After a big public announcement of the sort Apple had this week for the iPad CEO Steve Jobs often takes time in the day or two afterwards to have a Town Hall at One Infinite Loop, making himself available for questions from employees bold enough to stand up and take one right between the eyes.
This time, the big topics included Google and Adobe — no surprises there. Google recently unveiled its own Android-powered handset, the Nexus One, whose release Jan. 5 prompted Jobs to perhaps over-react by announcing on the same day that the iTunes store had served up three billion apps and that “… we see no signs of the competition catching up any time soon.” Apple’s billionth iPhone app download was greeted with great fanfare, but the two billionth not so much, so it felt a tad like Jobs was feeling some heat.
Jobs, characteristically, did not mince words as he spoke to the assembled, according to a person who was there who could not be named because this person is not authorized by Apple to speak with the press. On Google: We did not enter the search business, Jobs said. They entered the phone business. Make no mistake they want to kill the iPhone. We won’t let them, he says. Someone else asks something on a different topic, but there’s no getting Jobs off this rant. I want to go back to that other question first and say one more thing, he says. This don’t be evil mantra: “It’s bullshit.” Audience roars.
About Adobe: They are lazy, Jobs says. They have all this potential to do interesting things but they just refuse to do it. They don’t do anything with the approaches that Apple is taking, like Carbon. Apple does not support Flash because it is so buggy, he says. Whenever a Mac crashes more often than not it’s because of Flash. No one will be using Flash, he says. The world is moving to HTML5.
The world, of course, includes Google, which last week in a somewhat more modest development bypassed Apple’s iPhone app blockade by unveiling an html5 version of Google Voice, which takes full advantage of mobile Safari on the iPhone. Wired.com found it to be an impressive variation of the app Apple has neither approved nor officially rejected.
And it is, of course, in keeping with Google’s stated view (Android app marketplace notwithstanding) that the future is really in web-based applications and not in mobile apps at all. Web-based applications of the sort html5 makes much more viable.
So, great work rallying the troops, Steve — but be careful what you wish for.
NO doubt about it, 2009 was ne of the most economically challenging years because it has impacted the way Malaysians view their personal financial futures.
It may even trigger the Baby Boomers (aged 64 to 46) and Generation X’ers (aged 45 to 30) to relook their retirement planning processes to ensure financial sustainability for old age.
We will be confronted with situations of not having enough money for old age if our retirement savings suffer from continuous financial pressures like consumerism, inflation and financial market volatility.
And if this situation continues collectively as a nation, it can pose challenges for the Government in financing retirement, old age living and healthcare as we move towards an ageing society.
By 2020, Malaysia’s population above the age of 60 will increase to 3.2 million, or 9.5%. The United Nations, in its guidelines, classifies any nation with 10% of its population above the age of 60 as an aging nation.
Even if we are slightly under the 10% mark in 10 years’ time, we should be planning and implementing retirement policies now so that the future economic stresses of our ageing society are lessened.
Like the saying – “An ounce of prevention is worth a pound of cure” – year 2010 is the turning point of a new decade to implement new retirement strategies and policies, with collective effort required from the Government, employers and individuals.
The big picture
We must take a new approach to creating a progressive “silver society”. Retiring and growing old will no longer be synonymous with declining wealth and health if we start to take proactive steps while learning from developed countries.
The World Economic Forum September 2009 report on “Transforming Pensions and Healthcare in a Rapidly Ageing World: Opportunities and Collaborative Strategies” was published at a time when the economic crisis was stimulating new critical thinking about fundamental retirement and ageing challenges.
A concerted effort from government, private sectors and civil societies is essential to address an ageing population with declining labour force, and alarming healthcare and pension benefit costs, according to the report.
It highlights 11 strategic options to better cater for the changing retirement and healthcare expectations. While each strategic option could stand alone, their strength lies in their synergy and complementarity.
We shall focus on two of the 11 options which can be easily implemented, as the others require more effort and time.
Promote work for older cohorts
This implies shifting public policy, business practices and personal behaviour towards lifetime employability and active ageing. For many people, productive employment is now possible and desirable well into the 70s. Life expectancy has increased by around two decades in the last half century, while retirement ages in many countries have changed very little.
Our mandatory retirement age in Malaysia is at 56 years for the private sector and 58 years for government employees. If life expectancy increases into the 70s, it will mean that, on average, a Malaysian will have almost 20 years of no work and no pay.
There are many positive implications of increasing the mandatory retirement age to, at least, 65. Baby boomers and generation X’ers have more years to earn money, more contributions to the Employees’ Provident Fund, more savings for investment opportunities and less years idling before passing on. Increasing the mandatory retirement age may also help to lessen the Government’s economic stress and overcome the declining labour market.
Financial education and planning advice
In the area of retirement, individuals are increasingly expected to take responsibility for the management of risks and determining their level of retirement income, and must bear the consequences of wrong or inappropriate decisions.
Financial education is the process by which individuals improve their understanding of insurance, investment, retirement saving products and concepts.
This enables them to become more aware of risks and opportunities, develop the skills and confidence they need to make informed choices, know where to go for help, and take effective action to ensure an adequate retirement fund.
Financially literate individuals are more likely to plan responsibly for their old age. However, policy-makers and financial providers must acknowledge that financial education alone may not be sufficient to overcome behavioral biases such as a tendency to procrastinate about retirement savings decisions.
“Every cloud has a silver lining” if we are successful in implementing some of these strategic options which are relevant to us in the next 10 years. I am sure there will be new opportunities to build a vibrant “silver economy” where wisdom and experience are valued as much as youth in our society.
Yip is a personal financial coach and also founder and CEO of Abacus for Money.
1. Promote work for older cohorts For many people, better health in old age means productive employment is now possible and desirable well into their 70s. Coordinated action to change public policy, business practices and personal behaviour can promote lifetime employability and active aging.
2. Shift delivery of healthcare to a patient-centred system Instead of a reactive focus on curing disease, patient-centred healthcare systems have a proactive focus on maintaining good health. Such a fundamental reorientation of healthcare systems can help reduce the incidence of preventable chronic diseases in old age.
Stimulate consumer empowerment
3. Promote wellness and enable healthy behaviours Lifestyle factors and behavioural choices play a major role in determining the level of health in old age. Making people aware of the health consequences of their choices must, however, be accompanied by creating physical and social environments that are conducive to healthy behaviours.
4. Provide financial education and planning advice Financially literate individuals are more likely to plan responsibly for their old age. Improving awareness and understanding of private pensions and retirement saving products enables people to make informed choices and take effective action to ensure an adequate retirement income.
Strengthen funding and savings
5. Encourage higher levels of retirement savings As public pensions increasingly offer lower replacement rates, retirees’ standards of living depend more on their level of complementary private benefits. Incentives and opportunities need to be provided to expand participation in, and increase contributions to, private pension systems.
6. Facilitate the conversion of property into retirement income Reverse mortgages (or “lifetime mortgages”) allow elderly individuals to release equity in their home without the need to sell the home and move to a smaller property. Borrowers can choose to receive the loan in the form of a lump sum, a series of payments or a lifetime annuity.
7. Stimulate micro-insurance and micropensions for the poor As an extension of the microfinance movement, micropensions are a combination of micro-insurance and microsavings products which have retirement income as their primary objective. They target poorer households, and the amounts contributed may be very small.
Optimize capital allocation
8. Enhance pension fund performance Pension fund performance is one of the key drivers of retirement benefits in capital-funded pension systems. It can be enhanced by measures to optimize the design of investment strategies and improve the quality of pension funds’ governance and administrative efficiency.
Improve efficiency and cost effectiveness
9. Realign incentives of healthcare suppliers Better health in old age is compromised by waste and inefficiency in healthcare systems that reward doctors and hospitals for services provided rather than health outcomes achieved. Pay-for-performance measures can improve efficiency by realigning incentives of healthcare providers.
10. Ensure that cross-border healthcare delivery benefits all stakeholders Cross-border healthcare delivery includes patients travelling overseas for treatment and patients interacting electronically with a healthcare provider in another country. It has the potential to be developed in ways that can benefit patients and countries of all income levels.
Enhance risk management and risk sharing
11. Promote annuities markets and instruments to hedge longevity risk Longevity risk is the uncertainty surrounding future improvements in mortality and life expectancy. Annuities protect individuals against this risk. The functioning of annuity markets can be improved by further developing longevity indexes and issuing longevity-indexed bonds.
There is little question that banks need to be reigned in and watched closely – it’s a question of how much
THE international banking community, after having brought the world to the brink of disaster and having wreaked havoc on the economies of the world, is now griping, really griping.
The gripes stem from efforts being made around the world to regulate bank activities, particularly by US President Barack Obama who announced a number of key measures to help ensure that there is no repeat of the crisis that threatened to crash the world.
This, extracted from Obama’s speech last week on the financial reforms, outlines succinctly the changes: “For while the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse. These are rules that allowed firms to act contrary to the interests of customers; to conceal their exposure to debt through complex financial dealings; to benefit from taxpayer-insured deposits while making speculative investments; and to take on risks so vast that they posed threats to the entire system.
“That’s why we are seeking reforms to protect consumers; we intend to close loopholes that allowed big financial firms to trade risky financial products like credit default swaps and other derivatives without oversight; to identify system-wide risks that could cause a meltdown; to strengthen capital and liquidity requirements to make the system more stable; and to ensure that the failure of any large firm does not take the entire economy down with it. Never again will the American taxpayer be held hostage by a bank that is ‘too big to fail’.”
It was quite clear to anyone who watched the situation closely the reasons for the financial crisis. Banks were taking too much risks with depositors money and were not doing the business of banking properly. Bankers were being rewarded when huge risks they took resulted in extraordinary profits for them, paying themselves millions of ringgit in bonus. There were substantial incentives to take risk. The average bonus at Goldman Sachs for instance was almost US$500,000 a year!
This high figure is because of many staff who routinely earned millions of dollars a year. Goldman’s bonuses amounted to an incredible nearly 40% of revenue – revenue, not profit. And most of its revenues came from proprietary trading – trading for its own account. Because of their huge size, banks have tonnes of deposits.
Citibank’s deposits amount to over US$800bil. If they muscle into proprietary trading – and many of them have – they can move markets by using just a small portion of their deposits. These can be in the commodities, foreign exchange, derivatives or other markets.
In fact major investor/speculator/manipulator – depending on who you talk to – George Soros said at the World Economic Forum at Davos earlier this week that Obama did not go far enough to push banking reform. His arguments ran counter to those by bankers who predictably wanted less regulation. In situations like these, common sense should prevail.
And how about this one which Obama formulated with former Federal Reserve chief Paul Volcker: “It’s for these reasons that I’m proposing a simple and common-sense reform, which we’re calling the ‘Volcker Rule’ – after this tall guy behind me. Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that’s something they’re free to do. Indeed, doing so – responsibly – is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”
Around the world people should stand up and fight against this attempt by banks to stop close supervision of their activities, arguing that this will crimp their profits and cut the creation of jobs. The world needs to be protected against bad banking.
We should take heart in this extract of that speech by Obama: “So if these folks want a fight, it’s a fight I’m ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small business, they can’t keep credit card rates low, they can’t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers – that’s the claims they’re making. It’s exactly this kind of irresponsibility that makes clear reform is necessary.” Well said Obama.
Managing editor P. Gunasegaram says there is no harm done and every benefit derived, from requiring banks to be prudent. After all, are they not the custodians of our money?
