Just trying to search some negotiation quotes in the internet. Surprisely, find out some quotes which I feel are very useful not only in business, but in life too!
- Chester L. Karrass
- Robert Estabrook
- Ivan Goncharov
6. Never forget the power of silence, that massively disconcerting pause which goes on and on and may at last induce an opponent to babble and backtrack nervously.
- Lance Morrow
8. During a negotiation, it would be wise not to take anything personally. If you leave personalities out of it, you will be able to see opportunities more objectively.
9. Flattery is the infantry of negotation.
- Lord Chandos
- John F. Kennedy
A Failure To Learn From The Past
0 Comment Published 7:19 PM in Forbes.com , Good Articles By Michael-Liew
Marti G. Subrahmanyam
After perhaps the most tumultuous week in the financial markets in living memory, the question on everyone's mind is whether this turn of events was inevitable. In order to answer this question fairly, one has to avoid making the common mistake of using 20-20 hindsight based on the facts that have come to light in the past 15 months or so.
1. tumultuous - adj. Characterized by tumult; noisy and disorderly.
2. inevitable - adj. Impossible to avoid or prevent.
3. hindsight - n. Perception of the significance and nature of events after they have occured.
Suppose we were back in 2002, looking at the architecture of the global financial system based on the knowledge of events until that point in time. We would have known about several crises of the previous two decades: the stock market crash of 1987; the Japanese financial meltdown that lasted through much of the 1990s; the Asian financial crisis of 1997 and the Russian default-LTCM crisis of 1998; and, of course, the dot-com collapse of 2002.
4. architecture - n. A style and method or design and construction.
What lessons did the past crises teach us? What were the warning signs that were already evident at that time?
The declining savings rate and the looming trade and budget deficits.
This trend could only continue as long as U.S. deficits were being financed by issuing large quantities of financial claims to countries with large trade surpluses--principally China and Japan, but also many emerging economies. These transfers of financial claims--principally U.S. Treasury obligations--are substantial in relation to the overall size of the financial market. They will likely cause major disruptions to economic activity if there is even a hint that they may be interrupted.
5. loom - intr.v. To come into view as a massive, distorted, or indistinct image.
6. deficit - A situation in which liabilities exceed assets, expenditures exceed income, imports exceed exports, or losses exceed profits.
7. claim - n. A demand for payment in accordance with an insurance policy or other formal arrangement.
8. substantial - adj. Solidly build; strong.
9. disruption - n. The act or an example of upsetting.
Low interest rates and easy availability of credit.
Cheap credit exaggerated the returns from leveraged investments at both household and corporate levels. This easy-money policy encouraged speculation particularly in real estate, but also in assets, more generally. The global real estate boom and the rapid growth of the private equity industry are prominent examples of the institutionalization of such leveraged investments.
10. exaggerated - v.tr. To enlarge or incrase to an abnormal degree.
11. particularly - adj. Separate and distinct from others of the same group, category, or nature.
12. prominent - adj. Widely known; eminent.
The backlash against regulation
The failure of corporate governance in companies such as Enron and WorldCom led to greater regulation of corporations, principally through the passage of the Sarbanes-Oxley Act of 2002. The increased regulatory burden created a backlash against regulation in general. This sentiment was in tune with the prevailing political mood in Washington, which had lead to the repeal of the Glass-Steagall Act (which separated investment banking from commercial banking) in 1999.
13. backlash - n. A sudden or violent backward whipping motion.
14. governance - n. The act, process, or power of governing; government.
15. sentiment - n. A thought, view, or attitude, especially one based mainly on emotion instead of reason.
16. prevaling- adj. Most frequent or common; predominant.
17. repeal - v. To take back or remove.
"Too large to fail" and moral hazard.
Although the argument about the systemic consequences of the failure of a single large financial entity has been used before, the most spectacular example of its use prior to the present crisis was the 1998 bailout coordinated by the Fed for the hedge fund Long Term Capital Management. This anchored in the minds of investors the notion that, at some point, large financial institutions carry such grave consequences for the entire market that the regulators have no option but to bail them out.
18. entity - n. Something that exists as a particular and discrete unit.
19. bailout - A situation in which a business, individual or government offers money to a failing business in order to prevent the consequences that arise from a business's downfall.
20. anchor - verb. To make secure.
21. notion - n. A belief or opinion.
The asymmetry in the regulation of commercial and investment banks.
Both types of financial institutions offered increasingly similar products and services. Even the deposit-taking feature of commercial banks was mimicked by the ability of investment banks to issue short-term paper, albeit without insurance guarantees.
22. asymmetry - n. Lack of balance or symmetry.
23. mimic (Past Tense mimicked) - v. To copy or imitate closely, especially in speech, expression, and gesture; ape.
24. albeit - conj. Even though; although; notwithstanding.
However, commercial banks were subject to more stringent regulations than investment banks, principally with regard to their capital adequacy under the Basle guidelines. Investments banks were subject to securities regulation, but not in terms of the risks they took or the amount of capital at their disposal. To stretch this point further, new entities--such as hedge funds, as well as more traditional financial arms of iconic manufacturing companies, such as General Electric and General Motors , or insurance companies, such as AIG were indistinguishable in their practices and products from conventional financial institutions.
25. stringent - adj. rigid; tight.
26. adequacy - n. enough; sufficiency
27. iconic - adj. Of, relating to, or having the character of an icon.
If the reason for regulation of commercial banks was the potential for systemic risk, regulation would be just as valid for these other types of quasi-financial institutions. The question is whether it should focus on the form or the function of a financial product or service.
The exponential growth of the derivatives market.
This growth was particularly noteworthy in the credit area, with the creation of more and more complex credit derivatives. Many of these products put a greater distance between the original credit transaction--say, a mortgage loan from a bank to a house buyer--and the ultimate owner of the claims, which were created by combining these loans and slicing and dicing them into various "tranches." The incentive of the lender to monitor the capacity and ability of the borrower to repay the loan was blunted as a consequence, creating a huge moral hazard for the credit markets.
28. Tranches - A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice".
29. blunte - adj. Lacking in feeling; insensitive.
This growth was concentrated in the over-the-counter market.
Over-the-counter markets are more opaque than exchange-traded markets because the transactions are bilateral and the trades are not known to other market participants. The risks of default to the counterparties could be considerable, especially if there is no collateral posted. In contrast, exchanges publish their trades and use a clearing house for derivatives transactions: Prices and volumes are transparent to the whole market. Due to margins they impose on all traders, the risks to the counterparties are substantially mitigated. (A case in point is that no one today has a clear idea about the outstanding amounts of credit derivatives to the institutions that have recently failed or are likely to fail, causing the prices of credit default swaps to gyrate.)
30. over-the-counter - adj. Not listed or available on an officially recognized stock exchange but traded in direct negotiation between buyers and sellers: over-the-counter stocks.
31. opaque - adj. Impenetrable by light; neither transparent nor translucent.
32. bilateral - adj. Having or formed of two sides; two-sided.
33. collateral - adj. Situated or running side by side; parallel.
34. mitigate - v. To make less severe or more bearable.
35. swap - v. To exhange/trade (one thing) for another.
36. gyrate - v. To move or cause to move in circles or around an axis.
The increased complexity of new financial products.
These new products placed a greater burden on the accounting-standards boards to ensure that the financial disclosures matched the underlying economic reality. This opacity was an important component in the spectacular collapse of Enron, which had created an unbelievably complex web of off-balance-sheet entities that no analyst could fathom. As financial products and markets became complex, the accounting was struggling to keep up.
37. opacity - n. Lack of clarity.
38. fathom - v. To penetrate to the meaning or nature of; comprehend.
The changing model of credit-rating agencies.
Credit-rating agencies moved from assessing and rating credit risk to advising financial-product designers on modifying their products to obtain a more favorable rating. Since these entities--principally Moody's Fitch and Standard & Poor's--are the arbiters of credit quality, much depends on their judgment. Their conflicts of interest have pervasive effects on the whole financial system.
39. arbiter - n. One chosen or appointed to judge or decide a disputed issue; an arbitrato.
40. pervasive - adj. extensive.
The above list indicates that many of the warning signs--some of them, admittedly, in their early stages--were there for the policymakers to see well before the present crisis.
However, they were ignored, and--even worse--were dismissed as irrelevant. In particular, the lessons from the Japanese and later pan-Asian experience were dismissed as being peculiar to countries with ill-developed capital markets and unrelated to markets in English-speaking countries, principally the U.S. and the U.K.
41. peculiar - adj. Distinct from all others.
In light of the above discussion, what could have been done to prevent or at least mitigate some of the systemic risk we face today? One can go through each one of the above trends, which could have been discerned many years ago, and state what corrective action could have been taken. It is clear that the excesses of the last five years resulted from a collective failure to learn from the past. After all, those who cannot learn from history are doomed to repeat it.
42. discerned - v. To recognize or comprehend mentally.
Marti G. Subrahmanyam is the Charles E. Merrill Professor of Finance, Economics and International Business at New York University's Stern School of Business.
Original Link: http://news.my.msn.com/article.aspx?cp-documentid=1694170#toolbar
Privatising fisheries works | A rising tide | The Economist
0 Comment Published 12:02 AM in Good Articles , The Economist By Michael-Liew
FISH STOCKS
Sep 18th 2008
Scientists find proof that privatising fishing stocks can avert a disaster
FOR three years, from an office overlooking the Atlantic in Nova Scotia, Boris Worm, a marine scientist, studied what could prevent a fishery from collapsing. By 2006 Dr Worm and his team had worked out that although biodiversity might slow down an erosion of fish stocks, it could not prevent it. Their gloomy prediction was that by 2048 all the world's commercial fisheries would have collapsed.
1. avert - verb. to change the direction or course of.
3. marine - adj. of or relating to the sea.
Now two economists and a marine biologist have looked at an idea that might prevent such a catastrophe. This is the privatisation of commercial fisheries through what are known as catch shares or Individual Transferable Quotas (ITQs).
6. catastrophe - n. A sudden violent change in the earth's surface; a cataclysm.
Christopher Costello and Steven Gaines (the biologist) of the University of California and John Lynham of the University of Hawaii assembled a database of the world's commercial fisheries, their catches and whether or not they were managed with ITQs. As these fisheries were not chosen at random and without having any experimental control, they borrowed techniques from medical literature--known as propensity-score matching and fixed-effects estimation--to support their analysis. The first method compared fisheries that are similar in all respects other than the use of ITQs; the second averaged the impact of ITQs over many fisheries and examined what happened after the quotas were introduced. Whichever way they analysed the data, they found that ITQs halted the collapse of fisheries (and according to one analysis even reversed the trend). The overall finding was that fisheries that were managed with ITQs were half as likely to collapse as those that were not.
7. propensity - n., pl, an innate inclination; a tendency.
8. respect - n. The particular angle from which something is considered.
For years economists and green groups such as Environmental Defense, in Washington, DC, have argued in favour of ITQs. Until now, individual fisheries have provided only anecdotal evidence of the system's worth. But by lumping all of them together the new study, published this week in SCIENCE, is a powerful demonstration that it really works. It also helps to undermine the argument that ITQ fisheries do better only because they are more valuable in terms of their fish stocks to begin with, says Dr Worm. The new data show that before their conversion, fisheries with ITQs were on exactly the same path to oblivion as those without.
10. anecdotal - adj. Based on casual observations or indications rather than rigorous or scientific analysis.
11. lump - v.tr. To put together in a single group without discrimination
12. undermine - tr.v. To weaken by wearing away a base or foundation.
13. oblivion - n. The condition or quality of being completely forgotten.
RACING TO FISH
Encouraging as the results are, ITQ fisheries are in the minority. Most fisheries have an annual quota of what can be caught and other restrictions, such as the length of the season or the type of nets. But this can result in a "race to fish" the quota. Fishermen have an incentive to work harder and travel farther, which can lead to overfishing: a classic tragedy of the commons.
The use of ITQs changes this by dividing the quota up and giving shares to fishermen as a long-term right. Fishermen therefore have an interest in good management and conservation because both increase the value of their fishery and of their share in it. And because shares can be traded, fishermen who want to catch more can buy additional rights rather than resorting to brutal fishing tactics.
14. resort - intr.v., to have recourse
The Alaskan halibut and king crab fisheries illustrate how ITQs can change behaviour. Fishing in these waters had turned into a race so intense that the season had shrunk to just two to three frantic days. Overfishing was common. And when the catch was landed, prices plummeted because the market was flooded. Serious injury and death became so frequent in the king crab fishery that it turned into one of America's most dangerous professions (and spawned its own television series, "The Deadliest Catch").
15. illustrate - v.tr. To clarify by serving as an example or comparison
16. intense - adj. Extreme in degree, strength or size.
17. shrunk - v.intr. To become reduced in amount or value; dwindle.
18. frantic - adj. characterized by rapid and disordered or nervous activity.
19. plummet - intr.v., To fall straight down; plunge.
After a decade of using ITQs in the halibut fishery, the average fishing season now lasts for eight months. The number of search-and-rescue missions that are launched is down by more than 70% and deaths by 15%. And fish can be sold at the most lucrative time of year--and fresh, so that they fetch a better price.
In a report on this fishery, Dan Flavey, a fisherman himself, says some of his colleagues have even pushed for the quota to be reduced by 40%. "Most fishermen will now support cuts in quota because they feel guaranteed that in the future, when the stocks recover, they would be the ones to benefit," he says.
Although governing authorities are important in setting up ITQs, so is policing of the system by the fishermen themselves. In the Atlantic lobster fishery a property-based system has arisen spontaneously, says Dr Worm. Families claim ownership over parcels of sea and keep others out. Anyone trying to muscle in on the action risks being threatened; their gear may be cut loose or their boat could vanish.
20. spontaenously - adverb. of one's own free will.
Jeremy Prince, a fisheries scientist at Murdoch University in Australia, has been involved in ITQs since they were pioneered in the early 1980s by Australia, New Zealand and Iceland. In Australia they are only one way of managing with property rights, he says. Depending on the nature of a fishery, other methods may work better. These might divide up and sell lobster pots, numbers of fish, numbers of boats, bits of the ocean or even individual reefs. The best choice will depend on the value and underlying biology of each fishery, and in some places they may not work at all. In a fishery with a large, unproductive stock that grows slowly, fishermen may prefer short-term profit to the promise of low long-term income and catch all the fish straight away. Nevertheless, Dr Prince believes that, overall, market-based mechanisms are the way forward.
21. reef - n. A strip of ridge of rocks, sand, or coral that rises to or near the surface of a body of water.
So, if Dr Costello and his colleagues are right and the profit motive can drive the sustainability of fisheries, why do the world's 10,000-plus fisheries contain only 121 ITQs? Allocating catch shares is a difficult and often fraught process. In America it can take from five to 15 years, says Joe Sullivan, a partner in Mundt MacGregor, a law firm based in Seattle. The public, he says, sometimes resists the privatisation of a public resource and if government gets too involved in the details of the privatisation (rather than leaving it to the fishermen to work out), it can end up politically messy. But evidence that ITQs work is a powerful new hook to capture the political will and public attention needed to spread an idea that could avert an ecological disaster.
Second, Marked by or causing distress; emotional.
24. ecological - n. (The science of) the relationship between organisms and their environment.
Fish and the market | Economies of scales | The Economist
0 Comment Published 3:18 AM in Good Articles , The Economist By Michael-Liew
FISH STOCKS
Sep 18th 2008
A new way of saving fisheries shows it can work; it deserves more attention
BEFORE 1995 the annual fishing season for Alaskan halibut lasted all of three days. Whatever the weather, come hell or--literally--high water, fishermen would be out on those few days trying to catch as much halibut as they could. Those that were lucky enough to make it home alive, or without serious injury, found that the price of halibut had collapsed because the market was flooded.
1. halibut – n. A white fish, Hippoglossus spp.
2. come hell or high water – adv. in spite of all obstacles; Synonyms – no matter what happens, whatever may come.
3. literally – adv. Usage problem (Used as an intensive before a figurative expression).
Like most other fisheries in the world, Alaska's halibut fishery was overexploited--despite the efforts of managers. Across the oceans, fishermen are caught up in a "race to fish" their quotas, a race that has had tragic, and environmentally disastrous, consequences over many decades. But in 1995 Alaska's halibut fishermen decided to privatise their fishery by dividing up the annual quota into "catch shares" that were owned, in perpetuity, by each fisherman. It changed everything.
4. fishery – n. A fishing business.
5. disastrous – adj. Extremely Bad.
6. in perpetuity - Idioms For an indefinite period of time; forever.
BREAM OF SUNLIGHT
Despite their salty independence, even fishermen respond to market incentives. In the halibut fishery the change in incentives that came from ownership led to a dramatic shift in behaviour. Today the halibut season lasts eight months and fishermen can make more by landing fish when the price is high. Where mariners' only thought was once to catch fish before the next man, they now want to catch fewer fish than they are allowed to--because conservation increases the value of the fishery and their share in it. The combined value of their quota has increased by 67%, to $492m.
7. incentive – n. Something, such as the fear of punishment or the expectation of reward, that induces action or motivates effort.
8. mariner – n. One who navigates or assists in navigating a ship.
Sadly, most of the rest of the world's fisheries are still embroiled in a damaging race for fish that is robbing the seas of their wealth. Overfished populations are small, and so they yield a small catch or even go extinct. Yet the powerful logic in favour of market-based mechanisms has been ignored, partly because the evidence has largely been anecdotal. Now a study of the world's 121 fisheries managed by individual transferable quotas (ITQs), one form of market-based mechanism, has shown that they are dramatically healthier than the rest of the world's fisheries. The ITQ system halves the chance of a fishery collapsing.
9. embroile – tr.v. To involve in argument, contention, or hostile actions.
10. extinct – adj. No longer existing or living: an extinct species.
11. mechanism – n. An instrument or a process, physical or mental, by which something is done or comes into being: “The mechanism of oral learning is largely that of continuous repetition” (T.G.E. Powell).
12. Anecdotal – adj. Based on casual observations or indications rather than rigorous or scientific analysis; informal.
13. Halve – tr.v. To lessen or reduce by half.
By giving fishermen a long-term interest in the health of the fishery, ITQs have transformed fishermen from rapacious predators into stewards and policemen of the resource. The tragedy of the commons is resolved when individuals own a defined (and guaranteed) share of a resource, a share that they can trade. This means that they can increase the amount of fish they catch not by using brute strength and fishing effort, but by buying additional shares or improving the fishery's health and hence increasing its overall size.
14. rapacious – adj. taking by force; plundering.
15. Steward – n. An official who supervises or helps to manage an event.
16. Brute – adj. of or relating to beasts; animal.
There are plenty of practical difficulties to overcome. In theory, for instance, you should allocate shares through auctions. But if fishermen do not agree to a new system, it will not work. So fishermen are typically just given their shares--which can lead to bitter, politicised arguments. In Australia, a pioneer in ITQs, a breakthrough came when independent allocation panels were set up to advise the fishing agencies, chaired by retired judges advised by fishing experts. The next test will come in November, when two large American Pacific fisheries decide whether to accept market management.
17. allocate – tr.v. to set apart for a special purpose; designate.
18. auction – n. An auction in which an item is initially offered at a high price that is progressively lowered until a bid is made and the item sold.
19. typically – adv. In an expected or costomary manner; for the most part.
20. chaired – tr.v. To install in a position of authority, especially as a presiding officer.
ITQs, and other market mechanisms, are not a replacement for government regulation--indeed they must work within a well regulated system. And they will not work everywhere. Attempts to use ITQs in international waters have failed, because it is too easy for cheats to take fish and weaker regulations mean there are no on-board observers to keep boats honest. And ITQs will not work in slow-growing fisheries, where fishermen may make more money by fishing the stock to extinction than they ever would by waiting for the fish to mature. But in most of the world's fisheries, market mechanisms would create richer fishermen and more fish.
There was a time when fishermen were seen as the last hunter-gatherers--pitting their wits against the elements by pursuing their quarry on the last frontier on Earth. Those days are gone. Every corner of the ocean has been scoured using high technology developed for waging wars on land. Politicians and governments still seek to cope with fishermen's poverty by subsidising their boats or their fuel--which only accelerates the decline. Instead governments should promote property-rights-based fisheries. If fishermen know what's good for them--and their fish--they will jump on board.
21. pitting – v.tr. To set in direct opposition or competition.
22. Wit – n. The natural ability to perceive and understand; intelligence.
23. Quarry – n. A hunted animal; prey.
24. Frontier – n. A region just beyond or at the edge of a settled area.
25. Scoure – v.tr. To clean, polish, or wash by scrubbing vigorously.
26. Cope – intr.v. To contend or strive, especially on even terms or with success.
See this article with graphics and related items at http://www.economist.com/opinion/displaystory.cfm?story_id=12262197