tag:blogger.com,1999:blog-85340128663872220252024-03-13T09:43:17.656-07:00Global finance and economicsTariq Khosohttp://www.blogger.com/profile/12986305535909493637noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8534012866387222025.post-14362085667787883162014-01-10T20:09:00.002-08:002014-01-10T20:09:34.684-08:00Spending to save the world<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-US">In the
business world today, marketing is increasingly tapping into the consumer
psyche of the masses. The corporate social responsibility of big businesses today
arguably takes more from society than what they give to it. <o:p></o:p></span></div>
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<span lang="EN-US">Companies
are expected to do more than just sell a mere product in the business world
today. Probably the best known subject for example is Toms, a for-profit
company with a social cause that has mass public appeal. The company<span class="msoIns"><ins cite="mailto:Tariq%20Khoso" datetime="2014-01-10T21:32"> </ins></span>employs
a “1 for 1” concept where the company delivers a free pair of shoes to someone
in need in an impoverished country through NGOs for every pair bought as a
product in its home country. Depending heavily on corporate social
responsibility, Toms has made a success out of this business model better known
as the B1G1 model (Buy1Give1 model).<o:p></o:p></span></div>
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<a href="http://veggywood.com/wp-content/uploads/2010/07/TOMS-logo-with-mission.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://veggywood.com/wp-content/uploads/2010/07/TOMS-logo-with-mission.jpg" height="159" width="200" /></a></div>
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<span lang="EN-US">The B1G1
model has tapped into the psyche of consumers who feel more altruistic with their
shopping decisions. While they put on their brand new shoes, they know that a
similar pair of shoes will be given to someone who is in need, however this
model raises some of dynamic questions:<o:p></o:p></span></div>
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<u><span lang="EN-US">Is this
really a long term solution?<o:p></o:p></span></u></div>
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<span lang="EN-US">Donations
can be of use in times of disasters or when the apparatus of markets don’t
function anymore. However, a means of supporting communities through donations
is a major source of deadweight loss. In small economies, donated shoes can and
will put local shoemakers out of business.<o:p></o:p></span></div>
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<u><span lang="EN-US">Is the
B1G1 model sustainable?<o:p></o:p></span></u></div>
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<span lang="EN-US">B1G1 models
are marketing themselves as the pioneers of supporting causes for the lesser
privileged thus making them subject to the market activity of some remote and
otherwise disconnected society. If the consumers are no longer in purchasing
products made by B1G1 companies, the potential recipient of the free product gets
hurt.<o:p></o:p></span></div>
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<span lang="EN-US">This sort
of altruism that can be purchased at the sales terminal seems to only keep the
underprivileged alive and does not better their overall condition.<o:p></o:p></span></div>
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<span lang="EN-US">Another
company that maintains similar practice is the Seattle based coffee giant
Starbucks.<o:p></o:p></span></div>
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<a href="http://oldstrathcona.ca/Uploads/ff771377-74a0-48ec-9f68-9a48adbe3616.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://oldstrathcona.ca/Uploads/ff771377-74a0-48ec-9f68-9a48adbe3616.jpg" height="135" width="200" /></a><span lang="EN-US">A trip to one
of their franchises is designed to make the customer feel warmer about their
consumer habits. The price the customers pay isn’t just for a cup of coffee but
it also includes what they’re buying into – coffee ethics. The intangible
surplus of the coffee is the consumer’s satisfaction that they buy “coffees that
are Fair Trade Certified. By doing this, they ensure that farmers receive a
fair price for their hard work”. The idea that consumers can buy their
redemption at a higher price is a vicious circle which packages altruism in
consumption.<o:p></o:p></span></div>
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<a href="http://starbucksmelody.com/wordpress/wp-content/uploads/2010/01/EthosLogo-2.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://starbucksmelody.com/wordpress/wp-content/uploads/2010/01/EthosLogo-2.jpg" height="200" width="200" /></a><span lang="EN-US">Acquired by
Starbucks in 2005 for $8 million, Ethos Water came with a mission of “helping
children get clean water.” With a price range of $1.80 to $2.00 in Canada, it stands
to be one of the more overpriced bottle of water in the market today. For every
bottle sold, 10 cents (5 cents in the US) are put in their Ethos Water Fund which,
to date, has $7.4 million in its reserve. Despite the donations at their end, the price of
the water bottle, $1.70 to $1.90, still remains highest amongst its
competitors. Such marketing practices have been likened to profiteering. A fund
of $7.4 million represents only 0.37% of their total operating income in 2012.
Something quite obvious just doesn’t seem to add up here.<o:p></o:p></span></div>
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<span lang="EN-US">What is
intriguing is that massive advertisement costs are incurred to keep the
consumer satisfied with the belief that the coffee that they have bought ‘into’
has served a higher purpose than just having provided them a caffeine fix.<o:p></o:p></span></div>
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Tariq Khosohttp://www.blogger.com/profile/12986305535909493637noreply@blogger.com0tag:blogger.com,1999:blog-8534012866387222025.post-57334199488263278182013-12-20T16:06:00.001-08:002013-12-20T16:06:16.485-08:00Buddhist elements in today's western capitalism<div dir="ltr" style="text-align: left;" trbidi="on">
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Capitalism, today, has become a form of chaos that
functions. To fully engage and to try being in control in this market will make
one go crazy. The ultimate meaninglessness of this phenomenon is felt in times
of economic depressions where a sight of managers jumping out of their office
buildings is no rarity. Bubble and bursts aside, even a rumour in the market
can lead to its stability on fragile grounds.<o:p></o:p></div>
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A fairly new remedy practiced by western CEOs to counter
these occurrences and even push this economic system is by borrowing the
methods of the East - Buddhism. Buddhists stress the importance of tuning out
the worldly chaos and to meditate. Managers are using this method to
participate in the frenzy of markets without fully engaging themselves into it.
They say that sort of 'inner distancing' of the self allows them to speculate
all day and keeping their calm throughout. This is known as mindfulness. <o:p></o:p></div>
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The notion of ‘mindfulness at work’ is a new one. A search
on Amazon.com reveals that most books published on this matter are done so in
the current decade. What is striking that this is a being a made a business of.
Book are published as well as lectures and seminars are also conducted at
prestigious universities. <o:p></o:p></div>
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Harvard Business School professor William George has
collaborated with Buddhist meditation master Yongey Mingyur Rinpoche for a
conference on mindful leadership. This aims to introduce core Buddhist concepts
into Western leadership ideas to develop strong business leaders in today's world.
Google even has courses for its employees called "search inside
yourself" which teaches emotional intelligence through meditation. <o:p></o:p></div>
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Steve Jobs, co-founder of Apple Inc. was a practitioner of
Zen Buddhism. Steve Wynn, CEO of Wynn Resorts and the 227th richest man in the
world, is also practicing Buddhist. Top performing Western companies such as
Deutsche Bank, Nike, Apple, Yahoo, and Google all have a 'quiet room' where
employees are encouraged to take time out from the stressful environment and
switch off for a bit. <o:p></o:p></div>
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What is interesting here is the switch of attitudes between
the East and the West. Eastern financial hubs are having a greater say in
today’s capitalism whereas western countries are swiftly adapting eastern
methods to cope with the stress and unpredictability of it. This merger of
spirituality/religion into the business world is surely going to a dawn an
altered method of business. The 2008 financial meltdown has indeed required new
ways to cope with the uncertainty. But the active implementation of this coping
mechanism signals that is more volatility to come and we better be prepared for
it.<o:p></o:p></div>
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Tariq Khosohttp://www.blogger.com/profile/12986305535909493637noreply@blogger.com0tag:blogger.com,1999:blog-8534012866387222025.post-64720933054573049932013-12-13T15:31:00.001-08:002013-12-13T15:38:59.210-08:00China's housing market - the big bubble.<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="http://img.timeinc.net/time/photoessays/2010/ordos/ordos_01.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://img.timeinc.net/time/photoessays/2010/ordos/ordos_01.jpg" height="211" width="320" /></a></div>
Liu Li-Gang, ranked as China's number 1 economist has called
it a bubble. So has Wang Shi, the Chairman of the largest residential property
firm, China Vanke. Yet the hopeful bullish seem to think that China's housing
prices can increase without faltering. As multitude of rural dwellers emigrate
to the cities, the largest urbanisation in history has created a conspicuous
demand for housing in the urban centres of the country. To keep pace with the
hordes moving in, there is a colossal increase in housing projects across major
Chinese cities.<br />
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In September 2013, housing prices in Beijing jumped by 18
percent compared to the same period in 2012 according to data provided by the
National Bureau of Statistics. In Shanghai, the rate was 14 percent. An overview
of this would give an optimistic picture… and why shouldn't it? At this rate,
the housing prices may go even higher. Despite the promising figures, industry
players are already calling this insatiable growth a bubble.<o:p></o:p></div>
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On the flipside, however, it seems that entire
neighbourhoods and portions of cities has houses and apartment blocks
proliferating but only in vain. The phenomena of "ghost towns" has
now become prevalent in China. Traditionally, ghost towns are former
settlements which are no longer in use now, for example, communities
surrounding Soviet coal mining towns which are now completely abandoned. Mind
boggling as it may be, there are "cities" in China built to accommodate
millions only to find a handful of people living there. The names Ordos,
Tianducheng, and Thames Town in Songjian District come to mind.<o:p></o:p></div>
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This excess of capacity, also known as overinvestment, is
taking the shape of a bubble - albeit a controllable one, labelled by Wang
Jianlin. The Chairman of Dalian Wanda Group announced at the World Economic
Forum in Davos 2013, that the group will not rule out on acquiring hotel
management firms so as to diversify investments out of Mainland China. By 2020,
it hopes to have a $100 billion revenue with 20% of income coming from overseas
markets.<o:p></o:p></div>
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<a href="http://www.wnd.com/files/2012/07/china3.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://www.wnd.com/files/2012/07/china3.jpg" height="240" width="320" /></a>After investing in other countries in the Southeast Asia and
the US, China Vanke also wants a fifth of its revenues from overseas as well. <o:p></o:p></div>
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In similar vision, R&F Properties, Guangzhou’s one of
the largest real estate companies has made plans for its first acquisitions
abroad in Malaysia. Its plans are to build residential as well as commercial properties
there for $1.4 billion. The Chairman commented “R&F has been exploring
opportunities to tap into fast-developing markets overseas to boost its
longer-term profitability.”<o:p></o:p></div>
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Chinese magnates are securing long measures by taking early
measure. The questions remains - when will the bubble burst? Liu Li-Gang claims
that China is facing an increasing risk of a property bubble. “But certainly
within the next ten years, we're going to see another real estate bubble burst,”
the former head of Bank of Boston said at a panel discussion about investment
in China and the US. Few even argue this process has already started.</div>
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What is for sure now is that housing prices will keep on
increasing for the time being, as the trend of investing in housing, in China,
is prevalent over other forms of stowing money away safely.<o:p></o:p></div>
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Tariq Khosohttp://www.blogger.com/profile/12986305535909493637noreply@blogger.com0tag:blogger.com,1999:blog-8534012866387222025.post-86198155951546775912013-12-07T23:54:00.004-08:002013-12-07T23:54:44.484-08:00Bitcoins are a serious matter now<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLxBmaeLRdgTMvFLjrG43d3u8L4aMVRD51EIbU8ecmTyPwNstK0y3gmxv8-TqMdxIW-zGfEb-7yrXgesbTiOcXTwR1v2_yxxD2UFQZrnuxJREFc69BDNOBOnPvoAhh5slbskXVKPmqkLxP/s1600/bitcoing.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLxBmaeLRdgTMvFLjrG43d3u8L4aMVRD51EIbU8ecmTyPwNstK0y3gmxv8-TqMdxIW-zGfEb-7yrXgesbTiOcXTwR1v2_yxxD2UFQZrnuxJREFc69BDNOBOnPvoAhh5slbskXVKPmqkLxP/s320/bitcoing.png" width="320" /></a></div>
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The data on BitcoinAverage.com is updated between 30 seconds to every minute. At this very moment (21.36 7/12/2013), the Chinese Yuan accounts for 42.2% of the global Bitcoin trades while the US dollar is 52.4%. The smaller trades include the Euro, British Pounds, and Canadian Dollars at 3.0%, 0.4% each respectively.<br />
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On 5 December, the Chinese government barred banks from trading in the digital currency, in what is said to be a first step in regulating Bitcoin. As a result, Chinese Bitcoin exchanges saw the currency drop in value. It is also worthy mentioning that Baidu, China's largest web services company, stopped accepting the digital currency after this announcement. To understand the impact of Bitcoins, the surge in value is clearly observed by looking at the data. On 6 November, it was trading for 1,621 Yuan. Today, one month later, the value has soared by 256% to 5,766 Yuan even though the latter figure is after a 20% drop after the announcement.<br />
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A quick conversion suggests that in the last 24 hours, 1.1bn Yuan and 219m dollars have been converted into the digital currency, one which has no trail of transactions after the conversion.<br />
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Representatives of the People's Bank of China have indicated that Bitcoins renders money laundering effortless for illegal operations simply because there is no regulation over the currency. Analysts have indicated that the government will be left with no choice but to take Bitcoins more seriously if the share of transactions in the currency increase. They do point out that the value of Bitcoins in circulation in relation to other currencies is tiny and that it is not likely to have much impact on the economy in general.<br />
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Does China's action mean danger for the pseudo-currency? "As Bitcoin transactions can be done anonymously and are not restricted by location, it's difficult to monitor capital flows and it therefore facilitates money laundering and financing for terrorist activities," the People's Bank of China stated. Fact is, the Chinese government hasn't outlawed the bitcoins but rather they have placed it under tighter control so as to regulate it as it asserts that ordinary investors are subject to high level of risk in this volatile currency.<br />
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Even though this open source, decentralised pseudo-currency may be put under regulation and control, can the Bitcoin really be flattened out to stability and thus, cleansed of the excess risk it carries?</div>
Tariq Khosohttp://www.blogger.com/profile/12986305535909493637noreply@blogger.com0