France and Australia – Two white devils colluding to maintain western hegemony in the Pacific Ocean

‘No country can be allowed to dominate the Indo Pacific, the leaders of France and Australia said yesterday…China’s push into the Pacific…could upset the strategic balance in the region.’ AFP
 
What is Macron and Turnbull talking about? Turnbull said France, an European country, is a Pacific power. Why, because France is still holding on to several Pacific islands as their colonies, just like the Americans. The Australians also have special influence over several Pacific islands and cannot accept China investing in these islands and gaining influence in the region.
 
What is this strategic balance in the region that will be upset? It is the dominance of European powers over the Pacific islanders. They want to control these islands and maintain their influence over them.
 
These Europeans coming from far away Europe still want to rule over the Pacific Ocean and are branding China as the hegemon when they themselves have been the hegemon of the region and the whole world.
 
Little powers like Australia and France still think that they are great powers and with 3,500 men could win a war in China. They are dreaming. The only European power that realized that the game has changed is Britain. They were urged by the Americans to sail the new HMS Prince of Wales into the South China Sea as a show of force. The British knew that this act could see the sinking of the Prince of Wales one more time, this time by China, not by the Japanese. They scooted off.
 
The French, after their humiliating defeat at Dien Bien Phu by the Vietnamese with the support of the PLA, still did not learn any lesson and still think they can be the gangsters to rule over the Asians in Asia.
 
China should start by stopping buying raw material from Australia. China does not need Australia. Australia without China would go into recession. They are suffering now when China has stopped all official visits from Australia. The Australia trade fair in China is also cancelled as all permits applied by Australian ministers were not approved. Even in the Boao Forum Australia was disinvited.
 
China is waiting to launch many more anti Australian move if this little country misbehaved. And it is misbehaving very badly. Watch what China would do next to the descendants of British convicts.

Malaysia GE - Between the devil and the deep blue sea

Anyone uttering the word frivolous about the Malaysia GE? Yes, it is frivolous, it is about infidelity, it is about sleeping around, anyone will do, even with those that killed your loved ones or punched the day light out of you and put you behind bars. You cannot believe that this is true. This is thousands of times more than the Deng Xiaoping's black cat, white cat, as long as it catches the mouse, it is a good cat moral. Malaysia has outdone Deng Xiaoping in every way. Malaysia boleh.

The devil has his hands dripping with blood. But no one is looking at it, or at least no one thinks it wise to talk about it. And the devil is strutting around hugging the survivors and descendants of those that his bullets and butcher knife missed. Did anyone remember what happened a few years ago? Did anyone recognise the devil without his horns? They might but are not saying. They even put on a brave smile and hugged the devil as he came by.

The deep blue sea has hands dangling with money. There is money everywhere, his pockets are fulled of money and he could simply swing his arms around and everyone would be jumping for joy picking up the cash. The deep blue sea is all about making everyone rich and giving everyone a better life. He is pro economic growth, investment, to provide more and better jobs to those who want a better and richer life. He does not hide his agenda. He believes or at least gives the impression that black cat or white cat, catches mouse means good cat.

The Malaysians would have to choose between the devil and the deep blue sea. The Malay votes would be heavily polarised and divided. The super extremists or super ultras would be with the devil. Hope no blood will spill but you can't be sure as the devil is always the devil eternally. You can bet that tension will rise when the devil speaks. His evil schemes and agenda will be the same. The other half of the Malay votes would be with the deep blue sea. The ultras and extremist will still be with him. They can see money and prosperity and would be appeased. Other than these two factors, the devil and the deep blue sea are sama sama. You can't tell the difference between them. They would have the Malay votes equally split between them.

The game changer will be the Chinese votes. Do not be surprised that MCA will be the big winner in this GE. The Chinese voters would have to choose and it is highly likely that they would choose the deep blue sea than the devil. They know the devil all these years and know that the devil is still the devil and would unleash his devilish blow when needed to achieve his evil objective. The Chinese voters have  a lot to fear the devil.

On the contrary they see the deep blue sea more practical, pragmatic and development and growth minded. Money talks and if everyone is rich, there would be less tension and less likelihood of bloodshed. The deep blue sea would create a bigger economic pie for everyone and there will be more money to go around to make everyone happy or less unhappy.

What can the devil offer? The devil does not have any card to play except the racist card and more of the same during his reign of terror. And when he shouted all in, be afraid, be very afraid. The devil is merciless and very vengeful. The devil will not take no for an answer. Would the other half of the deep blue sea do the necessary to make the devil disappear before he could do more harm to the country and the people he hated most and exploited most to achieve his personal agenda for so many decades?

My bet, the Chinese votes would be the deciding factor and the deep blue sea looks much better to stay on in Putrajaya. And for good measures, he may lock up the devil for good.

Market Failure Due to Asymmetric Information - Adverse Selection and Moral Hazard

In the book based on an inquiry into the nature and causes of the 2008 Global Financial Crisis entitled "FREEFALL - Free Markets and the Sinking of the Global Economy", Economics Nobel Prize Laureate (2001) and Columbia University Professor Joseph E. Stiglitz wrote:

Quote

"Finding root causes is like peeling back an onion. Each explanation gives rise to further questions at a deeper level: perverse incentives may have encouraged shortsighted and risky behavior among bankers, but why did they have such perverse incentives? There is a ready answer: problems in corporate governance, the manner in which incentives and pay get determined. But why didn't the market exercise discipline on bad corporate governance and bad incentive structures? Natural selection is supposed to entail survival of the fittest; those firms with the governance and incentive structures best designed for long-run performance should have thrived. That theory is another casualty of this crisis."

Unquote

Market failure is a common term in microeconomics to reflect the need for some form of regulations and accountability of agents (consumers and producers) in the unfettered free market when externalities, imperfect information, socially undesirable market dominance etc arise. In the area of perverse incentives in the market place, two forms of asymmetric information can be associated with such possible market failure. One, adverse selection; and two, moral hazard. To simplify the understanding of such market failure, let's take two simple examples.

For moral hazard, a similar example in day to day economic activities is that of motor insurance. Why is moral hazard considered a form of market failure and thus socially undesirable? This is because no insurance company can be certain, at the point of underwriting the motor insurance of any driver, of the future behaviour of the driver. Motor insurance companies would be OUT of Business if there is no way of ensuring the responsible FUTURE behaviour of drivers insured under them. Thus, there is this concept of CO-PAYMENT known as "EXCESS" or "DEDUCTIBLES" mechanism built into a motor insurance agreement. For example, if the excess of a motor insurance is $3,500, then any accident repair amount below that sum is fully borne by the driver/ owner of a vehicle. By having the co-payment mechanism built-in, motor insurance become feasible in the market place and minimise the moral hazard of reckless FUTURE behaviour.

In the banking sector where executives take undue risks for short term gain (such as those causing the 2008 GFC), inherently similar moral hazard exists but DOES NOT seem to be mitigated by any "co-payment' mechanism in the {perverse} incentive packages they receive.

In 1970, another Economics Nobel Prize Laureate (2001) Professor George Akerlof (husband of former FED chair Professor Janet Yellen) of University of Berkeley, California published a paper entitled "The market for 'lemons': quality uncertainty and the market mechanism" which led to the growth and research in the field of asymmetric information. This publication subsequently led to the enactment of the "Lemon Law" in many countries including the United States, Canada, Australia, and in recent years Singapore {Consumer Protection (Fair Trading) Act} where it addresses the market failure arising from adverse selection in the used car market and other consumer goods.

Now, market failure due to asymmetric information arising from moral hazard and adverse selection in different sectors of an economy is CERTAINLY NOT NEW as it can be traced as far back as 1970 which is almost half a century ago.

ALAS, in the field of banking, unfortunately and mostly, moral hazard in the area of excessive risk taking is left to the free market mechanism (as what happened during the 2008 GFC). There does not seem to have any material "co-payment mechanism" to keep the market failure of moral hazard in check. What were the consequences?

Professor Joseph Stiglitz wrote in his book "FREEFALL":

Quote

"In the great recession that began in 2008, millions of people in America and all over the world lost their homes and jobs. Many more suffered the anxiety and fear of doing so, and almost anyone who put away money for retirement or a child's education saw those investments dwindle to a fraction of their value. A crisis that began in America soon turned global, as tens of millions lost their jobs worldwide -- 20 million in China alone -- and ten of millions fell into poverty.'

Unquote

What is the lesson learned?

Quoting from Professor Stiglitz again: "We have to be wary of too facile explanations: too many begin with the excessive greed of the bankers. That may be true, but it doesn't provide much of a basis for reform. Bankers acted greedily because they had incentives and opportunities to do so, and that is what has to be changed."

In short, could perverse incentives be the ROOT CAUSE?

Professor Stiglitz made the following observations in the same book: "In peeling back the onion, we need to ask, Why did the financial sector fail so badly, not only in performing its critical social functions, but even in serving shareholders and bondholders well? Only executives in financial institutions seem to have walked away with their pockets lined -- less lined than if there had been no crash, but still better off than say, the poor Citibank shareholders who saw their investments virtually disappear."

Could it be the skewed structure of "perverse incentives"? Despite technology disruption and what not, this so called supposedly modern economic system and technological advancement in this age of AI (artificial intelligence) seems to be at a loss (and clueless) in the field of building in a mechanism of accountability and "co-payment" when potentially rogue high pay executives run amok and threatened to bring down the entire system, just as what happened in the 2008 GFC (Global Financial Crisis).

Leo 81

Asians assisting the West to recolonise Asia

This topic could also be titled, Asian news to be reported by Asians. More than half a century has gone past and Asia is still unable to shake off the colonial yoke. Many Asian countries are still colonised by the West, some unknowingly, some happily. This phase of post colonial Asia is the colonisation of the minds, the thinking, the mindset, by the use of main media. The main media is the biggest culprit, the biggest instrument in the colonisation of the Asian minds to be continually subservient to the angmohs. Angmohs are great, smart, clever, sophisticated, kind, handsome, civilised and knows all, have great ideas and enjoy life, make living better. The Asians are daft, unthinking, cannot thinking, inferior, crude and base, completely devoid of ideas, did not know how to live life, basically backward and stupid, despite all the best education they could get in the best western universities.

This is not just a white lie, it is a lie that daft Asians conditioned themselves to believe in and to live in, with the help of the main media, with stories written and reported by the angmohs about them. Many Asian main media cannot live without the angmohs and some half baked Asians thinking like angmohs to tell them what is right, what is wrong, what is good, what is bad, what to think and what not to think, what to say and what not to say.

All Asian media have failed in this task, miserably, except for those countries that have some pride in themselves, in believing that they are not inferior to the angmohs.

It is high time that Asians start a news agency that reports news the Asian ways, news that are written and read by Asians, particularly of their respective countries. It is an insult to the respective people of their countries to have their own news, domestic news, written and told by the angmohs or fake angmohs. When would the Asians start to respect themselves to have their own people tell their own stories and not to be seen and told from the perspective and tainted views of angmohs whose interests are contrary to their well being?

There are many able Asians, politically conscious of what is going on around Asia, to take up this call, to set up an Asian media, with Asians managing and writing and telling Asian news. People like Jack Ma, Li Ka Shing, Robert Kuok or Ho Kwon Ping, just to mention a few, should step forward, individually or as a team, to form such a news agency, to educate and enlighten the daft Asians that they are not that daft, to have pride in being Asians and to think Asians. They could cooperate with the respective govts of Asian countries to have their respective news makers and producers, to tell the world about themselves, in their own words, and free their people from being colonised by the angmohs for the last time.

Asia is for Asians. Asians must take charge of their own lives and do, think, talk about what is good for themselves, not what the angmohs are saying and thinking for them. Asia must grow up, be adults, not forever be like children or adolescents, forever needing to be told and led by the angmohs. Asians must free themselves from being colonised by the angmohs and chart their own destinies, to be themselves and be proud of themselves, for their own good.

The last thing the literate Asians should do is to assist the angmohs to continue to colonise the minds of fellow Asians. You don't need the angmohs to tell you to hire them to teach in your universities to deserve higher rankings. You don't need the angmohs to tell you that you are well and good, to tell you who is the devil and who are the good guys. You have a mind to think for yourself.

You are Asians, not angmoh slaves and servants.

Firm's Objectives - Profit vs Non-Profit

Part 4: Firm's Objectives - Profit vs Non-Profit

Fundamentally, the management structure in Warren Buffett's Berkshire Hathaway is arguably the best incentive-driven to yield maximum returns, that is, investment-wise it is stable in the setup in relation to motivation and incentive to perform.

Warren Buffett and his right hand man bullionaire Charlie Munger are quintessentially significant sharehokders in their investment holding company and the classical economic theory of profit maximisation for firms fits in nicely.

But when there is significant "gap" in ownership-management relationship aka known in economics as principal-agent relationship, then economics theory has long acknowledged that the classical profit-maximisation theory would not hold but alternative goals of firms take precedence. It is especially so when executives KPI and incentives are "not non-perversely structured".

In such firms, not only is the classical economic condition (MR=MC) of profit-maximisation violated, some other objectives such as "SATISFICING" are deep-seated in their management corporate culture.

The performance-incentive relationship in such firms is essentially "not stable" and "distorted". One theoretical analogy can be in what is known as the Nash Equilibirum which is the cornerstone of Game Theory widely taught in or part of economic courses. Paramount to this concept is that the dominant strategy of both or all parties ends up in a Nash Equilibrium and no party has the incentive to deviate from it as it yields the best outcome for all. In short, it is a self-sustaining stable relationship.

But what if such a Nash Equilibrium is terms of the company structure is not forged and thus one party has the incentive to deviate from agreed goals such as profitability? One example is what happened in the risk-taking by executives in some financial firms leading to the last GFC in 2008. In their investment venture (or "adventure"), it was almost unmistakably "heads they win, tails they walk away" (often with a golden hand-shake). In a way, such "skewed-" incentives driven deep-seated culture is "perverse".

Arguably, the shareholdership-management structure in Warren Buffett's Berkshire Hathaway is far more superior and stable and creates almost always a win-win scenario for both management and shareholders.

Sadly, from the financial carnages witnessed in the last GFC, the corporate governance in terms of incentives structure in many firms are found wanting and the executives' incentives are often "perversed" than not.

Leo81