Should Politicians be Deciding our Fiscal Policies?

It seems that the hurricane called the global recession is starting to lose steam and peter out. But, if you follow global weather patterns, you see that there are always after effects, residual shocks, smaller storms, etc. In short, no disaster seems to operate independently. There is always cause and effect.

So what caused this recession? After all, if you can isolate the cause of a disease, you can help prevent its recurrence. The near collapse of the US economy was frightening. The devastation caused by it harmed countless individuals and businesses alike. Many have not yet recovered. Who is to blame?

It's easy to say that the mega-bonuses within the nation's financial industry were the problem. However inappropriate these bonuses may have been (and continue to be), they were not, and are not, the root of evil. No, when all is said and done, the root of economic evil is lousy government policy. Government leaders, and their script writers, are excellent at describing the ill-gotten gains of the private sector. It is quite easy to divert public attention from the real problems at hand by placing blame at the markets whose goal is to earn money. How many millions of American homes are now in foreclosure due to a mortgage system that was manipulated by US government policy, rather than operated by the modes of free economy?

Imagine, for a moment, that the US government operated along the lines of a major for-profit corporation. The Senate and Congress would be the Boards of Directors and/or shareholders. The CEO and his staff would have to justify their fiscal policies and operate the business in such a way to please the directors and shareholders. After all, the bottom line is what truly matters. Sounds absurd, of course. On the other hand, can one imagine a mega-corporation continuing to function while juggling an operating debt of more than $1 trillion? Of course not. At the minimum, some change in fiscal policy may be deemed necessary.

But, governments continue to operate based on political need. Business will adjust to the times and weather storms as necessary. With a little luck and hard work from non-government entities, society will persevere economically and overcome the mistakes of its political leaders. If we want to avoid another recession, it's truly time that politicians stick to their business but leave the money matters to the professionals.

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Normalizing Interest Rates?

With the end of the global recession now becoming more than merely a prediction, the time has come to begin the clean-up from the temporary measures that were a necessary part of the economy during the difficult financial times. In short, besides stimulus funds becoming part of the scenery, record low interest rates were also an everyday occurrence.

Interest rates, at near zero levels, were the Shangri-la of investors. Investors who could tap this virtually free money, profited well and the markets responded in kind. In a chain of events, this unprecedented boost of the markets helped restore confidence in the average household and greatly strengthened the ailing economy by fortifying its foundations. However, even the best of vacations must come to an end. Any student of economics will tell you that interest rates reflect and influence an economic situation. Artificially set rates will cause undue influence and possible damage. The current rates were set for an emergency situation. With the economic emergency now having been downgraded, the time has come to allow the markets to respond appropriately. The question now is the timing and magnitude of the normalization of rates. Having faced a near collapse of the financial sector in the Western world, it is crucial that the central banks of both the US and Canada time their adjustments accordingly. For example, towards the end of the Great Depression in the 30's, the US government pulled out its stimulus funds in a final push in 1937-38. This sudden move, due to improper timing, had a negative effect, pushing the US economy into a tailspin and sent the markets reeling.

Economists are mixed in their predictions as to the end of the rock-bottom interest rates. Most feel confident that neither the Governor of the Bank of Canada nor the U.S. Federal Chairman will allow a repeat of the Great Depression mistakes. However, even the latest of predictions for rate hikes is no later than early 2011. Some predict that rates will begin rising by this summer. In either case, investors should prepare themselves for a return to normalcy. The worst, we hope, is over.

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Female Entrepreneurs - Unite!

No longer can it be said that business is a man's world. Female entrepreneurs are an integral part of the business world. According to a report from the Organization for Economic Cooperation and Development, Canadian women comprise 30% of business across the nation. This percentage is larger than any other country. In the United States, during a ten year period beginning in 1997, businesses owned by women grew at double the national rate of all U.S. private businesses.

So, the good news is that women are making their mark on business in substantial numbers. The bad news is that they are not using these numbers for any collective purpose or advantage.

There is power in numbers. However, most female entrepreneurs seem to prefer worrying only about themselves. An umbrella organization, Women Entrepreneurs of Canada, whose mandate is to create a more collaborative climate for women business owners, is fighting an uphill battle, as reported to a small core group of members at a recent meeting of the organization.

Rather than share ideas and efforts, the group reported that female business owners prefer to do for themselves and not share. Sharing resources and ideas is simply not the norm in female businesses, leading to duplication of efforts and a loss of a potentially powerful female lobby.

Men invest more time and energy developing their businesses. Thus, women cooperating with each other could greatly strengthen their businesses by uniting their efforts. Also, women are less confident than men in certain key business tasks and could certainly benefit by supporting each other to get over hurdles.

On the other hand, in a male dominated world, women still encounter certain prejudices in business. A strong female lobby could help push for changes in the business world that would lead to parity in general, while addressing the distinct needs of female entrepreneurship when applicable.

This organization, while small at present, is picking up speed and hopes to build a strong, influential coalition of female entrepreneurs to help the nearly one third of Canada's business community leadership.

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Canadian Debt - The Foreign Investment Choice

Canadians, as opposed to many nationals around the world, were long accustomed to hearing reports of budget surpluses. What was once a source of national pride will now seemingly become but memories in the nation's historical archives. The recent recession has left both the national and provincial coffers in ruinous debt, and both are seeking ways to grapple with the need for cash to finance stimulus spending, the primary catalyst of the monumental deficits.

Ironically, while lawmakers must deal with the aftermath of the financial crisis and re-formulate fiscal policies in order to keep the deficits under control, investment bankers see this new situation as a unique opportunity to sell government bonds.

Based on recent figures, the combined national/provincial debt is estimated to reach $100 billion by the end of the current fiscal year. However, selling public debt in these staggering amounts is not as difficult as it may seem, even in a struggling global economy. Canadian debt is being gobbled up by foreign investors at a lightning pace.

It appears that international markets see investment in Canada as a wise choice. Among the Group of Seven countries, Canada has the best fundamentals; a strong, vibrant currency; and is rich in valuable natural resources. Once the dust settles from the recession, these factors will leave Canada well positioned. Wise investors see this as an ideal time to align their investment dollars with strong future potential.

Investment bankers admit that 2009 presented a highly volatile market, with each month differing sharply from its predecessor. But, when all is said and done, the nation's top investment banks, working hand-in-hand with both the federal and provincial governments, have managed to sell the vast majority of government bonds issued, primarily in foreign markets.

The need for cash, combined with the demand for strong investments, led to some unique investment situations for both the federal and provincial governments. However, just as the aftermath of the recession demanded new ideas to deal with new situations, so did the investment world rise to the occasion and help the governments get the best deals possible.

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Did Lack of MBA Ethics Cause the Recession?

It was inevitable that one outcome of the recession, aside from the devastation of the economic hurricane, would be deciding who or what truly was to blame. The truth is there is no one factor or person. However, as the smoke begins to clear, there is increasing blame being attributed to the financial leaders of our generation, specifically the mighty who have fallen.

We have all been witness to major financial scandals over the last couple of years. Many of these scandals have been perpetrated by key figures in the upper echelon financial world, individuals with impeccable credentials, or so we thought. To the dismay of both the public and academia, a good number of these individuals bore MBA's – seemingly their license to direct the financial community – from some top business schools.

While no pattern has emerged, a number of questions have arisen regarding MBA programs and the students therein. While there are no guarantees, an MBA from a top business school is a tremendous stepping stone to a lucrative career. The question is how desperate are students to obtain that coveted degree.

In a 2006 study released by the Academy of Management Learning and Education, an astonishing 56% of MBA students admitted cheating, far exceeding any other major discipline.

The focus of many major MBA programs is quite straightforward – your sole obligation is to make as much money as possible for your stockholders, within the parameters of the law. Unfortunately, a decided absence of ethical teachings has caused many graduates to ignore the legal obligations of earning money. The argument that students want to earn as much as possible in order to repay their expensive education doesn't hold much water. Were that the case, medical students would be dropping like flies in insurance scams.

Many business schools acknowledge that a lack of classes in business ethics may be part of a larger problem and some, indeed, have begun to change their curricula to reflect a necessary change. Others schools have tightened their application processes to help weed out potential "future problems." Overall, the fall of the giants has helped remind us that, in a democratic society, we are all equally accountable for our actions.

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Hope on the Horizon for the US and Canada

The news is out – the recession is over! Or is it?

Whatever you read today seems to have a different opinion. Some say that the worst is behind us and we're recovering very nicely, thank you. Others say that we're experiencing a temporary lull before the next storm. Optimists say we can return to our previous standards of living. Pessimists say that we should learn from our mistakes and prepare for the next rainy day.

The truth probably lies somewhere between the two. The fact is that the best of economists will tell you that predicting the future is virtually impossible. Yet, when the figures are checked and re-checked, the recent economic indicators are rather positive. Forget the major "what-if" theories and focus on what's really happening.

Recently released figures for the final quarter of 2009 indicate a growth in the GDP of both Canada and the U.S. In the U.S., the growth is attributed primarily to inventory rebuilding. While some consider that a temporary measure, likely to taper off, others point out that the need for increased inventory is due to resurgence in consumer spending. True, consumers are still spending their money more cautiously but the figures remain positive.

Not just consumers are spending more. Business investments grew by 2.9% in the final quarter, as compared to a nearly 6% drop in the third quarter. Equipment and software investments rose by a whopping 13.3% for the quarter. Also, net exports added to the U.S. GDP, indicating that the Americans are now using their weak currency and high productivity to their benefit in foreign trade.

Back in Canada, economists have re-examined all the figures and are pleasantly surprised that economic growth in the fourth quarter exceeded 4%, well above the forecasts. The Canadian figures continue to rise well, indicating that recovery is progressing.

It's hard to tell but, for the time being, after a treacherous journey, both Canadians and Americans are safely on the way back home.

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How to Perk Up the Disgruntled Employee

You wonder what happened. A couple of years ago, you hired a key employee who seemed like the whiz kid that would be a major asset to your team. At the onset, it worked. But, as time wore on, the shine began to tarnish. The "whiz" became a "was." It's easy enough to say the employee should go home and you'll find another rising star. But, many managers agree that you would be mistaken. Training new employees is costly, both in time and money. Moreover, if you originally spotted talent, chances are that the talent is still there. The question is what happened along the way and how can you improve the situation.

In the hustle of daily business, managers often tend to focus on the most pressing issues and ignore the secondary or tertiary ones. However, our employees are among the basic raw materials that allow the business to operate. When you consider the fact that the majority of an individual's waking hours are spent at work, it is vital to make sure that the person enjoys his work. There is a direct correlation between performance and employee satisfaction.

Perhaps the whiz kid just became part of the background. You assumed that outstanding performance would just come naturally to such a person. But, what about providing positive feedback? Has a job well done been rewarded, either monetarily or through other recognition? Have you taken the time to sit and chat every now and then? Find out what is bothering that employee. You may discover that a breakdown in the managerial chain of command has affected this person and left a feeling of disgruntlement. In that case, track down the true source of the problem and you might correct the situation. A simple discussion may reveal that your employee needs additional skills in order to perform the task at hand. In that case, attending a course or a change of task will rectify the problem.

Managing an effective staff requires time and skill. It's not enough to give assignments and sign paycheques. Remember that a loyal staff is vital to your company's success. Invest the time and energy to develop and protect that loyalty.

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How to Deal with the Know-It-All Employee

Practically every manager has encountered this employee. An average worker has a self opinion of extreme competence. Yet, despite a decided lack of skills, this employee will make decisions independent of any managers or co-workers.

Different styles of management will handle this situation in a variety of manners. Some would say that this type of behaviour must not be condoned and would immediately dismiss the employee. However, a more experienced manager does not rush to fire employees. After all, one needs working, trained employees, rather than terminated ones.

It is imperative to thoroughly assess the situation. Has the employee's decision making caused damage to the company, either in a business sense or by demoralizing other employees? If so, your response may be somewhat harsher. If not, a subtler tone may be in order.

Speak to the employee. Find out what makes the person tick. Were they trying to cover up a lack of knowledge or simply being irresponsible? Do you think, after speaking to them, that change is possible or is this merely the person's personality? If change is possible, go for it! Sometimes, the mere fact that a person has been noticed can trigger a change, especially if the employee knows that they are being watched. Or, perhaps, a change of scenery may help. Move the employee to a different task. Another tactic to consider is the chain of command. Try allowing the employee to consult with you, rather than a supervisor. The feeling of importance may counter the feelings of resentment or punishment for having been caught doing something wrong.

Each case, undoubtedly, is different and there is no clear cut recipe for success. However, the bottom line is that you have to make a business decision and do what's best for the company, not for your feelings. It's not always easy to do what's right but management is all about making the tough decisions.

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Public Speaking: No Joke (Unless You Can Deliver it Well)

Public speaking does not come easy for some people. For others, it's a snap. The more experienced speakers have learned the secrets while many novices will wake up that morning with a major headache.

Making a presentation, or giving a speech, is part of the business world. But, in order for your presentation to achieve its goal, the delivery must be successful. This requires your connecting with the audience. Experience has demonstrated that a common technique, when applied correctly, is opening with a joke.

A joke, when delivered properly, can break the ice with the audience. It sends a message that the speaker is here to speak with us, not to us. Similar to the co-worker that attracts a crowd at the coffee machine by telling a good joke, you can attract the crowd in front of you to listen to you.

Of course, this is not an opening for a standup routine. Neither should you use the podium to tell the latest racist joke that you heard at the bar last night. The motto is KISS – keep it short and simple. It makes good sense to do some research beforehand and try to learn what makes the audience tick. For example, a high tech joke will not work well for an audience of medical practitioners. But, a good doctor joke certainly will. Be careful, though, not to insult anyone in the audience. If you feel that they will appreciate it, try poking fun at the industry, but only if you're part of it. Outsiders are not usually welcome to do this.

Learn to read your audience. If you see that your joke is not going over well, abandon it (with a shrug for a last ditch attempt at a chuckle) and get on with the business at hand. Delivery is everything! You have to go with the flow of the audience. Sometimes, the audience is waiting for what you have to say. Other times, they may be waiting to leave. Do what you can, in a professional manner, to win them over. Telling jokes, like making a powerful, impacting speech, is an art. Learn the craft carefully and you can be quite successful.

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Buy American and Canadian Too!

The American Recovery and Reinvestment Act of 2009 was the landmark US$787 billion economic stimulus package intended to jumpstart the ailing U.S. economy. While it contained a variety of elements, one of the more controversial clauses was the "Buy American" stipulation. In order to qualify for government contracts, U.S. companies were obligated to buy only from American suppliers and manufacturers.

As both the U.S. and Canada rely heavily on exports between the two nations, "Buy American" was met with strong opposition from both American and Canadian business. Supporters of the clause argued that America needed to boost sales and manufacturing at home. Opponents noted that supply chains north and south of the border are so intertwined that all parties involved would be hurt, not improved.

After months of deliberation between the nations, a multi-faceted trade deal has been reached between Canada and the U.S. All though yet to be fully ratified (the U.S. requires an executive order while Canada requires each province and territory to sign, as well as the federal cabinet), the agreement reflects the spirit of cooperation that has long existed between the two neighbours.

Canadian companies will now be able to bid on procurement contracts in 37 U.S. states. Similarly, U.S. suppliers will receive reciprocal access to provincial procurement. As the possibility of future U.S. federal funding is quite realistic, the current deal contains a commitment to fast-track negotiations on possible "Buy American" stipulations.

As a result of this reaffirmation of the strong links that connect the two nations, talks in Canada of promoting "Buy Canadian" retaliatory actions have been suspended.

Rather than just looking at what's good for each other, both Canada and the U.S. have agreed that maintaining the long-standing friendship will have a positive payout for both countries.

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