Wednesday, 30 December 2009

What is really important? - Saying goodbye to 2009

I may care about big important topics like poverty,  fair trade, saving the environment ... etc. but all I really want at this moment is to be with my family for New Year. However this year due to circumstances my mom, my dad and I are celebrating in different countries. Hopefully 2010 will then bring us all together again.

I love my family more than anything in the whole wide world.

Happy 2010 everyone! Wishing you a year of love and fulfilment :)

Wednesday, 16 December 2009

what do bankers and developed nations of Copenhagen have in common?

picture credit

Yes, old topics and some development...
Bankers: We are good at taking money from tax-payers as "bail-out" money, which was necessary as you have no choice to go down with us if we do. BUT we refuse to sacrifice any of our bonus because... It's not our problem that you guys don't have quick access to easy and cheap money.
Developed countries: We are great at contributing to global warming and exploiting you resourceful but poor continents in the past centuries or so. BUT now we refuse to help combating global warming by providing firm commitment on long-term financing for you poor peps (We need to keep our bankers happy and it is enough that we had to sacrifice and agree to the other 3 terms).

Bankers: If you make us sacrifice our bonus then we will be going elsewhere. Screw you!
Developed countries: If you don't accept that we won't finance you long term then you are the bad guys who are making an agreement at Copenhagen more difficult. YOU HAVE NO CHOICE SO we urge you to sign a deal anyway "For the common good, all countries should participate" (Ban Ki-moon on promised financial aid not included in terms)

Why does it all sound a bit too familiar?...

Thursday, 10 December 2009

Tuesday, 8 December 2009

Vietnam and Global Warming

As the Copenhagen Climate Change Summit 2009 continues and while surprisingly some people are still unconvinced about global warming and its impact, here are some photos showing how Vietnam has been affected in recent years as a result of this climatic changes (unless they can give me another reason). This is a country with a 3.500km coastline and a population that still relies heavily on agriculture, fishing and tourism -- it is now one of those that suffers most from climate change.

Average temperature in Summer is becoming higher and higher every year (as high as 43 degrees Celsius last  Summer). Even now in winter the temperature in Hanoi is 20degrees celcius, much higher than it usually is. At the same time temperature variation is drastic with change between cold and warm periods  happening over night.

At the same time the environment is getting worse and worse in Vietnam. Cities are becoming overcrowded and pollution is becoming unbearable. But the people have no time nor resource to do anything about it because they're all too occupied with working hard to catch up with the industrialized world... Instead they put up with heavier storms and worse flooding they come. These developing countries need support to change the ways they develop before it is too late.

Storms sweeping this coastal country has become stronger and more frequent

Traditional outdated production methods are causing undeniable damages to the environment

Deforestation remains a common practice contributing to terrible flooding all over the country

Literally bare mountains tops

The Hong (Red) River in the North drying up


Credit to

Sunday, 6 December 2009

We're living in "The age of Stupid"

“We wouldn’t be the first life form to make itself extinct. But what would be unique about us is that we did it knowingly. What does that say about us?” - “In my opinion our use or misuse of resources the last 100 years or so, I’d probably rename that age, something like The Age of Ignorance, The Age of Stupid.”

Quotes from the documentary/film "The age of Stupid" by Director Franny Amstrong that I just watched tonight (Link to film The film stars a man (Pete Postlethwaite, Oscar-nominated) living alone in the devastated future world in 2055, looking at media footage from 2008 and asking why we didn't stop climate change when we had the chance? This is one of the most talked about film of 2009 and has spawed the hugely-successful 10:10 campaign in the UK (

With The Copenhagen Climate Summit going on (Dec 7 - 18), we are still waiting for some sort of international agreements and commitments to be made before this Global Warming matter can have some progress. For almost a decade now I have heard of global warming. I was also part of student groups raising awareness and campaigning on campus at business school to help keep our planet in better shape, but most of the time we were viewed as being idealistic and the campaigns fall short of realizing institutional/individual actions. It is difficult to pursuade the busines savvy community of environmental issues. After the short lived buzz that An Inconvenience Truth created on our campus, I wonder how many individuals really give a rat's ass.  I personal have been more aware and have lowered my energy consumption level as frequently as I can (please feel free to laugh at me) and my individual consumerism needs (which worked out quite nicely for my personal finances, too). 

That's the thing about this epic problem of our time, we all know it to some extent but we don't care enough until we are personally affected by terrifying natural disasters or seen lives torn apart within close proximity of us as a result of temperature changes. We rely on policy-makers too much to lead but the future of our planet (to them) doesn't seem to be as important as potential economic loss from commitments to reduce carbon emissions. We're reached a certain consumerism level, it's difficult to cut back. We are on some sort of money-addicted drugs.

Different from An Inconvenience Truth where Al Gore is the star and presents a more theoretical explaination of climate change and its potential effects on our lives, The Age of Stupid shows actual footages from recent climatic disasters and at the same time propose the dilemma and complexity (and stupidity) of the situation. The film includes problems in the west: rapidly melting of glaciers on the Alps, Hurricane Katrina's overwhelming reality, unsuccessful wind-farm projects in England (due to locals  voted 11/1 against the wind turbines that potentially would be blocking their views)  to countries like India where an entrepreneur sets up a budget airline with dreams to transport the poorer population around the country with ease; in an African country where a young medical student dreams of the American dream but has to make do with what she has; or in Irak where children forced out of their country because of a certain war that was mainly launched for oil... Can you watch this with complete ingnorance? 

It's like looking through a binocular observing people faraway on the beach, they are anything but occupied with the sand under their feet... We are able to overcome emergency situations fast but lack the ability to see the bigger picture (quote film). Are we going to try and rectify the situation only when it is actually too late? 

Even my rather nonchalant movie partner was buzzed about what he can do to help after watching this film. But I think he will just sleep on it for now after finding out that electric cars cost up to £100,000. There goes his business idea.. but I will make sure he makes some sort of personal commitments (he did pledge to build his house with energy efficient facilities when he would have one).

I think we all must start somewhere individually and not wait for these politicians to make up their minds. We don't have to bring activities in our lives to a complete halt but merely by being responsible when using the resources we have so abundantly (electricity, water, recycling, walk or cycle more). I am sure you can think of something...

Those who care really about Earth's future and have compassion and a sense of urgency --- please also visit and watching the film is a good way to get inspired!!! 

And no, I'm not writing this to campaign for any entity -- I actually care about this.

World Peace Please

Saturday, 5 December 2009

Banker's Bonus -- what to do?

Investment Bankers' bonus is another oh-so-hot topic in the press at the moment. With many friends working in this sector, I understand to some degree the frustration from people working in the industry and also those outside the circle who do not get how these guys make so much money at the same time pay no damages for their mistakes (ok, juniors received less bonus last year, which probably was still equivalent to a person's annual salary in other industries). My ears prick up every time I hear the word bank bonus  --- It's just fascinating, our need of money and having as much of it as possible.

Here is my attempt to paint a picture as why there is so much buzz...

With positive results in the finance sector this year, most investment bankers are optimistic that their bonus culture is back after damp compensation in 2009. The Financial Times Weekend newspaper has predicted that bonus will be around 35% higher than last year. For those of you who have no clue how much that is let me draw you a little chart ..

Average global investment bank pay 2009
% Δ ‘08
Analyst *
80 to 90
40 to 60
120 to 150
110 to 120
120 to 140
230 to 260
150 to 200
350 to 500
500 to 700
200 to 250
500 to 700
700 to 950
300 to 400
$1.2m to $1.6m
$1.5m to $2.0m
*NB : 1st year - Analyst (1-2 years experience); Associate aver. 3 years experience
(source Financial Times Weekend Dec5/Dec6 2009)

Let's not even mention Regional Heads or Global Heads' compensation. Of course headlines from last week included some hints that  "at least 5,000 UK bankers would earn over £1million this year" (that's £1billion for a bunch of people in the UK only).

There has been a lot of criticism and anger from the public as to how much bankers are still getting paid in bonuses despite their recent contribution to the suffering of economies worldwide (blind risk-taking investments in incomprehensible financial products). This resulted in millions of people losing their jobs and homes in the western world,  and considerable effects in other developing economies. So why are these bankers still being paid so well?

When the financial world came tumbling down, government had no choice but to provide bailout money to help these banks get back on their feet. Many of them have actually been able to repay the borrowed amount (this week Bank of America won approval to repay the $45bn in troubled asset relief programme) and make huge profits for themselves. But this is also thanks to the access banks have to that "ultra loose money from central bank" (which channels down much slower to businesses) and much less competition within their industry (due to mergers and/or the disappearance of certain bankrupt entities like LB or Bear Stearns).  It's not that they are total genius --- conditions are (still) in their favour and it is a must that they do well as their failure would bring us all down.

So should they be getting a bonus each as ravishing as before? Should these bonuses be regulated by government? I do think they have been overcompensated, especially during bubbles. And this has result in expectation of ravishing bonuses that all  bankers have gotten used to. But I don't think government regulating bonus is a good idea if that regulation is not equally applied to all banks. Because any unequal intervention will do harm to a competitive industry and the finance industry is super competitive thanks to their pay structure.

This is the reason why this week RBS directors threatened to leave after The UK Treasury prevented them from making the bonus payments in line with market rates. This sounds like a slap in the face for taxpayers as 70% of RBS is owned by UK public. But why wouldn't they if they can go work at a competitor that pays them so much better? Restricting RBS' bonus pool while other banks aren't is going to do more harm than good to everyone.

In response to this outrage anger from the public/press, some banks say they will be paying out a much bigger chunk of bonuses in stock this year. And perhaps much of this stock bonus should also be tied to the bank's long term performance. Banks have also find another way to avoid the bonus argument by raising (as much as doubling) basic salaries to their employees.

Reforming the compensation structure is not going to be easy but it needs to be done and done quick. One FT article suggested that there should be a regime to force shareholders and creditors, and not taxpayers, to bear the losses of the failure. Also if banks can pay lavish bonuses they should be able to afford thicker capital cushions by having more aggressive capital requirements. I totally agree with this. There is nothing wrong with people making big gains/losses due to their investments with THEIR money. It just should not be done at the expenses of others.

With all due respects investment bankers are not all bad. They work very hard even at junior levels and competition to enter the market and to stay in the market is fierce. Their sacrifice is what many of us don't want to lose out on (not all bankers have great families). It takes certain personality to make it in this industry. This is partly why they are paid to well to start with.

We will see what the pool bonus pool payout will be earlier next year...

Sources Financial Times Weekend Paper Dec5/Dec6 2009

Friday, 4 December 2009

Fairtrade is Unfair... but is there really free trade? Yet?

I've finished reading Margaret Lamb's book on the Fairtrade Foundation and their fights in helping to find "a better deal for Third World producers". The book has an inspiring storyline and was informative enough with an ending chapter to suggest ways you can help the "movement", which has been doing considerably well for the past decades.

While Fairtrade gets good support from an increasing number of people (with a demographic that is getting younger and younger)  in developed countries, it doesn't seem to impress as many economists. Being sceptical is part of what makes good ideas work better (of course with the intent of looking at these ideas with constructive criticism). I don't think totally dismissing the Fairtrade movement like a study mentioned in the previous entry is helpful...  In many ways,  the "study" (if it can be called so as it lacks solid evidence of an economic paper) seems like a tactic to attack fair trade from all possible angles to make a case for free trade as the ultimate solution. It doesn't propose a solution to the problem that the Fairtrade organisation wants to solve. Although it made some valid points, all that stuck with me was the statement "Fair trade is unfair, free trade makes you rich" (Why does that sound horrible? Is it because it's true?).

Fairtrade is far from being a perfect system but it raises and temporarily solves certain concerns that economists who are brilliant at macro level may not be able to solve the immediate needs of those at micro level (ability to push changes quickly enough through policies? - I see this as a discrepancy between macro and micro level). I believe Fairtrade is a solution that is working in some ways - there are producers and workers in the third world who have been economically disadvantaged or marginalized by the conventional trading system. We cannot wait for the free market to correct these problems while they suffer, can we? (We certainly didn't wait for that to happen with the recent financial crisis).

A promised minimum fixed price to help them cover at least production costs seems like an idea... its long run effect on free trade is another issue. But how free is trade really? Farmers from developed countries benefit from government subsidies while those in developing countries have no protection whatsoever. Is that really free trade or really the richer gets it all? Freetrade attempts to make life easier for these marginalised farmers, maybe just a bit easier according to some studies -- 0.18 cent/per person/day may not be a lot to us but in the third world every penny counts (source

Despite my support for the cause Fairtrade is fighting for, I believe a lot more work still needs to be done. Fairtrade currently is only able to help 5 million people in 49 developing countries, which isn't yet comparable to the billions living in poverty. Despite that, isn't it still a positive start from nothing? And if they can add something like £10 per annum to every pocket of every man in countries where the average farmer income is appro. £160 then it isn't bad at all? (source -- something must be working.

Moreover, raising awareness is also an important issue. There is nothing wrong with creating a brand, everything that works or sells these days needs a brand. Fairtrade has made people aware of the situation that is so distant from their own problems. And by purchasing the products they are contributing in some ways while waiting for politicians and policymakers who are divided on all major issues at the Doha rounds, struggle to agree on Climate changes and other important issues.

One valid point from a prominent economist, Peter Griffith, is that Fairtrade (and their criticism) needs to back their work with more solid and convincing results -- While they have been very successful at marketing their initiatives, they are not getting an overwhelming support from the mainstream economists and economic publications (not even the Economist nor the Financial Times).  Not only that these criticism is helpful in the process to make Fairtrade even fairer but also being able to convince these guys is a huge credit to the movement.

Also I keep wondering why countries like China, India or those in SE Asia aren't really getting any help from Fairtrade (yet)? (It is suggested that they're benefiting directly from free trade.. free market). I know that in Vietnam in the past decades has been struggling with price war of certain exported products and farmers are definitely affected by that  (a topic to investigate in a later entry perhaps).

 I really don't like to think that "fair trade is more about flattering Western shoppers than transforming the lives of Third World farmers" (source BBC) but without concrete evidence that might be an inconvenience truth.

Here are some links to discussions regarding this topic including a short video by Philip Thomson "A bitter aftertaste"

The title of this entry is quoted from the Adam Smith Institute study "Unfair Trade" by Marc Sidwell
And all the websites stated in this entry

Thursday, 3 December 2009

FairTrade vs. Free Trade

I have heard of the "Fairtrade" movement for a long time but even as a student of economics I'm sure I don't totally understand its economic impacts...

When I was working at the Warwick Arts Centre coffee shop during my time at Warwick University, fairtrade coffee was on offer though you have to request it to actually get it. I thought that was weird but I paid little attention to the movement, partly because I had problems of my own to worry about. Later on I heard rumours saying that Fair Trade didn't really work, what customers paid extra didn't really get back to the hand of the workers. This disencouraged me even more and I thought no further about the subject... But slowly I started to recognize the amount of exposure Fairtrade products were getting in supermarkets, coffee shops and charity shops.

... And until recently. I came across Harriet Lamb's book "Fighting the Banana Wars"  as I was rummaging through stocks of the liquidating Books Etc. company, I thought I'd give it a try learning more about Fairtrade or at least attempt to understand what a difference this movement would make to farmers around the world. After all coming from a developing country where 80% of the population still works in agricultural, I should be able to decide for myself whether "Fair Trade" is a good idea. It sounded good. I have heard so many stories about the hardship of farmers in developing countries so Fairtrade must be doing something right, like helping the voices of these farmers be heard in some way.

I am half way through the book. What I have understood so far is that Fairtrade helps to protect the farmers and agricultural workers in developing countries, who are getting paid poorly and are literally unprotected from the harms that modern agricultural techniques and what today's market economy (more-or-less free trade) have exposed them to, to have a fairer price for their produce.  I have just finished chapter 3 " To hell and back" in which Lamb discusses the volatility of commodities prices in recent times and how farmers in the developing world are suffering from these low prices due to subsidies introduced by government of developed countries to help their "local" farmers. This in turn have pushed prices of commodities like coffee and cotton to a level that farmers in poor countries cannot compete with and are struggling to make profits...

I have yet to form a strong opinion on the topic, but I am keen on understanding both sides of the argument as any student of economics would do. I turned to the Adam Smith Institute's for  opposing view of Fair Trade. So far, I am not too impressed with it... Make be it's because Harriet's book was more persuasive? I hope to make my own case soon...

For those of you who are interested please follow the links below to the study by Adam Smith Institute and the response of Fairtrade Organisation in the United Kingdom to their published "study".