Friday, January 09, 2009

[long termism] the incentives need to be attractive

Long-term planning takes courage and lays potential burdens on posterity, whilst providing them with benefits which must be paid for now. In other words, your balance sheet in this and the next quarter are not going to show any tangible result for the investment, under current accounting methods.

Business think tanks have been urging long termism for a long time, e.g.:

1. Pension fund trustees should develop internal governance practices consistent with a long-term investment outlook. 2. The transition from antagonism to engagement of certain long-term investors-especially regarding long-term strategic discussions-should be fully explored.

Taking British industry as an example, Roderick Moore says:

Will Hutton is absolutely right when he says that we would all benefit if British companies invested more in research, development and training, and formed long-term relationships with their workers, bankers, suppliers and customers. However, I would like all this to be achieved by voluntary agreements between the people involved, because they perceive that it is in their best interests, rather than being forcibly imposed by the state, as stakeholding theorists believe it should be. This will only happen if taxation and company law are reformed so that companies are freed from the pressures which are driving them into short-termism.

Ditto in the U.S. Lawrence E. Mitchell, writing today in Business Week, takes the long view and diagnoses a problem at the heart of the American business system:

“The real culprit is the growing preeminence of finance over operations. It causes stock market considerations to trump those that improve the actual workings of a business. And the quicker the stock payoff can be engineered, the better. Until that changes, don’t expect CEOs to stop gaming the system.”

So that's a known known, still relevant in the current crissis, as is political short-termism, which is far more insidious for the planned economy. Andrew Leigh and Glenn Withers say:

Four attitudinal conditions are identified as restricting implementation of good policy in Australia. These are: short-termism, divided responsibility, risk aversion and lack of trust [in politicians and institutions].

Commonwealth Bank Chair John Ralph said at the 2004 AGM that “In today’s climate it takes a brave CEO to promote a long-term risk R&D project that will reduce current earnings and deliver the benefits well past his or her tenure.”

Today it would be seen as lunacy. Here are some other areas which need to be addressed:

The press exacerbates the problem. Leigh and Withers:

The media as an institution also has a role to play here. Regrettably Australia has amongst the most concentrated newspaper ownership, most advertising dependent television and most parsimoniously funded public broadcasting amongst the OECD countries.

Social safety nets are a huge drain

Social safety nets are in place as they were not in the nineteenth and earlier twentieth centuries, but there is fear that these may be wound back severely as pressure on government budgets increases, including through demographic ageing [and] growing numbers on disability support and single parent payments.

The failure of the two party Westminster system of government

The political wisdom has been that oppositions should present “small targets”, offering not bold visions of the future, but small increments on the status quo.

The Westminster system, with its loyalty-based preselection sidelining of talent, the adversarial, grand-standing political debate from entrenched positions and that "small target" presentation, is inimical to brainstorming and sound long term strategy.

Evidence based policy testing never shows its face

[Governments don't] work to improve the evidence base from which we build our economic and social policies. Cost-benefit analysis for all large public investment projects should be obligatory and made publicly available. Similarly, randomised policy trials.

It's all very well for Jamie Saunders, of Bradford City Council to state:

Successful councils ensure that the voices of all get heard – not just the most vociferous, powerful or well-established… it means safeguarding the interests of future members of the community. Many decisions made now will have long term implications. These need to be identified, understood and designed into local policies.

.. but as more and more people are realizing, the new hierarchy of available money dictates the pecking order and today it runs like this:

1. EU loans and grants rule, especially outside London and the regions, e.g. Yorkshire Forward, allow only people to have a voice who are onside with the Common Purpose mindset, i.e. the EU rules;

2. The only long-termism is stemming from EU policy and it's not a long-termism which is healthy for "Britain as Britain" or for its new serf class.


Seems to me that there are a few immediate changes required:

1. Kill off Lisbon in Ireland and start the road back to regaining control of Britain by British money reinvesting in infrastructure, production and R&D, despite the allure of EU money;

2. Cross-party agreement to make mandatory a percentage of annual revenue for long-term infrastructure based on all interested party recommendations;

3. End to confrontational Westminster politics, retention of premier minister and council of ministers, cross party;

4. Elimination of stealth taxes, VAT, capital gains tax and implementation of flat tax rates with reductions to reward incentive on start-ups involved in national manufacturing.

That's a start.

Now of course you're going to say that they'll never get their snouts out of the trough [N3 here] so what incentives could you offer the two party system to end itself? The only way I see is for an external threat to galvanize the parliament into an enforced working arrangement, with personal financial incentives in the medium term to create a vote in parliament which would allow this to happen.

Only then could there be, not so much a covering of butts but a joint attempt to find solutions.


  1. James,

    I think the general situation has deteriorated too far for your ideas to work.

    This past holiday I was introduced to a gentleman who I took to be a county councillor. He appeared interested in the current financial malaise, familiar with EUSSR, and vaguely aware of Common Purpose.
    I deliberately paid him a visit to discuss these, and other, things.
    It transpired he is a District councillor in a conservative held district, in a labour dominated county council.
    Several developments approved at district level, vital infrastructure, are being held up at county level by labour councillors, hoping to discredit the conservative district level, and attain a labour majority at district level at the next elections.
    This stalemate will be the subject of High Court Action in the next few months, as the delay is now several years!

    It seems this is quite common, and illustrates the depths to which politics for the benefit of party, to the exclusion of local residents, has sunk in the last few decades.

    To proceed, I offered a brief outline of what limited knowledge I have, and offered links and an ongoing dialogue if he so wished.

    He considered carefully for several minutes and we then talked around the subject for a reasonable time.

    To summarise, he was very interested, but felt it would detract from the service he could offer his constituents, - time constraints. He suggested that I approach someone at county level.

    I answered that knowing the disposition of CP graduates, the majority of elected officials at county were probably bought.

    He agreed.
    We shook hands.
    I left.
    We know how to contact each other.

    That is at one level

    This link may help your searches
    You have mentioned this person before
    Note Phil Gramm, you should google him a few times with "the Enron loop hole", - and his wifes position and how she was bribed! (not his wifes name, she used a different one)

    REturning to now, I note Merrill Lynch are saying that a lot of their wealthy clients are demanding physical gold bullion for investment/insurance purposes, and this from Jesse
    who is always a good read

    Interestingly, and to further illustrate the Fed/banking corruption, and the global slime of the crime syndicate called JP Morgan, who is one of the major suppressors of PM prices, at the behest of the Fed,
    This link explains an oblique attempt to suppress PM prices

    And a quote from a pit trader in response "What has set off this particular rash of idiocy is the rebalancing of the various commodity indices which have lowered the weightings of some commodities while raising the weightings of others. This has resulted in both front running ahead of the actual date that the new changes go into effect as well as some preliminary action by the funds. Again – no questions asked – no attempts to finesse a movement of positions – what we get is a big “KERPLUNK!” with enormous sums of money being shoved into markets or withdrawn from markets irrespective of the effects of such massive one-sided flows. There was once a time when large traders knew how to slowly and gradually move money into and out of markets in a manner which allowed them to position themselves somewhat furtively by making only minimal disruptions to prices. Those days are long gone since we now have the Pac-Man crowd and the Mortal Kombat generation who are manning the trading desks at these firms. Maybe they are looking for the combination of the right keys to press to produce a power move that will allow them to gobble up all the competition. Nothing else can explain this display of such ineptness and clumsiness. Personally, I am insulted to be grouped in the category of a trader if these people define what trading consists of.

    Regardless, gold was beaten down as a result as were many other commodities which only yesterday were soaring upwards only to abruptly reverse course and puke out all of those gains. That is why I said you have to be careful trying to read too much into the price action of these markets right now because they are being governed by other factors than fundamentals. It is all a money flow game which is why scalping, or short term trading is about the only way to trade these things right now, at least until the fools running these hedge and index funds calm down a bit.

    Let me make one further comment about the reduction in the gold weighting in some of these indices – Do any of you recall back in 2006 just prior to the midterm elections here in the US when Goldman Sachs inexplicably made a change in their commodity index and reduced the weighting of unleaded gasoline? That resulted in a huge sell off in that market which “fortuitously” knocked the price of gasoline lower right in front of the elections. Hmmm. Those who own the index can of course do whatever they want with it but I personally feel that this is another area where shenanigans are much too likely. Given the lack of ethics that mark out society, especially in our financial system (can anyone say Madoff), the cynic in me says that anything is possible nowadays and that there is far too much room for “politics” to influence the weightings assigned to various commodities in some of these indices. That is why I still prefer the old reliable CCI or the Continuous Commodity Index over these others. Unfortunately it seems like very few of the index funds use that particular index when assigning money to the various commodity markets.

    There are various estimates out there about the amount of gold contracts that will need to be sold in order to bring the funds down to the respective weighting in gold so as to bring themselves into alignment with the new changes to a couple of the indices. I will not bore you with the details but suffice it to say, this is where the selling is coming from. It was also probably given a good kick lower by the appearance of more of the usual selling as gold neared the $880 resistance level. I will say one thing about all this – if you really know the fundamentals of a market and if those fundamentals are bullish, then you can take advantage of the short-sighted stupidity of the funds as their actions present opportunity for traders of convictions who are also well-capitalized. If they insist on indiscriminately throwing away everything of value even at prices below value, then use that to your advantage. The simple fact is that these bozos are here to stay so smart traders (you know – the ones who actually use their brain to trade) will adapt to their presence.

    Technically, and take this with a grain of salt because of the reasons mentioned above concerning the index rebalancing, gold has stalled out at $880 and is probing for buying support. The last two days have seen that emerge below the $840 level. That will need to continue to prevent further technical damage to the market as it is now trading below the 10 day moving average (short term bearish) and is threatening to close below the 20 day moving average (again – short term bearish). It is still above the 40, 50 and 100 day moving averages so the longer term is friendly. The area near $830 is very important from a technical perspective as it must hold to prevent a break down due to fund liquidation which will occur should shorts be able to shove it below this level and hold it there as there are sell stops under that level. The onus is on the bulls to prove their mettle.

    JP Morgan is well known for what it is and what it does. It is now a "Bank Holding Company", but its "Investment Bank" Status allows it to see the positions of its hedge fund clients, their stop-loss limits, etc. The implosions in the markets of hedge funds are partly the result of this knowledge. This is a clear conflict of interest that was made legal a few years ago.

    The corruption goes far too deep, at all levels.
    What is happening globally is planned. It is inconceivable that the out-of-balance global trading system of surplus and deficit nations was not ringing alarm bells with every economist and government official.
    It is also inconceivable that the result of actions by Greenspan, the Fed, the BofE, BofJ, BofChina, and the various leverages held by international banks, and the corrupt enabling legislation, mostly written by lobbyists, were also unpredictable.

    Look at it this way.
    Iceland currency fell to 20% of its original value, overnight.
    An Icelander holding gold would experience a 500% increase in its value/purchasing power in Icelandic terms, overnight.

    I do not know of an adequate cleansing agent that would rectify global problems.

    Regrettably, as the situation deteriorates, demands for a solution will force the hand of the politicians.
    Those responsible for planning this debacle will be waiting for this point, with their well thought out solutions. We are already seeing power grabs, and the staking out of territory. Thankfully these actions by various parties seem to oppose each other at this time. This will prove temporary...............

  2. I think the general situation has deteriorated too far for your ideas to work.

    May well be so. I'm going back to the last two weeks of Anon comments and going to see if I can cobble together an action plan.

  3. Here



    Google some more.


    A "Shadow Banking System" is a deliberate attempt to evade statutory oversight regulations.
    Just look at the list of major names!

    The economics manipulations from these moves defeats all classical economic theories. The effects are unknown until they blow up. This is the intent, - defeat of current systems. $10T shadow banking system just does not "just happen"!!!!!!!!!!!

  4. Top of page 2 in above link..

    By 1999, the Gramm-Leach-Bliley Act rolled back Depression-era restrictions, allowing banks, brokerage firms and insurers to merge into financial holding companies that would be regulated by the Fed.

    "That would be regulated by the Fed"!!!!!!!!!
    Translation, - the fox guarding the hen house.

    There's that name again, - Gramm

  5. GS and JPM are now fed approved Bank Holding Cos, (took just a few hours) so they can get Fed bail-outs.

  6. Google some more on Shadow Banking System", you'll be amazed.

    Any where up to $550T at one point"

  7. The serious intent by major global banks, was to deliberately avoid legal oversight.

    Party to this intent were the officials charged with oversight responsibility.

    The injection of debt into a fiat system has limitations. At the end it creates negative GDP.

    Compounding debt is exponential, it overcomes the ability to repay it.

    Economies increasing outsourcing manufacturing rely more on service industries for GDP. This is false. In order to increase bottom line, financial institutions of deficit countries are forced, with connivance of authorities, to drive down interest rates at which they borrow, and to become "inventive" in their creation of financial vehicles.

    Fraud becomes endemic on the part of the institutions and the authorities.
    Having exhausted domestic opportunities for profit, fraudulent paper is then sold globally.

    Bought politicians always find it easier, and short term more remunerative, to tinker with regulations to maintain the status quo, and thus enter criminality, particularly when at the end of their political term the beneficiaries of their criminality offer remunerative positions.
    The solutions to global trade imbalances, foreign currency manipulations, global hegemony of a global reserve currency backed by a vast military/business complex, itself majestically corrupt, are difficult in the extreme, and beyond the political and career lifespan of elected, and regulatory officials.

    Far easier to take the money, and hope, and duck.

    You think bailouts for the criminals will work?
    Look at the numbers.
    The fact that currently politicians want to maintain the status quo should tell us they fail to understand the problem.
    A "nation-by-nation" approach will not work. It could create protectionism.
    Look at the list of banks preparing to use the Dark Pools. They are global. If one jurisdiction tightens, they move, withdraw capital, create collapse, and force the nation to rescind!

    And so we arrive.
    The realisation of the need for a global response. Global oversight regulations.

    And there the banks, and their bought representatives sit. At IMF, BIS.......
    Waiting with their prepared solutions.

    And the mental acuity of our bought politicians??

    The very ones who would deceive us about Lisbon and the EUSSR "democracy", the very ones who subscribe to retro-altered global temperature figures, carbon taxes, carbon trading, to permanently defeat the acquisition of personal wealth and a thriving middle-class, those who strive for personal power before ANY consideration of their electorate, - these will represent us honestly in the future horse-trading??

    Would YOU trust them?

  8. Although what was practiced over the last few decades was not capitalism but legalised fraud and semi Communist-Monopolism the final goal for dominant minority has been a global Communist-Capitalism/Monopolism blend which their political puppets are now openly calling for. The video interview below between Norman Dodd and G. Edward Griffin took place in 1982. Norman Dodd headed the House Special Committee/Reece Committee, an investigative committee of the United States House of Representatives. The committee investigated Tax-Exempt Foundations and Comparable Organizations. Norman Dodd explains the committee’s findings that tax exempt foundations are merging Communism/Socialism and Capitalism together within the USA, the final stage of what elites desire.

    And, for your delectation....





  9. Henry (Hank) Paulson is a member of CFR


    So it obvious that he would favour the appointment of Strauss to the IMF.



    Because on the 14th Oct, 2007, a European branch, (and a few others) of the CFR was opened, and if you read the fifth para, you will see Strauss as a founder member.


    Now tell me nothing is planned!!!

    Strauss >>IMF >>ECFR >>CFR >>Paulson.

    Jesus H Christ, all the traps are laid and baited...................

  10. So, at the time the shadow banking system was in full growth, the CFR was busy spreading its power base around the globe..................

    Rahm Emmanuel is Obama key man

    He is very well connected.

    Explore his Mossad links!

    Try this for Starters

  11. Ready made solution to the Banker made, Government approved, cause of the “problem”

    A solution to this banker-made global problem already exists and has been talked about for many years. One of the most recent articles coming in 2007 from a top politically influential group called the Council on Foreign Relations titled
    “The End of National Currency“.

    Wikipedia lists
    some of the CFR’s previous directors as David Rockefeller, George H. W. Bush, Alan Greenspan, George Soros, Zbigniew Brzezinski…

    also says that the CFR “has exerted influence on U.S. foreign policy from the beginning, due to its roster of State Department and other government officials as members.”

    In that article
    the council advises that “the world needs to abandon unwanted currencies” and then goes on to say the Dollar is one of those, which shows their interests do not lay with the U.S., but they use the U.S. as a useful tool, the world is their oyster. The CFR’s solution to dramatic currency fluctuations, which we are now seeing, is to introduce “multinational currencies as yet unborn,” which of course would need to be under the full control of international/regional central banks.

    This suggestion has been talked about for a long time but even in 2007 such a grand solution would not have been considered seriously for implementation; well thanks to the current stage of the global banking scandal many are saying what the International Monetary Fund chief

    recently said
    , “the banks’ losses are the worst we’ve ever seen,” and “the IMF thinks it’s a global problem that needs a global response.”

    Bloomberg let us know what the elite want from this created chaos when they printed what the pawn French President Nicolas Sarkozy said, “We want a new world to come out of this.”

  12. Would YOU trust them?

    The trouble with being Anon is that we don't know which Anon is saying which thing.

    One of the Anons said, some time back, enough of the analysis, time to act and I agree.

    What is here in the comments section is fine but we need a concerted action plan to prevent it happening before this becomes the Great Depresssion and we march off to a ludicrous war.

    There have been some suggestions in these pages and elsewhere but I don't think we've come up with a winner yet.

  13. "There have been some suggestions in these pages and elsewhere but I don't think we've come up with a winner yet."

    Well, thanks for reading , James. Sometimes I wonder if the room is empty.

    That said, don't you think it is important to establish the identity of the various combatants in the upcoming negotiations, and take an informed opinion of their game plan. I've seen nothing on any pages that shows the combination of links just displayed, that leads to the identification of the CFR, or ECFR, and therefor the characters involved, in such detail?
    Brown and his co-conspirators take a slightly different view to ECFR, and both differ to the Japanese, Russian, Brazilian, Indian, Chinese, views, - to name a few.

    Toss in the varying education policies, and carbon nonsense, and you have a real buggers muddle to negotiate through to establish their positions.

    As illustrated in my first post on this page, whatever moves are made, or suggestions you make, will have to be at grass-roots level, as all actors above that level are already bought, or have an interest in not getting involved.

    Grass roots, however, are not the easiest to convince, variously favouring Britneys crutch or coronation street.

    Hell, I failed to convince CU and Nick on their site, about a conspiracy that's as plain as the nose on his face, and CU brags about a masters degree, (don't know about Nick)- like that prepares him for situations like this!

    So, fire away, I'm all ears.

    And good luck. :-)

    Oh, BTW, there should be no confusion on your part who the anons are, given what you see, so I don't understand your objections.

  14. As far as the policies of the CFR are concerned, Zbigniew Brzezinski is the man to follow.

    To me, however, there is something very wrong between his ears. However, he's palls with Rockefeller..........which perhaps says a lot about rockefeller.....

    BTW, "would YOU trust them?" was rhetorical. :-)

    BTW, in the Irish film I linked recently, did you notice the background flag during the Bertie Ahern interviews? - - CFR.

    I'm pretty positive the current Irish politicians have been bought for the next Lisbon vote.
    Which will antagonise the electorate greatly.
    Prior to the last Lisbon vote, I phoned a number of associates in the Republic, - they didn't need persuading to vote NO. Let's hope they remain so convinced.

    400 million relying on less than 4 million, and Sinn Fein, for their freedom, - makes you wonder, don't you think?

  15. Oh, well, I guess the room is empty.This will be my last comment on this vein.

    In the UK the telegraph carries the story of coming secrecy of printing money, ie quantitative easing.

    The twat in No 10 is determined to devalue out of debt, and screw the consequences.

    This act alone will cause my capital to leave £, before the failure of Gov. bond sales.

    In the US This is Obama rescue package. The assumption of zero % rates for a long time in appendix 1 guarantees its failure

    The world is barking mad.


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