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The Intended Goal is to Make Money, but in an Honest Manner

by with No Comment BooksBusinessFeatured Highlights

The Intended Goal is to Make Money, but in an Honest Manner

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Book Corner: I’ll Make You An Offer You Can’t Refuse, written by Michael Franzese

Who says gangsters have marketable skills? Michael Franzese says so. Brooklyn-born Franzese, a former caporegime (which is a mobster who is second in line under a Mafia capo) and made-man in New York’s Colombo crime family, went legit following a religious awakening during an early ‘90s prison stretch. Franzese left behind a life of crime and became a motivational speaker, Mafia analyst for the media, writer, commentator, and even actor.

In this book – one out of seven that he’s written – Franzese argues that despite the criminality that he now abhors, gangsters have skills in running businesses that if copied, can put the average business or corporation ahead of the pack. I’ll Make You an Offer You Can’t Refuse is divided into eleven standalone sections, or rather lessons. In contrast to his former life, Franzese discusses running your business with honesty, transparency, and integrity.

He stresses the importance of choosing a good crew and surrounding yourself with capable people, starting your day as early as possible, proper planning, eliminating clutter, seeking counsel only from the wise, customer service, listening more than talking, learning from failures, etc. For example, one interesting section deals with the importance of effective negotiations – the famed “sit-down” as known to anyone who has seen The Sopranos and most other gangster portrayals in TV shows and movies.

Franzese informs us that unlike the sensationalist portrayal of crowded rooms, and long meetings with tempers flaring, sit-downs are short, sober, curt meetings attended by very few where the intended goal is to reach a mutually-acceptable compromise as soon as possible. After all, time wasted in long meetings is time better served making money, right?

At 160 pages, this book is relatively compact, nor does the author re-invent the wheel. Franzese’s skill is not only taking material that might be part of stuffy business textbooks and delivering it to the readers as filtered by his experience, but peppering the book with illustrative examples that keep them within a known cultural framework. As a result, the book comes out easy to digest.

Overall, we may not agree with how Franzese gained his business knowledge, but the lessons in I’ll Make You an Offer You Can’t Refuse are valid. His former crew would probably agree.

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Returning to the Roots of Commerce and Positive Contribution

by with No Comment AssetsBusinessFeatured Highlights

Returning to the Roots of Commerce and Positive Contribution

This article was originally written in September of 2009 when the U.S national debt was 3 trillion , as of June 2023 it is above 32 trillion USD. Mr. Jeremy Blatch suggests current economic conditions warrant further reflection.

As the bloodletting continues in an attempt to cure the banking disease, we are no closer to resolving the root cause of the problem of the financial crisis. Unlike the proletariat in France before the revolution, the masses have not been offered cake to chew on, but a diet of more indebtedness. The chosen elite have distributed billions of other people’s money leaving the silent majority to choke in anger and incredulity.

The Chairman of the U.S Federal Reserve, when challenged by Congress as to the authority which allowed him to give away billions of tax payer’s dollars, nervously sighted the Federal Reserve Act of 1913. The total capitalization of the USA at that time was perhaps USD 500b. The current Public Account Deficit of the USA is around 3 trillion USD (3,000,000,000,000). Where is the money coming from to repay this?

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The Dominance of Central Bank Policy and Government Mismanagement

For the first time in history, we have witnessed central banks and governments acting in unison to give away huge sums, seemingly daily to banks and the capital markets. In the press and media, figures in billions and even trillions have become common place. Governments are not companies. They cannot manufacture anything except perhaps lies. Or misspeak if you prefer to be politically correct. What they can do is print money, as they own and control the printing presses. They can then distribute the paper. In this case swallowed up by a banking system, drowning in its own sea of corruption, deception, mismanagement and greed.

We are told that the banking system is now stable again. But for how long and at what cost? The Damocles sword for failure in times of plenty, has yet to fall and will do so as a crippling tax burden on future generations. This at a time when Western governments are unable to guarantee their own elderly a life of dignity in their final years. The great champion of freedom and equality – the USA, cannot even guarantee its people a basic level of free health care at point of need.

The last decade has ended on a sad but predictable note, proving that we have sown the wind of increasing wealth at any cost, and have reaped the whirlwind. In the process we have singularly failed to distribute that wealth and resources equitably to where it’s needed.

Ironically one if the trends to emerge over the past decade of plenty are the development of socially responsible funds. The concept is to allow investors to direct their money into companies whose activities and ‘modus operandi’ are contributing positively to society. This is of course is selective, but at least the investor knows what their money is buying.

The Rise of Sovereign Wealth Funds as a ‘Caretaker’

Governments, especially with oil revenues have joined the band wagon creating Sovereign Wealth Funds. Norway the third largest oil producer, has formed a fund aimed at being socially responsible. In a global economy, ownership of companies is the most important way to have influence claims the Norwegian Foreign Minister. More humanitarian than an oil baron, the Norwegian government was key in gaining the International Land Mines Treaty, and also hosted the historic meeting in Oslo between Israel and Palestine. With the wisdom of Joseph they established a Petroleum Fund, in 1996, now renamed the Pension Fund to take care of the future generations. What a comparison to the arrogant ineptness of the USA, UK and Europe, who have burdened their future generations. The Norwegian government pension fund excludes companies that it believes are failing ethically. Interestingly, there are as many companies who are blacklisted abusing their employees as there are failings in other areas.

Whilst Norway has unambiguously laid out its outline addressing the needs of its own people before the needs of society at large, not the same can be said of Sovereign Wealth Funds which in general are about gaining political and strategic power by buying into the economy and owning strategic assets in the western industrialised nations. As we witness a shift in the balance of world economic power, ownership of strategic assets and the ability to guard and maintain trade routes will dominate the next decade’s macro economic strategy.

The concept of allowing investors choices consistent with their ethical beliefs is nothing new. But is it possible to combine successful business practices while looking after the disadvantaged.

The Impact of the Quakers in the Business World

The first funds to allow investors to direct their money into companies whose activities they approved of were pioneered by the Life Assurance Group Friends Provident in the 1980’s. This pioneering move was typical of the Quakers who were the founders of the Life Assurance Company. The Religious Society of Friends was a Christian movement founded in England in the 17th Century by George Fox. Puritans and non-conformist, they were given the name Quakers’ a term of derision, as they would often quake in the presence of God. They gained a reputation for social activism and were instrumental in the campaign against the transatlantic slave trade of the 18th and 19th centuries. Many were imprisoned for their faith and beliefs.

The Quakers flourished in business and due to both their success and religious beliefs made more enemies than friends. Persecuted and unable to gain insurance, they formed their own company. One of the overriding concerns of the Friendly Society, was to care for the poor and disadvantaged in their own communities.

Many captains of commerce and industry, in the 1800’s were Quakers, who founded and managed their businesses on biblical principals. Joseph Fry who started the famous Fry’s chocolates built a small town for his employees of his factories, with all amenities, schools, hospitals and recreation facilities. Work was scare, and many had to leave their home towns to find employment. Fry’s were bought by the Cadbury company. John Cadbury, himself, also being a Quaker. Edward Pease, owner and pioneer of the first railway in England from Stockton to Darlington housed his own employees, and Joseph Rowntree founder of the famous Rowntree Chocolates was the first person to develop low cost housing for the poor.

Barclays Bank had its roots in the Quaker movement. Unable to obtain loans the Quakers decided to form their own bank. True to their faith and beliefs employees were well housed and looked after.

In spite of being persecuted for their beliefs, through their success in business they were able to alleviate much poverty in serve the wider community. They didn’t need to wait for governments to bankrupt their future generations, they used what they had wisely, and gave something back. The bottom line in any business must be to make money. But as we have seen with the banking and financial crisis of today at what cost?

Originally published in www.ehh.gi in September 2009. Jeremy Blatch is the Founder and Consultant of Ein Harod Family Office.

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Determination and Success: Integrity of the Catcher’s Mitt

by with No Comment Behavioral SentimentBusinessFeatured Highlights

Determination and Success: Integrity of the Catcher's Mitt

In the Long Run’ mused Maynard Keynes ‘we are all dead’ or as someone else once said, ‘Don’t go through life with a catcher’s mitt on both hands, throw something back’. The author of that line is unknown but we can assume that he knew something about baseball and the cut and thrust of business and life. It seems to me that the two are inseparable… In the consumer society of the developed world in which we live, the lifestyle we enjoy is largely shaped by the extent to which we buy and sell.

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A market without anything to sell will be just as ineffective as a market full of merchandise with no one to buy. When we have real financial wealth, we are able to indulge many of our fantasies or dreams. That’s one of the reasons for aspiring to wealth and the independence it brings. For example once you have travelled around the globe staying in the world’s most luxurious hotels it’s not necessary to have the 5 star penthouse suite, something more modest will do. Once you’ve tasted the grape it’s not necessary to taste it with every meal.

Success in anything comes at a price and business is no exception. The ability to be disciplined and to persevere no matter what, is possibly the single greatest attribute to be successful in business. As Calvin Coolidge put it ‘Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men and women with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipotent’.

But perhaps there is another price to which, in a sense, it is not obvious until it hurts and that is the price of integrity. The lack of ability for individual companies and institutions to police themselves, has led to a plethora of regulatory bodies for professions and businesses. We have created a “blame and shame” culture in which so often we prefer to abrogate responsibility and seek litigation, rather than facing up to the challenge ourselves. Integrity perhaps is best summed up as acting in a responsible, honest and fair way no matter what the cost to the individual or company.

We have been given a shocking example by many in authority on how to be economical with the truth, once a civil offence now a well-­honed practice is to ‘spin’ the facts to suit a particular agenda of self interest.

Philanthropy, no longer the preserve of the rich and famous, often anonymous, through centuries has made a contribution to the good of many of the underprivileged, as well as aiding education research and science, from which we all have benefited in some way. Many of the wealthy have historically helped the poor and those needier than themselves. Two of the world’s current incurable illnesses are AIDS and cancer, the major problem facing the developing nations is AIDS. Hardest hit are the children with an increasing numbers of orphans born with AIDS. In contrast, the problem facing the developed nations, is one of cancer, and in particular breast cancer. Drug addiction and alcoholism, particularly amongst the young is increasing at an alarming rate in both the most affluent areas of society and amongst the desperately poor, like the street children on Seventh Avenue in Guatemala City.

Huge wealth has been created over the past two decades, not least amongst City of London financiers, many of whom became millionaires on the strength of their bonus payments alone. That we should try and help those less fortunate than ourselves is a desire common to most people. We also know that charity begins at home. The stock market is the barometer of the economy, and the economy is driven by business, and business is the powerhouse that can make a real difference by making a positive contribution to the society in which we all find ourselves. Working with integrity is perhaps not just about the way we treat our employees, colleagues and competitors but also about how we use the wealth that we create. Whilst financial wealth will mean different things to different people, having more than we need gives us an opportunity to make a difference for others, however small we may think the contribution is, and speaks more about us than the what we are able to give.

Taking off the catcher’s mitt and throwing something back is at the heart of charitable giving and philanthropy and in doing so helping the weakest and most vulnerable in society. ‘ For it is more blessed to give than to receive’. After all, in the long run, we are dead.

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The Ten Commandments of Business and How to Break Them

by with No Comment BusinessCultureFeatured Highlights

The Ten Commandments of Business and How to Break Them

Book Corner: Ten Commandments of Business and How to Break Them, written by Bill Fromm

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When Fromm wrote this book in the early 1990s, he was the president of Barkley and Evergreen (now Barkley), a Kansas City-based advertising agency and was a known and respected veteran in the advertising field. The book describes his personal philosophy of managing employees and dealing with customers, which, according to this book, breaks the mold of standard – and sometimes stodgy – corporate culture. Fromm provides a quick and interesting read, (the book clocks in at a tight 170 pages) with each “commandment”, or rather lesson, backed up with snippets from his personal experience.

Fromm writes about eliminating the tendency to hide behind memos and reports, calling it the “CYO” (cover your ass) culture. He states that the most effective form of communication is face-to-face. Same for suggestion boxes – he says to get rid of them. If your employees cannot comfortably speak their minds, then your company has a serious communication problem that must be dealt with on its own before you start taking suggestions. Fromm also tackles the modern management culture: when you separate the company into “officers” and “enlisted men” with layers of bureaucracy, perks, privileges (such as reserved parking for management) and physical barriers, you end up instead with an “us vs. them” attitude where the company is two teams, not one. And, as Fromm says, the company must be one team, not two.

Overall, Fromm places a heavy emphasis on treating employees with respect and class, resulting in what he says are happier and more productive workers. The most memorable example is his insistence that business cards be given to everyone, regardless of position – even the custodian. It makes the employees feel special and provides great advertising for the company. He gives the example of summer interns who were given business cards, and when polled later about their experience at the company, all the interns listed the cards as one of the most memorable experiences there. Fromm also stresses the importance of company events and fun meetings as enjoyable means to build and maintain morale.

In addition to culture and morale, Fromm writes about profits, marketing, customers, and more. Not every one of Fromm’s commandments is applicable to every company, and not every company needs to adhere to every commandment to be successful. But in a world where the successful reach their achievements by putting radical spins on standard thinking, Fromm’s book has much food for thought.

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Risk Friday: To Freeze or Reduce is not the Correct Question

by with No Comment AMT MarketsBusinessFeatured Highlights

Risk Friday: To Freeze or Reduce is not the Correct Question

The U.S debt ceiling debate in actuality, is a vote to legally increase the amount of debt the U.S government can spend. Approval of the debt ceiling vote will give a green light to the government to be a larger debtor without consequence. Other than eventually not being able to pay its bills in the future, what’s the problem some might ask. And let’s not consider potential downgrades from S&P, Fitch Ratings and others for the moment.

Here are the Problems Ahead for the U.S

U.S debt dominoes have grown heavy and are getting harder to stand back up, but those with the ability to spend simply do not care because they will never be held responsible. The U.S government seems to have forsaken capitalism and have entered the plundering stage, where the government believes it can ‘find’ enough revenues from higher taxes and the selling of long-term Treasury bonds while remaining the big man on campus.

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Gold Five Years Chart as of 26 May 2023

Higher taxes frequently stymie businesses and make it harder to hire employees because the expenses become too big. As an example for what the future could look like in the States turn your eyes to Chicago, where elected city leadership is considering implementing a ‘head tax’ in which businesses would need to pay a fee on each person it employs. The tax situation is getting so ridiculous in Chicago, that long time economic juggernauts like the Chicago Mercantile Exchange are grumbling and threatening to leave because of “ill-conceived” policies.

Likewise, the U.S government seemingly doesn’t understand that spending cannot be replenished by tax collection alone. Actual cuts to spending need to take place. It is called reducing the deficit. The naive will eventually be made to see the light painfully.

The Ramifications for the U.S could be Economically Untenable

U.S interest rates which have been raised the past year and a half, have affected mid and small sized banks and the amount of money the U.S government has to pay on maturing bonds because of higher borrowing costs. Fitch Ratings has recently whispered publicly they may be forced to downgrade U.S debt offerings, this if the U.S government doesn’t increase the amount of money it is legally allowed to owe. Pause for a second here, do you see the absurdity in this clown show? In other words a rating service company is OK with the debtor being allowed to ‘borrow’ more money from itself that it does not have – in order for that same debtor to be allowed to ‘promise’ it can repay its debt at a later time.

The U.S government keeps allowing debts to grow and creating entitlements as if this has no effect on inflation. Quantitative easing and stimulus packages initiated by the U.S government artificially kept the Gross Domestic Product figures looking positive and the equity markets happy for more than a handful of years. However, the proverbial ‘can’ has been kicked down the road so many times it is ready to disintegrate. The debt problem is simply being passed down to the children and grandchildren of the U.S, or so the current leadership seems to hope. But what if the debt problem explodes now? This generational problem is systematic globally, other governments practice equally bad or worse fiscal policy. Politicians do not like to walk around with empty hands.

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USD Index Five Years Chart as of 26 May 2023

The Clock is Ticking Loudly and Some Investors are Paying Attention

The clock is ticking in the U.S and unless they can prove expenses can be managed better, they are on a perilous road to becoming a regular nation among others, that is looked upon with scorn and derision because they cannot pay their debts. The dominance of the USD will be punished and shattered if they do not stop the nonsense. The dollar’s status as the reserve currency of the world has been slipping incrementally for a couple of decades and this will continue if the U.S government does not seize the problem and find solutions. A failure to show budgetary sanity and decrease expenditures will eventually cause something many U.S citizens do not want, relegation to the status of a ‘regular’ nation. The attitude of, “I remember when” could become a refrain heard in the U.S sooner rather than later.

The U.S is in a precarious place and sunshine in many respects is not on the horizon. Financial institutions supposedly believe the U.S debt ceiling will be taken care of in the coming days or weeks. However, a debt ceiling agreement is not the correct bandage for a broken leg, the problem is much larger. Debt should not be allowed to continuously grow. If the situation gets worse, some nations sitting on the geopolitical fence may shift their alliances depending on the ability of mutual relationships to help deliver economic stability.