Executive Global Winter 2020 by Executive Global

www.executive-global.com | Winter 2020

Productivity | Strategy | Profitability

MICHAEL PENTO

Quantitative tightening and the repo market

JOHN WILLIAMS

Prognostications for 2020 and beyond

HARRY DENT

The asset bubbles must now burst

LINDIWE RAKHAREBE

Profitability in conventions and events

THE MULTI FAMILY OFFICE

Romain Gerardin-Fresse discusses intergenerational wealth and estate planning for UHNWIs

INSIDE

UK £4.50 Europe €5 USA $7

WHISPERING ASPENS

RING CANYON RANCH

Cuchara, CO / $1,400,000 / 160± Acres

Columbia County, WA / $1,100,000 / 755± Acres

BACHMAN & ASSOCIATES 719.742.5551 / DiscoverBachman.com

BLUE MOUNTAIN FARM & RANCH 509.382.2020 / BlueMountainFarmandRanch.com

DAPHNE 1,423 - PRICE REDUCED

TBD WALLER SPRING CREEK ROAD

C21 FARM & RANCH HARVEY PROPERTIES 903.785.8484 / C21Farm-Ranch.com

DEITRA ROBERTSON REAL ESTATE, INC. 832.642.6789 / IKnowRanches.com

Franklin County, TX / $3,213,000 / 1,423± Acres

BLUE CREEK RANCH

Waller County, TX / $1,395,000 / 39± Acres

SANGO WILDLIFE CONSERVANCY

Gunnison County, CO / $29,500,000 / 10,650± Acres

Sango, ZIMBABWE / Price Upon Request / 148,263± Acres

EAGLE LAND 907.209.4300 / EagleLand.com

INTERNATIONAL SPORTING PROPERTIES 207.449.2918 / InternationalSportingProperties.com

INTERNATIONAL

SPORTING Harvey Properties

PROPERTIES Marketing to the World

A M E R IC A N F A R M A N D R A N C H . C OM

BENTWATER FARM

BULL CREEK RANCH

Montgomery County, TX / $3,950,000 / 81± Acres

Park County, WY / $10,000,000 / 1,502± Acres

JACOBS PROPERTIES 936.597.3301 / TXLand.com

POWERS LAND BROKERAGE 307.217.2777 / PowersLandBrokerage.com

LOMETA RANCH

IRRIGATED RICE/ROW CROP FARM

SUPERIOR TOWN & COUNTRY REALTY 512.749.8509 / SuperiorTownandCountry.com

281.235.5566 / TaylorLandInvestments.com

Lometa, TX / $1,299,000 / 346± Acres

LAKE TRAVIS RANCH

Brazoria County, TX / $7,492,500 / 1,500± Acres TAYLOR LAND INVESTMENTS

RUDIO MOUNTAIN RANCH

Marble Falls, TX / $10,975,000 / 807± Acres

Dayville, OR / $27,950,000 / 24,178± Acres

TEXAS RANCH BROKERS, LLC 512.756.7718 / TXRanchBrokers.com

THE WHITNEY LAND COMPANY 541.278.4444 / WhitneyLandCompany.com

A M E R IC A N F A R M A N D R A N C H . C OM

Highest % of PhD graduates in Canada

Investor Friendly City

Affordable Hub for Industrial Land R&D Centres

#1 Small City for FDI (Financial Times UK)

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CONTENTS

WINTER 2020

EXECUTIVE GLOBAL

46 EDITOR-IN-CHIEF John Marshall HEAD OF PRODUCTION Peter Green EDITORIAL Thomas Hughes, Rachel Smith, Oliver Taylor, Shannon Berkley ART DIRECTION & DESIGN Stormcues Limited BUSINESS DEVELOPMENT Steve Williams, David Warmann, Jack Moore, David Goldwin, Mike Walsh COMMERCIAL DIRECTOR Luke Francis PHOTOGRAPHY James Drake, Sarah Dean Executive Global Magazine is published by: Stormcues Limited 405 Kings Road Chelsea London SW10 0BB Tel: +44(0)207 993 4782 www.executive-global.com ADVERTISING advertising@executive-global.com EDITORIAL editorial@executive-global.com The information in this publication has been obtained from sources the proprietors believe to be correct, however no legal liability can be accepted for any errors. No part of this magazine may be reproduced without the consent of the publisher. Executive Global is registered trademark ® of Stormcues Limited. Copyright © 2020 Stormcues Limited. All Rights Reserved.

• Productivity, Strategy, Profitability

FRONT COVER FEATURE The Multi Family Office

Nothing new under the sun 24

Our cover feature and CEO Profile highlights the activities of French Riviera-based crisis management firm in our interview with Romain Gerardin-Fresse, Founder and CEO of Gfk Conseil-Juridis.

Executive Global’s bespoke series of interviews on Productivity, Strategy, and Profitability. We caught up with Lindiwe Rakharebe, CEO of Durban ICC, to discusses MICE and business tourism in South Africa.

Reverse tax evasion

34 36

Dr. Knut Olsen, discusses the relationship between taxpayers and tax authorities.

FDI & INWARD INVESTMENT

16 City of Abbotsford 18

Harry Dent reports on the danger zone for the next financial crisis as cycles converge.

Gold glitters as Fed loses control 22 John Williams explains why precious metals offer stability in uncertain economic times.

Europe-wide MMT

Donna Gillespie, looks at the perfect intersection of people, place and price.

Michael Pento again examines activity in the repo market and its impact upon Central Banks.

Now the bubble must burst

Shannon Berkley reports on historical episodes of economic turmoil in the United States.

Kingston, Ontario

FINANCE The Grimm Repo - Part Two

A history of American crises

Thomas Hughes, comments on the potential idea of ‘QE 2.0’ for the European continent.

PROFITABILITY Profitability in MICE

Claudio Grass, explores the concept of MMT. Is it true that deficits truly ‘don’t matter?’

We explore the benefits, advantages and opportunities for investors and companies relocating or expanding into Abbotsford.

The elite aircraft registry of choice 42 Why The Cayman Islands Aircraft registry is the main option for aircraft owners and operators.

Crooked Run Farm 186 ACRES 610 PIN OAK ROAD, PAW PAW, WEST VIRGINIA, WV 25434

Magnificent custom full log and stone 8,000 SF home on 186 acres of mostly forested land. Total privacy with big inground pool, lit tennis courts, 3 car attached garage, fabulous equestrian facilities. A mile of two lane paved roads, multiple streams, and manicured walking paths. House features all white oak floors, 35’ high great room with stone fireplace, India granite kitchen, full gym and sauna, professional office. Multiple decks, porches, stone terraces. Two separate apartments for guests or managers. A great corporate, non-profit or association retreat, just 100 miles from Washington DC, 25 minutes from Winchester, VA. 87 miles to Washington Dulles International Airport. “Taxpayers may defer tax on eligible capital gains by making an appropriate investment in a Qualified Opportunity Fund and meeting other requirements.’’ IRS.GOV QUALIFIED OPPORTUNITY ZONE HS 1000148763 — $3,700,000 Please see video tour of this property at snyderbailey.com

Snyder Bailey & Associates The Best People, The Best Properties for over 30 Years

CAROLYN SNYDER BROKER

Office - 304 267 1050 | Cell - 304 283 1537 www.snyderbailey.com

CONTENTS

WINTER 2020

EXECUTIVE GLOBAL

76 32

16 Believe in Barbados

Rachel Smith writes on why Barbados is such a great location for investment and business.

Visit the picturesque Baden-Baden 46 Oliver Taylor on why Baden-Baden has been such an attractive location for European elite.

A newly ordered world

AVIATION Private jet travel with NetJets

56 The Plaza Hotel New York

Rachel Smith reports on the unrivalled flexibility, comfort and opulence of private jet travel.

48 The Austrian Airlines experience 58

Pforzheim Jewellery Museum unveil treasures from the Napoleonic era in this exhibition.

Thomas Hughes reports on Austria’s flagship carrier, also sampling the flying restaurant.

The Honda HA-420

TECHNOLOGY

Oliver Taylor reports on Honda’s development and implementation of its own aircraft model.

Financial Trading in 2020

Thomas Hughes looks at why it is such a great time to be a trader with today’s technology.

The next decade Server computers for business

Thomas Hughes analyses the best computing configurations for business expansion.

Oliver Taylor, reports on the effectiveness of corporate branding for large corporations.

• Productivity, Strategy, Profitability

Andrew Main Wilson, looks at a new series of research reports on Business School strategies.

Corporate branding

Peak Credit

Oliver Taylor analyses the case for investing for capital gains vs cash flow with property.

Country Club Properties

With such scenery, is there anything better than living in the Highlands, North Carolina?

Crooked Run Farm

62 The Ossiano Restaurant

Peter Lorange on coming changes to higher education in business and management.

54 MBA Research

Rachel Smith reports on the majestic, towering landmark that is New York’s legendary hotel.

We look at the private estate that is the ultimate CEO, corporate venue or Hunter’s Retreat.

EXECUTIVE EDUCATION

52 A flexible future

Shannon Berkley looks at the potential impact of a vast shift in technological advancement.

LUXURY LIFESTYLE

Shannon Berkley looks at Dubai’s no.1 luxury underwater bar and restaurant.

March 3, 2020 New York Athletic Club, New York, NY

The Big Apple is host to Opal Group’s Family Office Winter Forum. Whether by bridge, tunnel, or taxi, the schlep to Times Square will be well worth it! Held in one of the world’s largest financial capitals, this one-day event perfectly aligns with the culture of the city that never sleeps. Families and financial managers will enjoy a fast pace day of interactive panel discussions and networking breaks. With over 500 delegates there is always an opportunity to meet potential clients. While in the session room, trending investment topics will be addressed by some of Wall Street’s most sought after managers and advisors. Themes of family governance, alternatives, and impact investing, will have even the most cynical of New Yorkers believing in their financial future. The Family Office Winter Forum will leave each delegate stimulated, enlightened and in that New York State of Mind.

SPONSORSHIP & EXHIBITING OPPORTUNITIES ARE AVAILABLE

If you are interested in attending, sponsoring, speaking or exhibiting at this event, please call 212-532-9898 or email info@opalgroup.net

opalgroup.net

Where the World meets Africa The Durban International Convention Centre (DURBAN ICC) is a worldclass facility, renowned for its high standards of service excellence and has successfully staged some of the world’s most prestigious and complex events. The five-star graded centre prides itself on being a leading venue for meetings, business events, conferences and exhibitions on the African continent. However, this is not their own opinion, but rather the overwhelming feedback received from their clients who have voted it in the top 1% of Convention Centres worldwide, as well as “Africa’s Leading Meetings and Convention Centre” no fewer than 17 times! The DURBAN ICC is a versatile venue of enormous dimensions, flexible enough to meet any need, no matter how extraordinary. The Centre offers the largest column-free, multipurpose event space on the African continent. The Centre’s main convention area of 11,600m² can be opened up to form one enormous venue or subdivided using operable walls into 22 separate convention halls of various sizes. International and

national conventions, exhibitions, sporting events, concerts and special occasions of every kind can be accommodated. Flexibility and versatility are key factors in the design of this state-of-the-art, technology-driven Centre. Building on the legacy of a number of important events including COP-17 in 2011 (the second largest in history), the biggestever 21st International AIDS Conference in 2016, the 69th World News Media Congress, the International Society of City and Regional Planners Congress (ISOCARP) 2016, the World Economic Forum on Africa, Africa’s Travel Indaba and 4th BRICS International Competition Conference to name a few, the centre continues to attract major international events to the City. The DURBAN ICC is committed to broadening the economic impact of the events and tourism sector through contributing to inclusive economic growth and economic transformation.

DURBAN ICC Commits itself to Service Excellence

Widely known as South Africa’s entertainment “playground”, the City of Durban, which lies along the extensive KwaZulu-Natal coastline, captures the best of the whole of Africa, boasting beautiful beaches, warm weather all year around and a melting pot of cultures. Delegates visiting the Centre can look forward to superb standards of culinary excellence and hospitality. As part of the Durban ICC’s gourmet evolution over the past 21 years in the industry, they are completely reinventing their culinary offering in order to showcase some of Durban’s authentic African Cuisines. Furthermore a wide range of new innovative packages have been designed to meet the unique needs of each target market, at the best possible rates. The Durban ICC offers you first-world convenience and a proudly African meetings experience. The Centre is fully Wi-Fi enabled and connectivity is complimentary to its delegates and guests. The Centre is located 30-minutes from the King Shaka International Airport and over 3,600 Hotel rooms are within a 10-minute walk of the Centre.

*Voted “Africa’s Leading Meetings and Conference Centre” 17 times at the World Travel Awards. ISO9001, ISO 14001, ISO22000 and OHSAS18001 certified. TGCSA 5-Star Graded and AIPC Quality Standards Gold Certified.

What makes the Durban ICC Africa’s Leading Meetings and Convention Centre? The 112,000m2 Durban ICC is renowned for 5-star service and facilities, state-of the-art technology, mouth-watering African cuisine, and of course, its unique location on Durban’s sun-drenched shores. What sets it apart, though, is the unique African soul that infuses and inspires every meeting, conference, exhibition and event to create truly unforgettable experiences.

DURBAN ICC FAST FACTS • Durban International Convention Centre (DURBAN ICC) comprised of the DURBAN ICC Arena and the Durban Exhibition Centre. • Voted “Africa’s Leading Meetings and Conference Centre” by the World Travel Awards no fewer than 17 times in 19 years and continuously strives to deliver excellent service. • Largest flat floor, column-free multi -purpose event space in Africa. • Maximum capacity at the complex: 22000 delegates, 112 000m2 of flexible event space • Ranked in the world’s Top 17 Convention Centres by the International Association of Congress Centres (AIPC); and • The Centre is located 30-minutes from the King Shaka International Airport and over 3,600 hotel rooms are within a 10-minute walk of the Centre.

AFRICA’S LEADING CONVENTION CENTRE

EDITOR NOTE

Foreword

EXECUTIVE GLOBAL Editor’s Note

Foresight is 2020 In the quickening Age of Information and with knowledge on almost any subject at our fingertips, there is one thing every investor can be sure of in 2020: the big earners are staring everyone in the face right now. The best asset classes for investment and opportunity at the moment are not a wellkept secret, and investors can shortlist them through relatively untechnical analysis at this early stage of the year already. oday’s investor is both pleasurably swamped with copious trading intel and running the risk of being suffocated by it. That significantly more, faster and better intel is available today is undeniable, and investors’ ability to zero in on likely winners is stronger than ever. It has become exponentially easier for investors to make intelligent decisions and take calculated risks in managing their portfolios. Precious metals have been suppressed for so long, particularly the industrial metal silver which remains incredibly undervalued. Knowing that an American election is happening this year and that China will likely buy big all round in moments to present as maintaining its growth rate are both good insights into the year ahead. With a dirty derivatives market and a highly dynamic (and possibly scary) housing market on the table, precious metals are glowing. The real estate bubble in the world’s major cities is a hangover from the credit boom of the 1990s. Cities like London, New York, Paris, Toronto, Zurich and Los Angeles, looking at the Case-Shiller Price Index, are touting housing at prices significantly higher than their rural counterparts. Occupancy is key, as is diligence for any investor. The future of robotics and automation is rushing towards us, living up to the tech pace and profit potential familiar to the arena. Expect huge developments from AI in 2020, and those that either engage almost everyone or those that truly remove the barriers of impossibility will also pay the most. The 2020 arena facing investors last saw a recession in 2008 — something key to remember. It is now populated by

executive global • Productivity, Strategy, Profitability

negative yielding junk bonds, Zero and Negative Interest Rate policies, an Inverted Yield Curve, Yield Curve Control, and now the crazy notion of Modern Monetary Theory (MMT) — hyperinflating the currency supply. Interest rates have never been this low. While some assets perform well in times of downturn and crisis, others only do well in a booming economy. The longer we go without a market correction (or crash), the more inevitable and potentially destructive it might become. Foresight lies in preparing for this correction, the ‘black swan’ moments. There has also been significant repo market intervention with the Federal Reserve having to pump billions of dollars into markets just to keep the world economy afloat — all potentially explosive kinetic energy waiting to be unleashed. With all of the advanced information providing insight into the inevitability of a huge market correction, and the potential for certain asset classes to benefit from a violent reversion to the mean, for the sake of profitability, investors’ foresight should certainly be 2020 going forward. EG

John Marshall John Marshall Editor-in-Chief, Executive Global

Baden-Baden

the Spa & Culture Town

Casino Baden-Baden

Friedrichsbad

Museum Frieder Burda

Seldom is it easy to find a cosmopolitan city in the heart of the countryside that offers both tranquility and excitement. Yet, that is exactly what Baden-Baden is; an idyllic international spa town in Germanyâ&#x20AC;&#x2122;s Black Forest. Established more than two thousand years ago as a place for people to reconnect with themselves, the city has since become a place of enchanting natural beauty with a spectacular variety of opportunities for adventure and excitement.

Baden-Baden Tourism Board Phone +49(0)7221 275 200 Email info@baden-baden.com www.baden-baden.com/en

A N ew l y Or de r Wo rld Tr fr Na Er

easu r om t h pol eo a

Schmuckmuseum Pforzheim

ed 19. 10. 2019 through 01. 03. 2020

e nic Sabre of honour with the coat of arms of the margraviate of baden Paris, beginning of 19th century Badisches Landesmuseum Karlsruhe Foto Thomas Goldschmidt

FINANCE

Pento Portfolio Strategies Photo: mervas / Shutterstock.com

The Grimm Repo - Part Two In 2019, global central banks did a complete 180 degree turn with their monetary policies. After a half-hearted attempt to normalise interest rates during 2018 failed miserably, the total assets of the Federal Reserve, European Central Bank, Bank of Japan and People’s Bank of China climbed back to $19.9 trillion by December of 2019 –very close to their 2017 highs. Article by

Michael Pento

CEO, PENTO PORTFOLIO STRATEGIES

f you squint your eyes, you can see the feigned attempt to normalize monetary policy in the chart titled Total Assets of Major Central Banks. Yet, just this marginal move caused panic in markets. Chairs Yellen and Powell described the Fed’s Quantitative Tightening (QT) program as something that would be running in the background and as boring to the markets as watching paint dry. However, it turned out to be the catalyst for a freeze in the junk-bond markets and a stock melt-down by the end of 2018. On December 19, 2018, the Fed implemented its fourth rate hike of the year, increasing the Fed Funds Rate by 0.25% from 2.25% to 2.5%, and signalled two additional rises in 2019 were in store. At that point, Powell assured that the Fed balance sheet runoff was on ”autopilot.” ”We thought carefully about how to normalise policy and came to the view that we would effectively have the balance sheet runoff on automatic pilot and use monetary policy, rate policy to adjust to incoming data. I think that has been a good decision. I think that the runoff of the balance sheet has been smooth and has served its purpose and I don’t see us changing that.” But the Fed’s “autopilot system” had a software glitch so dangerous that it would have made Boeing notice--because it almost immediately led the market to nose-dive. That week, the Dow Jones Industrial Average (DJIA) recorded its biggest weekly loss in more than a decade, and, on December 24, the S&P 500 entered bear market territory on an intraday basis. As a result, both indexes finished the year with the largest annual losses since 2008. The Fed’s autopilot system was quickly turned back to manual, but not before creating significant dislocations in

the market. On March 20, 2019, the Fed announced that the paint had started to peel and was intent on soon ending its QT program. FURTHER DEVELOPMENTS Four months later, on July 31, the Fed announced its first interest rate cut since December 2008 from 2.5% to 2.25%. The reduction of interest rates was billed not so much as a rate-reduction cycle but as a “mid-cycle adjustment.” After adding almost $3.60 trillion in assets to its Balance Sheet in the wake of the Great Recession, in an act self-described as a “profile in courage,” the Fed was only able to unwind a cowardly $0.75 trillion. Leading one to conclude no one at the Fed had the real courage to normalise. But the damage was already done. The Fed’s unprecedented destruction of $100’s of billions in base money supply left banks with a shortage of reserves. The QT process took excess reserves down from $2.2T, to $1.4T. That may still sound like a lot of liquidity, but given the demand for US dollars and the bias on the part of banks to hoard cash, it is

• Productivity, Strategy, Profitability

not nearly enough. In any case, the Fed’s prediction that its QT program would be a harmless and boring exercise goes down as another stark illustration of the utterly opaque condition of its crystal ball. The trouble in money-market land began on September 17 of 2019, when the repo rate rose above 10% for certain loans, as banks refused to lend money--choosing instead to hold on to their cash. The Repo market consists of overnight secured lending between banks and is influenced by the Fed Funds Rate (FFR). The Effective Fed Funds Rate (the actual rate banks get access to unsecured loans) spiked well above the high-end of the Feds target. By October 15 of 2019, the Federal Reserve realised this was not a transitory problem and began buying short-term Treasury debt at an initial pace

FINANCE

Pento Portfolio Strategies

GLOBAL CENTRAL BANKS MUST STOP THEIR GROSS MANIPULATION OF SOVEREIGN DEBT YIELDS AND ALLOW INTEREST RATES TO RISE FROM THE CURRENT INSANE LEVELS.

of $60 billion a month. Chair Powell has assured markets its purchases of short-term Treasury bills would continue into the second quarter of 2020. But just don’t call it QE: Fed officials contend these purchases are nothing like the bond-buying stimulus campaigns employed by the central bank between 2008 and 2014. The basic mechanics of this ”non-QE” are exactly like QE’s 1, 2 & 3. The Fed is expanding its balance sheet and buying bonds for the purpose of providing liquidity for the banking system. This means certain financial organisations out there are seriously hurting for cash. Otherwise, they would never have needed to pay 8% over the current borrowing rates targeted by the Fed. The truth is there is an acute dollar shortage that has formed, which was caused by the drainage of

liquidity from the Fed’s QT program. The fragility of the Repo market is especially concerning given its attenuation following the credit crisis a decade ago. Banks are simply required to hold more reserves now than before 2008, and around $750 billion of those reserves were taken away and burned due to QT. Therefore, the good news is this current crisis is not yet similar to 2008, where distressed assets were being hypothecated by insolvent entities—at least not at this point. The bad news is, what we have now is a liquidity crisis so acute that solvent financial institutions were having to exchange high-quality assets for overnight loans at double-digit interest rates. Just imagine how ugly things will get in the Repo market once those assets become impaired, and the borrowing institutions become insolvent during the next recession. For those that still doubt the fragility of markets and the economy, just remember the complete shutdown of the junk bond market and plunge in asset prices that occurred at the end of 2018—the Russell 2000 lost 25% of its value from September to the end of the year. Wise investors will understand that the current economic construct clings tenuously to the misplaced hope that central banks can keep the paper-thin skin on these asset bubbles from bursting. Investors are now dealing with a protracted earnings recession, anaemic global growth, dysfunctional money markets, an inverted yield curve, a virus that has taken the Chinese economy offline, a massively overvalued equity market, a debt-saturated global economy and governments that are without sufficient fiscal and monetary room to help. This illustrates clearly the tenuous nature of the bond bubble and that it will someday implode like a supernova---sending yields skyrocketing on a long-term basis. However, it most likely does not yet mark the start of the epoch debt bubble debacle that is in store. We will need a surge of inflation expectations or the credit markets to shut down for that to occur. Nevertheless, we are moving closer to that eventuality every day. THE ONLY REAL SOLUTION HERE IS TO LET MARKETS FUNCTION FREELY Global Central Banks must stop their gross manipulation of sovereign debt yields and allow interest rates to rise from the current insane levels. Having $15 trillion worth of negative-yielding sovereign debt around the globe is unprecedented and extremely dangerous. We must let real estate prices fall to a level that allows first-time home buyers the ability to handle a 20% down payment and to service the mortgage. Stock prices should never be 1.6 times the size of the underlying economy, as they are today. The normal level for this ratio is 0.8. The government should also seek to cease propping up the financialisation of the economy, which is the primary destroyer of the middle class. Debt must be restructured instead of inflated away. Then, after this great reset, we can finally have a long period of viable prosperity for all. The question is, do we have the courage to take the pain necessary to achieve that goal? The economic chaos is coming anyway; the sooner it occurs, the less painful it will be. EG

For further information, please visit: www.pentoport.com www.executive-global.com

Winter 2020 •

FINANCE

Economy and Markets

Central Banks Accidentally Create the Greatest Financial Asset Bubble in History: Now It Must Burst I have spent years documenting how pervasive and global this current bubble is. It’s the greatest financial bubble in all of history. It’s in stocks, real estate, bonds, commodities (up until 2008), Bitcoin, yachts, wines, art, collectibles…everything. Article by

Harry S. Dent Jr. AUTHOR & EDITOR, ECONOMY AND MARKETS

he rich are getting richer, especially since this bubble really got going in 1995 with the first tech stock bubble. The top 20% own 88% of the financial assets and control 50% of consumer spending, and the top 1% near 50% and 20%, respectively. So, they have an outsized impact on the economy. They also have to park their newfound riches somewhere, so they are the ones driving up these great financial asset bubbles. And the central banks are feeding this – unintentionally at first, but intentionally now. They’re the ones who’ll lose the most when the bubble bursts. The point of this article is threefold. To make clear that: 1. The central banks did not intend to create this monstrous financial asset bubble – it was a byproduct of its aggressive and risky stimulus policies and the only thing that actually helped – so they had to keep doubling down, which can only end badly as bubbles always do. 2. There are two ways to create “money.” The traditional way is bank lending to multiply M2 or money supply/bank deposits. That creates immediate GDP and spending growth. The second, more powerful way, is financial assets, which create a wealth effect with a minor impact on short-

term spending and a major impact on long-term spending. But such assets can disappear suddenly and dramatically. 3. Stocks were the single biggest financial asset to benefit instead of being the worst to decline in such a winter season – without such massive QE to fight deflation and debt/bubble deleveraging. Hence, the paradox of the greatest stock bubble in the worst economy and recovery in U.S. history – and worst crash since 1929-32, just ahead likely between 2020 and 2022-23. The problem with financial assets is that when they bubble dramatically – which is rare and hasn’t happened broadly since the 1920s – they lose most of their value (89% for stocks into 1932 back then) and don’t come back for decades. Hence, that form of longer-term wealth only lasts as long as the bubble does (and they always burst). And we are very far into the greatest bubble in history. Hence, a lot of long-term wealth is about to be destroyed for decades, and mostly held by the most affluent. FINANCIAL ASSET PRICE INFLATION Both of these forms of money can and do deflate. M2 most rarely, as in the early 1930s, and most likely again in the three to four years ahead. But financial assets deflate more severely, and more often! We’ve already seen three major stock crashes well beyond the 20% maximum corrections in the less volatile spring boom from 1942-68: 40% in 1987, 46% in 2000-02, and 54% in 2007-09. The fourth is ahead at 80+%, by my calculations. Real estate deflated 34% between 2006 and 2012, more than the 26% crash in the Great

• Productivity, Strategy, Profitability

Depression from 1929-33. The next real estate crash should be 40% to 50%... and recall how much damage the first one did to households and the banks! I showed in the September 2019 issue of my flagship newsletter, The Leading Edge, how there is always a final bubble in the winter season from government stimulus against the first major bubble crash. The last was the 1932-37 bubble after the

AND THE CENTRAL BANKS ARE FEEDING THIS UNINTENTIONALLY AT FIRST, BUT INTENTIONALY NOW. THEY’RE THE ONES WHO’LL LOSE THE MOST WHEN THE BUBBLE BURSTS.

FINANCE

Economy and Markets Photo: Keep Smiling Photography / Shutterstock.com

1929-32 crash that saw a higher percentage gain than the 1925-29 super bubble, but did not come close to making new highs as it started from much lower levels. This one is just off-the-charts due to the massiveness of QE and the “should be obvious” impact more on financial assets – as that’s what the central banks are buying with this money created out of thin air. It’s not going into bank lending and money supply expansion. Hence, no consumer price inflation, as the gold bugs expected! Instead, unprecedented financial asset price inflation. MONETARY METHADONE The point: QE especially creates financial asset bubbles due to its unique way of creating money — buying government bonds, and sometimes even stocks (like with Japan) — which puts money directly into the financial markets and inflates prices while artificially lowering interest rates. Normal measures of making reserves more available or lowering short term interest rates are designed to make bank lending more expansive – to create M2 and GDP growth from leveraged lending into investment in productive assets that create more jobs and profits to sustain longer-term growth – until we www.executive-global.com

over-expand, as we did into both 2007 and 1929. QE was intended to do that but didn’t, because central banks don’t really understand debt and financial asset bubbles. Companies and consumers were already up to their eyeballs in debt and capacity, so they didn’t need to borrow more money. David Stockman aptly calls that “peak debt.” Central banks started doing it and the only positive impact was the wealth effect from the asset bubble. That has been the only thing that actually ended up keeping us out of the next Great Depression – not renewed bank lending… but at the expense of the greatest bubble in history that can only do one thing: burst! We’ve become addicted to QE like a monetary drug. It makes us high through rising financial assets out of proportion to actual growth and the economy. We’re getting something for nothing. People who are high don’t make good decisions or live in reality. There are only two options for an addict: detox or die. Japan has chosen to slowly die, and they are in the emergency room on life support. I hope we finally choose – or more likely get forced to choose – to detox this unprecedented debt and financial asset bubble, instead of taking ever-more drugs to keep from coming down off the high.

CENTRAL BANKS WERE JUST TRYING TO SAVE THE BANKS AND FINANCIAL SYSTEM When the subprime loans started to default, Fed Chair Ben Bernanke didn’t see a big problem. Most economists don’t understand the history of how debt bubbles create financial asset bubbles that then have to deleverage and burst, typically very painfully. They only know they don’t want that pain or apparent failure when it threatens. But a bubble bursting is not failure! It is the system purging itself of toxins (in this case unproductive debt and financial asset bubbles) to get healthy again. That’s a big reason we came screaming out of the Great Depression, not crawling out as we’ve been these last 10 years. It’s no accident that the Fed was first created in 1913 after several decades of no central bank – and then 20 years later we were at the bottom of the greatest depression in U.S. history following the greatest stock bubble. Central banks and politicians just want to create a financial nirvana: 3-4%+ growth with 1%-2% inflation… and no recessions, ever. That is such a massive misunderstanding of how our economy and free market capitalism work, that our economists, central bankers and politicians rant like six-yearolds to me, despite their advanced educations… they know nothing! This is childish to presume. They want the same thing every consumer wants and gets in commercials and sales pitches: “a zipline to heaven.” They don’t understand that recessions help purge the system of unproductive debt and companies and jobs, like the common cold does. You suppress colds as most people do, and you often end up with pneumonia or something more serious, like cancer. You suppress and try to avoid recessions by lowering interest rates and stimulating with government spending and you end up with a depression, not a recession. And depressions almost always follow debt and financial asset bubbles like 1914-29 or 1865-73, or recently 1995-2007. The only way out of this mess is to do the opposite of what they did in the 2008/9 financial crisis: Let this bubble deflate and only reward banks and financial institutions that write off or write-down debt. That will clean the slate of unproductive debts, companies and banks to let us grow again for the next demographically destined global boom from 2023 to 2036. Let the stronger banks and companies absorb the weaker ones where appropriate. Preventing recession as we did in 2009 forward, is the wrong policy and history will show that. The investors that get out of risk assets like stocks and real estate will thrive in this great reset. The businesses and financial institutions that hunker down, focus and cut costs will survive and gain massive market share. The ones that don’t see it coming will not be around to talk about it. 2020 – 2023 is the danger zone for the next financial crisis occurring given my demographic, technological and geopolitical cycles converging. EG

For further information, please visit: www.economyandmarkets.com Winter 2020 •

PRODUCTIVITY STRATEGY PROFITABILITY

Durban International Convention Centre

PROFITABILITY

Profitability in Conventions and Events Interview with

Lindiwe Rakharebe CHIEF EXECUTIVE OFFICER, DURBAN INTERNATIONAL CONVENTION CENTRE

Our interview on Profitability with LINDIWE RAKHAREBE, Chief Executive Officer at Durban ICC, centres on the warm subtropical hub of tourism in Durban as we explore the numerous benefits for MICE and business tourism provided by the world renowned Durban International Convention Centre in South Africa. Executive Global look into the finer details of what it takes to cut the mustard as one of the preeminent institutions responsible for staging some of the world’s most prestigious and complex events.

Having hosted celebrities including Mary J. Blige, Josh Groban, and Enrique Inglesias, comment upon the global appeal of Durban ICC in relation to MICE? Durban offers all the conveniences one would LR expect from a modern convention city including a world-class airport, an efficient transport system, a wide variety of excellent hotels and restaurants, not to mention an award-winning convention centre. The city’s scenic beauty, it’s golden beaches and glorious sunshine make it an obvious choice for conference organisers. Durban, and the Zulu Kingdom are home to hundreds of kilometers of pristine beaches, world-famous game reserves and the awe-inspiring Drakensberg mountain range. EG

How fundamental has the Durban ICC been EG in attracting international business and tourism to the local economy? As South Africa’s first purpose-built LR international convention Centre, the Durban ICC played the pioneering role in attracting international events to our shores after being welcomed back into the international community. Since our official opening by former president Nelson Mandela in 1997, the Centre has welcomed literally hundreds of thousands of international visitors to South Africa. And would you subsequently include that convention centres have a fundamentally positive impact on a nation’s GDP? Absolutely! In the case of the Durban ICC, LR our economic impact has been significant. Our GDP contribution is independently measured and in the last financial year alone GBP 327-million (R6.3-billion) was contributed to SA’s GDP as a EG

result of our events. Taken cumulatively, a total of GBP 2.4-billion (R45.4-billion) has been added to the national economy since 2007 thanks to our activities. Tell us more about some of the event packages you have to offer? The packages are designed to make the LR booking process easier for the organiser and provide an excellent event experience for the delegate. As an international centre, we have a myriad of culinary options and services available, so we were very selective about the service offerings we included in our various packages to provide the guest the best value without compromising on the five-star experience they expect from us. EG

In what ways may the initiatives run by Durban ICC have a positive impact on business profitability for corporate clients? LB: Our Corporate clients can benefit from LR preferential pricing agreements, owing to the volume of business which they place with us over a given financial year. Corporate clients can also take advantage of the versatile nature of our centre, which is able to be moulded around the specific needs of the event. One example is our “Hall of Stars” which offers a tribune seating system with retractable seats which can be raised into the ceiling. This offers cinema style seating for their morning conference and a flat-floor venue for the gala dinner that evening – without the expense of hiring two separate venues. EG

What are some of the greatest challenges posed by companies wanting to run a successful convention and how may you assist here?

• Productivity, Strategy, Profitability

Successful conventions take a lot of coordination and local knowledge, which can be a challenge. We pride ourselves on working with the best service providers in the business and offer a one-stop-shop service to remove the coordination hassle from the event process for our clients. For those clients who have a challenge traveling to South Africa at a specific date, we offer a full video-streaming service so that their event content can be enjoyed by a larger audience across the globe at a time which is more convenient for them. We also offer an innovative business model in this space which opens new revenue streams for the client as well. LR

What can board level executives expect when travelling to the Durban International Convention Centre? These executives can expect a world-class LR convention experience. The Durban ICC has consistently been ranked in the top 15 convention centres in the world for the past six years in a global survey of clients of the International Association of Convention Centres. EG

You have won numerous awards. What is the secret to your success as a multi-award winning institution? It’s really no secret – we really do aim to deliver LR the friendliest, warmest service to each and every guest that visits our centre. I believe this is what sets us apart from others – our genuine service excellence, which is the heart-beat of the Durban ICC. EG EG

For further information, please visit: www.icc.co.za

I believe this is what sets us apart from othersour genuine service excellence, which is the heartbeat of the Durban ICC

FINANCE

ShadowStats

Gold Glitters as the Federal Reserve Loses Control Precious Metals Can Offer Purchasing Power Stability in Unstable Financial Times.

Article by

John Williams

FOUNDER AND ECONOMIST, SHADOWSTATS.COM

S. economic activity and financial-system stability face increasingly negative turmoil in the months and year ahead, exacerbated by the U.S. Government having lost control of its fiscal policies, at the same time the U.S. Central Bank—the Federal Reserve—has lost control of its monetary system and interest rate policies. Under such unstable circumstances, individual and private investors still have the ability to protect the purchasing power of their assets by holding precious metals. Not surprisingly, gold and silver prices recently have moved to multiple-year highs. A potential factor exacerbating these circumstances going forward, independent of long-range Federal Government and Federal Reserve fiscal- and monetary-policy malfeasance

and not otherwise considered here, is the developing risk of coronavirus pandemic. SOME HEADLINE U.S. ECONOMIC DATA ARE ROSY, BUT THE MORE-MEANINGFUL NUMBERS ARE NOT Still, as this article goes to bed in the last week of February 2020, the U.S. popular press and Wall Street are hyping a “booming” U.S. economy, with a 50-year low unemployment rate, along with a “booming” stock market. At the same time, the U.S. Federal Reserve boasts that its policies have established an economic environment of “sustainable moderate growth.” Indeed major U.S. stock indices recently have been holding at historically high levels, just off all-time highs as we go to press. Consider, though, that some of the underlying “booming” economic indicators in recent months have not been so booming. For example fourth-quarter 2019 Real Retail Sales (the industry’s usual make-or-break Holiday Shopping Season) contracted quarterto-quarter by 0.6% (-0.6%), as seen usually in recessions. January 2020 Industrial Production was on early track for a first-quarter 2020 contraction, having

declined year-to-year in fourth-quarter 2019. For the full year 2019, series such as Residential Construction, Manufacturing and New Orders for Durable Goods actually contracted against the prior full-year 2018 activity. Most recently, the Cass Freight Index®, which I consider to be the most reliable indicator of domestic freight activity, and a basic indicator of the broad economy in the United States and Canada, declined year-to-year by 9.4% (-9.4%) in January 2020. That followed annual declines of 7.9% (-7.9%) in December 2019 and 3.3% (-3.3%) in November 2019, completing 14 consecutive months of negative annual change. That pattern of severe annual deterioration last was seen at the 2007/2008 onset of the Great Recession. There are no signs here of booming or sustainable-moderate economic growth. ONE HAPPY HEADLINE NUMBER, 3.6% JANUARY 2020 U.3 UNEMPLOYMENT WAS AT A 50-YEAR LOW, ALMOST Other than for recent prior readings between 3.56% in October 2019 and 3.50% in December 2019 (a true 50-year low), the January 2020 headline U.3 unemployment rate of 3.58% was at its lowest level in 50 years. While such is great headline news, it would be more meaningful if the U.S. government had not redefined its broader unemployment measures in 1994 to eliminate accounting for the long-term (more-than-a-year) discouraged or displaced workers. That 1994 unemployment re-definition timing coincided with implementation of the North American Free Trade Agreement (NAFTA), which promised to displace, and did displace, a number of U.S. workers who simply disappeared from the formal U.S. unemployment accounting measures.

Photo: Newscast Online Limited / Alamy Stock Photo

• Productivity, Strategy, Profitability

1 See Executive Global Autumn 2018, “Returning to a Gold Standard Is Not a Substitute for Fiscal Restraint,” and Spring 2019, “Yield Curve and Recession, Unfettered Money Creation and Hyperinflation.”

FINANCE

ShadowStats

THE U.S. GOVERNMENT CAN AND DOES MASK ITS REPORTING OF ACTUAL ANNUAL INFLATION, HAVING DONE SO SPECIFICALLY SINCE THE EARLY 1980S, WITH A VARIETY OF REPORTING GIMMICKS.

At that time I undertook to estimate the broad unemployment picture as though it had continued without redefinition, and have continued to do so to date on my ShadowStats.com website. The difference today is that counting the long-term discouraged and displaced workers in the broadest unemployment measure (ShadowStats), as it had been before 1994, generates a January 2020 unemployment rate of 22.0%, versus the government’s headline broadest U.6 of 6.88% (only counts discouraged workers who have not been discouraged for more than one year), and the headline U.3 rate of 3.58% (excludes all discouraged workers and anyone who has not actively looked for work in the last 30 days). Nonetheless, related Labor Market Stress measures, such as the Employment/ Population Ratio and Participation Rate, tend to reflect an economy in recession, as opposed to full employment. The stress measures are more consistent with the ShadowStats unemployment number and a deepening recession, than the 50-year-low headline U.6 unemployment of 3.6% and an economic boom. Headline 2019 U.3 CPI-U Annual 2019 Inflation of 2.1% Reflected Heavy Reporting Gimmicks, 2019 Headline Annual Inflation Was 9.5% Net of Government Redefinitions. Also discussed and detailed on the ShadowStats.com website, I have adjusted current U.S. headline inflation for the government’s

redefinitions since the early 1980s, which specifically were aimed at reducing headline inflation, so as to reduce Cost of Living Adjustments for those on Social Security or U.S. Government Pensions (in an effort to reduce the Federal Budget Deficit). As noted in the headline, the official 2019 CPI inflation of 2.1%, was 9.5% net of the gimmicks. This concept is introduced here because those gimmicks also mask Modern Monetary Theory inflation effects. Shown in the accompanying graph, artificially depressed headline CPI masks the inflationary impact/U.S. dollar debasement with the headline CPI, versus the ShadowStats Alternate CPI and the Gold Price. Where the gold price effectively has held even against the traditional, non–gimmicked inflation, such means that over time, increases in that price of gold effectively have offset the lost purchasing power of the U.S. dollar under the effective MMT in U.S. Government and Federal Reserve financial operations. Effective Modern Monetary Theory (MMT) Does Not Work as Advertised; It Accelerates Actual Inflation and Currency Debasement Against Gold. Previously discussed in Executive Global1, despite formal comments in opposition to formal MMT by the U.S. Treasury Secretary and Federal Reserve Chairman, expansion of the Fed’s balance sheet and U.S. government federal deficit in recent years, without any offsetting constraints, have been effective MMT. Impact of Unfettered U.S. Federal Spending, Federal Deficit Expansion and Federal Reserve Balance Sheet Expansion Has Been to Explode Gold Prices, to Debase the U.S. Dollar. The U.S. government can and does mask its reporting of actual annual inflation, having done so specifically since the early 1980s, with a variety of reporting gimmicks. ShadowStats.com regularly has tracked and estimated what headline inflation would be today, net of those reporting gimmicks (see the ShadowStats Alternate Inflation Charts and the ShadowStats Commentary on Inflation Measurement. In particular, consider the ShadowStats alternate inflation, as plotted here, along with the headline CPI inflation and gold prices over time. PRECIOUS METALS PRESERVE THE PURCHASING POWER OF YOUR WEALTH AND ASSETS The accompanying graph plots historic gold prices since 1665 in New Amsterdam to date, showing the relative price of gold against headline inflation, and what inflation otherwise would have been without formal redefinitions by the U.S. government to cut cost-of-living adjustments for Social Security recipients, for example. Where holding gold covers actual inflation over time, it remains an extraordinarily valuable option, should anyone’s circumstance be caught up in an MMT or current mainstream “no inflation” economic euphoria. Expanded detail of the MMT fiasco will follow in a subsequent column. With such as background, today remains a good time to look to preserve the long-range purchasing power of one’s wealth and assets with physical holdings of gold and silver. EG

For further information, please visit: www.ShadowStats.com www.executive-global.com

Winter 2020 •

CEOPROFILE

Romain Gerardin-Fresse Founder and CEO, Gfk Conseils-Juridis

THE MULTI FAMILY OFFICE Our exclusive interview on The Multi Family Office with Romain Gerardin-Fresse, Founder and CEO of Gfk Conseils-Juridis, highlights the activities of a crisis management firm headquartered in the French Riviera with a strong global presence spanning across five continents. Executive Global discuss intergenerational wealth, estate planning, luxury lifestyle management and investment advisory with the crĂ¨me de la crĂ¨me of multi family office consultants to High Net Worth individuals, affluent families, royalty and governments. What fundamental measures do you think should be taken by elite families who want to manage their wealth through a Multi Family Office? Wealth management is a task which requires RGF different parameters of excellence. High profiles are well aware that managing their assets is a sensitive task. Before entrusting responsibility to a Family-Office, they must first ensure that it will be able to integrate all the paradigms that are specific to their personal situation. According to their needs, their Family Office must be able to adapt their response. They must be able to reconcile their desire for yield, with the need to keep a share that can be mobilised at all times, to not only meet current obligations, but also unforeseen events that may arise. The trap lies in a claim of profitability that is too high, which would expose their own funds in a reckless manner. The role of a Family-Office is to know how to advise and orient clients differently, if they realise that their wishes risk compromising the stability of their financial base. EG

â&#x20AC;˘ Productivity, Strategy, Profitability

And which are some of the most successful examples of efficient Multi Family Office wealth management? The best success is the longevity of a business RGF relationship between a Family-office and its customers. Performing in the financial markets when all the indicators are looking good is quite simple. Taking advantage of the wave of general enthusiasm is within the reach of almost all asset managers. As an indication, the mildness of the last 5 years, except perhaps 2018 which was more complicated, has enabled some funds or private banks to achieve average profitability for an intermediate profile which could reach 15%. But succeed in maintaining a positive rate of return in more critical or more difficult periods, in particular by the diversification of its investment supports and by the discovery of new outlets, such as equity investments in shared property programs in countries emerging or booming, with double-digit leverage, is a sign of intelligence and adaptability that remains one of the primary qualities of a Family-Office. I insisted on the advisory nature of a relevant Family Office. Knowing how to stay the course and keep the bar, by convincing clients not to give in to the wind of panic that can blow on the financial markets and to limit the demobilisation of their assets positioned on sharply decreasing stocks, by integrating an educational dimension, is particularly important. EG

CEOPROFILE

Romain Gerardin-Fresse Founder and CEO, Gfk Conseils-Juridis

According to their needs, their family office must be able to adapt their response.

www.executive-global.com

Winter 2020 â&#x20AC;˘

CEOPROFILE

Romain Gerardin-Fresse Founder and CEO, Gfk Conseils-Juridis

Often, the fact of concentrating all these energies gathered under the same ‘‘chaperone’’, creates a synergy which is mutually beneficial for each customer. CV ROMAIN GERARDIN-FRESSE BORN Nancy, France ALMA MATER Southampton University EXPERIENCE 2020 Member of the prestigious American Society of International Law and affiliated to the New York City Bar 2019 Opening of a practice in Dubai at 41 Sheikh Zayed Road and in New York at 445 Park Avenue 2019 Appointment as Special Advisor to the Prime Minister of the Republic of Djibouti 2018 Contributor to the Davos World Economic Forum 2018 Political-economic editorial writer for Forbes, les Echos and Entreprendre Magazine 2017 Foundation of the Gfk Conseils-Juridis Law Firm 2010 Appointment as Special Advisor to leading political figures, in charge of defining strategies 2008 Appointment as Diplomatic Advisor on Special Affairs to the Consul of the DRC

EXECUTIVE RECOMMENDATIONS

» PRODUCTIVITY

Be reactive, concise and pragmatic

» STRATEGY

To be a strategist is to be visionary

» PROFITABILITY

Profitability in business is the result of efficiency and optimisation

Clients of a multi family office typically have a net worth in excess of $50 million as bespoke services may be costly. What are the great advantages of operating a multi family office? Multi-Family office practices allow, unlike a RGF specifically dedicated family, to spread the often important costs of having a team entirely dedicated to its service while at the same time being able to benefit from the same level of quality. The role of a Family-Office is to simplify the daily life of its customers. The tasks performed are numerous and are not limited to the simple management of their assets. General administration, taxation, dispute resolution and handling current affairs are all tasks that must be accomplished with speed, efficiency and confidentiality. More than a business partner, the Family-Office is a confidant who must be present at all times when his client needs advice, guidance or must be helped in making an important decision. A Multi-Family Office performs the same role as a Single, but with a load sometimes 20 times higher, because this level of attention and availability must be equivalent for each of its customers. EG

How would you describe the typical procedure when a single family office merges to become a large multi family office? The most important thing when a Single RGF Family-Office firm decides to become a Multi Family Office is to prepare for its extension. As I said before, a Multi-Family Office performs the same role as a Single, but with a much higher load, because this level of attention and availability must be equivalent for all of its customers naturally expect the same level of excellence. Also, a mistake would be to want to go too fast, and to deteriorate the quality of service provided by an overload of work that we would not be able to bear. Before integrating other clients into its structure, the Family-Office must make sure to recruit the right contacts, who share its work philosophy, and who maintain the same ”service oriented” culture. EG

How crucial is the notion of intergenerational wealth planning to the integrity of the family office structure? One of the main pillars of the Family-Office RGF is intergenerational wealth planning, since it concentrates all of its main principles: listening,

• Productivity, Strategy, Profitability

advising, defining and applying a strategy. This can have different aspects. Sometimes a historic customer who decides to make arrangements so that his children can continue to enjoy the fruit of his savings and his life of hard work, through specifically dedicated products, others who wish to anticipate ”the after” and organise their inheritance right now, or finally some who have just sold the company they created several decades ago, and wish to associate their children and grandchildren with the fruit of the sale. Talk about how some of the connections you have formed with private banks and management funds may benefit your clients? The recognition of our values and our RGF reputation has enabled us to forge solid ties, with eminently prestigious players in the private banking and management funds sector. From Monaco to Luxembourg via London or Geneva, our firm has negotiated partnerships with the most historic and renowned financial centers. EG

What are some of the greatest challenges you have come across in your capacity as political advisor and legal expert? First of all, we must remember the similarity RGF between these two positions. You always have to be on the lookout for legal, social, environmental and geopolitical developments that can have a direct impact on those you advise. This is why I like to say that there is real continuity between the two professions / missions. One of the biggest challenges is to defend a client from external aggressions that he may face, when these are unfounded or versatile. Defending yourself against something concrete and the reverse of which can be proved is easy. One of the worst nightmares for a public figure is to deny an unfounded and hyped public allegation. Justice is a virtue sometimes complicated to impose, but which deserves to be vigorously defended. More generally, the biggest challenge is to constantly refine our updated knowledge of external evolutionary parameters, which are necessary in order to define a strategy that is perfectly effective, in record time, so that the impact is the most effective. EG

Tell us about the importance of a family office having a holistic solution for reputational and crisis management with Gfk Conseils-Juridis? EG

CEOPROFILE

Romain Gerardin-Fresse Founder and CEO, Gfk Conseils-Juridis

this, the larger the investment base, the easier it is to protect assets according to a global strategy. You are considered as one of the 10 most influential and best legal experts in Europe have been several times awarded for your work. As legal experts, describe how you are best equipped to handle punitive changes in legislation that may negatively impact wealthy clients? Legal expertise is the base, for me, of the RGF Family-Office profession. Without extensive legal expertise, it is impossible to provide solid, effective advice and provide real protection to our clients. EG

You are also philanthropists, donating 5% of annual profits to humanitarian organisations. How important is it to give back to society? We have always placed moral values at the RGF epicentre of our missions, and this has been the case since the beginning of the creation of GFK CONSEILS-JURIDIS. We have committed to participate in the development of a caring economy, where profit is a source of voluntary redistribution. Thus, each year we donate 5% of our profits to charitable works and we systematically associate our clients with three or four major projects chosen at the beginning of the year by members of our team, from public work sites. EG

ABOUT ROMAIN GERARDIN-FRESSE Romain Gerardin-Fresse is the Founder and CEO of Gfk Conseils-Juridis. Romain has a solid reputation in handling technically complex files, requiring extensive legal expertise and the implementation of administrative strategies, in particular for the purpose of restructuring or expanding a commercial structure.

ACCOMPLISHMENTS

» Grand Cross of Public Encouragement » Grand Cross of the Order of the Star of Good and Merit

» Knight in the Order of the Belgian Cross » Knight in the Order of the Star of Mohéli » Medal of Honor from the City of Nice » Medal of Honor from the City of Paris » Awarded Best Luxury MultiFamily Office 2019 by the Luxury Lifestyle Awards

» Awarded National Winner 2019 for France for

Customer and Market Engagement to €25 Million turnover by the European Business Awards

More Recently

» Awarded Best Luxury Crisis Management Firm of the Year 2019 by the European Business Magazine with 40,000 votes

» Nominated Best Business & Reputational Consultancy Law Firm 2020 by Executive Global Magazine

» Nominated ”Man of the Year 2020” by Business Worldwide Magazine

www.executive-global.com

As I said, a Family Office fully integrates the concept of personalised advice and support, in all sensitive matters and in all stages of life where its clients may need their informed opinion. Certain public figures or large groups call on our firm, in particular to entrust it with the management of a crisis situation. It can be a health scandal, a stir caused by the revelation of an embarrassing financial affair, or a more personal issue. We then have to deal with the cause and consequence of the problem. In this, beyond solving the problem or the litigation itself, we are committed to preserving or repairing the image of our client who could suffer the ravages of the sensationalised media coverage in which our society evolves today. The crisis is the typical case for which we must act with quasi-surgical precision, in record time and whose global approach must be relevant and without pitfalls. RGF

What are some of the main differences in wealth planning strategies between multimillionaire and billionaire families? In terms of wealth management, the larger RGF the financial surface, the higher the investment opportunities. The positions can be multiplied, and the investment martingales are available in larger numbers. In this, the gain is exponential to the share of assets invested. There is a phrase from John Maynard Keynes that I like very much. He said that ”markets can stay irrational longer than you can stay solvent”. In EG

Tell us about how GfK Conseils-Juridis can help with the long term business strategy of a family office? Our office is a true high-end multifunction RGF tool that meets the slightest requirement of wealthy clients. We have the best collaborators and partners in the areas of law, taxation, accounting, communication and auditing. We act like a conductor who absorbs the problems encountered by our customers and then dissects, analyses and resolves them, without neglecting any aspect. EG EG

For further information, please visit: www.gfkconseils-juridis.fr

EXECUTIVE SNAPSHOT Romain Gerardin-Fresse is regularly invited to present his insightful outlook on matters in television and written press, he also serves the needs of High Net Worth Individuals, affluent families, royalty and governments and is a contributor to the agenda of the World Economic Forum.

Winter 2020 •

FINANCE

Independent Precious Metals Advisory

Moden Monetary Theory: There Is Nothing New Under The Sun Modern Monetary Theory, or “MMT”, has been getting a lot of attention lately, often celebrated as a revolutionary breakthrough. However, there is absolutely nothing new about it. The very basis of the theory, the idea that governments can finance their expenditures themselves and therefore deficits don’t matter, actually goes back to the Polish Marxist economist, Michael Kalecki (1899 – 1970). Article by

Claudio Grass

CEO, INDEPENDENT PRECIOUS METALS CONSULTANT

MT says that the national debt means that we owe the money to ourselves, so the central bank in combination with the approval and blessings of the political branch can now together spend as much as they want without facing any consequences. In other words, we can print our way to prosperity. The only real problem according to the theory is that there is not enough money and not that resources are scarce and therefore limited. To understand the basic idea behind this, let’s use the game “Monopoly” as an example. If players decide to double the amount of monopoly-money to play with, the logical outcome will be that people start to pay much higher prices e.g. for the same amount of locations. Whenever more money is chasing the same amount of goods, prices will rise. Another lesson is that the bank will always win, especially when it has the power to

change the rules at any time during the game. The main cause for most of the problems of our days is the current central banking system. But how many people have ever thought about what money is, or how did it came into existence? How many know whether it was always used a debt security by government declaration or if it once was a property title, as it still pretends to be? Well, I can tell you that over the past decades, I haven’t met a lot of people who really thought about these questions. At the same time, our public education system and the mass media ensure that the next generation won’t think about them either. Meaningless distractions, alternative facts and daily doses of fear effectively crush most inquisitive instincts. It’s a process that Immanuel Kant recognised a long time ago and described in the following way: “First, these guardians make their domestic cattle stupid and carefully prevent the docile creatures from taking a single step without the leading strings to which they have fastened them. Then, they show them the danger that would threaten them if they should try to walk by themselves. Now this danger is really not very great; after stumbling a few times they would, at last, learn to walk.” However, examples of such

• Productivity, Strategy, Profitability

failures intimidate and generally discourage all further attempts.” With MMT, a massive shift in terms of centralisation of power will take place. Drastic changes in our current system would be possible, with a massive push away from the private sector and from individual freedom towards more government control. This is extremely dangerous. History is our witness that centralisation in the hands of government, particularly when coming from a so-called “morally superior” ideology, never had a good outcome for the people. State officials, institutional actors and those closest to the top of the power pyramid were the only ones to ever benefit from such systems. A LICENSE TO PRINT MMT essentially gives carte blanche to those interest groups to boost government spending to astronomical levels. At the same, it allows within a very short period of time a government-enforced, massive redistribution of wealth and a gigantic misallocation of capital. Over the next few years, the biggest growth potential anywhere in the market, besides the militaryindustrial complex, will be found in everything that

FINANCE

Independent Precious Metals Advisory

Photo: Video Media Studio Europe / Shutterstock.com

is related to climate change. You can be sure that governments will just print massive amounts of money and flood this sector with it, where you will find a tremendous number of formal politicians and bureaucrats creating artificial and well paid government-sponsored jobs. The European Union alone wants to spend €1 trillion until 2030 on this new sector. If Trump loses the next election, Americans can

STATE OFFICIALS, INSTITUTIONAL ACTORS AND THOSE CLOSEST TO THE TOP OF THE POWER PYRAMID WERE THE ONLY ONES TO EVER BENEFIT FROM SUCH SYSTEMS.

www.executive-global.com

also be sure that MMT will finance the same moves over there too, most likely with the “New Green Deal”. Let me quote Joan Robinson, who used to be a friend of Kalecki, MMT’s inspirer, during his days at Cambridge university. She summarised his theory as follows: “the workers spend what they earn and the capitalists earn what they spend”. Interesting, isn’t it? This is how the original Marxist thinkers defined capitalism. You might have understood that in their eyes the individual is the worker and when everything is under government control, the politicians and bureaucrats become the real capitalist. This is exactly the opposite of my understanding of capitalism, which is also only possible in a free and decentralised society. Of course, it is important to understand that the term “capitalism” has been purposefully misdefined and hijacked from the beginning by Marxist thinkers. FAR-REACHING CONSEQUENCES MMT, also conveniently facilitates other dangerous polices and ideas, that so far seemed unrealistic, like Universal Basic Income and “helicopter money” that have been particularly propagated by government sponsored economists

for the past few years. It sounds pretty cool that people will not have to work to make a living - they can lay back and enjoy money for free provided by the government. But as we all know every coin has two sides, and to me as a fan of history, and monetary history in particular, an old saying comes to my mind: “Gold is the money of kings, silver is the money of the bourgeoisie, barter is the money of peasants – and debt is the money of slaves.” It would seem that the only thing history actually teaches us is that we learn nothing from it. Nevertheless, there is hope, due to the decentralised and open-source internet and the increasing connectivity and access to knowledge. These ensure the competition of ideas, the emergence and evolution of different schools of thought, and the means for millions of people to learn about the world and to become conscious individuals with their own opinions. In addition to that, our financial system is also being challenged and pushed towards a more positive and healthy direction, as hard assets, blockchain applications and cryptocurrencies are laying the foundation for a decentralised approach, where financial sovereignty is key and privacy is respected. For now, however, we still live in a two-class society, divided between those who have to pay taxes and those who live off them. As you can imagine, the above mentioned changes and shifts are not welcome by government and its servants. They see a return to a culture of public debate, based on respect and on the premise that we can “agree to disagree”, with the humble understanding that no one knows the truth, as a threat. Therefore they enforce a de-industrialisation agenda in combination with mass-migration, using the climate hoax as an excuse to speed up a cultural suicide. They prefer to have a monoculture and are against the amazing beauty that lies in complexity, in different cultures, in different regions, with different languages and beliefs. By splicing it all together, they destroy all of them at once. At the end of the day, what MMT, the Green New Deal, QE, NIRP, Helicopter Money or any other sort of government promise or intervention have in common is that they are all collectivistic by definition, aimed against the individual and based on the crazy findings of the “Economic School of Zimbabwe” – where everyone became a trillionaire. Henry Hazlitt described it best, in his “Marxism in One Minute’’: “The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects — his laziness, incompetence, improvidence or stupidity. Never believe in the honesty or disinterestedness of anyone who disagrees with you. This basic hatred is the heart of Marxism. This is its animating force.” EG Winter 2020 •

FINANCE

Monetary Policy

A History Of American Economic Crises The world has faced numerous occurrences of calamitous economic collapse. Historical episodes of economic slatecleaning typically centred on Europe, although the “New World” of the Americas, mostly the US, has accounted for many of the more recent instances of financial meltdown in the context of the modern nation-state, reports Shannon Berkley. est of the Greenwich Meridian, America’s economic management has always been a distastefully impactful reality for Europe and even Asia. With a greater distance and persistently massive home market, Asia has occasionally weathered American fallout better than Europe, but this has seldom been a salve for global economic recovery, taken as a whole. Gold, still a safe haven in spite of its own minor wobbles over recent decades, is seen as a storehouse of wealth. It remains a persistently stable hedge against wholesale loss, and this has both a historical and valid market legitimacy.

SCANDALOUS CRISES OF BYGONE CENTURIES In a virtual blueprint for the dotcom bust of 2000, the Dutch Tulip mania collapse of 1637 had certain identical key ingredients: greed, novelty and a

true artificiality that created a giant bubble. Centred on Holland and surrounding states, “tulpenmanie” was one of the earliest recorded progressions of market speculation on future values. As demand continued to outstrip supply, both for natural species in volume as well as bred varieties, this moment in the “Dutch Golden Age” shocked participants and onlookers. Although not completely devastating to the Dutch or European economies, the sheer scale of the extent of Tulipmania, as well as the sudden and catastrophic evaporation of a previously delirious market, gave the world one of its first glimpses of market crashes that could bankrupt people on a substantive or national level. With tulips high up on the first official futures markets sanctioned in Holland in the 17th century, ”tulip mania” is still trading jargon, derisively referring to stocks that may culminate in a burst bubble sooner rather than later. Perhaps a more apt blueprint followed in the

• Productivity, Strategy, Profitability

following century, when land speculation and British banks’ concerns over mass withdrawals in the face of war with France reverberated across the Atlantic. Known as “The Panic of 1796,” a number of downturns in cross-Atlantic credit markets ran into 1797, affecting both the American and British economies. The impact was sufficient to identify as a true economic downturn, and when the Bank of England halted specie payments on the back of the populace’s fears of a French invasion, economies stalled and dipped, resulting in hardships throughout both nations. Although not based on subprime mortgages, the land speculation that was rampant in the US concurrent with England’s woes, popped on a scale that deflated national courage, bankrupting thousands and affecting millions. It would be no overstatement to say that this particular event gave investors their first taste of global events beyond their control, which in turn cemented gold’s status as a safe haven. This dictate has persisted to the current era, where precious metals most often anchor the modern diversified investment portfolio. SLOW TO LEARN, QUICK TO FALL WHEN DEBTS ARE CALLED A further “Panic of 1819” followed hot on the heels of the 1797 crisis. Largely a US financial crisis, it precipitated a broader economic collapse in America that persisted for a number of years. Led again by land speculation, one upshot of this period was a subsequent transition towards a wholly autonomous economy, with longstanding commercial ties to Europe unbundled in its aftermath.

FINANCE

Monetary Policy

Photo: T photography / Shutterstock.com

Banks and other American lenders were also in a bout of excessive issue of paper money, something that merely clinched the economy’s collapse. Prime among lenders, the Second Bank of the United States (SBUS) found itself guilty of its own rampant fixed asset speculation, panicked, and called an end to loans overall, mostly in its western outlets circa 1818. SBUS also faced a failure by state-chartered banks to compensate it in metallic currency when presented with their own bank notes. These banks in turn attempted to redeem their status by foreclosing on a myriad of agricultural and business loans. National unemployment dotted with widespread bankruptcies ensued, and in many pockets around America, the local economy collapsed. This episode is notable for the subsequent mistrust that arose among the American population, as it was an open and shut case of banks doing the worst to their debtors to save their own skins. Corporations were seen to shed jobs with an unprecedented fervour in a bid to stay afloat, and the national morale took a severe beating. In a real sense, this episode allowed for the rise of two national amendments. Firstly, American citizens agitated for political change that would see greater government culpability in the form of oversight of financial institutions. Secondly, the notion of central banking and federal monetary policy became an insistent logic, very much forming the basis of the modern landscape in the US. A further unfortunate upshot of this period of economic meltdown came in the year 1837, brought about by the Panic of 1819. Incumbent president Andrew Jackson engineered the transfer of state funds from SBUS to several smaller state www.executive-global.com

banks. While it may have seemed to Jackson and his advisors at the time to be a good policy not to put all eggs in one basket, people were unnerved, the general population lost confidence in the American banking system and a recession ensued. Also known as the Bank War of the early 1800s, Republicans on the other end of the scale upheld SBUS as an economic stabiliser, as its original goals had been to provide uniform value in the American currency, smooth over trade and price variations, and essentially act as the credit arm of the treasury department. It was also seen to enable longer distance domestic and foreign trade, while regulating the lending practices of state banks. IT TOOK THE RAILROADS FOR MISERY TO TRAVEL THE WORLD In what can justifiably be termed the first truly global financial crisis, rampant speculation in the seemingly unendingly profitable American railroad industry led to the next major economic bust. With extensive domestic and foreign investment in play, the railroads were beginning to run thin on profits, while a significant shipment of gold was also lost at sea. In a complex interrelationship, investors were finding it rough going on the stock market, after years of cavalier spending perpetuated an extremely bullish outlook for the coming decades. Railroads started stalling on debt repayments and property speculators began actively losing money. As panic set in, people rushed to the banks to withdraw their money. While a typical run on deposits is a highly risqué moment for banks at any point in time, the large shipment of gold lost at sea exacerbated matters. At the time, banks were still obliged to issue reimbursements in gold and found

that they could not meet demand. On August 24, 1857, a collapse began with Ohio Life Insurance and Trust Company’s New York office folding. A domino effect ensued, with banks across the nation collapsing. Widespread unemployment devoured the national consciousness once again, and a three-year depression ensued. Reverberations were felt across the globe as much foreign investment was at play, although this collapse mirrored previous episodes in many ways. While the government

NATIONAL UNEMPLOYMENT DOTTED WITH WIDESPREAD BANKRUPTCIES ENSUED, AND IN MANY POCKETS AROUND AMERICA, THE LOCAL ECONOMY COLLAPSED.

was fairly powerless to halt the national panic that demanded withdrawals, it also illuminated how such doomsday scenarios had not been effectively hedged by the dissolution of SBUS. A particularly devastating collapse followed just over 20 years later, while the American economy was still both recovering but stable, yet not amenable to the kind of rank speculation that had tilted it in Winter 2020 •

FINANCE

Monetary Policy the mid-1800s. The 1883 episode was particularly devastating as it came at what was to be the end of that recession, rather than being the cause. The recession essentially became a depression as Europe’s depleted gold reserves saw European states importing tons of gold from the US. The start of 1882 saw a major contraction where railway returns, imports, and coal and cotton yields were around 25 percent down on previous figures. Resulting in a depression “within” a recession, the year of 1884 was a particularly bleak one for global markets, business and the populace at large. New York national banks in particular had ceased investments and called loans, once again ruining businesses by the thousands, while bankrupting emerging and existing retail investors. In a prolonged bout, many commentators also highlight “The Panic of 1893.” Technically beginning in 1893 and lasting four years, this was another episode hot on the heels of the 1884 darkness that saw almost all sectors of the economy flatten or tank. Tremendous social upheaval ensued, and the final political outcome of the national discontent saw William McKinley sworn in as president. The turn of the century brought new hope, yet it was to be short-lived.

THE INFAMOUS STOCK MARKET CRASH OF 1929 The world’s worst global financial catastrophe happened in 1929. Much has been written and deconstructed about this horrific episode, but it remains a fairly simple example of speculative greed toppling the tree. The difference in 1929 was that the depth of participation in global markets and volume of money at play were certainly greater than ever before. Lulled into a sense of business as usual, on October 28, 1929, the Dow Jones shed 13 percent, an alarming number for a bullish trading arena. This is often seen to have been predicted by the previous Thursday’s trading when investors churned a whopping 12.9 million shares in the day’s trade. In a whirlwind moment of plummeting value, Tuesday October 29 saw the markets shed a further 12 percent, and there was no holding back the panic and impending, unavoidable collapse. Giving rise to the Great Depression, stock speculation had again bubbled up too far past boiling point, and instead of a measured correction, pandemonium

AS A NEW CENTURY DAWNED, BIG MONEY CAME OUT OF THE CLOSET There were eight tremors between 1962 and 1913, with 1884 being the darkest year for many. Centred in Manhattan, the post-war euphoria of the haves went on to mask the deep schism developing within the have-nots. Speculation returned as adamantly as ever, and after a moment’s safe trading in the markets, tragedy returned almost as soon as the century began. A huge attempt at stock cornering in 1901 — a bid to take control of the Northern Pacific Railway by E. H. Harriman, JPMorgan and Jacob Schiff — was orchestrated through William Rockefeller’s First National City Bank and James Stillman, with Standard Oil putting up the cash. The moguls reached a compromise in forming the Northern Securities Company, but the panic that surrounded these giant market movements ruined countless smaller investment firms and retail traders. For those who either survived this period or bounced back from it, a more ravaging culmination came with the first legitimate crash of the New York Stock Exchange in 1907. “The Panic of 1907” — known by some historians as the Knickerbocker Crisis or the 1907 Bankers’ Panic — was a ghastly financial crisis that unfolded over a three-week period in October that year. The NYSE fell by as much as 50 percent while the background recession did nothing to aid citizens’ confidence. It is worth noting that this national crisis was sparked by the ill-informed speculation of just two brokerages, and as their poorly timed attempts failed, markets panicked and collapse ensued. Photo: Alex Jovanny / Shutterstock.com

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overtook the markets in a matter of days. Estates were wiped out extensively in the US, but also all across the globe. After the “Roaring Twenties” had seen stocks at record highs, 1929’s plummet led to massive job losses, ten years of virtual unemployment in the economy, and grisly hardship for the American people. 1937 saw a return to dark economic times. Although the economy was still struggling and the Great Depression was not over, things were improving. A relative normality was emerging, but as an aftershock of the 1929 financial collapse played out upon the industrial sector, unemployment spiked again, and industrial productivity and profits fell. It is again worth noting that all of these speculative crises further cemented gold as the safe haven of choice for millions of investors. The precious metal might have lacked the exuberant attraction of rapidly rising shares, yet it avoided their downsides as well. From 1940 onwards, relative stability dominated the markets, whether because of greater government control or because

FINANCE

Monetary Policy the market makers themselves accepted that such corrections cost too much in lost time, wealth and participation. Probably a product of both considerations, things were fairly stable in the US up until 1974. This was the year that saw the collapse of the Bretton Woods system where currencies were pegged to the US dollar, which was in turn pegged to gold. More due to speculation and market fears than any single event, stock markets around the world crashed in 1974, the system collapsed and the US, UK and many other countries took a hard economic knock. Certainly precipitated by an oil embargo staged by the OPEC exporters the previous year, as well as by US dollar devaluation, the American economy slumped alarmingly and was once again stagnant for all intents and purposes. THE PACE QUICKENS TOWARDS THE 21ST CENTURY With 1974 being the decade’s horror show, the pace seemed to quicken as the century drew to a close. In 1987, a new Black Monday occurred. The first ”Quant Crash” resulted in global stock market crashes. Not five years later, in 1992, speculation once again ruined supposedly rock-solid pillars of trading. The European Exchange Rate mechanism collapsed, due largely to hedge funds’ avarice and a broad bout of rampant market speculation by a large numbers of investors, many likely following in their wake. Both the British Pound and Deutsche Mark took a hammering, flattening many markets across the globe. The year 1997 ushered in the Asian Financial Crisis. Due to some particularly Asian yet far more generic trading risks — notably concerted speculative attacks on the Thai Baht which then rolled onto other Asian currencies — an Asian meltdown ensued, as investors fell over themselves to exit Far Eastern currencies. Enter the year 2000, where the game boom virtually returned the tulipmania of the 1600s. Novel tech stocks had been shouting at investors for massive investment. An unknown entity, the internet spawned a delirious imagining of immense wealth to be made online, and billions of dollars were thrown at every conceivable dotcom or “internet” enterprise that sprang up. As had often been the case, fear of losing out on a sudden boom spurred investors to invest heavily in stocks that turned out to be almost worthless. With little understanding and much greed behind them, dotcoms dropped like flies and untold billions were lost, shaking markets and ruining thousands upon thousands of retail and institutional investors. 2008 AND BEYOND? If the dotcom bust was a ghastly modern glimpse of raw greed and stupidity, it soon faded into insignificance as the subprime mortgage fiasco unfolded in 2008. In what has surely been the greatest globally reverberating and debilitating shambles, private concerns were found to be extending mortgages at unsustainable rates, while www.executive-global.com

Photo: Kamira / Shutterstock.com

the derivatives markets were spiralling into greater and greater quasi-fraudulent activity, with everyone trading on everyone else’s debt. Banks had been selling far too many mortgages, not particularly to enable a burgeoning population, but rather the self-serving secondary market of mortgagebacked securities. House prices fell sharply in 2006, triggering the collapse of the entire chain. Defaults tainted pension and mutual funds as well as the companies that owned these derivatives. Seemingly untouchable names in the financial world went under, Quantitative Easing (QE) on the part of many governments attempted to soak up the shock, and even sovereign debts rattled and threatened

DEUTSCHE BANK IS A PRIME CULPRIT OF DIGGING ITSELF A DERIVATIVES HOLE, AND IS CURRENTLY SITTING ON THE WORTHLESS FRUITS OF RAMPANT DEBT MONETISATION.

default across the globe. For the first time ever, the wheels almost came completely off late capitalism, and a global recession that persists even to this day in some form or another ensued. Actor Jeremy Irons in the 2011 film Margin Call aptly depicted the exact machinations of innumerable investment banks at that time. Realising that they had traded themselves into a corner, their attempts to shed bad debt did nothing but shine an immediate spotlight on the entire fiasco, which subsequently tumbled with

alarming repercussions for the world at large. The collapse forever changed consumer confidence, expectations of government oversight and possibly business conduct, although speculative greed has bedevilled the markets since they were first formed. No matter the intensity or intricacies of regulation, investment banks always seem to find a new hole through wish to push trillions of dollars in a self-enriching cycle before collapse looms. Going into 2020, the largest investment bank in the world faces collapse. Deutsche Bank is a prime culprit of digging itself a derivatives hole, and is currently sitting on the worthless fruits of rampant debt monetisation. Such derivative trading works well — in the interests of banks — until one player in the game either defaults or cries foul. Global legislators are either too stymied or otherwise constrained by their own understanding of a free market to put real teeth into regulation that would outright forbid practices that, time and again, have led to financial ruin for various or all parts of the global economy. Looking at the decade ahead, it seems financial markets are unwilling, slow, or simply incapable of learning from history, as a future calamitous crash is almost certainly due within a few years. As long as the same instruments are available to the marketplace, investment entities will attempt to woo others’ money for their own short-term gain, precipitating another massive crash at some point in the near future. While government regulation is constantly improving, there is no matching raw greed’s inventiveness, it seems. As low or negative interest rates loom, an orthodox yet still absurd notion for many, and inept governmental interventionism, constant asset bubble inflation and persistent debt monetisation continue, it is only a matter of time before markets “correct” again, which is simply a euphemism for saying that the world will once again pay for the shockingly flippant excesses of the few. EG Winter 2020 •

FINANCE

Central Banking

Europe-Wide MMT? In 2019, a doctrine known as the “Modern Monetary Theory” (MMT) broke into the forefront of debates. While it rose to prominence in the USA, the MMT is now actively being discussed for implementation in Europe as well, thinks Thomas Hughes. prone to long-term debt depreciation via inflation. As a result, in economies with a large public debt, inflation expectations are generally higher. Additionally, by providing full employment, the state won’t be the most effective employer and investor. The public sector has low productivity and capital. The transfer of incentive policies from the private to the public sector will lead not to a revival, but to a damping of economic growth. Last but not least, there are also problems with timely decisionmaking: taxation through which MMT supporters plan to control inflation is inert. Unlike the interest rate, it is difficult to increase it promptly - revising

Photo: Alexandros Michailidis / Shutterstock.com

he preposterous idea that the budget deficit does not matter, the money machine is fully capable of covering the difference between government spending and tax income without resulting in inflation, and other similar views have come up in a completely new light. While heralded as a magic wand kind of solution by some prominent political figures, MMT has also drawn some sharp criticism that simply cannot be ignored, attaching this theory to naught more than simple left-wing populism. MMT is an unorthodox concept, according to which the state can, with certain reservations, finance budget expenditures by issuing money to achieve full employment without inflationary consequences. In theory, the MMT is designed to answer the circumstances that the world has encountered in recent history. In the fight against the thread of recession and deflation, the central banks of developed economies bought up government debt

to expand money supply. As a result, their assets swelled to incredible values, comparable only to the times of World War ll, when they were forced to finance military spending. Moreover, nowadays, despite large-scale programs of quantitative easing (QE), negative or near-zero interest rates are still a reality. RAISING TAXES VS DEVALUING DEBT Now it is important to consider that equity financing of the budget deficit, in most cases, has ended up in stellar inflation. It is for this reason that national legislation on central banks gives them independence from the government, and also prohibits direct loans to the budget and the purchase of government bonds in the primary market. Public debt has limitations even in advanced economies. A government can deal with elevated debt in two ways: by raising taxes or by devaluing it. Raising taxes will hurt economic growth, which is why authorities are

• Productivity, Strategy, Profitability

SUPPORTERS OF MMT CURRENTLY DO NOT GIVE ANY THEORETICAL OR EMPIRICAL ARGUMENTS, EXCEPT THAT THEY WILL ADHERE TO A REASONABLE POLICY.

budgetary norms can take years. In practice, no country uses taxes for short-term inflation control. HARMFUL TO EUROPEAN ECONOMIES Supporters of MMT currently do not give any theoretical or empirical arguments, except that they will adhere to a reasonable policy. This is largely due to the lack of economic models in MMT - the theory is based mainly on speculative arguments. Worse yet, MMT isn’t only speculative, but actually harmful and threatens to bring chaos to European economies, for it is basically QE 2.0. EG

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FINANCE

Dr K Olsen Global Tax

Reverse Tax Evasion Tax evasion is unacceptable, but ‘reverse tax evasion’ - where the state swindles taxpayers - is particularly serious and unacceptable, and much more serious than ordinary evasion. ‘Reverse tax evasion’ is when the authorities consciously (or unconsciously) deprive taxpayers of their rights so that they have to pay more tax than required by the law. Photo: Worawee Meepian / Shutterstock.com

Article by

Dr. Knut Olsen

CHARTERED GLOBAL TAX ADVISOR, DR. K. OLSEN GLOBAL TAX

he undersigned has almost 40 years of experience as a chartered global tax advisor, professor of international taxation, head of global tax, and he has unfortunately experienced ‘reverse tax evasion’ throughout the world over several decades, where taxpayers have unfairly been ordered to pay vast amounts of incorrect tax. There are many reasons why taxpayers are subjected to ‘reverse tax evasion’: a) A country’s tax authorities might want to impose as much tax as possible at any cost, even though they do not have the authority to do so, and consequently demand that taxpayers should pay unfair and incorrect taxes. b) The attitude of the tax authorities might be that taxpayers are scoundrels who will avoid paying tax at every opportunity. Such negative attitudes quickly result in taxpayers being subjected to ‘reverse tax evasion.’ c) The authorities draw up ingenious rules so that taxpayers are deprived of their rights and thus have to pay more tax. d) The tax authorities fail to comply with procedures and guidelines. e) Decisions are not quality secured. f ) Tax authorities deliberately ignore the EU Agreement which gives taxpayers certain rights. g) The international tax legislation in particular, are extremely complicated, and not all tax officers possess the expertise necessary for working on such cases. h) The main rule is that someone is innocent until proven otherwise, but taxpayers are often guilty until proven otherwise. i) If the tax authorities have doubts about whether a transaction should be subject to tax, they may claim that it is indeed subject to tax and leave it up to the taxpayer to provide proof or hire an adviser to investigate the matter at the expense

THE INTERNATIONAL TAX LEGISLATION IN PARTICULAR, ARE EXTREMELY COMPLICATED, AND NOT ALL TAX OFFICERS POSSESS THE EXPERTISE NECESSARY FOR WORKING ON SUCH CASES.

of the taxpayer. j) The tax authorities make threats, e.g.: ”if you do not accept our adjustments we will make problems for your company for the next 5 years” - something which should obviously be regarded as constituting serious, illegal abuse of power.

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k) Appeals cases in which the tax authorities refuse to admit that they have made a mistake are a matter of prestige. l) The legislative authorities change the facts which relate to being able to engage in ‘reverse tax evasion.’ Taxpayers should adopt a critical attitude towards decisions and tax audits, made by the tax authorities, since the main aim of the tax authorities does not appear to involve safeguarding the taxpayers’ rights. It is hard to say how much tax has been collected by the tax authorities on a global scale as a result of ‘reverse tax evasion,’ but we are talking about significant figures. The question is: why haven’t the OCED, EU, UN, G20 and national authorities placed focus on ‘reverse tax evasion’? We need to focus far more on such dubious practices - and these need to be stopped. EG

For further information, please visit: http://www.knutolsen.com

FDI & INWARD INVESTMENT

Kingston Economic Development Corporation

The Perfect Intersection Of People. Place And Price - Kingston Ontario When you combine Canada’s smartest workforce, a highly strategic geographic location, and a lucrative mix of incentives, the opportunities are endless writes Donna Gillespie, CEO of Kingston Economic Development Corporation. Article by

Donna Gillespie

CEO, KINGSTON ECONOMIC DEVELOPMENT CORPORATION

ingston, Ontario, Canada proves that cost and quality are not mutually exclusive when it comes to investing. Kingston offers all the advantages of an urban setting with dedicated resources and support you would expect from a global partner. With a highly skilled workforce and three strong postsecondary institutions, including one of Canada’s top universities, Kingston is a highly educated and rapidly growing Smart City and is fast becoming a favourite for investors seeking to set up shop in Canada. With its proximity to the United States border and major Canadian cities like Toronto and Montréal, Kingston is an ideal

location to establish your business whether your product moves by land, sea, or air. Considering these advantages, and a local government that is seeking to attract new employers, it is no surprise that the City’s fully serviced business parks are rapidly filling with savvy investors taking advantage of the opportunities in Kingston. Site Selection Magazine identified Kingston as one of the Top 20 Places to Invest in Canada in 2019, and Financial Times UK named Kingston the top Small City for Foreign Direct Investment in the Americas in 2017. LOOKING FOR A PLACE TO HAPPEN? With Kingston as your home base, you have easy access to global customers and business opportunities. One of Canada’s busiest highways, Ontario’s Highway 401, passes through Kingston, offering direct routes to major economic hubs like Toronto, Ottawa, Montréal, and Detroit. Within an eight-

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hour drive, businesses can reach up to 25 million North Americans in cities like New York, Buffalo, Philadelphia, Boston, Pittsburgh, and Albany to name a few. Kingston also sits along a rail corridor which sees daily passenger trains heading between

THIS BEAUTIFUL, MODERN CITY BENEFITS FROM PLENTY OF NATURAL ATTRACTIONS AND RECREATION, A VIBRANT CULTURAL SECTOR, AND SHORT COMMUTE TIMES.

FDI & INWARD INVESTMENT

Kingston Economic Development Corporation businesses are organisations like Utilities Kingston, Hydro One, and Enbridge, which supply water, electricity, and natural gas access across the city. Utilities Kingston also maintains over 1,000 route kilometres of fibre optic cable connecting hundreds of institutional and commercial buildings throughout the region. Couple these advantages with low corporate taxes and the support of Kingston Economic Development Corporation to help you establish your new venture, and it is easy to see why Kingston is becoming a hotbed for foreign direct investment. The city has recently attracted international food processing giants Feihe and Frulact to the city and has retained its robust manufacturing sector which includes internationally recognised names like Bombardier, Invista, and SNC Lavalin.

Toronto and Montréal, as well as cargo trains. If you are heading stateside, the Kingston area offers numerous American border crossings. Visitors leaving the Kingston area can be in New York state within about 30 minutes. Via Interstate 81, New York City is just a six-hour drive. Those looking to Kingston’s waterways will also find the city is an ideal place for business. Kingston’s shoreline sits along the St. Lawrence Seaway, making Kingston part of the “Highway H20” which saw $35 billion worth of economic activity pass through in 2017. The waterway stretches from Duluth, Minnesota and western Ontario to the Atlantic Ocean, providing access to global markets and North American coastal states and provinces. Kingston is also the largest city near the Picton Terminals, a recently renovated deep water port with 24/7 loading and unloading facilities. The local airport has also benefitted from recent investments designed to upgrade its service offerings. In 2019, the City of Kingston extended the runway and expanded the terminal to expand the existing service. www.executive-global.com

DELIVERING VALUE The City of Kingston is keenly interested in creating the right environment for business success. To that end, the City manages several fully serviced business parks with approximately 100 acres of available land across the city. This affordable, shovel-ready industrial land features state-of-theart infrastructure with easy access to Highway 401 and the city’s downtown core. These employment lands are ideal for industrial businesses, research and development, and other business uses. To help ease the start-up costs associated with establishing a new location, the City of Kingston has waived development and impost charges for industrial uses. Additionally, between the Canadian and Ontario governments, eligible businesses can apply to over $10 million in available incentives, as well as Scientific Research and Experimental Development Tax Credits ranging between 15 and 35 per cent. Powering the success of Kingston-based

PEOPLE POWER Queen’s University, St. Lawrence College, and Royal Military College of Canada bring a steady influx of students and educated faculty to Kingston, and these institutions forge strong relationships with local businesses. By partnering with these institutions, many Kingston-based businesses have enhanced their product offerings and research and development by tapping into what Statistics Canada calls “Canada’s smartest workforce”. In a highly educated country like Canada, Kingston stands tall with three times the number of PhDs in Kingston versus the Canadian average. Two thirds of Kingston residents aged 25 to 64 have completed some post-secondary education, according to Statistics Canada. Many students and academics move to Kingston for the schools, and they stay for the great quality of life. This beautiful, modern city benefits from plenty of natural attractions and recreation, a vibrant cultural sector, and short commute times. In fact, in its 2018 rankings of the best places to live in Canada, Maclean’s Magazine named Kingston as one of Canada’s top communities, citing its affordability, strong median income, and safety among other factors. And in 2019, the Canadian Centre for Policy Alternatives named Kingston Canada’s best city to be a woman. These factors make finding and retaining the right talent in Kingston simpler than in many other cities. THE COMPLETE PACKAGE Whether you are looking to break into North America or grow your existing footprint, Kingston offers the right mix of people, place, and price to help you earn a strong return on your investment–as many international players have already discovered. With local government agencies keen to help you succeed, the ideal setting to access the North American market, and the right price to keep operations affordable, the conditions are right for success in a wide range of industries. To begin your investment journey in Kingston, please visit: kingstoncanada.com EG

For further information, please visit: www.kingstoncanada.com Winter 2020 •

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City of Abbotsford Economic Development

Abbotsford, British Columbia - Be a Part Of The Next Story Our interview with Vern May at City of Abbotsford Economic Development explores the benefits, advantages and opportunities presented to investors and international companies looking to relocate or expand into the city. We sit down to talk Profitability in Abbotsford with the Manager of Economic Development. What would you say it is that makes the City of Abbotsford the ideal location for business? Situated in the close proximity to one of the VM most desired global hubs in the world – Vancouver, Abbotsford has great access to markets in both Canada and the U.S. as well as Asia-Pacific consumers. EG

And what are some of the notable advantages the jurisdiction presents to investors? Canada is the only G7 country that offers VM investors preferential market access to over 1.5 billion consumers in 51 countries through our present trade agreements. Abbotsford’s mild climate also defies Canada’s “wintery” stereotype which significantly contributes to the quality of life for those with active lifestyles. EG

With a diversified economy covering agriculture, transportation, manufacturing and retail as well as the highest dollar per acre of agricultural land in Canada, why have other cities have not been able to match your output? Recognising our geographic limitations – VM nestled between mountains, rivers and an international border, we are laser – focused on our key sectors of agriculture, aerospace, manufacturing EG

and technology as well as industries that support them. We work closely with companies for whom we are the right fit – we’re not “one size fits all”. Tell us about some of the clean tech and sustainable initiatives you have been involved in and how you may assist companies in meeting their sustainable development obligations? Our success is rooted in our soil so we have a VM heightened sensitivity to land and water stewardship. This includes civic initiatives for effective water management and treatment. We also support agricultural waste innovations and exploration of the circular agriculture economy. EG

Can you highlight some of the major EG incentives Abbotsford offers in terms of workforce development? Recognising that workforce is a key concern VM worldwide, we work closely with our local school divisions and post-secondary institutions to ensure that the education sector is adaptive to the needs of industry. Tell us about some of the most essential considerations for businesses wanting to relocate or expand into Abbotsford?

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Canada’s stable political outlook and trade agreements are opportune for international companies looking to access U.S. markets while operating in a cost-conscious location with strong regional and international connectivity. VM

And how may you facilitate business growth and assist with the expansion process? It takes a team to build a community. Our VM department acts as a concierge for business to navigate processes at City Hall and all levels of governments and to advocate for investors to bring their projects to fruition. EG

What prevalent trends do you see affecting the region within the next 5-10 years and how may international businesses be part of the next story? Environmental awareness and sustainability VM will continue to be a huge factor in industrial development here. Water stewardship and treatment, increased efficiency in agricultural production and minimising all waste streams present the greatest opportunities for innovators operating in these areas. EG

For further information, please visit: https://caed.abbotsford.ca/

We work closely with companies for whom we are the right fit - we’re not ‘‘one size fits all.’’

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Civil Aviation Authority of the Cayman Islands

The Elite Aircraft Registry of Choice The Cayman Islands Aircraft Registry (The Registry) is the registry of choice for many owners, financiers, management companies, attorneys and other key decision makers. Stringent standards and a mandate for absolute safety guide our oversight of Cayman registered aircraft. The Registry has been operating as a reputable offshore aircraft registry since the early 1970s and has an outstanding safety record. he Civil Aviation Authority of the Cayman Islands’ (CAACI) dedicated technical team works with aircraft operators on annual plans to ensure regulatory standards and timelines are met and where appropriate, flexibility and customised solutions afforded. The CAACI works closely with Cayman Islands’ industry experts in the legal/ financial and company registration sectors to ensure sound and secure transactions for the initial aircraft registration or changes thereafter. CAACI staff is highly qualified and experienced in regulatory oversight and in working with aircraft management and maintenance organisations to ensure compliance with internationally mandated standards. The CAACI operates in accordance with a statutory instrument that is predicated on UK legislation found in the “Air Navigation (Overseas Territories) Order 2013,” AN(OT)O (and subsequent amendments) contains regulations governing the operational and airworthiness requirements of Cayman registered aircraft. Also relative are the requirements contained in the Overseas Territories Aviation Requirements (OTARS) as published for all UK Overseas territories. The criteria for registering an aircraft begins with the compliance/due diligence phase whereby

the eligibility of the aircraft owner is determined and compliance with the established anti-money laundering regulations of the jurisdiction is established. Documents are submitted via VP-C Online - the CAACI’s bespoke secured electronic portal which manages applications, authorisations and certificates. THE APPLICATION PROCESS During the initial application process, the applicant can choose from a list of available registration marks which start with VP-C plus two variable letters. Once the aircraft application is accepted, the second phase of the registration process begins which entails the technical review of the aircraft for initial airworthiness certification and operational authorisations. These processes and subsequent continuing airworthiness certifications are all managed securely within VP-C Online, which allows 24/7/365 access by registrants and those managing aircraft on the Registry. The secured portal also acts as a repository for all technical and supporting documentation for the registration and continuing airworthiness processes for the tenure of the aircraft while on the Registry. Clients will also enjoy the ability to check the status of applications and to re-print certificates or authorisations should the need arise. Clients have voiced that

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this convenient system makes the Cayman Islands Aircraft Registry a preferred choice in registration of aircraft. Information pertaining to registration of aircraft on the Cayman Islands Aircraft Registry can be obtained from the CAACI website at https://www. caacayman.com/aircraft-registry/ When examining reasons to register an aircraft in the Cayman Islands, discerning owners and decisionmakers find that the Cayman Islands provides a credible, politically stable jurisdiction. As a leading tax neutral international financial centre the English legal system provides owners and financiers of aircraft certainty and confidence. Traditionally a private Register, the CAACI in conjunction with the CI Government and the Cayman Islands ’ Special Economic Zone – Cayman Enterprise City (CEC) has introduced an alternative means for compliance with the ‘Principal Place of Business’ criteria to allow offshore Air Operator’s Certificate (AOC) to be granted for certain commercial operations. A SET OF ADVANTAGES There are many advantages to setting up in the Special Economic Zone. Some of these include: (a) No corporate, income, sales or capital gains or payroll tax payable by the company or employees in the Cayman Islands;

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Civil Aviation Authority of the Cayman Islands Photo: EA Photography / Shutterstock.com

CLIENTS WILL ALSO ENJOY THE ABILITY TO CHECK THE STATUS OF APPLICATIONS AND TO RE-PRINT CERTIFICATES OR AUTHORISATIONS SHOULD THE NEED ARISE.

(b) 100% foreign ownership permitted; (c) A three to four week fast-track business licensing regime; (d) Single fee for operation of business within the special economic zone annually, which includes rent, licensing fees and work permit fees; (e) ‘One stop shop’ administration services; (f ) Easy access and direct flights to the US, Canada and London; (g) CEC can obtain renewable five year work / www.executive-global.com

residency visas for Cayman-based staff within five working days, irrespective of their country of origin or position they will hold within the company; (h) There is no maximum limit on the number of work permits a company is allowed; and (i) A company that is set up within the Cayman Maritime & Aviation City can hire local employees for the Cayman office. REGISTRATION & FINANCING The Cayman Maritime & Aviation City offers an exceptional opportunity for businesses in the aviation sector to leverage the outstanding features of the Cayman Islands business environment, particularly where a physical presence is required, for example in obtaining an AOC. This is yet another reason the Cayman Islands is the preeminent jurisdiction for aircraft registration. The CAACI also works in close partnership to ensure that aircraft registrants have expert guidance on applicable law and procedures. One such example of the CAACI working in partnership with local aviation specialists was evident in 2015 when the CAACI was a member of a local working group that included top aviation finance attorneys along with the CI Government’s Ministry of Financial Services. This group was established to develop enabling legislation to have The

Convention on International Interests in Mobile Equipment and the associated Protocol on matters specific to aircraft equipment (also known as the ”Cape Town Convention”) come into force in the Cayman Islands. The Cape Town Convention is an international treaty that aims to standardise transactions involving movable property, such as aircraft. In July 2015, the UK ratified the Cape Town Convention and extended it to some of its territories that had ready and waiting enabling legislation – the Cayman Islands being one of those territories. The International Interests in Mobile Equipment (Cape Town Convention) Law (Cayman Islands) , 2015, was enacted and came into effect on 1 November 2015 accordingly, the Cayman Islands received international recognition under the Cape Town Convention. The CAACI recognises the importance of aircraft financiers and lessors as key financial intermediaries in the acquisition process. This is a valuable relationship to the CAACI fosters through an insightful and collaborative understanding to the interdependencies of the industry. The CAACI introduced material processes, online portals, bespoke products all specifically designed to support the activities of aircraft lessors. The CAACI is working to establish long-term relationships with lessors that provides ready solutions where aircraft registration support is required with emphasis beyond the registration process. The CAACI’s focus is to offer a Register that efficiently facilitates the transitioning of aircraft between leases, which is supported by highly qualified and experienced full-time personnel. In addition to its existing functionality, VP-C Online is being innovated to include a Lessor Module whereby a lessor can apply for a dedicated account. This account will provide ready access to all of the airworthiness and operational certifications of the various aircraft of a particular lessor which has been registered in the Cayman Islands. HIGH QUALITY CUSTOMER SERVICE With a focus on the quality of service, flexibility, bespoke online offerings, attention to detail and safety, the CAACI continues to strive to set itself apart from other jurisdictions. The CAACI remains committed to offering a personal, responsive and high quality service to their customers, and to finding innovative and efficient solutions to the needs of those they work with. Director-General of the CAACI, Mr. Richard Smith said, ’With over 50 years of aircraft registry experience, the Cayman Islands Aircraft Registry offers total aircraft registration solutions. Our dedicated team is focused on providing aircraft registrants and operators with professional and timely service that we know is of vital importance to their interest’. For more information of the CAACI, please visit www.caacayman.com or call (345) 949-7811. EG

For further information, please visit: www.caacayman.com Winter 2020 •

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Barbados FDI

Believe In Barbados Barbados is a fabulous island surrounded by coral reefs with picturesque beaches, lush tropical nature and an even, mild climate throughout the year. Its landscape is dominated by plains, but closer to the east coast, the relief becomes more mountainous, writes Rachel Smith. he island is located at the eastern end of the Lesser Antilles archipelago. Its east coast is washed by the waters of the Atlantic Ocean, and the west - by the Caribbean Sea. Geographically, it is rather close to the South American continent, only 434.5 km northeast of Venezuela. Its closest neighbours are Saint Lucia and Saint Vincent & The Grenadines, both to the west of the island. It has an area of 431 km², with a mostly flat landscape. Historically, the country is a former colony of Great Britain, where all British traditions are still carefully preserved - so much, in fact, that it is often referred to as Little England. There are also protected places on the island where unique species of tropical plants and animals have been preserved in the wilderness, so it is not surprising that it’s highly sought after by visitors from around the world. Whilst Barbados may still be called a “developing country”, its specialisation in international services and high standard of living have earned it the standing of the 53rd richest country in the world, in terms of GDP (Gross Domestic Product) per capita. For more than 300 years, the nation’s primary industry has been the cultivation and processing of sugar cane, but in the 1970s, tourism rose to the forefront. Since the 80s and 90s, the attempts to diversify the country’s economy by attracting foreign investment, have paid off and created favourable conditions for developing new business. Barbados is also on the list of those prestigious havens with low taxation. Though not the classic tax haven per se, one could still call the little Caribbean island a very attractive low tax jurisdiction, in which some types of taxes are absent. In Barbados, there are no capital gains taxes, nor inheritance or gift taxes. However, these exemptions aren’t true for other sources of revenue;

the authorities apply income tax and VAT, which in most cases is 17.5%. This is understandable, for if you want to live in a well-developed country with a modern telephone network, well maintained roads and a transport network, as well as good, free education, you will have to cash out some taxes. TAXATION In 2011, that tax rate in Barbados was of 20% for revenues up to 24,200 Bajan dollars (Bds$), and 35% for income over 24,200 Bds$. Pegged to the USD, one US dollar costs two Bajan dollars. Naturally, there is a deduction of 25,000 Bsd$, and for seniors over 60, this deduction goes up to 40,000 Bsd$. So far, it looks like you will end up paying more or less the same amount of income taxes as in any other developed country, right? So why, then, do some people move to Barbados precisely for tax reasons? In addition to the fact that in Barbados there is no tax on capital gains or inheritance, as a resident immigrant, you will only pay tax on the foreign

IN BARBADOS, THERE ARE NO CAPITAL GAINS TAXES, NOR INHERITANCE OR GIFT TAXES. HOWEVER, THESE EXEMPTIONS AREN’T TRUE FOR OTHER SOURCES OF REVENUE...

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income that you will transfer directly to Barbados (to an account at the Bank of Barbados). As a result, immigrants can completely avoid income tax if they keep the bulk of their income outside of Barbados. Qualified professionals from abroad, who specialise in international business or work in the financial sector can expect a 35% discount, that is -35% of their income is not taxed for the first three years of living in Barbados. If you want to work in Barbados, you will have to pay national insurance, which again, by the standards of a tax haven, is quite high: 10.1% of it is paid by the employee and 11.25% by the employer. For selfemployed professionals, the insurance is of 16.1%. However, this national insurance is paid only by revenues earning up to 4090 Bajan dollars a month. This contribution should otherwise not worry you at all if you intend to live off your investment income or retirement. On the other hand, if you decide to open a business in Barbados, you ought to consider the addition of national insurance to your expenses. In Barbados, there is also a property transfer tax paid by the person who sells the property on the island’s premises. For amounts that exceed 125,000 Bsd$, this tax is of 2.5% plus a 1% on printed levy. The country also has an annual land tax, which property

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Barbados FDI

owners in Barbados must pay. For the first 150,000 Bajan dollars, it is of 0%. Over the next 250,000 - 0.1% Over the next 600,000 - 0.45%. For amounts over one million Barbados dollars - 0.75% For example, if you own a home in Barbados that costs half a million US dollars or 1 million Bsd$, you will then pay an annual land tax of $1,475. Senior citizens enjoy a 50% discount on this reduction. By the end of 2019, Barbados had signed 38 international treaties, of which, 34 are double taxation treaties, and 4 are tax information exchange treaties. Corporate tax in Barbados is also considerable. The basic rate is 25%, and the rate for small businesses is 15%. In order to qualify for a lower tax rate, a business in Barbados should fit the following: 1 million Bajan dollars or less in prepaid capital, a turnover that does not exceed 2,000,000 Bsd$ and less than 25 employees. CITIZENSHIP AND RESIDENCY If you have no particular reason for using an offshore company that is registered in Barbados, it is advisable to refrain from registering offshore in Barbados. However, if you do end up having to register an offshore company in Barbados, it is better to choose one in the sphere of international business. If your offshore company is trading (as opposed to investing), then your corporate tax rate may be from 1 to 2.5%. So, all that considered, you may wonder: who can use Barbados to save on taxes? What would constitute a scenario where taking your business to the island may prove profitable and beneficial? Although the income tax in Barbados is relatively high, you can easily protect your overseas income from the state. www.executive-global.com

Photo: Dave Primov / Shutterstock.com

For starters, you become a resident of the country if you remain on the island’s territory for 182 days in a calendar year, which happens to be the same duration as the tax year in Barbados. It is also suitable for those who wish to save on their capital gains taxes. The island has enough double tax treaties that can reduce the input tax in other countries. Barbados is equally great for its milieu, if you wish to mingle among the rich and famous, and network in the high society. Many celebrities, whether in the world of entertainment or the realm of business, own real estate on the island’s premises, and no less famous guests often come to visit them. Naturally, this makes for a quite affluent social environment. All in all, the country is a rich island with a well-developed infrastructure. The literacy rate in Barbados is one of the highest in the world at 98%. Here, wealth is put on display, with the most modern, expensive vehicles driving down the streets amidst luxurious villas. The cost of living in Barbados is thus very high. This likely doesn’t apply to you, but Barbados is definitely not the place to relocate to if you don’t have the money. On the bright side, Barbados has a huge selection of luxury real estate,

excellent beaches and a low crime rate. In general, Barbados has a very high standard of living, for those who can afford the bill. If you are thinking about buying a house in Barbados, then real estate is available here without any additional restrictions and you will not need to get a license like in many other tax havens. Property prices in Barbados are higher than in the British Virgin Islands, but not as high as in Bermuda. BARBADOS REAL ESTATE If you start with the most expensive real estate in Barbados, then you can choose a beautiful house with four bedrooms, that is located right on the beach for about £2.5 million. However, you can also find fantastic houses, condominiums and apartments with seaside views and pools, all around the island, for amounts ranging anywhere from £400,000 to £1,000,000. Of course, there is also real estate in Barbados that costs less than £300,000, but it will take quite some effort to find it. A one-room studio apartment in Barbados can be bought for £100,000 pounds. The commission of real estate agents in Barbados is 5% and it is paid by the seller. EG Winter 2020 •

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Baden-Baden Tourism Board

Visit the Picturesque Baden-Baden If you have long been dreaming of heaven on earth, rejoice - dreams sometimes do come true! Baden-Baden is one of the most idyllic locations you could wish for, whether you’re looking to take a vacation or even to relocate and call a part of its picturesque location home. We will be covering this unforgettable German town that will have you eager to book your next flight, writes Oliver Taylor. ow, there is something particular about Baden-Baden which makes this destination of the former Grand Duchy of Baden feel like a hidden gem, even though it enjoys international renown and has been a favourite spot of the European elite for decades. Located 60 kilometers away from Strasbourg, the village tends to resonate with a certain charismatic familiarity despite its extensive history. Within the Black Forest, amid sharp conifers poking at the clear vast skies, and lined with the luminous waters of the Rhine, Baden-Baden appears like a jewel hidden in the hollow of a green valley. Yet within the embrace of lively nature, Baden-Baden itself is a town of opulent housing, high-end hotels, plenty of the world’s best vehicles, luxury boutiques and star-studded tables… The city of Baden-Baden - is a sort of MonteCarlo of the Black Forest. It is truly the summer capital of Europe, with its splendid resorts and rich history that make it a place marked by wellbeing; however, one can find paradise here at any given time of the year.

LUXURY WITH A LEGENDARY CASINO The small city of Baden-Baden is situated in the federal state of Baden-Württemberg, spread among pine expanses on the western slopes of the Black Forest, and has fascinated poets and writers, aristocrats and members of royal families for centuries. It was already known for its healing thermal springs back in the days of the ancient Romans, and by the 18th century, became a favourite resort destination of the European nobility, especially - the Russian nobles. Today, Baden-Baden still captivates its visitors with the fabulous beauty of landscapes, aristocratic charm and centuries-old traditions preserved against the trials of time. The town is rich in historical and architectural attractions. The Kurhaus, for instance, is the hallmark of Baden-Baden - a magnificent Belle Èpoque-style masterpiece built by Friedrich Weinbrenner in 1824 and surrounded by a marvellous park. Inside the Kurhaus is its legendary signature casino - one of

the oldest and most famous in Germany. Fans of gambling will surely find themselves drawn to the allure of the legendary historical casino, famously called the world’s most beautiful casino by international style icon Marlene Dietrich, an establishment which presents a world of oldschool gaming with roulette, blackjack, poker and slot machines in the ambience of the Belle Epoque. Casino Baden-Baden has been long renowned as the hotspot for European and international social elite, attracting English Lords, Parisian composers, Russian diplomats, celebrities, well-known business executives, politicians and stars from around the globe, with its charming style and elegance. A RICH HISTORY On a high 400-meter cliff, stands Hohenbaden Old Castle erected in 1102 and active throughout the 11th to the 15th century, during which, it served as the residence of the Margraves of Baden. An aeolian harp is installed in the knight’s hall of the castle, playing when the wind blows, and the terrace offers stunning views of the city, the Black Forest and the Rhine Valley all at once. These panoramic views can also be admired from the terraces of the New Renaissance castle, built in the 14th century on the Florentine mountain. At the end of the Lichtentaler Allee, lined with elegant mansions, one can find the Cistercian Abbey, founded in 1245 and still standing to this day. Near the Kurhaus, there is the Trinkhalle, a pump room with 16 Corinthian columns and amazing frescoes depicting scenes from the Black Forest legends. And next to the Friedrichsbad complex are the ancient ruins of Roman baths - a museum of ancient culture that recreates the more than 200-year history of the term. Baden-Baden is generally famous for its interesting museums, such as the Museum Frieder Burda, in whose halls more than 1000 works of art from the XX-XXI centuries are known to be exhibited, including 8 paintings by Picasso. Among other notable museums around the destination, we can find: the Johannes Brahms HouseMuseum, where the composer lived from 1865 to 1874, the Fabergé Museum, which tells a story about

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THESE PANORAMIC VIEWS CAN ALSO BE ADMIRED FROM THE TERRACES OF THE NEW RENAISSANCE CASTLE, BUILT IN THE 14TH CENTURY ON THE FLORENTINE MOUNTAIN.

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Baden-Baden Tourism Board

for its first-class clinics. Here are some of the most renowned clinics that attract visitors from around the world. The modern clinics provide treatment and rehabilitation for cardiac diseases, the treatment of internal diseases, orthopaedics, psychosomatic medicine and rehabilitation, as well as with internal medicine and psychology. Baden-Baden is an important medical destination where specialists provide the best treatment. This little piece of paradise on Earth also offers great opportunities for sports and outdoor activities - from hiking, cycling and skiing through the fabulous Black Forest, to golf, tennis, horseback riding and hang gliding.

the life and work of the great jeweller and presents more than 700 exhibits - from the famous Easter eggs, to the amazing decorations from the time of the First World War, as well as the Historical Baden-Baden Museum and the State Art Gallery in Baden-Baden. NATURAL SIGHTS 12 thermal springs of the resort stream forth from a depth of almost 2,000m, and 12 of them originate in the area of Florentine hill. The sources are between 12-17 thousand years old and provide over 800,000 litres of thermal water on a daily basis! The cit y has t wo dedicated thermal complexes. At the foot of the Old Town stands the magnificent building of the Roman-Irish thermal bath, named the ”Friedrichsbad”, which was opened in 1877. Inside, in addition to its www.executive-global.com

thermal pools that allow you to go through a hydrotherapy cycle of 17 stages, visitors will find a piece of the town’s rich history within opulent interiors decorated by amazing frescoes, mosaics and antique sculptures. Mark Twain once wrote about this location: “Here, in Friedrichsbad, after 10 minutes you forget about time, and after 20 minutes about everything else.” Those seeking a more contemporary experience won’t find themselves disappointed either. In the heart of Baden-Baden, visitors can find a modern thermal complex the Caracalla spa, named after the Roman emperor Marcus Aurelius Caracalla. On its territory there are outdoor and indoor pools with water temperature from 18 ° C to 38 ° C, as well as grottoes, waterfalls and a sauna area. Among other things, Baden-Baden is also famous

A REMARKABLE CITY The cultural life of the city is no less remarkable. Visitors may enjoy performances in the Festival Hall Baden-Baden, Germany’s largest opera and concert house which hosts international opera, ballet and concerts at the highest level. Known for its great acoustics, the concert hall presents world-renowned artists, including the Berlin Philharmonic Orchestra and the Mariinsky Ballet. In the magnificent BadenBaden Theater modelled after the Paris Opera and in the Kurhaus guests can enjoy a great selection of events year-round. Baden-Baden will equally impress the gourmets - 36 restaurants are recommended by the Michelin guide, and Le Jardin de France and Röttele’s restaurants located in the Neuweier Castle in the Rebland are marked with one Michelin star. You should definitely try traditional local dishes made with seasonal Black Forest products and delicious wines from the renowned Rebland region. Shopping here is concentrated mainly on the streets in the Old Town and in the area of the Kurhaus Colonnade. To get to Baden-Baden, there is the Karlsruhe / Baden-Baden Airport located 22 km from the city centre, and the Frankfurt International Airport that is approximately a 2-hour drive away. EG

For further information, please visit: www.baden-baden.com/en Winter 2020 •

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Pforzheim Jewellery Museum

Cameo brooch depicting Napoleon Agate, diamonds, silver, gold Nicola Morelli Early 19th century Albion Art Collection, Tokyo

A Newly Ordered World - Treasures From The Napoleonic Era Pforzheim’s Jewellery Museum is marking the life and times of one of history’s most iconic figures. Napoleon Bonaparte fundamentally changed the political geography of Europe, radically and lastingly transforming the continent’s civic landscape within a very short timespan.

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019 marked the anniversary of his birthday: 250 years have gone by since the birth of the French general, politician and emperor. Like Alexander von Humboldt, who revolutionised people’s view of nature, and developed modern, interdisciplinary scientific perspectives, Napoleon, too, significantly contributed to shaping our modern world. Napoleon’s personality and farsightedness are still fascinating. In his Code civil (back then called Code Napoléon), the equality of all people as declared during the French Revolution was codified – at least for the men –, and neither the aristocracy nor the clergy were favoured merely due to their social status any longer. The exhibition, which started in October 2019, spotlights Napoleon’s influence, as well as the jewellery and fashion of his era, which were undergoing major changes. Visitors can look forward to admiring about 150 exhibits, including pieces created by Nitot, Napoleon’s court jeweller. Numerous pictures show how Napoleon presented himself and had himself depicted and, exhibited alongside documents, as well as utilitarian and luxury items, are giving visitors an impression of his epoch.

JEWELLERY CREATED IN NAPOLEON’S ERA The jewellery of Napoleon’s era was very different from that created before the French Revolution: it was more unobtrusive, but no less precious; rather, it was even more valuable. Its formal idiom was reminiscent of the Biedermeier style: delicate and, unlike the pompous Baroque jewellery, sleekly simple and finely crafted, gilded and sometimes embellished with intaglios and laurel leaves. Diadems and representative necklaces created back then will be on show, as well as a golden dinner service, plus a belt typical of the time, enhanced with malachite and intaglios, which was fastened at the wearer’s back with silk bands, thus gathering the fashionable, gently flowing dresses below the bosom. We’ll also be showcasing fashion lithographs and magazines to illustrate the correlation between jewellery, fashion and politics. The garments worn during the Ancien Régime, comprising breeches and wigs, corsets and crinoline dresses, were entirely unfashionable and no longer wearable after the political change. The beginning of the Directory in 1795 brought about the development of a distinctive, antiquity-driven Parisian fashion. Women were now wearing shortsleeved dresses with a high waistline, whose cuts and designs required new types of jewellery. Napoleon was an aficionado of cameos and intaglios in the classical antique style which, in addition to symbolising his imperial aspirations, highlighted the gemstones’ multi-layered structure to perfection. Fabrics were often enhanced with a bee motif that, in a sense, was symbolic of a turning away from the royalist lily. The exhibition presents an overview of the Napoleonic era, which brought about fundamental societal changes within a relatively short period of 15 years and, during these highly dramatic years, also inspired the creation of superbly crafted objects. EG

For further information, please visit: www.schmuckmuseum.de

February 19-21, 2020 Royal Sonesta New Orleans, New Orleans, LA

This Investment Education Symposium aims to provide broad education and information on investing, fiduciary responsibility, and selection of money managers to the key decision makers and other representatives of the nation's largest pension funds, endowments, foundations and other institutional investors. Participants of this conference will have the chance to exchange ideas and learn from other delegates and presenters who manage some of the largest capital flows within both the traditional and the alternative investment communities. Institutional investors will come from across the country not just to network but also to learn from the nation's leading institutional investors, asset managers, hedge fund managers, consultants and more.

SPONSORSHIP & EXHIBITING OPPORTUNITIES ARE AVAILABLE

If you are interested in attending, sponsoring, speaking or exhibiting at this event, please call 212-532-9898 or email info@opalgroup.net

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TECHNOLOGY

Forex & Brokerage

Financial Trading in 2020 It’s a great time to be a trader! The quality of professional analysis is rising for stockbrokers, and retail traders can also expect a huge leg up from AI in the coming year or two. Looking specifically at forex, CFD and futures trading, the requirements for a tech setup that can give retail traders a seamlessly fast and powerful trading experience have been mapped in 2020. This is what is needed and what it needs to look like, as many have learnt by trial and error over the last decade what the issues are with substandard tech in trading, reports Thomas Hughes. oor hardware and buggy or dated software cannot be components of successful, regular trading. Indeed, they seldom are in this era, as poor assets are essentially a self-fulfilling loop: slow tech and poorly built apps will eliminate those that are employing them. If we now know so well what the wrong kit looks like, how can we make sense of the dazzling array of offers out there claiming to be the very best thing for forex traders? Or derivatives traders, crossover

Photo: antoniodiaz / Shutterstock.com

• Productivity, Strategy, Profitability

traders or crypto traders — the list is a long one. Indeed, while everyone is often obsessed with “signals” and trying to predict the market, successful traders know to start out with the correct gear to get the job done. The hottest tips in the world can be meaningless if the speed and overall capacity of trading tech is below par. Let it also be said that the immediate points below apply to all types of retail day traders. Of course, dedicated software packages will have their own focus such as forex, stocks or CFDs, but while exact software packages vary based on trading

TECHNOLOGY

Forex & Brokerage type, hardware and peripheral requirements remain similar across the board. SETTING UP A DAY TRADING STATION - HARDWARE SPECS Many reputable trading trainers insist: don’t trade on your phone! Of course, many people do, but it is still accepted that the best results stem from a purpose-built trading station, and that involves a laptop or desktop PC. A computer is not as accessible as a smartphone, and this fact alone has probably helped more novices than can be counted, to avoid the constant fiddling in the markets that makes people second-guess their trades, chase losses and lose money. It is not a bad thing not to carry your day trading station with you everywhere. While those same reputable trainers do also warn against “trying to make trading a 9 to 5 job,” sitting at a trading station remains preferable to trying to place good trades regularly via a smartphone while on the move. THE DAY TRADING MONITOR Small screens simply won’t display all of the charts and other intel that most traders want to see while trading. Toggling between screens is not an effective solution as data is best put to use when perpetually visible and in close proximity to one another. Indeed, many traders begin with two screens, simply to accommodate the need for visibly displayed data alongside the trading screen itself.

The modern personal trading station has as many as four monitors positioned in front of the trader, typically all slightly raised, front and centre, with the keyboard on the desk surface itself. PC monitors have more pixels per inch than TV monitors, which means that co-opting an old smart TV is probably going to fail. The resolution of all PC monitors is typically more than adequate, and it is really size preferences that need determination. Monitors (or laptop screens) of the 40 x 20cm variety are the minimum ideal, although many prefer a larger screen. Going larger makes it difficult to employ a single screen in a desk setup. When maintaining a comfortably sized trading screen, additional larger monitors can be mounted on a wall instead to display multiple graphs and streaming intel. By the same token, some traders insist that a single screen around 90cm wide, typically the size of an entry level ‘big screen’ TV, is the optimum setup for trading. Tweaked to personal taste, the rule here is ‘don’t try to trade on a small screen.’ Have one PC, or one PC and 4 monitors, but ensure that screen size is sufficient on all. GRAPHICS CARD (GPU) With the advent of multiple screens for home trading setups, if all screens are to be run from a single computer, the graphics card becomes an important consideration. Although marketers use “graphics card” and “CPU” (central processing unit) — and even often use CPU and GPU (graphics processing unit) interchangeably to confuse things further — the graphics card is the unit, while the GPU is typically the chip within the unit. A more powerful GPU will allow you to run two monitors, while a single PC’s GPU should be rated at a dedicated 2GB minimum. For multiple screens, 4GB becomes essential. A good recommendation is to buy for future additions. CPU CONSIDERATIONS Look at the CPU specs too, as the CPU determines how many tasks your PC can handle at any one time, measured in seconds. Modern CPUs have what are known as “multiple cores,” and the higher the core score, the faster your PC. Day trading demands at least a 4 to 6 core CPU. Personal trading stations vary, but skimping on a CPU spec typically means slower execution of trades and a more frustrating experience overall. THE HARD DRIVE While RAM is essentially temporary memory, a PC’s hard drive is its solid storage space. The hard drive stores the PC’s operating system and apps. Modern computers will depict the hard drive capacity in GB or TB, and here again, the more the merrier. Two considerations on the hard drive are critical for traders: first, that the hard drive is rated at least 500GB, although 1TB+ is preferable. Secondly, a solid state drive (SSD) is preferable to a hybrid hard drive (HHD). Although HHD drives incorporate a flash module (hence the “hybrid” component of an HHD), the SSD drives are faster by 5 to 7 times on average, and also more reliable.

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RAM MEMORY The random access memory (RAM) spec of a PC is critical to performance. Although it is unlikely that traders will encounter PCs that are chronically under-supplied, it’s best to simply spec towards the top end of RAM to be assured that the basic functionality of a PC will meet your trading requirements. Also concerned with being able to quickly multitask, the RAM specs on a trading PC should be at least 16GB, as freezes and crashes are simply not an option when trading. OTHER ESSENTIALS FOR DAY TRADERS Traders are unable to wait for signal or power to return in the event of an outage, as downtime can translate to quick and often significant losses. A trader’s internet connection needs to be exemplary, as does his power backup, and here are some critical elements to day trading that every serious trader will have in place. INTERNET CONNECTIVITY Many, many traders trade from countries where internet connectivity and Wi-Fi availability were put in place long ago. Their connection standards are usually exemplary — fast and always on. Others struggle with their existing setups, often running at speeds as low as 100mbps or less. Under these circumstances, an upgrade is essential. Either opt for better service providers and pay their asking price, or use ADSL or fibre cables as an alternative. Without a decent internet connectection, even with the most powerful computing setup in the world, day trading becomes a mess of delayed data, inability to place trades, and lost opportunities. Indeed, it is not an overstatement to say that unless a trader’s internet connection is infallible, nothing else about day trading can function correctly. UPS (UNINTERRUPTIBLE POWER SUPPLY) Although laptops have a battery backup, most desktops today still lack built-in UPS. A UPS is really a dual benefit, as not only will it allow uninterrupted trading should power outages occur, it also shields users’ tech from power surges or spikes. At the very least, a UPS will afford the time to close positions and exit trading gracefully — an important consideration if you’ve been sitting on the edge of your seat counting pips desperately! COOLING UNIT Liquid cooled PCs might have seemed ostentatious a decade ago, but don’t forget that adding a monitor (or three) alongside the highly demanding computing ability that trading demands, means that the PC can overheat quickly. Running at temperatures above spec on a regular basis can also dramatically reduce component life. Installing single or dual fan cooling tech is often necessary, while a liquid cooling unit remains top of the range and addresses any overheating issues. Should these considerations be taken into account, most traders are well equipped to benefit from market opportunities as they occur. It is almost unthinkable in 2020 to suffer the costly disadvantage of a bad tech setup. EG Winter 2020 •

TECHNOLOGY

Automation & Robotics

Technological Developments In The Next Decade Looking at technological advancements that we can expect to see rolling out over the coming decade, it seems sci-fi has never been so mainstream so fast. Unimaginable realms of augmented or completely virtual reality, service and capability levels are going to bounce several leaps ahead, and a vast shift to automation looms, writes Shannon Berkley. larming advancements in nanotech, robotics and AI “mimicry” where AI is developed and housed in such a way as to look like us, emulate us, learn our human nuances and massive lexicon of words and anomalies, seem to roll out on a weekly basis. With Hanson Robotics having set the pace with Sophia in 2015, there are striking such “social” applications being developed, as well as military, enterprise and especially medical developments that are set to change our world dramatically by 2030. A recent article quoting an MIT Media Lab professor on the immediate future noted a prediction “that the technological changes that would take place over the next century would be more rapid-fire than the technological changes that had taken place over the past 20,000 years.” A good example of this would be a glimpse at driverless cars. Initially billed to become reality over the next 20 years, they’re here already. Push the auto-drive in a Tesla and you’re experiencing driving without having to drive, some 19 years ahead of those initially mooted schedules.

DISRUPTION AND DELIGHT AWAIT Advances in automation and robotics, while relieving millions of mundane work, also demand a sharp adjustment in our views of society, as those millions will then be unemployed. Both blue- and white-collar workers face replacement in droves over the next decade. It could be a good thing — if governments and societies can develop new activities as fast as old job categories become redundant for

humans — but it’s going to be a painful moment. Indeed, social upheaval might be so substantial that a decidedly authoritarian streak might emerge in previously genteel democracies, simply in order to manage public upset at loss of income and a widening wealth gap. The essentially “unemployable” status of millions or billions across the globe is going to test human egalitarianism in a dramatic new fashion. It’s difficult to quantify which industries will be the most impacted by automation in the form of robots, but any manufacturing, processing or even “calculating” enterprise where humans need to accrue and amalgamate data for reporting ends are industries likely to shed a significant number of human jobs. In the coming decade, formerly untouchable industries like the meat packing industry, for example, where humans have remained relevant due to the balance of skills necessary to perform the task, as well as the variable nature of what they’re working with, might be almost completely automated. The androids are coming, believe it. Automobile manufacturing has been both heavily robotised and heavily dependent on human wit and savvy for decades. People still build cars, because the “final finish” on items of this nature needs to meet consumer expectations in a human way. Guaranteed, however, is that androids cost less to employ than humans over the longer term, and so the human component of auto making will rapidly decrease over the next decade as AI becomes more intelligent, able to deal with the subtle nuances

• Productivity, Strategy, Profitability

demanded by modern consumers. It’s a very short step from driverless cars to machines designing and manufacturing them. The human component in auto and overall industrial manufacturing is shrinking, and that will accelerate. “Handmade” cars like Ferrari are likely to maintain their elitist appeal, but that kind of artisanal niche in any industry is far more a contributor to the wealth gap than any means for keeping people employed. Blind loyalty to simply being “better” through automation can alienate billions of working people, and that is an unfortunate but intrinsic component of tech advancement. Business, never big on the moral front, will need to incorporate social responsibility in drastically new, voluminous ways, perhaps in tandem with government oversight that legislates to this effect. THE PLUS SIDE, LARGELY RESERVED FOR THOSE WITH INCOME TO ENJOY IT Conversely, the service sector is likely to improve tremendously within the next even five years, thanks to AI. How that plays out in societies shedding employable people remains to be seen, but there is some hope that logical new frontiers for human employment will open up on the back of AI’s application, and also that upskilling will move many agrarian and other impacted souls into a different echelon of employment. Government as a human experience is also likely to be sorely tested over the next decade, where it

TECHNOLOGY

Automation & Robotics Photo: sdecoret / Shutterstock.com

is what the military-industrial complex will do with AI. International fishing fleets wiping out ocean stocks with robots is sufficient of a horror show, but when military entities already have the technology to remotely exterminate millions of “undesirable” humans, a personal right to life might become a quaint notion in the years ahead. SELF-EMPLOYMENT IS LIKELY TO BECOME OBLIGATORY FOR MILLIONS Entrepreneurship, while strongly associated with a single person’s ability to perceive and pursue markets, might become a mandatory pursuit for millions of people soon enough. Even here, AI can generate ideas and map out business plans to optimise profits for any individual who inputs limited criteria. An AI life counsellor, business or life coach is not far behind either. Perhaps it will prove to be AI’s saving grace, at least for everyone shortly destined to find themselves unemployed, to whatever extent it can facilitate entrepreneurial development in the next decade. A brave new world awaits us. In a truncated nutshell, machine learning will accelerate in the coming years. As the learning “learns,” the pace will rocket — think human evolution

remains to be seen just how representative they are of the people’s interests, as opposed to simply collecting tax money, whether it comes from humans or automated enterprise. Although arts and entertainment would seem to be impervious to AI penetration, “artistic” algorithms like Google’s AI-powered Bach Doodle is indicative of how humans, in fact, are applying the old building tools of algorithms that have always been a component of computational life. AI’s development still requires human insight and development to decide how we might want to apply and experience AI, but even that will probably change soon enough. Think tanks of the near future might well be completely automated themselves. With blockchain so enabling fintech enterprise, its more flamboyant application cryptocurrency is working against its survival, indeed against fiat currency’s survival. Taken as a whole, on a globe almost unrecognisable from the world we knew even 50 years ago, it seems probable that bankers will become little more than automated accounting and processing apps over the next decade. Thousands of banks have closed branches worldwide, shedding the human component and client interface. Crypto’s decentralisation has forever dented the centralised www.executive-global.com

structures of yore, and people simply want simpler processes, easier credit and more rewards — all current aspects of banking that can be wholly automated. And investment banking is set to shed stockbrokers like seed husks too, as the prospect of machines better handling trading and investment as well as portfolio management in our highly convoluted and maddeningly complex financial world becomes reality. While robot traders have been negligible junk for decades, and human judgement and savvy remained essential attributes to beat the markets with any level of success, that’s over now. This is only the beginning, the first glimpse of AI replacing the quants, other analytical aides and the stockbrokers themselves in the daily movement of trillions around the globe. The whole healthcare system comprising documenting, recording and treating patients is amenable to huge AI application, likely with better overall treatment in line for patients. Nanotech medical applications are also something of a miracle frontier, where medicine is using AI to pursue and treat intractable illnesses and conditions that have plagued humanity for centuries. Back to the downsides, most worryingly for some

of the last 400 years, condensed into two or three months! That, is the kind of timeline now common to the tech frontier. Whether robots will make our lives easier or a dark, uncaring nightmare remains to be seen, but it’s likely that AI and robotic build will affect different people very differently. Taken as a whole, we are indeed closer to the Jetsons economy, but unfortunately only for some. Much as AI originated from the highly elitist educational and enterprise echelons that the vast majority of the world’s population never takes part in, so too are its most profound benefits likely to empower a small percentage disproportionately. Although a push-button paradise might surround all of us, the likelihood of Terminator-style abuse of the new tech age by bad players, or simply the shrinking of a real sense of altruism in a global society, are worrying possibilities that need constant monitoring. EG Winter 2020 •

TECHNOLOGY

Computing

Server Computers For Business So, your business has grown significantly, and you need to buy your first server or upgrade the ones you already have. Congratulations! Purchasing a server is a very important decision, so light excitement is justified, says Thomas Hughes. ith the help of this guide, we will clarify the main points that will help determine which type of server is best suited to your tasks, as well as give an idea of the price range. By the end of this read, you should have the information you need to avoid throwing money in the wind and be able to choose the optimal server for your operation. Although a small server may look like a modern desktop computer, both machines are designed for completely different tasks. The desktop computer is intended for use by one person who needs a friendly operating system; a dedicated server, on the other hand, is designed to support multi-user applications such as mail, messaging, print servers, event planning services, databases, ERP and CRM systems. In addition, the server allows your employees to share information and interact with each other, since it acts as a central repository for all your documents, images, contacts and other important files. It can host an intranet portal so that employees can easily exchange data. The server can automatically back up your desktop and portable systems, so you never lose important information if one of the computers crashes or goes missing. Servers are designed to provide reliability, security and fault tolerance, with truncated storage options. If you plan to expand your business, choose the server with the best scalability that will grow with your company.

CLOUD OR HARDWARE SERVER? With technological progress, cloud servers gained increased popularity and grew to rival the conventional, physical machines. So, what about the cloud - is it a viable alternative? It definitely can be. Services like Amazon Web, Microsoft, and Rackspace Cloud Hosting can offer certain benefits.

For starters, they do not require serious investments and there is no need to hire IT specialists to manage the server. You also don’t have to worry about hardware and software that becomes outdated and obsolete over time. Do not, however, forget the drawbacks. Whilst not the case for big companies, other cloud server providers aren’t invincible to bankruptcy and, in case they do close, you could lose access to your data. In the absence of Internet access, you will be cut off from your applications and information. If your company experiences slow Internet and employees use large files, work efficiency may suffer. And, last but not least, storing information on equipment outside your direct control can be a privacy and security risk. It is also worth noting that while you may save on the purchase and maintenance of equipment, and IT costs, you are “renting” the services from your cloud provider - often, those costs can be higher than buying your own machine. Now, in terms of brands, the most famous providers include Dell, Fujitsu, HP, IBM, Lenovo and Oracle. Choosing the right server for you largely depends on the applications that you intend to run on it. If your company has more than 10 employees, if you must use a mail or print server, if you plan to work with a complex database or specialised applications, and if you require large data storage, it’s worth considering a full version of the server: tower, rack mount or blade-type. Tower-type servers look a lot like a desktop. They can be mounted on the floor, on a table, or upgraded for rack mounting. These servers are quieter than others due to the fact that they do not require fans for cooling. The higher-end “tower” servers, with a powerful processor, lots of RAM and plenty drives, can help you out even with virtualisation. Whilst they

• Productivity, Strategy, Profitability

Photo: Amy Walters / Shutterstock.com

have easily swappable parts, advanced remote control functionality and a pleasant quietude, their scalability may leave you wanting, making them far more suitable for smaller businesses than big corporations. Fujitsu is one of the few companies that is involved in the development and production

IF YOU INTEND TO EXPAND THE SERVER FLEET IN THE FUTURE, THEN CHOOSE A MODEL WITH THE POSSIBILITY OF SUBSEQUENT RACK MOUNTING.

TECHNOLOGY

Computing

as easy as inserting a new blade into the slot. You can install network components such as Ethernet switches, firewalls, load balancers and servers all into the same rack. Because the chassis provides power, cooling, I / O, and interconnectivity for all of its components, you don’t have to look for new cables while adding new things. Considering the elevated initial and maintenance costs, but also the high performance, this type of server is a good fit for large corporations with lots of resources. DATA CENTRES AND LATENCY The HP ProLiant BL460c Gen9 bladetype server, features various configurations and deployment options. Such flexibility allows you to use a storage system for major IT applications, with optimal capacity in accordance with the workload, which in turn, leads to lower costs of ownership. This highly productive solution adapts to the stringent requirements of any server environment, including virtualisation, support for IT and web infrastructure, collaboration systems and high-performance computing. HP OneView accelerates the delivery of IT services through a software-defined approach for the management of all resources. The server can boost productivity by 70% with its new Intel Xeon E5-2600 v31 processors and an advanced HP DDR4 SmartMemory module with speeds up to 2.133 MHz. The price here would be roughly £1,525 ($2000). Now, an increasing number of corporate data centres, requiring high throughput and low transaction latency, which previously used hard drives (HDDs), ended up facing performance delays with the ever-increasing amount of data being passed around. As a result, they had to adapt and adopt solid state drives (SSDs), which are a modern solution for improving the performance, efficiency and reliability of the data centre.

of all sorts of servers from small businesses to supercomputers. Fujitsu Primergy TX1310 M1 is a good budget-level solution, oriented to small and medium-sized businesses, which comes with some pretty high-quality components, and an unrivalled, perhaps most reliable warranty on the market. Like almost everything in this price segment, it is designed for silent round-the-clock operation and offers RAID 0/1/10 support. It is equipped with an Intel Xeon E3-1226 v3 chipset, with two 1TB hard drives and 16GB of RAM. Its market price is around £345 ($450). SERVER OPTIONS If you need, or will need, several servers, consider purchasing the rack-mount type. This server has a standard width (suitable for 19-inch racks) and a standard height, which allows you to place it in a relatively small area. Rack servers do not differ from towers in their equipment: they have sockets for several processors, numerous slots for RAM, and a large space for storing data. Now, rack systems are www.executive-global.com

highly scalable, for they require no additional floor space and can be stacked vertically until the cabinet is full. However, due to their proximity, racks will require an advanced cooling system to keep them operational. These are perfect for companies in the process of growth. Super Micro Computer Inc’s new A+ server line uses the highly efficient EPYC processors by AMD. These racks offer a large amount of memory, several options for network adapters, support for flash drives on the NVMe bus, and the ability to install GPUs. The most powerful in this line is the Ultra A+ model: its motherboard has two sockets for the CPU, uses DDR4 memory, has seven PCIe 3.0 slots and two 25GbE network adapters. The model is made in a 2U chassis and allows you to install twenty-four 2.5-inch SSDs or hard drives. It is priced around £760 ($1000). Blade servers are the most expensive, but also the best performing option. The main difference between blade and rack servers, is that the former is installed into a chassis. Adding a new server is

BESPOKE CONFIGURATION Thanks to the lack of moving parts and the availability of a new microcircuit, there is little to no risk of physical damage to the disk compared to the classic HDDs. You are safe from disk crashes and unexpected shutdowns. The SDD’s transfer speeds are considerably faster, about 4-5 times higher for writing and 5-6 times faster for reading. On top of that, it has a long service life and low accident rates, as well as high fault tolerance, even while dealing with the busiest workloads. Servers can also be configured into RAID formations. RAID is a disk array (i.e. a complex or, if you want, a bunch) of several devices, which can include HDDs and/or SDDs. This array serves the purpose of increasing the reliability of data storage and the speed of reading and writing information. The general conclusion is as follows: if the server is purchased for a small company with modest needs, and is supposed to be installed right in the office, it is rational to stop at an inexpensive floor-standing option. It fits easily into the budget and has a much quieter cooling system for the space. If you intend to expand the server fleet in the future, then choose a model with the possibility of subsequent rack mounting. EG Winter 2020 •

AVIATION

NetJets, Inc Photo: LightField Studios / Shutterstock.com

Private Jet Travel With Netjets There is a certain flexibility, comfort and opulence that even the world’s most prestigious first and business class flights can’t offer. To forego the hassle of waiting times, luggage check-in and check-out, customs, and other sources of stress during the trip, can seem like the ultimate luxury for some travellers, but is a necessity for others, thinks Rachel Smith. here is nothing quite like traversing the skies within a private jet all to yourself. Of course, few are those who can cash out for an entire airplane, so owning one remains a dream for most…or, rather, remained. Meet NetJets - the Berkshire Hathaway subsidiary that specialises in fractional ownership of business aircraft! Read on if you want to learn more about this innovative company and how you too, could have a share of your very own airplane. Founded in 1964 under the name of Executive Jet Aviation, NetJets Inc. is the world’s very first private business jet charter and jet management venture. It was inaugurated by the joint effort of Air Force Generals

Curtis E. LeMay and Paul Tibbets, a Washington lawyer and former military pilot Bruce Sundlun, as well as celebrities James Stewart and Arthur Godfrey. The company board’s original chairman was retired Air Force Brigadier General Olbert F. Lassiter. THE BENEFITS OF ALL TRAVEL OPTIONS Upon foundation, Executive Jet Aviation took its initial flights in its first year, with a fleet of ten Learjet 233. A decade later, Executive Jet Aviation had approximately 250 contract customers and logged more than three million miles per year. In 1984, a former Goldman Sachs executive, Richard Santulli bought Executive Jet Aviation Corporation

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and became its chief executive officer. Within two years, he established the NetJets program with the innovative approach that has defined its image and business as the first shared aircraft ownership program in the world. In 1998, one of its clients and CEO of Berkshire Hathaway, Warren Buffett purchased Netjets Inc. and took it under his wing. Currently, NetJets’ fleet has about 800 aircraft and more than 4,000 customers: according to its own estimates, the airline occupies 10-15% of the global business transportation market. NetJets Europe, which is the leader in the European business aviation market, has 150 aircraft and 1,600 customers, and its carrier delivers them to 5,000 airports in the world.

AVIATION

NetJets, Inc giving the most optimal return on that investment. To address this issue, NetJets divided each aircraft into shareholdings and began to sell them to its customers as property. Depending on the frequency of flights required, a businessman or corporation can acquire from NetJets anywhere from half of the jet (the largest share) to 1/32 (the smallest). For example, a 1/16 share in a Hawker 750 costs about $750,000, that is, exactly 16 times less than the total cost of the jet. By becoming the partial owner of an aircraft, the NetJets’ client receives the equivalent amount of the flight hours that they can use during the year. Of course, those hours are not given to the owner of the aircraft’s share for free, and have to be paid for as well; however, the result comes up much more cost-efficient than standard rates. In addition, the owner of the share pays monthly expenses for all the costs related to the aircraft, including its maintenance. NetJets Europe, for instance, distributes the cost of upkeeping among all shared owners, so the amount of monthly payments is not comparable to the cost of servicing your own aircraft in its entirety. On average, several hundred thousand dollars a month are required for the maintenance.

With results like this, it’s almost hard to believe that in the mid-1990s, the European division of NetJets still had only 14 aircraft and 90 customers in total. Businessmen and top managers of large corporations, whose work tends to constantly send them from one part of the globe to another, find themselves faced with a decision: do you purchase a ticket to the first class of a regular airline, book a charter flight on a business jet, or finally buy your own plane? NetJets aviation business operator has managed to combine the benefits of all air travel options into one. The logic behind its business model was as follows... PARTIAL OWNERSHIP Airline flights save consumers from spending millions on buying and maintaining a ship. Moreover, a person depends on timetables, transfers, not to mention the hustle and bustle of airports. However, buying an airplane is obviously quite the expensive pleasure. For example, a medium-sized Hawker 750 business jet will cost about $13 million with service costs adding up to about $1 million every year. Meanwhile, even the executives that travel the most, only spend about 160 hours a year in the air, while an airplane can fly five times as much, thus not exactly www.executive-global.com

A VARIETY OF OPTIONS It is also worth mentioning that, when buying a stake in the aircraft, NetJets customers in fact gain access to all of the company’s other vessels. If the shared owner needs to take their flight and their particular plane is currently occupied or is on the other side of the world, the air carrier will provide them with a similar business jet within 10 hours. This system proved to be quite popular with the clients, so between the best customer care and the innovative shared ownership model, NetJets had rather smooth sailing even over the last global crisis. Though the company didn’t disclose its figures for revenue and profit, while several business jet operators were ruined and business flights altogether plummeted by a third, NetJets Europe had lost only 20% in revenue, which it then quickly recuperated. While many companies in the USA and Europe tried to copy the shared ownership model, it never worked quite as well as NetJets. The idea that one can buy an airplane then sell it to 8 people is appealing, but what happens if all 8 of them need to take a flight at the same time? So this model is only viable when a company has a very sizeable fleet, equipped with the highest quality of aircraft - which NetJets does. Among said fleet, one of the most popular medium-sized jets is the Citation Latitude by Cessna. The Latitude is engineered custom to client preferences - under the close collaboration of NetJets designers and Cessna, based on customer feedback, this airplane has been personalised to the very last detail. It is a medium-sized aircraft with all the comforts of a large jet, featuring ergonomic seats, high-quality glossy veneers and cold rooms, manually selected by the company’s design team. Other advantages of the Latitude include: the equipment of Inmarsat’s high-tech SwiftBroadband system, the Wi-Fi satellite system that is available worldwide, and a new enhanced soundproofing system servicing the cabin at heights less than

1,828m when flying in cruise mode. In addition, the airplane has a Gogo entertainment system that organises, manages and provides data on the flight, as well as all available media and aircraft cabin controls. NetJets’ Citation Latitude has the largest width and height among all Citation jets. Its cabin has a height of 1.85m and a truly even and flat floor. The aircraft accommodates up to eight passengers and has a flight range of 3,000 land miles, or seven hours, which makes it easy to get across continents, between most destinations in the world. This business jet also offers best-in-class features for short-haul flights and impressive climb rates, which gives you access to a variety of general aviation airports and significantly saves time for the passengers. Other airplanes in the NetJets fleet include the Cessna Citation Bravo, Cessna Citation Ultra/Encore, Hawker 400 and Cessna Citation XLS/Excel in the

BY BECOMING THE PARTIAL OWNER OF AN AIRCRAFT THE NETJETS’ CLIENT RECEIVES THE EQUIVALENT AMOUNT OF THE FLIGHT HOURS THAT THEY CAN USE DURING THE YEAR.

light cabin; Hawker 750, Hawker 800, Hawker 900XP, Cessna Citation Sovereign, Cessna Citation X, Hawker 4000, Gulfstream G200 and a Bombardier CL350 Challenger in the mid size cabin; Dassault Falcon 2000, Dassault Falcon 7X, Gulfstream IV, Gulfstream V, Gulfstream G550, Bombardier CL650 Challenger and Bombardier Global Express. In September 2019, Bombardier proudly celebrated the delivery of its 100th Challenger aircraft to join the NetJets fleet. This landmark event underscores the strong partnership between Bombardier and NetJets, and reflects the huge demand from business jet users to travel aboard the industryleading Challengers. The 100th Challenger in the NetJets arsenal is the award-winning Challenger 350, which continues to lead the super-midsize segment. BENEFITS WITHOUT DISADVANTAGES Equipped with such an impressive diversity of aircraft, it should come as no surprise that NetJets constantly experiences a high demand for business aviation, and sees clients choose the fractional ownership model more and more. The company offers all the benefits of having your very own jet, without the disadvantages. Actually owning an airplane would come with the burden of costs associated with its operation and “housekeeping”, including the maintenance during its periods of forced downtime. With NetJets, you pay only for the hours you spend in the air, while sharing all other overhead costs with your fellow co-owners. EG Winter 2020 •

AVIATION

Austrian Airlines

The Austrian Airlines Experience Something of a best-kept secret in the highly competitive world of air travel, Austria’s flagship carrier is a polished gem. A Lufthansa subsidiary, Austrian Airlines AG — better known simply as “Austrian” — offers Business and First Class flight experiences that set industry standards. Definitely one of those bringing the star quality to the Star Alliance, the airline is based in Schwechat, in the Vienna International Airport complex, writes Thomas Hughes. ustrian hasn’t simply provided luxury travel to consumers, it has defined it in many ways. Aiming at a consummately opulent experience, indulgent features for premium fliers include multi-functional, dynamic chairs able to adjust lumbar support and massage tired travellers; variably inflatable cushions; full ambiance control; big screen entertainment; a top tier menu and even an on-board chef. Flying First or Business Class on Austrian ticks all the boxes.

AUSTRIAN SERVICE MAKES ONE FEEL AT HOME Possibly the most endearing attribute of Austrian is its recognition of the need for a comprehensive experience. In the lounge, in the air, the service levels never dip, and maintenance overall perpetuates an industry standard many others lack. Amenities are not simply top drawer — it is the ever-present willingness of service that sets the airline apart. An ample buffet typically awaits premium travellers in the lounge, with an extensive range of beverages on offer, too. A good wine list with a variety of beers complements a large variety of coffee options, while neat showers await those who would like to freshen up before the flight. Ample space, personalised and big-screen entertainment, as well as a high level of intelligent technical aids populate the premium flight experience on Austrian. The airline features a large touchscreen In-Flight Entertainment (IFE) built into the back of each seat. Passengers can expect almost perpetual attention in the form of a diverse and current newspaper and magazine selection offering in English and German presented by staff from taxiing onwards, drinks, snacks and superb food dishes during the flight. Seats in premium class on Austrian fully recline in under half a minute, and the bed effect is intoxicatingly comfortable. Foot wells and side cubbies are copious. A welcome amenity kit provides

Photo: Soos Jozsef / Shutterstock.com

...A WIDE VARIETY OF CUISINE IN A FLIGHT OF A FEW HOURS. THE FOOD STANDARD IS TOP TIER, AND AUSTRIAN HAS MADE ITS KITCHEN A PRIME COMPONENT....

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personal hygiene products, socks and a face mask, as well as face cream, lip balm and earplugs. Premium bathrooms offer travellers sealed combs, a full shaving set and stain wipes, among other useful sundries. AUSTRIAN’S FLYING RESTAURANT For many, the most memorable part of a premium flight on Austrian is the menu. A dizzying array of starters and main courses dot what’s on offer, and meals are plated seat-side off the service trolley. Courses keep coming and it is possible to sample a wide variety of cuisine in a flight of a few hours. The food standard is top tier, and Austrian has made its kitchen a prime component of the allure for premium travellers. The airline flies to several domestic and over 120 international seasonal and year-round destinations, covering around 60 countries across the globe. EG

CONTACT

LIST PRICE - $8,700,000 USD 1415 6th Street, Santa Monica, CA 90401 3 beds | 4 Baths | 2 1/2 Baths | 8,228 Sq. Ft. EXTRAORDINARY live/work architectural by architect William Dale Brantley, 1986. First time on market: high-end modern, mixed-use compound w/multiple work spaces + chic residential penthouse. Ground floor + mezzanine features 2 separate workspaces (5,500 +/- SF total) incorporating warehouse-sized work spaces w/18-foot ceilings, art gallery, private office suites, workrooms, mechanical rooms & bathrooms. Could be divided. Ultra-private (2,700 +/- SF) 3rd floor penthouse. Huge open living room & dining room, chef's kitchen, master suite w/library, walk-in closets + dual bathrooms. Full-length skylit gallery, office, powder, laundry & additional ensuite bedroom complete floor. Three-sided, private 3rd balcony envelopes entire residence, ideal for major entertaining or intimate gatherings. Optimum for owner/user, production company, tech start-ups, artists, design professionals. Elevator to all 3 floors. Secured garage via alley (5 covered + 2 uncovered spaces). Impeccably maintained. MLS# 18414020

Shelby Ring Cell (213) 973 7435 Email shelby@ShelbyRing.com

AVIATION

Honda Aircraft Company

The Honda HA-420 Jet Chances are that when you hear the name Honda, you think of its vehicles and motorcycles, but is it the only thing that they produce? No! In fact, the company has developed and implemented its very own personal aircraft model, says Oliver Taylor. t isn’t unlikely that you haven’t heard of it, seeing as it isn’t particularly used in civil aviation, nor is it as famous as some other luxury aircraft, so most passengers aren’t acquainted with Honda’s first commercially available airplane. However, it is most definitely worth looking at, with its innovative design and $5,280,000 USD price tag. Read on to meet this unique jet! For the design and creation of this model, the automobile giant established a special department, which then evolved into a separate company dedicated to the production of business jets. The Honda Aircraft Company - a subsidiary of the Honda Motor Company, introduced its first aircraft’s flight in 2003. The company developed it completely on its own, without any support from outside, and used only Japanese parts and local labour throughout the process of its production. The model was called the Honda HA-420 HondaJet.

POWERED BY GE HONDA / HF120 ENGINES OF 2050 LBF EACH, THE JET HAS A MAXIMUM CRUISING SPEED OF 790 KILOMETERS PER HOUR AND A MAXIMUM RANGE OF 2000 KILOMETRES.

PRAISED FOR ITS DESIGN The HA-420 HondaJet is a small twin-engine business-class personal aircraft. While Michimasa Fujino, the founding president and CEO of the Honda Aircraft Company, has been working on the model since the 1990s, it has appeared in operation only by 2011 and began deliveries in December 2015 as the global financial crisis hindered the

process. However, the jet quickly found its clientele and has been praised for its design. In terms of technical specifications, the HA420’s exterior is 12.99 meters long, with a total height of 4.54 meters and a wingspan of 12.12 meters. Its interior is 5.43 meters long, 1.52 meters wide and 1.47 meters high. The typical configuration includes up to 1 crew and 6 passengers (or 2 crew and 5 passengers). For baggage space, its combined stowage is 66 cubic feet. Powered by GE Honda / HF120 engines of 2050 lbf each, the jet has a maximum cruising speed of 790 kilometers per hour and a maximum range of 2000 kilometers. A PRACTICAL SMALL AIRCRAFT As you can see, Honda has created a practical small aircraft designed for business. Due to its size, it has little weight and thus consumes much less fuel than other conventional private jets. Among its many defining features, the HondaJet’s engines are mounted on pylons above the wings, it has a laminar shape of nose and wings, and enjoys efficient pilot equipment in the cockpit. The placement of the engines above the wings corresponds to a concept drawn by Fujino over twenty years ago. This choice of position is dictated by the desire to improve the aerodynamic characteristics of the aircraft. In addition, this allows you to make the jet’s cabin and cargo compartment more spacious, as well as reduce noise and vibration within the plane. While the company has focused exclusively on the HA-420 so far, its Greensboro hangars are much taller than what the jet needs, which hints that there are more projects planned for the future. EG

Photo: Oleksandr Naumenko / Shutterstock.com

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EXECUTIVE EDUCATION

EFMD

A Flexible Future Higher education in business and management has functioned in more or less the same way since it was first introduced as an appropriate subject for study. But things are perhaps about to change and there are at least five reasons why.

Article by

Peter Lorange

CHAIRMAN, LORANGE NETWORK

he needs of executives/students are changing. Many are now being made redundant due to emerging technological advances, including artificial intelligence, and consequently, the size of the population that requires re-educating is mushrooming. The present executive/student typically requires more flexibility than business schools have been able to offer in the past. Today’s executive/students bluntly resist spending weeks, or even months, on business school campuses. Cost pressures on the educational sector are becoming more intense. Thus, it has become imperative to find less expensive ways to employ

faculty or to make use of schools’ campuses. Of critical importance is the fact that the emerging technolog y supports change. Today, studying at home via distance learning is a preferred option compared to classroombased study, much of which tends to be sadly uninspiring. The emerging technology allows for remote, deep, interactive learning such as online flashcards, case studies, and quizzes, chatbots with professors and helps assistants, instant grading and so on. Finally, related to the point above, education, like many other goods and services, has witnessed increased pressure to “adapt to the times”. As students use technology more and more in their personal and professional lives, their attention spans decrease and they demand more interactivity and speed in learning. So education, just as retailing or other service offerings, has to keep evolving in line with its consumers.

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BACKGROUND Student enrolment is going down. This is particularly of MBA programmes but it also seems to be the case more generally. What are the reasons? Let me point out just three: There seems to be a growing realisation that there are many other forms of preparation for a successful career than the typical business school offering. For example, the study of engineering and the sciences seems to be on the rise. Perhaps the providers of these, as well as other disciplinary areas, are making it easier to combine study with practical apprenticeships in real companies. As well as this shift in student preferences, there is also the issue of an ageing population in many developed societies. The number of student applicants is simply no longer growing. This fall in applications and the lack of growth in business schools may be driven by several other problems, of which the following seem particularly acute: Tuition fees are perhaps now so high that a “limit of tolerance” has been reached. In other words, studying at a business school is becoming too expensive. The programme curriculum often seems to be too inflexible, making it difficult to effectively combine study with a career. Employers might find that the student is expected to be away from his or her place of work far too often to make this feasible. There seems to be a trend towards “learning on the job” and a focus on specific job-related

References Davidson, C.N. (2019), The New Education, Basic Books. Lorange, P. (2019), The Business School of the Future, Cambridge University Press.

EXECUTIVE EDUCATION

EFMD

Photo: Rawpixel.com / Shutterstock.com

achievements. Many employers or companies in developed countries seem more focused on hiring top talent that has already proved itself “on the ground” rather than “in the classroom” through degrees or academic achievements. In other words, today a candidate for an interview is often asked “what have you done or achieved?” rather than “what (or where) did you study?” POTENTIAL SOLUTIONS A more effective concept for a business school degree programme is clearly necessary. This might encompass: A minimum period of time an executive student should spend at a school, which could be quite low, say, one week during a given period. Employers would be key decision-makers in terms of what is realistically acceptable in the context of their business. A considerable amount of self-study of diverse cutting-edge expert reports, typically built on the offerings, competences, and research of a range of leading experts drawn from several business schools. Increasingly, the variety seems to be key. There is typically no simple answer to cutting-edge dilemmas. Different experts from different schools may see things differently and this diversity will become increasingly important. It is vital to take advantage of virtual learning and digital knowledge transfer as well as digital www.executive-global.com

communities. Modern distance learning is now generally of very high quality and today’s students are comfortable studying independently. There should also be face-to-face learning experiences, to complement the distance learning element of a programme. These will typically take place in workshop settings on campus or in a hotel with a focus on discussions of cutting-edge dilemmas. The class leader will take on a role that is perhaps more analogous to a conductor of an orchestra rather than the traditional professorial approach of one-way learning. These workshops will typically not be limited to the usual 45-minute format of regular classes. It would be helpful to run these workshops over weekends to avoid conflicts with students’ day-to-day jobs. The key here is the efficiency of the offering. This business school of the future will be more efficient because it will be able to provide more practical, tangible and relevant deliverables. THE ‘‘SCHOOL’’ As mentioned above, the cost structure of many business schools seems out of hand. While it is important to strive for quality, this does not imply that it should be quite so expensive. Some fundamental questions might have to be raised. A thoughtful programme of outsourcing, drawing on resources only when needed, might have to be put in place. Let me raise some questions relating to particular “sacred cows”, which are increasingly being accepted by schools as problematic: Staffing levels tend to mushroom. Why are so many members of staff needed? Why not take advantage of outsourcing opportunities? Another question, which is perhaps even more fundamental, might focus on what tasks these additional staff are performing. Are they essential? Are the tasks effectively performed? Are the staff being well enough managed? And, most critically of all, is all of this a core part of a typical business school’s raison d’être? Why employ full-time professors? Most professors have relatively modest workloads. Their contractual requirements in terms of teaching might typically be fulfilled over a relatively short period of time of a school year. So how is the rest of their time being spent? Why maintain an expensive campus with extensive buildings and grounds? As noted, distance learning will increasingly be expected to take over from the existing campus-based model, implying that conventional classrooms will be much less in demand. Face-to-face workshops will typically take place in smaller seminar rooms, around circular tables on “flat” floors with a relatively limited capacity of, say, 30 students at most, a far cry from conventional lecture halls. Airport hotels might perhaps be better suited to meet these needs. They certainly often offer easier access than many conventional campuses. So the bottom line is: why do we need a conventional school campus at all? The result of all of this streamlining might be a considerable cost saving, without a reduction in quality.

We are seeing new entrants becoming active in markets that have traditionally been the domain of business schools–consultants, special providers, expert entrepreneurs. These new actors do, of course, take advantage of the types of cost savings suggested. By paring down staff numbers, reducing the professorial time commitment and avoiding expensive commitments to campus buildings, education itself will be able to match the wider societal trends and bring executive education more in line with today’s business world realities. PEDAGOGY Pedagogy is clearly changing and we highlight some further contributing factors: Learning from what might be regarded as “cutting edge” seems key. There is an overwhelming accumulation of knowledge these days. Research will, of course, continue to push the limits of knowledge. But, increasingly, the best insights and practice might also come from business. Senior business executives, including leading-edge consultants, may be at the vanguard of new knowledge and they should be brought on board the lecturing team. They should be part of an emerging pedagogy. Writing down one’s analysis of a particular real-world business dilemma and submitting this for grading, typically in the form of a relatively short, succinct paper, may be an essential part of

WHILE IT IS IMPORTANT TO STRIVE FOR QUALITY, THIS DOES NOT IMPLY THAT IT SHOULD BE QUITE SO EXPENSIVE. SOME FUNDAMENTAL QUESTIONS MIGHT HAVE TO BE RAISED.

the “new” pedagogy. Setting down one’s thoughts on paper demands the key skill of precision, a requirement that is generally lacking in much of students’ academic experiences today. Such a paper will represent the application or the proof of the knowledge a student has acquired. CONCLUSIONS We see a dramatically evolving reality for the “business school of the future”, including revised offerings, new roles, and configurations (costeffective and better) and a more powerful pedagogy. The business school sector has traditionally been rather conservative. This is clearly expected to change! EG

For further information, please visit: www.globalfocusmagazine.com Winter 2020 •

EXECUTIVE EDUCATION

Association of MBAs

MBA Research Andrew Main Wilson, CEO of AMBA & BGA, on the first releases among a new series of research reports examining Business School strategies amid economic uncertainty. n August 2019, Forbes reported that ‘the MBA degree was in crisis’. The publication revealed that, for the second consecutive year, even the highest-ranked Business Schools in the US were beginning to report significant declines in MBA applications, The report went on to predict that the worst was yet to come, with many programmes due for double-digit declines. Bloomberg Businessweek painted a similar picture in November 2019: ‘Applications are down across the board. The US labour market’s continued expansion provides little incentive for those contemplating a graduate business degree to spend the time and money to get one.’ Citing high course fees and lack of student recruitment incentives, the article suggested that ‘part of the problem is self-inflicted’.

AMBA-ACCREDITED PROGRAMMES Since I put together my previous column for Executive Global, AMBA & BGA’s research and insight team has published our MBA Application and Enrolment Report, and I am proud to reveal that the new 2019 MBA Application and Enrolment Report shows that Business Schools accredited by AMBA are bucking this worrying trend – with institutions in our network collectively reporting a whopping 9% increase in applications to their MBA programmes. The MBA Application and Enrolment Report provides the latest picture of AMBA’s global network of accredited Schools and how they are performing in the MBA market. The results demonstrate the continued excellence of AMBA-accredited Business Schools and their ability to expand their programmes in an ever-more demanding world. The report analyses figures relating to the 2018 calendar year, as reported by AMBA-accredited programmes across the world. I am delighted to say that this study represents AMBA’s largest synthesis of application and enrolment data to date, with 236 Schools contributing to this year’s analysis. This also reflects the continued growth of AMBA’s network of world-class MBA programmes. This year’s research therefore covers more programmes, applications and enrolments than any previous study conducted on AMBA-accredited management education. It encompasses 823 courses, 127,080 applications and 47,654 enrolments, which is an indication of the huge volume of individuals seeking to maximise their career potential and lives through a world-leading business education programme.

Photo: Ryan DeBerardinis / Shutterstock.com

CMY

The report provides an up-to-date view of the composition of our network and the profile of AMBA-accredited Schools in 2018. It also analyses 202 Schools that participated in this study both this year and last year, comparing how they have fared between 2017 and 2018. We hope that its findings are of great use to the Business School community, and the management education sector, as it seeks to further enhance understanding of MBA demand and delivery. Last month, we launched the first part of our Business School Leaders Survey, in association with Canvas, which looks at the impact of technology in business education. The Business School Leaders Survey

DUE FOR RELEASE OVER THE COMING MONTHS, PART TWO WILL INVESTIGATE BUSINESS SCHOOL RECRUITMENT AND ADMISSIONS, WHILE PART THREE WILL LOOK TO FUTURE OPPORTUNITIES...

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intends to share the voices and opinions of Business School leaders throughout the world. Due for release over the coming months, part two will investigate Business School recruitment and admissions, while part three will look to future opportunities and challenges impacting business education. THE THIRST FOR INNOVATION This study is based on research conducted with 355 Business School leaders from 57 countries across the AMBA & BGA network and seeks to examine how Schools are managing in today’s global economic climate and how they are harnessing technological developments for today and tomorrow. The thirst for innovation will remain crucial in ensuring that they continue to be leading thinkers and practitioners of management education in a world constrained and challenged by the sustainability of the planet and ever-evolving geopolitical issues. I would like to thank every Business School that has contributed to our research. Without your input, this insight would not be possible. To find out more about these reports and to access their findings, please visit: www. associationofmbas.com/research. EG

For further information, please visit: www.associationofmbas.com/research

SUN YAT-SEN UNIVERSITY

LINGNAN-MIT INTERNATIONAL MBA Full-time and part-time International MBA programs

MIT Co-operation Global Immersion China Experience

More details...

TEL: +86-20-84115222 E-mail: lizhim3@mail.sysu.edu.cn

MIT Co-operation An experienced faculty team works with MIT professors. One study module in MIT campus, Boston. Visiting Fellow in MIT Sloan for one semester. Exclusive opportunity for MIT Degree. Receive MIT non-diploma certificate. Global Immersion Dual-degree programs with ESCP Europe and RSM, Erasmus University. Exchange study opportunities for 14 universities in 7 countries. Study tours with partner schools in Europe, including ESCP Europe, Antwerp School of Management and London Business School. China Experience One of the top schools of economics and management in China. In Guangzhou, an open coastal city neighboring Hong Kong and Macao. The center of the Pearl River Delta, one of the most economically dynamic and flourishing areas in China.

EXECUTIVE EDUCATION

Corporate Strategy

Corporate Branding for Executives Corporate branding has evolved, and going into 2020, it is becoming nothing short of a dialogue. With such impactful issues at play in the modern world, branding has to express an opinion. To this extent, corporate executives understand that their branding needs an anchor; a powerful factor in every successful brand today, says Oliver Taylor. eyond corporate social responsibility — something increasingly pushed by global board members to be included with marketing and overall branding — and assuring clients that you are on the right side of history, brand brings visibility. It may sound alarmingly simple, especially for corporates which have made a very big success out of a very local demographic, but without growing brand visibility, the store of public trust will never rise. Consumers will always default purchases to known brands when faced with indecision. Twenty years ago, corporate branding’s main aim was to out-muscle any opposition. Today’s corporate branding needs to maintain that visibility, while also being acutely aware of social issues, who they are talking to, and general consumer trends.

WHAT MAKES A GREAT BRAND? A good brand begins with good hiring, a great team ethos and a clear focus. Great brands like Nike, Amazon, Intel, Google and Pepsi know their target markets intimately. No matter the cost, these brands know it is worth it. McDonalds, Unilever, American Express and Coca Cola all have clearly defined missions. It may seem trite or trivial from another’s perspective, but their processes are executed so consistently that they become part of our social fabric. It might even present as maverick and elitist, but that is a huge consumer demographic, as Apple knows only too well. In spite of some bad products over the years, such as the MacBook’s infuriating butterfly hinge failure, these companies enjoy unrivalled consumer obsession. They understand their unique selling propositions (USPs), who they are talking to, and what they represent. Apple has basked in unwavering loyalty from its dedicated customer base for years. The company understands its competition, and because it has identified its key values and has told its story so engagingly to its audience, it has become

Photo: Fotazdymak / Shutterstock.com

a giant in the tech sector. Corporate brand identity needs to reflect the company’s goals, its mission, its attitude and, most importantly, it needs to do this all consistently.

IT MAY SEEM TRITE OR TRIVIAL FROM ANOTHER’S PERSPECTIVE, BUT THEIR PROCESSES ARE EXECUTED SO CONSISTENTLY THAT THEY BECOME PART OF OUR SOCIAL FABRIC.

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Modern, successful companies know that in the era of Inbound Marketing, there exists a critically important relationship between the corporation and the consumer. The Effie Index, for example, measures the success of marketing campaigns from around the world each year. Because they in effect act as a litmus test for successful branding, the Fortune 500 and Fortune 1000 companies watch these awards carefully each year. THE IMPORTANCE OF CONSISTENCY Advertising is imperative and no brand rises to prominence without a concerted campaign. Although tech start-up brands often grow on their innate value and massive adoption, dedicated marketing efforts foreshadow their success in almost every case. In short, advertising needs to be consistent, engaging and effective when measured in real terms, for therein lies the key to successful corporate branding. EG

F O X H I L L FA R M 3 8 0 U P L A N D R O A D, K E N N E T T S Q U A R E , PA 1 9 3 4 8 U S A A taste of the Sublime Nestled among Chester County's rolling hills is a farm, a gracious yet comfortable home that evokes the best of Europe and southeastern Pennsylvania. Among ancient beeches, centuryplus old spring house and barns, the house built in 2006 holds the most modern amenities while offering the authentic feel of a breathtaking historic stone home. Whether you seek solace or space for family, guests and friends, two-footed or four, your quest is fulfilled. A few things to add: In ground pool, hot tub, tennis courts, indoor riding arena, two outdoor rings, easy to ride out over the countryside. Fox Hill Farm 380 Upland Road, Kennett Square, PA 19348 USA Offered at $7,995,000

Margot Mohr Teetor RE/MAX Preferred 1595 Paoli Pike Suite 101 West Chester, PA 19380

Main Office: 610-719-1700 mmteetor@gmail.com www.margotmohrteetor.com Cell: 610-476-4910

LUXURY LIFESTYLE

The Plaza Hotel

New York’s Luxurious Plaza Hotel New York’s legendary Plaza Hotel is a majestic, towering landmark that you simply cannot miss. It stands watching over Fifth Avenue, near the New York Central Park, right in the heart of Manhattan amid its fashionable boutiques, high-end restaurants, historic art galleries, Bohemian nightclubs, and the full, immersive experience of that modern N.Y. life writes Rachel Smith. he Plaza Hotel, whose most recent renovation was worth over $400 million, is a historical monument of national importance as of 1969, and one of the most remarkable features of the city’s gorgeous skyline. Beyond being one of the world’s best hotels, it also serves as a monument to American traditions since the beginning of the 20th century and continues to offer its guests the most luxurious lifestyle. The building is an embodiment of a dream shared by three affluent businessmen - financier Bernhard Beinecke, hotelier Fred Sterry and president of the Fuller Construction Company, Harry S. Black. At the dawn of the last century, the gentlemen acquired a hotel building with a 15-year history and initially invested $12 million in it, to transform it into one of the most elegant hotels in the world. Renowned American architect Henr y Hardenbergh then redesigned the hotel building, combining majesty, grandeur, and undisputed chateau-style French chic that is now at the root of its charm. New York’s Plaza Hotel opened its doors and received its first guests on October 1st, 1907. Throughout its remarkable history, the hotel has served as a luxurious home abroad for some of the most remarkable people in the world, including presidents, kings, ambassadors, famous businessmen, as well as sports and cinema stars. Many best-selling movies have also been filmed on its premises and even if you’ve never been, you could still recognise it from the sets of The Great Gatsby, The Cotton Club, and Crocodile Dundee among others. The hotel’s restaurants, bars and clubhouse offer a fine menu of American cuisine, complemented by an extensive wine list, fine champagne, cocktails and other drinks to satisfy even the most discerning tastes. Guests also have access to a spa, a fitness center,

a beauty salon, halls for banquets and meetings, onsite boutiques, a reading room, a swimming pool, and a gorgeous winter garden. FIFTH AVENUE’S FINEST It enjoys a prime location on Fifth Avenue, on the south side of Central Park in the Manhattan area, 3.4 km from the John F. Kennedy International Airport ( JFK) and 14 km from LaGuardia International Airport. The Plaza Hotel boldly combines tradition and modernity and is the perfect spot for exploring the city! Now, in terms of comforts guests may enjoy, there are quite a few that are worth mentioning. For instance, the hotel features the magnificent Caudalie Vinothérapie Spa with a Turkish bath, a Vinothérapie wine therapy cabinet, a Vichi shower room, a boutique, an exclusive French Paradox Wine Lounge, 14 spa rooms and one private room for couples with an exquisite decor of dark wood and sculptures. It is the perfect place for all-around health and appearance care with a focus on modern programs and spa services based on wine therapy. Guests can benefit from all kinds of massages (including its trademark full-body massage). Various body wraps and scrubs (including one with Cabernet wine) are offered for face and body skin-care; the beauty arsenal features natural ingredients and extracts (wine, grapes, honey) and cosmetics from Caudalie (France). The experience comes complete with light dishes, wines, herbal teas and red grape leaves. In addition, guests have access to the elite Warren Tricomi beauty salon, owned by Joel Warren and Edward Tricomi, with its globally recognised hair care and styling expertise of over 20 years. Exercise is important, and the Plaza Hotel features a cutting-edge fitness center - Radu’s Physical Culture Spa and Gymnasium, owned by the

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fitness industry leader Radu Teodorescu. With an area of 771 m2, the expansive center has a swimming pool with sports paths, a basketball court, Pilates, aerobics, boxing, martial arts classes and personalised fitness programs with personal trainer services. All the guests can use the services of the Clefs d’Or concierge to organise their leisure time, learn about the restaurants, boutiques, famous musicals, galleries and museums in New York City, including a solution for booking tickets to venues and shows. There is a variety of on-site boutiques with renowned products, including Anna Hu (designer jewellery), Arthur (clothing for the whole family and family gatherings) and Assouline with a reading room located in the lobby (featuring unique and exclusive items for home libraries). In terms of entertainment, the Plaza Hotel is rich with venues for its guests. The Oak Room Restaurant, for starters, is an opulent destination of carved wood panels and vaulted ceilings resembling a medieval European castle. Already in 1907, the

LUXURY LIFESTYLE

The Plaza Hotel

Photo: James R. Martin / Alamy Stock Photo

NOW, IT IS ONE OF THE MSOT ROMANTIC LOCATIONS IN NEW YORK, WITH A LIGHT GLAMOUROUS ATMOSPHERE AND AN IMPRESSIVE MENU OF TRADITIONAL AMERICAN CUISINE.

Oak Room was a restaurant with a real gentleman’s bar. Now, it is one of the most romantic locations in New York, with a light glamorous atmosphere and an impressive menu of traditional American cuisine. Guests have the option to organise private www.executive-global.com

events in a separate restaurant room for 18 people and exclusive dinners at a special chef ’s table for 8, located by the restaurant’s kitchen with a separate entrance. The Oak Bar offers wonderful views on Central Park, and is most famous in Manhattan for its seasonal cocktails and the delectable menu of chef Eric Hara. LUXURY DINING The Palm Court restaurant, outfitted with glass ceilings, is located in the center of the hotel lobby. It is saturated with New York’s vibrant vitality, and in the afternoon, it comes alive with the delicate aroma of rare teas, inviting guests to enjoy a drink on Limoges china in English, French and Russian styles, with a menu of gourmet dishes and desserts. The Champagne Bar, which offers beautiful views on the famous Fifth Avenue and the Pulitzer Fountain, lets guests relive the history of the hotel, having remained in the same place it was located in

100 years ago. It’s known for its champagne, black caviar and a rich wine list in the evenings; whilst in the afternoon, you can enjoy cakes and light dishes, complemented by its selection of worldrenowned coffee. Among other points of interest, there is the stylish Rose Club, located in the lobby of the hotel, on the site of the former Persian Room club with 41 years of history. It has retained the legendary aura of Broadway shows and a menu of signature cocktails and delicacies. The Todd English Food Hall - a European-style café, offers its visitors dishes of Mediterranean and international cuisine. It has a lovely atmosphere with a fashionable interior decor of mosaic marble, ceramics and wooden panels. The American chef Todd English also supplies the Plaza Food Hall - an on-site café and pastry shop. Of course, beside all these must-visit locations, the Plaza Hotel also has an outstanding room service for its guests! A MASTERPIECE OF A HOTEL The hotel features 7 high-end, modernly equipped halls for banquets and meetings with an area of 1,951 m2 (including a ballroom) and a maximum capacity of 450 people. Beside the concierge service, beauty salon, boutiques and other sources of wellness and entertainment, visitors also have access to taxi call and limousine service (including the Rolls Royce Phantom), car rental, parking, as well as laundry and dry cleaning services. Surely enough, guests of all situations and occasions can expect to find the hotel accommodating. Those traveling with kids will be happy to see rooms suitable for children; there are cribs, high chairs, crayons for drawing, and even babysitting services available on request! People with kids of a more furry nature may bring their small canine companions along, with a maximum weight of 6 to 9.07 kg per dog. As for couples, there are wedding services and special programs geared toward honeymooners! All in all, considering the 20 floors worth of luxury, integrity and rich history of the venue, it should come as no surprise that the Plaza Hotel has welcomed the world’s leaders on its premises. Ever since its opening, and for the decades to come, it has served as the rendezvous location for important political meetings that have shaped the world. At the same time, the hotel has also opened its stage for many international cultural icons. From Miles Davis recording his 1958 live album, to Peggy Lee, The Mills Brothers, Josephine Baker, Sandler and Young, and Liza Minnelli just to list a few, the most remarkable artists have performed in the Persian Room. In 1993, U.S. president Donald Trump, who owned the hotel from 1988 until 1992, held his wedding to Marla Maples in front of 1,500 guests. Perhaps even more famously, its premises were used in the classic Home Alone 2: Lost in New York, starring Macaulay Culkin. Commenting on his purchase of the hotel in an open letter to The New York Times, Trump once stated: “I haven’t purchased a building, I have purchased a masterpiece – the Mona Lisa.” EG Winter 2020 •

LUXURY LIFESTYLE

Property Investing

Peak Credit: Why Housing Investors Should Focus On Cashflow Safe as houses, they say — referring to the generations-old assumption that house prices will always go up. In bygone days, it often did happen that blossoming economies gave rise to steep value hikes within one lifetime says Oliver Taylor. f investments and the markets that underlie and impact them have taught us anything over the last decade, it’s that things can change. The old adage of simply “investing in property” held broadly true then, but the current global realities of investment demand a more refined approach. This is not to suggest that buying houses as assets is no longer attractive. On the contrary, investing in property remains incredibly attractive — as long as investors differentiate between “investing and sitting” (long term capital gain) and “investing and managing” (buying for cashflow). The latter is not to imply extensive property management, which can be contracted out as needed in line with budget allowances. Rather, housing investors in today’s market need to focus on cashflow generated by their portfolios, rather than adopting a “sit and wait” approach to accumulating property investments. As will be demonstrated below, the former approach actually allows investors to expand their portfolios, while the latter has become a higher risk approach that can lead to negligible returns, and

certainly no spare cash within the buyer’s lifetime. The notion of house prices continually escalating over time has been dented too often to be deemed a certainty. Individual aspirations and risk tolerances vary, but for those who wish to avoid a potential debt trap and wholesale loss, while also enjoying added income and an expanding portfolio, buying for cashflow is the logical way to go. TWO ESSENTIALS FOR A DYNAMIC HOUSING INVESTMENT PORTFOLIO If “investing and managing” sounds like a lot more work, it isn’t, certainly not in the experience of savvy investors who keep cashflow in mind with every purchase. The management aspect is fun — who doesn’t like extra rental income to spend on buying more investments? There are, however, two caveats. Investors will ideally buy the first house in cash, no mortgage. In addition, they will likely need to defer capital gains or other tax liabilities by pursuing their equivalent of the American 1030 Exchange protocol. In the United States’ IRS legislation, a 1031

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Photo: CaseyMartin / Shutterstock.com

Exchange is where an investor defers having to pay capital gain taxes on the investment property when it is sold, provided that another similar property is bought with the proceeds of the sale. Also called a Starker Exchange, this legal route to avoiding taxes enables a larger portfolio sooner, as well as higher cashflows, as tax liabilities are minimal. Shrewd investors can also toggle the system to suit their circumstances. For example, if one owns a high-maintenance housing unit, it can be “traded off ” through a Starker Exchange for a lowmaintenance (and thus ultimately) higher-income house, without attracting tax liabilities. Although the investor’s cashflow goes up after shedding a poor earner for a far better one, very little or no tax is attracted. Certain mortgage products only exist if home price appreciation is a central assumption, which it should not be, hence the necessity of paying cash. The Big Short’s Mike Burry said that ‘’once home price appreciations are no longer a given, new types of mortgages disappear from the market. Home prices starved of peak credit fall- and fall steeply

LUXURY LIFESTYLE

Property Investing

compounding effect of such variances in periods between hikes in value translate to a huge difference over the long term. Cons: • Municipal rates and other taxes may eat a greater portion of the asset’s rental income, as will higher maintenance. • Capital gains tax is unavoidable. • Rental income from the purchased asset is unlikely to allow for accumulated savings to buy again in the same echelon for many years — years of lost opportunity. • Markets can turn or major social shifts can affect the final value of the asset when it is time to sell.

b oug ht, a llowing subsequent rental income to be put to work to grow the investment portfolio. Modest skimming is of course expected, but the majority of rental income needs to be employed towards further investment if the aim is to garner assets that generate cashflow. as mortgage and re-financing options crumble away.’’ As the velocity of money slows, the economy contracts, and credit dries up. What Burry is in effect saying is: in current markets, buy in with cash and invest for cashflow returns. It is fairly standard across the board that rental income typically equates mortgage repayments, resulting in zero gain for investors. A better route is to buy onto the ladder in cash and employ subsequent rental income to work along other avenues with the view to cash them in and buy another house in cash, or taking on limited debt to buy additional properties. Keep in mind that investors who utilise rental income to supplement or wholly constitute their daily living expenses are workers, not investors. They’re working a rental agreement for sustenance. True investors have a base income from which the initial savings can be made and the first house

EMPLOYEE TAXATION HAS BEEN HIGH FOR DECADES, WHILE BUYING A CASHFLOW-ENHANCING HOUSE ATTRACTS TAXATION AT COMPARABLY BENIGN LEVELS.

www.executive-global.com

INVESTING FOR CASHFLOW VERSUS CAPITAL GROWTH Although authors like Robert Kiyosaki have been educating investors on the necessity of buying assets that make money, the persistence of a desire for “safety” and a hands-off passive income still dominate the minds of many. Looking at the benefits and downsides of both approaches, the different aspects that they entail will allow investors to determine their ideal approach when considering their investment goals and personal circumstances. There is a common refrain among notable investors that money today is better than more money years down the line. Not only inflation, but the missed opportunities in years of working capital in the form of rental income (cashflow) spur smart investors to buy things with their savings that will make them money now. INVESTING FOR LONG TERM CAPITAL GAINS Pros: • With a longer-term vision and careful initial appraisal (lots of homework), investing for capital gain should deliver exactly that — a handsome capital gain after many years, albeit one that has a known tax liability attached to it. • Reduced volatility is a big attraction for many investors looking for capital gains. As the markets run amok on occasion, these investors sit with a solid immovable asset that is likely to gain over the longer term. Moreover, many industry voices insist that stable areas afford investors the opportunity to buy properties that will double in value every seven to ten years, while cashflow property investments are usually marginal (new) developments that can only hope to double in value every 15 years. The

INVESTING FOR CASHFLOW Pros: • Especially when buying with cash, but even when accepting a modest mortgage liability, rental income from the asset should exceed monthly repayments, allowing for the paying down of debt that in turn results in an enabling asset, shrinking debt and the opportunity to invest further, sooner rather than later. • Assuming an investor buys onto the ladder with cash, the prospects for growing the portfolio are potentially endless thereafter, following a simple rinse and repeat formula. Cons: • Very often, sure-fire rental properties fetch a lesser price when sold. There can be a trade-off between enjoying cashflow and accepting that the property in and of itself is not a prized asset likely to fetch a hefty price one day. • New developments can be over-pitched, resulting in a correction a few years down the line. Anticipated urban migration or other broad movements may not manifest as anticipated, and cashflow might be poor in spite of careful planning. CHOOSE CAREFULLY TO GET THE INVESTMENT BALANCE RIGHT It is important that investors decide at the outset which model they feel more comfortable with. Whether the deal is for a single-family home, commercial home with business rights, industrial real estate or a multifamily complex, projections should be conservative and solid, encompassing all possible scenarios. Passive income on the modern globe has become critically important for everyone. Nothing beats cash in hand, not yet. Investors who appreciate the opportunity that money today holds for more money tomorrow, will buy a house as an asset that produces cashflow. It is also worth noting that such passive income is taxed far less than earned income. Employee taxation has been high for decades, while buying a cashflow-enhancing house attracts taxation at comparably benign levels. Of course, the ideal for many might be the best of both worlds: investing in a rental income house that is located or otherwise positioned to spike in value as the years wear on. It does seem, however, that current cash in hand is far more enabling than a long-term anticipation of a hefty return, especially as the immediate future is so poorly predicted. EG Winter 2020 •

LUXURY LIFESTYLE

Country Club Properties

Welcome To Country Club Properties The only thing better than living in the Highlands, N.C., is living at one of the many fantastic country club developments in and around the Highlands-Cashiers plateau.

here is arguably no finer mountain scenery anywhere in the Eastern U.S. than that surrounding Highlands, and nowhere else will you find the consistent level of quality that makes these Highlands developments unique. At each of the country clubs featured here, you will find exclusive golf courses designed by some of the greatest names in golf architecture. Each course is professionally maintained to ensure that every round is pure joy. No matter how often you play, the sheer splendour of your surroundings in Highlands will also ensure that your every day here will be more memorable than the last. And it is not just golf. Many clubs offer exquisite dining opportunities, tennis, swimming, fitness centers, and spas. But more important, they offer communities where you will instantly feel at home and where lifelong friendships are made. EG

For further information, please visit: www.ccphighlandsnc.com

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BRUSHY FACE Spectacular mountain view with very usable grounds, lovely landscaped yard, guest house, main house is in excellent condition and was built by Deadeye Potts. Private and secluded and borders USFS Lands. Old Brushy Face is a very desirable neighbourhood with exceptional elevation and location to Highlands!

Offered at $2,000,000. MLS# 92355

Stillmont Large and spacious Ranch plan is in move in condition with a spectacular view. The owners and just added a new roof . Designer quality with 3 bedrooms plus a family room with full bath, plus a 2/1 bath guest house. Cathedral ceilings in the living room, updated baths, carport. Estate sized lot. The best closets you have ever seen

Offered at $1,795,000. MLS#92227

Lovely Old Orchard estate Over 9 acres with a spectacular mountain views, this house is move in condition, with 5 bedrooms, 4 1/2 baths. Fully renovated kitchen with dining area and cathedral living room with fireplace. Immaculate grounds and guest house is available listed separately. Do not miss this one if you want privacy and usable yard.

Offered at $1,875,000. MLS# 91113

Contact Terry Potts Web www.ccphighlandsnc.com Email ccp4terry@gmail.com Office 828 526 2520 Cell 828 421 3417

LUXURY LIFESTYLE

Snyder Bailey & Associates

Photo: David P. McMasters

Crooked Run Farm

The 33-foot-tall great room artfully blends light, logs and stone to create a dramatic yet comfortable setting.

CROOKED RUN FARM, presently a private residence, is the ultimate CEO, corporate venue or Hunter’s Retreat. The property offers great natural beauty, a peaceful healthy lifestyle and total privacy. It was conceived and built by California CEO Michael Brown as a post-retirement home for him and his wife Tracey. riving across the country off the beaten path he was captivated by West Virginia’s upper Potomac Highlands. He found a forested, flat 186 acre parcel and hired a helicopter and flew over the property. “Then I walked it every single inch, and found it covered with old-growth trees and a crystal-clear mountain stream.” Brown built a log and stone residence secluded within the 186 acres. While majestic and luxurious are not words typically associated with log homes, this 8,400 SF structure defies the usual perceptions of log homes. “I knew what I wanted for a house,” says Brown. “I didn’t want rustic. I wanted elegant. I wanted something solid that would last. I knew log cabins tended to be dark so I made sure we had plenty of large windows. I also wanted arches throughout the house windows, doors and entryways. I just did that to give the house more character.” Indeed, Brown wanted to take advantage of the beauty of the area surrounding the house. The numerous large windows, ample sitting areas outside, even a fire pit for outdoor cooking are all expressions of that thinking. Brown says as soon as visitors walk through the front door, they can see straight through to the back of the house and get a taste of the mountains and grandeur surrounding them. This 8,400 SF, whole log, lodge-style estate features equestrian facilities, 2 additional apartments,

THE SWIMMING POOL (HEATED WITH A VANISHING EDGE AND WATERFALL), SPA, THE TENNIS COURT, THE MILES OF TRAILS AND THE EQUESTRIAN CENTER WILL ALL WOW YOU!

an in-ground pool, spa, a lit tennis court, 4 streams and maintained riding and walking trails. In addition to the huge logs provided by the nation’s leading log dealer, the features include 4 kinds of marble as well as granite, wood floors, huge rooms, vaulted wood ceilings and a fabulous kitchen. The estate is gated and really private; but within it are 3/4 mile roads paved to state highway standards complete with street lights! There are great views of the surrounding mountains. 2 HOURS DRIVE FROM

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DC or BALTIMORE, 30 minutes to Winchester, Va., 40 Miles to Washington/ Dulles Int Airport. This house is an aesthetic, architectural and engineering marvel. It feels like a first class hunting lodge in the Rockies, its rustic grandeur a seamless continuation of surrounding scenery. Everything about the design, construction, amenities and visual presence is absolutely first class. The huge untapered logs, the floors, the various marble extras, and of course the views are impressive. The swimming pool (heated with a vanishing edge and waterfall), spa, the tennis court, the miles of trails and the equestrian center will all wow you! The two separate apartments over the garage and over the barn are great for guests or caretakers. The outdoor log furnace provides virtually free heat for the entire house. The metal stable and other equestrian facilities are also fabulous and the many cleared, graded and drainage controlled paths are great for riding. It all sits in splendid isolation, but, more prosaically right in the middle of a DESIGNATED OPPORTUNITY ZONE. This will give any investor a great opportunity to convert/expand it into a world-class full blown retreat, resort or hunting lodge or an unforgettable event center. EG

For further information, please visit: www.snyderbailey.com

Why Over 100 People Every day Are Moving To Tennessee Although Tennessee does not exempt all income from taxation, the state doesn’t tax your earned income. The average worker does not pay a dime in income tax on his wages. The state also exempts retirement benefits from taxation, including military, Social Security and pension income. Quality of life is exceptional. Music, arts and culture, restaurants are thriving. Property taxes are generally lower than in “blue states” which is probably why I find a lot of Northeastern boomers moving in. Central Geographical Location to access both coasts. Business Friendly Environment. Great Air service - including private airport services. Tennessee is a true four season state with short, mild winters.

3190 New Union Road, Dayton, TN, affectionally named Diamond’s Acres, is a stunning 34 acre equestrian property, strategically arranged with over 4,500’ of shoreline on Lake Chickamauga, and just a two minute boat ride from the Tennessee River. This country estate is privately nestled behind the gates that lead to a luxury waterfront home. The long drive passes by two barns, including a state of the art horse barn with indoor riding arena. On the left, you’ll pass two historic log cabins that were relocated on the property, creating a wonderful artist studio. The stately 9,000 sq. ft main residence sits just in front of the lake, with a separate detached garage with luxurious guest quarters above. Your view of the lake includes a beautiful salt water pool, professional putting green, and two bay boat dock on Lake Chickamauga. Please call for your private showing today. $3,750,000.

3200 West End Avenue, Suite 500, Nashville, TN 37203 Cell - 1 (615) 330 0555 Office - 888 519 5113 x425

stevemyershomes.com steve@stevemyershomes.com

LUXURY LIFESTYLE

Atlantis The Palm Dubai Photo: Jochen Tack / Alamy Stock Photo

The World’s Most Expensive Restaurants — No. 1: Ossiano One to make anyone hungry, Dubai’s underwater bar and restaurant, Ossiano, is located at Atlantis Hotel, The Palm, and is the most expensive restaurant in the city. The eatery offers guests a luxurious and elegant dining experience that includes breath-taking views of the Ambassador Lagoon right from the table says Shannon Berkley. ocated on the ambitious man-made island of Palm Jumeirah, the venue specialises in seafood delicacies. Known to be a place where fine dining is suffused with artistic brilliance, Ossiano is a romantic’s ideal setting, as the marriage of intimacy, exquisite culinary dishes and the otherworldliness of staring out into deep water, all combine for a genuinely enchanting experience.

SEAFOOD AS IT SHOULD BE Although a diverse and all-encompassing menu awaits diners, seafood seems almost a natural choice as guests are surrounded by deep blue water. Seafood surprises, twists and even more surprises await firsttime visitors at this dynamic venue of culinary innovation. If ever there was a restaurant on earth in which to truly investigate the extent and tastiness

IF THE AMBIANCE GENERATED BY FLOATING SHARKS AND STINGRAYS ISN’T SUFFICIENTLY IMPRESIVE, THE INCREDIBLY ORNATE PRESENTATION OF DISHES WILL BE.

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of seafood, Ossiano is it. Full of warm glows and azure blues, Ossiano is famous worldwide for its bold and extensive selection of mouth-watering seafood delicacies. Service is abundant and quick, yet couples seeking untroubled intimacy should say so beforehand. The view from within the underwater kitchen bar is part Cupid, part appetiser, and part pure magical charm. Recognised as one of the world’s top chefs, Chef de Cuisine Gregoire Gerber has become globally renowned for his wholesale rejuvenation of traditional dishes, while virtually composing an entire seafood menu of novel-twist dishes singlehandedly. Famous for arranging set menus of several courses, the seafood menu options in particular are an exquisite journey into the Head Chef ’s own imaginings of a delicious meal. CULINARY INNOVATION AT OSSIANO Gregoire Berger is a singular talent, and patrons are typically divided between those who have come to witness the stunning views, and those who know what sumptuous eating is all about. Diehard foodies flock to the venue, and Berger never disappoints. There are indeed less intimidating and almost affordable al la carte meal options, but dedicated food connoisseurs will want to wade through the Ossiano Experience Menu as it is a journey into paradise for the discerning palate. If the ambiance generated by floating sharks and stingrays isn’t sufficiently impressive, the incredibly ornate presentation of dishes will be. Berger has a penchant for cooking with flowers — a huge number of dishes served at Ossiano contain florals. If they haven’t been skilfully incorporated into a dish, flowers are likely to frame it ornately in a garland. EG

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