U.S.’s Startup Myth; China’s ‘Ford Moment’: Commentary Review

Job-Creation Faith Is Misplaced

Recently an acquaintance at the next table in a Palo Alto, California, restaurant introduced me to his companions: three young venture capitalists from China. They explained, with visible excitement, that they were touring promising companies in Silicon Valley. I’ve lived in the Valley a long time, and usually when I see how the region has become such a draw for global investments, I feel a little proud.

Not this time. I left the restaurant unsettled. Something didn’t add up. Bay Area unemployment is even higher than the 9.7 percent national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years.

The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups. (July 2)

Andy Grove

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So Far, Capitalism Rules

If these factory strikes continue, China may have to go Communist.

It’s tempting to wonder which way China will go. Will it side with demands for higher pay and let strikes broaden? Might it clamp down on this budding Solidarity-style movement to protect the all-important export machine? Or will workers demand a true Communism -- not just one that abhors Google?

So far, China has taken the first path, going more the way of capitalism than Communism. It raises the specter of a “Henry Ford moment” in the most populous nation, with both good and bad implications for the global economy.

First, the good news. China’s leaders are taking a page from the industrialist who built Ford Motor Co. In 1914, Ford doubled the average automaker’s wage to $5 a day. It made his Model T more affordable to them and provided a model for a stable workforce that formed the core of the U.S. middle class.

It’s a dynamic China needs more of, and signs are that it’s spreading before our eyes. The positive domino effect it unleashes would create a growing domestic market for products factory workers produce. It would accelerate China’s shift from exports to a consumer-led economy. (June 28)

William Pesek

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Banking Bill Invites Meltdown

The financial overhaul bill set for passage sometime next week is supposed to “bring accountability to Wall Street.” In announcing an agreement between the House and Senate last week, Senator Christopher Dodd noted that “the American people have called on us to set clear rules of the road for the financial industry to prevent a repeat of the financial collapse that cost so many so dearly.”

The final bill, though, does little to prevent a systemically important bank from failing, and makes it far more difficult for regulators to assist one seeking to avoid failure. This all but insures that the system-wide calamity the bill should be trying to prevent will, in fact, occur again.

Most of the systemic risk in the U.S. is now carried in the six largest bank-holding companies (Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley). The bill lets them off easy: none is to be broken up and the effort to lower the risk they take on was diluted. (June 28)

Roy C. Smith

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EU Mulls Sovereign Default

The notion that default might be the only sensible exit strategy for an indebted euro nation is finally gaining traction with the authorities. With global financial markets still in a state of disrepair, investors would be wise to tread softly amid the potential nightmares.

A draft European Union document, dated June 25 and scheduled for discussion July 12-13, was obtained this week by Bloomberg reporter Meera Louis. The draft suggests the forthcoming stress tests planned for the region’s banks should assess the dangers posed by “exposures to sovereign risk.”

That’s a euphemism for asking whether banks would blow up if a government couldn’t pay its debts. Including that scenario in the analysis is an admission that the prospect of restructuring has, in the minds of the euro’s apparatchiks, moved up the scale to “possible” from “out of the question.”

On June 28, the Bank for International Settlements weighed in with its annual report. Cheery reading it is not. (July 1)

Mark Gilbert

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--Editors: John Lear

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The Chinese economy’s secret recipe

Comment by FAN GANG

CHINA’S GDP growth this year may approach 10%. While some countries are still dealing with economic crisis or its aftermath, China’s challenge is – once again – how to manage a boom.

Thanks to decisive policy moves to pre-empt a housing bubble, the real estate market has stabilised, and further corrections are expected soon.

This is good news for China’s economy, but disappointing, perhaps, to those who assumed that the government would allow the bubble to grow bigger and bigger, eventually precipitating a crash.

Whether or not the housing correction will hit overall growth depends on how one defines “hit.” Lower asset prices may slow total investment growth and GDP, but if the slowdown is (supposedly) from 11% to 9%, China will avoid economic over-heating yet still enjoy sustainable high growth. Indeed, for China, the current annualised growth rate of 37% in housing investment is very negative. Ideally, it would slow to, say, 27% this year!

China has sustained rapid economic growth for 30 years without significant fluctuations or interruption – so far. Excluding the 1989-1990 slowdown that followed the Tiananmen crisis, average annual growth over this period was 9.45%, with a peak of 14.2% in 1994 and 2007, and a nadir of 7.6% in 1999.

While most major economies in their early stages of growth suffered crises, China’s story seems abnormal (or accidental), and has elicited periodic predictions of an “upcoming crash.” All such predictions have proved wrong, but the longer the story lasts, the more people forecast a bad end.

For me, there is nothing more abnormal about China’s unbroken pattern of growth than effective macroeconomic intervention in boom times.

To be sure, both economic development and institutional reforms may cause instability. Indeed, the type of central government inherited from the old planned economy, with its overstretched growth plans, causes fluctuations, and contributed significantly to instability in the early 1980s.

But the central government must be responsible for inflation in times of overheating, lest a bursting bubble fuel unemployment. Local governments and state-owned enterprises do not necessarily have those concerns. They want high GDP growth, without worrying much about the macroeconomic consequences.

They want to borrow as much as possible to finance ambitious investment projects, without worrying much about either repayment or inflation.

Indeed, the main cause of overheating in the early 1990s was over-borrowing by local governments. Inflation soared to 21% in 1994 – its highest level over the past 30 years – and a great deal of local debt ended up as non-performing loans, which amounted to 40% of total credits in the state banking sector in the mid-1990s.

This source of vulnerability has become less important, owing to tight restrictions imposed since the 1990s on local governments’ borrowing capacity.

Now, however, the so-called “animal spirits” of China’s first generation of entrepreneurs have become another source of overheating risk. The economy has been booming, income has been rising, and markets have been expanding: all this creates high potential for enterprises to grow; all want to seize new opportunities, and every investor wants to get rich fast.

They have been successful and, so far, have not experienced bad times. So they invest and speculate fiercely without much consideration of risk.

The relatively high inflation of the early 1990s was a warning to central government policymakers about the macroeconomic risks posed by fast growth. The bubble bursts in Japan’s economy in the early 1990s, and the South East Asian economies later in the decade, provided a neighbourly lesson to stop believing that bubbles never burst.

Since then, the central government’s policy stance has been to put brakes on the economy whenever there is a tendency toward overheating. Stringent measures were implemented in the early 1990s to reduce the money supply and stop over-investment, thereby heading off hyperinflation.

In the recent cycle, the authorities began cooling down the economy as early as 2004, when China had just emerged from the downturn caused by the SARS scare in 2003. In late-2007, when GDP growth hit 13%, the government adopted more restrictive anti-bubble policies in industries (steel, for example) and asset markets (real estate), which set the stage for an early correction.

Economic theory holds that all crises are caused by bubbles or over-heating, so if you can manage to prevent bubbles, you can prevent crises. The most important thing for “ironing out cycles” is not the stimulus policy implemented after a crash has already occurred, but to be proactive in boom times and stop bubbles in their early stages.

I am not quite sure whether all Chinese policymakers are good students of modern economics. But it seems that what they have been doing in practice happened to be better than what their counterparts in some other countries were doing – a lot on “de-regulation,” but too little on cooling things down when the economy was booming and bubbles were forming.

The problem for the world economy is that everybody remembered Keynes’ lesson about the need for countercyclical policies only when the crisis erupted, after demanding to be left alone – with no symmetric policy intervention – during the preceding boom. But managing the boom is more important, because it addresses what causes crises in the first place.

In a sense, what China has been doing seems to me to be the creation of a true “Keynesian world” – more private business and freer price competition at the micro level, and active countercyclical policy intervention at the macro level.

There may be other factors that could slow down or interrupt China’s growth. I only hope that policymakers’ vigilance will prevail (and be improved upon), enabling China’s high-growth story to continue for another 10, 20 or 30 years. – © Project Syndicate

Fan Gang is Professor of Economics at
Beijing University and the Chinese Academy of Social Sciences, director of China’s National Economic Research Institute, Secretary-General of the China Reform Foundation, and a member of the Monetary Policy Committee of the People’s Bank of China.

Migrants from new EU states increase London homeless tally

• UK capital's homeless now 4,000, from 2,500 three years ago
• Growth in new rough sleepers attributed to economic tailspin

 

Rough sleeping in central London. Photograph: Martin Godwin for the Guardian

Almost a quarter of London's rough sleepers are from new EU states, a trend exacerbated by rising unemployment that is reversing a decline in homelessness in the capital, a report says .

Most of those sleeping on the streets come for a better life but many find limited opportunities, and, in some cases, become destitute. While the number of homeless British nationals in the capital has stabilised at about 2,500, citizens of the 10 central and eastern European states account for hundreds more added to the most authoritative tally of rough sleepers. The database Chain, or Combined Homeless and Information Network, which is maintained by Broadway, a homeless charity, tomorrow publishes figures showing that London ‑ the location of more than half of the country's rough sleepers ‑ has almost 4,000 homeless people, a figure up from the 2,500 listed three years ago.

The biggest single factor contributing to growth in the newly homeless is the tiny fraction of 1.5 million migrants who came in search of work from the EU's new border regions but who ended up on the streets as the economy went into a tailspin.

These people are often left to fend for themselves; unless they have worked full-time for a year, migrants from former eastern bloc countries that joined the EU in 2004 and 2007 have no right to public funds and only limited access to services. The outcome is often isolation and homelessness.

British charities say that while the tide of largescale migration from eastern Europe has largely reversed, many people are staying on thinking there is a only a limited safety net in their own country.

This assertion has been denied by Krzysztof Lisek, a Polish MEP who has helped homeless Poles in the UK. He said that if it were a question of social security then "the migrants would probably choose the Nordic countries".

Last week during a series of interviews in London where homeless people queued for breakfast provided by charities, many of those on the streets shrugged off the hardships. Most sleep outside, often on church steps. They scavenge at markets because "so much good food is thrown away", and their days are spent traipsing between shelters or begging; an hour seems to yield a less than a pound.

"You can buy a baguette after a few hours of begging," said Roman Maciejewski, a 39-year-old former hospital porter from Poznan, west Poland, who arrived this year looking for work but ended up sleeping under a tarpaulin. "It is a open air apartment by the Thames. The weather is much harder in Poland than here."
Broadway's chief executive, Howard Sinclair, said: "Clients live on bendy buses, scrounge for scraps, have to endure snow and rain. The life expectancy of a homeless person on London streets is 42. That is not something that should be happening in 21st century London."

Sinclair said that if the problem were not tackled, Boris Johnson, London's mayor, would find it "very difficult" to make good his promise that by 2013 that no one would be living on the city's streets. Unlike the government figures, which count the number on the streets on one night of the year, and which have been criticised by some homeless charities for providing only a partial snapshot of the problem, Chain tallies the homeless throughout the year.

The spurt in rough sleeping has led to some radical measures. Since June 2007 more than 1,000 eastern and central Europeans have been flown home, at taxpayer expense. Many flock to the capital's most prosperous parts; the City of London "reconnected" 130 people with their families last year.

Ewa Sadowska, chief executive of Barka UK, a project that aims to help European migrants, said that those arriving here did not realise that their own governments now helped homeless people. She said that in Poland homeless people were paid cash benefits and got free access to services in "social integration centres".

She added: "Many of the homeless come from a generation that went through communism, they are scarred and don't trust authority. They drink and find a group that behaves like them. It becomes a lifestyle, and not an easy one to get out off." 

• Randeep Ramesh, social affairs editor
• The Guardian, Monday 5 July 2010

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Internet affairs a home wrecker

By RACHAEL KAM and SEREAN LAU
newsdesk@thestar.com.my

KUALA LUMPUR: Online social networking sites can be a good place to meet new friends or even seek life partners but they have also become a breeding place for divorces.

Marriage counsellor Yvonne Lee said the Internet had been cited as one of the reasons for divorces of late.

“The Internet can trigger marital problems or worsen a couple’s existing problems. It has opened up more choices for those looking for partners, regardless of whether they are single or married,” explained Lee, a premarital programme trainer at the National Population and Family Development Board in Kuala Lumpur.

Lee, a director of Enrich Counsel-ling and Therapy Centre, said that while the Internet could be one of the causes for divorce, it was still the quality of the relationship that determined the outcome of a marriage.

One in 30 new clients the centre counsels every two months has cited the Internet as one of the reasons for their marital break-up.

A victim of an “online” affair, Ann discovered that her husband, Jason, had registered himself with some foreign match-making and social networking websites to meet other women.

“I thought Jason was having an affair with a woman from China but apparently there were several of them,” she said, adding that they would exchange lurid sex talk and even nude pictures online.

Jason, an engineer, has since left his wife and two children for a married woman he befriended online.
Hillary, 33, from Kuala Lumpur, was pregnant with her third child last year when she discovered her husband’s affair with another woman, a Malaysian working in Hong Kong.

She not only found suggestive emails on his smartphone and computer but also photographs of the mistress with her husband.

Albert, a psychologist, admitted having affairs with at least six women he met on Facebook and three others on Skype before his wife found out about his infidelity and divorced him.

He had joined social networking sites to locate his former university mates and soon added anonymous women as his friends.

Sometimes, it is not the husbands who cheat.

Susan, 42, a mother of a 12-year-old girl dropped a bombshell on her husband recently — she wanted a divorce to marry a Frenchman of African origin whom she befriended on Facebook. The couple run a small retail outlet in Malacca.

Consultant psychologist Valerie Jaques said most couples who cited Internet love affairs as the reason for divorce were already facing some problems.

She added that these problems, whether physical, emotional, psychological or social in nature or a combination, could result in loneliness.

“A lonely person who receives attention via the Internet or face-to-face will be extremely vulnerable, and this can develop into a more serious relationship,” said Jaques from Integrated Psychological Network Sdn Bhd.

“People fall for nice words. Lonely people will be more vulnerable to nice but empty promises.”

Battle of the technices - Steve Jobs & Bill Gates

By JOEY YAP and TEE LIN SAY
starmag@thestar.com.my

PC vs Mac?

Both Steve Jobs and Bill Gates are highly intelligent and good at accumulating wealth - but one of them will enjoy that wealth along with good health while the other will struggle with ailment.

In the last part of our series on face reading, we examine two titans who have been battling it out in the technology arena for decades.

 MICROSOFT founder Bill Gates and Apple co-founder Steve Jobs are both American magnates who command the respect of the world with the paradigm-shifting inventions their companies have developed.
Gates is almost single-handedly responsible for the revolution in personal computing, which began with the launch of the retail version of the Microsoft Windows computer operating system on Nov 20, 1985. Since 1995, he has consistently remained in the upper regions of any “richest American men” list you can think of.
This year, Gates, 55, is the second richest man listed on Forbes’ magazine’s annual list with US$53bil (RM173.84bil).

Meanwhile, Job’s US$5bil (RM16.4bil) net wealth may be nowhere close to Gates’ gold mine, but he is the ultimate icon of the idiosyncratic and individualistic Silicon Valley entrepreneur.

Battle of the techies: Both Steve Jobs and Bill Gates (below) are highly intelligent and good at accumalating wealth – but one of them will enjoy that wealth along with good health while the other will struggle with ailments.

 

He is presently invading the world with the launch of the iPhone 4 last week, on June 24; it was the best product launch in the history of Apple Inc, according to news reports earlier this week.

Recently, Jobs predicted that personal computers running on Microsoft Windows operating systems are in permanent decline.

Does this mean it’s the end of Gates empire?

Gates’ window on the world

Based on face reading, the answer is no.
Gates’ current age point is denoted in the mouth area – and he has a big and wide mouth with good flags.

Remember what we said previously? “Bigger mouth, bigger say”. Well, Gates’ huge mouth definitely means an abundance of influence, power and respect. As a non-executive chairman, he may no longer play an active role in Microsoft now, but his reputation and clout is far from diminishing.

Bill Gates

 

With that sort of mouth, people tend to listen to and obey him – a good thing too, because he wants things his way!

Notice too, that Gates has bell shaped laughter lines (wide and deep but shaped like a bell) – these are the best type to have because they indicate a person who commands huge respect and has huge authority. The other lines on the sides of the face that go all the way up – guan jong wen – reinforces this, as they mean mass public support.

Gates also has a classic lion’s nose, which is an entrepreneur’s nose. The nose itself is quite large, but not disproportionate to the rest of the face.

The nose wings are wide, denoting the ability to generate wealth from a variety of sources. The tip of the nose is particularly bulbous and, most importantly, dips down, indicating excellent business acumen and a sharp financial mind.

Gates nose is also well-supported by his cheeks. This denotes that he has a very good right-hand man and close aides to help him achieve his goals and support his wealth generation efforts. That is why, even with Gates taking a lesser role, you don’t see the company crumbling, or shareholders turning jittery.

His wealth is also a result of his wisdom – he has a high forehead. Gates is a thinker, one who is always analysing and strategising.

His chin is prominent and bulges out. This is an extremely important feature for people in today’s cutthroat business world. A chin like this means wealth and career positions that are established and rock steady.

In business, this means that Gates is firm in his decisions and cannot be swayed without a very good reason.

As his eyebrows do not extend across the length of his eye, they could be be regarded as short. This denotes someone who is unsentimental and merciless and who prefers to count on himself rather than depend on others. Short eyebrows belong to people who prefer to be unencumbered by partners.

His eyebrows are also straight and do not arch at all. This means someone who has a consistent personality and is focused and determined. The straightness also indicates that Gates believes in measured responses and that he likes to observe a situation before jumping in or taking action.


That is why Microsoft is not as aggressive or as “boat-rocking” as Apple in terms of its product line-ups.

While Microsoft has sometimes been slow to enter a particular area of technology, once Gates does decide to enter the fray, he will have thought out all the angles and have a clear vision of emerging victorious.

For example, Microsoft allowed the Netscape Navigator to establish itself as a browser before deciding to get into a “browser war” with its own Internet Explorer – and we all know how that ended, don’t we?

To sum it up, Gates six “mansions of wealth” position is very prominent and meaty, which means great wealth. The wealth mansion points are two points each on the forehead, the cheeks and the lower chin area.

He also has a square face, or field face character, that is very symmetrical and proportionate. This shows that Gates is of the earth element. Typically, most wealthy people have earth-shaped faces.

Gates eyes are also very strong. He has glossy and spirited eyes, which are known as “noble dragon” eyes. Couple these eyes with his lion nose, and you have a person with full power, authority and wealth.

Furthermore, his chin is squarish and long, which represents a very wealthy and prosperous old age.

Applemania is Jobs

If there’s anyone who can create a new culture, its Jobs, the co-founder (with Steve Wozniak) of Apple Inc and the man who made Pixar Studios into an Academy-award winner.

Wealth-wise, it is clear to see: Jobs has a very good nose, with wide nostrils and a downward-dipping nose bulb, indicating someone who is very savvy financially and in wealth generation.

If we compare the amount of creativity reflected in Gates and Jobs’ faces, Jobs would appear to have the superior face.

His most prominent feature is his high and broad forehead. This indicates someone who is very intelligent. Analysing and solving puzzles is second nature to him. His forehead’s width also indicates that Jobs has had plenty of opportunities throughout his career – he has helpful people and “guiding angels” to push him to excel in his field.

His forehead also indicates he has a lot of creativity, as can be seen by how he turned Apple around with ground-breaking advertising campaigns and marketing techniques. Together with his small and long eyes, these are hallmarks of a very successful entrepreneur.

Job’s thick eyebrows go upwards like a warrior, a feature usually found on heroic personalities. They are courageous, principled and intelligent and are the sort who will fight for the rights of the oppressed.

Those eyebrows also indicate that Jobs has a very positive outlook on life, hence enabling him to fight cancer (he was diagnosed with a rare form of pancreatic cancer in 2004) – and produce the best smart phone in the world, the iPhone, of course!

His protruding eyebrow bones mean he is more aggressive and will take on a more active role. He dares to stand out in the crowd and be different.

While Jobs may be better as a creative entrepreneur, Gates would be better as the leader. This is because Jobs’ sharp and long eyes indicate that he has an eye for detail. Couple this with the protruding eyebrows, and it is evident that he likes to be in control of everything.

Jobs eyes are also sharp yet sunken. Couple this with his thicker eyebrows, and it means that he knows how to find the right partner to help him. His eyebrows represent sibling and partnership palaces. He has the ability to find the right people at the right time.

Jobs also has the high-set ears that are a feature of people with high IQs.
His bulging fortune and virtue palace (the area above the eyebrows) indicates someone who is hard on himself and who is not contented because he is in constant pursuit of perfection.

That is why it is not surprising that Jobs is today listed as either primary inventor or co-inventor in over 230 awarded patents and patent applications.

Jobs, like Gates, is also 55 this year, so, similarly, his “age luck” is also in his mouth. Jobs’ mouth is wide, indicating influence and power.

However, he has been growing a scruffy sort of moustache of late that covers the fleshy part of the area above his lips – this may not be helpful.

In Mian Xiang (face reading) terms, a good face is one that is fleshy and has good qi. When a person has a fleshy face, he should not hide it under any facial hair.

Jobs has an oblong face, which is known as the “metal face” in Chinese metaphysics. Hair, on the other hand, is considered a wood element. When one has facial hair on a metal face, it is akin to “metal chopping wood”, which then creates sparks – and, hence, obstacles.

Notice, too, that Jobs has a narrower and shorter chin than Gates. This denotes a person who is more creative, but may suffer from health issues in his old age.

Jobs face is also gaunt. In face reading, hollowness and gaunt faces are never good features.
He is especially gaunt around the jaw and lower cheeks, meaning Jobs’ face does not fulfil the criteria for true wealth: when a person’s face is fleshy in all six of the mansions of wealth.

Who is doing better?

So, will Jobs survive his battle with his ongoing ill-health? He’s certainly got the determination and drive to do so. Furthermore, his eye spirit is strong, indicating that he is going through his good fortune cycle. However, the facial hair will continue to mean trials and tribulations.

Furthermore, Job’s fa-ling (laugh lines) do not cross the mouth even when he smiles. That means he will have continuing health problems before he turns 60.

To have a good life after 60, one needs deep and long fa-ling, good ear lobes and full eyebrows. Jobs ear lobes are not fleshy and while his eyebrows are strong, notice that they are sparse towards the end.

Hence, healthwise, Jobs may continue to face challenges.

Obviously, as Jobs has been single-handedly responsible for much of Apple’s success, his stepping down or demise will not be good for Apple Inc.

The fact that Apple may face challenges can be seen in Jobs’ sunken eyes (which indicate unhappiness) and bearded chin.

On the other hand, Windows will continue to flourish even without Gates. Gates has been improving with age. Gates face is meatier than Jobs’, which again shows that Gates has better fortune. To have true good fortune, one cannot be too thin.

Of course, good fortune is not just about money, it is also about health and love. So, as a whole, while Jobs may be the more creative entrepreneur and creates waves among techies worldwide, the person blessed with true good fortune – money, health and love – is Gates.

For more on face reading, drop by FemmeCity (organised by Clove) at the Kuala Lumpur Convention Centre from July 30 to Aug 1. Admission to the fair is free.

Feng shui expert Joey Yap is the founder and principal of the Mastery Academy of Chinese Metaphysics. StarBiz writer Tee Lin Say is Yap’s student of face reading.