Are there any ulterior motives behind the Government so called “Stress Test” on 19 of the Nation’s Largest Banks? By Ofuoma Odje
On April 4th 2009, Treasury Secretary Tim Geithner testified before a congressional oversight committee headed by Elizabeth Warren and stated that "the vast majority" of banks could be considered well-capitalized.
If this is the case, why is the Government still talking about the stress test and the possible ramifications for the banks?
Why is there so much back and forth between the Banks and the Treasury over the stress test? And why are the results still being delayed?
The true motives behind this stress test are still unclear at this time, but certain conclusions can be drawn based on the chatter from the Treasury and other Government officials.
From an objective point of view, the stress test looks like a directed effort at State control of the banks deemed to need more capital by the Treasury.
In other words it appears the so called “Stress Test” is a backdoor to nationalization of the nation’s largest banks, to more TARP money from congress, and Government direction of the banking industry.
This means that key functions like control over executive compensation and ousting of CEOs that were formerly reserved for shareholders could now become exclusively reserved for the government.
Treasury Secretary Gaithner made it clear that none of the 19 banks will be allowed fail.
This surely reveals that if necessary, he intends to go back to congress for more TARP money in order to re-capitalize banks deemed as weak per his “Stress Test”.
If this is the case, the stress test is a political exercise that could expose nearly a Trillion Dollars hole in bad assets amongst these 19 banks.
Government remedies for under-capitalized banks
The Government has said that Banks needing more capital will be given 6 months to raise such capital privately, after which they must accept government funding.
The government is currently considering 2 options to address the under-capitalized banks.
Since the TARP funds are running low, the first and most likely action will be to follow the Citigroup model, where the government converts the Banks preferred shares it acquired via TARP funds into common equity.
But what good does this conversion really do? Let’s look at this scenario and its ramifications.
Currently, the Banks have to pay interest to the Treasury on the preferred shares it exchanged for TARP loans. While the government receives interest on those preferred shares, the shares themselves do not bestow any voting rights on the government.
If those preferred shares were converted into common equity, the banks would not have to pay anymore interest on the TARP funds. But there’s a catch.
By converting the preferred shares into common equity the Government does 2 things it clearly has said it does not intend to do. First, it takes a larger or the largest stake in the Banks which is tantamount to semi-nationalization at best along with voting rights to match. For example, if we look at the planned Citibank conversion we would see that the Government stake is increased to 36% making it the largest shareholder with matching voting rights.
Secondly, it dilutes the value of common equity and wipes out shareholders. The worst part of this exercise is that it doesn’t make significant improvements to the banks health. Shareholders are simply wiped out in favor of the Government without actually adding one cent of new money to banks.
Seeing the potential ineffectiveness or damage that can be caused by this conversion of preferred shares into common equity, the next option available to the Treasury will be to approach congress for more TARP money.
If indeed the Treasury follows this cause of action, then it could be well said that the stress test was nothing but a Trojan horse intended to approach congress for more TARP, which of course means more Government Direction of the economy, more Government control of Executive compensation and how Banks are run in the U.S.
The overheads of Government involvement
The TARP however, comes with its own problem. Neil Barofsky, the Special Inspector General overseeing TARP, has warned that the TARP program is 'inherently vulnerable to fraud, waste and abuse.' This risk he says grows as the plan becomes larger and more complex. Already federal investigators have opened about 20 criminal probes into possible securities fraud, tax violations, insider trading and other crimes.
In spite of these criminal underpinnings that could come with the TARP program, it is increasingly becoming clear that this is the path that Gaithner and the Treasury Department are likely to embark on.
So are we just adding to the numerous examples of government failure to provide effective and efficient services to the public?
We already see a slew of these Government wasteful spending and failures all around us.
Government has failed with Medicare and Medicaid to provide decent and efficient healthcare to the uninsured and even to war veterans who have put their lives at risk for the Country. Government has failed to provide high quality education to the public to enable America compete on a global scale and has even failed to provide a fair Justice system at the state and federal levels to protect its citizens.
These are just a few examples of why Government intervention in Private Enterprise could only mean bad news.
Knowing this, what then makes the Government the best choice to run the nation’s Banking Industry in the light of the financial collapse?
Any Bank that needs money to pay its bills simply put should not be a Bank. Something has to fail in order for Capitalism to succeed.
The Stress Test appears to be a mistake by an over-panicked Treasury Dept. who got themselves into a box when they announced that they were going to perform a stress test without thinking about what would come next after the results were announced.
We’ve seen this in the delays and steps taken by the Treasury in connection to releasing the results of the stress tests. First they released the parameters behind the tests, and then released the results to the banks only, and then they moved the public release date from May 4th to May 7th.
They even claimed that prior to the release of the results to the public, they would correct any faults raised by the Banks about the way the tests were conducted. In this case, how then will the stress test offer any transparency?
It is clear that all banks in the U.S. are insured. Why then do we need to know which ones are more equal than the others?
These stress test results could only be harmful to the banks and investors.
It is very hard to say that this is not going to lead to the nationalization of the U.S. banking industry.
If the government is going to have major stakes in banks, control bank lending policy and control employee pay and bonuses there is no question that the banks will be nationalized, at least for as long as they keep government money.
The government however continues to deny this by saying banks should remain private, and that it has no intention to nationalize them. Based on its actions however, an interpretation to what the government is actually saying could be that it desires to keep control over the banks, but does not want to be held accountable.
With government intention to nationalize healthcare, adding the banking sector results in government control of more than 20% of the economy. This does not look like free enterprise and capitalism; instead, it has the flavors of socialism.
Do the banks have alternatives?
The first question that comes to mind when opposing government involvement is that: - can the banks grow their way out of this crisis on their own?
There are other alternatives to the direct government intervention through TARP and Nationalization.
The first alternative will be to relax Mark-to-Market rules. Mark-to-market rules force banks to readjust the value of the assets they hold to reflect current market prices. For assets like mortgage-backed securities the market prices have declined well below the prices at which the banks would agree to sell them. Assets that have not defaulted however continue to generate income and that income makes them worth more to the banks than buyers on the market would be willing to pay.
Nevertheless, under the current Mark-to-Market rules it doesn’t matter that the assets generate income and have not defaulted. Their values must be adjusted to account for what the rules describe as a “hypothetical transaction at the measurement date.”
Mark-to-Market rules are harmful to banks in two ways. Firstly, the banks are forced to take losses on paper as though they were actual financial losses based on fire-sale valuations of securities that they may not intend to sell. Secondly and perhaps the most damaging is that mark-to-market rules are used in assessing banks’ capital requirements. This means that banks deemed by regulators to be undercapitalized are forced to sell forced to sell assets at diminished mark-to-market prices in order to raise enough capital to keep the regulators satisfied.
These forced sales cause banks to lock in losses and drives down prices of similar assets, thus creating a vicious cycle of wealth destruction.
Under pressure from lawmakers, The Financial Accounting Standards Board (FASB) recently relaxed mark-to-market rules.
The changes apply to the second quarter that began in April 2009. The changes will allow banks to value assets at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale. This change however is not enough to help banks earn their way out.
So long as banks are still forced to take losses on performing assets, they face tough choices like accepting TARP money and government control or lose customers and shrink their asset base. We’ve already seen some banks like Citibank and American Express offering customers cash incentive in exchange for either reducing their credit limits or closing their accounts as they move to get rid of customers, reduce their asset base and avoid more TARP money.
Another alternative is for the Treasury to change the Bank Capital rules, particularly on its focus on Tier 1 Capital and Tangible Common Equity requirements. In other words the government could change the parameters of the so called “stress test”. If this were done then the stress test results would not be as harmful to the banks, because it will not force them to require new capital.
Conclusion
The banking system has taken a hard hit. Banks are earning money on some of their products, but capital is being eaten away by the declining value of toxic assets governed by Mark-to-Market rules. The situation can be likened to fighting a cancer. This unfortunate situation is not helped by mark-to-market rules and government capital requirements for the banks.
The current low rates on borrowing can potentially help the banks grow their way out of this crisis if the FASB would do more about mark-to-market rules and if the government would change their capital rules for the banks.
If they did this, the banks will get help to quickly De-TARP and the injection of further taxpayer money in pursuit of a solution to a regulatory problem could be avoided.
The current government actions have done more to politicize a regulatory process more than anything else. This is underscored by the stress test which has been a show trial and political exercise.
The motivation behind the stress test remains a mystery, but it does appear that the Treasury and the Whitehouse intend to pursue the reinstitution of credit by staying on the banks long enough to change the way credit is issued.
Until the government gets out of the way, investing in banking stocks will be purely speculative. Purely speculative like investing in biotech companies who have drugs in clinical trials with the hope that the clinical trials will be successful. Perhaps the wise advice right now is not to invest in banks until the government gets out of the way.
Banks should be regulated by the Office of the Comptroller of the Currency, the FDIC and the Federal Reserve; not by the Treasury and the Whitehouse.
Ofuoma Odje
Showing posts with label Ofuoma Odje. Show all posts
Showing posts with label Ofuoma Odje. Show all posts
Sunday, May 3, 2009
Friday, May 1, 2009
One tip to keeping runners winning
Training for a 3k, 5k or longer run?
When preparing for a long distance race, we often put all our focus on training hard and improving our lap times, leg strength, endurance and general fitness.
While this is a disciplined thing to do it can hurt rather than help our chances of maximum performance on the day of the race.
In order to avoid that pitfall, here's a helpful tip.
Avoid all serious training in the final few days of the big race.
British researchers discovered that doing serious training 48 hours before the big race reduced by 7 percent the total distance covered by runners.
According to Samuele Marcora, Ph,D., the research showed that the excercises caused a high level of muscle damage which affected the runner's brain and caused him to exert more effort, even when he felt no sore in his muscles
Ofuoma Odje
When preparing for a long distance race, we often put all our focus on training hard and improving our lap times, leg strength, endurance and general fitness.
While this is a disciplined thing to do it can hurt rather than help our chances of maximum performance on the day of the race.
In order to avoid that pitfall, here's a helpful tip.
Avoid all serious training in the final few days of the big race.
British researchers discovered that doing serious training 48 hours before the big race reduced by 7 percent the total distance covered by runners.
According to Samuele Marcora, Ph,D., the research showed that the excercises caused a high level of muscle damage which affected the runner's brain and caused him to exert more effort, even when he felt no sore in his muscles
Ofuoma Odje
Wednesday, April 15, 2009
Ofuoma Odje on Business Journalism
Is business journalism now a blend of political and business Reporting?
by Ofuoma Odje
Long ago Business journalism used to be about Walls Street, stocks, businesses, finance, entrepreneurs and so on.
Business journalism today however seems to be a blend of Washington, Capitol Hill, Politicians, Legislation and many other socio-political issues along with core business reporting.
It appears that September 2008 collapse of the Global Financial System along with the recent worldwide recession is redefining Systemic Financial Procedures, consumer sentiment/spending, Lending and Borrowing practices, as well as Business Journalism.
One example was the recent frenzy about bailout nation. Main Street has been furious about the Fed’s actions that was seen by many as mortgaging the future of all Americans to bailout major Financial Institutions that have been irresponsible in conducting their business.
Many argue that these institutions should have been allowed to fail even if it meant the collapse of Capitalism and that those institutions left standing after the collapse should have been allowed to benefit from the demise of these failed institutions.
There has also been the auto crisis. With GM and Chrysler on the verge of Bankruptcy and Ford struggling to stay healthy, many have questioned why the Government should throw good money after bad money.
Both the Bailout of the Financial Institutions and the Auto Crisis were hot button topics during the 2008 Presidential Elections.
Mainstream business media including the likes of CNBC and Bloomberg have been caught in the middle of business and political reporting. They often interview politicians on business shows/airtime who sometimes have no business background or full understanding of the subject matter in play but are influential in passing important legislation that would impact the business community.
They also report on the behavior of these politicians and how they sometimes base their vote on legislation that impact the economy on pure political and main street sentiment, even when those sentiments are not in the best interest of the economy.
Then there are the politicians who are lobbied by Walls Street with cash and gifts to influence how they vote on legislation.
Many argue that the 2008 collapse of the Global Financial System has permanently scarred Capitalism forever, and that trust would almost never be wholly restored.
As for Business Journalism, one could also argue that it would never be strictly about business, finance and the markets from this point on.
Ofuoma Odje
by Ofuoma Odje
Long ago Business journalism used to be about Walls Street, stocks, businesses, finance, entrepreneurs and so on.
Business journalism today however seems to be a blend of Washington, Capitol Hill, Politicians, Legislation and many other socio-political issues along with core business reporting.
It appears that September 2008 collapse of the Global Financial System along with the recent worldwide recession is redefining Systemic Financial Procedures, consumer sentiment/spending, Lending and Borrowing practices, as well as Business Journalism.
One example was the recent frenzy about bailout nation. Main Street has been furious about the Fed’s actions that was seen by many as mortgaging the future of all Americans to bailout major Financial Institutions that have been irresponsible in conducting their business.
Many argue that these institutions should have been allowed to fail even if it meant the collapse of Capitalism and that those institutions left standing after the collapse should have been allowed to benefit from the demise of these failed institutions.
There has also been the auto crisis. With GM and Chrysler on the verge of Bankruptcy and Ford struggling to stay healthy, many have questioned why the Government should throw good money after bad money.
Both the Bailout of the Financial Institutions and the Auto Crisis were hot button topics during the 2008 Presidential Elections.
Mainstream business media including the likes of CNBC and Bloomberg have been caught in the middle of business and political reporting. They often interview politicians on business shows/airtime who sometimes have no business background or full understanding of the subject matter in play but are influential in passing important legislation that would impact the business community.
They also report on the behavior of these politicians and how they sometimes base their vote on legislation that impact the economy on pure political and main street sentiment, even when those sentiments are not in the best interest of the economy.
Then there are the politicians who are lobbied by Walls Street with cash and gifts to influence how they vote on legislation.
Many argue that the 2008 collapse of the Global Financial System has permanently scarred Capitalism forever, and that trust would almost never be wholly restored.
As for Business Journalism, one could also argue that it would never be strictly about business, finance and the markets from this point on.
Ofuoma Odje
Monday, April 13, 2009
Ofuoma Odje on President Barack Obama's healthcare plan
Ofuoma Odje on Barack Obama’s Universal Healthcare Plan
Universal health care is a Government sponsored system for the healthcare of all its residents regardless of their medical condition or financial status. Is this feasible America? And is it the best for American Businesses?
As the push for the Barack Obama proposed Universal Healthcare heats up on Capitol Hill many argue about the merits and demerits of a Universal Healthcare system.
Experts estimate Americans without Healthcare insurance to be as many as 47 million. At the same time, Healthcare spending in the United States account for about 15% of its GDP, the highest in any industrialized nation.
Nationalized healthcare models are being used in Countries like Canada and Great Britain and residents of those countries are fully covered by the State. There are questions however, about the quality of healthcare services received under those models.
Perhaps we couldn’t make an argument as to whether the health insurance based model being used in the U.S today would have also proven successful in Canada and in the UK or other European Countries because they never adopted such a model in the first place.
Good or bad we must critique the whole idea of a nationalized healthcare system in the U.S. There are arguments ranging from the insinuation that the Government is no good at running anything and that the current U.S healthcare system is the best in the world and should not be tinkered with by the Government, to arguments that Healthcare coverage is a right to U.S citizens and residents rather than a privilege as it is today.
It would seem that a good place to start is to find out who stands to gain the most and who stands to loose the most from a nationalized healthcare system.
The increasing cost of employee Healthcare in U.S is a cause of a lot of concern in Corporate America and many Executives are speaking out about the impact on earnings and the ability of U.S businesses to remain competitive on a Global scale whilst carrying this burden. Employees have also expressed concerns about the rising cost of their share of health insurance premiums.
Major U.S Employers like Wal-Mart and General Mills have been some of the recent proponents of Universal Healthcare that have argued that the current Health Insurance Model is simply unsustainable going forward.
There is little doubt that the Barack Obama Universal Healthcare plan cannot take off without broad reforms and enactment of regulations to govern the provision of health coverage by large healthcare companies.
This raises the first question which is:- How can we include an estimated 40% of the population and reduce Healthcare costs by over 60% at the same time?
Even if there are efficiencies to be realized from restructuring the existing system, it is still somewhat baffling to imagine the credibility of this proposition without having the taxpayer on the hook for a very significant portion of the bill. One could even argue that Healthcare giants like Aetna and United Health Care could not remain profitable without huge taxpayer subsidies.
One key point to note is that companies like Aetna and United Health will effectively see the demise of their HMO business as those who currently have coverage would make changes to their plans in order to take advantage of Barack Obama Universal Healthcare plan.
Who are the winners and losers?
A good question though, is who actually benefits from Universal Healthcare? It is hard to be definite today, but one could argue that Generic Drug makers and Hospitals would be winners right off the wall.
Corporate America would be another big winner as the burden of Managed Employee Healthcare is lifted off its shoulders. In addition, the estimated uninsured 47 million Americans would also be winners under this scenario.
While big Pharma would take a hit because of Government pressure on drug pricing, those who do well with producing hard-to-make generic drugs should experience lower development risk.
However, Government pressure on drug pricing could hamper research and development of new drugs or result in U.S. Pharmaceutical Companies relocating abroad to countries with more favorable business environments; taking away U.S jobs in some cases.
Companies like Aetna and United Health would not be as fortunate because their HMO business will be completely wiped out by the Barack Obama Universal Healthcare plan, and if there are no taxpayer subsidies these companies will see a decline in earnings.
The Politics
The Barack Obama proposed Universal Healthcare Plan would be a success if there is no money to be made in the decision making process of enacting the Universal Healthcare Plan.
It is no news that big business is in bed with Lawmakers and Politicians. Therefore we must expect serious lobbying of Lawmakers and Politicians by large Healthcare institutions that stand to gain or loose from Universal Healthcare.
This kind of lobbying however, if allowed, will get in the way of getting the peoples business done. The result could mean that Universal Healthcare would be held up in both houses of congress and never get enacted in Barack Obama’s first term. Even worse we could see a compromised mediocre version of Universal Healthcare passed by the House and Senate after falling victim to lobbying by big business interests.
The Bottom-line
Universal Healthcare may well not be feasible in America for the sheer reason that it’s a socialist concept that goes against the very tenets of Capitalism on which the American society was established.
Simply put, it is un-American to propose the use of taxpayers’ money to pay for the Healthcare of those who do not contribute to the economy.
On the flip side, one could take a long shot and make an argument that Healthcare is a constitutional right of all Americans. In the face of this kind of argument, Universal Healthcare could stand a chance.
Ofuoma Odje
Universal health care is a Government sponsored system for the healthcare of all its residents regardless of their medical condition or financial status. Is this feasible America? And is it the best for American Businesses?
As the push for the Barack Obama proposed Universal Healthcare heats up on Capitol Hill many argue about the merits and demerits of a Universal Healthcare system.
Experts estimate Americans without Healthcare insurance to be as many as 47 million. At the same time, Healthcare spending in the United States account for about 15% of its GDP, the highest in any industrialized nation.
Nationalized healthcare models are being used in Countries like Canada and Great Britain and residents of those countries are fully covered by the State. There are questions however, about the quality of healthcare services received under those models.
Perhaps we couldn’t make an argument as to whether the health insurance based model being used in the U.S today would have also proven successful in Canada and in the UK or other European Countries because they never adopted such a model in the first place.
Good or bad we must critique the whole idea of a nationalized healthcare system in the U.S. There are arguments ranging from the insinuation that the Government is no good at running anything and that the current U.S healthcare system is the best in the world and should not be tinkered with by the Government, to arguments that Healthcare coverage is a right to U.S citizens and residents rather than a privilege as it is today.
It would seem that a good place to start is to find out who stands to gain the most and who stands to loose the most from a nationalized healthcare system.
The increasing cost of employee Healthcare in U.S is a cause of a lot of concern in Corporate America and many Executives are speaking out about the impact on earnings and the ability of U.S businesses to remain competitive on a Global scale whilst carrying this burden. Employees have also expressed concerns about the rising cost of their share of health insurance premiums.
Major U.S Employers like Wal-Mart and General Mills have been some of the recent proponents of Universal Healthcare that have argued that the current Health Insurance Model is simply unsustainable going forward.
There is little doubt that the Barack Obama Universal Healthcare plan cannot take off without broad reforms and enactment of regulations to govern the provision of health coverage by large healthcare companies.
This raises the first question which is:- How can we include an estimated 40% of the population and reduce Healthcare costs by over 60% at the same time?
Even if there are efficiencies to be realized from restructuring the existing system, it is still somewhat baffling to imagine the credibility of this proposition without having the taxpayer on the hook for a very significant portion of the bill. One could even argue that Healthcare giants like Aetna and United Health Care could not remain profitable without huge taxpayer subsidies.
One key point to note is that companies like Aetna and United Health will effectively see the demise of their HMO business as those who currently have coverage would make changes to their plans in order to take advantage of Barack Obama Universal Healthcare plan.
Who are the winners and losers?
A good question though, is who actually benefits from Universal Healthcare? It is hard to be definite today, but one could argue that Generic Drug makers and Hospitals would be winners right off the wall.
Corporate America would be another big winner as the burden of Managed Employee Healthcare is lifted off its shoulders. In addition, the estimated uninsured 47 million Americans would also be winners under this scenario.
While big Pharma would take a hit because of Government pressure on drug pricing, those who do well with producing hard-to-make generic drugs should experience lower development risk.
However, Government pressure on drug pricing could hamper research and development of new drugs or result in U.S. Pharmaceutical Companies relocating abroad to countries with more favorable business environments; taking away U.S jobs in some cases.
Companies like Aetna and United Health would not be as fortunate because their HMO business will be completely wiped out by the Barack Obama Universal Healthcare plan, and if there are no taxpayer subsidies these companies will see a decline in earnings.
The Politics
The Barack Obama proposed Universal Healthcare Plan would be a success if there is no money to be made in the decision making process of enacting the Universal Healthcare Plan.
It is no news that big business is in bed with Lawmakers and Politicians. Therefore we must expect serious lobbying of Lawmakers and Politicians by large Healthcare institutions that stand to gain or loose from Universal Healthcare.
This kind of lobbying however, if allowed, will get in the way of getting the peoples business done. The result could mean that Universal Healthcare would be held up in both houses of congress and never get enacted in Barack Obama’s first term. Even worse we could see a compromised mediocre version of Universal Healthcare passed by the House and Senate after falling victim to lobbying by big business interests.
The Bottom-line
Universal Healthcare may well not be feasible in America for the sheer reason that it’s a socialist concept that goes against the very tenets of Capitalism on which the American society was established.
Simply put, it is un-American to propose the use of taxpayers’ money to pay for the Healthcare of those who do not contribute to the economy.
On the flip side, one could take a long shot and make an argument that Healthcare is a constitutional right of all Americans. In the face of this kind of argument, Universal Healthcare could stand a chance.
Ofuoma Odje
Wednesday, March 4, 2009
Ofuoma Odje on electronic paper
If we were to quantify the costs of producing paper, printing information on it, mailing it around and destroying it, we would find a stunning amount of money being wasted. This is especially true for those instances where the paper adds no value to the intended target of the information, or was simply unsolicited.
Therefore as the focus shifts to a green revolution with cleaner energy, lower emissions standards and renewable energy sources, we must not forget that recyclable electrons in the form of electronic data/paper paper is key to huge cost savings and increased efficiencies.
Electronic data/paper can be delivered in seconds or minutes bypassing physical delivery processes. Digitized data can theoretically last for ever while paper in a file cabinet will eventually wither away.
There is the potential for new opportunities in this area :- primarily in innovative solutions to replace today's paper based systems; AND in educating the workforce to utilize these solutions to achieve cost savings and increased efficiencies thereby realizing the true value of this strategy.
At a time of budget crisis in both public and private sectors, paper seems to be one of the most overlooked avenues through which a lot of money is being wasted.
We all have received mailings and notices after telephone or email correspondences with businesses or government/other authorities. A lot of these correspondences contain things we already know and don't need to be reminded of in paper.
Further, this creates a liability for us as we have to destroy a lot of these paper correspondences as a result of privacy a ndidentity theft concerns.
When we shred these papers for example, we use energy in addition to the energy used in generating and distributing the paper to us. We also create trash that has to be disposed of.
Getting rid of paper as much as we can may seem at first to only save a little bit of expense. But if we really follow the trail; from production, distribution, printing, mailing, to destruction of paper and recycling---there is quite an impact.
There are however, bigger issues to overcome before electronic paper can be a mainstream solution to paper based data/information today.
For example, when we go to Bestbuy or a similar store to buy a product, it comforts us to hang on to our receipts just in case. We like to look and the terms and conditions at the back of the receipts that tell us when and how we can return and/or exchange the product. This is sort of a mini-consumer's bill of rights.
Moving to electronic data in this above instance will have to result in the establishment of some kind of a contract representing the terms and conditions at the back of the paper based receipts. That may create another level of bureaucracy of unintended consequences.
This surely is a topic for debate as there will be people on both sides of the isles arguing for and against.
Regardless, we do have to start this debate somewhere.
Perhaps this may lead to another interesting topic for a good discourse:- Are there unecessary costs to the Fed for printing money? What are the chances of electronic money(credit/debit cards etc) fully replace our paper currency in this generation?
Pretty interesting to think about...
- Ofuoma Odje
Therefore as the focus shifts to a green revolution with cleaner energy, lower emissions standards and renewable energy sources, we must not forget that recyclable electrons in the form of electronic data/paper paper is key to huge cost savings and increased efficiencies.
Electronic data/paper can be delivered in seconds or minutes bypassing physical delivery processes. Digitized data can theoretically last for ever while paper in a file cabinet will eventually wither away.
There is the potential for new opportunities in this area :- primarily in innovative solutions to replace today's paper based systems; AND in educating the workforce to utilize these solutions to achieve cost savings and increased efficiencies thereby realizing the true value of this strategy.
At a time of budget crisis in both public and private sectors, paper seems to be one of the most overlooked avenues through which a lot of money is being wasted.
We all have received mailings and notices after telephone or email correspondences with businesses or government/other authorities. A lot of these correspondences contain things we already know and don't need to be reminded of in paper.
Further, this creates a liability for us as we have to destroy a lot of these paper correspondences as a result of privacy a ndidentity theft concerns.
When we shred these papers for example, we use energy in addition to the energy used in generating and distributing the paper to us. We also create trash that has to be disposed of.
Getting rid of paper as much as we can may seem at first to only save a little bit of expense. But if we really follow the trail; from production, distribution, printing, mailing, to destruction of paper and recycling---there is quite an impact.
There are however, bigger issues to overcome before electronic paper can be a mainstream solution to paper based data/information today.
For example, when we go to Bestbuy or a similar store to buy a product, it comforts us to hang on to our receipts just in case. We like to look and the terms and conditions at the back of the receipts that tell us when and how we can return and/or exchange the product. This is sort of a mini-consumer's bill of rights.
Moving to electronic data in this above instance will have to result in the establishment of some kind of a contract representing the terms and conditions at the back of the paper based receipts. That may create another level of bureaucracy of unintended consequences.
This surely is a topic for debate as there will be people on both sides of the isles arguing for and against.
Regardless, we do have to start this debate somewhere.
Perhaps this may lead to another interesting topic for a good discourse:- Are there unecessary costs to the Fed for printing money? What are the chances of electronic money(credit/debit cards etc) fully replace our paper currency in this generation?
Pretty interesting to think about...
- Ofuoma Odje
Sunday, March 1, 2009
Ofuoma Odje-- New ideas to cut Govt. budget's via the use of New Technologies
Paper elimination strategies as part of cost savings when digitizing current paper based records.
Bringing citizens up to speed with the use of new age technologies for locating and disseminating information
Bringing citizens up to speed with the use of new age technologies for locating and disseminating information
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