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
NOBEL AWARDEES OBAMA, OLSTROM & WILLIAMSON
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December 10th is the day assigned for the Nobel Awards ceremonies. In compliance with Alfred Nobel’s will, the Peace Award is handed over in Norway at Oslo’s Storting Hall whilst the other Nobel Awards including the Riksbanken Economic laureates, an award added in 1968, participate in a later ceremony the same day at Stockholm’s Concert Hall.
This year’s ceremony has followed the usual protocol where it not for the fact that the awards were for a majority of American citizens headed by no less than U.S. President Barack Obama. Without any intent of demerit for the other Nobel laureates, I must call the attention to this year’s Economic awardees, Olstrom & Williamson, who together with Obama form a solid indication of the Nobel Committee’s intention in the awards for 2009.
Much has been said after the surprise announcement of Obama’s Nobel Peace designation, to the point it belittled the announcement a few days earlier of the Riksbanken Economic Awards to Elinor Olstrom and Oliver E. Williamson. To the very moment the awards were delivered yesterday, a sector has remained adamant to accepting Obama’s merits and debate over said issue has missed entirely the relevance of the overwhelming American presence in the Nobel Committee’s decision for 2009. Moreover, it is the first time that women occupied the awards’ major limelight, with Elinor Olstrom being the first woman to become an economic laureate.
While Obama was handed his diploma in Oslo according to Nobel’s dictates, Olstrom & Williamson, as well as the other laureates, received theirs from the hands of Sweden’s King Carl XVI Gustaf at Stockholm’s Concert Hall. The strict protocol that these ceremonies have followed over the years may have been broken in few occasions, such as Mother Teresa’s request to cancel the banquet in lieu of donating the funds to charity. Obama has perhaps also done a similar act which few seem to have given due importance. The U. S. President has shortened his Oslo visit to less than 24 hours, just enough not to accept the regal protocol dinner offered in his honour. He has a lot of work back home. I make mention of this situation to back up my argument as to the reasons that may have warranted these outstandingly American Nobel Awards in 2009 with Obama in the key role.
In the aftermath of an unexpected financial crisis in the U.S.A. that has dragged global markets into the mire of a rather complicated economic international scenario, one must analyse Obama’s peace diploma in unison with the other awards, especially those in Economics to Elinor Olstrom & Oliver E. Williamson. It is well known that the crisis broke out at the closing of the previous U.S. Administration with President Bush at the helm. Never before had Washington been so neglectful of international trade & commerce and so bent on using its military force to maintain its world supremacy. The results of such international socio-economic policy have been the sad inheritance George W. Bush handed over to America´s first Afro-American President. Both Olstrom & Williamson have worked for decades in Social Economics whereby enterprise was given its just place and consumers justly valued in the development of international trade. Their theories were never in the mind of Republican U.S. Administrations and proof stands that today Obama has to fight it out to get a historic health bill approved.
Due to U.S. supremacy not only in military issues but likewise in worldwide Economics, this year’s Nobel Awards to Obama, Olstrom & Williamson pretend to call international attention to the need for “social peace in the United States of America” if the international community of democratic states is to resolve the socio-economic needs of the entire world.
Obama’s speech, in a humble tone for his still undeserved international merits, spoke of his role as U.S. Commander-in-Chief. It is fair to grant him a justification for his pseudo-military role as the world’s most powerful man in command of the best armed nation in current wars and skirmishes in different conflict zones. His decisions affect not only Americans but citizens of independent states with regimes of different nature. Whereas his predecessor justified all types of invasion as a defence action against terrorism, Obama has assumed a realistic stance to differentiate the causes of the various live warfronts today. This change of posture alone is worth taking into account as a merit for consideration in a peace award. Obama not only uses oratory to convince. He first is convinced himself of what he puts into words. He did not seek to justify any war nor wished to argue on theory of “just war”, for which reason I will not argue on his statement that some conflicts are necessary. Nevertheless, it is not Obama who is in doubt as a “man of peace”. It is The Establishment in America, with its vested interests and powerful lobbies that must be under surveillance.
Does America want to be known as a democracy for peace or of war? This is the question.
Obama, Olstrom & Williamson have acquired a commitment. With them, all other American citizens awarded Nobel prizes in their respective field of science. Not one of them can be considered in favour of anti-social actions defended by the most reactionary segments of American society. Without a support to these Nobel laureates, the world is in fact leaning towards conservative ways of managing world economics without any consideration for the poor of the world or environmental concern for future generations.
This is the essence of Obama’s peace award, in company of the recognition for Elinor Olstrom as a woman in the world of Economics and Williamson’s contributions towards better controls on enterprises’ model of acquiring benefits. The challenge of these awards now put America in the limelight. Will the United States of America live up to its mission of democracy, peace, climate & social changes in the forthcoming decade of this New Millennium?
Only time will tell.
Fernando Fuster-Fabra, Madrid
Tags: Carl XVI Gustaf of Sweden, Climate Change, E. Olstrom. O.E. Williamson, Economics, Environmental Protection, George W. Bush, Just War, Nobel, Obama, Oslo, Poverty, Republicans, Social Economics, Stockholm, Storting, The Establishment, World Economic Crisis
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
LABOUR DAY THE WORLD OVER EXCEPT IN NORTH AMERICA
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Since 1894, May 1st. has served as commemoration to mark workers’ gaining social rights all over the world. Curiously enough, said celebration is held in practically all nations except in the United States of America & Canada, with their own holiday set on the first Monday of September.
True to say that labour rights are far from reaching an equilibrium point applicable to any and all workers alike. Each state and government progresses at varying speeds of social achievements and protection for workers in the multiple entrepreneur activities at local, national & international fronts. Far from being eradicated, child labour and women’s discrimination still are practices in vigour in a great number of underdeveloped and developing countries in Africa, Asia & Latin America. Furthermore, the conquests of the Eight-hour A Day Movement that motivated the setting up of the popular May Day (Labour Day) holiday in Britain in the late 18th. Century has not erased completely long working shifts of more than 10 hours per day in developed countries, with the U.S.A. and Canada at the top.
Globalisation has further deepened workers’ lack of protection towards a dignified working post and even their health & welfare put in danger. The concept of free-market competitiveness has only set its aim at maximum economic profit with little concern for the means of attaining same. In consequence, it is the weaker members of the international community that bear the load of excessive working hours for minimum retributions.
At such times of crisis where even qualified workers are laid off from traditionally well-paid secure jobs such as those in High-Tech industries, one must consider what is to become of this globalised work environ full of mediocre potential labour competing in unequal terms in countries with increasing unemployment. Going even a step further down, we should attempt to understand the desperate intents of Chicanos crossing the Río Grande border into supposedly prosperous America or Africans defying the ocean in cayucos to reach the Spanish and/or Italian coasts of the European Promise Land.
If this world in crisis is incapable of understanding that misery & hunger in underdeveloped regions of the world are nurtured with modern-day means of communication such as television & internet to keep them informed of the bounties in other hemispheres, then we have not learnt the basics of human nature and our capacity to fair out even in extreme danger. Perhaps, we may have been blinded by the privileges we have enjoyed thus far without considering that in the meantime others have suffered the backlash of our excesses in the wake of our own economic progress and status-seeking selfishness.
The time has come to ponder on the responsibility of each and every citizen of the world in creating a collective conscience towards a true-hearted movement aimed at equal opportunities in attaining a dignified work post and optimum social welfare coverage.
This is the challenge for all of us in a world in crisis in this New Millennium.
Madrid, May 1st. 2009
Tags: America, Canada, European Union, Globalisation, Great Britain, Labour Day, May Day, Social Rights, Social Welfare, USA
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
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