1 Ghosts of deflation back to haunt us (Lim Say Boon
in Straits Times) The ghosts of deflation past have returned to haunt global stock
markets. The casualties have spread from other emerging markets to China and,
now, the developed markets are affected as well. Since the global financial
crisis, the world has found itself six years older but none the wiser on how to
fix the economy, for all the money printed around the world.
The US, euro area, Japan and even China- fell into
deflation as a result of the global financial crisis in 2008. At one stage, it
looked as if quantitative easing had overcome inflation in the US, and economic
recovery would also lift Europe and Japan out of deflation. Not so. US
inflation has been declining relentlessly since 2012. Prices in Europe and
Japan are borderline deflationary again. The ghosts from 2008 were never
exorcised.
Inflation has been on a downtrend since 2011. Beyond
an initial rebound in consumer prices from 2009, the global economy never
overcame the structural tendency towards deflation. The collapse in commodity
prices over recent years is troubling on a number of fronts. Quantitative
easing was supposed to lift commodity prices by debasing paper currencies. But
it didn't work. Note that this was one of the strategies that lifted the US out
of the Great Depression.
Ageing demographics and low productivity growth have
also been structural drags on growth. Older people who continue working but
spend less than in the prime of their lives add to deflationary pressures. Meanwhile,
productivity growth in the developed market economies has also shifted down.
This is a world of inadequate demand and excess
supply. There had been a series of competitive devaluations around the world,
starting with quantitative easing in the US and a weaker dollar immediately
after the global financial crisis. But since then, rates have been cut all
around the world. They are all doing the same thing - that is, exporting their
deflation or attempting to stop somebody else doing that to them in a world of
inadequate demand.
In such a world, the suppliers - the emerging markets,
for everything from commodities to manufactured goods - are at a disadvantage.
Economies with demand are likely to enjoy a bit more insulation from the
shocks. But mind you, they are not immune from a slower world. And this will
show in the coming days and weeks in the equities markets.
2 One in 65 UK adults a millionaire (Patrick Collinson
in The Guardian) The number of millionaires in the UK has shot up by 41% over
the past five years, with one in 65 adults now classed as having a seven-figure
fortune thanks to booming house prices and stock market gains.
There are now 715,000 millionaires living in Britain
compared with 508,000 in 2010, with London having the highest concentration of
wealthy individuals. But wealth does not correlate with kindness. The region of
the UK with the lowest average annual pay – Northern Ireland – is by far the
country’s most charitable, with 45% of households giving to charity, Barclays
found. The figure for London was just 28%.
The figures are likely to reignite concerns about
the north/south divide and income inequality in Britain. Median household
incomes have gone up just 2% since 2011, according to the Institute of Fiscal
Studies, yet the number of millionaires continues to surge.
It was revealed this week that more than £42bn was
paid out in bonuses in the last tax year, much of it to bankers in the City,
where payouts have returned to within a whisker of their 2007-08 peak. Rampant
house price inflation in the capital is behind much of the surge in London
millionaire numbers. .The research showed that every UK region is now more
affluent than it was five years ago.
3 Chaos to confidence through strategic planning
(Clate Mask in San Francisco Chronicle) The day-to-day hustle of business lends
itself to a world of chaos and confusion. You feel like you’re failing as an
entrepreneur and as the leader of your company. High performing people, well-paid athletes and
successful business owners have one thing in common: confidence. Confidence
drives success, but it takes preparedness and daily execution excellence. Strategic
planning provides confidence and clarity.
Strategic planning isn’t a one-time event. It’s not
a set-it-and-forget-it activity. Once you’ve developed your mission, you need
to break it down into annual and quarterly priorities.
At Infusionsoft, a small business sales and marketing
software company, we hold quarterly planning sessions with team leaders to
provide context for the upcoming quarter. This context provides clarity and
focuses on the 20 percent of the activities we do as a collective company that
contribute 80 percent of the strategic progress that we’re trying to make
towards our mission.
You can have a vision for the future, but you need
to focus on the work you have today. Plans are great, but you won’t see
progress unless they’re translated into daily activities. Employees need to be
able to tie their projects and job functions to your current mission.
With a strategy in place and daily focus made clear
for each of your employees, you’ve laid the groundwork for high performance.
Now, it’s time to make sure that your people are working together like a
well-oiled machine. There’s nothing more frustrating than individual parts that
don’t add up to a whole. Stepping back to look at the business holistically is
key.
Entrepreneurs who aren’t intentional about planning
are in a constant state of chaos and confusion. Ultimately, they leave the fate
of their business to chance. The strategic planning process is about creating
the future that you desire. It’s intended to transform chaos and confusion into
clarity and confidence. If you want to improve the likelihood of success for
your business, you must be intentional. Plan strategically, strive for daily
execution excellence and work as a team. The future of your business depends on
it.
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