Are We There Yet

Naturally, friends have been asking if I am bearish now as I have not been writing about the markets of late. Well, first of all, there's nothing much to write home about. Nothing much has changed, I have said most of what I wanted to say. While I am slightly bullish on emerging markets, there is very little impetus for buyers to move in until the big boys stop being so volatile.





Then some would say if this was going to be contained or localised, i.e. much of the hurt and pain being in Europe and the USA. To a large extent, that is true. While I think emerging markets may go a bit ballistic when the dust settles, it is also a scenario which we are likely to see an overbought situation, or rather a premium valuation in store. The danger lies in the inherent inflation within emerging markets. Owing to the very low interest rates in the US, Japan and Europe, the rest of the emerging markets cannot really hike their own rates without causing a stampede for their currencies.


China has already hiked theirs a few times and their markets have suffered. Will the same happen for emerging markets? Unlikely, because with the big boys in disarray, emerging markets will have to maintain their local engines of growth even if it means higher than usual inflationary pressures.





Big Picture Issues


a) Transfer of problems - It is pretty obvious that the subprime mess and other real estate related lending excesses hav been transferred largely from the major banks to their respective governments. Much of the problem is still there. Do governments write them off without needing to care? Not really, you have to pay somehow. You can attempt to rescue as many banks and financial institutions but the mess just gets transferred to a different party. Now we are seeing the problems at the sovereign debt level. 


We wouldn't be having this crisis now if it wasn't for the subprime mess and excessive real estate lending. That was a mess because of many factors but largely because ratings firms such as Standard and Poors made unbelievably stupid mistakes, not once but throughout the last 5 years leading up to 2008. Now they have the audacity to say US ratings should be downgraded (albeit the rating should go down) ... but the gall of it all.





b) The global property scam -  A massive transfer of income to the very rich has occurred while middle class real incomes stagnated. The middle classes only tolerated this because Central Bankers created housing booms to keep the impoverished middle classes borrowing and spending to give them the illusion of prosperity and stop them from revolting. 


How do you do that? You do that by keeping interest rates very low, keep printing money, keep the system very liquid - some have gone to equities but by and large the biggest beneficiaries have been property markets throughout most of the world. Yes, you see obvious bubbles in Singapore, HK, parts of China, Canada, Australia and even certain places in Malaysia. We thank our lucky stars that our property markets did not go through the same correction as the major developed nations - but is that because we did not have a massive contraction in liquidity brought on by a financial scare? 


How is this scam hurtful? Well, you propel property prices higher and higher with low interest rates and excess liquidity. It serves to fan the flames of property prices higher, causing a bull run for the prices, causing people to chase and get some action before its too late. 


Its never a zero sum game. Much of the froth in pushing prices higher has to be in much much bigger mortgages that people are taking to participate in the run. As long as the public can pay down their mortgages, you won't see foreclosures or a major correction. You and I know that prices have basically gone out of reach of the young and working. 



However we need a boom and bust to deflate this thing. The boom will come via stock markets, which is why I believe other emerging markets which have not seen similar troubles like the US, Japan and Europe will see liquidity being funnelled there. There is the boom and there will be the bust, which I expect towards 2H 2012.

Maternity Leave & Disrespectful People

One stupid letter in The Star was the most widely emailed article. Not the first one, which was a piece by a rep from ILO, but the reader's letter in response to the article. I know some of you would have thought "Gee, I hope Dali read this and will write something on it". Well I did, and I am. The content of the reply was deplorable and disrespectful in so many ways. My sensitive comments in red.



StarBiz: THE issue of maternity leave has received considerable attention lately by workers' and employers' representatives as well as the Government.

The past 60 years or so has witnessed more women of child-bearing age than ever before entering the job market worldwide as well as in our country. Maternity protection as it relates to work and family responsibilities is an essential entitlement in the context of the rights of working women.

The International Labour Organisation (ILO), the agency within the United Nations system devoted to promoting decent work, over more than 90 years of its existence, has adopted a series of international conventions regarding maternity protection.

The First Maternity Protection Convention was formulated in 1919, the year of the ILO's founding. Since then, the ILO has been a major voice on the rights of working women globally.

The most recent ILO Maternity Protection Convention (No. 183) and its accompanying Recommendation (No. 191), 2000, spell out what member states have adopted as the internationally recognised minimum standard that they should aspire to in terms of maternity leave of not less than 14 weeks, as well as non-discrimination in employment, facilities at work, and benefits and entitlements in the context of national law and practice.

Currently, of ILO's 183 member states, the vast majority of them, including several in the Asia Pacific region, provide 12 weeks or more maternity leave with more than 70 of those providing 14 weeks or more. Fewer than 30 countries mandate a maternity leave of less than 12 weeks.

Malaysia, for long an active member of the ILO and currently serving on two of the three benches of its governing body, could reinforce its commitment to workers' rights, in particular that of working women, by reviewing the status of our law and practice regarding maternity protection and consider how best these can be brought into conformity with the minimum internationally recognised standard.

RUEBEN DUDLEY,

Former United Nations/ILO regional deputy director for Asia & the Pacific.

I REFER to “Stay in step with the ILO on maternity leave” (The Star, May 21) and agree with the writer that maternity protection is an essential right of working women. (Hallo... essential right you say, and you agree, it seems what you think is a right is really just a privilege ... i.e. that the government or company are so nice to allow women to have maternity leave. Woman (if that is really you), do not confuse a right with a privilege, the former is enshrined in what we deem as our freedom and claims to be a citizen in a particular country, and that we would never be punished for exercising our freedom or claims. The latter is called a privilege as it implies only via the benevolence of our government or employers that we are accorded those privileges).

However, no reasonable woman, working or not, would argue that she should be paid while she is not working. (Hallo woman, I think you are confusing being pregnant as a leisure activity. When something is as fundamental as getting access to drinking water, do you think that is not a right? If a company does not provide access to drinking water, do you think that is fair? What about holidays? These are part of the cost of employment. Since when is maternity leave a disastrous impact on bottomline, if it is these companies should not be around. Psst, I think 99 out of every 100 woman think it is OK to get paid when on maternity leave). Paying a salary to a person that is not fulfilling his or her job description is economically disadvantageous to the employer and to the economy at large.

While the woman gets paid for not working, there is another prospective employee who may have to go hungry and homeless because he can't get a job. (Herein lies the suspicion as to why I think the writer is a male masquerading as a female, probably using her mum's IC, "he can't get a job", why does it have to be a he? "He" is probably not as good or qualified, probably thats why he DID NOT DESERVE TO GET EMPLOYED in the first place, not because he does not have a uterus!!! That argument as a "cost" and "taking away jobs from others who do not ever want to be pregnant" is as solid as quicksand).

By asking for ridiculously generous benefits, women's rights activists have bankrupted uncountable companies in the West and now they are trying to do the same here. (Pray tell, which companies, instead of making a ludricous brushstroke at half truths. You want to check out the maternity benefits at Microsoft, at GE, at Citigroup, at Nestle, at Nike, etc... A caring employer not only tries to maximise the output of their employees but knows how important it is to retain motivated employees. Loyalty and a sense of belonging does wonders to productivity and reduces enormous HR costs as they do not switch jobs so often. Its whether you view is as an "investment in your employees" or an unnecessary expense).

I wonder if the ILO and similar rights organisations only consider the rights of the workers when formulating their recommendations, or if they also look at the balance sheets of the companies.

A pregnant woman should resign, or take unpaid leave until her child is born and until he is big enough for her to return to work. Pregnant women are already unable to fulfill their duties because their condition does not usually allow them to perform as they should. The position left vacant should be filled by temporary or contract workers. (Spoken like a true small time entreprenuer who is grappling with minimal profits. You would be wonderful as a businessperson in an undeveloped country where you can put in place these laws yourself. You line of thinking not only is repulsive, its disrespectful to women in general. Pregnancy is not just a part of life, it is the very process why you exist in the first place. What you are saying is so disrespectful as if pregnancy needs to be viewed as a "cost factor").

Women should not be selfish and think they can have it all, and lawyers should consider that human rights are subservient to the performance of the economy. Every right has a price, and having no job gives you no money to pay for your rights. (Woman (if that is you), maybe you have your own plot of land for farming, but most married couples need to be both working in order to have a mortgage and a car early in their marriage. It so happens that most women need to be pregnant around 30 (i.e. early in their career) and do not have the luxury of living off a single salary. When you rob a person of their choice to be pregnant, or make their pregnancy as a hindrance, it is awful. I don't know man, maybe you were immaculately conceived cause you sounded like your were birthed from a stone ... probably in an office environment between 9-5).

A business proposition must be equitable to be successful, and by demanding that women be paid although they are not working, while others are practically starving because they can't get a job, the ILO jeopardises the interest of the mother, the child, and the future of the country.

MARISA DEMORI