Friday, 30 April 2010

France, Islam and the new cultural revolution

A French woman driving while wearing a niqab, a full face veil with only space for the eyes, was recently issued a ticket for unsafe driving. Apparently, the niqab hinders the full vision of a driver. (Surely, the peripheral vision of someone wearing a niqab is no less than that caused by wearing a motorcycle crash helmet?) Hence, the traffic summons.
Having lived in the Middle East for many years, I can say that female drivers (with or without the niqab) probably have a lower probability of causing traffic accidents than their male counterparts. I am sure international road accident statistics will back up my claim.
Let's not fool ourselves. The French police action is hardly linked to road safety. It is also not about human rights. The controversy is about the amplified prominence of Islam in Europe.
For a variety of reasons, Muslim consciousness has increased rapidly in the post 9/11 environment. The outward appearances of religiosity, including the hijab and the niqab, have found their way onto city streets all over the world.
Some may legitimately argue that segments of the Muslim population in the West use the hijab and other religious symbols as a form of silent protest against Western cultural domination.
And here lies the problem.
'Islamic' culture, if there is such a thing, cannot be clearly defined. Even if Muslim culture could be defined, undoubtedly it has been in the doldrums for many centuries with signs of life appearing only since the 1900s. It's hard for Koran recital contests to compete with Hollywood blockbuster movies.
That the Islamic world cannot speak with pride of even one international cultural capital is embarrassing.
Think of the world's vibrant cities. The cities that come to mind include London, New York, Paris and perhaps Shanghai, Tokyo and Hong Kong. Stretch the imagination slightly. Will cities like Cairo, Istanbul, Kuala Lumpur, Lahore, Damascus or Dubai enter the list? Unlikely.
The dynamic has improved with the beginnings of an Islamic cultural renaissance visible. However, the picture is not entirely clear as much of the renewed intellectual activity is based in Western nations around Muslim émigrés. The fact underscores the weak academic 'enabling' environment found in most Muslim countries.
Between the radical Mullahs who find most things un-Islamic and the weak research infrastructure, including a lack of world class higher educational institutions, an academic is better off working in New York, London or Paris versus Cairo, Istanbul or Islamabad. And, of course, most research material is not available in Urdu, Turkish or Arabic. That is, unless one conducts research on Islamic theology.
Although Islamic theology has a place in the world, it does not create doctors or teachers. Nor does theology help construct electric power plants, railways, hospitals or any of the other things in modern life which we take for granted.
So what's with the current European predilection with Islamic symbols? Whether we speak of minarets in Switzerland, the niqab in France or simply halal only restaurants there is obviously a deeper trend at play.
It concerns the awakening of a more assertive Islam. The world has a new generation of Muslims who are questioning their own identity. In the process, these Muslims are making the Europeans question the notion of 'Europeanness' and the European identity.
Ultimately, I suspect one will have to wait for the European Court of Justice to determine whether the niqab is an acceptable part of Europe or not. However, we already know that Turkey is not an acceptable part of Europe, with or without the headscarf.

Wednesday, 28 April 2010

Goldman Sachs and capitalism's ‘New Normal’

Goldman Sachs (GS) prepares to take on the US government, in the form of the US Senate and the Securities and Exchange Commission (SEC), in the coming months. The GS Chief Executive Officer Blankein versus Senator Levin exchange is a small battle in a larger war.

In the internet age we have a tendency to redefine traditions. Thirty is the new twenty, small is the new big and billions are the new millions.
High finance has been no exception. It has been redefined.
Traditional banking business is a relic of the past. Bankers do not lend money anymore. Bankers invest money aka play with OPM (other peoples' money). Yes, at some level the 'investments' are actually loans, but the degrees of separation between the lender and the borrower are umpteen.
Certainly, few bankers know the people to whom they lend money. Personal assessments of character and ability to repay are replaced by point systems. Few bankers visit business premises to check plant and machinery of borrowers.
When an AIG trader, if there are any left, buys a synthetic security he buys a piece of paper with a value associated with another piece of paper. The second piece of paper is linked to a loan securitized such that it becomes another piece of tradable paper. Perhaps the third piece of paper is the 'real' loan which some individual is servicing as a mortgage on their home.
It's easy to see why active market participants may not even care about the underlying exposure (loan) of the synthetic security. They leave the qualitative judgement on the final loan on which the entire structure is built to the rating agencies.
The rating agencies, like the hedge funds which proliferate through the financial ecosystem, rely upon quantitative, disciplined back testing to determine loan default rates. Of course, historical relationships, quantitative or otherwise, tend to break down over time.
China was a communist, centrally planned economy until the 1990s. India, with its pseudo-socialist economy, was a Soviet ally during the Cold War. Kabul, Afghanistan was the end point of the Hippie Trail which started in Volkswagen vans all across Europe. Brazil was a basket case economy suffering from chronic hyper-inflation and budget deficits.
Similarly in finance, relationships that remained stable for the last decade change dramatically at short notice. Whether the changes were triggered by Greenspan's easy credit era or home sellers running out of buyers to 'flip' their houses to, it really does not matter.
Ultimately, the system broke down. It will take years to fix and the world economy's new structure is still uncertain. The Chinese Renminbi may be the international reserve currency several decades hence, or perhaps the world will revert to the gold standard. No one can say for certain.

The 'New Normal' for capitalism is trading in paper certificates. The certificates may represent pork bellies, oil or paper which relies on paper which relies on paper which relies on paper which is valued based on the upward movement of US Dollar interest rates when it is sunny in London but when it is raining in London the value of one hundred bushels of wheat are to be used!
Ultimately, it's all paper and as long as one buys low and sells high (not necessarily in that order) then it's all worthwhile. Taking out money from the market is the new mantra for international bankers.
Play with the numbers enough and it's not a zero sum game. In other words, the money can be 'created' and original goods and services are no longer necessary.
So when watching the Goldman Sachs versus the World drama, let's remember that it's a world which the financial sector did not create without active participation from the broader society. When times were good everyone cheered.
Today, Iran's nuclear threat is no longer the greatest threat to Western civilization. The honour belongs to Goldman Sachs CEO Blankfein and his loyal (though greedy) troops scattered around the world's various financial capitals.  
Just in case someone wishes to profit from the entire mess, there are some gainers. During the last two weeks, as Goldman Sachs stock price dropped seventeen percent, Morgan Stanley's stock price gained three percent. In the old fashioned investment world, a relative outperformance of twenty percent is worthy of a handsome bonus.

Monday, 26 April 2010

Shrinks, theologians, the devil and the death clock

Most consider death to be a morbid thought. Yet, death is an inevitable fact of life. Everything must die. Humans, animals, plants, even inanimate objects like planes, trains and automobiles perish sometime.

Death may be a precursor to a new beginning. Dead plants fertilize the soil for more crops. Creatures that died thousands of years ago are today's fossil fuels. For humans, the monotheistic religions certainly propagate some form of afterlife.
At least the monotheistic religious traditions attempt to instil a fear of God, often through anxieties over death.
While it is impossible to verify any claims about a human soul's post death condition, one can certainly opine about the philosophy of death. One does not need to be noted Swiss psychiatrist Elisabeth Kubler-Ross to have opinions on death and dying!
Theologians and hedonists argue that humans must live to the fullest. However, their viewpoints are diametrically opposed in methods to achieve the same objective. 
Theologians suggest a full life must be devoted to God by indulging in a faith based regime which purports to keep us away from evil behaviour. Hedonists tend to see life as an equation in which 'pleasure minus pain equal happiness.'
Both philosophies have one idea in common: we live each day as if it is our final day on this earth. And, that is why an individual's philosophy of death provides qualitative insights into character.
Will someone go out partying during their last night on earth or will they seek penance and repentance in prayer out of fear? Perhaps just eat the proverbial last meal and then a restful night of sleep to enter the afterlife?
The permutations are as endless as personalities on the planet.
I only hope that when it's my turn I am not filled with fear. I can't hide my history from my own self. For my acts of omission and commission, I am accountable to at least myself. The rest may not be irrelevant but should take care of itself.
If my conscience is clean I can have that last night of restful sleep, uninterrupted by demons and wizards. No valium capsules necessary.
Elisabeth Kubler-Ross sounds eerily close to Muslim theologian Al-Ghazzali when she said, "It's only when we truly know and understand that we have a limited time on earth - and that we have no way of knowing when our time is up, we will then begin to live each day to the fullest, as if it was the only one we had."

The sceptics may wish to visit the Death Clock to check their estimated time of departure. Additionally, as the Irish toast goes:
May you have love and raiment
And a soft pillow for your head
And may you spend forty years in heaven
Before the devil knows you're dead.

Friday, 23 April 2010

The global media: on picking and choosing wars and the Am-mex region

The power of the global media to set the international agenda is incredible. The news the world watches on international television channels and reads in umpteen newspapers is eerily alike.

Television channels like CNN and BBC, despite their respective US and British centric biases, carry almost identical news. Similarly, given the propensity of newswires like AP, AFP and Reuters to dominate the print media, newsreaders in Hong Kong, London and Sydney often read the same articles on major international events.
Surely, there are economic reasons for the monopoly on news by major international players. Undoubtedly, the world benefits by increased and convenient information flow.
Some items make the news and others do not. The war on terror makes the grade but the war on drugs does not.
Consider the global war on terror. Each and every day for almost the last decade global citizens are bombarded with considerable details on any event, large or small, related to the war on terror. Even a firecracker exploding in Pakistan's tribal areas will flash across CNN screens ('through reliable sources CNN has learnt of an explosion in Pakistan's lawless tribal areas') within a few minutes.
Americans, not generally known for their grasp of international geography, are suddenly aware of the finer distinctions between North Waziristan, South Waziristan and the towns of Mir Ali and Wana. Not surprisingly, most Pakistanis are themselves not fully aware about the existence (and legal framework) of the various agencies within the Federally Administered Tribal Areas (FATA).
The war on terror is real for the world, whether it is fought in Yemen, Iraq or Afghanistan.

On the contrary, few know of the war on drugs being waged just south of the Rio Grande River. Perhaps only the scores of civilians dying daily in Northern Mexican towns such as Juarez, or those killed in shootouts in the hotel district of Mexico's prime beach resort, Acapulco know of this forgotten war.
Ok, so Juarez might be the murder capital of the world but it is still the Mexican equivalent of Mir Ali. Monterrey, however, is not.
Monterrey is Mexico's third largest city and home to much of Mexican industry. Monterrey is Mexico's Kandahar or Pakistan's Peshawar. Incidents in Monterrey are of international interest.
Thus, when a dozen SUVs cordon of an entire district of the city and storm two hotels, including the Holiday Inn to abduct six people one would think it will make global news headlines. But no, the episode is either a footnote in a print newspaper or not mentioned at all.
If a similar event occurred in Yemen, Mali, Indonesia, Pakistan, Jordan or Afghanistan, then speculation about lack of central authority, collusion with Al-Qaeeda and a host of other matters will fill the international news ecosystem incessantly.  
Undoubtedly, the world is an unfair place. Like nations, individuals pick and choose their wars carefully. To fight the international media may be easier due to the advent of social media. However, let's not fool ourselves, until a war is adopted by the mainstream media it does not exist.
Everyone is familiar with the war taking place in the Pak-Afghan border but few hear about the war which takes place on the US-Mexican border.
There are public wars and there are private wars.

Maybe if the Am-Mex war seeps over onto the US mainland it will be more widely reported. Mexican drug barons are as feisty as Obama's warriors in defending their interests and there are no guarantees the Mexican war stays limited to Mexico.
Osama's original war was against the US troop presence in Saudi Arabia. Clearly, the war is no longer confined to Saudi Arabia. Read any newspaper.

Wednesday, 21 April 2010

The US, Zionist-imperialist conspiracy in Kyrgyzstan

It's difficult to pin the blame for all the world's ills on the CIA, Zionists or even Goldman Sachs. Although I do admit to searching for clues by reading the secret documents recovered from the captured US Embassy in Teheran in 1979. (The documents were published in book form in Pakistan.)
Despite poring through the many 'secret' memos, I was unable to find evidence of a grand conspiracy originating either in Tel Aviv or Langley, Virginia.
Like all nation states the strategic objectives of the US are pretty well known. In fact, they are even contained in a report published annually by the US Department of Defense!
A traditional Kyrgyz storyteller relating his tales

Unlike me, the residents of Kyrgyzstan will be harder to convince that US intentions are 'pure' and there is no hidden agenda.
From being one of the many republics in the former Soviet Empire, Kyrgyzstan obtained its independence in October 1991.
Oddly, the Kyrgyz ruling elite, like the other 'tans,' was not very happy about its new found freedom. Independence required the political elite to renew its legitimacy as a ruler of the impoverished nation, the poorest of all the Central Asian states.
Being part of the Soviet Union meant Moscow paid all the bills and the Communist Party ensured that control remained firmly in the hands of Moscow. As long as the Communist Party of the Soviet Union (CPSU) in Moscow was kept happy, the Kyrgyz elite exercised complete control over the 'autonomous republic.'
Kyrgyzstan is a small nation with a population of just over five million. Seventy percent are ethnic Kyrgyz with Uzbeks (15%) and Russians (9%) bringing up the rear. The country is strategically located and houses a US base used to resupply American troops fighting in Afghanistan.
And here's where the story gets murky.
The national flag of Kyrgyzstan

Former President Kurmanbek Bakiyev, himself the product of the 2005 Tulip Revolution, tried to play the fine line between the two competing regional powers, Russia and the US. He allowed the establishment of the US base as an alternate route to supplying materiel to Afghanistan. He was even bringing China into the picture by connecting the Kyrgyz electricity grid to China's.
The rub lies in the manner in which the Bakiev clan went about reorganizing the country's economy.
In October 2009, a Presidential Decree appointed Bakiyev's 32 year old son, Maxim Bakiyev, as the head of Central Agency on Development, Investments and Innovations (CADII). The CADII was responsible for "structural reorganization of the country's economy, support for business, attracting foreign investment, and most importantly, preparation of the country's budget and national economic programs."
In other words, without pleasing Maxim Bakiyev nothing moves in Kyrgyzstan.
Enter the US military and its strategic objectives. It needs fuel to operate its regular flights from its Kyrgyz airbase. So, according to the Wall Street Journal, the US secured fuel supplies by entering into a contract with a company owned by Maxim Bakiyev.
Multiply these contracts a hundred times over and it is not hard to see why the Kyrgyz population may be fed up with nepotism. Nor is it difficult to see why the US may be closely associated with propping up the former regime.
The coincidences pile up when it is reported that Maxim Bakiyev is on his way to Washington for an 'official' visit at just about the time the recent civil unrest reaches a crescendo.
Not surprisingly, the new Kyrgyz administration has opened criminal cases against the President's son. Undoubtedly, the cases will not resolved in court but through negotiations between Kyrgyzstan, the US and possibly Russia.

The Great Game is being played not only in Afghanistan but in all Central Asia.
The game may have started centuries ago but the final move appears nowhere in sight. Surely, Uzbek President Islam Karimov and his Kazakh, Tajik and Turkmen counterparts must be watching events in Bishkek as closely as in their own countries.

Monday, 19 April 2010

Zen Buddhism and the modern stock trader

Surprising as it may sound, but short term equity trading is very much a Zen phenomena. Short term, high velocity trading requires immersion into a larger force, an appreciation of the finite nature of one's power as an individual being in a larger entity. An understanding that what is real is not always right and what 'should be' is different from 'what is.'
Zen emphasizes experiential prajñā, particularly as realized in the form of meditation, in the attainment of enlightenment. As such, it de-emphasizes theoretical knowledge in favor of direct, experiential realization through meditation and dharma practice. (Zen, Wikipedia.)
The stock exchange may be an odd place to look for enlightenment but dig deeper and it may not seem that odd a starting point.
The Great Buddha Hall at Chuang Yan Monastery

Any stock exchange is comprised of thousands, if not millions, of buyers and sellers converging at single point: a company's stock. No specific buyer or seller dictates the price at which a transaction is executed.
More buyers make the stock dearer and more sellers push the price lower. The final price is the culmination of a process called price discovery.
Simple enough, but where's the Buddhist connection?
Well, a short term trader becomes a part of the larger market. The market formed by these thousands of buyers and sellers. She does not fight the greater powers, the universal forces. Forces represented by the broader market.
These universal forces are much larger than her. She accepts them. She becomes 'One' with the market. A form of meditation, meditate and be mesmerized by the ticker tape! And, of course, control the base emotions of greed and fear.
The stock market may not be just or fair but it's difficult to argue with reality. If Coca Cola's stock price moves from USD 54 to 55 then USD 55 is the new reality.
A trader may not like it. A trader may not have anticipated the price movement but, hey, it is what it is! And, it is 55. Argue all you want.

Like a Zen Buddhist, what a short term equity trader really needs to do is search within herself to understand why she was not in tune with the broader market forces. Accept the loss and move on.  
Equity trading activity is almost an out of body experience. When 'in the zone' money making trades flow effortlessly. Outside the zone and the trader is a bumbling klutz who loses money in the market faster than a croupier collects money from a gambler.
Trading is an individual experience. The results, measured in hard cash profits and losses, cannot be ignored. The numbers brutally undress the individual trader. Eloquence or sophistry cannot hide bad numbers. Good numbers embalm the soul.
It's like standing in a temple or a mosque and coming face to face with oneself. That's all there is to it. That's the way it is.

Want to argue – go argue with the market.  Let the market know Coca Cola should trade at 50. It may make one feel better ... until one realizes the account statement still values holdings at the real market price. Not what the price should be.
Control greed and fear, open an online brokerage account and practice Buddhism in front of your computer screen. That is the way.
The way that can be spoken of
Is not the constant way;
The name that can be named
Is not the constant name.
The nameless was the beginning of heaven and earth;
The named was the mother of the myriad creatures.
Hence always rid yourself of desires in order to observe its secrets;
But always allow yourself to have desires in order to observe its manifestations.
These two are the same
But diverge in name as they issue forth.
Being the same they are called mysteries,
Mystery upon mystery -
The gateway of the manifold secrets.

Friday, 16 April 2010

Yuan revaluation: an alternate view

A nation's monetary and exchange rate policy require a multi-dimensional approach. The US Federal Reserve Bank monitors a host of factors to forecast future economic trends and manage policy.
Bernanke's job is a thankless one. Get the mix right and either no one will notice or the politicians hijack all the credit for the good times. Get it wrong and be constantly grilled by various Congressional committees.
Take Alan Greenspan. During his tenure, few Americans complained about Greenspan's low interest rate policy. People were too busy adding stock portfolio gains to their ever increasing house prices, and consuming goods and services with their new found unrealized paper wealth.
Today Greenspan is demonized as a factor in causing the Great Recession.

Like the US, China's economic policy cannot take a simplistic approach. China's economy too has various competing forces at play, both domestic and international.
However, given China's 2.7 trillion US Dollars in exchange reserves China's exchange rate policy is highly politicized. From the US Treasury Secretary's 'surprise' visit to Beijing to Congressional leaders demanding China be labelled a currency manipulator, emotions are running high.
The US Administration seems to be caught in a bind. US domestic politics demands a tough line but realpolitik dictates a softer approach.
China is the largest lender of funds to the US. Every US government Treasury bill China buys is effectively a loan to the US government. And the US is borrowing a heck of a lot of money these days!
Many argue that the situation is caused by Chinese government policies which keep the Yuan's exchange rate artificially weak, thus stimulating US imports from China. After all, the primary source of China's hoard of Dollars is purchases of Chinese goods by the Americans. Further, it is suggested that all of America's trade problems with China will be resolved as soon as China allows its currency to strengthen against the USD.
History suggests there is more to trade relations than merely currency values.
In 1985, the US had a 46 billion Dollars trade deficit with Japan. The USD – Yen exchange rate was 254.78 Yen to one Dollar. In 1995, the trade deficit increased to 59 billion Dollars although the Dollar had lost more than half its value. In 1995, one Dollar could be purchased at approximately 99 Yen. In 2009, the trade deficit had reduced to 45 billion Dollars while one Dollar purchased approximately 90 Yen.

Essentially, the US had 'inflated away' its debt obligations to the Japanese. The Japanese, as one of the largest creditors of the US, were being repaid with a debased US currency; a currency worth approximately one third of its 1985 value.
Is the US pushing the Chinese to revalue the Yuan for similar reasons -borrow today's Dollars from the Chinese and repay them with a weaker Dollar sometime in the future?
A stronger Yuan has other repercussions. US children will pay more for Barbie dolls, imported from China. We all know that the US dependency on imports of Chinese manufacturing products extends well beyond Barbie dolls.
Politically, a strengthened Chinese currency may increase Sino-US tensions. Chinese purchases of overseas assets will increase from their already heightened pace. Whether China is purchasing mining assets in Africa or bidding for US oil companies, the price tag for China will be lower due to a stronger Yuan.
During the last decade, 9/11 is not the only momentous event to have occurred. China's entry onto the global stage has been gradual but becoming ever more apparent.
When pushing for a stronger Chinese currency, the US must beware of the 'Law of Unintended Consequences.' We must be careful what we wish for just in case we get our wish.

Wednesday, 14 April 2010

Brother, can you spare a few Drachmas?

Another day, another bailout. What else is new?
European Union (EU) leaders have agreed to a multi-billion aid package to prevent Greece from declaring bankruptcy. Yes, countries can go bankrupt!

National bankruptcy mechanisms are no different for nations – spend more than you earn over an extended period of time and the bills add up. Creditors boycott debt (i.e. credit cards are maxed out!) and start demanding repayment.
Greeks have a good life with a relaxed work culture. In the past, tourism, shipping and tax evasion were some of their biggest businesses. Oh, I am sorry did I forget to mention olive oil?
With the advent of the EU, tourism, shipping tax evasion and spending EU subsidies are some of their biggest businesses.
Before the internet and globalization, the Greek system worked well. Greeks showed up at work, enjoyed themselves and took home Drachmas as payment for their toils.
Remember the Drachma? Unlike the Deutschemark, the Drachma was never a favourite of currency traders. In fact, it was pretty much a controlled currency much like basket case Latin American currencies of the day.
Well, whenever the Greek government could not honour its obligations it did what any self respecting nation does (check out a twenty year graph of the USD - Yen exchange rate for further confirmation!): it devalued its currency. Lend me one hundred Drachmas and I will repay you one hundred drachmas. However, the Drachmas buy you only one litre of olive oil today, versus three when you lent me the money.
Ah, the good old days when life was simple.
Fast forward to the new millennium and olive oil farmers have to deal with speculators trading in instruments that, well, no one understands.
Comprehending the investment securities does not really matter because someone else will be holding the bag when it comes time to pay the piper. Why worry about the future? Churn the security, take the bonus and let the government bail out the aggrieved party whenever social unrest requires severe action.
The only problem is the Drachma does not exist anymore. And, Greece is part of a 'civilized' club of nations. Greece can't 'devalue' its problems away anymore or it gets blackballed.
Hence, the European taxpayer picks up the tab. The Greeks continue to retire at 62 with some of the healthiest pension benefits in the world – if they are lucky enough to receive them.
Of course, for the 'Big Boys' of the European Club, including the Germans, French and British the Greek bailout is small change. European imperial possessions in Africa and Asia generate more cash than their respective Royal Families can spend renovating their castles and palaces.
The US Dollar replaced the British Pound as the world's international reserve currency several decades ago. The US Dollar is slowly being eased out of its privileged position as surely as I write this post.
However, there is one major flaw in my theory: there is no ready replacement for the US Dollar. A Pepsi may substitute for Coke, or a Whopper for the Big Mac but reserve currencies are not so easy to swap.
All currency candidates have some serious drawbacks.
The Euro, well not only Greece but the rest of the PIGS (Portugal, Italy, Ireland and Spain) must be reckoned with. The Yen, the Japanese need to lop off a few zeros and maybe the Yen can be a serious contender! The Yuan has too many controls and a general lack of faith in China's policy continuity.
List the currency and I'll state its shortcoming. Nevertheless, let there be no doubt the US Dollar is on its way out.
(Colonel) Georgios Papadopoulos President of the (Greek) National Government

Several centuries ago, Greece introduced representative government to humankind. In 2010, Greece is perhaps the harbinger of another new era: the post-internet society. After a period of tremendous growth and innovation brought about by information technology, society may have to wait for the next major technological breakthrough to start another virtuous cycle of growth.
Or maybe we just watch CNN and wait for the breaking news that, following months of civil unrest, a Gang of Colonels has taken over Greece and declared martial law. The military government's first act to restore national pride: the revival of a strong national currency called the Drachma.

Monday, 12 April 2010

Denmark: freedom of speech, beer and cartoons

Jesus may have turned water into wine but it is beer that the average Dane seems to take more seriously. With almost eleven billion Dollars in worldwide sales, Carlsberg employees understand the criticality of the global beer economy.

However, like global corporations in any industry brewers also find themselves under pressure during the current economic crisis. Compared to 2008, Carlsberg's 2009 net revenue marginally dropped. Granted most manufacturers may have been happy with a 1% year on year drop in sales but let's be real: cans of beer are not directly comparable with Alcoa's aluminium, Toyota's cars or even Pfizer's Viagra tablets!
Power has shifted from employees to employers and managements' are using the shift to implement difficult policies that may have been impossible to put into practice in earlier years, layoffs aside. Some corporations tighten up medical reimbursements, others reduce overtime benefits but Carlsberg is no ordinary company.
The first Carlsberg brewery was established by Jacob Christian Jacobsen in 1847 at the Valby Hill area just outside Copenhagen, Denmark. The first batch of beer was brewed on 10 November 1847. By 1860, the brewery was producing 20,000 barrels.
In 2009, Carlsberg sold 135 million hectolitres of beer in more than 150 countries. A hectolitre is equivalent to 100 litres.
It might be difficult to visualize 135 million hectolitres but it just might be enough to top up the Indus River enough so as to avoid a confrontation between India and Pakistan over their bilateral 1960 Indus Waters Treaty!
On April 8, Carlsberg management took one of its toughest corporate decisions ever. From that date, free beer is only available to employees during their lunch break. What nerve?!

The strict 'lunch-only' policy prompted 800 workers to strike and disrupted delivery of the golden ale across Copenhagen.
While truck drivers are exempt from the new policy, they joined the strike to express solidarity with their less privileged colleagues. Drivers "are permitted to bring three beers from the canteen because they often don't have time to have lunch there."
Denmark may respect freedom of speech more than Islam. But, at least for Carlsberg employees, beer is obviously higher up the pecking order than both freedom of speech and Islam.

Friday, 9 April 2010

Singapore’s Islamic law and the inheritance imbroglio

In reality, Singapore's Administration of Muslim Law Act (AMLA) is not complicated at all. There is even a spreadsheet on the Islamic Religious Council of Singapore (MUIS) website which calculates how a Muslim's assets are divided after death.
Unfortunately, most Singaporeans are not aware that religious inheritance laws are imposed upon Muslims. As non-Muslims, most Singaporeans are not concerned about the predicament either, despite the fact that civil law will increase the 'common space' among the diverse population.
It is in that context that the recent ruling by Singapore's Court of Appeals upholding the 'survivorship' principle was encouraging. The ruling also brought the AMLA situation into stark focus within the legal fraternity. It also highlights the potential for confusion at those points where Singapore's civil and religious law intersect.

Knowing full well that my comments are slightly aggressive within the Singapore context, I promptly despatched the following letter to the Straits Times.
The paper did not deem it worthy of publication but the Grand Moofti believes the text should be shared with a broader audience.
To the Editor:
The recent declaration by Singapore's Court of Appeals that "the general law will prevail against the Muslim law [Administration of Muslim Law Act] on this issue [inheritance law regarding assets jointly owned]" is encouraging. The precedent set by the court decision provides clarity over the distribution of a Muslim's jointly owned assets.
However, the Obeidillah Salim Talib case raises the important question regarding the validity of a Muslim's will if it relates to more than one third of his estate. 
Prevailing practice suggests Singaporean Muslims have no choice but to abide by the provisions of the Islamic Religious Council of Singapore's (MUIS) interpretations of the Administration of Muslim Law Act (AMLA) for disposing of assets following death; interpretations which the Court of Appeals declared to be no more than 'expert opinions.'
AMLA singles out Singaporean Muslims by not permitting them to bequeath assets, accrued over a lifetime of work, based on individual conscience and freewill. The situation is a denial of fundamental freedoms to a particular segment of Singaporeans purely on the basis of religion, freedoms readily available to all non-Muslim Singaporeans.
It will certainly be a step forward if Singapore's higher judiciary can confirm that a Muslim's duly registered will pertaining to his entire estate is recognised by Singapore's legal framework. The will, of course, may still voluntarily abide by the fatwa or religious guidance provided by MUIS for disposal of an estate.
Yours sincerely,
Imran Ahmed

Wednesday, 7 April 2010

Singapore’s latest landmark: Suntec Cathedral

The recent news concerning Singapore's City Harvest Church's (CHC) acquisition of Suntec Singapore International Convention and Exhibition Centre exposes weaknesses in Singapore's regulatory framework managing charitable and religious organisations.
The Suntec Expo Centre is an established feature in the international convention circuit. In the current month, there are almost twenty international exhibitions scheduled at Suntec.
Suntec is a Singapore landmark, not just as a shopping mall but also as an exhibition centre.
The Fountain of Wealth at Suntec, Singapore

The CHC, too, is a fixture within Singapore. With its 33,000 members, the CHC is a powerful force for Christianity in Singapore.
In the last two years alone, CHC received 86 million Singapore Dollars in donations. In the financial year 2008 – 2009, CHC paid SGD 9.3 million in staff salaries and allowances versus 'Local Community and Charity Work' of SGD 2.9 million. Total balance sheet size was SGD 111.1 million with net liabilities of SGD 7.6 million.
Put simply, CHC is rich. Even after debts, CHC owns assets of over SGD 100 million. Acting as an obvious multiplier effect to the large membership is the financial strength and ongoing donations collected by the CHC.
In March 2010 the public became aware of CHC's plans to convert Suntec into its new home.
A church is not just a main sanctuary and nothing else. Having extra facilities is critical to the operations of the church. We need areas for children, rooms for Bible study, car park space and eating places. Suntec Convention Centre has more than 30 meeting rooms, and we will have access to over 8,680 car park lots in the Suntec-Marina area. Between Suntec City and the Convention Centre, there are 283 stalls/restaurants for our members to eat at, and 622 retail stores for our members to shop in.
Clearly, the acquisition of Suntec was a 'takeover' of the premises. One would assume that CHC had comprehensive plans to modify and 'rework' Suntec to ensure its suitability for the events envisaged by CHC.
Ordinary Singaporeans are right to be sceptical of the transaction.
While the authorities have subsequently confirmed that a rezoning of Suntec from commercial to religious use has not been requested by the new owners, questions about CHC intent are genuine.
Imagine a wealthy religious Arab trust fund buying Chijmes and converting it into a religious centre, complete with madressa and mosque with courtyard. CHC's intent and plan for Suntec is no different.
From an investment perspective, CHC tax exempt status gives it an undue advantage. All revenue is tax free. Hence, CHC required returns are lower than for ordinary corporate and individual businesses.
CHC's acquisition distorts returns in the real estate market as tax exempt entities are willing to pay higher prices for assets than typical taxable investors. In a free market, a level and transparent playing field for investors is the primary role of the authorities.
In the Suntec transaction, there is no transparency and questions about the fairness of the purchase abound.
On a social level, one has to be suspicious about commercially managed religious organisations encroaching upon Singapore's common space. Combining large amounts of cash with thousands of fervent believers is a recipe for increasing social cleavages in a diverse society.  
City Harvest Church's twentieth anniversary celebrations at the Singapore Indoor Stadium

In 2008 – 2009, CHC spent approximately SGD three million on 'Christian Television Broadcast and Mass Media, Church Television Ministry and Internet Broadcasting;' an amount equivalent to the SGD 2.9 million spent on social work.
Undoubtedly, all charities, including religious and ideologically inclined organisations, have a legitimate need to become self-sustaining entities. However, naked capitalism must be subordinated to the broader interests of society.
A comprehensive regulatory framework, possibly restricting charitable investors from taking management stakes in other businesses, is an immediate requirement. Like all religious organisations legally operating in Singapore, the activities of Kong Hee's Church must be circumscribed in a reasonable manner.


Imran is a business and management consultant. Through his work at Deodar Advisors, Imran improves the profitability of small and medium sized businesses. He can be reached at

Monday, 5 April 2010

Singapore, Xinjiang, foreign talent and domestic discontent

Imagine the following scenario.
After years of officially sanctioned migration by a Malay minority government, Singapore's 2010 population has transformed to a Malay plurality, i.e. ethnic Malays are 41% of the population. Official policy to ensure social stability concentrates leadership within the Malay community. Senior leadership and bureaucratic positions are available only to Malays.
Non-Malays, due to formal and informal discrimination swell the ranks of the unemployed. Chinese Confucian and Indian Hindu traditions are discouraged as being 'un-Singaporean.' No children below eighteen are permitted to enter temples. Hungry ghost month traditions of burning offerings to ancestors may lead to jail or detention.
Street scene in Kashgar, Xinjiang

Singapore's ethnic Chinese are nowhere in the picture, courtesy social and cultural development policies.
That, in a sense, parallels the recent history of Xinjiang.
Chinese government data indicates that in 1947, immediately prior to the 1949 establishment of the People's Republic of China (PRC), the Han population was 5% (222,000) of Xinjiang's total population. Fifty years later, in 2000, PRC census numbers confirm that the Han population represents 40-43% (depending on static versus 'floating' population) of Xinjiang.
In 1999, the Chinese Communist Party Central Committee Document 7 authorities changed several longstanding policies towards the region. The revised policies go to the heart of one aspect of traditional Uyghur culture, Islam.
The state restricted the number of permits granted people applying to go on Hajj. There were reports of new rules governing prayer: loudspeakers could not be used in giving the call to prayer; prayer before 9 a.m. was prohibited; and praying was restricted to those people who could fit within the mosque structures themselves – thus prohibiting the traditional practice of worshippers spilling over into squares outside mosques at prayer times on festival days. Regulations forbidding minors from participating in religious activities were strictly enforced (though not in other parts of China); signs declaring no admittance to anyone under eighteen appeared above the doorways of Xinjiang mosques. University students were told that prayer, fasting for Ramadan, or, for women, wearing a headscarf, were inconsistent with communism and that they would be expelled if they continued the practice. (Millward, p. 343)

It's easy to understand why Uighurs may feel their historic way of life is threatened. Are the cultural compromises worth the benefits of the extraordinary economic growth that comes with being part and parcel of the PRC? After all, Beijing pumps significant development money into the province through the Great Development of the West Campaign.
Many Uighurs argue that the real beneficiaries of development are the 'foreign talent.' One Hong Kong University scholar's study concludes there is a strong correlation between ethnicity and income: the higher the Han population the greater the GDP per capita for the district. For example, Southern Xinjiang's per capita income is half that of Xinjiang as a whole. The population of Southern Xinjiang is 95% non-Han. The study used official government census and GDP per capita data.
Xinjiang's history is intertwined with Beijing. Of course, Uyghur ethnic and cultural associations with other Central Asian republics, including neighbouring Kazakhstan, are also a strong part of the equation.
The Karakul Lake, off the Karakoram Highway linking Kasghar with Islamabad, Pakistan

Ultimately, Beijing does as Beijing does. The PRC's emergence as a global economic and political power further limits external influence on Beijing's policies towards ethnic minorities like the Uighurs. One can only hope that Beijing's centralizing and population policies do not push Uighurs into the waiting arms of religious extremists ready to open another front in their violent efforts to create a fundamentalist Islamic state, 'Uyghuristan.'

NB – My primary source of data and information is Eurasian Crossroads: A History of Xinjiang, James A Millward, Columbia University Press (2007). I admit to not having visited Xinjiang (although I have stepped into Xinjiang via the Khunjerab Pass of the Karakoram Highway connecting Islamabad with Kashgar). Readers are recommended to formulate their own independent views based on multiple sources of information.

Friday, 2 April 2010

Condoms, Islam, Catholicism and Communist style ‘democratic centralism’

Islam is not the only religion in the news these days. Catholics compete for the headlines with new revelations of child abuse in various countries. The scandal has caught up with the Pope's history. He is being compelled to respond forcefully about allegations he played a part in the child abuse cover up.

The atrocious behaviour on kids by Catholic functionaries is not the only reason Catholicism makes the news. The church's stance against the use of condoms is well known. The church advises natural birth control methods or abstinence outside of marriage.
The Catholic ban on the use of condoms is most problematic in Africa where condoms are a critical weapon in fighting the spread of HIV. True to the party line, church officials in Africa condemn the use of condoms under any circumstances.
In fact, in 2007 the head of the Catholic Church in Mozambique claimed that some condoms are deliberately infected with HIV. The claim was made at a time when 500 Mozambique residents were infected with HIV daily, adding to the 16% of the population already HIV positive.
In a television interview a few days ago, the head of the England's Catholics stated that he can understand why some find the argument to use condoms attractive, especially in Africa and the developing world. The comments are bound to cause controversy as they question the unity of church beliefs.
Like any bureaucratic organization, the Catholic Church's centralized structure is both a strength and weakness. The discipline imposed upon Church officials provides a clear objective to all.
Like a well oiled military machine, the Vatican soldier in Angola or Brazil both know exactly what to believe and preach. Irrespective of local cultural considerations, their beliefs are identical.
The 'Party Line' is sacrosanct and violating the 'truth' provides grounds for excommunication. Expulsion means no further corporate advancement towards headquarters in the Vatican and, just as important, a lifetime of guilt for violating God and the Pope's edict.
It must be difficult to live with such guilt.
Islam, on the contrary, can justly be characterized as a 'messy' religion. The religion contains a mass of ulemas constantly issuing opinions on important temporal issues. Forget ulemas, even fake Grand Mooftis barrage their religious compatriots with religiously shrouded arguments on any and all matters!
Islam has no formal bureaucracy and, thus, no single voice to speak on worldly or spiritual themes. Theoretically, any Muslim is qualified to opine on questions of religion. Of course, the ability of a religious scholar from Al-Azhar University to sway public opinion is greater than that of a blogger!
Ultimately, it is the mass of public opinion that matters most in shaping religious beliefs and practices; one reason why Islamic religious bureaucracies (in countries where they exist) tend to be extremely sensitive if not fully subservient to national political leaders.
Struggles between political and religious leaders in the Islamic world are common and generally result in a workable compromise which defines exclusionary spheres of influence for both sets of leaders.
Democratic centralism of the sort practiced by the Vatican is neat and orderly. Contentious debates are resolved behind closed doors. Intellectual sparring is couched in sophisticated and diplomatic language. However, once a policy decision is reached there is no confusion.

European Muslims face with the issue of headscarves and veils in non-Muslim majority societies. Afghan Muslims wrestle with Taliban notions concerning women's rights. Singaporean Muslims contend with religious laws concerning inheritance and the blurring of lines between Malay culture and Muslim practices. Pakistani Muslims synthesize Hindu cultural practices within their own version of Islam.
As with nations, there is no 'one size fits all' solution for religious structures. Democracy is messy and often slowly meanders along at the lowest national common denominator. Authoritarianism makes for rapid advances but frequently in the wrong direction and without regard to long term individual and social costs.
Walking the tightrope between centralization and autonomy requires the dexterity of Olympic gymnasts, not the rigidity found in most religious ideologues.