• FAMILY BUSINESSES OFTEN BECOME STAGNANT due to lower engagement of external talent, risk avoidance (in order to preserve wealth for future generations), but mostly conflict between the objectives of next-generations along with the inherent “emotional-laden nature of family business.” A recent survey of 200 family-run Swiss firms focused on ‘entrepreneurial orientation’ – correlating their degree of engagement in product market innovation and risky initiatives with management and business performance to conclude that “performance improved with higher levels of multi- generational involvement when the companies had adopted a high level of participative strategy – in which family members engaged in open & direct discussion about the innovation needed and direction of the business… bringing a diversity of perspectives… and allowing consensus views to emerge.” Adopting such strategy after-the-fact – when prior policies have already led to family dysfunction – involves careful process, which DCG has decades of experience in successfully mediating. It’s never too late to course-correct. [KMPG FAMILY BUSINESS BLOG – Jan 13]
  • THE ‘BIG MAC INDEX’ IS AN EXCHANGE RATE GAUGE based on “theory of purchasing-power-parity – that in the long-run exchange rates should ‘adjust’ so that the price of an identical product is the same across borders.” Since rates do not adjust without political and regulatory interference, this of course doesn’t happen. Impact of “local currency over/under valuation against the dollar” creates the following current disparity: the dollar price of a Big Mac averages $4.56 in America but is higher in most of Europe (ranging from $4.68 in Germany to $7.51 in Norway) and lower in other areas of the world (from $3.20 in Japan to $2.61 in China to $1.82 in South Africa). [THE ECONOMIST – July 13, 13]
  • OUR COURAGEOUS LEGISLATORS: “Tax Reform is apparently so treacherous for Senators these days that they require the utmost protection from the public – half a century’s worth.” A memo earlier this month to the Senate Finance Committee “promised to mark all submissions ‘Committee Confidential; not for distribution; do not copy; materials may not be released to the public from the Nat’l Archives or by the Finance Committee prior to Dec 31, 2064’… Only ten staffers are authorized to see proposals; only two digital copies will be made, each saved on a secure, password- protected server, with paper copies kept in locked safes.” Apparently the 50-year program is “the practice for all congressional committees” so that elected legislators can argue for or against tax breaks in negotiations, but still be free to “attack it publicly if that suits his/her political interests.” [CNN MONEY – July 25, 13]
  • “THE RANKS OF PERMANENTLY UNEMPLOYED CONTINUE TO RISE STEADILY.” According to Bureau of Labor Statistics, over 4.7 million have been without a job at least seven months and 3 million over a year; in 2007 it was around 1.2 million. Unsurprisingly, this has led to “an extreme surge of people claiming disability in order to be eligible for early social security… A record surge of almost 3 million applicants in 2010 alone…with over 11 million now covered.” As if the aging population wasn’t a big enough problem in keeping social security solvent, the trend of this additional burden looks unstoppable – particularly since “the Congressional Budget Office projects similar trends for the decade to come…with disproportionate numbers claiming disability for such things as mental illness and back pain, conditions that are difficult to evaluate and disprove, versus usual work-related injuries.” [FINANCIAL INTELLIGENCE REPT – July 13]
  • AS REPORTED IN LAST WEEK’S DCG BULLETIN, Standard & Poors financial rating agency colluded with mortgage banks “to sell near-worthless loans as AAA-rated securities” based on solid evidence. Still no criminal prosecution, but Dep’t of Justice is finally, at least, suing S&P for $5 billion, alleging that it “intentionally misled investors… by producing inflated ratings between 2004 – 2007 to please its clients in the financial industry.” [THE ECONOMIST – July 20, 13]
  • THOUGHTS FOR THE WEEK: Stress and Anxiety are caused by a simple protein, nicknamed the ‘misery molecule,’ according to British scientists who study the brain’s pituitary gland with one of the world’s most powerful x-ray machines.

    According to the Wall Street Journal, an average three-hour baseball game contains less than 18 minutes of action (pitches, hits, throws, running) and average televised football game contains only 11 minutes of ‘action’ time.

    “Vocations which we wanted to pursue, but didn’t, bleed, like colors, on the whole of our existence.” -Honore de Balzac, novelist