The Great Debate UK

What the new normal looks like

After a crisis the most unusual thing can be that things remain the same. For example, apart from media stories of doom and gloom, by and large if you managed to keep your job then the bankruptcy of Lehman Brothers and ensuing financial crisis may not have affected you acutely and life may have, more or less, gone on in the same fashion albeit with a bit more banker bashing than before.

Change as a result of a crisis can take years to manifest itself into a tangible difference. But five years after the financial crisis, and three years after European sovereign debt implosion, some of the long-term market and psychological effects are finally starting to be felt. Here are a few examples:

Low interest rates

In a post Lehman world, a 3% 10-year Treasury yield is considered a major threat to the global economy. Prior to the crisis rates had peaked at more than 5% in 2006. Cast your mind back even further and the average yield between 1980-1990 was more than 10%. U.S. mortgage rates are another anomaly these days: when 30-year fixed-rate mortgage yields rose to 4.7% in May, market commentators were beside themselves about the danger this could do to the U.S. housing recovery and how the end of the American Dream is upon us. However, the average rate between 1990 and 2007 was more than 6%, and it still managed to fuel a house-buying boom (albeit one that ended up doomed).

Low interest rates are also symbolic of a different and altogether more worrying trend in global finance: the cult of equities. Don’t get me wrong, stock market rallies are a good thing, but central bank action (inadvertently or not) is helping to prop up stocks to the detriment of savers. This seems like a strange focus for central banks especially when populations from Italy to Germany, the U.S. to the UK, and even China, are ageing. Traditionally, the older the population the more conservative the investment philosophy, but central bankers seem to be ignoring this core cohort of the global population. We have become so used to low interest rates that we don’t really question when major central banks like the Federal Reserve delay interest rate normalisation, as it did back in September, or when U.S. politicians refuse to drop partisan bug-bears to reach a fiscal deal and thus help foster an environment where rates could rise.

from The Great Debate:

Apple: ‘Early adopter’ as fashionista

To much fanfare, Apple announced Tuesday that Angela Ahrendts is resigning as chief executive officer of Burberry and joining the inner circle in Cupertino, California. “Apple-polishing” has become the headline du jour. Picturing the soignée Ahrendts surrounded by geeks in jeans and hoodies, we might be forgiven for wondering why Apple feels in need of a fashionista buff-up. After all, there is hardly a product line more shiny-bright than Apple’s -- or one with less affinity to the cold exclusivity of the world’s great fashion houses.

But the extraordinary affection that iPhones inspire is different from the anxious ostentation surrounding high fashion.

Apple attempts to become fashionable

The UK lost one of only three female CEOs on the FTSE 100 on Tuesday, as Burberry CEO Angela Ahrendts quit. My concerns about females at the top aside, the interesting thing about Apple’s new hire is the link between Apple and fashion and what it tells us about the evolution of the tech industry.

Ahrendts is a smart choice to become the head of retail and online stores for Apple. Firstly, her marketing skills are second to none. During her tenure at Burberry she has completely transformed the consumer experience at the iconic British brand. The stores are beautiful. The central London branches are styled just as well as the brand’s catwalk stars; they look more like a high-end boutique hotel in Paris or Milan than a high street shop.

Is a low corporate tax rate really in Ireland’s benefit?

–Kathleen Brooks is research director at forex.com. The opinions expressed are her own.–

The tax affairs of Apple and Google have brought attention onto Ireland for all the wrong reasons of late. Ireland’s reputation has undeniably been dragged through the mud as the corporate tax affairs of some of the world’s largest companies come under scrutiny in Westminster and Capitol Hill.

Why we are not witnessing a tech boom

Photo

By Kathleen Brooks. The opinions expressed are her own.

The words ‘tech bubble’ have been bandied about since the Apple share price really started to climb at the end of 2011. Earlier this month, its market capitalisation hit $600 billion dollars, only the second company to see its market cap get that high. So it appears like everyone wants a bite out of the proverbial apple.

There is a dangerous precedent for markets’ believing that tech stocks can only go in one direction. The dotcom bubble back in 2000 caused havoc in the equity markets and also contributed to the Federal Reserve keeping interest rates incredibly low, one of the contributing factors to the housing crisis in 2007.

from The Great Debate:

How Apple, and everyone, can solve the sweatshop problem

Every few years brings us another sweatshop offender. In the 1990s it was Disney, and then Nike and Gap. The 2000s brought us Wal-Mart. The past few weeks Apple has been in the crosshairs.

One question is of paramount importance: How can we use this current public conversation to finally drive a different outcome? What must companies do so that 15 years after Kathie Lee Gifford tearfully became the first sweatshop poster child, workers who make and grow products for global consumers are paid fairly, protected from danger and free to advocate for themselves without fear of reprisal?

from The Great Debate:

Jobs made Apple great by ignoring profit

By Clayton Christensen and James Allworth
The opinions expressed are their own.

Steve Jobs retires as the CEO of Apple with a reputation that will place him amongst the pantheon of history's great global business leaders. Many people have written about what makes Jobs and Apple special, but I think they’re missing what truly set him apart. Jobs has succeeded by eschewing the one thing that most people view as the raison d'être for companies -- profit.

When I left the industry to come to academia 22 years ago, it was driven by a set of questions that had troubled me for some time. Why was it that the best run companies in the world -- companies that have had incredibly smart leaders, following carefully detailed plans and with tremendous execution ability -- reliably seem to come unstuck? The answer to this question is what has become known as the theory of disruption.

from Breakingviews:

Microsoft ought to kick off search for Bing buyer

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

NEW YORK -- Microsoft needs to concentrate on a different kind of search: finding a buyer for Bing, its online search business. The industry's distant number two is a distraction for the software giant -- and one that costs shareholders dearly. The division that houses Bing lost $2.6 billion in the latest fiscal year. Facebook, or even Apple, might make a better home for Bing. And a sale would be a boon for Microsoft's investors.

from MacroScope:

The iPod – the iCon of Chinese capitalism

Walking past Apple's sleek shop along London's Regent Street on Sunday, my wife asked me what I wanted for Father's Day.

"An iPad?" I ventured, half-jokingly.

"Are you sure you want one? Don't you care how they're made?" came her disapproving reply.

from MediaFile:

Apple and Twitter: A New Power Duo?

One big winner coming out of Apple’s developers’ conference on Monday is Twitter.

Apple announced that the Internet microblogging service will be integrated directly into future versions of the iPhone and iPad software.

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