This “Doing business in Singapore” audio guide from the Economist is a great way to prepare yourself if you are going there for business, or simply brush up on your knowledge of Singapore’s business culture if you go there regularly.

I personally don’t get why their claims extend so far. Taiwan is a touchy subject – I get it, and will leave it aside. But as their influence in the region grows, China does have a tendency to push the line a bit further as soon as it can. The problem for China will be to know when being a Bully will not be tolerated any more as it gains influence on the world stage. Countries like Malaysia or Vietnam, presently have a hard time stepping up to the Big Panda for fear or endangering their economic ties; but this could change should American and Chinese tensions continue to rise. I hope the bully won’t push its hands too far…

A MIDDLE-AGED man felt chest pains. As an executive at IBM, an information-technology firm, he had excellent health insurance, so he went straight to a specialist. His cardiologist put him through a bunch of tests, including a computerised tomography scan. A radiologist noticed something odd in his neck, so he went to a neck surgeon, who checked him out and found nothing. He went back to the cardiologist, who gave him an angiogram, which caused dangerous complications and landed him in hospital for a while. In all, he ran up more than $150,000 in medical expenses before the chest pains disappeared on their own.

When they reappeared several months later, he spoke to Paul Grundy, the head of health-care technology at IBM. Dr Grundy, a doctor of preventive medicine by training, asked him if his lifestyle had changed recently. The executive mentioned that he had taken up gardening again. Dr Grundy quickly established that his chest pains sprang from a muscle he had strained through overzealous weed-whacking.

The here above is an extract from the Life is expensive – A special report on business in America article by The Economist. The US health system is much discussed lately – with good reasons. I highly recommend any who wish to enter this discussion to read this article as it reflects pretty well where the system is today, and may open some eyes.

I also recommend this article as I laughed for a good five minutes when I saw this photo. You’ll understand why when you read its excerpt

But the real strength of the economist lies not only in its publication, but in its readers. The discussions following an article are sometimes even better than the article itself. Jomellon‘s take on this report is one such example. I liked it so much I decided to quote it here under. Share the love as some say…

One typical scenario for the last 18 years:
January -
Private Equity Investor (PEI) has 20 million. He uses it as security to borrow 200 million from Bank1 to buy a company ‘Widgets’. Widgets is a solid manufacturing business with assets of land, factories, patents, a brand, good will and no debts.

March -
Widgets borrows 300 million from Bank2 – no problems, its a solid business – but here comes the bit where it all goes criminal, though not illegal…

Widgets pays out 300 million to PEI its owner as a dividend, who repays 200 to Bank1. Widgets has to pay 20 million in interest per year. PEI keeps 100 million.

July -
Widgets also sells its assets: land, patents and so on and leases them back for 30 million a year.
The sales bring 200 million which Widgets also pays out to PEI its owner. PEI now has 300 million.

August -
Widgets Pension Fund is ‘restructured’ bringing a liquid 150 million onto the balance sheet. Widgets has liabilities to its pensioners with little to back them. 150 million is paid out to PEI as a special dividend., PEI now has 450 million.

December -
PEI sells the business to a pension fund, for 100 million, less than he paid as it has a lot of debt, but it is a good business, at least in a bull market. PEI now has 550

Recap:
Widgets now has 300 million debt costing 20 million a year in interest, plus 30 million in leasing payments. It has pension liabilities and the pension fund is almost worthless. PEI had 20 million at the start of the year and now has 550 million. But the business is still viable, as Widgets can meet its payments.

5 years later -
Sadly hard times come. Sales drop, prices drop, costs are cut, people lose their jobs, including engineers, managers, the shop floor and the sales team who did real work for years, created real value, invented the patents, built the brand. It doesn’t help. The company has no stores of fat – it goes bust. The banks loans are sour. Everyone loses their jobs, the pensioners cannot be paid.

This happens 100 times so the banks are bust too, but get bailed out by the taxpayer (that’s those guys who lost their jobs and pensions at Widgets)

PEI lives happily half the year in The Bahamas with the 550 million which he ‘earned’ in a fabulous year of ‘value creation’ in which the assets were ‘really made to work’, all made possible by the power of free and light touch regulated markets. He lives the other half of the year in London, but does not pay British tax. With his cash bundle he is contemplating which assets he can pick up in the current firesale.

Recap: Widgets are bust, its employees are jobless, its pensioners are broke. It suppliers are going bust, the banks are bust, the public treasury is bust… PEI has 550 million.

Problem for very advanced economists, unemployed Widget makers, penniless pensioners and bright 3 year olds: spot the problems with organising the economy this way.

Three articles from the Economist, all on the same subject, but from different perspectives. The markets have been terrible over the past months. To such a point that many companies are savagely reducing their dividends. Tough time for the dividen investor who was expecting GE or Dow Chemicals to continue providing much needed cash in these troubled times. At the same time, with every passing month, investors’ odds are improving. One such example is John Paulson, made a fortune betting against mortgages, and is now starting to look for opportunities in the wreckage.

Morningstar’s advices on how to avoid these three investment mistakes is a good reminder to keep things simple, and come back to basics when we lose our ground. Should you not have done it recently, now is a good time to review your situation following these principles.

I also advise you to check the latest Economist report on entrepreneurship. I found myself coming back to some of Fred Wilson‘s ideas, and it reinforced my belief in this crisis being a boon for entrepreneurship. The trend seems to pick up in the state: Weary of looking for work, some create their own.

Finally, to ease the tension a little, BoingBoing had fun going through Amazon looking for books explaing “Why the Real Estate Boom Won’t Bust” and other silly predictions… All of them still being on Amazon’s shelves !