Maltastar
Measuring Political
Leadership
I am gaining the impression that finally people have started reasoning with their head and no longer with their heart and are increasingly questioning whether it was wise for Alfred Sant to re-contest for leadership following two wide general election defeats. They are also raising doubts as to whether it was wise to hold the leadership contest before the Party had had time to analyse the reasons for the bad performance at the polls last April.
I am meeting an ever larger number of grassroots who are questioning on what basis the leader has assumed that the analysis work being undertaken by an autonomous working group will absolve him from any serious guilt? How has he come to conclude before the analysis work is concluded, that his continued leadership of the party is in the interest of giving MLP the best prospects for winning the next election?
When discussing these issues the question crops up as to what criteria to adopt for measuring the efficiency of a political leader. One of my colleagues has suggested that four criteria should be adopted for such purpose:
Zero Interest
When two weeks ago the European Central Bank (ECB) surprised the market by going for a bold cut of 50 basis points in the Euro interest rate bringing it down to a record low of 2%, the ECB President Duisenberg was emphatic in stressing that he was not giving any signal for future direction of interest rates.
But it seems that as in politics, a week can be a long time even in economics. And both the most influential central bankers in the world, Greenspan from the US Federal Reserve and Duisenberg were last week giving signals that they are preparing to fire more of their diminishing dry powder reserves in the form of further cuts in interest rates.
In fact it is now widely expected that the Federal Reserve will next week cut US dollar interest rate by a minimum of a quarter and a possibly one half of a percentage point from the already low level of 1.25%. It is also widely expected that the ECB will also trim interest rate downwards again in July in order to check the strength of the Euro against the dollar.
What is making Monetary Authorities cruise quite fast towards the zero interest rate level that have prevailed inJapan
Stock Exchanges have recovered substantially from their lows of mid-March and investors seem to be pricing in strong economic growth for the last quarter of 2003 believing that the interest rate cuts will finally start delivering where prior cuts have failed.
The only way that both investors driving up equity prices world-wide and the main Central Banks can be simultaneously right is if there results a period of inflation-free strong economic growth. This is quite a myopic wishful thinking scenario. It assumes that growth in consumption and consumer confidence will fill existent spare production capacity and benefits from technological efficiencies. This will keep the unit cost of products from rising threatening future inflation and will avoid constraining Central Banks to engineer sharp turnarounds in their interest rate policies.
This is quite uncharted territory in post-war economic history and we have few benchmarks to guide what we can realistically expect. The issue as to whether bonds will again outperform equities this year is not yet closed and the possibility that both would perform well, quite an unusual outcome, is also possible given the experience of the last three months.
It all depends on the consumer. If the consumer can sustain a bright outlook towards economic growth long enough until this could start being reflected in higher payrolls than things would work out for the better. On the other hand if the consumer gives up confidence under the pressure of falling payroll numbers and insecurity about their own future job retention, than not even zero interest rates can force the consumer to spend the economy out of deflation.
When two weeks ago the European Central Bank (ECB) surprised the market by going for a bold cut of 50 basis points in the Euro interest rate bringing it down to a record low of 2%, the ECB President Duisenberg was emphatic in stressing that he was not giving any signal for future direction of interest rates.
But it seems that as in politics, a week can be a long time even in economics. And both the most influential central bankers in the world, Greenspan from the US Federal Reserve and Duisenberg were last week giving signals that they are preparing to fire more of their diminishing dry powder reserves in the form of further cuts in interest rates.
In fact it is now widely expected that the Federal Reserve will next week cut US dollar interest rate by a minimum of a quarter and a possibly one half of a percentage point from the already low level of 1.25%. It is also widely expected that the ECB will also trim interest rate downwards again in July in order to check the strength of the Euro against the dollar.
What is making Monetary Authorities cruise quite fast towards the zero interest rate level that have prevailed in
Stock Exchanges have recovered substantially from their lows of mid-March and investors seem to be pricing in strong economic growth for the last quarter of 2003 believing that the interest rate cuts will finally start delivering where prior cuts have failed.
The only way that both investors driving up equity prices world-wide and the main Central Banks can be simultaneously right is if there results a period of inflation-free strong economic growth. This is quite a myopic wishful thinking scenario. It assumes that growth in consumption and consumer confidence will fill existent spare production capacity and benefits from technological efficiencies. This will keep the unit cost of products from rising threatening future inflation and will avoid constraining Central Banks to engineer sharp turnarounds in their interest rate policies.
This is quite uncharted territory in post-war economic history and we have few benchmarks to guide what we can realistically expect. The issue as to whether bonds will again outperform equities this year is not yet closed and the possibility that both would perform well, quite an unusual outcome, is also possible given the experience of the last three months.
It all depends on the consumer. If the consumer can sustain a bright outlook towards economic growth long enough until this could start being reflected in higher payrolls than things would work out for the better. On the other hand if the consumer gives up confidence under the pressure of falling payroll numbers and insecurity about their own future job retention, than not even zero interest rates can force the consumer to spend the economy out of deflation.
I am gaining the impression that finally people have started reasoning with their head and no longer with their heart and are increasingly questioning whether it was wise for Alfred Sant to re-contest for leadership following two wide general election defeats. They are also raising doubts as to whether it was wise to hold the leadership contest before the Party had had time to analyse the reasons for the bad performance at the polls last April.
I am meeting an ever larger number of grassroots who are questioning on what basis the leader has assumed that the analysis work being undertaken by an autonomous working group will absolve him from any serious guilt? How has he come to conclude before the analysis work is concluded, that his continued leadership of the party is in the interest of giving MLP the best prospects for winning the next election?
When discussing these issues the question crops up as to what criteria to adopt for measuring the efficiency of a political leader. One of my colleagues has suggested that four criteria should be adopted for such purpose:
-
Loving
the Party more than one loves oneself
-
Keeping
the team together united by a strong vision
-
Getting
results and achieving objectives so as to translate the vision into
reality
-
When
objectives get missed with untypical regularity knowing that it is time to go so
as to make it less painful for the Party to choose new leaders that can take it
to its objectives.
Not much to argue about I think. I
shall certainly be adopting these criteria when the full facts of what led Labour to its defeat last April are made known through
publication of the analysis report now under way.
Portfolio
Performance
Strategy 1 No Risk Lm1001.141
Strategy 2 Medium Risk 1002.650 (after Lm40 charges)
Strategy 3 High Risk Lm 1001.880 (after Lm20 charges)
Strategy 4 High Risk For Curr. 1015.800 (after Lm40charges)
All quotes are net of withholding tax on profit or interest where applicable, and use latest available price quotes and rates on Saturday 14th June.
Strategies 2 and 4 gain from the continued strength of the international equity prices last week. The greatest gain was made by Strategy 4 which is all equity based with a great bias versus technology and biotech shares. This strategy is also USD over-weighted and gains when the USD moves well relative to the Euro.
Strategy 3 also moved ahead as Maltacom shares added 2c0 to close the week at 92c0.. Strategy 1 accumulates interest at 3.5%.
No changes were made to the portfolio.
Strategy 1 No Risk Lm1001.141
Strategy 2 Medium Risk 1002.650 (after Lm40 charges)
Strategy 3 High Risk Lm 1001.880 (after Lm20 charges)
Strategy 4 High Risk For Curr. 1015.800 (after Lm40charges)
All quotes are net of withholding tax on profit or interest where applicable, and use latest available price quotes and rates on Saturday 14th June.
Strategies 2 and 4 gain from the continued strength of the international equity prices last week. The greatest gain was made by Strategy 4 which is all equity based with a great bias versus technology and biotech shares. This strategy is also USD over-weighted and gains when the USD moves well relative to the Euro.
Strategy 3 also moved ahead as Maltacom shares added 2c0 to close the week at 92c0.. Strategy 1 accumulates interest at 3.5%.
No changes were made to the portfolio.
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