What A Speechmaker ... What A Leader

As I am writing this, Obama is only halfway through his State of the Union address. At a time when Americans have kind of lost track of Obama's vision and "change" mantra, they have a kind of disconnect to the whole thing. At a time when the media cast doubts over Obama's plans to tax the banks, impose new regulations to control them, at a time when Main Street thinks the government is losing its fight to reprimand and teach Wall Street a lesson ... it wasn't easy for Obama.

I have posted on how and why Obama is such a great speechmaker - you can learn most of it, but you cannot learn how to connect. He is not only charismatic, he does not seem artificial at all. In the end, you trust him more because he connects all the dots of your concerns.

Obama's speech is genuine sounding, he made sure that he connected to the everyman in smaller towns, just count the number of small towns he mentioned. He also did not gloss over the realities, that he knows things are not all that rosy, that things put in place are working and that all should be in the same boat.

We have to remember that the media is still largely controlled by Republican-leaning people. In one simple sentence, Obama's contentious tax on big banks gains huge acceptance - when these banks asked for bailouts, and in less than a year are preparing to reward themselves with a huge bonus pool... Obama's tax on them does not seem so bad, especially when it is going to support a jobs bill to create jobs and sustain lending to small businesses.

He did not alienate the Republicans but will put them up to be on the same side to lift the US out of their difficulties. More importantly, Obama has showed all that HE is still very much in CONTROL, that he is still on top of the matters that concerns all, and that he is still addressing the major issues effectively, decisively and continuously.

He punctuates his speech with strong convincing ideas, logic and persuasiveness that is hard to shake off. Well, you can cast a lot of market doubts on Obama government's thrust to reform banking, ability to create jobs, the ability to lift the economy out of the doldrums, and the ability to maintain a stricter fiscal prudence to eliminate deficit ... in one fell swoop, Obama has literally dusted all those concerns off with aplomb and credibility. He reminded all on the cohesiveness of his government's every step and that all actions are working towards many bigger visions for all Americans. I think all market shorts will be running to cover their positions FAST...

Yes, I am in awe again ... this speech is even better than those he made in the past ... even when you know he has the gift of gab, even when you know he is already charismatic ... you still go away feeling you can trust him even more in spite of his natural abilities (which many may use to deceive and con others with).


p/s photo: Choi Ji Woo

Ess'kue Me, Mister Liu!!!

During the recent APEC meeting in Singapore, Liu Mingkang, China's chief banking regulator, took a cheap shot at the US and Obama when he remarked that the US Federal Reserve is fueling speculative investments and endangering global recovery through loose monetary policy. Why I think that was a cheap shot - even my blog has been saying that for the longest time. The policies Liu was refering to were the weak USD, massive liquidity and currency printing, and low interest rates by the US. Liu basically said some standard knowledge: "The US Fed is boosting speculative investments in stock and property markets and will pose new, real and insurmountable risks to the global economy."

Mr. Liu, what do you expect the Fed or Obama to do??? Raise interest rates in the US while property prices, corporate spending and empoyment are still pretty weak??? To criticise the US is so easy. Hallo... you want to talk about bubbles, just look at China's massive expansion in dubious loans over the last 10 months - now that's a bubble as well.

Everybody do not want the financial crisis to happen but it has. How you work together to revive the global economy is more important, rather than criticising one another's policies. Every government is most concerned about saving jobs as it could derail the broader economy for a long time if left unchecked. The underlying rationale is to prevent social unrest, which could spell the end of many governments during times of crisis. Everybody has their own turf to mend first, only then can they work together to bring the global economy out of the woods.

How can the US seriously have a firm or strong USD now??? It needs to be more competitive, it needs to adjust its purchasing power in light of the massive amount of USD being printed, it needs to attract investments into its businesses and assets by having a lower USD - is that wrong? How in the hell is Obama going to justify having a firm USD in current times - yea, make it more attractive for US companies to ship jobs abroad, make US products a lot more expensive. Come on Mr. Liu, think before you speak, or rather stand in the other person's shoes before speaking. What about the massive China's stimulus program, isn't that easy money as well?

As to whether the US monetary and fiscal policies will lead to another global asset bubble, that will take some guess work. As things go, yes, we are headed for one, but we have yet to see how the major central bankers act further down the road. If they behave responsibly and keep selling bonds (buying back liquidity or soaking up liquidity) at a gradual pace, the asset bubble scenario may be averted. The flip side of it is when they do soak up liquidity, you will see asset prices correcting - I guess the strategy is to do it gently and in step with market mood swings. Mr. Liu, you think only you understand that the USD carry trade result in speculation???..., I am sure all central bankers know that, even the central bankers of Mali know that - just work together with other central bankers and stop spewing unnecessary jibes to win brownie points. You can criticise, but offer solutions lah, let's see how and what you would propose to do if your were in Bernanke's shoes.

You can criticise the USD carry trade (borrowing in USD and speculating in foreign currencies, stocks and other assets) but that is beyond the scope of the Fed or Obama. Plus market movements or capital flows may not be long term, it may be shifting trends, you cannot simply manipulate short term monetary or fiscal policy for the sake of controlling what might reall be short term market trends. There will come a time when markets will think the USD has gone too low and the USD carry trade will unwind by itself. Do not jump around like a mad dog over normal course of events when currencies are realigning. Makes me think you not fit enough to be China's banking regulator.


p/s photos: Han Hyo Joo

Obama Tightens The Screws On Firms That Were Bailed-out

PRESIDENT Barack Obama's administration is poised to order cash salary cuts of 90 per cent on average for top executives at firms that received the biggest government bailouts, according to media reports yesterday.

The seven companies that received the most government assistance at the height of the US financial crisis will each be required to cut the salaries of their 25 best-paid executives. The firms are AIG, Bank of America, Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial.

Smaller companies and those that have repaid the bailout money, including Goldman Sachs and JPMorgan Chase, are not affected. These banks last week reported record quarterly profits and have set aside tens of billions to reward their staff. Goldman, for example, has earmarked US$16.7 billion (S$23 billion) for compensation so far this year, or more than US$500,000 per employee.

For the affected seven firms, the biggest cuts will be to the cash portions of the 175 employees' salaries, which will be slashed by an average of 90 per cent, and will mostly fall below US$500,000, the Wall Street Journal said.

- The 175 executives targeted by 'pay czar' Kenneth Feinberg are not only the highest-paid but also considered among the most talented and productive from seven companies that have received billions of dollars in taxpayer money.

Their base salaries will be slashed by an average of 90 per cent.

- That applies to the five top executives and the next 20 highest-paid employees at Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.

- Another 525 employees at the companies will also face new curbs on pay from Mr Feinberg, but those details have not yet been released.

- The government did not want to make executives return compensation already received this year, but the reduced pay levels will be the base for making decisions on salary in 2010.

- The executives will still be subject to compensation limits as long as their companies are receiving support from the government's US$700 billion (S$975 billion) bailout fund. Their total compensation was being cut in half, on average.

- Cash salaries will be limited to US$500,000 for more than 90 per cent of affected employees. Personal expenses for such perks as company autos and corporate jets will be capped at US$25,000 without approval from Mr Feinberg's office for higher payments.

- The pay restrictions for all seven companies will require any executive seeking more than US$25,000 in special benefits - things such as country club memberships, private planes and company cars - to get permission for those perks from the government. -- AP

Bernanke's Reappointment - Yes & No Camps

In my view, he should be reappointed, no question. If Henry Paulson was still around, then I would have asked that Paulson be sacked as Treasury Secretary as it was mainly his fumblings with TARP and the yes/no with Lehman Brothers which exacerbated the crisis. Bernanke was reappointed by President Barack Obama for a second term as Chairman of the Federal Reserve. Bernanke will still need to be approved by the Senate. His current term as chairman of the Federal Reserve expires in January 2010. In the past weeks there was debate about whether he should or will be reappointed. Doubters pointed to political pressure to delay fiscal reform and to Bernanke's failure to prevent the housing bubble. Supporters pointed to Bernanke's success in preventing a second Great Depression, despite some mistakes, and to his democratic decision-making style.

Why Bernanke Should Not Have Been Reappointed

• Stephen Roach, Chairman of Morgan Stanley Asia, disagreed with Obama's choice because Bernanke did not do enough to prevent the recession. Bernanke failed due to his agnosticism towards asset bubbles, blaming the bubble on Asia's surplus savers and believing markets know better than regulators.
• Irwin Steltzer, Director of Economic Policy Studies at the Hudson Institute: "An angry president can be counted on to appoint a crew more sympathetic to his views, and less fixated on the sort of anti-inflationary exit strategy that Bernanke has been touting, and the Chinese, their vaults stuffed with dollars, are demanding. There might well be a new chairman in the Fed's near future."
  
• Richard Bernstein, Former Chief Investment Strategist for ML: "His policies both before and after the banking and credit crises have attempted to maintain financial market status quo. Despite the crying need for changes to monetary policy at least as monumental as those of Mr. Volker, Mr. Bernanke did nothing to alter the U.S. banking system's disastrous course...The next Fed chairman must lead a new paradigm of monetary policy to ensure that neither real nor financial asset inflation becomes extreme."
  

Why Bernanke Should Have Been Reappointed

• Dr. Nouriel Roubini: "Bernanke deserves to be reappointed. Both the conventional and unconventional decisions made by this scholar of the Great Depression prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0....Bernanke deserves to be reappointed so that he can manage the Fed's exit from its most radical economic intervention since its creation in 1913."
  
• Steven Pearlstein, WashPost Business Columnist: "Bernanke has been courageous and creative in his determination to do whatever was necessary to prevent a financial meltdown....As chairman, he has gone out of his way to share power and responsibility with other board members and fostered a new spirit of collegiality. His deep understanding of financial crises--as an academic and as crisis manager--makes him uniquely qualified to help Congress shape the new regulatory architecture and implement its reforms."
  
• FT: "Bernanke's fine judgment has stood him and the economy in good stead. Decisions to lower interest rates in early 2008, excoriated by many other central bankers at the time, have since been vindicated. His tenure is not flawless. Like others, he overestimated financial markets' ability to regulate themselves. But he has proved a pragmatic crisis manager not hostage to dogma."
  

p/s photos: Yang Mi

How To Speak Like Obama

One of the main reasons why Obama is so popular and effective is his oratory skills. Yes, oratory skills can be honed. You can actually improve your public speaking skills by joining Toastmasters. You will learn how to develop the necessary skills in engaging your audience, build on your subject matter, learn about delivery, phrasing, etc... To get to Obama-level, you need natural charisma, much like JFK and Martin Luther King. Leadership qualities, to a large extent can also be honed, but to be a natural leader where people instantly look up to you is a quality that is hard to find. I have come across a few articles that tries to look at how Obama works his oratory skills. Here are the main points:

a) Always know your audience, their expectations, their anxieties, their concerns. When you speak to a group of parents-teachers, its different, when its with union workers about to lose a lot of jobs, its different, when its in front of TV, its different, when you are speaking to political reporters, its again different.

b) Following on the first point, you then broadly define the issues at hand, bring up the context of issues in the audience's perspective, show that you know what they are concerned about. Anticipate what they are thinking. Bringing up points on both sides of the issue and clarify your stance. Justify your stance. At the same time, you must not be seen to be playing your audience - hence you must show integrity, honesty, pragmatism and be realistic about the issues.

c) You have to learn to pause, to allow the audience to reflect and absorb the points. You need to build up your argument and thesis and let your words resonate. When you rush past prepared text, you will lose the impact key words and phrases can have on the audience... e.g. "yes, we can" long pause...

d) Use short phrases. Use phrasing techniques to bring your audience along, like a boat ride, riding out each wave of euphoria and reflection.

e) Be aware of your body language. No fidgety movements. Eye contact and facial expression must be correlate. You have to rehearse how to maintain calmness. If you have to flip pages, do it slow and deliberate. Always look out to the audience as if you were commanding the troops.

f) Always have a good beginning, a casualness (or light hearted humour) to embrace the audience to your side before you launch into your speech. Be aware that you do not climax in your speech too soon, you need to b uild it up, much like a conductor writing the various parts for his orchestra - you want to bring things to a crescendo.

g) Always end well, with the key phrase or what the audience should get from your speech.

A person even of Obama stature cannot do all things by himself. In Obama's case, he has a very very good speechwriter in Jon Favreau. Though only 27, he has the necessary energy and idealism to act as the sounding board. He has the tenacity to understand various tough issues, and drive through the points in a clear way in line with Obama's political views and leanings. That is not an easy task. He has to write the way Obama is thinking, and even the way he usually speak, because if not the speech will sound contrived and regurgitated.

Its not easy to speak well with integrity and class.


p/s photos: SPEED is an all Okinawan female J-pop group