Taiwan's pension funding issue

許璋瑤 - 前主計長 - 社會保險改革

COPD

COPE 1

COPD 2

COPE 3

Why didn't homosexuality disappear through evolution?

http://news.sciencemag.org/sciencenow/2012/12/homosexuality-may-start-in-the-w.html?ref=hp

Wiki compares project management software


Source Forge download project management software


accroding to Source Forge:
"ProjectLibre is an open source alternative to Microsoft Project. We have a community site as well at http://www.projectlibre.org It has been downloaded in 194 countries the first month of release and was just voted Sourceforge's "Project of the Month" ProjectLibre is compatible with Microsoft Project 2003, 2007 and 2010 files. You can simply open them on Linux, Mac OS or Windows."

Dalio on the develeraging world

What is the next decade look like

Shapiro leaving SEC

Shapiro's achievements at SEC and the unfinished tasks

Who is Elisse Walter?

Mortgage Settlement

http://online.wsj.com/article/BT-CO-20121116-710251.html

Alzheimer's

http://online.wsj.com/article/SB10000872396390443624204578060941988428604.html

http://online.wsj.com/article/SB10001424127887324595904578119213254334162.html

http://online.wsj.com/article/SB10000872396390444897304578044520966644406.html

教育投資是一種浪費?

在台灣有很多博士級的流浪教師。碩士找不到工作。大學畢業的起薪比我二十幾年前大學畢業時差不了多少，然而物價和二十年前比起來高了不少。不斷的教育投資，所得到的結果是投資報酬率越來越低。我個人覺得，臺灣流行的 “文憑不重要” “學者誤國” “學校教的理論無用” “教授肥貓” “五年五百億浪費” 等等的言論，有一定的社會背景，並非一味的"反智"。如果清大畢業後較好的出路是到澳洲當屠夫，採礦，那麼說教育投資事一種浪費，並不過分。

問題在於經濟。長期的失業，或者所學非所用，造成教育投資的write off, or write down。個人的終生所得，因為留校時間長，造成可就業時間縮短而減少。學校和老師對學生就業並不關心。任其自生自滅。產業不斷移往工資更低的地方。如果學生"自力救濟"，到澳洲打工，這是大人的錯，還是年輕人的錯?

我覺得台灣社會的文憑崇拜，因為歷史的因素，一直是社會的主流。但是資本主義全球化的結果，是中產階級的空洞化。製造業流往中國，使三億中國人脫離貧窮，這是全球化的正面影響。但是中間所得的國家，以及富裕國家的中產階級，都面臨收入減少，貧窮化的問題。社會的領袖們，包括學者，意見領袖，如果不正視這個問題，想辦法提高國家的整體競爭力，則他們的領導威信會越來越低。意見，只會越來越不受重視。

Cover story of Time, Oct 29, 2012: "College is dead. Long Live college." talked about the situation in the US. For anyone who is interested.

Money Market Reform Links

Bair supports floating NAV

What is pension de-risking?

GM moonshot has completed. Other pension de-risking projects are on the rise. What is penison de-risking? In short it is to pay lump sum to participants so that the company no longer has the pension liability on their books.

What are the benefits to the companies?

• Demographic trend is that people are living longer. This means companies are on the hook to pay annuity to pension participants longer. Paying lump sum today will release companies future surprise on their obligation to pay
• The world is deleveraging. High government debt in US, Japan, and several big European countries means that austerity policies will be prevalent around the world. This points to slow economic growth and low interest rate. Low interest rate increases a company's pension liability. Slow economic growth diminishes a company's pension asset return. Many companies have taken the view that taking pension liabilities off their book is good for the company's financial future.
• PBGC premium is rising due to high government debt and potentially higher risk of company failure due to the slow economic growth. De-risking reduces the premium to be paid.

How do participants take these company derisking effort? From the numbers I see majority of the participants take a lump sum. Less than 30% of the participants take annuity. I also hear some employees take this as a company betrayal to them, making their retirement less secure.

Is this trend spreading to public pension plans?

Anyway, DC is the trend of future retirement. DB is definitely dying. Everyone now has a stake in the financial market, be it stock or bonds, there is no escape. Succeesful investment becomes more and more important for everyone. Financial advisors are probably going to see strong demand for their services in the next decade.

"Guaranteed income is the top thing that people are looking for in their investments, and they'll take that over a rate of return. Going forward, annuities will become even more mainstream." --Cathy Weatherford, chief executive of the Insured Retirement Institute"

The traffic light analogy

In the city traffic light is a fact of life. People know from their daily experience that regulation of traffic flow is necessary, even if incovenient when you are in a hurry. In the rural area, traffic light is regarded as an undue intrution to personal freedom and judgement of the traffic situation.

This difference in daily experience also explains the different opions about gun control. Rural residents see owning guns as the only guarantee of their own safety and security. Because of its vast space and longer distance, if there is a violent crime it will be over before the police arrive. For the city dwellers, on the other hand, the crowded, diversified, quickly changing environment make shooting back impractical. It will be safer for everyone if no one is allowed to carry guns in the city except for police. As a result support for gun control is strong.

This rural city divide may also to some degree explain difference in political ideology and party affiliation. The rural farm states are conservative because their living space is large and far in between. Naturally they prefer more freedom and less rules. For example, Wyoming, Montana, North and South Dakota are rural and conservative. In population centers like New York City and Los Angels people understand rules are necessary for busy, fast moving city life. As a result their leaning is liberal, which is giving authority to beauracrats, and everybody have to live with building codes, fire codes and so on.

US is a big country that encompass both rural areas and large cities. I think there is always going to be debates about which way is better - more freedom or more rules. I also think this is why a high degree of local autonomy is necessary: some areas need more rules; others more freedom. If possible, both should have their way.

Spanner distributed global database

Spanner distributed global database

Spanner is Google's scalable, multi-version, globally-distributed, and synchronously-replicated database. It is the first system to distribute data at global scale and support externally-consistent distributed transactions.

This is one of the most important technologies of the future. Read when I have time.

Boston Globe endorse Elizabeth Warren

Boston Globe endorse Elizabeth Warren

 "She’s a relentless striver whose life story represents the best of American upward mobility. As a young mother, she worked her way through community colleges and state universities to become the nation’s top expert on financial consumer protection."

"And after earning an enviable job at Harvard Law School, she pushed her way into the political arena, wrangling with such renowned inside players as Larry Summers and Tim Geithner to achieve her goal of creating a consumer protection bureau. Her crowning achievement, the bureau guards the interests of average citizens contending with credit-card companies, student-loan holders, auto lenders, credit bureaus, and more. Anyone who’s felt powerless to escape a fee that seems unfairly imposed, or to cover an interest rate they didn’t bargain for, owes Warren a debt of gratitude."

"The fact that she didn’t stay on the sidelines, enjoying her teaching gig, attests to her commitment to what she believes in."

What strikes me most, though, is that she was a registered Republican for 10 years. Not a politician back then, she turn to become a Democrat at the age of 45.

A firm believer of "personal freedom, personal responsibility" at young age, she realized through life experience how unfair life can be to some people. Her research into personal bankruptcy statistics changed her view on why people file for bankruptcy. Contrary to popular belief that these are irresponsible, reckless people, they are often victim of life's unpredictable fate - a health problem, a close relatives sudden death, and lost of job at an unfortunate time.

What strikes me, is that at $300,000 annual income, she doesn't need to get in these dirty fight. She can enjoy a good life quietly. But she chose to fight the debt collection industry, made and making more enemies in this huge interest group.

What drives her? According to her own words - Matthew 25:40 - "as you have done it unto one of the least of these my brethren, you have done it unto me."

To me, this should have been what Christianity is all about.

Algea oil not yet sustainable

http://news.sciencemag.org/scienceinsider/2012/10/large-scale-algae-biofuels-curre.html?ref=em

So it is not yet feasible in large scale production.

I think algae oil as energy source and insect worm as protein source are two most promising things for a planet of 9 billion people.

Freedom and Social Justice

Free market (Laises-faire) doesn't mean it is OK to cook the book in the mold of Enron. It doesn't mean it's OK to lie about credit rating. It doesn't mean insider trading is fine. It doesn't mean it is OK to pollute the air, leave factory working conditions in danger of explosion, or ordering unnecessary medical service at public cost in the name of patient center medicine. Above all, free market doesn't mean greed before morality.

http://online.wsj.com/article/SB10000872396390443995604578002432460754000.html

reading list

Politics
http://www.thepoliticalguide.com/
http://www.politifact.com/


http://www.treasury.gov/press-center/press-releases/Pages/tg1729.aspx


http://fdic.gov/news/board/2012/2012-10-09_notice_dis-a_res.pdf?source=govdelivery


http://www.cpifinancial.net/news/post/16104/iosco-publishes-policy-recommendations-for-money-market-funds


Mao:
http://online.wsj.com/article/SB10000872396390444813104578016243142147194.html

http://online.wsj.com/article/SB10000872396390444180004578015170039623486.html

http://www.npr.org/2012/11/11/164801546/recording-the-untold-stories-of-chinas-great-famine


Dog poison:
http://dogs.about.com/od/dogandpuppyhealth/tp/toxicfood.htm


WHO essential medicine:
http://en.wikipedia.org/wiki/WHO_Model_List_of_Essential_Medicines


Osteoarthritis
http://en.wikipedia.org/wiki/Osteoarthritis

http://www.uptodate.com/contents/osteoarthritis-symptoms-and-diagnosis-beyond-the-basics

http://en.wikipedia.org/wiki/Paracetamol
http://en.wikipedia.org/wiki/Ibuprofen
http://en.wikipedia.org/wiki/Aspirin

Yakuza - Japan's Criminal Underworld

Will stocks do well in the coming decade?

US national debt held by the public stands at $11.3 trillion today. To pay down this debt, fiscal austerity - higher taxes and spending cuts - is inevitable. Given this fiscal background - government deleveraging - I think the economy will grow slowly. Stock performance, especially companies that focus on domestic market, are likely to be mediocre. I also think global economic growth will be slow in the coming decade, because of the amount of debt in the US, Japan, and European countires.

Just want to put down a note here to see if I am right in 2022.


http://www.treasurydirect.gov/NP/BPDLogin?application=np

Agile

Individual and interaction over process and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation

Iterative, incremental approach - get feedback quickly and respond quickly

Iterations of analyze, design, build, and implement

New product design
Evolving requierement
Experimental approach to solution using new technonoly
Client willing to staff product owner role
Team works best when managing itself

Roles: product owner, scrum master, team member

Trust but verify

We trusted the auditors, and the demise of Arthur Andersen and Enron proved that trust was misplaced.

http://en.wikipedia.org/wiki/Arthur_Andersen#Enron_scandal


We trusted the rating agencies, and the AAA rated CMO suffered a 36% loss.

http://en.wikipedia.org/wiki/S%26P#Criticism


President Reagan was right - trust but verify.

It is hard to do. Auditors and credit rating agencies are professionals. It takes a lot of data and analysis to reach a correct conclusion. It takes time and effort. So we hired professionals to do the job and trusted their report and judgement. We even have regulations on insurance companies requiring bond portfolio meeting credit quality standard.

So we trusted. And they betrayed.

The human brain

By making our brains more flexible we pay the price of being more susceptible to schizophrenia.

http://news.sciencemag.org/sciencenow/2012/09/compared-with-chimps-humans-slow.html?ref=em

noble eightfold path

Just this noble eightfold path: right view, right aspiration, right speech, right action, right livelihood, right effort, right mindfulness, right concentration...I followed that path.

1. Life is challenging. For everyone. Our physical bodies, our relationships-all of our life circumstances-are fragile and subject to change. We are always accommodating.
2. The cause of suffering is the mind’s struggle in response to challenge.
3. The end of suffering-a non-struggling, peaceful mind-is a possibility.
4. The program for ending suffering is the Eightfold Path.

Internal motivators

Internal motivators, on the other hand, help drive you toward something positive, like being there for your family, taking control of your health, and having a sense of purpose. Successful people learn to develop strong internal motivation that make changes last over time.

Questions to ask before you hire a wealth manager

Q. What percentage of the firm's revenue is generated by its wealth management business?
A.

Q. Is the firm privately or publicly held?
A.

Q. Do the owners and employees of the firm invest their own wealth alongside that of clients?
A.

Q. Are the firm's client relationship managers paid for sales or service?
A.

Q. Are the firm's portfolio managers paid based on assets under management or on long-term performance?
A.

At Bessemer Trust, wealth management is our only business, and we've been doing it for over 100 years. We're privately held and always have been. We don't have to answer to some parent company's short-term earnings objectives or cross-sell products for them. We have no hidden agendas. What's more, our owners and employees literally invest their own wealth right alongside that of our clients, so you benefit from a lot of very careful thinking. Our client service teams have no financial incentives to recommend one manager or asset class over another. They entirely focused on serving our client's needs. And our portfolio managers are compensated based on long-term performance, not on short-term returns or assets under management since such incentives can taint judgement. Compare that to the answers you get from other wealth management firms. To ask a question that's been on your mind, call us. And make it a tough one. We like those. Minimum relationship $10 million.

Joseph Stiglitz

The Nobel Memorial Prize in Economics in 2001 "for laying the foundations for the theory of markets with asymmetric information" with George A. Akerlof and A. Michael Spence.

Before the advent of models of imperfect and asymmetric information, the traditional neoclassical economics literature had assumed that markets are efficient except for some limited and well defined market failures. More recent work by Stiglitz and others reversed that presumption, to assert that it is only under exceptional circumstances that markets are efficient.

Problems of information are central to understanding not only market economics but also political economy.

Wiki

A long bright future - medicare

Some 30 to 40 percent of medical procedures are ineffective or redundant.

An estimated thirty thousand Medicare patients die each year from unnecessary or unproven care.

Peter Orzag, former director of Congressional Budget Office and Office of Budget and Management maintains that ineffective or redundant medical procedures cost the nation roughly $700 billion each year.

It's time to consider not just evidence about the effectiveness of procedures, but their cost effectiveness.

Independent health care board consist of health economists and physicians who would consider the cost effectiveness of new and existing technologies, medications, and procedures.

SEC canceled vote on money market fund rules

Industry lobby won today. Now it falls on the Fed to do the right thing.



remember this day - a historical evidence that private business always put their own interest before the stability of the entire system. And this is the exact reason why we need strong institutions. Don't let those libertarians tell you that government should always be as small as possible. Those comments are self-serving at best.


To me, disclosing NAV is nothing more than telling the truth. Saying NAV will never break the buck is a lie, and institutional investors know it. That is why the savvy investors pulled their money out of Reserve Primary before unwitting retail investors could.


Facing vested interest at a sum of $2.6 trillion, even telling the truth can not muster enough vote. That is the tradedy of the day. I hope retail investors are paying attention. Market rules aren't always fair. And if you don't have the resources or the time to monitor quickly changing situations, you can be left to hold a stinky bag of bad assets, sold to you as " as safe as a bank deposit".


http://www.sec.gov/news/press/2012/2012-166.htm

The U.S. trade balance in June shrank to $42.9B

The U.S. trade balance in June shrank, again thanks in part to lower oil prices but also from a general import dip. The trade deficit decreased to $42.9 billion from $48.0 billion in May. Exports advanced 0.9 percent, following a 0.3 percent rise in May. Imports shrank 1.5 percent after a 0.8 percent decrease in May.


The narrowing in the trade gap was led by the non-petroleum goods gap which narrowed to $34.4 billion from $37.5 billion in May. With help from lower prices, the petroleum deficit decreased to $22.5 billion in June from $24.8 billion the prior month. The services surplus slipped to $14.6 billion from $14.9 billion.

On a not seasonally adjusted basis, the June figures showed surpluses, in billions of dollars, with Hong Kong $2.6 ($2.9 for May), Australia $1.9 ($1.7), Singapore $1.2 ($1.0), among others. Deficits were seen, in billions of dollars, with China $27.4 ($26.0), OPEC $8.5 ($11.2), European Union $8.4 ($10.5), Japan $6.0 ($6.4), Mexico $5.9 ($6.3), Germany $4.1 ($4.9), Ireland $2.6 ($2.7), Canada $1.5 ($2.0), among others.

Treasury Budget

The Treasury's deficit in July is $69.6 billion for the lowest July deficit since 2007. Calendar effects did move about $12 billion of spending into June and boosted receipts for July by about $6 billion.

Ten months into the fiscal year, the Treasury's deficit, at $973.8 billion, is 11.5 percent smaller than the prior year. Receipts are up 6.1 percent so far this fiscal year with corporate income taxes, at $182.4 billion, showing the largest gain at 29.8 percent. Individual income taxes, at $928.2 billion, are up 4.2 percent. In contrast, the outlay side shows little change with a only 0.4 percent decline. Defense spending, at $564.4 billion, shows the largest decline at 3.2 percent.

compare US healthcare cost with OECD countries

http://assets.opencrs.com/rpts/RL34175_20070917.pdf


http://online.wsj.com/article/SB10001424052748704409004576146520257051938.html

http://online.wsj.com/article/SB10001424052748704696304575538112856615900.html

http://online.wsj.com/article/SB10001424052748704457604576011382824069032.html

Social life and health

Health isn't just predicted by how many resources people have, but by how they relate to other people. Feeling isolated make you sick. The social world remodels your body. Your relationships with the people around you profoundly influence whether you perceive the world as a safe, comfortable place, or as one that is threatening and uncertain. As long as your brain thinks that everything is fine, your body is going to be running a program of long-term investment, general maintenance, and rebuilding. If your brain perceives that you are in an uncertain or threatening environment then it's going to activate stress responses in the rest of the body that trigger changes in gene expression. When we feel threatened our fight or flight response will be activated.

A naturally shy, introverted child may hang back on the playground, get picked on for doing so, and become even more likely to withdraw. These variations in individual temperament are relatively small difference to start off with, but they can propagate into big differences over time by shaping the pattern of social choices you make. Consistently choosing one way over the other solidifies your outlook on whether other people are generally good and trustworthy, or unfriendly and threatening. If your worldview leans toward the later, you are more likely to build a more autonomous, independent life for yourself. That in turn propagates this perception that the world is a distant place, that there is no one else you can turn to. That world view seem to be correlated with long term increases in health risk.

The lonely people's immune systems tended to over express an array of inflammation genes, which control immediate tissue repair processes but also drive the wear and tear we know as aging.

Year 2050

US Census Bureau is anticipating that there will be 1 million centenarians kicking around by 2050.

2050 - 1967 = 83

Will I be around?

Q: "What's the best thing about being over 100 years old?"
A: "No peer pressure"

Older people are less likely to hold a grudge, more likely to forgive. Being slow to anger, can be very useful skill for mediating interpersonal conflicts. They can help different members of a group see the bigger picture.

Combine wisdom and perspective with youth and vigor.

My readings in the past year

A long bright future by Laura L. Carstensen

Power: Why Some People Have It and Others Don't by Jeffrey Pfeffer

Highly Effective Networking: Meet the Right People and Get a Great Job by Orville Pierson

This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart and Kenneth Rogoff

A Financial History of Western Europe (Economic History) by Charles P. Kindleberger

Moody's: "The level of uncertainty about the outlook for the euro area... is no longer compatible with a stable rating outlook."

Germany: "Even if Germany were to receive a worse rating, it would still be the country with the best rating in Europe, because all the other countries would have to be downgraded."

Moody's: "A Greek exit would set off a chain of financial sector shocks... policymakers could only contain at a very high cost."

Germany: "If Germany gives additional billions in aid without anything changing in these countries, things will move in the wrong direction."

Moody's: "Over the transitional period...additional pressure on the strongest nations' balance sheets will increase pressure on their credit rating."

Germany: "The risk mentioned by them are not new, although the analysis places particular emphasis on short-term risks while longer term stability prospects go unmentioned."

Fertilize ocean with iron to reduce carbon

http://www.reuters.com/article/2012/07/20/us-climate-oceans-idUSBRE86J1E920120720

Evidence is increasingly clear that the U.S. economy is slowing.

The dollar declined against the euro and the yield on 10-year U.S. government bonds dropped to an all-time low as the data stoked worries the economy was floundering and could need more help from the Federal Reserve. U.S. stock prices were lower.

The International Monetary Fund slashed its forecast for global economic growth on Monday and urged European policymakers to take bolder action to stem their crisis. It also warned that China's economy risks a hard landing.

Job creation in the United States has slowed dramatically in the last few months as employers worry about a sagging global economy hurt by Europe's snowballing debt crisis. Bernanke's peers at central banks in China, the euro zone and Britain have cut interest rates this summer to prop up their economies.

The U.S. factory sector also has shown signs of contraction due to the global slowdown, although on Monday a survey showed New York state manufacturers perked up in July. Still, new orders shrank at the state's factories.

The retail data is worrisome because it suggests consumer spending, which drives about two-thirds of the economy, is also sagging.

A poll showed on Monday that American companies are scaling back plans to hire workers with a rising share of firms saying the European debt crisis is taking a bite out of their sales.

The Commerce Department said sales of motor vehicles and parts dropped 0.6 percent last month. Receipts at electronics and appliance stores declined 0.8 percent.

Sales at gasoline stations dropped 1.8 percent, reflecting a decline in gasoline prices.

Excluding autos, retail sales fell 0.4 percent last month. A so-called core measure of retail sales, which excludes autos, gasoline and building materials, dropped 0.1 percent.

Lateral Move

Once you are proficient in a skill you tend to use it again and again. You become less inclined to learn new skills, use new concepts and try new tools, because you know the ones that worked. You are like a hammer seeking nails. But to be successful long term you need to keep and eye on the new skills and tools. When the problem is a screw, a hammer is not going to be effective.

Lateral move increases job satisfaction. You learn new skills, have different perspectives, build new relationships, and add variety into your reseme.

800 years of financial crisis

Financial crises are common and similar.

Debt and default go hand in hand.

Currency debasement and depreciation are common ways adopted by sovereign to reduce debt.

This time is different - yeah, right.

Some working skills

• Consult: fist seek to understand, then to be understood
• Negotiate: is the relationship long term (colaborative) or short term (competitive)? Can you find win-win solution?
• Strenthen relationship: what is the thing your counterparty value? Can you provide them? What is the thing you value? Can you clearly communicate them?

Policy choices

What are the policy choices you have when faced with recession?

1. Lower exchange rate to improve exports
2. Lower interest rate to spur home and car buying
3. Public investment in infrastructure, education, and public health
4. Encourage domestic and foreign investment by reducing restrictions, red tape, welfare and taxes. Streamline regulation to reduce cost of doing business.

# 1 and 4 are supply side measures. They aim to increase production. # 2 and 3 are demand side initiatives. They work by stimulating demand.

Conservatives usually want to use supply side measures. Liberals usually want to use demand side policies.

Why compromise and unity is important for growth

Political infighting can pull down economic growth. This is true everywhere in the world.

In 2011 in the US we see the national debt ceiling brinkmanship in Congress pull down consumer confidence and business hiring. In Europe the dispute between German and southern countries - Spain and Italy - can pull the entire euro zone into recession. The same force slowed down the economic development in Africa, India, and many other places in the world.

Strike and labor dispute is another example.

To foster growth and prosperity it is important to resolve political differences.

Communicate with yourself

Some notes from reading:

• Heed your mind and your life will follow
• Make time for quiet reflection and listen to your heart
• Face your fears
• Be open - Don't be afraid to make changes in your life
• Stand up for what you believe
  
  
  
  

BIBOR manipulation

LIBOR rate is used to price adjustable rate mortgages, car loans, and coporate prime rates.

Traders and executives at Barclay manipulated the rate to profit from trading position.

Barclay paid $450M to settle the charge.

What's shocking is CNBC's Rick's comment: "Central bank is manipulating rates. There is nothink wrong Barcaly trying to do the same thing."

Well, Central Banks manipulate interest rates to foster price stability and economic growth. They do it for the benefit of the society. Barclay did it to profit themselves. There is a difference here.

I found it troubling that financial commentators are justifying illegal behavior. It points to an environment that people lost their sense of right and wrong, and the only goal is to profit, even at the cost of society.

How to invest in current environment?

Bond yield is artificially low due to central bank buying and holding of $2 trillion plus Treasury and agency securities. Bond pricing is at historically high valuation.

Stock - S&P PE at 14 is at historical average and isn't cheap. Given a deleveraging outlook I expect slow economic growth. I think blue chip consumer brands are going to do well, especially those with emerging market exposure. High leveraging companies are benefiting from low rate environment but may face challenges to grow.

Real Estate - the best time in a decade to buy.

Retirement Cost

median annual expenditures in 2009 (in 2010 dollars) for a household with at least one person age 65 to 74 totaled:

• Home: $14,471
• Food: $3,896
• Health: $3,504
• Transportation: $3,887
• Clothing: $830
• Entertainment: $2,417
• Other: $1,185

Money Market Fund reform

This article explained the history and rationale of money market fund reform.

Securities and Exchange Commission Chairman Mary Schapiro made the case for sweeping money fund changes before the Senate banking committee Thursday, warning that the industry was highly vulnerable to further runs. Criticizing "the fiction of the stable NAV," Schapiro said that it was a matter of time until a fund ran into serious trouble, potentially causing a "contagion that spreads quickly" through the financial sector. "The implications to our economy are very broad and very deep," she added.

7 lifestle factors of longevity

Very small number of factors make a big difference in longevity, and they are pretty commonsense. Longevity hinges largely on seven lifestyle choices, which, if made by age fifty, serve as excellent predictors of well-being after age seventy. They are:
1. not smoking
2. not abusing alchhol
3. getting regular excercise
4. maintaining one's weight
5. having a stable marriage
6. an education
7. good coping mechanism for dealing with life's troubles.

After age 70 a mere four factors - excercing, not smoking, consuming alcohol only moderately, and following a Mediterranean diet heavy on fruits, vegetables, and healthy fats like olive oil - reduce by a whopping 60 percent one's chances of dying from any cause over a ten-year period.

Study from King's college London: identical twins aged differently when one twin exercised regularly and the other did not. This difference is measured by comparing the length of telomeres, the protective caps on the ends of each cell's chromosomes, which are considered reliable biomarkers of aging. Telomeres wear away with time, leaving cells more vulnerable to genetic damage, which can precipitate diseases like cancer. The difference amounts to 9 years of aging.

German government 10 year bond yield hit 1.4%

5/25/12
Bond market is hinting at deflation. If you lend your money to German government for 1.4% a year, you must be expecting an inflation over 10 years that is less than 1.4%. That is an inflation rate considered by most central banks in the world as too low to foster growth. Is the world economy heading toward another recession?

3 ways to improve your performance

1. Live a more active lifestyle to boost your energy level.

2. Improve your Emotional Intelligence. Learn how to handle stress and be optimistic facing set back.

3. Continue to improve your social skill and oral communication.

Simon says:

"Such banks have become too large and complex for management to control what is going on,"
"The regulators also have no idea about what is going on. Attempts to oversee these banks in a sophisticated and nuanced way are not working."

former IMF chief economist and MIT professor Simon Johnson

 Fed regulators in hot seat over JPMorgan loss

My view:
1. break up the megabank so that they can safely fail without causing crisis.
2. short of that, the only remedy is to require a much higher capital cusion on the largest multinational banks. Build in a safety margin so large that it is impossible to fail.

Volcker says his namesake rule reduces conflicts of interest

 Former Federal Reserve Chairman Paul Volcker told a Senate banking subcommittee that it is unlikely that banks will be able to handle the potential customer conflicts presented by trading activities. "The risk of failure of 'large, interconnected firms' must be reduced, whether by reducing their size, curtailing their interconnections, or limiting their activities," Volcker said. He said the Volcker rule is a good start toward that end.

Can Gold counter deflation?

May 9, 2012 - Market reflection
"The political scramble in Greece, which points squarely at another election next month, is posing an increasing threat to the stability of Europe. The Dow fell another 3/4 of a percent to 12,835. The euro is back under $1.3000, down 1/2 percent on the day to $1.2940. Oil fell another $1 and is at $96.50 while gold fell another $20 to $1,590."

It is interesting that gold fell another $20 along with oil. It doesn't look like gold has any power countering deflation. It is only useful when inflation expectation rises.

If not served as money or centrl bank asset, the yellow metal almost has no pratical use.

On homosexuality

昨天北卡州以公民投票 通過了第一憲法修正案

在我看來，civil union 也一並禁止，是極不人道的。 打擊同性戀者不會使你的婚姻更穩固。任何人有打擊同性戀者這種想法，都是因為害怕自己的婚姻出問題。可是同性戀已經有幾百年有記載的歷史。同性戀並不會傳染。

教會的領袖們對同性戀的議題要小心應對。五百年前教會審判哥白尼，說地球繞太陽是異端邪說。前車之鑑不遠。

現代社會的主流價值之一，是容忍，是包容。以鞏固婚姻為名，打擊天生與你不同的少數人，不是未來的主流，更不是以愛，關懷，犧牲，為主要價值的基督教所應追求的目標。

鞏固傳統婚姻是值得追求的目標。打擊同性戀不是。

同性戀者的痛苦，你看見了嗎? 通過了這個法案，離婚率就會下降嗎?

I am not upset about the election result. I predicted it will come out that way. What I worried most, is that church in the US became a force of intolerance, much like Muslims in the middle east.

Homosexual is genetic. There are only 1 percent of the population have that tendency, and they are not contagious, to you or your family. You are NOT under threat. Further more, homosexual people don't "choose to be" that way. Most of the gay comes from traditional family. And children raised from homosexual environment turn out to be 99 plus percent heterosexual.

I feel treating gays and lesbians as a behavior problem is harsh and inhumane. Unfortunately, that is the stance of most church in the US. Billy Graham came out supporting the NC amendment in the last days before election. My neighbors who attend Baptist church go on Facebook to proudly demonstrate that they voted. They don't even know that they are conducting a cruel act toward a very minority who won't do any harm to the society.

People are born with different color, gender, height, or even health conditions. Modern science think Sexual Orientation is just another dimension of that difference. It is unclear why this self-defeating gene was passed down over generations, but it is harmless to others. I feel the only humane way to treat these people is to be tolerant. We can peacefully live together. There is no need to push them back into the closet, asking them to live in the dark corner of the society. That's what Muslims do. Christians should know better.

I will continue to try my best whenever there is an opportunity to explain the importance of tolerance. Homosexual people will never have enough vote to protect themselves. It is only when heterosexual people willing to understand them, they have a chance to live a less isolated life. I believe Christians have the love and courage to be the understanding party.

I hope you will understand where I come from. I am not offended by your post. I seized the opportunity to educate people who has never think of the other side, that I believe is a more humane way forward. In this sense I should thank you for bringing up the topic and giving me the chance to say my views. So thank you.

Rebuttal to Ron Paul's FT 5/8 article

Ron Paul's idea about monetary policy is completely wrong. Unfortunately there are still sizeable people who are misled by him and believe what he says.

The main goal of QE is to fight deflation. And only a scholar who knows the Great Depression so well as Bernanke can use this policy so timely and boldly.

The fact is after printing $2 trillion dollars, the cumulative inflation is hovering around 2%, right on target.

Japan's lost decade of 1991 to 2001 is exactly due to central banker's reluctance to use QE. It was an unconventional tool back then and only academics like professor Bernanke was advocating it.

Ron Paul advocated return to gold standard, so as to tie central bank's hands to print money. What he doesn't know, or doesn't care to know is that the policy he advocated caused deflation and is the main cause of the Great Depression.

It would be a tragedy of a generation if his policy is ever adopted by any central bank.

It is also untrue to claim the housing bubble is a result of money printing by central bank. Housing peaked in 2006 before any QE was put into action.

The theoretical justification for printing money, is that the velocity of money flowing through economy slows down significantly due to a severe financial and confidence crisis. When liquidity flows very slowly, more quantity is justified. The goal is to maintain the price level and quantity of production.

http://en.wikipedia.org/wiki/Deflation#Major_deflations_in_the_US

http://en.wikipedia.org/wiki/Great_Depression_in_the_United_States

Oil price dropped more than $6 in the first week of May

Only two days really mattered in the oil markets this past week. After mild oscillations the first three days of the week, the spot price of West Texas Intermediate dropped Thursday by a little more than 2-1/2 dollars per barrel on an unexpectedly weak ISM non-manufacturing report. And crude fell just over 4 dollars a barrel on Friday on the disappointing jobs report.


Net for the week, the spot price for West Texas Intermediate dropped $6.44 per barrel to settle at $98.49. This is the first time spot WTI settled below $100 per barrel since early February 2012. This will help the Fed with its forecast for softening inflation and may even put back a little money in consumer wallets. Lower gasoline prices will help offset soft employment.

Debt to Income

The debt-to-income ratio shows how indebted consumers are relative to income. A rising ratio indicates that consumers are taking on greater debt burdens with respect to income growth. In a growing economy, this may not be dangerous. However, indebtedness could quickly become a problem if income and employment conditions turn around. The yearly change in debt outstanding shows yearly trends in debt growth and tends to be less volatile than the monthly change.

A balance sheet recession means consumers are overly indebted and future income will be directed to debt repayment rather than consumption. Aggregate demand can be surpressed for a long time and hence the economic growth and job creation.

A balanced economic growth means a good balance between production and consumption. This usually implies a healthy balance sheet and the debt-to-inomce ratio is not too high.

PM's essential traits

Entrepreneur provide opportunity for people to grow and prosper. This is the main contribution of businessman to the society. If you can create high pay jobs you contribute to the society.

I surround myself with the right kind of people and I listened.

What's that market really need? Have customer's need in mind.

All PM are PMI certified so that we speak the same language.

Root cause – ask why, why, why.

Know with whom you must communicate and when.

Communicate to promote transparency. Be truthful, even if you have to break bad news.

“We want to do this because it's the right thing to do.”

PM are first and foremost leaders. So be versed in leadership and motivation theories.

1. Lead with integrity
2. Servant-based leadership – mission before self
3. Be accountable and hold others accountable
4. System of award and recognition – good people leave for lack of recognition
5. Invest in your people – develop them
6. Be open-minded – receptive to new ideas
7. Never walk by a problem – fix it
8. Clear roles and responsibilities
9. Be a source of positive energy
10. Stay focused on project scope

Learn how to say no smoothly.

Responsibility, Respect, Fairness, Honesty

Take collaborative approach to leading the team.

Have a continuous improvement plan

Risk is part of life. Learn how to select and take risk.

Don't micromanage. Trust but verify.

1. Be an outstanding communicator
2. Be a people person
3. Be a big-picture person
4. Leader and manager
5. Process improver
6. Document it so that you can repeat the success
7. Be a planner
8. Be well organized
9. Recognize value of people working for you
10. Try to add value

People forget what you do 3 days after you did it.

Focus on telling customers why they should choose us.

Create confidence in your customers.

Digest - the power of reputation

We are in an era that has witnessed the demise of industry giants who thought they were above the law, lie to customers and investors, used creative accounting to hide misconduct, earned profit at the expense of everyone associate with them, and in the process destroyed all trace of trust. The collapse of these companies and the downfalls of their executives demonstrate that greed, manipulation, and dishonesty have no place in business. Business leaders who build their reputation on fear and loathing go down in history as failures.

Mars

How to land on Mars?

Observations of used car market

1. Used car market is full of over-priced cars.
2. When you see something cheap, is it value or lemon?
3. It's more useful try to understand the business. How do dealers make money?
4. Why you should only buy from an owner if you can wait? Owners have reasons other than profit to sell.
5. How do you ensure quality?

Peter Goodwin died at 83

“Life is unfair. Be fulfilled, be happy with yourself. Recognize achievements and be proud of them then go on to further achievements. Know what you want to do and do it. Be happy. Know good friends. Be in love.”

Oregon physician behind Death With Dignity dies at 83, using aid-in-dying law he championed

The future of China

FT commentary:
A political crisis will not stop China

NASA

NASA budget is about dream.

Turkish Soap Opera ignites cultural war in Isamic world

Reuters reports

Successful Turkish TV soap opera - 85 million people watched. Beautiful women and sexy men are in the show. Hardline Islamic clerics says the producers should be executed, as it portrays pre-marital sex, alcohol drinking, and many other Islamic taboos. For a religion that prohibits pre-marital sex but allows man to own four wives, it is understandable why the conservatives are so angry. It's all about sex.

China sacrifices growth to satiate inflation dragon

China is facing middle income trap. Inflation pressure is up even as growth slows. Urgently needed is social safety net – pension and healthcare - to spread the wealth created in the past two decades. If the social engineering is successful domestic demand will pick up and replace export as the future source of growth. The government still controls so many economic levers that I think it is possible to transition successfully.

China sacrifices growth to satiate inflation dragon

Is your partner cheating? Take the quiz

Quiz: Is your partner cheating?

I found it very informative and was surprised by several answers.

The lesson from Zappos

“delivering happiness” is a philosophy anyone can apply to business and all other areas of life.

To be successful company you need a distinctive brand, a pipeline for developing talent, and a creative corporate culture, all built on collegial fun and customer service.

First impression is important, but part of your brand is built on consistency. It's important to be consistent in the right things, and these are not always the obvious things or the most easily measured things.

Some customers are concerned with "What happens if I make a decision that I don't like or that I need to change?" The concept of "Make it easy for the customer to change their mind, and therefore have peace of mind" has proven profitable. Warrantee should comes with product as well as service. It may be costly in the short term but the lasting effect on customer satisfaction will win over time. The reputational effect is what you count on to be successful long term in your professional field.

How much is market risk?

Industry assumption: 20%.
But VIS shows from time to time it's a lot higher.
Risk appetite paradigm shifts back and forth. That is what history tells us.

How to beat the market

Smart money magazine reported an obscure money manager who dropped out of college to become a stock picker. He turn $100K into $500K (400% return) in 7.5 years (90 months). Here are his secrets:

1. Ignore the economy. Where is the economy going next quarter? Where is the S&P headed? Mecham says he ignores those issues; instead he looks for stable, defensive business that can thrive whenever bad times come.

2. Don't diversity. Most mutual funds own dozens or even hundreds of stocks. But to outperform with a big portfolio, a manager has to outsmart the market simultaneously on a raft of securities. Smaller funds and private investment can only rely on just six or eight stocks.

3. Don't sweat the spreadsheets. Many Wall Street analysts build elaborate financial analyses to calculate a company's earnings growth and other patterns. But for small portfolio it is more productive to use that time trying to understand a company and its industry - the management, the competition, the customers, and so on.

4. Think decades, not quarters. Shareholders and managers tend to focus on companies' announcements of quarterly or annual earnings, and whether they beat or miss analysts' estimates. But Warren Buffett say it's more useful to try to figure out where a company will be in a decade.

5. Don't just do something; Stand there. One of the toughest things for investors to do is to sit still and do nothing - especially when nervous clients demand that they respond to short term fluctuations in the market. But most of the time, says Buffett, inactivity is the right longer term move. Mecham: "It's about keeping emotions from corroding the decision process."

Health Care in the US

Who should pay?
Who should receive care?

The biggest challenge in the US is 15% of the population earn very little and the top 20% earn a lot. So naturally the bottom are not insured. Public policy was also intentionally kept that way - one who can not afford to buy insurance are left to medicaid or no coverage.

In the US, if you are not a productive member of the society, and you are not rich by inheritance or saving, you deserve to die when sick. Rationing healthcare means medical attention are shifting from the rich to the sick. This is the real reason why there are so many argument against health care reform.

Read WSJ opinion and the message is: If you are poor you deserve to die. Don't expect any help from us.

Work is more than just a pay check

In management's mind employees are here only because we need a pay check. They will terminate us when revenue is down. They will cut our benefits when profit is down. This is called "at will" employment and is the norm in the US.

But from employee's perspective, especially those who's always dutiful and give their best, work is more than just a pay check. It is the only way we know to earn a living, to support our family, and to contribute to the society's well being. It's about life, not just money.

But the management will always focus only on the top line and bottom line. They are not doing their job if they deviate from that principle. They worry about their own job when that happens.

Socially Useless (financial engineering)

I wrote the paragraph on my note book around early 2010 when Goldman was investigated by Senate. A colleague think Senate investigation into Goldman's dealing right before the financial crisis is witch hunt. I disagreed with him.

My argument is as follows:
What is the purpose of synthetic CDO?
Why do you need to restructure sub-prime mortgage, making it looks safe, before selling it to banks and pension funds?
Isn't it because investors would not buy the sub-prime outright?
Why is it that four of the five major investment banks have a new boss after the financial crisis, but not Goldman?

Wall Street firms are proud of their "intellectual capital" that created CDO. But most of that financial engineering are socially worthless, because the bottom tranche was sold to investors who will take flight when the market get into trouble. They are not "stable insurer" of the credit risk. In the end, complex structure only serves to mask the risk, make it hard to discern. And when risk is hard to comprehend you have a credit expansion that is global in scale.

reading digest Feb 24

Once someone has made a positive or negative judgement about a potential job candidate, that judgement colors subsequent performance appraisals. What this means is job performance matters less for your evaluation than your supervisor's commitment to and relationship with you.

Many studies have documented the influence of numerous factors, ranging from educational credentials to race and gender, on careers, with performance often having a statistically significant but substantially smaller effect on advancement.

Emotions and behaviors become self-reinforcing: if you smile and then others smile, you are more likely to feel happy and smile. This reflexive quality in human interaction means that a mood or feeling, once generated, is likely to be quite stable. Grove might have to act confident and knowledgeable at first, but as others caught that feeling, it would be reflected back, making Grove himself more confident.

Part of it is self-discipline and part of it is deception. Deception in the sense that you pump yourself up and put a better face on things than you start off feeling. But after a while, if you act confident, you become more confident. So the deception becomes a reality.

Churchill: "Words are the only thing that last forever". Language that influences can create powerful images and emotions that overwhelm reason.

Don't hide in the legal technicalities. Confront common sense understanding of what's right and wrong.

If you make people laugh, you can tell them anything.

It is better to widely disperse your network building efforts and build many weak ties. Don't get hung up on making a favorable impression in any single place, but instead find an environment in which you can build a great reputation and keep trying different environment until this effort is successful.

Many people want to demonstrate how wonderful they are by working diligently to change others' mind and repair their image. But such efforts are seldom successful.

There are doubts whether higher trading volume of financial instruments created any value for the economy and society. Deregulation was the dominant ideology during Greenspan era. Now people are thinking most of the transaction that happened in a split of a second are socially useless.

Grit is good.

Is housing getting better?

Housing market stats

教廷解密風暴 梵蒂岡陷洩密醜聞

Liberty times reports

Relationship

when you make others around you look good, they will love you forever

Is fiscal tightening pro-growth?

The theory goes like this:

Fiscal tightening means a smaller public sector. Smaller public sector means lower tax. Lower tax will induce more private investment and create more jobs. In the end the economy will grow.

But in the experience of Greece and Portugal the fiscal tightening caused loss of job and reduced pay in public sector. Because the public sector was large this means consumers have much less money to spend. The contraction in demand pushes business to withhold investment and reduce inventory, causing a further drop in investment. Economic output drops, and new investment is not in sight because the confidence are so weak.

The conservatives think if you brave the pain, overtime the confidence will return. You should not relapse on the policy tightening and business will eventually believe the new regime is for the long term. But how much longer can people bear with the recession and despair?

台灣人民要享有決定自己命運的權利，那只有民進黨執政才有可能

Taiwan's sovereignty issue:
A historical special case.
1. Can not become an independent country because of China and the US opposition.
2. But has the potential of permanently independent from China's rule, if its people continue to be willing to decide its own fate.

history

commentary

LNG is the future

Earth quake concern in Japan has prompted Japan to import a lot more LNG.

Natural Gas Price has fallen since the adoption of fracking.

Natural Gas emits about half of the CO2 compare to oil. But there are caveats.

Criteria to Test Product Suitability

Income
Net worth
Liquid net worth
Tax status
Investment objective
Age
Rish tolerance
Investment experience
Liquidity need
Investment time horizon

Qatar Purchases Cézanne’s The Card Players for More Than $250 Million, Highest Price Ever for a Work of Art

Pictures

Worry about Taiwan's future

Tax revenue and spending

From Congressional Budget Office:

US Budget at end of 2011

Tax revenue: 2.3 trillion
Spending: 3.6 trillion
Deficit: 1.3 trillion
GDP: 15 trillion
Deficit as a percentage of GDP: 8.7%

Break down of the tab:
Social security: 725B, 4.8%
Defense: 700B, 4.7%
Medicare: 480B, 3.2%
Medicaid: 275B, 1.8%
Other formula based, such as unemployment insurance, civilian government and military retirement, veteran's benefit, earned income tax credit, food stamp, etc: 545B, 3.6%
Interest servicing debt: 227B, 1.5%
Non-defense discretionary: 646B, 4.3%

Time wasters

The challenge is to overcome these time wasters and become more productive and effective.

1. Planning

• over-planning

• lack of written goals and deadlines

• taking on too much

• failure to divide projects into manageable tasks

• lack specific plan of activities to meet goals selected

• lack of daily planning

• shifting priorities constantly

• lack of contingency planning

• not monitoring progress throughout the process

• mis-estimating the amount of work needed

2. Organizing and Managing Yourself

• unorganized and messy work area

• lost time spent search

• procrastination

• lack of self discipline

• unfinished projects

• excessive socializing

• inability to say “no”

• perfectionism

• lack of personal focus

3. Organizing and Managing Your Environment

• email overload

• telephone interruptions

• drop-in visitors

• paperwork overload

• meetings

• lack of authority/ misunderstood authority

• duplication of effort

• lack of training

• inadequate equipment or facilities

• unclear communication