Author: admin

Globalization & the Insurance Industry

(The Perfect Storm Syndrome) – June 20, 2006 Update

On June 3, 2005 in an e-mail to a friend in the Philippines I discussed the Perfect Storm  Syndrome.

The Actual Perfect Storm E-mail
Date: Fri, 3 Jun 2005 22:46:05 -0700 (PDT)
From: Bienvenido Macario <laspinassja@yahoo.com>,
Subject: Re: new development here
To: macario@stanfordalumni.org, b_macario@hotmail.com
CC: Las Pinas <laspinassja@yahoo.com>

What’s important is the formulation of a national economic blueprint based on instituting the needed reforms. I’d say 6 to 9 months to prepare a draft and for the first two years it will be reviewed every 6 months or whenever certain domestic or international event would dictate a review or re-assessment of the national- regional economic program based on the economic blue print.

I hope I am wrong but your region is quite vulnerable to three things that’s on the global economic horizon:

Components of the Perfect Storm – International Edition

1.) Dollar appreciation (strong dollar/currency).
2.) Interest rate fluctuations. (it could only go up.)
3.) Oil price hike.

Of these three (3) managing the dollar is the most complex and challenging.

Components of the Perfect Storm – Domestic Version

1.) Health Care
2.) Pension / Retirement
3.) Education (in general including the next work-force generation, present generation, retiring generation)

Of these three, education would be or should be the main focus and would be the most interesting.

However remote there is a possibility that all three could hit you in close succession. It is quite difficult to see how any country in Asia could be spared from this contagion.~

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~ – HSBC sees Asian ‘bubbles’

By Jimmy C. Calapati – Monday, July 20, 2009

http://www.malaya.com.ph/jul20/busi2.htm

Excess liquidity and record-low interest rates in Asia raise the specter of asset bubbles, especially in the property sector, Hong Kong and Shanghai Banking Corp. (HSBC) Global Research said. As a crisis erupts, the markets panic, and policy-makers, reading the news along with everyone else, slash interest rates to pump up growth, says Frederic Neumann, HSBC economist.

“In principle, this is perfectly all right. The trouble is, however, that if policy stays too loose for too long, it will blow bubbles,” Neumann said.

In Asia, Neumann said liquidity is far too abundant, keeping interest low. Yet, it appears unlikely that the region will strike out on its own and tighten while everyone else is stuck in the emergency room.

“In short, the seeds are being sown for Asia’s next bubble+. The world has not changed, it just moved places,” Neumann said. 

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Later on June 20, 2006, I wrote to another friend the impact of globalization it being the beings of the Perfect Storm Syndrome and how it will affect even the insurance industry. This is the forecast I made regarding the insurance industry using Warren Buffett’s Berkshire Hathaway Inc.  whose main business is insurance, as an example.

At this juncture the roots of the financial crisis of 2008 has started to take hold but it was still possible to do something to mitigate the impact of the crisis. Unfortunately like 2010 and probably 2014, the mid-term election politicking will remove any chance of resolving the most pressing issues.

Short Paper – Perfect Financial Storm
3 messages

June 20, 2006

Bert,

My position is simple.  Because of globalization brought about by the collapse of the Berlin Wall^ and the end of the Cold War, anything we do must be taken in global as well as domestic terms.  I say it is simple because I think no business or economic undertaking could escape the direct and indirect effects of these developments.

My papers almost always consider global and national implications.  To make this e-mail brief, I will concentrate of my paper of June 3, 2005 “Perfect Financial Storm” – International edition and domestic version (dated May 21, 2004).

As you will see, oil price hike is one item, why I want Elena and myself to be involved with energy and geothermal industry again. Mortgage, real estate and even the insurance industry**will definitely be affected by dollar appreciation and interest rate fluctuations.

So no matter what business, field or work you and Chona are in, even if one is working for the state or local government, this paper could be of use.

Components of the Perfect Storm – International Edition

1.) Dollar appreciation.
2.) Interest rate fluctuations. (it could only go up.)
3.) Oil price hike.

Components of the Perfect Storm – Domestic Version

1.) Health Care
2.) Pension / Retirement
3.) Education (in general including the next work-force generation, present generation, retiring generation)

Of these three, education would be or should be the main focus and would be the most interesting.

Ned