There are three interrelated means to reach this goal

Operational; e.g., Reduce costs

Marketing;  e.g.,   Increase sales

Mixed; e.g., Increase margins

The range of possible strategies is to a large degree based on two factors:

a.  What the supplier can bring to the table; i.e., core competency;

b.  What the customer needs; i.e., core competency deficits.

However, these by themselves are insufficient to determine the best (or even a workable) strategy. We are still left with an almost infinite number of possibilities.

At the end of the day, the optimal strategy is based not only on what can be done but equally importantly, what cannot be done.  Every strategic development project begins with client-imposed restrictions each of which limits the number of possible strategies.

Restrictions can be actual, perceived, or self imposed.

For example:

A factory client wishes to increase profits by changing his operation to provide speed-to-market, but has a serious restriction:    

Actual Restriction:  We have a logistics problem. We are located on an island in the middle of  the Indian Ocean.  This is a fact which must be recognized and accepted.

Perceived Restriction: We are located on an island in the middle of  the Indian Ocean and therefore cannot achieve speed to market.  This is not a fact, just a perception.  Logistics is a cost factor.  You can move product from anywhere to anywhere in less than 30 hours, if you are willing to pay for air freight.  If your product is a low value-added basic commodity which cannot carry the cost of airfreight, the restriction becomes actual.  On the other hand if your product is a high value-added fashion item, airfreight becomes viable and the restriction disappears.

In this situation, successful strategies are limited to those involving higher value added products

A factory client wishes to increase profit margins by changing his operation to produce higher value-added fashion products, but has a serious restriction:

Actual Restriction:  Our country faces a nomadic-worker problem. In many countries, typically leave their jobs after six months to work in another factory. This is a fact not a perception.

Perceived Restriction: Our country faces a nomadic-worker problem and therefore we cannot provide them with the advanced training necessary to move to higher value added products. This is not a fact just a perception. True, it is not cost effective to train workers if they will leave immediately training is complete. However, it is equally true that workers will stay with their current employers if the company makes the necessary effort to keep them.  Developing worker loyalty and motivation begins when management changes their attitude; no longer defining their workers as disposable tools and redefining them as capital assets.

Self-imposed restriction: Our country faces a nomadic-worker problem and therefore we cannot provide them with the advanced training necessary to move to higher value added products.  Workers are uneducated and generally stupid. We cannot stop them from leaving.  Investing in worker training will simply provide our  competitors with better workers. If management insists on treating their workers as disposable tools — not caring if the workers leave ­— they should not be surprised when the workers do leave.

In this situation, there are no successful strategies.  The factory cannot move up to higher value added products without worker training and no-worker-training is a self-imposed restriction

As you can see from the example above, not all restrictions are rational.

As a general rule, the less rational the restriction, the harder it is to overcome.

Actual restrictions are the easiest.  Here the client recognizes a problem and is paying the  consultant to overcome that problem.

Perceived restrictions are more complex.  Here the consultant must first convince the client that the restriction is indeed perceived and not factual; e.g., geography in itself does not mandate longer lead times.  Once the client recognizes  that the restriction is perceived — not actual — the consultant can then work to create a viable solution.

Self-imposed restrictions.  Are usually beyond solution.

Most are irrational:  The factory owner who believes that workers are a lower order of human being — stupid, coarse and incapable of learning — is trapped in the 18^th century.  No argument will convince him otherwise.  Since the supplier cannot move from low value-added commodities to high value-added fashion without long term training, there is no possible strategy.

Many self-imposed restrictions are ego driven:

My brand-importing company requires 52 full time designers — a common claim among companies led by designers, who mistake design is important for design is everything.

My Asian buying office requires 10 expatriate German managers — a common claim among some European companies where management is convinced that their nationals alone have a world monopoly on technical skills.

Some few are totally rational:  Your strategy must not reduce the number of local employees.  This is a special case where the client understands that this restriction will limit the possible strategies and will in any event prove costly, but is willing to pay the price.

Rational, irrational or totally insane, these restrictions are real.   In real life, it is these  limitations which usually determines the right strategy, if one exists.

The question is why?

There are three schools of thought each with its own answer

The Living-in-Denial La-La Landers:  2011 has not been a bad year for China.  Exports in units may be down -3% but total value is still 8% above 2010.

This is not  a particularly sensible conclusion.  I certainly do not think those with factories in China find comfort in  an 8% increase when at the same time  their customers are leaving China, taking their orders elsewhere.  And, while its true that so long as U.S. garment imports  were rising, made-in-China garment exports continued to grow, the data shows that this situation is changing for the worse.  Garment imports to the EU are falling sharply while the U.S. appears to be following the same downward path — not good news for made-in-China suppliers.

The It-Serves-You-Right Critics : If Chinese garments are not doing well, the fault lies with the Chinese industry.  In this case higher costs, resulting in higher FOB prices have rendered the industry uncompetitive.

This is my personal favorite. It is short, to the point; and has the added benefit of  following natural justice.  Too bad  the data says otherwise.  It is certainly true that  2011 has brought higher FOB prices for made-in-China garments.  In October 2011 prices for Chinese garments averaged $3.27 compared with $2.85 for the same month in 2010 — an increase of  15%.  However, at the same time the average FOB price from all suppliers rose by 17.4%.  As a result, China’s is becoming more, not less, competitive. October 2011 fob prices compared with its competitors dropped from discount of -4.1%  in 2010 to a discount of -6.1% recorded in October 2011.   When you consider that the Chinese industry is concentrated in better quality fashion­ goods and tends to avoid basic commodities, being at  any discount to world average is remarkable feat.

If you want to see prices increases look at India where between October 2010 and October 2011 average FOB prices rose 22%, Pakistan where in the same period prices were up 23% or Indonesia up 35%, Bangladesh up 37%, or Thailand up 41%.  Compared with these, China is looking pretty good.

All of which leads us to the third and final group

The Silent Minority:  I understand the question.  I have no idea of the answer

Perhaps the most sensible response.

Two years ago, I looked at the same problem and came to yet a fourth conclusion

Herein lies a tale.

“Prolepsis”

In 2009 I was hired jointly by the textile and garment industries in  eight ASEAN countries — Cambodia, Indonesia, Lao, Malaysia, Philippines, Singapore Thailand and Vietnam — to create a strategy to increase exports for the region.   This was the depth of the global recession — when even the major ASEAN garment exporters such as Vietnam, Cambodia and Indonesia were in bad shape, to say nothing of the second level exporting countries. It seemed that China was finally taking over the entire global garment exporting industry, leaving everybody else with the little remaining business that Chinese factories were unable or unwilling to take.

However, it seemed to me that China’s very success might provide a solution to my ASEAN clients’ problems

As China’s global market share approached 40%, the larger retailers and brand-importers were growing increasingly concerned with the size of their made-in-China orders.

Labor costs were rising, and while FOB prices for made-in-China garments remained stable, garment retailers and brand importers were concerned that rising costs would inevitably result in rising prices

To add to the uncertainty, both the U.S. and the EU Governments were growing increasingly critical of China’s trade policies — notably the devaluation of the Chinese RMB as well as other more direct export subsidies.  There was a growing possibility that one or both importing regions would impose anti-dumping and/or countervailing tariffs.

China’s  major customers could not afford to wait for the oncoming disaster.

Imagine you are head of garment sourcing for a major importer.  When disaster strikes the little guys — the  customers who placed 2,000 dozen woven shirts or any orders totaling a few million dollars would have little difficulties finding new suppliers outside China on short notice.  However, you as a large buyer ordering 100,000 dozen shirts per month and/or having outstanding orders totaling a half billion dollars, would be dead. You would require months if not years to build a new supplier base capable of capable of handling your quantities. For you and your fellow big importers, there are no quick fixes.

To avoid the potential catastrophe you would have to move in advance of the disaster, and develop alternative suppliers outside of China.

The ASEAN strategic goal was to prepare the ASEAN textile and garment industries to provide a viable alternative to China:  textile-mill/garment-factory relationships to provide the customer with one-stop shopping, and most importantly a range of services which would allow China’s former customers work more easily and efficiently with their new suppliers.

As expected, in 2011 customers started moving their orders from China to alternate supplying regions.  To some degree, CAFTA and Mexico benefited, but the big winner has been ASEAN.

Surprisingly our predictions were wrong.  The risks of working in China have not materialized.  Wages, overheads and the value of the RMB have all gone up, but none of these have seriously effected prices for made-in-China garments.  At the same time none of the U.S. and EU anti-China rhetoric resulted in Change.

Good news for the ASEAN suppliers:  Reality proved to be of negligible importance.

China’s loss of market share is real even though , the causes of that loss are are perceptions of a reality that remains unfulfilled and may never become realized

The bad new for China:   The perception of  China’s problems remain.  Those concerns are real.  Until the perception changes, China will find a return to dominance very difficult to achieve.

In the old model, factory marketing was totally passive with the customer or his agent approaching potential factory suppliers.  Those deemed reliable — able to ship a decent product on time at a reasonable price — received orders.  Business developed by attrition as customers discarded unreliable factories, distributing their orders among the remaining reliable factories.  Provided your factory shipped a decent product on time, at a competitive price you could count on greater future business.

That model no longer exists.  Today, the ability to ship a decent product on time, at a reasonable price is no longer an asset.  It is an entry level requirement which at best allows a factory to go to end of a very long line of factories all of which meet these minimum standards.

In the new model, the importance of the tangible product has been subordinated  to the intangible process.  Where once the factory’s role in the manufacturing process was limited to garment making,  that role has now has been extended to include every step from designer selects sample fabric to stock garments ready for shipment;  and beyond the manufacturing process to post-production which take us to the final step in the product cycle — last stock garment sold to the consumer.   In this new model, the customer will ask the factory, “which steps are you competent to perform and how much money can your performance save me?”

In the old model factory core competency was defined solely as ability to cut, sew and finish garments.  In that one-dimensional world, every factory could be graded as a point on a single line moving up from least competent to most competent.

In this new multi-dimensional model, the single graded line has given way to an almost infinite array of lines based on range of variables, including product type, customer type, services offered, and services required.

In this new model, to be successful a factory must provide a range of processes in which it excels and which are of value to a particular group of customers.  It is these core competencies which differentiate the successful factory from its less successful competitors.

At the same time each customer must examine their own core competencies to determine what they lack in order to provide their customers with range of products and services they consider necessary to compete in their market.  Retailers and brand importers must overcome these core competency deficits  either internally by developing new competencies or externally by allocating these processes to suppliers who have these core competencies.

In this new model the successful supplier is the factory that is able supplement the limited abilities of their customers to create a comprehensive core value process

In the new model a factory’s ability to fill their customer’s core competency deficits will become the single most important factor differentiating that customer’s  top strategic suppliers from their mid-level normal suppliers to their bottom marginal suppliers.

To operate successfully, factories and mills must radically alter the way they market their products.  The old way — passively standing around waiting for the customer to provide orders — has become the road to failure.

In this new world, you the supplier must take a proactive dynamic approach

Match your core competencies with your customers’ needs

Ø     Define your special abilities — core competencies

Ø     Target a range of customers with complementary needs — core competency deficit

Ø     Work together with your customer to create the greatest mutual benefit — comprehensive core value process — from this combination by:

a. Changing your operation to suit your customers’ requirements thus enhancing your value as a strategic supplier;

b. Persuading your customers to modify their operation thus increasing the value of the relationship by taking maximum advantage of your abilities.

In a period when global trade declines, traditional relationships break down as old  customers and  suppliers go out of business while the survivors — both customers and factories — search for partners able to provide greater value.  This presents a special opportunity for those customers and suppliers who having recognized the need for change are willing make the effort to create that change.

When the global recession finally ends, we will see a new garment industry where the old dominant/subordinate relationship between customer and supplier has been replaced by one of mutual dependency.

To survive each customer and supplier must decide where they stand now and more importantly where they want to stand in the future.

The EU has come calling, begging bowl in hand, to persuade you to lend them money to keep the EURO afloat.  You  currently hold about $3.4 trillion in liquid foreign currency reserves.

Should you lend the EU your money?

There are three good reasons for the Chinese government to provide  support for the EURO

1. The EU is your country’s  largest customer.  If the EURO tanks or the EU goes into recession, your export industry on which the country relies heavily will be badly hurt.

2. You cannot use this money in China.  To repatriate the money you must first convert it from dollars, EURO and Yen, to RMB which would sharply revalue the RMB raising export prices, causing even greater damage to your export industry.

3. You would like nothing more than to diversify your holdings away from the U.S. dollar.  It is really upsetting to use your country’s reserves to support your greatest competitor.  And, the only other currency large enough to deal in trillions is the EURO.

On the other hand, there are serious questions which should be asked and answered before committing your country’s hard earned reserves.

The EU is the world’s largest economy.  Why come begging to you, when the EU can certainly solve their EURO problems using their own resources?

Why aren’t the Germans and the French taking the risk?

More importantly why should China take the risk on  the EURO when the German’s and French  themselves are unwilling?

This is the EU’s  problem.  They know risks better than you.  Perhaps you should follow their deeds not their words

The French and German Governments tell you that your money will be safe because this time the Germans and French  are taking steps to ensure that in future all EURO countries play by the rules limiting the budget imbalances which is the root cause of the present problem.  However, when you think back, was it not those same French and Germans who first broke the rules in 2008?  It seems silly to count on  those who were responsible for the problem in the first place, to ensure that the same problem does not recur.

They tell you that they will bring in the International Monetary Fund (IMF) to guarantee your money.  However, it seems that in recent years the IMF has been hijacked by the EU, giving most of the IMF money (which includes your money) to the EU.  How can you rely on an organization run by the EU and for the EU, to act in China’s interest when that interest may conflicts with EU needs.

The decision is of course yours, but  remember you have a family, position and some real wealth.  You do not want to risk everything on a bad deal which your government does not support, the Party  does not support and the people do not support.

A more important question is,  what should you do after the EU falls into depression and the EURO finally collapses?

Here you would have more positive approach.

The EU is home to many good companies and some very good property.  During a depression when capital dries up and banks are unable or unwilling to provide support, even some of the best assets are cheap.

The money you do not throw away lending to the EU can be used to buy some very good capital assets on the cheap.  For example $3.4 trillion is more than the value of the entire German automobile industry.

Imagine using a part of your money to buy Volkswagen.  You would become a hero to the people and be seen as a great asset to the party.

Certainly they will get half

Ø     The EU will have its Recession.

Unemployment will rise and gross domestic products within the EU will fall.

On the other hand

Ø     The EU will recover as a stronger more cohesive entity. 

That part is a bit more uncertain.  The Franco-German solution depends on a new EU treaty where member countries willingly surrender more of their independence and sovereignty  particularly with regard to fiscal policy such as taxation and national budgets.  Getting all 27 countries to agree as required under the current EU treaty is somewhat problematic, particularly since the UK has already vetoed the treaty sight unseen.

Furthermore there is some doubt just how long the market will wait for this new treaty which  probably will never see the light of day.  The EU will require about one year to achieve its goal, while based on experience of the recent past, the market should give them somewhat less than a week.

The more probable result, will be further decline in confidence that the  EU will deal with its ongoing problems, and a rise in the belief that the EURO is untenable.

There is also the increasing probability that the entire EU economy will become trapped in a downward spiral:  Austerity resulting in higher unemployment, which leads to lower tax receipts coupled with higher government expenditure which in turn requires greater austerity. . .

To the degree that economic well being is based on fundamentals plus confidence, the EU is in trouble the on both counts.  The fundamentals look terrible and confidence in the EU’s ability to deal with its current economic problems has all but disappeared

The real question is not how the EU will fair (the markets having already determined that the EU will fair somewhere between poor and catastrophic), but rather how its inevitable economic decline will effect the rest of the world.

The U.S. has its own problems.  The U.S. economy is either in a state of anemic recovery or a new recession (depending on how you read the data).  The hardest hit is the  middle class and the workers — the vast majority of the population.  The U.S. government plans to provide little or no assistance to those with the greatest needs, which will create the same downward spiral as in the EU. Crisis in the EU might well lead to a tipping point where recession becomes depression.

East Asia, the third economic powerhouse will also fall into severe recession.  As demand from the U.S. and the EU dries up, China and the other great export economies will be faced with serious declines and rising unemployment.  With little or no social legislation such as government sponsored medical care and unemployment benefits, the unemployed will quickly sink into poverty.

This new global recession will be very different than those of the past 50 years when the U.S. economy acted as a locomotive pulling the other countries out of their economic holes.  This time there will be no locomotive.  In fact, 2012 may well be one enormous train wreck, leaving the global economy in ruins, with little ability to rebuild

Five years ago, this scenario would have been rejected as science fiction.

Even one year ago, this scenario would have been deemed highly improbable

Today science fiction has become reality and what was once considered  improbable has become the best projection.   Many corporations and other institutions have accepted this scenario as  quite possible and are creating strategies to survive the coming disaster and operate in the post-deluge era.

It will be left to future generations to decide just who was responsible for the depression of 2012.  It will be our role to try to survive.

This description is not only unfair, it is fundamentally untrue despite the fact that it is prevalent  at all levels of society, including the politicians themselves.  The problem is education.  Universities teach too much theory and too little practice.

We should take a page from the Bauhaus School of architecture, where rather than concentrating on the history of architecture and the beautiful buildings of ancient Rome and Athens, architectural students were taught the tools of their trade — carpentry, masonry, welding, etc.

With practical education our future political leaders will learn not only what they must do, but more importantly, how to do it and do it well.

The following is a simple draft of a student politician’s curriculum.  Doubtless, more qualified experts will refine my efforts.

1.    Elementary Pick Pocketing:  Required for all students:

a.     Students will learn how to steal money from unwary citizens without being noticed.

b.    Students will learn to be more focused and more importantly to become more discerning in their choice of victims, avoiding the strong and powerful who may effect retribution

c.     Most importantly, these are vital skills for those who fail to become senior political leaders and therefore must rely on petty theft to augment their meager official salaries.

2.    Elementary Prostitution:  Required for all students

a.     Students will learn to commit distasteful acts necessary to move up in their careers.

b.    Students will learn the benefits of selling a commodity of which they have an inexhaustible supply

c.     Students will learn that in life there are no friends, only johns

d.    Student will learn the need to start literally at the bottom

3.    Intermediate pimping:      Required for those wishing to specialize in government administration

a.     Students will learn the basics of human resource management

b.    Students will also learn how to convince the naïve and gullible that prostitution is a worthy career

NB:  A special seminar in elements of Blackmail will be offered to those with natural talents

4.    Intermediate Confidence Games and Scamming:  Suggested for all students with a serious interest in a career in legislature

a.     Students will learn elements of oration including the following:

i.     Making promises they know, they will never keep

ii.     Convincing their audience that they will keep those promises even though the audience knows those promises will never be kept.

b.    Students will learn how to blame others for the mistakes  that they themselves make

5.    Advanced bribery:  Open only to senior students who have displayed true leadership potential

a.     Maximizing under the table receipts

i.     Selling oneself to the highest bidder

ii.     Selling oneself as often as possible

iii.     Accepting payoff from both sides of the dispute

b.    Proving to others that bribery and corruption are necessary parts of honest government

From the skill sets shown above, we can see that our current view of our government leaders is incorrect

While it is certainly true that all politicians are crooks and whores, very few have the skill, experience and the ability necessary to become qualified pimps, con-men or extortionists. Only advanced tertiary eduction can fill this all important competency gap.

Finally it is very wrong to slander people trying hard to make a living, albeit illegally, by placing them in the same category as politicians. I, for one would be most aggrieved to be called  dirty politician.  Should anyone have the need to insult me I would prefer being called prostitute, conman or even extortionist.  The connotation is better

To foster this greater understanding, I suggest countries initiate a one year Govern Abroad Program.  We might begin by sending the U.S. Government to Beijing and the PRC Government to Washington, each to govern the other’s country.

There will be challenges, but with a measure of good will, these will not be insurmountable.

The most obvious is language.  Chinese Premier Wen Jiaboa’s knowledge of English is not great while U.S. President Obama’s knowledge of Putonghua is frankly nonexistent.  We are therefore quite fortunate that no one pays any attention to what either of them says.  I am confident that each could continue to make speeches in their respective language, without anyone knowing the difference.

The role of the respective legislatures also pose very few problems.  China’s National People’s Congress is a rubber stamp organization where voting strictly follows the party line. So too is the U.S. Congress where Senators and Congressmen take pride in the fact that they have not had an original thought since the end of the Roosevelt administration, 66 years ago.  Chinese legislators may have temporary difficulties until they learn just who runs the United States Government. Fortunately, once on the job in Washington, they will meet many friendly lobbyists who will be more than happy to set them straight.

Another challenge may be the need to learn the difference between China’s rule by policy and the United States rule of lawyer.

A good example illustrating this difference is government’s seizure of their citizens’ homes.  In both countries the right of government to throw people out of their houses is well established.  This is particularly true when the subject property is owned by a low income person who is unable to maintain his property to  the high standards required by the local government.  Such property is subject to seizure for two reasons.

a.  The property is blighted

b. The owner being poor and relatively unimportant has no rights.

In the event of problems, the China solution is to send in the police who arrests the property owner and sends him to jail.  In the event of any legal action the property owner’s lawyer is arrested and he too is sent to jail.

This system has operated so efficiently that local governments have upgraded their efforts. Where once local governments  evicted only the poor and powerless, they have now moved upscale.  At a well-known gated suburban-style community on the fringe of Beijing, the local government has recently dispossessed doctors, financiers, authors as well as retired government bureaucrats.

This simply will not work in the United States, where each man’s home is his castle.

In the United States even government must follow the law and where you must hire a lawyer before taking any action.  The best example, occurred in 2005 in state of Connecticut where the local government seized non-blighted property for the sole purpose of giving that property to a local developer who paid $1 per year. In Kelo v. City of New London, 545 U.S. 469 (2005) The United States Supreme Court — the highest court in the country – ruled in favor of the local government stating that seizing private property for the sole purpose of increasing municipal revenue was legal.  At that point the local government could Justifiably send in the local police to arrest any recalcitrant former property owners and send them to jail with a clear conscience.

I am convinced that the Govern Abroad Program will not only increase mutual understanding between the U.S. and China but also will show that there is little difference between their respective governments

The Chinese, on the other hand, see their country’s move towards world economic leadership as less a revolution, and more a return to the normal order of things.  They see U.S. and European supremacy as a short term historical blip which is about to disappear.  To the Chinese the concept of U.S. and European triumphalism is simply one more example of Western myopia, the inability to see that the world is somewhat larger than New York, London, Berlin and Paris, and that the world economic order has been around for a very long time.

The Chinese have a point.  For most of the past 2000 years, China has been the world’s dominant economy, and for reasons we in the West still cannot understand:

2000 years ago, at the height of the Roman Empire ­, when Western Europe accounted for about 14% of the world economy, China accounted for  25%

At the height of the Renaissance, when the new ideas, new industry and the move towards world trading Empires had increased Western Europe’s share to 18%, China’s share was still 25%

200 years ago, when the industrial revolution, the new science, and rationalist philosophy had increased Western Europe share to 23%, China’s share stood at 33%.

Imagine, without any of the benefits of Western philosophical, scientific or cultural developments which we believe were so important in the development of U.S. and European economic dominance, China accounted for one-third of world GDP

Then the Western Europeans arrived and China was driven down hill — two Opium wars, countless smaller armed conflicts, the slicing up the country by the European powers and later Japan all took their toll.  By 1870 Western Europe’s share of world GDP has risen to 33%, China’s had fallen to 17%[1].

To the people of China, their current economic success marks a final close to the 19^th century European takeover.

If the  Chinese people fail to sympathize with the many economic problems currently facing the West; If instead their government offers advice to the EU and the U.S. on the need to grow up, work together and solve their economic problems; and if that advice appears to be somewhat patronizing, think of the term Schadenfreude.   The Chinese have waited 150 years  to be taken seriously — to say,  “we told you so.”  They have a right to savor the moment.

Every year, it is the same institutions that come begging — Goldman Sachs, Citicorp, Bank of America.  More interestingly it is the same people.

I wonder, how does someone who just lost $20 billion keep his job or better yet, having bankrupted his previous employers how does he get a new job?  In any other industry, if an employee lost $2,000 he would not only be fired, he would be totally and forever unemployable.  Clearly the world of finance is different.

Consider this case study:

J. Piper Flounce, having just bankrupted his previous employers is now applying for a new position at another bank.  Imagine the interview with Chester Walnut  Executive Vice President for Procurement

Walnut:             Mr. Flounce, I see from your curriculum vitae, that your were previously with Blender & Mix where you were responsible for that unfortunate situation of the $20 billion loss.  Could you please tell me something about the events.

Flounce:            Let me say at once the fault was not mine.  The blame lies entirely with Gus, the floor sweeper.  I remember the day quite clearly because it was my grandmother’s 80^th birthday.  I was about to order two dozen roses for my grandmother, using my cell phone, when Gus joggled my elbow and as a result instead of pushing the button to buy two dozen roses, I pushed the adjacent button­, to buy $20 billion of toxic waste bonds.  Boy was I  embarrassed.  However, I can assure I took immediate steps to ensure this could never happen again.  I fired Gus on the spot!

Walnut:            It must have been very upsetting for this to have occurred on the very day of your grandmother’s 80^th birthday.

Flounce:            I can tell you my grandmother was very upset, when she thought I had forgotten her birthday.  Of course my grandmother was even more upset when two weeks later we repossessed her home.

Walnut:            Yes.  I can understand she would be upset.  Can you explain the circumstances leading up to the repossession?

Flounce:            As you can understand, since Gus would do little to minimize the $20 billion loss for which he was clearly responsible, I considered it my duty to immediately pitch-in to aid my stricken employers.  I therefore took all the funds for my most important  clients who had given me discretionary powers, and used every penny to buy the toxic waste bonds.  In the efforts to minimize the loss, I not only sacrificed my grandmother’s life savings, but also an additional $250,000 which I borrowed in her name using her home as collateral.

Walnut:            Most impressive Mr. Flounce.  It is very unusual for young people to act calmly in the face of serious and unforeseen disaster.  I particularly appreciate your loyalty, putting your employer’s interests above those of your family.

Flounce:            Thank you sir.  Let me say that my former grandmother’s house has proven to be a real asset.  We closed the sale yesterday for a tidy profit.  My motto has always been,  Family is your most important asset, because when times are truly hard  and there is  no one else to steal from.

Walnut:            Excellent.  Most excellent.  On behalf of Too-Big-To-Fail Corp, we would like offer you a position.

Flounce:            Not so fast.  I think we first have to discuss my signing bonus.  After all you do not find a person of my proven capabilities walking around unemployed.

Walnut:            Flounce you are our type of person. Welcome aboard.

NB: Do not confuse the bail-out season with the upcoming stay-out-of-our-business-season, that time of year when our bankers demand that our government given them total freedom from all regulations.

For example, the modern Olympics date back to 1896.  In the past 115 years the world has moved forward, while the modern Olympics remained virtually unchanged.  We must ask ourselves:  Do the skills required to compete still reflect the skills needed by our 21^ST century global society?

At this very moment literally millions of our young people are pushing themselves to the limit every day in an effort to run 100 meters in less than 10 seconds.  It pains me to say this, but running the 100 meters in less than 10 seconds has no real value unless you plan to become a professional purse-snatcher or liquor-store bandit. Are these professions that we want to choose for our children?

What value is the Hammer-throw or the javelin?  These were weapons of choice 2000 years ago.  Today no army, drug cartel or urban gang  would be caught dead using these.

It is time we introduce Olympic events that match the skills, our children will need to lead successful lives in today’s society.  Here are but a few examples.

The Bankers Triathlon:

1.    Insider Trading:  Each contestant will be given the names of three major corporations, for which they must obtain confidential information which will materially affect the each target company’s stock price. Each Contestant must obtain and use that information for personal gain. Points will be awarded based on the size of profit. Contestants are limited to assists provided by the International Olympic Committee as listed below:

Ø    $100,000 in used notes

Ø    200 grams of the finest quality cocaine

Ø    The telephone number of two prostitutes

(All unused assists must be returned directly to an IOC executive in an unmarked envelope)

Any contestant indicted during the event will be disqualified.

2.    Money Laundering:  (Sponsored by a group of non-profit charities located in Mexico, Colombia and Afghanistan)

Each contestant will receive a large suitcase containing $20,000,000 in very used twenty dollar bills, and will be required to carry out the following transactions

a.     Physically transport the suitcase and funds through U.S. customs.

b.    Convert the funds into marketable securities.

c.     Use the securities to invest in not less than three legitimate corporations

Points will be awarded based on the number of companies taken over.

In the event of disqualification the contestant will be incinerated

3.    Mortgage Securitization:  Each contestant will be given a list of 100 properties each with a market value of less than $100.  Each contestant will then

a.     Bundle the properties into 100 bonds, each with a value of $100,000.

b.    Obtain an AAA rating from at least one major bond rating organization.

c.     Market the bonds to banks, insurance companies, universities, governments and provident funds.

Points will be awarded based on the total sales value of the bonds marketed.

In the event of disqualification, we never heard of you

Marketing Biathlon

1.    Telemarketing: Contestants will be given the names of 1000 adults selected at random.  The contestant must contact the adults on their list stating:  “My name is Bernie Madoff.  I am offering you the opportunity to put your life savings in my new  investment fund, in which I guarantee a 10% annual return.”

a.     Points will be awarded on the number of people enrolling and the amount of money collected.

b.    Bonus points will be awarded for successful sales made between the hours of 2:00-4:00AM local time.

2.    Arms Sales:  Each Contestant will be given a series of three lists

a.     Major Weapons:  Suitable for invading a neighboring country

b.    Exotics Weapons:  Suitable for use by freedom fighters anxious to make an international impact

c.     Medium and small weapons: Suitable for use by children wishing to make a statement at school

Points will be awarded on the amount of money received.  Bonuses will be given for the impact derived from delivery

Competitive Hacking:  Contestants are given the names of the 535 sitting U.S. Congressmen and Senators.  Contestants have one week to list the hidden foreign bank accounts of each providing bank name, account number and balance.  Bonus points will be awarded for any member of Congress sitting on the Ethics Committee.

Competitive Lobbying:  Contestants will be given a specific piece of legislation for which they must receive commitments  from U.S. Congressmen and  Senators.

“A law to provide funds and military assistance to the Lords Resistance Army located in Uganda and Sudan.”

Points will be awarded for each member of Congress supporting the bill.

Bonus points will be awarded when that support includes funding for and/or children special needs equipment.

Our goal must be to imbue the next generation with the same values we have and to ensure that our efforts on their behalf are not in vain