What is going on?

Looking at the status of the G20 economies, one might say nothing works. Keynesianism taken extreme has led to negative interest rates, moderate unemployment and no growth. Neo-liberalism generated uncontrolled banks, opinionated leadership and polarization of welfare. Trickle down economics do not work at all, especially if we look at the African or the Latam economics. Even the Chinese market-oriented communism is crumbling here and there. So now what?

European Bank’s Shares Shattered or Under-valued?

The last few days saw the European bank’s shares substantially going down. Deutsche’s Bank shares went down from around 25 EUR/share in December 2015 to 13,68 today (Feb 12th, 2016). Other German banks suffered also losses of 10-20% on their share prices, whilst French and Italian ones did not fare very well too. Most of the hit banks were from the invesmtent banking sector – but the traditional commercial ones have not been spared too. Unicredit, the biggest Italian bank, has seen a similar fate too (down from 6 EUR/share to 3).
This downfall share price trend is ggetting super-serious for the bank sector itself, badly hurt by multiple factors. Amid most concerns are the (relatively) capitalization rules, which requires the banks to maintain a higher capital-to-loans ratio – and most of these mammoths have failed on the stress tests. Of course, this is a measure of efficiency – and most of the investment banks are trying hard to keep as low a ratio as possible, since this means for them doing business with other’s (mostly central banks) money/funds. A nice business model indeed for the banks, who have become mostly asset managers, rather than loan-making machines. Continue reading “European Bank’s Shares Shattered or Under-valued?” »

Why the Housing Market in Anglo-Saxon Countries Will Further Boom

Recently I was reading an interesting article on The Economist about the UK housing market. Whilst I do not agree with 100% of it (after all, the real estate markets have gone through various historical cycles), it is a well-argumented read. It basically says that whilst subventions via free land for the constructors might help, the housing market still has a huge inertia and might continue to grow.
One interesting extra argument (from my side this time) – the quantitative easing has introduced to the US/UK markets a lot of liquidity, which is not yet absorbed. As the liquidity will hardly find its place in new investments, it might find a safe cushion in the real-estate investments. One more reason why this might continue to be a good long-term investment.

It Might Be Time To Consider Taking a Cheap Mini-Holiday

If you are like many Brits, you have been struggling for the last few years just to get by. Between the bottom falling out of the financial markets and eroding retirees’ hard-earned savings while making the jobs picture frighteningly dim for the rest of us, it hasn’t been a particularly pleasant time. Now that things are looking better, however, it just might be time to think about going on holiday and letting go of some of those worries that have plagued you for such a long time. While things are still not completely back to whatever you considered normal, at least many of you might be in a position to let off a little steam. The key word here is “little”. It might not yet be time to summer in the South of France, but if you are sensible about it, a mini holiday might not be too great a stretch. Continue reading “It Might Be Time To Consider Taking a Cheap Mini-Holiday” »

Why Do Systems (Tend To) Fail on Monday

You wake up an 06:30, after a full relaxing (but somehow late ending) Sunday. You rush into your car and start commuting. The traffic lights system is annoyingly slow, delaying your usually course to the office. Some traffic lights are broken. No way you could shop for a drink at your favorite coffee shop – the queues are way too long this early on the week start. You get to the office – then you circle around 10 more minutes as usually to find a parking place.
When you get (finally) in front of your desk, the usual ERP interface starts 10 seconds later. The OS seems also very slow – lots of software updates pop up and urge you to restart your computer, and the office WiFi connection is painfully slow. Everybody’s running around in meetings and even the urgent “to do’s” are postponed. And the list can go on for pages.
What really happens on Monday mornings with our emails, sales organisations, computers and organizations? Why is everything so slow?
The answer came to me several weeks ago, when I was reading a piece of news regarding Netflix: it said that during prime time, when the highest-watched new episodes of their TV shows are aired, Netflix accounts for almost 40% of the bandwidth (or internet traffic) in the US. Which causes huge slowdowns in the internet traffic, to such an extent that some mobile operators even sued the company for over-using the internet infrastructure.
And this of course explains why Monday mornings are causing most of the work or human-used systems to slow down: the traffic is huge, be it the need to buy coffee, the urgency of having some products delivered or the high adrenaline of the organizations trying to get massive tasks done. Systems are usually designed to cope with normal loads (in terms of users, requests or processing other types of resources or information). They are NOT designed to cope with double the traffic during peaks. Continue reading “Why Do Systems (Tend To) Fail on Monday” »

How To Kick-Start Your Multi-Country Finance Management Career

wpid-IMAG2654.jpg You are a good country finance director or head of finance. You have a stable department, the knowledge of the local systems and legislations, and you have been very successful in this role for quite a while. Your multinational company is very happy with your financial directorship – the operating income flows are steady, your reporting is on time, subordinates act professionally and are satisfied with their jobs. And then you wonder – what is next for me? How can I do more? What is coming next in my career in multinational finance management?
You of course know the answer: the next natural career step is to take on a role in multi-country financial management. The usual path leads to a cluster or regional controller (or finance director) role. You should be heppy with that, since it gives you the chance to expand your financial management skills at multi-country level, as well as to embark on a path of multic-cultural and complex corporate finance learning.
There are also lots of questions – and the successful country finance directors are usually unsettled by them:

a) What does the new role require from me in terms of skills, experience, interactions?
b) How do I cope with the new role and the pressures associated?
c) How do I manage not one, but multiple legal entities/countries – whilst keeping the same success levels as in the past?
d) When do I start and where do I stop? etc

It is hard to answer all these questions in a short blog post such as this one, however – I will give you here some practical (and theory based) insights on how you can become a successful regional finance manager/director quickly and with little associated stress: Continue reading “How To Kick-Start Your Multi-Country Finance Management Career” »

“The Battle of Bretton Woods”, by Benn Steil – A Book Review

To be fair, the complete name of the book is “The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order”. This title kind of raises the expectations, doesn’t it?

Bretton Woods is, for most people outside of the economics field, just one of those expressions that specialists use to drive others away. It is the kind of expression mentioned when somebody needs to describe the redefinition of the economical order – or even more, the redesign of a financial system. Sounds like a big thing – and it actually is – Bretton Woods represented, in the aftermath of the 2nd world war, the place were the winning nations redesigned the monetary system and shaped what we have today in terms of financial flows globalization.

But don’t get me wrong – “The Battle of Bretton Woods” tells the story of the story, not of the technicalities behind. In retrospective, most historical decisions look usually logical and inevitable. The best history books, such as this one, do justice to the topic and show how intrigues and rivalries between the leading nations shaped the history at that moment. And boy, this was history – in this middle town of new Hampshire the dollar would become, after many strenuous battles, the currency of choice for international trade. This choice propelled US at the nexus of the modern economy, making it noit only the most powerful economy in the world, but also its guardian of choice. “The Battle of Bretton Woods”  how US became the biggest creditor nation, how the US banks started to do deals with other governments, why the international trade still takes place mostly in dollars – and so on. Many reasons just to read it, right? Continue reading ““The Battle of Bretton Woods”, by Benn Steil – A Book Review” »