Randomly Noted

Bill Ford, executive chairman of Ford Motor Co., worries about traffic gridlock on a global basis.

Zhengrong Shi, chairman and chief executive of China’s Suntech Power Holdings, one of the world’s largest solar panel companies, wonders whether “perhaps there’s too much democracy” in the U.S., making it difficult for the nation to adopt a coherent and consistent industrial policy.

“There are no decisions being made,” he said. “It’s like in a company. Sometimes you hear all the voices. The CEO knows what the right decision is and sometimes they just want to bang the table and say, ‘Let’s do it.’”

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Disappointment is the word recently used by a commissioner of the Securities and Exchange Commission about the percentage of corporate directors at big U.S. public companies who are women.

The figure cited by SEC Commissioner Elisse B. Walter in a Feb. 10 speech was 15.7%. That’s the percentage of board seats held by women at Fortune 500 companies, according to the 2010 Catalyst Census.

Here is the fuller quote from Walter, who fills one of the Democratic seats of the five-person commission:

“I think it’s fair to say that there are significant challenges for those who want to see true gender diversity in corporate governance,” Walter said in the text of a speech to the DirectWomen Board Institute. “While I will not offer up a personal analysis as to why women are underrepresented on corporate boards – I’ll leave that to the experts – I can tell you that my initial reaction to the statistics is disappointment.”

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California, meet Greece.

Illinois, meet Ireland.

Pennsylvania, meet Spain and Portugal.

It would be very helpful for the finance leaders of those states to study hard what’s going on with those European countries, especially if the White House’s deficit reduction commission is successful with a proposal to eliminate tax-free status of newly issued municipal bonds.

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Today’s regulatory battles about U.S. corporate governance focus on shareholder power: how much direct influence holders of a company should have to nominate directors or vote on the pay packages of top executives.

In the case of nominating directors, already approved by the Securities and Exchange Commission and now subject to a court challenge, it is the big instiutional shareholders who will get additional power.

A decade ago, the regulatory rage was over more basic things, such as disclosing important information,  and the beneficiaries of a controversial new regulation were the small guys, the seemingly shrinking pool of individual investors.

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Ah, the innocence and optimism of youth. Even about financial markets.

Those sunny qualities were on display in an investment strategy essay turned in by fifth grader Kelly Decker of Kansas City, Mo. Her sober and reflective investment plan, aimed at helping pay for her college education, was among the winners in a competition sponsored by the foundation of the securities industry trade group SIFMA.

There’s precious little financial and investment education provided America’s school kids, so cheers for the knowledge spread by the Securities Industry and Financial Markets Association Foundation program. About 20,000 students this year entered the foundation’s essay competitions. 

Mutual fund disclaimers tell you past performance is no guarantee of future results, and in Kelly Decker’s investment case, the accuracy of that warning would be plenty helpful. That’s because recent past performance for the sort of long-term, balanced investment plan highlighted in the essay has been anything but encouraging. 

The aspiring  investor wrote that she plans to take much of hard-won earnings from chores, babysitting and future summer jobs and place them in the U.S. stock market.

Kelly wrote that she has a “low risk tolerance” and a limited investment time frame for college.  About 25% of her investments would go to “blue chip” companies, and the rest to mid-cap and large-cap stock mutual funds. As college looms closer, Kelly wrote she will invest in the purported greater safety of bond funds.

Good luck.

As for a simple dose of (admittedly historical) market reality and the fact that long-term investing sometimes really means long term, consider that the Dow Jones Industrial Average continues to flirt with the 10,000 mark, a level it first scaled in 1999.

To meet the student’s goals, she’s counting on an average rate of return of 10% for the stock and mutual fund investments and 5% from the bond funds. The idea is to turn $28,000 into $34,000 to be applied toward a bigger number needed to cover the costs of four years of college at a state university.

There is an eerie development in recent days in the interbank lending market that has the look and feel of the dark days of 2008.

Short-term funding rates jumped for the second day in a row on concerns that financial instability among several Euro-zone countries could harm some banks. This is the market where banks lend to one another. And it was the seizing up of this market in 2008 that forced governments around the world to become lenders to the banking system.

There is no suggestion that anything like what happened in 2008 is in the cards today. But as Newswires reporter Deborah Blumberg noted, counter party risk fears have re-entered the market.

When the major credit ratings agencies found themselves on the hot seat some years ago after the accounting scandals at Enron and Worldcom, their defenses were reasonable.

If those fraud-ridden companies were essentially handing out inaccurate financials, it meant the ratings agencies were being duped like everyone else. After all, you couldn’t expect Standard & Poor’s and Moody’s Corp. to act as auditors. So, their ratings of the companies were too high when the companies’ real and troubling situations tumbled into public view.

Around the same time, the business models of the major ratings agencies were called into question – they are paid by the issuers whose securities they rate. The ratings agencies said they knew how to handle the apparent conflicts and because they were employed by so many issuers, the potential conflict was diminished as no one company represented a large percentage of the raters’ revenues.

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(This earlier ran on Dow Jones Newswires as a Money Talks column)

For all the talk about new world orders, new blocs, new spheres of influence and such we are yet to see the Group of 20 flex much muscle, or the BRICs (Brazil, Russia, India and China) manage to stay on message.

 This while European Union members wrestle publicly with how to deal with Greece–particularly how much money to hand over.

Governments still prioritize their individual needs over collective decision-making, and some groupings are proving a particularly fractious bunch.

That means, noise aside, we are unlikely to witness a sea change shift from the U.S. as a central decision maker or the U.S. dollar as the main global currency, or a major change in the phrasing and nature of world trade agreements; we are likely to also see a fair amount of protectionism persist.

The weekend meetings in Washington DC of the World Bank, the International Monetary Fund, the G-20 plus the G-7 were a classic exercise in maintaining the status quo. Only last year everyone was talking about how the G-20 would soon supersede the G-7/G-8, especially given the growing influence of China among the pack of the stronger developing nations.

That had implications for all sorts of things in terms of the balance of power, from emerging-market nations’ ability to negotiate things like trade, to what sort of currency should be the world’s dominant medium of exchange.

China and India, et al, are emerging powers. They are gobbling up more of the world’s resources and playing a bigger role as well in global politics.

But why presume the “south” is any more of a united grouping than the “north”? Emerging market nations may be just that, but they don’t necessarily have a lot else in common. Grouping them together and saying they will have the same agenda on trade, currencies and monetary policy is ridiculous.

Countries will act together, but only up to a point. Unions look less solid when their individual interests may be put at greater risk. That’s true for the G-7, G-20, EU and BRICs alike.

Witness the comments from officials from India and Brazil in recent weeks along the lines that it wouldn’t be a bad thing if China allowed its currency to rise. Are we seeing a crack in the BRICs?

Witness the German Foreign Minister Guido Westerwelle reminding everyone on Sunday that his country is “not ready to write a blank check” for Greece, after Athens appealed for an E.U. and IMF bailout.

 
We all like to bang on about a new world financial order. In reality, any change will be slow and incremental. The U.S. (with its outsize influence on the IMF and World Bank) and its currency will be top dog for a while yet.

Jerry York has passed away after being hospitalized earlier in the week with a brain aneurysm. We crossed paths in 1995 when Kirk Kerkorian staged an audacious effort to control and remake Chrysler. Kerkorian couldn’t have done it without Jerry,  who brought guts, operational expertise and straight-talk to the table. Jerry did much, much more in his career, making indelible marks on corporations and corporate governance across industries — but most significantly within the auto industry. He is gone at age 71, which is too soon.

To understand why Indonesia is moving forward and Malaysia isn’t, consider this horrifying story, “Malaysia Court Canes Three Women.”

The recent canings of four Muslim men and, for the first time, three Muslim woman, for having sex out of wedlock come after last year’s caning verdict – still not carried out – against a 32-year-old Muslim woman caught drinking beer in a hotel bar.

The only conclusion one can reach is that radical Islam’s influence is growing in this lush southeast Asian country of rich natural resources. Will Malaysia’s forward-thinking Muslims, and its ethnic Chinese and Indian minorities, permit this drift to continue? Have a look at colleague James Hookway’s piece, in which he notes that the main moderate Muslim opposition leader, Anwar Ibrahim, is on trial for alleged sodomy – “a charge that he denies and that he says was fabricated to destroy his political career.”

Meanwhile, Indonesia, with its own Muslim majority, is enjoying robust economic growth and there are signs it’s becoming easier to do business there. Just this week, an Indonesian court issued a ruling that in effect will let France’s Carrefour keep a majority stake in a local retailer. As colleagues Edhi Pranasidhi and Reuben Carder write, “the decision will give a filip to Carrefour’s aim of competing for market share in Indonesia” as incomes and consumption rise. This is Indonesia’s moment, as I’ve written before.