PERHAPS I AM LAZY

Lazy (adjective)
1. Unwilling to do work or make an effort. (Wikipedia)
2. Disinclined to activity or exertion : not energetic or vigorous (Merriam – Webster)
3. A disinclination to work or to take trouble (Merriam – Webster)
I’ve been taking stock of my life thus far the past few days and I suddenly came to realization that perhaps I am lazy! I’m not lazy as in lazy, lazy but rather I’m lazy in terms of taking charge of my life. I just go about doing the same thing again and again and again, over and over and over, day in and day out without taking charge of the direction of where I’m going towards the direction I wanted to go. It’s quite a paradox on how one could be working 12 – 18 hours a day from Monday till Saturday and almost always focused on work even when not working to be actually lazy! Perhaps, I’ve grown accustomed and comfortable with what I am doing now to actually risk venturing into an alternative. Maybe so. If that is the case, I may just be risk – averse. But then again, is the implied risk of taking an alternative that insurmountable or nearly impossible? Maybe the risk is not that great and in which case, I am definitely “lazy” (see definition) for not taking the alternative and challenge the risk associated with it. I just merely took the excuse of risk in rejecting the alternative. Or perhaps, I maybe too engrossed with my everyday “rituals” to actually care for a better alternative to the one I have. I’m too busy with fixing what is wrong on Earth and too distracted by it to dream for the star and actually reach for it. In which case, I am still “lazy” for not breaking the routine once in a while and giving an effort to make the alternative real. I just took being busy as an excuse. Or perhaps, I’m just too boring, too close minded, too unimaginative, too myopic to see past what is before me and look for alternatives around me. I’m just not thinking about alternatives. Definitely, I’m just being lazy for not even opening my eyes and see the possibilities of what the alternatives got to offer. In which case, there is no excuse. I’m just being dumb and lazy. Regardless of the reasoning, my little mental exercise the past few days yielded me one conclusion, that I am lazy! Then again, I just wondered. Am I the only one? Is there anyone like me? Perhaps I am not at all “lazy”. Instead, I just to belong to a generation of people or maybe a group of people who are just:
1. Comfortable with what they have and what they’re doing and put up an excuse of risk to reject an alternative even if the associated risk is that not great.
2. Too busy with their daily “routine” to actually pursue an alternative however better it might be and claim being busy as an excuse for not considering an alternative.
3. Plain boring, unimaginative, close – minded and myopic to even figure out a better alternative to what is existing.
Now, that is a tough call. Perhaps, I am ……………..

CRISIS OF CAPITALISM

The two most talked about issues that are hogging the headlines nowadays aside from the upcoming American election are the Global Financial Crisis and the Melamine Milk Scare, two different and independent issues but in reality, the two are connected. Both issues are actually symptoms of a greater malaise that is affecting our lives today and that malaise is the crisis of capitalism. For starters, this isn’t the first time that capitalism is mired in crisis. Over the course of centuries, capitalism has spawned many crises and perils of its own doing but somehow, capitalism as a socio – economic system had not only survived the many crises. It even manages to come out stronger and even weathered the challenges of other socio – economic systems to the point that it outlasts other systems that threatened to replace it as the dominant way of life. From the exploitation of labor that led to the rise of communism and the resultant cold war to the exploitation of the resources of third world countries leading to the 19th century colonialism and the World Wars to the exploitation of the environment that threatens human survival for the next hundred years, capitalism has more than once pushed human civilization to the brink of extinction. From the first stock market crash during the Holland Tulip Mania in 1637 to the Global Depression of the 1930s to the Asian Financial Crisis of 1997 to latest Global Financial Crisis of 2008, capitalism has authored one too many of a banking and financial crisis that destroyed the wealth of many and dashed their dream of prosperity. From the Foot and Mouth Disease to the Mad Cow Disease to the Salmonella Scare to the latest Melamine Milk Scare, capitalism had more than once toyed our health and played a cruel and sadistic joke with our lives. All of these are committed under the system that is known as capitalism and the reason for it lies in the very nature of capitalism – that of a system based on the individual’s boundless pursuit of profit to the extent of insatiability – greed. Too often than not, human beings under the capitalist system has systematically undervalued the “cost” (not simply the financial cost as in the cost of production) versus the profit to be derived. Most of the time, humans turned a blind eye to the “cost” or more bluntly, blinded by the dazzling profit to even care for the “cost”. Although, it could be argued that capitalism doesn’t have a monopoly on greed and that other socio – economic system is as guilty as capitalism but the fact is, greed has found its greatest expression under capitalism in a scale unrivaled by any other system. However, capitalism is not without its merit. Because of the emphasis on individual’s right to pursue profit based on their own volition rather than based on some whimsical authority figure, capitalism has manage to bring forth prosperity to a large number of people worldwide, creating a entire new social class – the middle class out of the vast number of poor. It has succeeded what no other socio – economic system could have done in “spreading the wealth” to the greatest number of people. So in the final analysis of what is good and what is bad about capitalism, the conclusion drawn would find capitalism superior compared to the other system that have been known so far but somewhat lacking and that a better alternative would be a welcome change. Unfortunately, such alternative are nowhere to be find. There is no emergent system, no “better version” of an old system that could sufficiently replace capitalism. Therefore, for the time being, it seems that capitalism would again survive. Even so, capitalism would have to undergo changes much like the changes it was forced to accept with the onslaught of communism and socialism – that of regulation– reining in its greed and which at the same time, constraining its dynamism as well. There are actually two fundamentally different approaches to regulation. The first one involves government regulation with it’s over burdening, time consuming, and slow moving bureaucracy. The other involves voluntary self – regulation, i.e., business ethics, corporate social responsibility, corporate citizenship, which might not be effective considering that not everybody would subscribe to it. At any rate, whatever form would it takes, there is no escaping the fact that the future of capitalism is in more regulation but not too much hopefully.

DISHONORABLE PROFIT

Sick Corny Joke of the Day:
1. Avoid “Fortified Milk”, because melamine maybe used to “fortify” the milk.

One of the biggest news that is hogging the headlines lately is the Chinese Melamine Tainted Milk Scandal. Actually, it is one of the biggest news globally because of the far – ranging reach of the Chinese export machinery. A lot of milk and milk – derived products, confectionery, and milk – based beverages of both big name companies and little known producers are affected by this scandal causing panic among buyers and inducing an aversion to milk based products among consumers. And they are rightly to be afraid, for the melamine tainted milk has so far claimed the lives of 4 babies and sickened some 53,000 more in China. It has become a nightmare for parents with babies and toddlers, for these parents do not know what “safe” brand of milk to buy for their babies, i.e., safe as in a milk formula with no trace of melamine. Melamine based on my research is a nitrogen based macro – molecule with a formula of (NH2)n. It is a highly toxic substance in large dosage and is used as raw materials in the production of melamine resins plastic, which in turn is used in the manufacture of melamine wares (plates, cups, saucers). It is used in building construction as a super – plasticizer. And in the 1950s, melamine was also used as fertilizer due to its nitrogen based chemical structure as well as a non – protein nitrogen source for feed to cattle. However, melamine use in fertilizer and in feeds was largely discontinued (not totally, I surmised) by the 60s basically due to the fact that melamine doesn’t easily break down into its useful nitrogen form during the digestive process in cattle and during photosynthesis in plants. There is however no indication of toxicity being the reason for its discontinued used. It is very probable that the fact that melamine is used in cattle feeds may have prompted it’s use in “watering down” the milk. I mean melamine is readily available to dairy farmers who are using melamine as cattle feeds and because of its nitrogen structure, addition of melamine in milk would produce a high nitrogen yield during laboratory test suggesting that the milk is “rich” in protein, which is in fact the opposite since the “fortified” milk has already been watered down in the first place. Milk is watered down to artificially increase the output from the same inputs and therefore fatten the profitability of whoever is the culprit behind this despicable scheme. Anyway, aside from melamine, another compound used as non – protein nitrogen for cattle feeds is cyanuric acid. Now, when melamine and cyanuric acid enters the bloodstream, it reacts to form melamine cyanurate which is a crystalline compound and once these crystals entered the kidney, it damages the cells resulting into kidney malfunction, which ultimately led to the deaths of those poor babies. As previously mentioned, melamine is added solely to increase the profitability of the milk producers. And this illustrate a very disturbing point, that some people can be highly ingenious and would go great lengths and at the same time, being unscrupulous enough to do something such as lacing milk with melamine just to earn more. And this is the crux of the problem, the greed for more profit. Taken in this light, it’s not only the producers of melamine tainted milk that are “blinded” by this greed for more profit. There are others like them and melamine tainted milk is just simply the tip of the ice berg and one of the latest case in the long lists of tainted product cases (although not all of them are as toxic as the melamine laced milk, some may even be considered “safe”). Furthermore, this is not limited to food products only. As a businessman and an MBA graduate, I’m all for profit, the more, the merrier however, I and many business people like me draw the line between what’s honorable and what’s not. Being honorable means you don’t “cheat” your customer just to earn a few quick bucks, you earn it the hard way, which is providing what the customer paid for even if that means ultra thin profit. Unfortunately, there are a few of these unscrupulous business people who are not bound by this code of honor. A case in point would be adding extenders to food products. Adding extenders is a common practice among food processors. It is not only a fact but a way of life as this could reduce cost in a price competitive environment and help shore up profit. Even so, there is a limit for adding extenders and in most cases; it is likely in the vicinity of 5 – 20%. It is not surprising however to see that the most unscrupulous ones would use extenders up to say 60% or more to the extent that they practically substituted the product with something entirely different (adding melamine to milk actually started out as simply adding extenders to milk). Adding extenders is just but one of the tricks. Another trick usually resorted to by unscrupulous business people of whom they are in the minority, is size reduction. So instead of 1/8” thickness, these unscrupulous ones would offer products that are thinner say maybe 1/16” and still sell it as 1/8” thick but with huge discount from the regular price. As I mentioned before, a majority of businesses are honorable and we don’t cheat. We even balked at cheating because we care much for the welfare of our customers and that our ethical beliefs prevented us from committing such a grave act. As such, we couldn’t really imagine that somebody could actually do that or gone to that great length but apparently, we are wrong in our assumption. As a result, we are usually caught off guard by the actions of these unscrupulous business people especially since these very same people are engaged in predatory selling, which drive some of the honorable ones out of business. In short, honorable business people are also victims, not just the buyers. I remember this lesson I had in business school. It’s about a firm’s competitive advantage. According to my professor, competitive advantage is that firm’s capability, or organizational ability, or assets that help provide an edge to a company versus other competing firms in attracting customers in the market. So if a company could produce their goods more efficiently than others and maintain superior quality as well and they are able to parlay such efficiency into a reduced price for the consumer, it is only but natural for such a company to attract a great deal of buyers from the market and with the expanding revenues as a result, such company would not only stay afloat but would grow substantially as well. Conversely, a firm who fails to deliver what the consumer want because it lacks the skills, the abilities, the capabilities, and the material resources to do so, it would eventually fail because it wouldn’t be able to attract any would – be buyers from the market. That is what the theory says. Reality however has a different take and this is what they didn’t teach us at business school; that unethical practices and unscrupulous attitudes can be and has proven to be a source of competitive advantage as well. If one doesn’t play fair, one always have an advantage no matter what. Well, one could always argue that customers are not stupid and that sooner or later, they would have discovered the hoax and drive these unscrupulous businesses out of business. Though that is true but the problem is that by the time, these unscrupulous businesses went bankrupt, the damage is already done for some of the “honorable” businesses would not be around by then as the latter were “priced out of the market” by these unscrupulous firms in the first place. So what then? What are we going to do? Well, the most effective solution to punish these unscrupulous businesses is for the buyer to exercise vigilance. Remember, the ultimate decider in the marketplace is not the competing firms nor the government regulators but the consumers and only you, the consumers. If the consumers demanded only the best quality before price, I don’t see how these unscrupulous businesses would succeed in the first place. Remember, the customer is always right.

Reference:
1. Wikipedia

REWARDING RULE BREAKERS

It is one of those usual rainy afternoons in Manila; heavy downpour causing flash floods during rush hour followed by traffic mayhem afterwards as people tried to get a ride after the rain and cars barely get moving at all due to both the floods and as well as due to public transports blocking the road. At any rate, in the worst of this kind of situations, monstrous traffic could extend for kilometers and a normally 30 minute travel could take as long as two to three hours. Traffic was so slow that one felt that it would be faster just to leave your car in the middle of the road and just walk home. Just when you think that you’re in a traffic nightmare already, you suddenly noticed vehicles usually jeepneys and tricycles but also other vehicles as well breaking from the “established traffic column”, overtaking virtually everybody else by travelling at the opposite lane and before you know it, what was once a 4 – lane 2 – way traffic (with no concrete barrier in the middle) has now in effect become a 4 – lane one – way traffic, which completely blocked the flow of the opposing traffic. As a result, somewhere down that lane, the same thing happened with the opposing traffic and whala! We have a gridlock! And what was expected to be a 2 – 3 hour traffic nightmare has now morphed into a traffic hell wherein cars barely crawl from their place. It take some time before a traffic cop came along and untangle the mess and guess what he did to solve the “crisis”? He lets the overtaking vehicles occupying the opposite lane to go first so as to “create an opening” for the opposing traffic to “flow” and eventually, traffic “normalizes” (as in reverting back to the “old” 4 – lane 2 – way traffic) and the flow “smoothens”. The traffic cop never even bothered about confiscating the licenses of these “rule breakers” and yet alone punishing them for creating the mess in the first place. What this story illustrate to us is that once a “rule breaker” or a “trouble maker” acting upon their self – serving interest and trying to grab a “fleeting” opportunity manages to “clog” the system to such an extent that the system breaks down entirely and that these “clog” of a rule breakers are so vital and strategic that they became the “key” to the solution to the mess that they created in the first place. As such, it became practical to reward these “clog” of a rule breakers by giving to them the gain they so desired (which in this case, getting to go first ahead of everybody else who diligently lined up in traffic) just in order to get the system back up running again. Of course, such scenario aren’t exclusively seen in Manila’s traffic during the rainy season, for the recent financial crisis plaguing the world is also an exemplary case in point. Here, we have a handful of financial institutions whose unbridled greed has managed to bring the entire global financial system to it’s knees and yet, instead of going the way of dinosaurs for being similarly “stupid”, we have to bail them out from the mess that they single handedly created because failure to do so would spell “the end of the world” as we know it (by “the end of the world”, think of it as the 21st century version of the Great Depression of the 1930s). Under “normal” market conditions, a company that makes a big mistake has to pay for it’s mistake big time; a company that commits a costly error has to pay dearly for that error and a company that happens to make a huge, momentous, and critically mortal “bubu” has to pay for it with every cents it had to the extent of going belly up. That’s, the law of the market. Well, at least that is true for “small” companies that don’t cause critical “strain” to the well – being of the economy. For companies that are too large, too vital, too strategic, too “important” to fail, the laws of the market are simply inapplicable. Being too large however, doesn’t necessarily exempt them from the laws of the market, a company must also be a “vital clog” as well as in the case in point. If AIG were allowed to fail, then, we would see the unwinding of derivative positions worldwide precipitating a catastrophe of incalculable proportions as funds from bank deposits, from retirement savings, from governments would just disappear. Or if the US government failed to bailout Wall Street, the credit market would be utterly destroyed forcing us to pay everything in cash (including global trade) and thus, drastically reduce the scale of economies worldwide (one reason why economy grows is because of credit as one can purchase and eventually sell more from what little capital they have). Yet, it is these very same companies that are the very reason why we’re in such a mess in the first place. And therefore, we “reward” these companies by bailing them out without “punishing” them in the way we punish lesser companies with little clout. Rewarding rule breakers are not really fair nor right but in scenarios wherein they are the “vital clog” to the smooth functioning of the system, “rewarding” these rule breakers are the most pragmatic thing to do if not the best solution to the problem. Even so, it is still hard to swallow and is still distasteful.

THE GLOBAL FINANCIAL CRISIS OF 2008

Quote for the day:

1. Cash is King – anonymous.

The biggest news hogging the headlines for the past 10 months or so is the total unraveling of the global financial system that till now has wiped out trillions of dollars (one new stories gave a figure of $12 trillion) and requires trillions more in bailout money. What started out as an American sub – prime mortgage crisis has now officially become a global financial crisis engulfing every nation on earth. And why has this happened? It is because of 3 things: (1) The creation of the derivatives market, (2) over – leverage of the typical working middle class, and (3) the globalization of finance. Derivatives are securities on a security (a security is a financial instrument indicating ownership or claim on a property or asset, be it an equity like common stock or debt such as bonds that has financial value and is tradable). To illustrate, imagine a 5 year tenor bond that pays 5% per annum quarterly that is bought by a financial entity. The financial entity in turn issues 5 – one year tenor bonds based on the 5 year tenor bond (obviously the two should have the same maturity). The interest to be paid for the 5 – one year bonds is derived from the interest income coming from the original 5 year bond. The financial entity makes money by pocketing the difference between the interest payout to the one year bonds and the income derived from the 5 year bond. Using the illustration, supposed that the interest rate of those one year bonds is set at 4% per annum, then by calculation, the financial entity makes a profit of 1% every year from the difference between the interest payout and income. The original 5 year bond is the security, while the 5 – one year bonds created from the original bond is the derivative. Based on the illustration, one might say that derivatives are not that complicated and it is a simple thing but in reality, the truth is much farther. Derivatives are way, way more complex. There are many derivatives in the market such as options, warrants, bond derivatives, Collateralized Debt Obligation (CDO), futures, etc. Now, if betting in a security is a tough call because nobody can really predict the future and the behavior of a security whether it would go up value or collapse the next day is highly volatile, imagine then betting on a derivative that hinges on these volatile and unpredictable securities. It’s a lot tougher. If buying on security is like playing a dinner table poker, playing derivatives is like gambling in a high stake casino. Now, the present financial crisis started out as a sub – prime mortgage crisis. Sub – prime mortgages by it’s term refers to real estate mortgages (loans for purchase of real estate and using the real estate in question as collateral) made to people with poor creditworthiness and/or to people with good credit standing but due to certain circumstances, the loans to be made do not conform to certain standard requirements and hence rendering these people with good credit standing ineligible to apply for the loan. In short, sub – prime mortgages are pretty risky loans with high default risk that normally, a prudent investor would shriek at putting their money into. However, due to their high risk nature, the commensurate pay – off is also high, i.e., the interest charged on this type of loans are quite high, very much higher than the prevailing interest rate. As such, it becomes “enticing” to some investors looking for means to “maximize” the return on their investments but their numbers are however, few. To broaden the appeal of the sub – mortgages to the greater number of investors looking for high return and relatively “acceptable” risks, investment banks began to package them as Collateralized Debt Obligations (CDO), a type of bonds whose cash payments to the bond holders came from the payments made on mortgages by the mortgagor (the borrower). In this set – up, the investment bankers are the ones who technically assume the risk of credit default by the mortgagor. Usually, investment bankers in order to assure bond investors of the steady stream of cash flows payout in spite of the erratic cash flow payment behavior of these high risk loans, would pool together numerous mortgages and creates a “basket” from these mortgages with more or less a predictable cash flows. The investment banker makes money from the whole scheme of things through charging commission on the sale of the bonds and the fees from obtaining the loan, management fees and etc. Investment banks don’t make money from the loans. This is entirely different from the traditional commercial mortgage loans obtained from a commercial bank. In the commercial bank mortgage loans, the banks obtained their loanable funds from depositors and in return pay, the depositors a fixed interest for the deposits which are usually low. The commercial bank would then in turn lend out these amassed funds to borrowers in return for interest payment. A commercial bank makes money from the spread between the interest paid to the depositors and the interest earned from the loans. In addition to that, the commercial banks assume the risk of credit default of borrowers. In this traditional set – up, due to the fact that the profit of commercial banks came from the interest spread between loans and deposits, return of investments on the part of the depositors are hideously low. Furthermore, banks are fiduciary financial institutions i.e., they are institution of trusts and as such are highly regulated by the government. Henceforth, commercial banks cannot just simply give out loans freely to anyone and this in turn forced them to apply stringent credit evaluation guidelines. As a result, poor credit quality borrowers were often unable to obtain loans from a commercial bank and sub – prime mortgages wouldn’t have existed at all. In contrast, the CDO deal would technically create a win – win solution for all the parties involved. The investor (the equivalent to the depositor of a commercial bank) would earn higher rate of return from his funds, the investment bank makes money through commissions and fees, and because the whole set – up is not regulated like that of commercial banks, poor credit quality borrowers can actually get a loan. It is precisely because of this supposed “win – win” scenario that makes CDOs the more preferred form of mortgage lending than the traditional set – up except for one caveat, the risk assumed by the banks. For investment banks, the credit default risk is very high, higher than the risks assumed by commercial banks because of the credit quality of the borrowers. To circumvent this problem, investment banks created another derivative product called credit derivatives and the types usually employed in this deals are the credit default swaps (CDS). This is where AIG comes in. Credit default swaps are very much like insurances. The investment banks basically buys a cover against credit defaults from the sub – prime borrowers and pays a certain sum for that cover with the basket of mortgage loans as reference not as collateral. In the event of a credit event be it a default on payment or a declaration of bankruptcy or pre – payment of loans, etc, the seller of the credit default swaps (in this case, AIG) pays the buyer of the swaps (the investment bankers) an amount equivalent to the difference between the actual market value of the defaulted security and the agreed value. So if the security is initially valued at let say, $1 million and after the credit event, the market value of the security is say $800k, then, the seller of CDS would pay the buyer the difference, which in this case is $200k. CDS may seem simple enough but it is actually not. CDS differs from a regular insurance in one aspect, namely, the collateral or the property or asset to be insured. In an insurance, there is a property or an asset to be insured and serve as collateral (in the case of insurance, the collateral is usually irretrievable in the event that triggers a payout). In CDS, the property or asset in question which in this case refers to the basket of mortgage loans serve only as reference for the calculation of the premium payments and eventual payout. There is no collateral at all. In short, investment banks or any financial entity doesn’t have to hold the reference securities in question but they still could buy for the cover and receive payout in case of credit defaults. In addition to that, there is no regulation to supervise the creation and sale of CDS. So what the whole set – up suggest is that CDS like any other derivatives are tradable instruments for profit gain and not simply just for cover of risks. So in the event that an entity felt that likelihood of default increases due to some macroeconomic changes and therefore increase the likelihood of a payout from the seller of the CDS, the holder of the CDS could sell it to a third party for a certain amount of profit. Or, the seller of the CDS could “sell” the swap to a third party in return for cash up front while the third party receives the premium payment from the buyer of CDS granting the likelihood of default is minimal at that juncture. Now, with the understanding of the underlying financial basis of the sub – prime mortgage loans, one would get a feeling that the entire complex and supposedly, “win – win” dealings hang by a very thin hairline, which is the paying capacity of the mortgagor or the borrower. If the borrowers pay their mortgages diligently and timely, the wheel of this dizzying meshwork of a clock would keep on going. On the other hand, if a few borrowers were unable to pay and defaulted on their mortgages, the “clock” would suffer a jolt but it will still tick but if there is a massive bankruptcy of the borrowers, the clocks utterly breakdown and the result is catastrophic and chaotic as we’re in right now. This led us to the second of cause of the global meltdown, which is the over leverage positions of the middle class Americans. Since the 1990s, with the launch of the dotcom boom, the ensuing prosperity has greatly increased the “paper wealth” of the average American thus laying the foundation for increase in spending. Couple this with a healthy economic growth for almost 2 decades, American spending increases dramatically to the extent that during the aftermath of the 1997 Asian financial crisis, American consumers became “the consumer of the world”. Two recessions, the Mexican Peso Crisis, the Russian financial crisis, the 1997 Asian Financial Crisis, the dotcom bubble burst, and the 2001 terrorist attacks had temporarily tempered the American economy but failed to completely dampen it. This is due in large part to the aggressive rate – cutting authored by the Federal Reserve under the guidance of Alan Greenspan. As a result, American spending continued to roar on. This time, it is abetted by cheap credit. It became common at that time for a typical American to possess multiple credit cards with credit transfer features. It was also at this time when American began to translate their paper wealth into hard assets via investments in real estate and automobiles. So what all this translate to is that the claims on the future cash flows, i.e., the money that had yet to earn of the average American grew significantly such that not much could be saved from what remains of those future earnings. Given this scenario, in prosperous times where opportunities for economic gains abound, future incomes are assured and were enough to cover all these claims. However, in bad economic situation, future cash flows becomes unstable and claims has caused an added burden to consumer struggling to make ends meet. This is what happened two years ago when inflation sky rocketed mainly due to a surge in oil prices and the spiraling increase in the cost of food. Added this to the aggressive rate increases to curtail inflation by the Federal Reserves, the claims on future earnings grew and ate whatever little surplus those future earnings had if not totally outstripped it. As an immediate consequence, Americans first reacted by withholding payments for big ticket items like mortgages or selling their fixed asset holdings like real estate. However, in a struggling economy wherein a few can afford to buy, the influx of so many real estate for sale resulted in precipitous dropped of real estate prices. This is in turn exacerbated the worsening mortgage crisis as paying mortgagor suddenly find themselves saddled with expensive debts with soaring interest rate backed by real estate whose value is declining rapidly. And so, it came to a point that defaulting on expensive mortgages packs more financial logic than holding onto it. This in turn creates a snowballing effect that produced the sub – prime mortgage crisis late last year. On the financial side of the sub – prime mortgage crisis, the patchwork of derivative deals has broken down completely as the cash flows from mortgage payments dried up forcing investment bankers to pay up the bondholders (the buyers of CDOs) from their own pockets and since investment banks normally don’t take in deposits, they’re hard pressed for cash. This in turn force some bondholders to call in the CDOs whenever possible which further aggravate the already perilous state of investment banks. Now, the CDS should in theory cover for the mounting losses from sub – prime mortgages but since the value of tradable CDS are way, way bigger than the actual mortgage default and the fact that the seller of CDS didn’t set aside a contingency fund in the event of default and that the default is no longer a distinct possibility but a reality, the fund required for payout of the cover is simply too much for a insurer of credit default and this is what led AIG to sought for government bailout. Now, with CDS being somewhat “useless”, investment banks are left alone to fend for themselves. With no revenue income (due to defaulting mortgages and restricted payouts from CDS), pricy debts (due to high interest rate CDO’s), and virtually no funds on its own (since investment banks don’t take in deposits like a regular commercial banks), investment banks are left with no choice but to find ways to raise funds and payout the bondholders. They do this by either selling their shares in return for cash infusion or borrowing heavily to finance short term debts. But as we all know, one cannot survive by raising debts at least, not that long. Because of the deteriorating financial conditions, financial institutions with excess funds became apprehensive about lending out precious cash to firms with doubtful survivality. And this triggers among other things, the fall of investment banks led by Bear Sterns and (hopefully) ended with Lehman Brothers, thus, precipitating, the Wall Street Financial Meltdown. Even so, the Wall Street Meltdown was actually an American crisis and limited to the USA only. It morphed into something greater because of a third factor and that is the globalization of finance. Since the end of the cold war in the beginning of the 1990’s, nations around the world began to realize the “superiority” of the capitalist system and quickly adopted it by opening up their markets to foreign trade and investment through the removal of tariffs and the removal of restriction on the flow of capital in and out of the country. The result is the alignment and integration of the national financial systems to the world financial markets dominated by Western Europe and Japan and led by the United States and this in the process gave birth to the global financial system that we see today. Financial markets of every nation around the world became more closely linked and highly dependent on each other. It is therefore no surprise to see American companies having financial interest across the globe and that the rest of the world has financial interests in America. One of the greatest American exports aside from Capitalism, Democracy, automobiles, computers, the internet, and McDonald’s is the derivative instruments (and the financial crisis if one is to be sarcastic about it). Companies around the world including their government’s central banks usually invested in American debt, a major part of which are in treasury notes but with sizeable investments in bonds issued by venerable Wall Street institutions with superb credit rating like Bear Stern and Lehman Brothers. So when Wall Street is crumbling, the rest of the world became apprehensive about buying into American debt and this in turn created a credit squeeze on these once high flying investment banks. As the value of American debts kept falling, the finances of some of these companies outside America are also gravely affected resulting into their shaky financial situation and expose their vulnerability to sudden adverse changes in the macro environment. And that adverse change was triggered with the fall of Lehman Brothers (a venerable financial institution with long history and previously good credit standing) and it’s eventually bankruptcy. Soon, companies with poor financial foundation and huge exposure to the toxic American debt followed suit and this in turn forced companies especially commercial banks to become even more apprehensive if not outright fearful about lending precious funds to other banks who maybe in intensive care. The net effect was the frozen the credit market. You see some companies for one reason or the other cannot turn their paper profits into cash easily that could fund their daily activities and they therefore turn to the short term debt market like the commercial papers market for their financing needs. However, with the credit market frozen, cash suddenly becomes scarce and companies are fraught with to panic on how to “sustain” their operations even if they are profitable and the old adage about “Cash is King” became the cardinal rule in the market. With little cash and nowhere else to borrow money from, the next logical step among companies was to sell whatever asset they could sell in order to raise cash and the most liquid of all assets available to them for the moment are their marketable securities that they’re holding, i.e., stocks (other assets like fixed assets are harder to sell and could materially affect their operational sustainability). After all, a dollar in cash is much better than a dollar in stocks whose value may become next to nothing overnight. This caused the global sell – off in stocks that we bear witness to the past few weeks. The global stock selling frenzy cause the companies to sustain loses which makes finances of these companies all the more precarious and this in turn feed more fear and panic contributing to the ceaseless downward spiral into total chaos necessitating unprecedented bailouts and intervention by governments around the world last week. And that folks, is in a nutshell (and 6 pages long), the 2008 global financial crisis, which is unraveling as we speak.

Reference:

1. Bond Markets, Analysis, and Strategies, 5th edition, international edition. Frank J. Fabozzi, Pearson Prentice Hall, 2004.

NESSUN DORMA

Nessun Dorma, the Latin phrase for “None Shall Sleep Tonight” is a highly popular classical opera song and is considered by many to be Puccini’s magnum opus. I first heard the song a long time ago at near the ending of the movie, “The Mirror has Two Faces” and then again during the climax – resolution phase of the movie “The Sum of All Fears”. I was since then smitten by the song and was mesmerized by the elegance and the grandeur of the music. However, there was a problem. I never knew the title of the song and for the longest time possible, I was searching for that mesmerizing music with not much of a success until recently when I “discovered” the music’s title rather accidentally. I was watching TV sometime ago and I came across Paul Potts and to my excitement, he was singing Nessun Dorma then as his award winning song. From there, I scoured the net, looking up for the name Paul Potts and finally discovered the music that captivated me for so long and last Sunday, I finally bought a copy for myself. Nessun Dorma based on my research over the internet (well, mostly at Wikipedia) is the one of the climatic song written by Puccini for his last play, Turandot. Turandot is a play about the story of a cold hearted “Chinese” princess who finally discovered love. Princess Turandot (the name is actually Persian in origin rather than Chinese but the play cast Turandot as a Chinese princess) is a strong willed and a cold hearted woman who vowed to never submit to any man however, her father, the emperor Altun wanted Turandot to get married at the soonest possible time. Eventually, Turandot relented to her father’s wishes on one condition, that the suitor should answer her 3 riddles. Turandot agreed to marry the suitor who will able to answer all the three riddles however, if the suitor failed to answer the riddles, he would be beheaded. And so, many young men came forth and tried to win the hand of Turandot but only to lose their heads. The last of these was a prince of Persia, he too failed at his task and was sent to meet his fate and it is here where the play begins. In midst of the commotion of the impending execution, a young wanderer came forth to see for himself what the commotion is all about and he chanced upon a blind old man with a slave girl who was shoved to the ground by the unruly crowd. The blind old man happened to be his father, himself a former prince and the slave girl was named Liu. Quickly, the young prince came to help up his father and father and son were rejoiced to have met up again. During the reunion, the young prince however, forbade his father to call out his name in public for fear of political persecution because of his past political ties. It is during this time when the gathered crowd witnessing the execution begged loudly for mercy for the unlucky Persian prince. In the middle of the clamor, Princess Turandot appeared in the balcony of her palace and ordered the execution to proceed showing neither mercy nor remorse (and witnessing for herself the execution). It is at this moment when our young prince caught a glimpse of this terrifying beauty of a princess and he immediately fell in love (call it love at first sight). And in his dazzled state, the young prince rushed to the palace door and strike at the gong, 3 times announcing to the world that he has taken up the challenge and at the same time, declaring his love for the cold – hearted princess. The crowd was shocked to hear the sound of the gong and equally shocked by the audacious stupidity of the young prince. At any rate, the palace door opened and three ministers, Ping, Pang, and Pong came to dissuade the young prince to give up his quest but to no avail and therefore, the three ministers led the young romantic to the court chamber to meet either his destiny or his doom. At the court, the young prince met both the emperor and the princess and proceeded to answer the 3 deadly riddles. The first riddle asked by the princess was, “What is born each night and dies each dawn?” To this riddle, the young prince easily answered, “Hope”. Unnerved, the princess presented her second riddle, “What flickers red and warm like flame but is not fire?” Now, the second riddle was rather difficult but nevertheless, the young prince prevailed after giving some thought for he gave the correct answer, Blood. Now, the princess was badly shaken and was rather angry when the crowd cheered for the young prince for now she presented her third and final and perhaps the most difficult riddle. “What is like ice but burns like fire?” It may seemed though that the princess has finally claimed another poor victim and our young prince has failed like those before him for he was unable to answer the question for a long time and then, just then the prince finally figured it out. He shouted his answer, “Turandot”! Shocked by the turn of events, Turandot fell on hers knees and pleaded with her father not to allow the marriage to take place but the emperor has spoken before and his word is the law of the land and he is bound to honor it. Seeing this, the young prince put forth a proposal to the princess. If the princess could answer by tomorrow morning the one riddle that the young prince would ask, the young prince would be willing to die but if the princess failed to provide the correct answer to the riddle, then she is bound to marry the young prince. Seeing her chance, Turandot agrees to the proposal and asked for the riddle, to which the young prince asked “What is my name?” In an instant, everyone was dumbfounded for nobody knew who the young stranger is. That night as the stranger was ushered to his quarters, the Princess Turandot sent out her guards with this explicit instruction, “None Shall Tonight until they find out what the stranger’s name is, if they fail by tomorrow morning, they shall all be killed.” It is in this context that our hero witnessing the frantic acts of desperation, that he sang “Nessun Dorma”. Soon afterwards, Ping, Pang, and Pong came to the chamber of our hero and offered him a bribe and asked him to leave during the night and so as to avoid the inevitable come morning but our hero flatly refuses the offer. It is not long afterwards that the guards brought in the blind old man and his slave for questioning since somebody have pointed out that the old man was seen conversing with the young prince. Running out of time and patience, Turandot have both of them tortured to reveal the identity of the stranger but none of them spilled the beans until Liu the slave girl in order to save her master and as well as repay the young prince for having smiled at her once (Liu is madly in love with the young prince) confessed to know the true name of the stranger. Liu told the princess that his name is “Love” and drove a dagger into her heart and killed herself. By this selfless act, Liu, now forever silent took the secret to her grave. The young prince on hearing the death of Liu was so enrage by the cruelty and the cold heartedness of the princess rebuked Turandot. However, he was also madly in love with the heartless princess that he gave her a kiss and tried to convince her of his true love for her. And in an act of love, he revealed to her, “My name is Calaf, son of Timur”. In this stroke of either ingenuity or stupidity, the young prince Calaf has placed himself in the hands of the princess for her to destroy or save. The next morning, the emperor Altun summoned the princess and asked her if she knew the answer to the stranger’s riddle and to which the princess replied, “yes”! “And what is his name?” The emperor demanded. Guess what the princess answered? “His name is Love”, that was the princess’ answer. Both Turandot and Calaf kissed and they eventually got married and lived happily ever after (as always the case in story – telling). Well, personally I think the storyline is quite bizarre (but I don’t know if the 19th century audience would find it bizarre as well or simply find it to their liking; I think it’s more to their liking). Then again, that’s the beauty of classical music. I mean, unlike modern pop music, which no one could barely “get” the message of the songs, classical music has an entire back story to rest on, which makes the song more enjoyable and entertaining. Enough said and speaking of Paul Potts, the guy is really one lucky Brit. Paul Potts used to be a phone salesman and rode a bike to work (based on what I heard) but he took his chance, his one shot at his dream and made it. He joined the reality show, “Britain Got Talent” (similar to American Idol and Simon sits as one of the judges there as well) and won with his rendition of Nessun Dorma. He became an overnight sensation and a darling in the internet circuit with his performances being shown in YouTube. Since then, he had begun his recording career and his album has become a certified platinum hit (if I remembered correctly). Furthermore, he also went on a world tour and last October 8, he came to town to perform his piece. I was never a music guy and I never dig going to concerts but in this case, I really liked to watch him sing. I really liked his rendition of Nessun Dorma. Unfortunately though, I wasn’t able to watch Paul Pott’s performance last Wednesday for no particular reason at all except for that I don’t have a date…….. (At least, Calaf has Turandot to listen to him sing).

Nessun Dorma

By Giacomo Puccini

Nessun dorma! Nessun dorma!

Tu pure, o, Principessa,

nella tua fredda stanza,

guardi le stelleche tremano d'amoree di speranza.

Ma il mio mistero è chiuso in me,

il nome mio nessun saprà!

No, no, sulla tua bocca lo diròquando la luce splenderà!

Ed il mio bacio scioglierà il silenzioche ti fa mia!

(Il nome suo nessun saprà!...e noi dovrem, ahime, morir!)

Dilegua, o notte!

Tramontate, stelle!

Tramontate, stelle!

All'alba vincerò!

vincerò, vincerò!

Translation:
Nobody shall sleep!... Nobody shall sleep!

Even you, o Princess, in your cold room,

watch the stars, that tremble with love and with hope.

But my secret is hidden within me,my name no one shall know...

No!...No!... On your mouth I will tell it when the light shines.

And my kiss will dissolve the silence that makes you mine!...

(No one will know his name and we must, alas, die.)

Vanish, o night! Set, stars! Set, stars!

At dawn, I will win!

I will win! I will win!

PRICING HUMAN BEHAVIOR

Quotes:
1. To be greedy when everybody is fearful and to be fearful when everybody is greedy. – Warren Buffet.
2. In business, it pays to be a cynic and a skeptic.
I remember this quiz I had in my Controllership class during my years in business school. The quiz was actually the first one in the said class. It was basically a sort of a review of our basic accounting knowledge, i.e., return on equity, leverage ratios, current ratios etc and our professor at that time gave us the previous year’s published financial data of the top 5 corporation in the Philippines as our test case. However, that particular quiz had a very interesting twist. I remembered that the last question asked in the quiz was which of the top 5 corporations we want to lend money to. I also remembered that the number 1 corporation at that time was Petron Corp which at that time is hemorrhaging badly and is deep in the red. The number 2 company at that time if my memory serve me right was Texas Instrument and MERALCO was like number 3. Anyway, all our financial analysis indicated that the number 2 company, Texas Instrument was the best choice to loan money to but guess what did I picked? I picked Petron! At the following session, the professor brought out the topic of our quiz and she frankly admitted that she was in a bind as to how to grade two particular answer sheets, mine and another guy’s paper. According to her, the correct answer was Texas Instrument (TI) which was quite obvious from our financial analysis but why in the whole wide world would 2 guys answer differently from the obvious? The other guy picked MERALCO and he reasoned that although MERALCO’s number were less than stellar compared to TI but her financial statement was by all means strong and furthermore, MERALCO has the stronger cash flow than TI, i.e., it is cash rich. So instead of crowding up at TI, a loan to MERALCO could prove to be more of a bane. Nice answer indeed! On my turn to defend my choice of Petron when I was asked the same question, my answer was relatively simple. Petron was and is still is partly owned by the government and it carries an express guarantee of the state on its debt obligation. Therefore, who cares if Petron was in the red, the government would simply pay the debtor regardless and from the state coffers. Although my answer was by and large practical, my professor rejected it and I scored the lowest at that quiz though I didn’t fail (at any rate, it was a minor setback; I eventually passed the subject with flying colors, 3.5/4.0; not bad for a non – accountant in an accounting subject). What was missing in the question at that time however was how much would we charge for the loan to our respective choice of company? For all practical purpose, Petron would probably be charged more for their weak balance sheet and if that were part of the question, I’m pretty sure that my answer would be the best one. Looking at hindsight, I can say that most of my classmates (99% of them are accountants by profession) at the controllership class are good accountants and auditors and nothing more. The other guy who answered differently is an example of a good value investor while I am the archetypal maverick Wall Street trader that everybody loathes nowadays. And this is my point, why would a guy like me (back then) and rest of the many who got “burned” in the latest subprime crisis would skirt the “obvious” safe choice and invest in high risk securities and end up in the mess that we are seeing right now? By the way, I didn’t get “burned” at all, I simply end up with the lowest score in that quiz taken years back but the great many lost their hard earn savings in this recent financial debacle. So what really is the cause? The answer is because of the need to maximize the return on investment. Put it simply, it is the “how much more could I get from the dollar or peso that I had invested be it in a financial instrument or in a business or in an asset?” It is human nature to want more “profit” for the little that we own. Nobody can blame anyone for wanting to maximize their return on investment. However, one had to remember that though almost everybody handles finance, very few do actually understand what finance is. Finance is not simply about managing returns. It is as much of managing risk as well (and allocating funds and managing cash flow). Finance is not just getting more bucks from what we have or maximizing return. It is also making sure that that buck is safe or in short, minimizing risk. Taken in this light, it puts the very idea of maximizing return in jeopardy. How we could maximize return if we are constrained by risk? For how could we be sure of getting that much money given the risk? And this is where the “magic” of Wall Street comes in. That “magic” is called pricing models, the pricing of human behavior and the human behavior in this particular case is Greed. Most people have a “healthy” appetite for risk, i.e., for a certain limited range of risk, people are willing to take their chances (if that didn’t happen, you won’t see people getting married). And for every risk, there is a commensurate return. The bolder ones getting rewarded with better pay offs. However, for huge risks, 99.99% of the people are avoiding it even if the return “commensurate” with the risk involved and one doesn’t need financial analysis to come to that decision. However, Wall Street has managed to skewer the risk appetite curve towards risk taking bordering on gambling and they do this by simply offering “bigger” return on investment, much bigger than the “commensurate risk” which in essence is stoking greed. Such is the case of the current sub – prime mortgage financial crisis wherein investment banks package mortgages with poor credit quality into a high yield debt instrument and resell it to investors looking to maximize their return. And as these sub – prime mortgages fumble under the weight of a falling economy, the debt papers backed by these mortgages became essentially a worthless piece of paper. This has in turn, triggered the massive selling of these debt instruments or calling in of these debts issued by some of the most venerable Wall Street institutions resulting into their bankruptcies and eventual demise. Alas, Wall Street has done what behavioral scientists had failed to do, that is to quantify or more specifically, to put a price on a human behavior – greed. Essentially, this is the same mechanism employed in pyramiding schemes. Greed however is not the only human behavior that is explicitly witnessed in these turn of events. Panic is one. Panic is the extreme fear that defies logical reasoning. By logical reasoning, it refers to logical financial reasoning and this is quite funny because how does one expect people to be logical and reasonable along the established rationale of a financial analysis when the rationale of their decision has turned from one of maximizing return to that of preservation? Interestingly, unlike greed, no one has priced panic yet. Perhaps somebody already did if one considers the bailout package as the ultimate price of panic. But then again factoring panic into the price decision could very well prove to be useful. I mean in regular appraisals of assets to be mortgage, most lender would only lend out a portion of the total value of the asset in question. The difference between the actual value of the mortgaged asset and the loan amount is the buffer that lenders seek in order to protect them against a devaluation of the mortgaged asset in case of a default and the ensuing fire sale. However, in times of panic wherein the price of the assets in a defaulted mortgage would precipitously dropped below its reasonable fair market value, lenders stand to lose because they wouldn’t be able to recover their money through the sale of the asset in a defaulted mortgage. Henceforth, pricing “panic” is essential if one is to stay afloat in times of market hysteria. However, there is an inherent difficulty in pricing panic since the rationale is no longer that of obtaining a return on investment but on securing the investment. Would somebody buy a $1000 asset for just $100 in a panic market especially when that person has been “burned”? Most likely not. After all, a dollar in cash is better than a dollar in a risky security. But what if the same $1000 asset is sold for say $10, would somebody buy? What about if it were sold for a dollar? If one can determine the discount from the fair market price of an asset that would entice a jittery investor to purchase the said asset, we would have our price on panic. Opposite panic, we have euphoria which in a not so long ago time, is the prevailing mood of the market. I remember before during my early days in business school, the fair valuation of a corporation’s common stock trading in the market was 15 times the projected future earnings of the said company. By the time, I’m halfway through MBA, that multiple has jacked up to 22x average with some valuation going as high as 30 to 50 times (that is during the internet bubble era). Furthermore, the valuation then is no longer based on projected earnings, which is properly defined as net income from operations after tax and interest and after deduction of one time charges. Instead, the market back then was talking about pro – forma income, which was accordingly defined as income from operations before tax before interest charges and before deducting other charges which was a very “creative” way to define profit. At any rate, how do we valuate euphoria or in the former Fed Chairman Alan Greenspan’s word, irrational exuberance? But before we could price euphoria, we have to define what a fair valuation is. Is 15x, 22x fair? This is aside from the fact that each analyst employing different methodology has their own forecasts and projections, which then should be used for valuation? So many questions, so little answers and this is basically why market swing and swoon. This is also why some people make money and some people lose money. All because of the volatility of human behavior and our inability to accurately price them for our own sake.

DIAMONDS ARE FOREVER

Last Friday night, I bear witness to one of life’s most unforgettable and endearing moments, that of my grand uncle’s (mother side) 60th wedding anniversary. The event was actually a family affair, an extended family affair to be more precise. All known family members and relatives were gathered together to celebrate the unwavering union of two people that has lived through life’s thick and thin, in sickness and in health, in prosperity and in trying times, through war (World War Two) and tumult for the last 60 years. As the night progresses, we were treated to the visual retelling of their family history, as well as story – telling, songs, and poetry recitals by my grand uncle’s grandchildren (I’m not included by the way). There was such warmth in the affair that one would feel that one is all part of a big happy family. Speaking of family, my grand uncle has six kids, all grown up, married, had kids and had stable careers or business. One of the grandchildren has actually gotten married and if things went well, my grand uncle and grand aunt could very well be a great grandparents soon enough. Anyway, the climax of the affair was really the visual retelling of their 60 years of being married to each other and the surprising thing was it was not about the vacations that my grand uncle and grand aunt spent together nor about the things they do together rather the highlights of their married life was all about their children, all six of them and their grandchildren. One could see all those pictures of my mother’s cousins growing up from their baby pics to their kiddie years then to their high school grad pics, then their college grad pics, then to their wedding picture, then the birth of their children (the grandchildren). All this seemed surreal because everything seemed to have happened in an instant. 60 years in just an hour. I can’t tell what my grand uncle and my grand aunt were thinking that night but I bet they were probably reminiscing about the past, the whole 60 years and how they have “breeze” through it. They may be thinking about their concerns in the beginning of their shared life, of their worries of their kids, their future, the next day, the next month, the next year, the year after that, the next ten years……. Of their hopes and dreams, of the hardships and joys that they been through. All of these now are moot to them and maybe, they will find that at times that it was silly as their worries back then are unfounded. I don’t know either if they are satisfied with what they had done for the last 60 years together or that they just simply feel elated neither do I know if they felt that they had lived a wonderful 60 years together and counting but for everybody else at the party that night, my grand uncle and my grand aunt do live a wonderful life so much so that one, actually I felt that spending my life with somebody I love and care for the next 60 years is worth it and to look back at it afterwards………. My grand uncle and my grand aunt are two of the luckiest person that I known and I wish that I’ll be that lucky.

POLITICS OF PAUPERIZATION

Quotes for the day:
1. Politics of pauperization: Politicians nowadays are pursuing policies that tend to pauperize the populace in order to guarantee for themselves an audience for their populist rhetoric.
2. There is no greater insult to the poor than to remind them of their poverty.
3. There are those who inspire people to become better and bring the best out of ourselves while there are those who kept reminding us about the worst that we are.
4. The present is the new past and the future is the new present.
I was passing by the old neighborhood where I grew up in Manila sometime last week and I was taken aback by the marked scene of deterioration. Gone are the neighborhood pananderia that I used to buy pandesal as well as the botika where I bought my medicines before. Disappeared as well were my old neighbors, Mr. Lim, who runs the neighborhood hardware store and Mang Roger, who owns the barber shop where I used to cut my hair when I was child. In its place are old dilapidated buildings and torn down houses and the stench of decay that is very much evident in the air. What happened to my old neighborhood? What led to its creeping destitution? Well, it is plainly obvious for everyone to see that it is our government who is to blame for our lot. While in other countries, skyscrapers being built every day, in our country, they are left to rot. Why the stark difference? Well, that’s bound to happen if we elect people who are more interested in getting elected than in getting things done. All you hear nowadays from politicians were how much they sympathized with the poor; how their heart bled for them; how they would endeavor, if elected to protect them; and best of all, how they would hand the poor “dole outs” as if they are beggars asking for it, which they are not. Gone were statements of hope, of encouragement, of visions of a better nation, of a future filled with opportunity and success. I’m no fan of Marcos but we do have to admit that despite his corruption and cronyism, the guy does have a vision. For since when after 1963 do we again hear the slogan, “This Nation Can Be Great Again” (in spite of what he promised, Marcos failed miserably in his “mission”). We, Filipinos are not really a hopeless lot. For given an opportunity, we Filipinos, like the rest of the world could rise from our station. Just look at the Filipino emigrants who made it around the world. They’re quite aplenty. Speaking of emigrants, it is quite funny that our emigrants could succeed in a country that is not theirs own yet they couldn’t succeed here in their native soil! Well, this is simply because there is no opportunity in this country! Such tragedy! Politicians, instead of enacting policies that provides opportunity and allows equal access to such opportunity for Filipinos are more focused in pursuing policies that provides charity. Charity, however can only sustain that far. Beyond that, life is pretty much the same, hopeless. For those who didn’t want to be trapped in this quagmire, emigration seemed to be a logical choice. As such, the exodus to a foreign land in search for a better life continues. With the flight of those who are capable of leaving and the persistent lack of opportunity plaguing those who are left, it is no wonder that urban decay is becoming even uglier. And that is what happened to my old neighborhood.

WIKIPILIPINAS

In my visit to the 29th Manila International Book Fair the past Sunday, I came across a booth that is promoting a new web site aptly named, WikiPilipinas (www.wikiphilippines.org). As one might guessed, this web site follows the concept and format of the popular Wikipedia. Whether or not, WikiPilipinas is an offshoot of Wikipedia or has some form of relationship with the latter or it is an independent non – affiliated web site, I never know. Anyway, what is important to discover here is that we now have a dedicated information center cum online encyclopedia about the Philippines. And it’s about time. I mean I’ve visited Wikipedia almost every day but I came across only with a few articles regarding the Philippines, it’s culture, it’s society, and it’s personality. Now we have a website dedicated only to the Philippines exclusively! Immediately after I came home from the book fair, I proceeded to visit the WikiPilinas website and my first impression about it after reading some of its article is that it is quite staid, neutral, and overtly generalized lacking depth at times when compared to the other articles in Wikipedia, which are more in depth and presents a totally different perspective and view from what is the generally accepted “truth”. Another thing I’ve notice about WikiPilipinas is that of all the articles I’ve read in it, it is 99% similar to the same articles posted in Wikipedia. This either suggests some affiliation with the latter or simply somebody just cut – paste and copy the whole enchilada from Wikipedia to WikiPilipinas. However, WikiPilipinas do have some notable differences with Wikipedia and this pertains to the category of Philippine restaurants guide and hotel guide although, again the article is rather staid and neutral; nothing helpful. Anyway, after visiting the website, I had to admit that I can’t contain my excitement. Finally, we have an online encyclopedia for ourselves. It made me feel proud being a Filipino – Chinese. In addition to that, I suddenly felt this urge to contribute to the “cause” – of enhancing the image of the Philippines and the Filipinos through WikiPilipinas. However, I am stumped by a single thought; what would I write about? I mean writing an article for WikiPilipinas is akin to writing a blog with one notable exception. In blog writing, the articles are highly opinionated – my opinions about world around me. In Wikis, the articles are not opinions but facts (if one were to stay true to the concept of an encyclopedia). This is the fault of the original Wikipedia, a lot (not all) of the articles I came across sounded like an opinion, which are at times inaccurate and often debatable. The spirit of Wikipedia is that let the “best qualified person” (which in a conventional encyclopedia refers to the best among the experts) writes the subject matter that they know best and let the whole wide world decide on the “accuracy” of such written article. But the point here is that not all people are well versed with the subject matter and with opinions disguised as facts, many are misled. So how do we root out “heresy” from the facts in this situation? How can we “decide” as a collective on the “accuracy” of the written articles if we are not well versed with the subject matter in the first place? (In some Wikipedia articles, some authors would create a section in the article that contains the “controversial” aspect of the subject matter and hence allow a more balanced point of view). So in short, what I need in order to write an article for WikiPilipinas are (1) it should be factual and not fictitious and it should have a credible basis, (2) it should be accurate and if it is debatable, (3) it should offer a balance view point. Well, given that criteria, the only article that I can think of writing is actually my own autobiography but writing an autobiography in Wikis would be the height of narcissism and vanity. Anyway, I am still figuring out on what to write on WikiPilipinas. A book summary perhaps? But it should be Filipino books which I admit I have read a little. Or a Filipino all time favorite dish recipe? But I don’t know how to cook except for the simplest of dishes which I even wonder if it has any semblance of a genuine Filipino cuisine. Hmmmm, tough decision! Anyway, I enjoin any Filipinos be it Pinoys or Chinoys reading this article to actually take up the “cause” and write something for WikiPilipinas, it is after all about us.

BOOK LOVERS ALL

“One’s work maybe finished someday but one’s education never.” - Alexander Dumas

Went to the 29th Manila International Book Fair yesterday at the new SMX Convention Center and boy, what an event! The place is teeming with books and jam-packed with people – book lovers like me! I spend 4 hours going through the shelves for books and in the process bumped into several people, mostly my old classmates at MBA, relatives, business colleagues, and a high school classmate. I actually never expected to meet a lot of “old friends” in a book fair because I had this notion that “not great many” people read books. To say that I’m happily proven wrong on this is an understatement. In fact, I’m pleasantly surprised to discover that book fairs could be a place not only for looking up for new books but also to look up for old friends. Books sure can draw people together. Anyway, I was only able to buy 2 books from the fair not because I didn’t find any interesting books on display but on the contrary, I felt there are a plenty to buy this time around. The only problem is the book merchants don’t accept credit cards except for hard cold cash. The two books I bought is already worth around Php4,480 (which brings my total book purchase for the month to close about Php8,000). It actually burned a hole in my pocket and I actually had to break my bank – my long dormant ATM account just to buy the books. Anyway, it’s actually a good thing also since I might end up with books that I would regret buying. The two books I bought are: “Competing in a Flat World: Building Enterprises for a Borderless World by Victor Fung et al” and “Factory Physics, 3rd ed by Hopp and Spearman”. The first book is published by Wharton School and is hard bound while the second book is published by McGraw – Hills. With these two latest additions, my total book holdings now tallies at 249 plus the 62 college books that I had in my possession; all in all, my mini – library now holds 311 books (that is excluding my other siblings book holdings). I made a quick survey of the books I had and discovered that of the 249 books, I had only read about close to a hundred which leaves me with about 150 books yet to be read. As of now, I’m on my sixth book in my reading list and assuming that I could finish 10 books a year (with each book containing about 300 pages or more, or roughly 3000 pages to read in a year). The 150 books remaining would take me about 15 years! In short, I would be able to finish reading all my books I had right now before I turn 50 assuming of course that I stop buying books or attending another book fair from this moment on for the next 15 years, which is highly unlikely I supposed. Ahhh, so many books………. At the rate I’m buying books, I would probably be able to set up a public library sooner than later. Not a bad idea, though that entails a place and a librarian which means additional costs…….. Oh well, I guess I would keep the books to myself to read in the meantime.

P.S. The 29th Manila International Book Fair is held in SMX Convention beside the Mall of Asia and will end on September 16.

NOT ANOTHER MANAGEMENT BOOK ON SUN TSU

I went to a book buying spree a few weeks back at Fully Booked at Serendra. It’s been quite a while since I went into a book buying frenzy for I spent more than 3000 pesos for 4 books that Sunday. Anyway, in the course of my shopping spree, I came across an entire shelf in the business book section filled with management books based on Sun Tzu’s Art of War. Not that I have anything against Sun Tzu’s Art of War or the authors who “distills” his genius into management principles but I hardly find the idea of Sun Tzu’s Art of War as a management book appealing if not outright preposterous. I mean The Art of War is a book about warfare, period and nothing more. Even if the wisdom contained in the 2000 year old book is timeless and applicable to basic business management, still it is out of its context and premise when it is applied to business. The primary reason people used The Art of War as a management book is because of the seeming similarity between warfare and business. In both arenas, it’s about the battle between two opposing forces vying for dominance with each marshalling their resources for the inevitable titanic clash and by logic, if The Art of War can be successfully applied in the battlefield, then why not in the bloody dog eat dog world of business. It is quite a strong and convincing argument indeed. It is not only The Art of War that is being used in “discovering” enlightened management truth; other military thoughts mostly in the form of military maxims are useful as well. In the words of the imminent management “theorist” Henry Mintzberg, the very first and oldest school of management thought is the school of military thinking exemplified by the famous military maxims that we came to learn about. However, though military maxims make good management principles, they hardly constitute good management at all, i.e., you can’t simply piece together a coherent management philosophy by piecing together military maxims. This is where The Art of War comes in. Unlike military maxims, the Art of War represents a coherent philosophy and not just some chop – chop thinking on how to fight a contest between two adversarial forces seeking dominance but that’s where the similarity between war and business ends. In warfare, the contest is basically a zero – sum game, you either win or dead, nothing in between. Even in victory, there is always casualty – corpses littered in the battlefield. It is in these circumstances that Sun Wu wrote his treatise in the Art of War. How to win a war without actually fighting a war? How to transform war from a literal fight to the death into a battle of wits, of maneuvers, of stratagem, of tactics? And his answer is simple - - - deception. The art of war is the art of deception. Sun Wu if he were alive now would have told anybody about that straight forward. You feigned, create diversions, launched a propaganda campaign of misinformation, psych out your enemy such that your enemy would be clueless about your motives, misread your intensions, misjudge about your plans and as a consequence cloud his thinking, lowered his guard, and fooled into making a wrong decision that expose his weak side for you to exploit thus handing over to you an opening, an opportunity, and ultimately victory if you’re not stupid enough to have bungled it. That’s what the Art of War is all about. The game of business on the other hand is not a zero – sum game not like war. And unlike war, there is an arbiter between feuding business competitors – the consumer. Lest one forgets, business is about satisfying a need or want of a consumer within his paying capacity. It is about providing a choice for the consumer to choose and in the process becomes The Choice. The objective of business is profit which in the simplest description is the difference between the revenue exacted from provision of satisfaction to the consumer and the resources expended to provide such satisfaction. The central premise in business is efficiency. The more efficient you are the more profitable you are. In war, we can’t talk about efficiency, for how we are going to define efficiency in warfare? The ratio between the number of soldiers killed versus the number of enemy killed? That sick. The objective of business is profit which hinges on efficiency meaning maximize the gain at the least cost possible. The objective of war on the other hand is nothing but the gain itself regardless of the cost however pyrrhic it can be; be it territorial conquest, strategic advantage, prestige, tribute or any perceived economic benefits. And this why I never liked the idea of Sun Tzu as a management philosophy because it is really out of the context and not in synch with the premise of business. If you’re anywhere good with deception in war, you’re a good commander; if you’re a master in the art of deception at war, then you’re a freaking military genius. Now, if you’re really damn good at deception, you’re a bloody god of war. In business, if you’re good at deception, you’re probably dishonest. If you’re a master at it, you’re a shrewd businessman but if you’re damn good, you’re a con man not a businessman.

CHANGING PHONES

Bought a new phone 2 Sundays ago to replace my aging and dilapidated Sony Ericsson P900. I didn’t purchase a new phone out of mere fancy but rather, I did so out of no choice. With scratches here and there, chipped edges, and crack keypads, using my P9 has increasingly become difficult even tortuous at times. And so with a heavy heart, I had to forego my old phone, my favorite phone. I love my P9 because it is the only phone that I actually “bought” for myself. Don’t get me wrong but I had phones before my P9 but I didn’t actually “choose” those phones. Rather, I rely on my brother’s or my sister’s recommendations on purchasing a new phone. You see I’m not what they call a “gadget enthusiast” and frankly to me, a phone is a phone is a phone. As long as it could make a call and send a text message, it’s a “good phone” for me regardless of the model. All that changed when I bought my P9. I like my P9 because of its metallic casing and the fact that they advertise it as a PDA phone for the executive and I’m a sucker for such (It turns out that the P9 is the cell phone of choice among DLSU MBA). Anyway, one of the most important reason I liked my P9 is that my P9 has a “Jotter” function, which is actually a notepad for me to write anything I want and that is important to me since I had a habit of scribbling down my thoughts whenever it popped up (I have a notoriously poor memory). Way back in high school, I came across with “famous quotes”, those “sacred” words of advice that came out of the mouth of the “sages”. I immediately fell in love with it and I began to earnestly find and collect these quotes. By the time I’m in college, I was not only collecting quotes but am also writing a few of my own (which I term “my thoughts”). Back then, I always carry a pocket size notebook that fits my shirt pocket to write on (a bit of ancient history; back then, there was no handheld device to use to write down my thoughts, cell phone were just in the drawing board and I’m the only one in class who carries a pager, “Easycall”). After college and for sometime in business school, I stopped writing down “my thoughts”. It is not because I ran out of ideas but because I don’t have anything to write on. I got tired of “carrying” a notebook (in fact, I never did bring anything to business school except for a ballpen). And it is under this situation that I got my P9 and it is why I loved it. For 4 years, my P9 was my companion in solitude, my confidante in silence. And now, when I am changing my phone and transferring my P9’s content that I realized how much my old phone has kept much my thoughts over the past 4 years. These thoughts are very personal to me. They are the very crystallization of my thought process and I’m sharing it to those who want to listen.
05/03/04: Life doesn’t wait for anyone. Take charge and siege the day.

05/05/04: Life today is not an abrupt jump from yesterday but the summation of the gradual accumulation of evolutionary changes that happen in the past.
Elaboration: Events or things don’t happen out of the blue or suddenly or dramatically. Instead the seed is sown way, way before in the past and builds over the years until it becomes “noticeable” to the extent that it is abrupt, sudden, and dramatic. If you want to be a step ahead, notice the little things along the way and be prepared for it for these small incremental changes would become a major event in the future.

05/08/04: The 4 models of “perfect man”
1. Confucius’ “Sage – King/Gentleman”, a morally upright but aggressive man.
2. Plato’s “Philosopher – King”, a logically thinking political/military leader.
3. Machiavelli’s “Prince”, a legally upright but ruthless leader.
4. Nietzche’s “Superman/Caesar with a Christ’s heart”, a compassionate but ruthless and aggressive man.
The underlying theme is balancing compassion with aggressiveness or to be an upright aggressor.
Elaboration: Different philosophers in both east and west have different conception of what is a superior man but strikingly, all of them tend to advocate a man who is aggressive but is within the bounds of human compassion. In short, aggression isn’t really wrong as long as it within a certain bound.

05/08/04: Everybody loves a hero, even the rich but especially, the poor and the weak.
Elaboration: Actually, I was I think reading about American history then in Wikipedia and I was reading about President Andrew Jackson, a populist in his time and I was comparing that to the electoral situation in 2004 wherein candidates are turning to populism to win elections and that middle and upper class rhetoric are riling strongly against “dumb” populist candidates who are perceived to be incompetent and incapable but what little they know that election is not about choosing capable leader but rather it is about choosing a “hero”. The Americans are very good in choosing heroes for presidents as in the case of Andrew Jackson.

05/10/04: The problem with Filipinos is that they justify poverty by saying that we could not bring our wealth to heaven once we’re dead. Because of that, they forego work in favor of other people’s charity. It’s a stupid excuse for indolence and lack of ambition or goal in life. I do not for all intension want to bring my money to my grave but to use it to enjoy life and best of all, bequeath it to my children.
Elaboration: I am sick and tired of hearing the popular Filipino phrase, “if you are dead, you won’t be able to bring your money to heaven.” At first, I thought this is some self content ideology being preached by the church to the believers to calm down their “greed”. In short, it is a religious thingy. But the more I hear that phrase coming from “poor” Filipinos, the more I realize that Filipinos are using that as a justification of remaining in poverty. They seem to say, it’s ok to be poor since I won’t bring my money to heaven after I die and everybody dies, therefore what is the point of earning money?

05/11/04: Love is all hype and overrated. When you’re with someone you love, 80% of the time you’re miserable while 20% of the time, you’re happy. But somehow the relative short period of happiness outweighs the miserable 80% and made it more tolerable and even worthwhile.
Elaboration: Funny thing about Love is that although it hurts a lot, we continue to ask for more and I think this is the reason.

05/15/04: On the 2004 elections, the aristocratic elite and the “masaphobic” middle class relentlessly criticize the illiterate and ignorant “masa” for supporting an “uneducated” and “unqualified” candidate. As the election outcome shows, the so called “masa” are not blindly stupid. They elect persons who are perceived to be their “hero” or champion. Persons they perceived to protect their interest rather than those who have the capabilities or leadership qualities. Come to think of it. It’s a wise and logical choice.
Elaboration: This is what election is all about. It is not electing a capable leader but rather electing a person that one perceived to be “in the same interest as ours” and therefore would without hesitation protect our rights. This is the original concept of democracy and elections and not in choosing a capable leader because if we were interested in capabilities then we don’t have to go through an expensive election to find out who is the more capable one. We could simply have a national examination open to all or an IQ test or a quiz bee contest to find out who is the more capable one and we could be sure about the result, I mean numbers (test results) don’t lie. If that is the case, I’m sure I could be president someday.

05/15/04: The new model of a perfect man in the 21st century is The Perfect Competitor or The Competitive Man.
Elaboration: This is my proposal for what is a superior man, The Perfect Competitor, a man who aims to win in competitions of any form but observes the rules of competition.

05/27/04: Conflicts happens whatever one do. It can’t simply be avoided nor prevented from happening. Instead, conflicts could be managed to minimize the negative impact and to gain the benefits of it. Therefore, a conflict management system should be in place to manage conflict. Failure to manage conflicts would lead to emotional distress and loss of control initiative.
Elaboration: When I was a lot younger, I tried to avoid conflicts. In fact, I abhor them. But as I grew older, I realize that conflicts cannot be avoided or eliminated. It just happened and it is as natural as breathing. And I came to understand that the best way to face conflict is to manage it.

06/03/04: Little people read the news. Great men make them.

06/04/04: Due to advancement in communications and transportation technologies, executives’ span and reach of control has greatly expanded. As such it is possible for governments to remove all together the middle level of local government, e.g., towns, municipality, and even provincial government without hampering government’s efficiency. In this way, the government can undermine the power of the local elites and prevent centrifugal tendencies.
Elaboration: Again, I was reading about history and the growing complexity of governance with the development of multiple layers of local government i.e., village, towns, city, province, and region etc. Governments of the old had to rely on the local elite in order to be able to enforce their effective rule. It is ironic that governments had to decentralize in order to achieve centralization. All that would change in the advent of newer communication technologies. Centralization could be achieved without compromising local interest. Anyway, this not only applies to governments but also to all form of organization including business organizations.

06/07/04: Cosmetics and beauty is very important to women as sex is to men.
Elaboration: I really can’t fathom why women would go agog over cosmetics except for this comparison.

06/12/04: Frameworks, especially theoretical business frameworks are a guide to logical deduction of a situation leading to its logical conclusion. However, this is by no means should be a stifle to creativity and a chain to creative thinking.
Elaboration: As a graduate of business school, I am trained to use frameworks to analyze and ultimately arrive at a decision but sometimes I felt stifled, for I am constrained to think a certain pattern. In short, I’m no longer thinking “out of the box”.

06/15/04: Life is like a conveyor. It brings you there when you least expected regardless if you are ready or not. Regardless if you wanted to or not, you have no choice but to face it. Whether you have a plan or not, you have face it, react to it even without finesse. However, we still have a choice on which conveyor we want to be in.
Elaboration: There are things in life that you don’t have a choice or that the only choice you have is yes or no and not whatever but there are things in life that we could choose specifically, the path we would want to go and as in the poem, “The Road Less Travelled”, that makes all the differences.

06/25/04: Emotions like anger are neither positive nor negative. Emotions are what make us human. The only problem with emotions is how we handle them or react to them. Emotions can cause us to behave irrationally, lose our focus and objectivity, and blinding us form thinking logically. Then again, emotions expertly handled can be a powerful motivator and a potent force for change. History could be said to be a story of a lot of angry people, angry of the status quo, of injustice. This causes revolutions that finally change the course of history.
Elaboration: The funny thing about reading history is that emotions had never quite figure in the development of events in history (at least that is how history is being narrated). Ironic because history is about the story of human beings and human beings are creatures of emotions. Furthermore, there are many of those who think that emotions are a liability to us humans (I was one of them before). I mean you get emotional, you do crazy stuffs that one would regret in the future. But thinking again, emotions are not bad. It is what makes us human without which we would just be some organic 386 computers attached to a loudspeaker. It is emotions that drive us, that make life “spicy” and colorful.

06/27/04: History repeats itself. It has repeated itself. It is repeating itself as we speak and it will keep repeating itself again and again if we don’t heed the lessons of history and remain vigilant about it.
Elaboration: A historian has the ability to see events or progressions of events beyond one’s lifetime. He could compress thousands of years of history into one gigantic panoramic view. And what is particularly distressing to a historian is that that picture is familiar to him because it is happening now. Not everybody is a historian and most people have a very short memory. As humans, we have the same need, the same want, and ran amok by the same emotion. And when we are faced by the same challenges, our choices for a solution is indeed very limited given the same need, want and emotion. As we such, we keep on making the same choices over the same problems and this in turn produces events that warrant us to make the same choice over again and again. That is how history repeats itself. The only way, we could “break” this cycle is to learn from the lessons of the past.

06/27/04: Life is all about inches. Crawling forward inch by inch and fighting every inch of it. – Al Pacino in “Any Given Sunday”.
Elaboration: “Any Given Sunday” is a football movie starring Al Pacino. The quote is an analogy of life and the game of football.

06/28/04: Westerners and many other people who believes in Christianity or the likes always personify evil as in good and evil are two entities battling each other for dominance. The objective of one is the total annihilation of the other. In this kind of thinking, a person could actually be 100% good. What is puzzling here is that the other cannot exist without its opposite after its destruction. How can we know to savor “goodness” when we can no longer abhor evil? How could we value life if there is no death? Good and evil exist as one in everybody and not separate. It is a result of choice. Hence, evil cannot be destroyed but avoided or suppress. If evil were to be “vanquished”, the lesser good will become the next evil.
Elaboration: The underpinning of this thought is the ancient Chinese philosophy of Ying and Yang, the concept duality of nature wherein one contradicts the other and also needs the other to exist. It is futile to totally remove the other from existence, instead, it is worthwhile to accept its existence and make a choice.

06/28/04: Faith is the individual belief of the human spirituality while religion is the organize worship of such faith manipulated by a malevolent genius.
Elaboration: Religion is an organization complete with a hierarchy and a doctrine. Faith is simply believing.

06/28/04: We humans live in a culture of death. We define our existence based on our impending doom. It is funny that people lived to prepare for their inevitable death.
Elaboration: Some people are obsess with leaving a legacy of their existence and spend a lifetime achieving it while others are into worshipping a supreme deity in order to ensure they have a “nice” afterlife and spend every minute of their existence to attain it but what happened to living the “now”?

07/03/04: Who are we to determine the fate of another person? By firing someone, we take away their financial income, their food, their hope and happiness. However, if we do not exercise the power, we could end up at the disadvantageous end of the deal. It’s killed or be killed. Sad but no choice.
Elaboration: The hardest part of being a manager to me is firing people. It sucks but there is no way around it.

07/16/04: What is the value of infinity? If we could determine the value, then we could be gods! To our forefathers, hundred, thousand, millions, billions, and trillions are mind boggling and for all practical purpose then, equal to infinity. To us, those figures mean nothing. We aren’t going to be mind boggled at all. Infinity is a limit and a barrier. Putting a value to it meant that we have overcome a limit.
Elaboration: Infinity is a concept. It signifies that things are unreachable, things that are unfathomable. If we could mentally convince ourselves that it is reachable, is everything else impossible?

08/01/04: Don’t be afraid about the end of a chapter, there is always a next chapter. Don’t be afraid about the end of a story. There will always be a new story. Don’t be afraid about things coming to an end, there is still tomorrow. The sun still comes out tomorrow. There is still life tomorrow. There is still hope.
Elaboration: Sometimes we have a hard time facing the end be it in a relationship, a career, a project, or even a book. To the extent, we can’t see what is beyond the end and that we get afraid of the coming end and we tried to delay it but we had to realize that things do comes to an end and that there is life after “the end”. Just move on.

08/27/04: We can’t win everything nor we have to in order to be victorious. We just need to win the more important ones. We can’t have everything but we don’t need everything to be happy. We just had to have the most important things in life.
Elaboration: Sometimes we do things just for the sake of doing it without realizing that we don’t have to do everything to make us happy.

08/27/04: Money isn’t everything but it buys ALMOST EVERYTHING ELSE. That’s good enough for me.
Elaboration: The quote, “Money isn’t everything” is a good quote except that when it became an excuse for being “lazy”. Remember, money may not buy you everything but it does buy you the rest of the things that can be bought.

08/29/04: Don’t judge a book by its cover, judge it by its content. However, for a reader who haven’t read or seen the book, it’s the cover that entices them to read the book and judge them later.
Elaboration: In the end, presentations and first impressions do counts regardless what other people say.

08/30/04: The meaning of life:
1. Life ends and continues.
2. Life is everything that happens between birth and death.
3. Life is the one possibility to have a million more possibilities.
4. Life could be a meaningless 4 letter word or a vivid and lively 100 discs DVD or an interesting volume of books.
Elaboration: If you lay dying and suddenly a genie pops up from nowhere and wants to give you one last wish, what would be your wish?

09/03/04: I have a lot of teachers that taught me about knowledge and skills but only a handful of them that I consider my mentor that inspire me and taught me about life.
Elaboration: Once in a lifetime, there comes a person that teach you not only knowledge but also wisdom. Cherish it.

09/03/04: Even geniuses need an inspiration and a mentor.
Elaboration: Some people needed a guide to get going in the “right” path while others simply needed someone to point the way.

09/06/04: There is no crueler fate than a man with a broken will and has lost hope.

09/06/04: There are things that changes and there are things that doesn’t change at all. There are things that changes which you can’t do anything at all. There are still things that change which you can choose what it would be let alone choose not to.
Elaboration: Sometimes change happens when we least expected and we have no say at all but there are times when changes are laid before our eyes to choose. Make a choice.

09/17/04: Leaders are individuals who make ordinary people do extraordinary things, Andrew Grove
Elaboration: The classic definition of a leader, the ultimate motivator.

09/17/04: It is extremely important that you show some insensitivity to your past in order to show the proper respect for the future. Robert Goizueta
Elaboration: Sometimes, the past can be a burden especially a glorious past, for this “past” becomes a sort of a formula of success and henceforth, shapes our expectation, which in turn constrict our freedom of action to craft a “creative and effective solution” against future challenges that is totally different from anything in the past.

09/17/04: Indifference kills an organization by making it less susceptible to change and thus unable to adapt to its environment.
Elaboration: The theory of challenge and response of Arnold Toynbee states that civilizations that still exists up to this day and would continue to exist in the future were able to do so because these civilizations had an effective response to the challenges that threaten their survival. Individual indifference in my point of view tends to make us individually “numb” and shrugged off challenges that threatened our collective existence and this would in turn hamper our collective response which would eventually result in our demise.

10/23/04: The only thing that separates me from my glory, my success, my goal, my future is me.
Elaboration: I am my worst enemy.

10/23/04: There are many revolutions in history like the industrial revolution wherein technological breakthroughs comes in droves within a 50 to 70 years span. The developments afterwards are merely innovations. We are now seeing the end of a revolution that of the computing revolution. A new revolution has dawned and that is the genetic revolution. Elfren Cruz.
Elaboration: Well, this is the topic of my professor’s discussion during one Christmas party. He was talking about the world we’re living in from a historian and a businessman’s perspective. We are currently living in an exciting time, a world between two revolutions, the end of one and the beginning of another.

10/26/04: The best thing a friend or a sibling or a parent or a spouse can do to a person he/she loved and cared is to believe in the person even if the person doesn’t believe in himself or herself.

11/03/04: You can outwit a competitor but there will always be competition.
Elaboration: There are times when we so hate our competitor that would do everything to “demolish” our competitor but lest we forget, competition exists and will continue to exist even if you manage to run your competitor aground.

11/08/04: The system of checks and balance is never meant to be a replacement of morality but a reinforcement.
Elaboration: In reading the history of democracy, the reason that political thinkers of the time came up with the idea of checks and balance is not to replace public morality totally but to make sure that all those in power to conform to the establish public morality by having someone “checking” the other. It was never meant to replace public morality of the ruling elite much like in our case right now in the present.

11/16/04: I exist therefore I matter.
Elaboration: Rene Descartes has a famous conclusion from his mental exercise, “I think therefore I exist.” But my question is, “do we only live to exist?” This is not some theory on predestination wherein everybody has a role to play in this world. My thinking here is that, we exists and we should make the most out of it.

11/16/04: You are what you do.
Elaboration: Based on Jean Paul Sarte’s philosophy of Existentialism. Actions define the person.

11/29/04: A true great man doesn’t need fame. People just remember him for what he did.

12/21/04: History is about people correcting the mistakes of the past with blood to set a path for the ideal future. Are we going to make our children correct our faults with blood so as to have a future for themselves?

12/21/04: Mencius once said that the duty of man is “to carry the burden of society till their death”. I disagree. The burden is not till ones death but onto the next generation.

01/07/05: Choice is given by the one who has power to the one who has none –Merovingian, The Matrix Reloaded. Freedom is not the right to choose between the choice given to us instead Freedom is the right to create the choices we are going to choose from.

02/13/05: My view of the Phantom of the Opera. Within the depths of the human soul lurk the horrifying darkness and the seed of man’s eventual downfall. However, within the same core lies the eventual redemption and ultimate salvation of mankind.

07/19/05: Money is a terrible master but an excellent servant. PT Barnum.

01/24/06: Excerpts from I, Robot. “Ghost in a Machine”. Random segments of codes linking to form an unexpected protocol and programs. Why is it for some who are in the dark would remain in the dark while others would stick together? And there are others who would seek the light?
Elaboration: This is an excerpt from I, Robot the movie. Of course, the movie talks about sentient robots but I do wonder about the “sentience” in human setting. Makes me wonder, how come each human being similar be they are to each in terms of a possession of a brain would be so different in terms of individual thinking?

01/24/06: How much we got? The answer is not in the clock. The answer is NOT MUCH and that is why life is precious.

07/10/06: Diversity is the art of thinking independently together. Malcolm Forbes.
Elaboration: This is given to me by Professor Cruz.

07/10/06: Isaac Bashevis on being asked if he believed in freewill or predestination. “We have to believe in Freewill; we got no choice.” Quoted in Fadiman.
Elaboration: Again, from Professor Cruz.

09/04/06: Hardwork is ain’t enough to succeed nowadays. Inventiveness, shrewdness, and risk taking are as important. In the agricultural era, hardwork is the only prerequisite to success for one cannot have a good harvest without it. In the early industrial age, hardwork is also the sole requisite of success since demand is great and the supply little, ones income depended on how much one can produce. However, in the era of hyper competition, it is not enough that you can deliver, you also have to outwit your competition.
Elaboration: When I was younger, my parents would always extol the virtue of hardwork but there comes a point wherein one would realize that no matter how hard a person work, you’re not reaping the kind of reward you’re expecting and this is why.

11/20/06: The faith revolution of the 20th century. There was a time when human life was uncertain and man turned to religion to give them certainty. There was a time as our world grew, those uncertainty vanishes and we question the necessity of religions. It is believed that as our understanding grew further, logic dictates that religion would no longer be necessary. But the opposite happened. As science advances, religion strengthened. For humans no longer turn to religion for certainty, we turn them for answer to the question, why we are here? What is this all about?
Elaboration: It is an observation of mine. How come a person seeped in the knowledge of modern science that tends to question the existence of an all powerful deity would surrender to such a belief of its existence.

01/26/07: The Socialist me. I encountered a beggar yesterday cleaning my windshield as I was waiting for the traffic. His intention might be noble but he is dirtying my windshield and I turned on my wiper in response and it hit his hands. I immediately regretted doing that. Here he is trying to eck out an honest living despite his poverty. He could turn to a life of crime but he didn’t and here I am turning an honest guy down. If circumstances were different, he having a good education and a bright future, he wouldn’t be cleaning my windshield. I should be more tolerant the next time.
Elaboration: Never to put a good man down.

02/20/07: This terrifying world is not devoid of charms, of the morning that makes waking up worthwhile. WISLAWA SZYMBORSKA
Elaboration: From Prof Cruz

02/17/07: We are not the same persons this year as last, nor those we love. It is a happy chance if we, changing, continue to love a changed person. – Somerset Maugham
Elaboration: From Prof Cruz

02/21/07: A great many people think they are thinking when they are merely rearranging their prejudices – William James.
Elaboration: From Prof Cruz

03/25/07: Celebrate for a nanosecond then moved on. Michael Dell
Elaboration: Success is fleeting and so should the celebration.

03/25/07: This is only the first step of the marathon. Michael Dell
Elaboration: The story goes that one of Michael Dell’s manager successfully opened a factory in Malaysia and as a consequence, was celebrating his success. Michael Dell sent as a congratulatory gift to the guy, a pair of running shoe and extolled him that this is the first step of the marathon. I actually used this to extol my students in the special class to continue work on their paper and defend it in their OCE, pass OCE and graduate, which some 50% of them eventually did.

04/14/07: Know your limits but never be limited by your limits.

04/22/07: Those who cannot remember the past are condemned to repeat it. George Santayana

05/29/07: If you can’t find the book you wish to read, write it. Prof Cruz

06/12/07: “Why independence if the slaves of today will be the tyrants of tomorrow? And they would be without doubt, because he who loves tyranny submits to it.” Jose Rizal
Elaboration: From Prof Cruz

12/14/07: Only those who doesn’t possess power obey the rules set by those who possessed power.
Elaboration: Only the powerful set the rules, the rest just follows.

02/03/08: The world is dynamic. It’s constantly changing. There is no such thing as a status quo. For the moment a status quo is established, somebody is already working to overthrow it. People who are displaced by the new status quo, people who haven’t or never gained anything, people who are threatened by the new status quo and lastly people who wanted to grab more but couldn’t. They are the ones who drive change.
Elaboration: Ever wonder why the world is dynamic and change is the new reality. It is because of this.
There are two lasting bequest we can give to our children – one is roots, the other wings. A toast to all moms!
Elaboration: From Prof Cruz

For last year’s words belong to last year’s language, and next year’s words await another voice and to make an end is to make a new beginning. – TS Eliot
Elaboration: From Prof Cruz

Live your life with so much love in your heart that if by mistake, you were sent to hell, the devil himself would deliver you up to heaven. Paulo Coelho
Elaboration: From Prof Cruz

04/10/08: With money comes culture and taste.
Elaboration: There is no point in maintaining an acquired taste or culture if you have a hungry stomach.

05/11/08: Well behaved women seldom make history, that is according to Laurel Thatcher Ulrich. Well, I completely agree. It’s the slut and bitches that we remember in history!
Elaboration: “Well Behaved Women Seldom Make History” is actually a book written by Laurel Thatcher Ulrich, a book that I came across during one of my visits to the bookstore but never read. Anyway, in most times in history, for women to get what they want in a male dominated society, they either have to wear a man’s pant or they could get into another man’s pant…..

05/15/08: In a free economy, not only people are given a choice but there exists a plethora of choices; a competition of choices. For a choice to win in this competitive environment, it is necessary for it to offer the RIGHT product at the RIGHT price at the RIGHT time at the RIGHT buyer.
Elaboration: In business school, we are trained to look in terms of product offerings, quality, price, service offerings, etc but to a customer, they do not see product offerings or anything. All they see are choices; be it tall or short; green or blue; now or next week. It’s all about choices. And market competition is not about competition of the best product or the best priced but rather it is the competition for the “better” choice.

05/23/08: There is no such thing as public governance. There is only public and personal interest. It is only when public and personal interests are aligned that we’ll have public governance otherwise, we have tyranny.
Elaboration: Just look at the present government.

05/24/08: The true measure of success is not how much profit was made during the good times but rather on the conduct of facing the tough challenges during the worst of times.
Elaboration: Remember evolution and the survival of the fittest? It is always easy to succeed when all the ingredients of success is laid on your feet. To succeed in a challenging environment, now that’s different.

From Robert Guizeta: Opportunity……… Ours to sieze…….Ours to live…… and ours to defend or otherwise, ultimately, ours to lose.

06/23/08: The most resilient businesses aside from food and medicine are cosmetics, porn, and politics.

06/26/08: A lot of people think that the world misunderstood them or can’t understand them at all. They never realized that the world has no obligation to understand them much less the desire to understand them.
Elaboration: Once in a while you came across with people who poured out their problems in PUBLIC, thinking that their problem is the only problem that the world needs to know.

07/15/08: Every disease has a cure or can be cured sooner or later. Stupidity has none.

07/24/08: Though power corrupts, power belongs to those who know how to use them.

07/27/08: It takes love to get married but it takes patience and toleration to stay married.

08/05/08: History doesn’t repeat itself. It’s the fools that keep repeating history!
Elaboration: History is a concept, a frame of observation. It doesn’t have flesh. It cannot think. It cannot react or pro act hence, history never repeats itself. Human beings on the other hand are the actors of history. To blame a mere concept for the repeated failures in history is irresponsible. Human beings, especially the stupid ones; the fools, they are the ones that keep on repeating history again and again and again because they never learn.

08/05/08: It takes a fool to bring down an empire and several geniuses to prop it up.

From my brother:
Money can’t buy you love but love is miserable without money.
Elaboration: Who ever said living in a shanty is romantic?

PostScript. My new phone is the Iphone clone and the twin brother of the Giorgio Armani phone by Samsung, the Samsung SGH F480 and I’m looking forward to write down more thoughts with it.