Fernando Fuster-Fabra's Blog
DAVOS, A STANDING ECONOMIC VIP ARMY
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I believe that banking institutions are more dangerous to our liberties than standing armies.
- Thomas Jefferson
With “Improve the State of the World: Rethink, Redesign, Rebuild” as theme of this 40th session and French President Nicholas Sarkozy delivering the opening address, the Davos Forum sets off to straighten some of the mistakes committed by the very economic frontrunners of globalisation that triggered off this and other economic crises in the last two decades.
Are the economic think tanks that have controlled the destiny of Mankind since the Allied victory in World War II now thinking of “rethinking” globalisation? I must say that it’s too late to think anew the very same thoughts that have prevailed since the global crisis burst wide open the financial and construction bubbles generated by no other than the leading financial institutions in the developed world. Wall Street and The City entities, brokers & intermediaries were up front making fortunes on the basis of foreign exchange, CDS’s and hedge funds whilst sinking further in the rut underdeveloped economies in Asia, Latin America & Africa.
Many have been the summits of world leaders with no results. One is the forum for the wealthy for their “rethought vision of world economics”. I doubt that it is because the wealthy and powerful wish to “redesign” the distribution of wealth, much less to “rebuild” Haiti with their earnings in 2009.
I suspect that Davos is another luxurious VIP summit to talk at leisure how to go about new ways of earning more and caring less for the needy.
Moreover, Davos has put the Obama Administration on dead centre of the bulls-eye of its contained fury. Never has a U.S. President been so belligerent with banking institutions. True to say too, never before has the U.S. Administration had to shell out such sums to refloat banks that didn’t manage their profits properly and paid enormous bonuses to incompetent managers.
At the end of the Bush Administration, French President Sarkozy spoke at the Washington G-20 Summit of the “re-foundation of capitalism”. All 2009 passed and no action in such sense was taken. On the contrary, the “old ways of the all-power bankers” have resurrected from a low profile to come back with more force. More large bonuses and back to conventional banking the world over with only the unemployed and poor sank in stress and misery.
What will Davos apport as conclusions this time? Will it be new forecasts of dangers up ahead? We have already had 40 sessions of such silly chatter. It’s time for action and it won’t be these economic bigots who will offer the right path towards worldwide economic stability.
Fernando Fuster-Fabra, Madrid
Tags: 2008, 2009, Africa, Asia, Bankers, Bush Administration, CDS, Davos, Developed Economies, Economic Crisis, Foreign Exchange, G-20, Globalisation, Haiti, Hedge Fund, Latin America, Nicholas Sarkozy, Obama, Obama Administration, The City, Underdeveloped Economies, Wall Street, World War II
EUROPEAN UNION: FIRST SIX MONTHS OF LISBON TREATY & SPANISH PRESIDENCY
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Today, Spain’s Prime Minister, José Luis Rodríguez Zapatero, presented the objectives of the EU’s first semester within the scope of the recently ratified Lisbon Treaty. His extemporaneous speech before the European Parliament was centred on the economic crisis but his explanations went on to indicate his inclination towards social policymaking.
Just a few weeks back, Rodríguez Zapatero went under fire in U.K. newspapers (The Financial Times & The Economist), seconded by Murdoch’s Wall Street Journal. Whilst the WSJ editorials are tinted by the ultra-conservative influence of no less than Murdoch’s Spanish Sancho Panza, in the person of Spain’s former Prime Minister José Mª Aznar, those written by British economic experts went beyond the limits of journalistic competence in questioning Zapatero’s capabilities in a sarcastic comparison to popular British TV character, Mr. Bean.
In its fourth rotating mandate, Spain has so far lived up to expectations, with important European milestones set in each one of its presidential semesters. With a clear all-out support of the EEC, later the EU, Spain has earned its entry into the European club and has there onward led some initiatives which other members, like the United Kingdom for one, have yet to set into their agendas.
This semester is too important for the 27-Member Union to waste words in sarcasm and destructive criticism, more so when the United Kingdom has undermined EU unifying efforts in too many occasions.
As an expert in EU relations, the underlying motive of such mocking comments is certain resentment towards Spain far beyond the political scene and more focused on Spanish corporations taking over numerous British enterprises in the last few years, to name a few – Banco Santander and Iberdrola.
In spite of Spain’s high unemployment rate at the present time, never has the U.K. generated as much jobs as Spain has in the years before the outbreak of the worldwide financial crisis nor has it contained its public deficit to have Spain’s five-year surplus. In fact, Tony Blair’s apparent economic miracle was partly a well-designed accounting reengineering by no less than Gordon Brown, as narrated in detail in the book – Fantasy Island.
Furthermore, Brown’s government has again manipulated figures in order to hide from EU scrutiny state subsidies to British banks in violation of European Commission regulations. Whereas Spain has not nationalised a single bank, the U.K. has both subsidized illegally and nationalised bankrupt entities. Whilst Spain has an exemplary supervision of financial entities the U.K.’s banking system is a free-for-all that allows quite a few irregularities.
The British economy has a full decade ahead before it can say it is out of the rut even if stats show that recession may have come to an end in 2009’s last quarter. What these financial newspapers seem to forget is that whilst Spain now lingers in unemployment, its growth potential in new technologies (solar & wind energy) and innovative activities (electric cars) with renewed immigrant labour forces will launch Spain into a new cycle of competitive businesses. What has been known as the financial crisis is greatly accountable to the uncontrolled business in Wall Street and The City. All risky financial gimmicks launched by the American & British banks have brought us to where we are.
Likewise, the British press seems to resent Obama’s chummy attitude towards Spain’s Prime Minister in detriment of Gordon’s declining role. Should the Tories take over next May, 10 Downing Street may still drift further away from The White House.
Spain has a challenge to reemploy its workers but the United Kingdom has a greater challenge – to start admitting they are no longer an empire.
It’s best these newspapers think twice their words before going to press. I’ll be watching in 2020 where the United Kingdom is to be compared to an environmental conscious businesslike Spain in this coming decade.
Fernando Fuster-Fabra, Madrid
Tags: Aznar, Banco Santander, Electric car, European Commission, European Parliament, European Union, Frantasy Island, Gordon Brown, Iberdrola, Lisbon Treaty, Mr. Bean, Murdoch, Rodríguez Zapatero, Solar energy, Spain, The City, The Economist, The Finanacial Times, Tony Blair, United Kingdom, Wall Street, Wall Street Journal, Wind energy
GENERAL MOTOR’S CHAPTER 11 – THE FADED AMERICAN DREAM
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President Obama’s June 1st. deadline failed to force GMC’s creditors into a negotiated solution to avoid bankruptcy. The world champions of free-trade once more had to step down from traditionally a liberal stance on private enterprise to solemnly announce government intervention in yet another private stock-exchange quoted corporation.
Previous negotiations to ease off the financial strain by getting rid of GMC’s European operations reached a tentative agreement to sell out to MAGNA STEYR, the Canadian-Austrian car parts manufacturer. Concentrated in the GM Europe group with factories in Germany, France, Belgium, Spain, United Kingdom, Poland, Sweden & Russia producing European brands such as OPEL, SAAB & VAUXHALL and distributing American models and Korean-produced DAEWOO (sold as CHEVROLET), the European GM operations involved roughly 1/5 of its total 250.000 worldwide workforce.
Assuming the EU’s intervention headed by Germany and its four affected Länders, the GMC crisis is far from a realistic solution. The Obama Administration failure to convince creditors, a large number of which are bond-holders, has forced the 60% takeover solution with an enormous disbursement from the U.S. public budget. It must be remembered that such funding was not only applied to the CHRYSLER crisis which may finally have a less tragic ending should Italy’s FIAT merger plan succeed, but also in the still quaky banking insolvency mess.
GMC has finally bowed down to what I pointed out as the fatal error of not applying Deming’s TQM which ended in TOYOTA’s factories instead. Ever since then, the U.S. automotive industry has slowed down to finally lag behind their Japanese competitors. Even efforts to participate in Asian operations such as was the case of GMC’s DAEWOO takeover in 2002 was insufficient to change the American giant’s TQM and strategic management philosophy.
Chapter 11 for one of the American Dream’s hallmarks must prove shocking for most U.S. citizens to have been taught that such brands as CADILLAC or COCA-COLA are truly American contributions to the rest of the world.
President Obama has indeed arrived as times required enormous changes not only to face up to economic crisis but also for the average American citizen to understand that the United States of America is a great nation that needs to examine its most elemental beliefs. Only then will the majority understand that the New Millennium has brought about something more than the tragic 9-11 that shook American society into crude reality. ¿Will “The Establishment” anchored in Washington D.C.’s powerful halls and lobbies let Obama play his cards? I wonder.
Madrid, June 2, 2009
Tags: 9-11, Belgium, Chapter 11, CHEVROLET, CHRYSLER, Coca-Cola, DAEWOO, Deming, EU, FIAT, France, German Länder, Germany, GMC, Italy, Japan, Korea, Obama, OPEL, Russia, SAAB, Spain, The Establishment, TOYOTA, TQM, United Kingdom, USA, VAUXHALL
GENERAL MOTORS: OUTCOME OF TQM REJECTION IN THE ‘60s
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The recent announcement of GMC’s plants and work force in the U.S.A. is the culmination of its erroneous posture toward the recommendations of W.E. Deming as to manufacturing processes. In spite entrepreneurs refusing to accept the fact that uncorrected errors have a cumulative effect on business development, History shows time and again that advances in management techniques cannot be continuously ignored. Innovation is not only about machines, patents, IT & Biomedicine. It has even a more relevant implication when we refer to innovation in decision-making processes that enhance competitiveness by means of efficiency improvement based on talent management & transformation.
Deming set out the guidelines that today are known as TQM but this visionary had to travel far from his homeland in order to implement his theories. The arrogance of the Detroit magnates ignored Deming’s proposal in their obvious blindness at medium-long term effective executive management of U.S. automotive industry supremacy at the middle of the past century. Thus, Deming set up his Total Quality laboratory in far-away Japan where Japanese entrepreneurs listened and applied his teachings. From said relationship came into practice such techniques such as Kaizen and Just-In-Time. Today, no one doubts about Deming’s teachings and TQM techniques are widely extended worldwide. I had the opportunity to live said experience personally as an engineering student, recalling Deming’s sadness at not having convinced his own countrymen in the car manufacturing business.
It was not until the ‘80s that the U.S. automotive industry called Deming to aid them through what was their first crisis. By then, TOYOTA had taken on a head-start of two decades with other Asian car manufacturers following suit. Detroit had lost its automotive industry supremacy.
Therefore, it is not strange today that GMC has had to admit its irreversible entrepreneur deterioration announcing the closure of 16 plants and the laying-off of 21.000 workers. The disappearance shortly of one of its oldest trademarks – PONTIAC – must have been a hard decision to take. GMC, like its other American competitors, FORD & CHRYSLER, has had a continued exercise of arrogance since the days of Deming’s professional self-exile to Japan. Today, GMC has been forced to bow down in humiliating defeat due to its lack of vision and effective talent management.
Madrid, April 30, 2009
Tags: Business, CHRYSLER, FORD, GMC, Human Resources, Japan, Just-In-Time, Kaizen, Sustainable Development, TOYOTA, TQM
