Tag Archives: Economy

An interesting presentation about today’s economy

In this interesting and easy-to-understand presentation, Professor Arturo Bris from the IMD business school in Lausanne, Switzerland, explains the latest economic evolutions in the world:
– what is happening in the US from an economic perspective
– the effects of the quantitative easing on the economy and on the finance industry
– an analysis of the PIIGS (Portugal, Italy, Ireland, Greece, Spain) countries which encounter serious difficulties with their sovereign debt.

The key take-aways for me were:
– the ration debt to GDP that is shown in every explanation of the Euro crisis is not an efficient indicator to measure how endangered a country is with its own sovereign debt. It all depends on his capacity to reimburse his creditors.
– Germany benefits from the sovereign debt crisis of the PIIGS crisis, but Angela Merkel must be careful with the German public opinion not to give the impression to bail out the other countries’ mistakes with German taxpayers money… tough task !

One remark : the USA can afford to have a weak dollar to export, since the oil, which in industrialized countries plays a critical role in imports, is payed in dollars. They don’t have the currency effects that affect other countries. This system will be beneficial to them as long as investors trust the value of the dollar. Will it always be the case ?

Finally, I have one question: Professor Arturo Bris states that the PIIGS countries, since they are net importers (i.e. with a negative trade balance), have an interest in a strong euro. But if the main providers of Spanish imports are already in the Euro zone, a strong Euro would not make a difference. Wouldn’t it ? And wouldn’t a weak Euro help increase the inflation and hence reduce the debt burden that the PIIGS country have to carry ?

Any input appreciated 🙂

Mark Hurd leaving HP

As probably most of you know, Mark Hurd, HP’s CEO and chairman has left HP for, according to HP’s press release, reasons related to the way he conducted business with a contractor.

While Mark Hurd was often seen as a tough CEO, especially from HP’s older employees, I personally think he has done a great job at the top of the company. Some criticized him for having killed the “HP way”, which was one of HP’s fundamental approach of dealing with employees but, since Carly Fiorina’s time as a CEO, has lost more and more importance in the company. Despite HP’s R&D reorganization, some revolutionary products such as Virtual Connect or HP BladeSystem Matrix were brought to the market when he was a CEO. Mark Hurd made of HP the number one IT company in the world, before IBM and its financial results always (at least since 2007, year of my enrolment) outperformed the expectations, and that is, I think, the most important. The best job security is to work in a company that actually makes profits.

I was very impressed by Mark Hurd’s performance on the following video of the Haas School of Business. What I will remember from this talk is the mantra of any CEO: “To succeed, you need three things: to have a vision, to execute it, and you need the best people”. I wish the next CEO of HP will succeed as Mark Hurd did.

A French-German friendship ?

As a French-German student, I have been experiencing some interesting differences of moral values and point of views. During four years, we (the students) have been told about French-German friendship, the historical base of this relationship and how positive all this has been during 50 years. Nonetheless I would put this affirmation of friendship in perspective from a critical point of view : first within both societies, then from a political and finally from an economical point of view.

Even if German and French are not seen as a hostile horde of aggressive enemies within the populations anymore, neither are they seen as friends. The percentage of pupils who choose German or French as first foreign language to learn at school at the age of 11 is very tiny. This choice is often motivated because, as German is harder to learn, the best pupils are put together in the best German-speaking classes.
Although people know the same American musicians, the national artists are almost unknown on the other side of the border. There is a very good reason for it : there is no common public sphere and no common medias. Even though Arte is a bi national TV channel, its content is mainly focused on culture and it is not really a mass media, which could bring both populations closer.
In both countries, normal citizens can give the name of one or two politicians of the other countries (at best). Negative nicknames such as the “boches”, “teutons”, and so on for the French and “Franzacken” for the German still remain within the populations.Typical cliche of a german
Of course, not all French and German people dislike each other : German like the way French people live and especially how French people enjoy life. There is a typical German saying to describe this pleasant situation : “to live like God in France”. French people, on the other hand, admire the German organization and their economical power. But most of these statements are stereotypes, indeed, French and German people simply do not really know each other.

Since the signature of the Elysée’s treaty in 1963, both countries tried to maintain the myth of a French-German friendship. Though the couples de Gaulle/Adenauer, Schmidt/Giscard d’Estaing, Kohl/Mitterand, have brought the political elites closer, the majority of the French and German populations are indifferent to each other. Even ministers are not able to speak each other’s language. The last high-ranked French minister of the education who could, was Luc Ferry in 2002. Angela Merkel can speak Russian because she comes from the former German Democratic Republic, but not French : hence, where can both populations find examples of a strong friendship ?
Furthermore, the political cooperation between both countries is not as intensive as expected. In fact, both countries have often the same policy and stand together on consensual subjects (the nuclear program of Iran for example) . Nevertheless, inside the EU, France makes sure that Germany does not take too much power . There is a flavor of mistrust in this political relationship, which absolutely does not match with a friendship.

Typical cliche of French peopleFrance and Germany are both the most important economic partner to each other. Nevertheless, the trust in this partnership on both side of the border is reduced. For instance, the French Government openly backed the merger of the French pharmaceutical group Sanofi-Sythelabo with Aventis (which was already a Franco-German company) in order to create a “national champion”, which could compete internationally with giants of the sector. On the contrary, when Alsthom (a train manufacturer) faced severe financial problems, the French economy minister Sarkozy prevented Siemens from buying it and urged banks to grant loans. Nowadays medias talk about this operation as a success how Alsthom has been “saved” by the French government. The question is : saved from what ? From more european integration ? If a big Indian company, for instance, wants to buy Alsthom : can Alsthom resist alone or will the government back it again, this time with even more protectionist measures ?
I think this position is not responsible in the long term. The more European companies stand together and merge with each other, the more the will be able to challenge international giants.

The next example of a (mostly) bi national cooperation is Airbus. By the way, it is funny to see how French people are persuaded that Airbus is a French company, forgetting the thousands of jobs in Germany, Spain and the United Kingdom.
This company is currently facing severe financial difficulties and it is interesting to see how both French and German governments get involved in a strict internal problems. In my opinion, not the Prime Minister but the executive director has to announce job cuts. The politicians must garantee that Airbus strictly remains European, because aircrafts are not a normal business. But the rest is a matter of business and not of politics.

To conclude this economic part, I would say that German and French companies (and sometimes involving governments) are quite rough with each other, forgetting that if they would play together and fair, without even thinking about any friendship, they could compete internationally.

We have two choices : either governments must find the means in order to bring both countries closer.

* They have to support the teaching of French or German in their countries, and could create common mass medias (radios and TV channels).
* On a political level, they must stop to mistrust each other and try to build an European unity.
* Then from an economical point of view, governments should not get involved in companies’ policies.

Or instead of using the word friendship, choosing the word partnership, which suits much better to this relationship and hope that the European Union will continue its unification without a strong Paris/Berlin axis…