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Friday 2 December 2011

We need to talk about capitalism, say CEOs



Simon Mann

Professors from the Harvard Businees School have identified ten major threats to capitalism. Professors from the Harvard Businees School, above, have identified ten major threats to capitalism. Photo: Greg Newington

Three professors from the world's pre-eminent business school have co-written a study that at first blush looks to fall more into the genre of horror story than business text.

But in identifying 10 powerful forces that threaten the existence of the capitalist system - the most successful engine of economic growth the world has known - the dons of the Harvard Business School appear to have drawn a line connecting the fears of the boardroom and those of the protesters of the Occupy Wall Street movement.

Income disparity, resource depletion and potentially cataclysmic climate change were recognised by CEOs in a series of conversations conducted by Harvard as among the potential ''disruptors'' of global prosperity. The financial meltdown of 2008 and the Occupy movement are clear manifestations of those fears.



''And we would expect more [of the same],'' says co-author Joseph Bower. ''Because people really feel outraged.''

Professor Bower and his colleagues note in their study the broad concerns of the 46 business thinkers brought together in forums on three continents, but by far the most widely held was ''the tendency of capitalism, as it currently functions, to produce extreme disparities of income and wealth''.

Said one unidentified Asian business leader: ''Herein lies a major challenge, because the world has become very much more prosperous as a result of market capitalism. The rich have become richer. The poor in most cases have become richer. But the gap between the rich and the poor has grown wider … There is the growing sense of being left out, even as people are getting better off.''

One European executive said: ''What was the good of capitalism? Was it the fact that we were building a very large, very well off - not wealthy but well off - middle class? We are not doing this any more.''

The Harvard project coincided with the Business School's centenary. What better way to celebrate it than to examine the state of the system that had nurtured its own rise to prominence? By then, it had conferred nearly 56,000 MBAs on men and women, many of whom went on to head prominent companies in the US and around the world.

The school brought together chief executives and business leaders in 2007 and early 2008 for its series of discussions. They included Australia's David Murray, the former Commonwealth Bank boss who is now chairman of the Future Fund.

Using its famous case-method approach to inquiry, it took as a starting point the then most recent World Bank growth projections and batted around the issues. Capitalism at Risk: Rethinking the role of business, just published, is the result.

Joining in the talks were executives such as Jeffrey Immelt of General Electric, John Elkann of Fiat and Bertrand Collomb of Lafarge.

That capitalism has delivered for billions is not at issue: in the last decades of the 20th century, 97 per cent of countries enjoyed increased wealth, according to the World Bank. But the executives cited as potential threats the powerful forces within financial markets, environmental degradation and political populism, terrorism and war, migration and pandemics.

''History tells us that when an awful lot of people are disenfranchised, they have no incentive to play by the rules, and given today's communications availability, weaponry … that's an issue we have to really think about,'' one said.

Unsurprisingly, they back business, not government, to ameliorate strains on the system through innovation and activism. ''Good government is crucial, to be sure,'' write the Harvard professors. ''But government … needs the support and engagement of business to function effectively.''

In the US, the argument for higher taxes on the wealthy has coalesced around billionaire investor Warren Buffett, who has become a poster boy for the Obama's administration's campaign to raise revenues, resisted by Republicans.

''Finding a way to mobilise the entire relevant business community - and others - to help support the needed taxes simply makes sense,'' the Harvard dons conclude.

Thursday 1 December 2011

Active-service aircraft carriers in world



Summary:
USA Russia Japan UK France Italy Spain Brazil Ag'tna India SKorea Thai.Total
 3     1          1    1     1        2       1      1       1     1      1       1    15

 
1) USS Kitty Hawk 
(CV-63) aircraft carrier of the United States

 
2) USS Nimitz (CVN-68) aircraft carrier of the United States

 
3) USS Enterprise (CVN-65) aircraft carrier of the United States




 
4) HMS Ark Royal aircraft carrier of the United Kingdom

 
5) Hyuga aircraft carrier of Japan

 
6) ARA Veinticinco de Mayo (V-2) aircraft carrier of Argentina

 
7) HTMS Chakri Naruebet aircraft carrier of Thailand

 
8) NAe São Paulo aircraft carrier of Brazil

 
9) ROKS Dokdo (LPH 6111) aircraft carrier of South Korea

 
10) INS ViraatINS Viraat aircraft carrier of India

 
11) Principe de Asturias-class aircraft carrier of Spain

 
12) Conte Di Cavour aircraft carrier of Italy

 
13) Giuseppe Garibaldi aircraft carrier of Italy

 
14) Admiral Kuznetsov aircraft carrier of Russia

 
15) Charles de Gaulle aircraft carrier of France

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Hong Leong Boss Quek Leng Chan loses shares in AMR Corp of American Airlines Inc.


By FINTAN NG fintan@thestar.com.my

Paper loss following AMR bankruptcy at RM273mil

PETALING JAYA: Tan Sri Quek Leng Chan, whose family interests include the Hong Leong and Guoco groups, may be looking at an almost complete loss just 3 months after acquiring a 7.3% stake in AMR Corp, the holding company of American Airlines Inc, which filed for bankruptcy on Tuesday.

Quek had acquired 24.4 million shares in AMR through Hong Kong-listed Guoco Group Ltd and related companies.



On its website, Guoco group said investments covering the global capital markets were made in view of enhancing capital value in line with the company's vision of achieving superior long-term returns for shareholders.

Media-shy: Quek acquired 24.4 million shares in AMR through Hong Konglisted Guoco Group Ltd and related companies.
The United States third-largest airlines went bust and filed for Chapter 11 bankcruptcy after it failed to post full-year profit since 2007 with US$24.7bil in assets and US$29.6bil in debt, according to news reports.

Other major shareholders of the airline included Primecap Management Co, a Pasadena, California-based investment firm with 12.30% stake, ICC Capital Management from Orlando, Florida with 7.49% stake and Capital World Investors with 7.40%.

Although it is unclear at what price the cigar-chomping Quek had acquired the shares, based on the closing price on Aug 15, the shares would have been worth US$92.2mil (RM275.21mil based on the exchange rates then) or US$3.78 per share.

On Tuesday, AMR's share price closed at 26 cents, down 93.12% since Aug 15.

Therefore, the media-shy Quek, known as a super high-roller who frequents casinos in Las Vegas according to reports, may be looking at paper losses of US$85.88mil (RM273mil as of yesterday's exchange rate).


American Airlines jets take off and land at Dallas Fort Worth International Airport in Dallas, Texas, USA, 29 November 2011. American Airlines, a part of AMR Corp. the nation's third-largest carrier, filed for Chapter 11 bankruptcy reorganization. - EPA

His potential losses came on the heels of another turbulent period for the airlines industry which has barely recovered from the global financial crisis of 2008/2009.

The International Air Transport Association director-general and chief executive officer Tony Tyler had said that 2012 would be a tough year although the industry's net profit forecast for this year had been revised to US$6.9bil from US$4bil in June.

He said this was due to “still exceptionally weak” profitability, with net margins at 1.2% versus the industry's US$594bil in revenue.

Meanwhile, Hong Leong Financial Group Bhd posted a 22.11% drop in net profit to RM252.20mil for the third quarter ended Sept 30 compared with the quarter a year ago after taking into consideration a surplus transfer of RM175mil. Revenue for the quarter under review rose 19.04% to RM919.67mil.