kevinwhope

Hi there, 

First, thanks for a good and challenging comment (see last entry).  I will try to deal with it here and over time.  I have no simple answers or magic bullet.  To say the issues raised are complex understates it.  Much of what we need to deal with is not and cannot even be known with 100% certainty with our current level of science and understanding, and there is plenty of material available, much of it pretty heavy slugging (sometimes you just have to take a break and watch Canada win gold in the World Jr Hockey tournament!).  What great escapism and we are constantly reminded of what a wonderful part of the world we live in for so many reasons.  The world news on TV so far in '09 has not been particularly encouraging. We live in paradise.

And our new granddaughter was born here to loving middle-class parents in as secure and beautiful a spot as exists on the planet (okay it gets a little chilly in the winter...), but what are the chances?  I have made this calculation before, proving I suppose, not only an interesting if obscure statistic, but that I have way too much time on my hands...
There are 6.5B people on the planet, and 134M births annually, an average birth rate of 20.3per thousand of population (from Wikipedia).  Our birth rate in Canada is 10.29 per thousand, or about 340K per year.  So daily there are 367K babies born, 930 of whom are born here in Cda.  That is about 1 of every 400 babies.  These are pretty long odds!  The odds are likely much higher of dying at birth, than being born in Canada. 

Approx 28 babies are born in Saskatchewan daily, about 1 of every 13,000 babies born world-wide.  Our granddaughter is pretty lucky - sort of won the lottery of life!  The odds of being born here to loving middle-class parents are even longer (many even here in Sk are not so lucky).  In fact each of us is pretty darn lucky! Not only to be born at all (a real fluke given all the genetic possibilities, etc), but to be born in such good circumstances.  Just something to think about and a real conversation-starter at parties...
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I see in the ROB today that a large company in India has been found to have produce "fake" financial statements.  We should expect to see plenty more of this in the coming months.  Watch for lots of surprises from China where standards (accounting, enforcement).are especially poor.  This is the common pattern at this point in the business cycle (and remember, this is a cycle, not permanent, we will recover as always).  It is symptomatic of common greed which doesn't change much from cycle to cycle.  It happens most at the top, not at the bottom as one might intuitively think.  We have seen tremendous profits and growth in recent years.  When we have reached a 'top' (we never go in one direction forever no matter what we are told by the experts), the incentive is for insiders to want to cook the books to make them look better, disguise the reality of a slowdown to keep the party going. 

They have been getting rich on growth, and have an incentive to give the false impression that it is continuing, or at least that it is not as bad as it really is.  Share prices tend to follow performance (a multiple of earnings and growth), and executive compensation is generally tied to performance and share prices (share options, etc).  If the reality is bad, executive compensation will fall (it has to).  So the built in temptation in the face of a bad reality, is to disguise that reality, cook the books.  When the reality is discovered, the surprise drives down share prices to reflect the new reality, but the executive compensation has already been taken, never to be seen again.  Deceived shareholders (including pension funds, CPP, charities, universities) are left with the losses.  Then the companies look to government for bailouts, and we get to pay again as taxpayers.  Sweet deal! 

This is one more reason to stay out of harms way and remain on the sidelines, at least as investors.  As taxpayers, it isn't so easy.  And as small businesses, there is no such incentive, nor shareholders to fleece (also, in small businesses, financial statements are not prepared in-house, so they are not easily cooked even if there was an incentive to do so). 

Even in the absence of actual fraud, the compensation of executives seems to have lost all touch with reality - there seems to be a real disconnect between compensation and performance, a lack of oversight.  There is no shortage of potential CEOs willing to sweat it out for tens of millions in annual compensation.  This rationale is nonsense.  In good times and not so good, it seems to have become the norm to take whatever you can get away with.  Witness recent numbers on CEO compensation in Canada - the average is into 8 digits - and even in a year like 2008 when shareholders, the owners who take the risk, lost their shirts.  Better oversight and accountability is required of Directors, who represent shareholders to Management.  Directors should be compensated for their efforts, but they should not be insured against law suits when they have been negligent in their fiduciary duty to shareholders - they should be fully accountable.  Directorship should not be just a slack 'plum' position without responsibility.  Directors are there to protect shareholders, not executives.  If Directors are not responsible, they shouldn't be there at all, giving the false appearance of scrutiny.  If they knew they were liable, they would be more likely to ask questions and keep management on its toes - that is supposed to be their job (just some thoughts...any comments?).
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Next, an artistic break...my pick this time is another early favourite, Joan Baez, a cutting-edge American folk singer of the 60s.  My original favourite song (and still is) was Stewball.  Google 'joan baez youtube stewball' and enjoy.  Other recommendations are It Ain't Me Babe, and Forever Young. 

When we first moved to our house on Colony St in1965 we got to know another single-mom and her daughter in the next block.  They soon moved next door to us in an identicle wartime house with a shared drive.  From our front step I could sit and listen as they played this (1964) album on their stereo.  I especially loved Stewball.  When we eventually got a stereo (1967?), a priority ahead of almost anything else, the first album we got had to be this one.  It was played a lot and for many years (Jim Reeves was good, but could not compete with the Big O and Joan Baez), cranked up loud for Stewball.  Baez became more radical as time went on and was a key mover in the anti-Vietnam effort of the late 60s.  She performed at Woodstock.

Just as an interesting side note, John Lennon's song, War is Over (aka Happy Xmas), which came out in the 70s contains strong elements from Stewball.  If you listen to them both you will hear it - not being a musical expert myself I don't know how to describe it accurately, but John Lennon must have been influenced, whether knowingly or not, by this song.  The song is originally from the UK and goes back many years, and in different forms.  I think that when War is Over came out, this common element is what probably appealed to me so much, and of course the great lyrics. 

I was a Joan Baez fan long before it was cool.

If anyone has any thoughts or memories on this or other performers and songs mentioned here, feel free to comment...anybody out there?
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Next I thought I would just give a very brief summary of some world solutions here (none simple or easy, nor are they mine alone):

          - rise above parochialism in all matters, we need to practice being bigger, not smaller in our thinking;  Be and encourage others to become world citizens, take a greater interest in the world and other humans and our planet beyond our immediate little 'universe';

          -  have dreams, don't let difficulty or opposition deter us in our dreams, take personal action on dreams, even if in exceedingly small steps;

          - strengthen world organizations, reform or replace those that are broken or outdated; 

          - weaken religions grip on humankind, speak up, refuse political correctness that dictates questioning religious beliefs or opposition is taboo, that religion is good without justification or reason, that we are too be subservient to man-made fictions in the sky;  In particular, speak up that the religious indoctrination of children is wrong;

           - strengthen and support education worldwide, esp of girls where they are traditionally excluded.  the price will pay back in huge dividends within a generation, not just for them, but all of humankind; 

           - reduce oil consumption (slow down, buy smaller replacement vehicle, consume less packaging and plastics, etc);

           - focus discretionary dollars toward experience over stuff.

There, that is a brief summary, once we have these taken care of, we can move on to others...
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more to come