27 June 2018 FT — Articles to Read

27 June 2018

 Question: According to US News & World Report, what are 9 habits that can get you out of a deep debt hole?

 GE takes stride towards break-up by spinning off two of largest units – Pg. 1

          …divest GE’s healthcare division and its stake in oil services company Baker Hughes reverses decades of acquisitions….

          The latest divisions being spun off accounted for 30% of the group’s revenue and 25% of its industrial segment profit last year.  Shares in GE, which had fallen nearly 50% since Mr Flannery took over, rose 8% to $13.78 in midday trading after the plan was unveiled yesterday

          GE will now confine its business to three divisions: equipment for the electricity industry, renewable energy, and aero engines and other aircraft parts

          GE is likely to cut its dividend after it completes the spin-off of the healthcare unit within 18 months….the dividend was cut last year for only the second time since 1938

 Berlin pencils in 4% minimum wage rise – Pg. 4

          Germany is set to raise the minimum wage by 4% to 9.19 (euro) an hour next year, ….

          The introduction of a minimum wage was one of the central demands of Germany’s Social Democrats in their previous coalition government…it finally took effect in January 2015….

          The minimum wage commission, which brings together employers, trade union officials and academics, said there was no evidence so far that the reform had hurt the economy

 Minimum wage laws still fall short for those on the bottom – Pg. 9

          Wage inequality fell in Germany in 2015 more than in any other country in the EU.  The minimum wage has narrowed geographical pay inequality between rich areas such as Bavaria and poor ones such as Mecklenburg-Vorpommern

          …studies found there was no damage to people’s employment prospects

          More importantly, low pay is not the only problem for people at the bottom of the economic scale.  Higher hourly wages do not help with unpredictable shifts or fluctuating incomes

 Gulf’s influence grows in flagship emerging market stocks index – Pg. 19

          Saudi Arabia’s entry last week to the MSCI Emerging Markets equity index – used to underpin about $1.5tn of assets globally – has reinforced the rising importance of the Gulf region

          ….the Gulf could conceivably account for about 7% of the index by 2020, more than index stalwarts South Africa, Brazil and Russia and behind only China, South Korea, Taiwan and India

          The impact of this will be magnified further by the fact that foreign ownership of Gulf stock markets is very low; …it accounts for just 1.9% in Saudi Arabia versus 35 – 65% in other big emerging markets

          Saudi Arabia is the biggest new entrant to the MSCI EM equity index since Malaysia was readmitted in 2000

          Qatar and the UAE were both admitted in 2014 and are likely to have combined weight of 1.4% after the ascent of Saudi Arabia, alongside Argentina, which will reappear next year after a 10-year absence

          Kuwait is next in the queue…expecting it to join in 2020

 Answer: (1) Learn how to shift your spending habits (Prof Note: Rarely do I get a drink anymore at restaurants.  $3 for a coke when a 1 litre is 99 cents…no thank you!); (2) Set up an automatic savings account (Prof Note: Forget the auto “anything”…do it manually.  Pay yourself first!); (3) Have an emergency fund (Prof Note: ONLY for familial health issues.  You should have a standard side hustle!); (4) Don’t automatically use an unexpected windfall to pay off your debt (Prof Note: Absolutely true BUT if you have no discipline you may want to reconsider); (5) Pay off smaller debts first (Prof Note: NOOOOO!!!  Pay off the high-interest debts first!); (6) Pay your debts on time (Prof Note: Absolutely!!!); (7) Use cash as much as possible (Prof Note: NOOOOO…then you loose points on credit cards!  Learn credit card discipline and be responsible!  ORRRRRR…as soon as you make a credit card purchase go to the smart phone and transfer from checking to the credit card); (8) Measure your debt (Prof Note: One cannot eliminate what one cannot quantify!); (9) Dine in (Prof Note: There is always room at my table for anyone on the list-serve.  On Nevis, the main is served at 1:00pm promptly!); (10) Continually monitor your budget (Prof Note: Yes, this is 10 but the question had “9”…I noticed this as well and double checked.  As for budget, stay true to your budget.)