
5. Marketing phobia
Misfire: Marketing is the Achilles heel of small businesses, according to business launch expert Karin Abarbanel (www.birthingtheelephant.com). Based on her interviews with entrepreneurs across a range of businesses, Abarbanel concludes that the worst mistake small business owners make is undervaluing marketing. "They take a 'build it and they will come' attitude that can seriously hamper their chances of success."
Fix: The thrust is to redefine marketing. Think of it as sharing your passion rather than selling.
6. Feast or famine
Misfire: Failure to "manage the pipeline" is the cardinal sin, according to project management expert Martin VanDerSchouw - a member of the US President's Business Advisory Council. "Many small business leaders get so wrapped up in trying to keep the business afloat today, they fail to think about tomorrow. In a tight economy, these pressures get even greater."
Fix: Look ahead. Spend an hour a day managing the business three to six months down the track.
Source: theage.com.au
A quick look at Xidelang (18.5.2010)
A quick look at Xidelang (18.5.2010)
http://spreadsheets.google.com/pub?key=tEtEdBnT28KID_KqaDJqu3g&output=html
http://spreadsheets.google.com/pub?key=tEtEdBnT28KID_KqaDJqu3g&output=html
Tuesday, 18 May 2010
Padini plans to spend RM7.55m on stores this year
Written by Melody Song
Sunday, 16 May 2010 23:28
SHAH ALAM: Fashion retailer PADINI HOLDINGS BHD [] plans to spend about RM7.55 million on existing and new stores by year-end, according to executive director Cheong Chung Yet.
Cheong, who is also Padini's creative director, told The Edge Financial Daily the average capital expenditure (capex) per square foot for its outlets was around RM200, while capex for its Brands Outlet store was around RM100.
"This year our major projects include a flagship Vincci store in Fahrenheit 88 Kuala Lumpur where customers will be able to get bags, shoes and accessories in-store, and a new 15,880-sq ft Brands Outlet store in Sunway Pyramid," he said, adding the company was also undertaking renovations in its Bandar Utama 2 and Pavilion Padini Concept Store (PCS) outlets.
At present, the company has 20 PCS outlets and is also eyeing East Malaysia and regional markets for expansion opportunities, said Cheong.
He also said sales from PCS outlets contributed about 40% of total group turnover in 2009, adding that some 150 new designs were introduced every month across its brands.
Padini has a total of seven primary brands, 197 outlets and consignment counters, and 72 franchise and dealer stores overseas.
"The next level for us would be to bring the company regional and to have more market recognition there," he said, noting that Padini already had some exposure in Asean countries including Thailand, the Philippines and Brunei, with 23 outlets in Saudi Arabia and nine in the United Arab Emirates (UAE).
According to the company's financial statements, its export market contributed about 10% of total revenue, which was RM128.4 million in the second quarter ended Feb 25, 2010.
Cheong said most of Padini's expansion plans were funded by internally generated funds.
He said Padini was cautiously optimistic on the outlook for the rest of the year, although the board of directors had not set a sales target.
"We have been maintaining earnings growth of around 18% year-on-year, which is impressive because sustaining this growth is challenging," he said.
On other challenges that lay ahead, Cheong said rising costs of raw material especially cotton yarns and labour costs in China where a large portion of garments and items were sourced from were areas the company was keeping an eye on.
"It is becoming difficult to sustain our retail prices, but we don't really revise our prices upwards," he said, explaining the company preferred to compromise with its suppliers on costs.
Padini was among OSK Research's top 50 Malaysian small-cap companies, which the research house said it liked for its robust return on equity (ROE) which it anticipates would hover above industry average at around 20% for the next two years, consistent earnings growth and strong balance sheet with net cash of RM25 million.
OSK has a neutral call on the stock with a target price of RM4.25. Padini closed five sen lower last Friday at RM3.75 with 6,400 shares done.
http://www.theedgemalaysia.com/business-news/166134-padini-plans-to-spend-rm755m-on-stores-this-year.html
Sunday, 16 May 2010 23:28
SHAH ALAM: Fashion retailer PADINI HOLDINGS BHD [] plans to spend about RM7.55 million on existing and new stores by year-end, according to executive director Cheong Chung Yet.
Cheong, who is also Padini's creative director, told The Edge Financial Daily the average capital expenditure (capex) per square foot for its outlets was around RM200, while capex for its Brands Outlet store was around RM100.
"This year our major projects include a flagship Vincci store in Fahrenheit 88 Kuala Lumpur where customers will be able to get bags, shoes and accessories in-store, and a new 15,880-sq ft Brands Outlet store in Sunway Pyramid," he said, adding the company was also undertaking renovations in its Bandar Utama 2 and Pavilion Padini Concept Store (PCS) outlets.
At present, the company has 20 PCS outlets and is also eyeing East Malaysia and regional markets for expansion opportunities, said Cheong.
He also said sales from PCS outlets contributed about 40% of total group turnover in 2009, adding that some 150 new designs were introduced every month across its brands.
Padini has a total of seven primary brands, 197 outlets and consignment counters, and 72 franchise and dealer stores overseas.
"The next level for us would be to bring the company regional and to have more market recognition there," he said, noting that Padini already had some exposure in Asean countries including Thailand, the Philippines and Brunei, with 23 outlets in Saudi Arabia and nine in the United Arab Emirates (UAE).
According to the company's financial statements, its export market contributed about 10% of total revenue, which was RM128.4 million in the second quarter ended Feb 25, 2010.
Cheong said most of Padini's expansion plans were funded by internally generated funds.
He said Padini was cautiously optimistic on the outlook for the rest of the year, although the board of directors had not set a sales target.
"We have been maintaining earnings growth of around 18% year-on-year, which is impressive because sustaining this growth is challenging," he said.
On other challenges that lay ahead, Cheong said rising costs of raw material especially cotton yarns and labour costs in China where a large portion of garments and items were sourced from were areas the company was keeping an eye on.
"It is becoming difficult to sustain our retail prices, but we don't really revise our prices upwards," he said, explaining the company preferred to compromise with its suppliers on costs.
Padini was among OSK Research's top 50 Malaysian small-cap companies, which the research house said it liked for its robust return on equity (ROE) which it anticipates would hover above industry average at around 20% for the next two years, consistent earnings growth and strong balance sheet with net cash of RM25 million.
OSK has a neutral call on the stock with a target price of RM4.25. Padini closed five sen lower last Friday at RM3.75 with 6,400 shares done.
http://www.theedgemalaysia.com/business-news/166134-padini-plans-to-spend-rm755m-on-stores-this-year.html
A quick look at Maybulk (18.5.2010)
A quick look at Maybulk (18.5.2010)
http://spreadsheets.google.com/pub?key=t_FY7rgxhGIW7AtIVKbgRig&output=html
http://spreadsheets.google.com/pub?key=t_FY7rgxhGIW7AtIVKbgRig&output=html
A quick look at Dutch Lady (18.5.2010)
A quick look at Dutch Lady (18.5.2010)
http://spreadsheets.google.com/pub?key=tSZUfBh6sqlDuzF6mlZwd1w&output=html
A quick look at JobStreet (18.5.2010)
A quick look at JobStreet (18.5.2010)
http://spreadsheets.google.com/pub?key=t_gp8dCkSwqnr86sAMKPM8g&output=html
A quick look at United Plantations (18.5.2010)
A quick look at United Plantations (18.5.2010)
http://spreadsheets.google.com/pub?key=tYSv8r0V5jZUslGQTEGKyYQ&output=html
Fed to Blame for Gold Surge, Currency Woes: Ron Pau
Fed to Blame for Gold Surge, Currency Woes: Ron Paul
The Associated Press
| 17 May 2010 | 10:07 AM ET
The Federal Reserve's practice of indiscriminately printing money is the chief culprit that has led to the surge in gold and demise of the euro, Rep. Ron Paul (R-Texas) told CNBC Monday.
As gold hits a succession of all-time highs and the euro struggles for mere survival, Paul said debt overloads at the base of the recent currency trends can be traced directly to the US central bank.
"The Federal Reserve behind the scenes has the power to create money out of thin air. It's very bizarre," Paul said. "They can bail out their friends and let the people they don't like fail, and create a trillion dollars or more out of thin air in order to prop up some companies at the expense of others ... It's absolutely bizarre and, yes, the American people right now I think are waking up to it."
Paul linked the disruptions to the departure in 1971 from the old Bretton Woods global currency system. He said he has been anticipating the surge in gold as confidence in currency wanes, and after the Bretton Woods collapse.
"This is the unwinding of a system," he said. "Until we replace it with something else you're going to continue to see this."
But Paul predicted that the system will be changed as more and more people begin to see its fundamental flaws.
"The gold surge recently has people discovering they're really printing money," Paul said. "They're just kidding themselves and kidding the American people that the Fed can keep doing what they're doing, because the economic laws will bring this to an end and probably in the not-too-distant future."
URL: http://www.cnbc.com/id/37189251/
The Associated Press
| 17 May 2010 | 10:07 AM ET
The Federal Reserve's practice of indiscriminately printing money is the chief culprit that has led to the surge in gold and demise of the euro, Rep. Ron Paul (R-Texas) told CNBC Monday.
As gold hits a succession of all-time highs and the euro struggles for mere survival, Paul said debt overloads at the base of the recent currency trends can be traced directly to the US central bank.
"The Federal Reserve behind the scenes has the power to create money out of thin air. It's very bizarre," Paul said. "They can bail out their friends and let the people they don't like fail, and create a trillion dollars or more out of thin air in order to prop up some companies at the expense of others ... It's absolutely bizarre and, yes, the American people right now I think are waking up to it."
Paul linked the disruptions to the departure in 1971 from the old Bretton Woods global currency system. He said he has been anticipating the surge in gold as confidence in currency wanes, and after the Bretton Woods collapse.
"This is the unwinding of a system," he said. "Until we replace it with something else you're going to continue to see this."
But Paul predicted that the system will be changed as more and more people begin to see its fundamental flaws.
"The gold surge recently has people discovering they're really printing money," Paul said. "They're just kidding themselves and kidding the American people that the Fed can keep doing what they're doing, because the economic laws will bring this to an end and probably in the not-too-distant future."
URL: http://www.cnbc.com/id/37189251/
US faces one of biggest budget crunches in world – IMF
US faces one of biggest budget crunches in world – IMF
By Edmund Conway Business Last updated: May 14th, 2010
98 Comments Comment on this article
Earlier this week, the Bank of England Governor, Mervyn King, irked US authorities by pointing out that even the world’s economic superpower has a major fiscal problem -“even the United States, the world’s largest economy, has a very large fiscal deficit” were his words. They were rather vague, but by happy coincidence the International Monetary Fund has chosen to flesh out the issue today. Unfortunately this is a rather long post with a few chunky tables, but it is worth spending a bit of time with – the IMF analysis is fascinating.
Read the details here:
http://blogs.telegraph.co.uk/finance/edmundconway/100005702/us-faces-one-of-biggest-budget-crunches-in-western-world-imf/
So does all of this mean the US is Greece? The answer, you might be surprised to hear, is no. Now, it is true that the US has some similar issues to Greece – the high debt, the need to roll over quite a lot of debt each year, the rising healthcare costs and so on. But it has two secret (or not so secret) weapons.
Finally, some might be tempted at this point to cite the fact that the US has the world’s reserve currency in the dollar as another bonus. I am less sure. There is no doubt that this has made the US a safe haven destination (people buy US bonds when freaked out about more or less anything), and has meant that America has been able to keep borrowing at low levels throughout the crisis. However, the flip side of this is that because it has yet to feel the market strain, the US also has yet to face up properly to the public finance disaster that could befall it if it does not do anything about the problem. America is not Greece, but if it does not start making efforts to cut the deficit within a few years, it will head in that direction. The upshot wouldn’t be an IMF bail-out, but a collapse in the dollar and possible hyperinflation in the US, but it would be horrific all the same. America has time, but not forever.
By Edmund Conway Business Last updated: May 14th, 2010
98 Comments Comment on this article
Earlier this week, the Bank of England Governor, Mervyn King, irked US authorities by pointing out that even the world’s economic superpower has a major fiscal problem -“even the United States, the world’s largest economy, has a very large fiscal deficit” were his words. They were rather vague, but by happy coincidence the International Monetary Fund has chosen to flesh out the issue today. Unfortunately this is a rather long post with a few chunky tables, but it is worth spending a bit of time with – the IMF analysis is fascinating.
Read the details here:
http://blogs.telegraph.co.uk/finance/edmundconway/100005702/us-faces-one-of-biggest-budget-crunches-in-western-world-imf/
So does all of this mean the US is Greece? The answer, you might be surprised to hear, is no. Now, it is true that the US has some similar issues to Greece – the high debt, the need to roll over quite a lot of debt each year, the rising healthcare costs and so on. But it has two secret (or not so secret) weapons.
- The first is that unlike Greece it is not trapped in a monetary union. The US, like Britain and Japan, can independently control its monetary policy; it can devalue its currency. These are hardly solutions in and of themselves, but they do help make the adjustment a lot easier and more gradual.
- Second, the US has growth. It remains one of, if not the, world’s most dynamic economies. It is growing at a snappy pace this year (in comparison to other countries). And a few percentage points of GDP make an immense difference, since they make those debts much easier to repay.
Finally, some might be tempted at this point to cite the fact that the US has the world’s reserve currency in the dollar as another bonus. I am less sure. There is no doubt that this has made the US a safe haven destination (people buy US bonds when freaked out about more or less anything), and has meant that America has been able to keep borrowing at low levels throughout the crisis. However, the flip side of this is that because it has yet to feel the market strain, the US also has yet to face up properly to the public finance disaster that could befall it if it does not do anything about the problem. America is not Greece, but if it does not start making efforts to cut the deficit within a few years, it will head in that direction. The upshot wouldn’t be an IMF bail-out, but a collapse in the dollar and possible hyperinflation in the US, but it would be horrific all the same. America has time, but not forever.
UK economy is stuffed – but not as badly as Greece
UK economy is stuffed – but not as badly as Greece
You can hardly blame George Osborne for over-egging the point. Gordon Brown was still trying to blame the Tories for all the ills of the world 13 years after they were swept from power, as if his own mismanagement of the economy in the meantime might not have had a little something to do with it.
By Jeremy Warner, Assistant Editor
Published: 10:22PM BST 17 May 2010
So it seems reasonable enough that still less than a week into office, Mr Osborne should use the opportunity of his first Treasury press conference to blame the last lot for all the pain he's about to inflict. It's what incoming governments do.
But it's rare indeed that an incoming governments gets such manna from the last lot.
"Dear chief secretary, I am afraid to have to tell you the money has run out, yours, Liam." This single-line letter from the outgoing Chief Secretary, Liam Byrne, to his successor at the Treasury, David Laws, was apparently meant as a joke, but it serves equally well as New Labour's final epitaph. Had Mr Byrne said: "we've spent the lot, and frankly, you're stuffed", he could scarcely have been more blunt about the true horror of Labour's legacy.
Things are much worse than you think, Mr Osborne said on Monday in an attempt to soften us up for the blows to come. In an interview, he said: "By the end, the previous government had become completely irresponsible and has left this country with terrible public finances, worse as a proportion of our economy than Greece."
Mr Osborne is hardly the first to say it, and strictly speaking he is right on both counts. I've written myself at length about the pork barrel spending that took place in the run up to the election, with ministers showering money on the regions as if it was confetti. It is also true that the UK has one of the biggest Budget deficits in Europe. But Britain is not yet Greece, and the new Chancellor should take care not to frighten the markets into believing it is.
The public finances are possibly in worse shape than the previous Government was letting on, and obviously there are a whole range of public liabilities that should properly be brought back on balance sheet. Public Finance Initiative liabilities alone have rocketed from £60.5bn in 2000 to £206.8bn (nearly 15 per cent of GDP).
But I would be astonished if Mr Brown had actually lied, a la Greque, about the true state of the books. Much of the smoke and mirrors that took place under Labour were almost childishly transparent. The real problem lies rather in the use of overly optimistic assumptions about growth and tax receipts. These may be unrealistic, but Britain is hardly alone in assuming a possibly unrealistic rebound to above trend growth.
There are a number of reasons why comparisons with Greece are ill-founded and possibly quite dangerous. Greece, too, it will be recalled showed no lack of enthusiasm for tackling the deficit. It was only after the Papandreou government announced its first austerity programme that the real damage to confidence occurred. This was primarily because the markets fast realised that the scale of the consolidation was so extreme that it was likely to condemn the country to years of economic contraction, thus making the medium term debt burden worse, not better. Greece would thus be incapable of repaying its debts without help.
This doesn't have to be the case in Britain, which in any case has a much larger and more robust tax base. What's more, the UK mercifully still has control of its own currency and interest rates, so can counter the fiscal medicine with accommodative monetary policy. The eurozone's reluctance to apply any kind of inflationary counterweight condemns much of the Club Med to extreme deflationary contraction over the years ahead.
Mr Osborne's task is similar to that of applying chemotherapy; in seeking to kill off the cancer of the deficit he must be careful not to lose the confidence of markets and end up killing off the patient too. It's a balancing act between too little and too much. On Monday, he said a little too much.
Even so, the new Chancellor's first day at school was on the whole an encouraging one. The establishment of an Office for Budget Responsibility under Professor Sir Alan Budd is an important innovation which promises to restore credibility, destroyed under Mr Brown, in the Government's handling of the public finances.
Sir Alan is right to view his task as more important than the establishment of the Monetary Policy Committee by the incoming Labour Government in 1997. Inflation was yesterday's enemy by the time Labour came to power. To me, it seems unlikely the Government's judgments on interest rates would have been significantly different from the Bank of England's.
Indeed, the idea that economic policy was somehow safe in the Bank of England's hands lulled everyone into a false sense of security, thereby allowing Mr Brown a degree of leeway on tax and spend he might not otherwise have enjoyed. Rather than pump-priming the feel-good factor with interest rate therapy, the Government did it instead with debt and public spending.
Mr Brown cynically manipulated the "golden rule" to the point of laughable irrelevance. By the end, Britain was running the sort of deficit you would normally expect from a recession, not an economy in the midst of a consumer boom.
Mr Brown was not just judge and jury, he was prosecution and defence too. By calibrating the Government's tax and spending plans against genuinely independent forecasts for growth and the economic cycle, the OBR should do for management of the public finances what the Bank of England did for monetary policy.
Sir Alan was a key player at the birth of independent inflation targeting. He rightly regards his latest task as an altogether bigger challenge. The scale of it is laid bare in the International Monetary Fund's latest "Fiscal Monitor". Across advanced economies there needs to be an adjustment amounting to 8.75pc of GDP on average to primary Budget balances to get overall debt down to pre-crisis levels of around 60pc.
More work still needs to be done to deal with projected increases of 4 to 5pc of GDP in health and pensions spending over the next 20 years. Those countries that fail to achieve fiscal sustainability will see their growth potential permanently and seriously impaired.
But Mr Osborne shouldn't be too downhearted. Things could be worse. The ruinous deflation that Britain might be facing now if it were in the euro hardly bears thinking about. On this level at least, comparisons with Greece are justified. Whatever Mr Byrne says, we are not as badly stuffed as they are.
http://www.telegraph.co.uk/finance/economics/7734494/UK-economy-is-stuffed-but-not-as-badly-as-Greece.html
You can hardly blame George Osborne for over-egging the point. Gordon Brown was still trying to blame the Tories for all the ills of the world 13 years after they were swept from power, as if his own mismanagement of the economy in the meantime might not have had a little something to do with it.
By Jeremy Warner, Assistant Editor
Published: 10:22PM BST 17 May 2010
So it seems reasonable enough that still less than a week into office, Mr Osborne should use the opportunity of his first Treasury press conference to blame the last lot for all the pain he's about to inflict. It's what incoming governments do.
But it's rare indeed that an incoming governments gets such manna from the last lot.
"Dear chief secretary, I am afraid to have to tell you the money has run out, yours, Liam." This single-line letter from the outgoing Chief Secretary, Liam Byrne, to his successor at the Treasury, David Laws, was apparently meant as a joke, but it serves equally well as New Labour's final epitaph. Had Mr Byrne said: "we've spent the lot, and frankly, you're stuffed", he could scarcely have been more blunt about the true horror of Labour's legacy.
Things are much worse than you think, Mr Osborne said on Monday in an attempt to soften us up for the blows to come. In an interview, he said: "By the end, the previous government had become completely irresponsible and has left this country with terrible public finances, worse as a proportion of our economy than Greece."
Mr Osborne is hardly the first to say it, and strictly speaking he is right on both counts. I've written myself at length about the pork barrel spending that took place in the run up to the election, with ministers showering money on the regions as if it was confetti. It is also true that the UK has one of the biggest Budget deficits in Europe. But Britain is not yet Greece, and the new Chancellor should take care not to frighten the markets into believing it is.
The public finances are possibly in worse shape than the previous Government was letting on, and obviously there are a whole range of public liabilities that should properly be brought back on balance sheet. Public Finance Initiative liabilities alone have rocketed from £60.5bn in 2000 to £206.8bn (nearly 15 per cent of GDP).
But I would be astonished if Mr Brown had actually lied, a la Greque, about the true state of the books. Much of the smoke and mirrors that took place under Labour were almost childishly transparent. The real problem lies rather in the use of overly optimistic assumptions about growth and tax receipts. These may be unrealistic, but Britain is hardly alone in assuming a possibly unrealistic rebound to above trend growth.
There are a number of reasons why comparisons with Greece are ill-founded and possibly quite dangerous. Greece, too, it will be recalled showed no lack of enthusiasm for tackling the deficit. It was only after the Papandreou government announced its first austerity programme that the real damage to confidence occurred. This was primarily because the markets fast realised that the scale of the consolidation was so extreme that it was likely to condemn the country to years of economic contraction, thus making the medium term debt burden worse, not better. Greece would thus be incapable of repaying its debts without help.
This doesn't have to be the case in Britain, which in any case has a much larger and more robust tax base. What's more, the UK mercifully still has control of its own currency and interest rates, so can counter the fiscal medicine with accommodative monetary policy. The eurozone's reluctance to apply any kind of inflationary counterweight condemns much of the Club Med to extreme deflationary contraction over the years ahead.
Mr Osborne's task is similar to that of applying chemotherapy; in seeking to kill off the cancer of the deficit he must be careful not to lose the confidence of markets and end up killing off the patient too. It's a balancing act between too little and too much. On Monday, he said a little too much.
Even so, the new Chancellor's first day at school was on the whole an encouraging one. The establishment of an Office for Budget Responsibility under Professor Sir Alan Budd is an important innovation which promises to restore credibility, destroyed under Mr Brown, in the Government's handling of the public finances.
Sir Alan is right to view his task as more important than the establishment of the Monetary Policy Committee by the incoming Labour Government in 1997. Inflation was yesterday's enemy by the time Labour came to power. To me, it seems unlikely the Government's judgments on interest rates would have been significantly different from the Bank of England's.
Indeed, the idea that economic policy was somehow safe in the Bank of England's hands lulled everyone into a false sense of security, thereby allowing Mr Brown a degree of leeway on tax and spend he might not otherwise have enjoyed. Rather than pump-priming the feel-good factor with interest rate therapy, the Government did it instead with debt and public spending.
Mr Brown cynically manipulated the "golden rule" to the point of laughable irrelevance. By the end, Britain was running the sort of deficit you would normally expect from a recession, not an economy in the midst of a consumer boom.
Mr Brown was not just judge and jury, he was prosecution and defence too. By calibrating the Government's tax and spending plans against genuinely independent forecasts for growth and the economic cycle, the OBR should do for management of the public finances what the Bank of England did for monetary policy.
Sir Alan was a key player at the birth of independent inflation targeting. He rightly regards his latest task as an altogether bigger challenge. The scale of it is laid bare in the International Monetary Fund's latest "Fiscal Monitor". Across advanced economies there needs to be an adjustment amounting to 8.75pc of GDP on average to primary Budget balances to get overall debt down to pre-crisis levels of around 60pc.
More work still needs to be done to deal with projected increases of 4 to 5pc of GDP in health and pensions spending over the next 20 years. Those countries that fail to achieve fiscal sustainability will see their growth potential permanently and seriously impaired.
But Mr Osborne shouldn't be too downhearted. Things could be worse. The ruinous deflation that Britain might be facing now if it were in the euro hardly bears thinking about. On this level at least, comparisons with Greece are justified. Whatever Mr Byrne says, we are not as badly stuffed as they are.
http://www.telegraph.co.uk/finance/economics/7734494/UK-economy-is-stuffed-but-not-as-badly-as-Greece.html
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