Jeanie Leung: Follow Your Passion!

By Shlomo  Maital

Jeanie Leung

My last blog was posted Nov. 5,  a very long (for me) 15-day silence, owing to travel, and difficulty in accessing Facebook and WordPress in Mainland China.   Today my wife and I are in Hong Kong, at Hong Kong University of Science and Technologies, a truly great research university where I will give five lectures.  HKUST is only 23 years old, founded in 1993,  yet it is now ranked among the world’s top engineering and science universities, owing to clever innovative leadership.  

    My friend Amylia took me on a tour of HKUST yesterday and by chance, in the library, we stumbled on an exhibition by an artist Jeanie Leung.  (See her website:  www.jeanieleung.com,  and ‘like’ her on Facebook,   Jeanie leung).    Jeanie is an HKUST graduate with a BBA (Bachelor’s in Business Admnistration).  She worked successfully in banking.   But her passion was art, even though she has never formally studied painting. 

    One day, she quit her job, left the secure paycheck – and sent out on an adventure.  She wrote a series of wonderful books,  child-like in quality but with powerful serious messages,  illustrated by her incredible acrylic-on-paper paintings.  The series of four books is called Colours of Stories.   Yesterday I met her in person at her exhibition and got her autograph. 

    Jeanie typifies two key principles. One is: Follow your passion!   She has, and has been eminently successful.  The second is:  Discovery and Delivery, you need both.  She had a brilliant concept for her books.  But she works exceptionally hard to implement them.  She finishes a painting in 2-3 days, and it takes over 40 of them to make a book.   From a video, it appears she works on the floor.      HKUST is helping her market her books and is giving her moral support – despite her abandoning the business world for the world of art and books. 

    Congratulations, Jeanie.   I hope others will follow your example.

IMF – Oops! We Got It Wrong!

By Shlomo Maital  

IMF

 

 The International Monetary Fund (IMF) was invented at Bretton Woods, NH, in July 1944.  It is headquartered in Washington, DC and its task is to bail out companies that get into financial trouble, overspending, overborrowing, etc.   And this happens often.

   The IMF is an exemplary organization. It has among the world’s best economists (its former deputy director was Stan Fisher, formerly head of Israel’s Central Bank, now Vice Chair of the U.S. Fed), and it even has an independent evaluation board that checks whether it has acted correctly.

   Now, this independent board has reported that..the IMF erred.  Ooops.

   Initially, when the global crisis broke out in 2007-8, the IMF recommended that governments support the economy, and indirectly its banks and financial institutions,  by using fiscal policy, i.e. deficit spending.  But then, the IMF switched direction, under pressure perhaps from capital markets, and said that governments should impose AUSTERITY,   cut spending, cut borrowing.

    Bad idea.  The independent IMF board said:  the IMF erred. It recommended austerity too early.  Perhaps, it should not have recommended austerity at all.

    It is sad when the world’s fireman, the world’s Mother Hen telling its chicks what the right thing to do is,  admits it blundered.  And sad when economics makes a mistake that is costly for hundreds of millions of people. 

It will be hard for even a serious body like the IMF to regain its credibility in future.

Gardens of the World – Seeing is Believing

By Shlomo Maital

   Gardens of the World singapore

Yesterday, Sunday, my wife and I visited Singapore’s remarkable Gardens of the World – domed gardens, showing the amazing flora and fauna of various regions of the world, including a man-made mountain with a walkway (that spiral trail you see is where you walk, viewing an incredible man-made waterfall).

   Singapore is only a small archipelago with some 5 million people.  Yet it has higher GDP per capita, by some measures, than the U.S.  It exports twice as much as its GDP.  How?  By value-added manufacturing – import components, assemble them, export them. 

   Singapore, the country, has exceptionally deep pockets, that enable it to afford such incredible structures as Garden of the World.  Its Central Provident Fund is the repository for compulsory savings – about a sixth of every pay packet by the employee, and an equal payment by the employer.   Singaporeans can draw on this not for consumption but for things like housing.  So by law, Singapore’s personal saving rate is a third of national income. 

   Singapore has a remarkable mindset.  As a small country, in a neighborhood that is not always totally friendly to Singapore,  it must be alacritous and resilient, to ‘remain relevant’, as a close friend from the Singaporean Foreign Ministry told me.  To remain relevant as a small country,  you have to be the best at everything you do. Singapore Airlines must have the most video movies of any airline and the best business class.  Singapore itself must have attractions for tourists that surpass anything you can see elsewhere.  Singapore has to be #1.  No excuses. And that no excuse mindset creates remarkable excellence. 

     Moreover, Gardens of the World has a strong message.  Here is the full beauty of G-d’s world, laid out before you, flowers, plants, trees…    and we are ruining it through climate change.  Let’s take action.  When you see the message vividly, first hand, in this manner, it is very powerful.  Will our children and grandchildren see the world of beauty as we do? Or will it be gone, as will be the case if we continue to pollute our air and our water and our land. 

QE RIP

By Shlomo Maital

QE3

  OK,  the Fed, under Janet Yellin, has officially ended QE3.  After injecting 4 trillions dollars of cash into the US economy,  $85 b. a month for almost four years, it’s over.  It’s time for a summary.  QE (quantitative easing, RIP, rest in peace).

  How well did it work?   Well, it was better than Europe’s austerity, and the EU learned nothing from Ben Bernanke’s aggressive actions to forestall a new Depression.  The U.S. unemployment rate is 5.9%,  GDP growth was 4.6% last quarter, and the dollar strengthened.   Is Europe paying attention?

  For investors?  The 3 QE plans created great uncertainty and volatility. Each time a QE (quantitative easing, meaning, the Fed buys bonds and injects money into the system, that banks can lend) was announced, the stock market rose (expecting some of the new money would go into equities) and each time it ended, the stock market fell. 

   Against expectations the QE 3  has actually lowered the 10 year Treasury bond rate, after it rose by 100 basis points.  This cost bond legend Bill Gross his job at PIMCO, the world’s biggest fixed income investment fund; he guessed wrong on the direction.

   Despite that mountain of money,   inflation remains low, because most of that money is just sitting there, not moving; money velocity has declined.  Deflation is the problem, in the U.S. but mostly in Europe. 

   Overall,  faced with the lack of fiscal policy (as politics forced Obama to slash the US federal budget deficit),  there was no other policy tool available to stimulate the economy, other than QE, boosting the supply of money.  It may yet prove harmful, because the dollar is the world’s currency, still, and there are far too many dollars washing around out there – they are causing property bubbles far away, even in Hong Kong and China.  But for now, it looks like the three QE programs led by Ben Bernanke worked not bad.  

   Let’s watch now how his successor Janet Yellin handles weaning Wall ST. from its junky addiction to cheap money.  

Is Aging (and Everything) a Matter of Mindfulness?

By Shlomo Maital

 Layout 1

Ellen Langer is a Harvard University psychologist who 25 years ago published a landmark book on “Mindfulness” – defined as “”the intentional, accepting and non-judgmental focus of one’s attention on the emotions, thoughts and sensations occurring in the present …”. In other words: Being here, in the ‘now’, not in the past, and not in the future.

   Lately, attention has returned to her work, with results showing that it can halt ‘aging’ and perhaps even…. cure cancer?

   An Oct. 22 New York Times article reports:

   “ In one [study], she found that nursing-home residents who had exhibited early stages of memory loss were able to do better on memory tests when they were given incentives to remember — showing that in many cases, indifference was being mistaken for brain deterioration. In another, now considered a classic of social psychology, Langer gave houseplants to two groups of nursing-home residents. She told one group that they were responsible for keeping the plant alive and that they could also make choices about their schedules during the day. She told the other group that the staff would care for the plants, and they were not given any choice in their schedules. Eighteen months later, twice as many subjects in the plant-caring, decision-making group were still alive than in the control group.”

     Langer feels that “what [sick] people needed to heal themselves was a psychological “prime” — something that triggered the body to take curative measures all by itself.” In 1981, She tried to show this with a group of older men told to reminisce about what they were like 22 years ago.

     “The men in the experimental group were told not merely to reminisce about this earlier era, but to inhabit it — to “make a psychological attempt to be the person they were 22 years ago,” she told the NYT. “We have good reason to believe that if you are successful at this,” Langer told the men, “you will feel as you did in 1959.” From the time they walked through the doors, they were treated as if they were younger. The men were told that they would have to take their belongings upstairs themselves, even if they had to do it one shirt at a time.” The study was called the Counter Clockwise study.

     What were the results????

     “Each day, as they discussed sports (Johnny Unitas and Wilt Chamberlain) or “current” events (the first U.S. satellite launch) or dissected the movie they just watched (“Anatomy of a Murder,” with Jimmy Stewart), they spoke about these late-’50s artifacts and events in the present tense — one of Langer’s chief priming strategies. Nothing — no mirrors, no modern-day clothing, no photos except portraits of their much younger selves — spoiled the illusion that they had shaken off 22 years.”

     “At the end of their stay, the men were tested again. On several measures, they outperformed a control group that came earlier to the monastery but didn’t imagine themselves back into the skin of their younger selves, though they were encouraged to reminisce. They were suppler, showed greater manual dexterity and sat taller — just as Langer had guessed. Perhaps most improbable, their sight improved. Independent judges said they looked younger. The experimental subjects, Langer told [the NYT reporter], had “put their mind in an earlier time,” and their bodies went along for the ride.”

       I’ll soon turn 72. I believe Prof. Langer. I believe that what you believe about your age, your aging, and your body, is close to what is. We seniors do not have to accept what society decrees – that we are retired, irrelevant, marginal, ill, feeble, forgetful and of little use to anyone. It’s time for a Grey Revolution…and Ellen Langer is providing the ammunition.

 

 

“Middle” Universities: You’re in Trouble

By Shlomo Maital

low middle

Brand name        “Middle”       Local Univ

Universities       Universities

At a recent gathering of some of my former students, I heard an exceptionally interesting talk by one of them, now a senior executive at an on-line university.

His point: many universities are asleep. They face growing stiff competition from on-line courses, which are meeting students’ needs far better. The age of ‘industrial grade’ education, one size fits all, standard program, standard diploma, standard degree,   is nearing its end.

   Students want specific skills, and according to Forbes Magazine, 80 per cent of MBA programs THINK they provide those skills, but 80 per cent of MBA students believe that they do not. The skills including: critical thinking, ability to analyze complex situations, decision-making and active listening.

   In future, we will need more knowledge workers, higher productivity, but governments are spending less and less on education (in the U.S. student loans impose usurious interest, up to 11 per cent, and unlike mortgages, they cannot be escaped).     More and more, employers want proof of key workforce skills, not empty credentials like diplomas or degrees that are evidence only of the ability to pay high tuition and pass exams.  

So, watch for on-line courses offering specific skills (e.g. on Coursera, a highly popular course teaches how to create applications for Android devices). Look for older workers to take those courses, as part of lifelong learning and skill rejuvenation. And warns the speaker, watch out if you’re a university “in the middle”, i.e. not a brand name, like Yale or Stanford or MIT,   and not a purely local university, conveniently nearby its students. In the middle, universities like Arizona State U., may be in trouble – offering neither the advantage of brand name nor close-by geography.

   In future all higher education will be a complex blend of conventional classroom courses and on-line courses. The universities that prepare best and fastest for this development will come out ahead. But most of them seem to be asleep.

The Obama Excuse

By Shlomo Maital

 Obama

President Obama, and the Democratic Party, appear to be headed for a larger-than-usual mid-term election defeat on Nov. 4, with the Republicans gaining control of the Senate and retaining control of the House.   But for America, this may not (believe it or not) be a bad thing.

   Obama and the Democrats have often used the obstructionist Republican-controlled House as the excuse for their lack of achievements. And indeed, the approval rating of Congress is abysmally low, lower than Obama’s! Americans are simply fed up with Washington and with both political parties.   Contrast this with German Chancellor Merkel’s 78 per cent approval rating, one other leaders can only dream about.

   But a chart in the recent issue of The Economist sheds some light on the Obama excuse. President Ronald Reagan faced a Democratic House and Senate in 1986-88, yet as a lame duck president in his last two years, passed a major tax cut bill. President George H.W. Bush faced a hostile House and Senate in 1988-90. Bill Clinton had a Republican House and Senate in 1994-2000, for fully six of his eight years as president, yet got the U.S. economy rolling. George Bush faced a hostile House and Senate in 2006-8….     And Obama had both House and Senate FOR him in 2008-10, controlled by Democrats, and… achieved, well,   achieved…. Uh…..?  

   To be an effective president and leader, in the face of House and Senate opposition, you need to be very skillful at compromise, at dialogue and at collaboration. Some U.S. presidents were. Obama wasn’t. It is not too late. He may yet learn, and may yet leverage the fact that if the Republicans do win control of Congress, and continue to obstruct, they will be severely blamed by the American electorate, and may lose any chance of regaining the Presidency in 2016.

   In President Lyndon Johnson, America had a president with long long experience in the Senate, who knew how to compromise and how to deal. In President Obama, America has an inexperienced President who is just now beginning to understand how to work with Congress. It has been six wasted years.

Ebola — Fact vs Fiction

By Shlomo Maital

ebola

As a would-be journalist, I’ve followed closely how the media report on the Ebola virus epidemic in Africa.   America’s NPR (National Public Radio) is excellent – but even NPR has spread hysteria and has reported very badly on the issue.   There is something about this deadly little virus that kills half the people it afflicts, that frightens people. And the media play into these fears, by amplifying them. Shame on them.

The Economist rides to the rescue. As always it brings us the truth, with the facts well explained.   In the Oct. 18 issue, here is what The Economist explains:

  • The number of infections (in West Africa – mainly Sierra Leone, Guinea and Liberia) is doubling every 2-4 weeks.   Meanwhile, though, Senegal and Nigeria have been declared ebola free. So it is possible to stamp it out.
  • If something doubles every, say, 3 weeks,   then in 10 doublings (30 weeks, or about half a year), it is 1,024 times greater.   So if 10,000 people have Ebola virus today in West Africa, 10 million will have it in half a year. This is why it is so urgent to come to the rescue of these three countries.
  • If the West does wake up and send help, the goal is simple: Get the infectious rate down, in West Africa,  from 1.5 to 2.2 persons per infected person (i.e. every person who has Ebola infects 1.5 to 2.2 other persons, today), to less than 1.   If this ratio, known as Ro, is less than one, then the power of compounding works to our favor.   Soon, Ebola disappears.     You can only get the Ro number down by having more hospitals, more trained health workers, faster medical care, etc.   Get people infected to quarantine quickly.  This is done instantly in the West,  but West Africa does not have the means. 
  • This is not a Western problem YET.   The West has a moral obligation to help West Africa, whose economies have been devastated.   But it WILL be a Western problem, if a half year goes by and the Ro remains at around 2. Then the Ebola will simply not be capable of being stamped out.
  • Why is Ebola so fatal and so dangerous? Because it is fiendishly clever, even though of course it does not have a brain. Ebola virus invades a cell, and makes it produce more viruses instead of the cell’s own DNA. Ebola has sugars on the outside coating of the virus, making it tough for the body’s immune system to attack it (antibodies stick to the glycoprotein instead of to the virus). The immune cells that the virus attacks race to the spleen, liver and lymph nodes and thus carry the infection there. Soon, the body over-reacts, and blood vessel walls become leaky, organs fail and the body goes into shock. President Obama has sent 3,000 U.S. soldiers to help Liberia. Much more is needed. Europe, of course, is sound asleep. And a lot of the money promised to   West Africa remains just that – a promise.   Unless the rich countries wake up, they will find themselves dealing with a problem that is one hundred times harder to solve.

 

  • All this – from a tiny virus!   How did it get so smart? It evolved – nature’s accidents created viruses that survive to procreate.

Find Meaning – Even Kids Seek It

By Shlomo Maital

meaning

Writing in the New York Times’ Sunday magazine (Oct. 19 issue), KONIKA BANERJEE (Yale grad student in psychology) and   PAUL BLOOM (Yale psychology professor) make a powerful, simple point.  It is a basic fundamental human drive, to seek meaning – to find meaning in the events that happen to us, right from early childhood.

   In research to be published in the leading journal Child Development, the scholars found that: “even young children show a bias to believe that life events happen for a reason — to “send a sign” or “to teach a lesson.” This belief exists regardless of how much exposure the children have had to religion at home, and even if they’ve had none at all.”     Other studies confirm that our search for meaning is independent of religious belief.   Atheists, too, need to find meaning.”

   The researchers caution us that this desperate search for meaning – the belief that there is order and purpose in the world, that it is not ‘aleatoric’ (random) – can lead us into error:

   “But it can lead us into error when we overextend it, causing us to infer psychological states even when none exist. This fosters the illusion that the world itself is full of purpose and design.”

   Sometimes, life is indeed random. Take the stock market, for instance. A lot of its movements are random. But ‘experts’ always find an explanation, mostly wrong.

   In his book Man’s Search for Meaning, Victor E. Frankl showed how finding meaning in the most desperate context (in his case, a concentration camp) can keep us alive.   I often quote Apple guru and VC Guy Kawasaki, who counsels entrepreneurs to “Make meaning, not money”.   In other words: Create value in the world, and the money will probably follow.

   People who have serious illnesses, for instance, often seek (and find) meaning in their suffering. They emerge from the illness resilient, strong and hopeful.   Meaning creates hope. And hope creates strength, often beyond what we could previously imagine.

   So, continue to seek meaning. Find meaning in your life, in your relationships, in your startup. And frankly, it doesn’t matter that much if you’re right or wrong about your theory.   And recall the two scholars’ last line — finding meaning does not mean you become passive. The opposite – we MAKE meaning by our actions:

“ … the events of human life unfold in a fair and just manner only when individuals and society work hard to make this happen.” 

Stock Prices Plummet in October

By Shlomo Maital

   market crash

On Sept. 13, in a blog titled “the coming meltdown”, I noted signs that the world economy was weakening.

Now, in this the middle of October, stocks have declined sharply.   For the month, U.S. stocks are down 5 per cent, German stocks are down 9 per cent and French stocks are down 11 per cent.   There are a number of causes.   Believe it or not, Ebola has created a negative mindset. Oil prices are down, slashing profits for many big companies and nations. Demand appears to be weakening in Europe, raising fears of a third recession since 2009. Geopolitics are highly unstable, with problems in Ukraine, the Mideast and elsewhere.

   At the same time, there is a flight to ‘safety’. Bond prices are up, as demand increases, with investors willing and even eager to take low yields in return for safety.

   The bright spot is the U.S. economy. Falling gasoline prices, often below $3 a gallon, have put money into working people’s pockets and they are spending it. This is a natural experiment. It amazes me how economists and policymakers are ignoring this simple evidence — spurring demand helps the economy! America’s economy is doing better than Europe’s as a result.

   October is an awful month for stock prices, for some reason. In October 1987, the market fell 20 per cent on a single day, but that was due to computer trading and a doom loop link between spot and future prices.

   The mindset of global investors continues to be shaky. In the end, it is the confidence, or lack of it, of global investors that drives equity and bond prices. When world headlines are terrible, as they are now, investors run for cover.  

Blog entries written by Prof. Shlomo Maital

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