Thursday, June 11, 2015

IMF walks out of Greece bailout talks; For UK, years more of spending cuts foreseen; Using diversity for business success

1 IMF walks out of Greece bailout talks (Phillip Inman, Graeme Wearden & Helena Smith in The Guardian) The International Monetary Fund has dramatically pulled out of talks with debt-stricken Greece after it accused Athens of failing to compromise over labour market and pension reforms. The Washington-based lender of last resort said its team of negotiators had quit talks in Brussels after reaching a stalemate.

The move left the Greek negotiating team with no option but to say it would also be leaving the talks and heading home to Athens. The IMF’s decision followed increasingly sharp criticism from EU officials frustrated at the Greek government’s continued refusal to bow to creditors’ demands. Donald Tusk, the president of the European Council, earlier attempted to pressure the Greek prime minister, Alexis Tsipras, to agree terms with its creditors, warning that the time for gambling was over.

Greece has wrangled with creditors over the release of the remaining funds in its bailout. Without the €7.2bn available, Greece faces imminent bankruptcy, putting up capital controls and even exiting the euro. Tusk warned that unless an agreement is signed in the next few days there is a risk that the talks will collapse and Greece will default on its existing €320bn of loans. He added: “There is no more time for gambling. The day is coming, I’m afraid, that someone says that the game is over.”


2 For UK, years more of spending cuts foreseen (BBC) Further cuts in government spending will be needed beyond this parliament in order to bring the national debt under control, UK’s Office for Budget Responsibility (OBR) has warned. In its annual report, the OBR said that without further spending cuts or tax rises, the national debt would only increase.

It said a permanent £20bn cut in annual public spending will be needed by 2020. That would help bring the national debt down to 40% of GDP by 2064, it said. If achieved, this means it would have taken more than half a century to bring the national debt back to the same level it was before the 2008 financial crisis. Last year, public sector net debt was £1.48tn, or 80% of economic output, compared with around £600bn, or around 42% of GDP, in 2008.

The forecast spending cuts come a day after the Chancellor George Osborne announced plans to bind future governments to operating a budget surplus during times of economic growth. The OBR said the government's triple-lock on the state pension - whereby the state pension rises by whichever is the greater of inflation, average earnings, or 2.5% - had meant an resulted in an additional £2.9bn cost to the government, seven times higher than the £0.4bn increase originally forecast in 2010.

Earlier this week, ratings agency Moody's warned that the government will find it very difficult to achieve a budget surplus by 2018-19, and is still likely to be operating a deficit of between 1% and 2% of GDP by 2020. The chancellor is due to announce spending cuts to welfare and government departments totalling £30bn over two years in his summer Budget next month.


3 Using diversity for business success (Cesar Melgoza in San Francisco Chronicle) Successful entrepreneurs know about overcoming adversity to beat the odds. And as both an entrepreneur and a first-generation immigrant, I would say that I’ve beaten the odds twice. But at least part of my success comes from yet another characteristic I have worked toward -- diversity -- which has helped me obtain the new perspectives that in turn have further helped me grow my business.

To understand what entrepreneurs who contribute diversity to the workplace can teach us about success, I sought out a colleague in the Hispanic business community whose experience parallels my own: Alejandro Ruelas is a founder and partner at LatinWorks, the largest Hispanic advertising agency in the country.

He emigrated from Mexico to Los Angeles at a young age. His story of founding LatinWorks personifies how he used diversity to beat the odds -- and his experience seeking diversity is useful for any entrepreneur facing adversity. Specifically, Ruelas used diversity to his advantage in three distinct ways:

A. Diversity of experiences. Ruelas and his family were more interested in building the relationships necessary to achieve a quality life in America. It was this desire to learn more, do more and meet more people that he attributes to his success. Working in the beer industry at the distributor level, Ruelas obtained a firsthand perspective about how consumers view a brand. In business school, he networked with successful company founders. As he rose through the ranks at Anheuser-Busch, he sought experiences that would shape his foundation as a leader.

B. Diversity of skill sets. Ruelas understood that choosing a quality team is what makes a business scale and grow. “As an entrepreneur, you need to focus on what you do best -- then surround yourself with people who are better than you at other areas,” said Ruelas.

C. Diversity of cultures. Cultural understanding is what prompted his agency to leverage Hispanic comedian Carlos Mencia in an advertisement for Bud Light during the 2007 Super Bowl. Choosing the right cultural icon allowed LatinWorks to become the first Hispanic ad agency to obtain a number one Super Bowl spot.

However, relying on culture to grow sales is a dynamic task. It’s important to understand that today’s American culture is the accumulation of multiple multicultural influences. To grow their businesses successfully, entrepreneurs must be aware of these nuances and cultural changes. A diversity of perspectives helps you grow; and an understanding of societal trends keeps you at the top. Building a business involves counting on and learning from people of all backgrounds, strengths and experiences.

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