Catarina's World

European Union leaders are now advocating “More Europe” as a solution to the Euro Crisis. Watch Harvard professor Niall Ferguson explain to The World Economic Forum what a more integrated Europe would entail:

Those pro “More Europe” fail to acknowledge that any federal system implies a transfer of resources from the more efficient and productive core to the periphery.

For well performing countries like Germany a federal Europe would be expensive. According to Ferguson, it would cost the Germans up to 8% of GDP per annum for the foreseeable future. And with the very real possibility of a full-blown European banking crises as a result of a trigger, say a Greek default, is a federal Europe really a good idea?

Seems to me it’s time to start having a fresh look at the problems facing Europe. What’s been done so far isn’t working and it’s highly unlikely that giving more powers to Brussels would do the trick. Contrary to Ferguson’s belief however, there is massive discontent with the EU in Western Europe. Doubt that governments in that part of Europe will be re-elected if they cede more power to Brussels.

The unpredictablility of economics

In 2008 Queen Elizabeth asked top economists at the London School of Economics what caused the economic crisis. And they could not give her an answer. With hindsight we can patch together what happened and the domino effect that ensued. But until events unfolded nobody was certain what would happen. Six month later the British Monarch received a reply from British economist Thomas Palley stating that economists have become increasingly arrogant, narrow minded and unable to innovate.

We can now also conclude that it would probably have been better for the world if Hank Paulson had saved Lehman Brothers, like Warren Buffett suggested. But Paulson, presumably, didn’t understand what Lehman’s bankruptcy would cause and hence refused to do so. Or, as some believe, deliberately exported a US problem to the rest of the world.

The unpredictability of economics is a major problem because most available tools take time to come into effect. By the time they do, the economic landscape may have changed. Even if everybody agrees that solution x is the best way forward they could all turn out to be wrong.

Testing if a crisis can be solved by austerity

At the moment European politicians are for the first time in modern history testing if austerity can fix an economic crisis. It was tried, for instance, in the 1840s and failed. And it looks as if it will fail again. Austerity is unfortunately having a negative impact on growth and development in Europe. People and governments are not spending, which is fatal and goes against the economic health desired.

How about parallel currencies?

Professor Dirk Meyer, an economist based in Germany, has come up with an innovative solution to the financial problems facing Europe.

He rightly states that despite the fact that the Euro is presently causing huge economic problems, it is politically and economically a good idea. Consequently Meyer believes the way forward is to keep the Euro and, at the same time, bring back national currencies.

It’s the best solution to Europe’s problems I have so far come across. And it is my hope that EU leaders are seriously evaluating that option. You may beat them to it by having a look at his ideas in “Bring back Deutsche Marks! (Euros can stay)”. It could enable Europe to have the cake and eat it. Why does it have to be either or? With economies as diverse as say, Germany and Greece, having parallel currencies could very well be the way forward.

Do you believe a federal Europe is a good idea? Will it solve Europe’s current economic problems? Would having parallet currencies work? Is it likely there will be another Lehman trigger in the future? If so, would a federal Europe be more vulnerable or protected? Or maybe you are of the opinion that  the current austerity programs will sort out Europe’s problems? Wen Jiabao said to EU leaders recently: “China will continue to invest in European government bonds and bonds issued by the European Financial Stability Facility”. So if the EU proceed with current policies Europe will, like the United States, end up heavily indebted to the Chinese government. 

Video: WorldEconomicForum – You Tube

Can’t help wondering why so many people on social media are just parroting others? Copying and pasting. And what’s worse that seems to account for part of what’s called creativity today.

A copy is never as good as the original. No parroting in the world will turn you into Marilyn Monroe. So be yourself.

What happened to creativity?

Have a section of humanity stopped being creative? Or is it just that too many people are lazy and hence just copy others? Don’t they realize that they will not impress the people they are trying to impress? Only ignorant people will buy what the parrots are doing. If you don’t have anything new to contribute, to say a discussion, don’t just re-write what someone else has already said. Coping and pasting from say, Harvard Business Review to make you look intellectual is not a great idea either. What’s wrong with saying that you agree or disagree?

Original ideas

If imitating others were just a social media phenomena it would be one thing. But unfortunately you have an abundance of people selling services online that haven’t got any ideas of their own. They just copy what others have done and charge for doing so. And we should not forget the copy and paste that’s becoming a problem in academia. A prominent European policician was recently caught having copied and pasted into his thesis.

But a copy is never as good as the original. No parroting in the world will change that. It may work short term but long term it will work against you. The European politician is a good example. He had to step down. Doubt that his future is as bright as it would have been if he hadn’t copied and pasted. Am sure he regrets what he did. But sincerely he should have thought of it before he cheated. Can’t help wondering if parrots, like him, have really stopped thinking for themselves?

Hard sell on social media

The amount of parroting on social media most likely boils down to people believing they have to sell themselves aggressively online. Can understand that to some degree. But don’t they understand that it’s obvious to others what they are doing? Am active on social media and almost every day someone re-writes what someone has already written to make it appear to be their new idea. One interesting phenomena are the people who are experts on all issues relating to all countries in the world, regardless of the fact that they have never even visited the country in question. But copying and pasting they certainly know how to do. Nobody, including myself, knows everything so what’s the point in pretending you do? People only lose respect for you.

Current buzz words leader, expert, entrepreneurial & innovative

The fact that many people believe they have to portray themselves in what they consider to be the right way is a major reason for all the parroting. Wouldn’t it be much better to have an honest look at yourself and decide what your strengths are? If you are not say, innovative, describing yourself so will work against you since you will be found out. Read in The New York Times that 70% of high school graduates in the US believe they have more than average leadership skills. Only 2% considered themselves below average. Truly wish their assessments were correct, but unfortunately 70% of them are not leaders and will never be leading anything. If this applied to the United States only, i.e. approximately 5% of the world’s population, it wouldn’t be too bad. But unfortunately it applies to the remaining 95% of mankind as well.

Use social media to portray the real you

What’s wrong with having talents that are currently not in fashion? Whatever talents you have you can create a lucrative niche for yourself. Why does everyone feel they have to portray themselves as business tycoons? Looking at profiles on social media today you easily get the impression that the majority of people in this world are on par with Warren Buffett and Bill Gates. It’s normal for children to imitate, but grown ups really should give up that habit.

Social media is a wonderful thing and I have met many fantastic people online, mainly thanks to my blog and Linkedin. If the parrots were just themselves and stopped pretending to be what they are not they would also start reaping positive benefits of social media. To start with they would gain respect. We are all unique and can contribute to society in different ways. That’s the beauty of humanity. Imagine how boring it would be if we were all parroting each other.

Photo: mseckington – Flickr

The Warren Buffetts and Bill Gates of this world are often described as just lucky. But is that really the secret behind their success?  Devote 5 minutes to watching Morten Hansen, management professor at UC Berkeley and Insead, describe the characteristics of leaders that make their organisations thrive in times of chaos and uncertainty:

Hansen studied high performing leaders and what he found goes against what we commonly believe about successful leadership.

Bold & visionary leaders a thing of the past?

That's the case according to Hansen. He brings up people like Bill Gates as prime examples of great leaders. Apparently Gates had no vision at all, in fact he was often wrong in his predictions.

Outstanding leaders instead create a future for their empirical trials. If the trials work out according to plan, they invest in the new idea. In other words, leadership is not about big bets but safe bets. Buffett is a prime example of such a leader which has led to an abundance of investors making fun of him and saying he had lost it. 

We all have good & bad luck

Good and bad events happen to all people and in all organisations. They are out of your control and not expected. Good or bad luck is another way of describing it. 

When comparing companies that are successful with companies that are not, Hansen's study found that they had more or less the same amount of good and bad luck happening to them. So he concluded that success had nothing to do with luck. 

If not luck, then what?

What the study found was that the well performing leaders and companies had a higher return on the good luck they got because they seized the moment. 

So how do you get higher return?

Successful leaders are prepared for bad luck, i.e. make sure that if worst comes to worst they know what to do.

They are prepared to seize the moment when good luck strikes. Bill Gates is a good example of that when he was still at Harvard but realised he couldn't finish his studies because he had to seize the moment when it came to personal computers.

And the third point is to execute brilliantly when you have good luck. That's how you get a higher return on luck. 

Do you agree with Morten Hansen that luck has nothing to do with success? Are we great by choice? Should we, like Bill Gates, have nightmare memos to be prepared for the worst that can happen? Are you one hundred percent committed and focused on succeeding with what you are doing? Are you creative in an empirical way i.e. don't make one big investment into a new area but spend years trying out a new concept and only when it shows that it's a great idea do you take the risk of moving into that area. Do you seize the moment when good luck strikes? If so, according to Morten Hanson you are a great leader and not an average one.

Video: HarvardBusiness – You Tube

Yes, that’s right, wealthy donors from developing countries, notably China and India.They are increasingly giving, donating, caring and sympathizing. Not, as some of you may think, just sell and take. And it’s not only a new phenomena. Saudi Arabia and the Gulf states have actually been quiet donors for decades.

Jet Li, Chinese actor, philanthropist and founder of the Jet Li One Foundation. Should not he get the same kind of recognition as Western philanthropists?

Am amazed at the abundance of get rich quick schemes being peddled on the internet. Even in Linkedin groups. Do people really believe that people like Warren Buffett, Donald Trump and Richard Branson made fortunes by joining a get rich fast scheme?

Do people really believe the Warren Buffetts of this world became billionaires by joining a get rich scheme?

Every day you come across offers stating that by paying, for instance, $29.95 a month you will soon be earning a fortune. Not to mention spam emails promising all kinds of wonders for a fee.

Wish it was that easy

It would be great if it was that simple, wouldn’t it? But unfortunately becoming a millionaire takes time and, as a rule, there is no such thing as getting rich swiftly.

Instant gratification – forget it

Instant gratification is rare when you are building up a fortune. To succeed you have to be able to think long term. Failing that, it’s unlikely that you will ever become wealthy.

However, in today’s welfare society most people unfortunately want money for nothing. Actually even think they are entitled to it. No wonder the Madoffs of this world are so successful. The only thing achieved by most people paying for get-rich-schemes is make money for the owner of the scheme.

Do you count on luck?

Well to do people understand that they are much more likely to strike it rich by understanding how money works as opposed to counting on luck. The odds of winning the lottery are much lower than when you invest prudently, providing you know what you are doing.

Few of us earn a fortune by only changing our time for money. You have to find ways to make your money work. Investing successfully is hence an important part of a millionaire’s success. But make no bones about it, it involves a lot of hard work.

Think long term and act

Millionaires have learnt to think long term, save and rarely spend money on unnecessary things.

Learn how to make money work for you and make sound long term investments. Millionaires do what most people just think about. To strike it rich you have to act and have a long term plan.

The most difficult aspect may be to accept the importance of doing small things on a daily basis and not get rewarded until later in life. Once accepted, that’s what makes you spend less and start making sound investments even when you don’t have much to invest.

Look at the Chinese in general. Their main priority is saving. They work hard and I can’t help thinking of a street in London where there were two laundries next to each other. One run by Chinese and one by Brits. The Chinese worked 24/7 while the Brits stuck to business hours and were closed on Sundays. Needless to say it didn’t take long before the Brits were out of business while the Chinese kept on thriving.

Maybe what’s most alarming is that there is obviously a huge market for get rich schemes. There wouldn’t be so many offers available otherwise. Apparently people even give away the details of their bank accounts. Only to find that they have been robbed. Having said that, the dishonest people peddling such schemes deserve nothing but contempt.

What do you do on a daily basis to increase your wealth? Are you making sound investments? Or are you hoping that luck will suddenly make you a millionaire?

(Photo: CNBC – Flickr)