Mario Cavolo

Since returning to Shanghai late Spring this year, I've fallen in love with the impeccably restored Langham Hotel, one of 1920s Shanghai's magnificent Art Deco buildings, and now one of the city's poshest boutique hotels, very nearby People's Square. This includes hosting our private monthly executive advisory lunch sessions at the Langham each month. Check out the Langham link at the bottom for some great photos.

Considering Mike Chinoy's two decades of service as CNN's Hong Kong and Beijing Bureau Chief,talk of business surrounded by nostalgic Shanghai is the right lead-in to proudly introduce Mike as our newest strategic partner and co-trainer for our media training and communication skills workshop on October 18th at the Langham. Mike is currently the Asia Managing Director for News Certified Exchange, an organization which trains and certifies professionals to be included in their powerful resource database of media-ready experts for journalists. As well, I am pleased to be included in that database as the media industry grapples with change and needs new ways to access knowledgeable experts on China who are also media-savvy.

More About Mike Chinoy

As Vice President and Managing Director for Asia, veteran correspondent Mike Chinoy oversees all business development and certification operations in the region. Mike spent over two decades with CNN, serving as the network's Hong Kong and Beijing Bureau Chief and its Senior Asia Correspondent. Mike is also a Senior Fellow at the US-China Institute at the University of Southern California and authored the book Meltdown: The Inside Story of the North Korean Nuclear Crisis.

About the Media Training Workshop, Langham Hotel, October 18th, 2010

Limited to only three individuals per session, participants will spend a separate half-day session with both experts. For example, the morning session with Mike and the afternoon session with Mario. The content of both sessions will cover the broad theme of expertise and strategic communication with the media

Mr. Cavolo’s session will focus more on detailed scripting and phrases; deep awareness, control and design of all related speech delivery to the media and in other executive/leadership situations.

The session with Mr. Chinoy will focus more on the nature of the newsgathering process, how to prepare for interviews, tips for effective interaction with reporters, and specific pointers for developing a strong presence in front of a camera, including the opportunity to videotape a “practice” interview.

With attendance limited to six, please don't hesitate if you are interested to attend; Contact KBC China's event coordinator, Harry Wong at harryw@kbcchina.com for additional information. The fee for this media training workshop is USD $3000 per person including video and follow-up.

"Critical Communication Skills For Executives" Four seats still left for this event on Sept 16-17th with myself and guest Daniel Smith. If you are an established or rising executive and your interest is critical, detailed communication and behavior skills, without the need to focus on media training, then join us at the Langham on Sept 16-17th "Critical Communication Skills For Executives" with superb guest trainer Daniel Smith

The Prime Directive, the Magna Carta, the Must Be Manifesto of the New Global Economic Reality is:

Interest Rates Must Remain Low. Say Goodbye to Yields

With the markets noting the continuing rise of treasury bonds, the direction of interest rates is called into question, but I maintain that there is no question as to the direction of interest rates; low interest rates are the single core essential requirement to a global economic structure which is sustainable. A recent article by Kurt Brouwer pointed up a bond bubble argument that “...interest rates have fallen so far and so fast that they have to go up at some point and this will hurt bond investors.”

It seems to me the most obvious of observations that if interest rates go up, hurting bond investors will be the least of our troubles. In the new mega-debt reality of today, interest rates simply can't be allowed to go up. They must stay down and all other parameters follow. Remember the "prime directive" in the Star Trek movies? This is the prime directive of today's global economic reality.

Many of my readers and clients are aware that I often argue against the likelihood of doomsday scenarios; that excesses will be absorbed and wound down over time rather than a D-day.

However, rising interest rates is the fire that will light the fuse to global economic hell with the heady heights of sovereign debt which has hit multi-trillion multiples of GDP across the global economies. Everything else follows this core top priority. In the absence of rising interest rates, the elitists and governments have many other chains they can yank on and indeed, they will do so. Think for a moment of the skyrocketing expense if interest on a few trillion goes from 2 to 5%; unequivocally devastating.

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There are many of us who live here in China for well over a decade. In my case, its been 11 years. Amongst the many fascinating observations on business and culture in China, one thing we all noticed from the very first day we arrive is that there is a massive untold, uncountable grey market "cash" economy.

Frankly, they like it that way. Wouldn't you?

Your first eye-opener can start in Chengdu, Sichuan province, circa 1999, when you learn that a certain well known local Chinese government office needs to hire several foreigners to do some much needed editing for the program of an upcoming international conference hosting heads of state from all over the world. On the day to collect payment for said editing work, the local gov't official opens the one square meter sized office safe at which moment you can't resist peeking to notice stacks and stacks of cash inside. That's not to say the cash is not fully accounted for and reported within the system. This story is simply to point out the mere tip of the cash economy iceberg in China. It is in fact amongst the wealthiest in the country where most of the cash is changing hands. We often go to the bank where it is normal policy and procedure to take your "bag of cash" to make the payment on the home you just purchased. While that bank transaction is definitely recorded at the bank and government real estate office, where that cash came "from" runs deeper into the mystery of China's not-so-hidden economy.

This not-so-little gem of trillion dollar knowledge has finally made it to international headline status courtesy of a research study commissioned by Credit Suisse.

Highlights from the report include:

"...The study found that the "hidden" household disposable income could be as high as 9.3 trillion yuan in 2008, equivalent to about 30% of China's gross domestic product."

Ok, now we're cookin'...

"...the flow of funds data don't accurately track the income of top households because much of it are the results of "illegal or quasi-legal" activities."

How do you define quasi-legal please and in what culture?

"...the shortfall in the figures revealed in the economic census and what households really received -- at 5.4 trillion yuan in 2008."

Enlightenment approaching...

"...Credit Suisse said investors may be setting their sights too low when it comes to gauging the impact of this vast pool of wealth."

That's a big bingo.

So then, above and beyond the known $2.4 trillion of government reserves, plus my estimated $15 trillion of mortgage-free home equity amongst the middle class, plus the known highest savings rate in the world at 36%, now we factor in an ongoing cash economy that has finally been estimated at between USD $1 to $2 trillion.

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Four long decades earlier, the word "Ginger" kicked off our boyhood crush memories of the movie starlet Ginger on the hit TV series Gilligan's Island. Was there anything better to do at 4pm in suburban America after school than watch Gilligan's Island, not to mention Dark Shadows and F Troop? Not a chance, not even a game of stickball. Homework waited patiently and even our Moms lovingly understood a growing boy's top priorities in life.

Thirty years later, I moved to China where the word ginger took on new but still daily meaning almost every time I pick up my chopsticks for a meal. Memories of Ginger's glittering bareback gowns, perfectly out of place on their happy tropic island gave way to that tasty, stringent and healthy Asian root by the same name.

Now, much in accordance with the coming inflation of agriculture foods due to increasing global demand, according to recent reports by Xinhua News, the price of ginger, a high quantity staple in daily cooking here, has jumped 18% in the past month through August 15th.

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Wow, what a cool hybrid idea. This high tech people mover is half above ground subway/half public bus. Seems to me a raised up double-wide bus allowing cars to pass underneath on the regular traffic lanes would work only built along a straight line route. Once again, China is one of the last places left in the world where this could be afford-ably designed and executed if the designers and city planners could work their way through the undoubtedly interesting list of reasons why it won't work well.

The StraddleBus Article at China Hush

Let's remember that the excesses revealed in the fresh HP Mark Hurd fiasco are only one example of similar excesses which exist in plain sight across corporate America. How we ever reached the point where most top executives at corporations earn multi-millions of dollars per year while instituting pay cuts and lay-offs to make the company healthy again. The unholy "wealthgrab" by Wall Street bankers and other corporate elite complicit with government leadership at the expense of America's middle-class will go down in the history books as the core of America's continued downfall. Don't bother asking the question, "Haven't we learned anything?" because nobody with the power to do anything about it is listening.

HP's Securities and Exchange Commission filings of the past few years have -- in plain sight of investors and journalists -- detailed this excess:

Mark Hurd's total compensation for 2008 (when the global economic crisis reached its nadir) was $43 million, making him the fourth-highest-paid CEO that year, even though H-P's shares lost 29% that year.

CIO Randy Mott's total compensation jumped 400% that year to $28 million.

Imaging executive vice president Vyomesh (VJ) Joshi's total compensation increased 83% in 2008 to $22 million.

Personal Systems EVP Todd Bradley's total compensation went up 263% that year to $21 million.

Technology Solutions' EVP Ann Livermore's compensation went up 31% that year to $21 million.

Now-interim CEO Cathie Lesjak got a 49% bump in total compensation in 2008 to $6 million.
This management team mandated that year that all Hewlett-Packard staffers would take a 5% pay cut for the year, and they boasted that they -- as executives -- would stand shoulder to shoulder with the staff by taking 10% pay cuts. They forgot to say that the executive cuts would be only on base salary and that they would more than make up for that on options, restricted stock units and other bonus goodies.

In 2008, H-P shareholders paid $7,472 for travel expenses for Mark Hurd's family to accompany him on business meetings. They paid $256,000 for Mark Hurd's personal security detail that year. And each executive was able to use $18,000 worth of financial advice that year on the shareholders' dime.

Full Article Worth Reading at The Street