Financial Crises and Global Capital FlowsWritten by Sam Vaknin
The recent upheavals in world financial markets were quelled by immediate intervention of both international financial institutions such as IMF and of domestic ones in developed countries, such as Federal Reserve in USA. The danger seems to have passed, though recent tremors in South Korea, Brazil and Taiwan do not augur well. We may face yet another crisis of same or a larger magnitude momentarily. What are lessons that we can derive from last crisis to avoid next? The first lesson, it would seem, is that short term and long term capital flows are two disparate phenomena with very little in common. The former is speculative and technical in nature and has very little to do with fundamental realities. The latter is investment oriented and committed to increasing of welfare and wealth of its new domicile. It is, therefore, wrong to talk about “global capital flows”. There are investments (including even long term portfolio investments and venture capital) – and there is speculative, “hot” money. While “hot money” is very useful as a lubricant on wheels of liquid capital markets in rich countries – it can be destructive in less liquid, immature economies or in economies in transition. The two phenomena should be accorded a different treatment. While long term capital flows should be completely liberalized, encouraged and welcomed – short term, “hot money” type should be controlled and even discouraged. The introduction of fiscally-oriented capital controls (as Chile has implemented) is one possibility. The less attractive Malaysian model springs to mind. It is less attractive because it penalizes both short term and long term financial players. But it is clear that an important and integral part of new International Financial Architecture MUST be control of speculative money in pursuit of ever higher yields. There is nothing inherently wrong with high yields – but capital markets provide yields connected to economic depression and to price collapses through mechanism of short selling and through usage of certain derivatives. This aspect of things must be neutered or at least countered. The second lesson is important role that central banks and other financial authorities play in precipitation of financial crises – or in their prolongation. Financial bubbles and asset price inflation are result of euphoric and irrational exuberance – said Chairman of Federal Reserve Bank of United States, legendary Mr. Greenspun and who can dispute this? But question that was delicately side-stepped was: WHO is responsible for financial bubbles? Expansive monetary policies, well timed signals in interest rates markets, liquidity injections, currency interventions, international salvage operations – are all co-ordinated by central banks and by other central or international institutions. Official INACTION is as conducive to inflation of financial bubbles as is official ACTION. By refusing to restructure banking system, to introduce appropriate bankruptcy procedures, corporate transparency and good corporate governance, by engaging in protectionism and isolationism, by avoiding implementation of anti competition legislation – many countries have fostered vacuum within which financial crises breed.
| | Add a teaching gig to your marketing toolkit Written by Cathy Goodwin, MBA, PhD
Add a teaching gig to your marketing toolkit How can you gain credibility and exposure for you and your business, reach a motivated audience, develop a far-flung network, hone your presentation skills -- and get paid to do it? Many executives and entrepreneurs have found an answer: they teach classes in adult education programs. Adult education is big business. In new century, "change" is a hot topic and learning is no longer confined to traditional degree programs. As people want to grow their careers and enrich their lives, specialized programs have emerged to reach this market. Some teaching venues require at least a master's degree. Others allow you to share your unique skills, from designing brochures to tarot reading. Temple University's continuing education program has offered a half-day class taught by a cleaning lady. The subject? Speed cleaning. If a target market exists for your business or if you have knowledge that people can use on job, chances are a target market exists for you in world of adult education. By entering this world, you can demonstrate your skills to a receptive audience, meet some terrific people, learn more than you expected and even have some fun. Teaching requires more than a good speaking voice and a knowledge-filled brain. Every minute you are in classroom, you are marketing yourself to your students. You must keep students involved for up to eight hours. Since average adult attention span is about fifteen minutes, you have to design exercises, activities and questions. You have to deal with unexpected. Students will arrive late, ask off-the-wall questions and challenge your expertise. Occasionally, students will be rude, insulting or even abusive.
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