Tag Archives: financial advisor

A New Policy Orthodoxy Is Emerging

babel 2My Comments: The more things change, the more they stay the same. Or is it the other way around? If your future financial wellbeing depends on guarantees and positive market performance, the more you need to pay attention to these trends. Or at least interact with professionals who do follow and understand them. This is pretty deep stuff so if you are easily bored by economics, it may put you to sleep.

August 24, 2016

Global CIO Commentary by Scott Minerd, Guggenheim Investments

There is a new debate emerging among policymakers in advanced economies. Two Federal Reserve Bank chief executives have taken the position that the natural rate of interest in the United States is much lower than previously assumed (see the chart at the bottom of these comments). These experts suggest the need for a slow pace of increases in short-term rates, with one Fed president projecting only one 25 basis point increase between now and 2019, and the other suggesting negative rates are increasingly possible in the next economic downturn.

Recently, U.K. gilts briefly joined the growing number of sovereign bonds that trade at negative yields. Investors should take note. Capital flows from regions of the world with slow growth and negative rates will continue to exert downward pressure on the term structure of the U.S. interest rates. As I have said before, it would be imprudent for investors to rule out the possibility of negative rates in the United States.

As the world’s major economies are mired with record low bond yields, practically non-existent inflationary pressure, and lackluster economic growth, policymakers cannot continue to simply do more of the same old thing hoping that even lower rates and more quantitative easing alone will reach the desired employment and inflation targets. After years of economic malaise in the wake of the financial crisis, the time has come to recognize that the current policy paradigm is nearing the limit of its effectiveness and perhaps already has exceeded it. I have written before of the unintended consequences of negative interest rates. One example is the unexpected strength of the yen after the Bank of Japan moved to negative overnight rates. The message is clear – the current monetary policy regime cannot succeed alone and aggressive fiscal policy must be added into the global policy mix. The chorus of monetary voices demanding fiscal action is growing.

Both of the aforementioned Federal Reserve Bank Presidents, James Bullard of St. Louis and John Williams of San Francisco, have evolved their views on the intractability of the current economic situation. Bullard believes that the best we can do in this environment is to assume that the current state of real output, employment, and inflation will continue over the next few years. He admits that over time economic regimes change, but “the best that we can do today is to forecast that the current regime will persist and set policy appropriately for this regime.” For him, the current “regime” means just one 25 basis point move between now and 2019. In the meantime, Bullard has stopped submitting longer-run forecasts to the Federal Open Market Committee’s (FOMC) Summary of Economic Projections, almost in protest.

While Bullard may prescribe additional policy measures in the future, John Williams of the Federal Reserve Bank of San Francisco wants to become proactive now. He is one of the world’s leading experts on the natural rate of interest, or the real short-term interest rate that would be neither expansionary nor contractionary if the economy were operating near its potential. Williams believes the natural rate of is currently very low and will likely stay that way for some time. The real natural rate, according to Williams, was in the 2.5 to 3.5 percent range for major economies for most of the 1990s, but it now hovers around zero for the United States and below zero in the euro area and Japan. He notes that the decline in the natural rate owes to a number of secular factors, including changes in the global supply and demand for funds, shifting demographics, slower trend productivity growth, and a general global savings glut.

“The critical implication of a lower natural rate of interest,” says Williams in a recent essay, “is that conventional monetary policy has less room to stimulate the economy during an economic downturn, owing to a lower bound on how low interest rates can go.”

To address the problem, Williams has suggested a new orthodoxy for monetary and fiscal policy solutions. This new orthodoxy would expand unconventional monetary policy tools, including asset purchases and negative rates; create monetary policy frameworks that target either higher inflation rates or nominal GDP growth; increase long-term growth potential through targeted and scaled capital spending on infrastructure, education, and research; and make fiscal policy more countercyclical, including through changes to tax policy and federal grants to states.

Numerous indications suggest that this new combined monetary and fiscal policy strategy may be on the horizon. In the United States, both presidential candidates are touting programs that feature significant infrastructure spending in 2017 and beyond. In Japan, policymakers are announcing fiscal stimulus while simultaneously flirting with the use of helicopter money*. More broadly, a lower natural rate implies a slower baseline path of rate increases in coming years and a greater likelihood that a broader array of unconventional tools will be needed during the next recession. I fully expect elements of this new policy orthodoxy will be implemented, over time, here in the United States, as well as in Europe and Japan. The reality is that as low as rates are around the world, we now have leading regional Fed presidents updating their outlooks suggesting that the natural rate of interest is much lower than expected. Investors need to accept that ultra low short- and long-term rates will likely be with us through the rest of this decade and possibly beyond. We live at a time where the unthinkable has become common.

Many policies implemented since the financial crisis would have been perceived as highly unorthodox or impossible to maintain just a decade ago. Clearly policy makers are beginning to shift the direction of future policy. This will be a major topic at the upcoming Jackson Hole Symposium where Fed Chair Janet Yellen will make a seminal speech. The outcome of this discussion will set the policy stage for years to come and impact the future direction for markets in the coming decades. Policies implemented in the near-term may be thought extreme by market participants today, but they will likely become commonplace in the emerging policy orthodoxy of tomorrow.

The natural rate of interest is the real federal funds target rate that would be neither expansionary nor contractionary if the economy were operating near its potential. A model estimate of the natural rate—developed by Thomas Laubach and John Williams, currently President of the San Francisco Fed—has fallen sharply since the crisis and stands only slightly above zero. A lower natural rate implies less need for policy to tighten and a greater likelihood that policy measures now considered unconventional will be employed in future cycles.

Options for Funding Long-Term Care Expenses

retired personMy Comments: When you reach retirement age, the elephant in the room becomes Long Term Care. This is when someone in the household becomes unable to perform two of what are called Actitivies of Daily Living, or ADLs.

A healthy spouse will simply take on more and more to help the affected person manage and get by from day to day. But it takes a huge toll, and if there are enough resources or insurance in place, there may be money to find someone to help.

Only two of the four ways to finance a solution are referenced in this blog post. If you want more information on the other two, call or email me.

This begins to explore ways to pay for those LTC expenses.

January 12, 2016 by Wade Pfau

Four general ways to finance long-term care expenses include:
1. Self funding with personal assets
2. Medicaid
3. Traditional long-term care insurance
4. Long-term care insurance combined with life insurance or annuity

I will discuss the first two of these today and go into the others in subsequent posts.

The overall cost of long-term care can be defined as:

LTC Cost = LTC Expenses + LTC Insurance Premiums – LTC Insurance Benefits

This equation highlights that the overall cost of funding long-term care is comprised of the actual expenses for care plus any premiums paid for long-term care insurance, less any benefits received (including death benefits or other auxiliary benefits, when applicable) from the insurance policies. For this formula, one may consider Medicaid benefits as a type of insurance benefit.

Before we go any further, notice that Medicare and health insurance are not on the above list. The misperception that Medicare provides long-term care support is common. Medicare provides support only in limited situations when an individual is confined to home, requires intermittent or part-time support from a Medicare-certified home health agency as prescribed by a doctor, and is expecting a full recovery. Full benefits last 20 days and partial support ends after 100 days.

Selecting between the four options listed above includes a number of considerations: age, health, ability to receive help from family or friends without overburdening them, wealth levels and how they may relate to Medicaid qualifications, legacy objectives, risk tolerance with regard to the financial impact of unknown long-term care events, and costs and benefits of different types of insurance.

As far as funding is concerned, developing a written plan and sharing it with family members can help avoid misunderstanding when the time comes. You should also ensure family members know about any funds set aside or any insurance policies designed to support care when the time comes. A qualified elder care law attorney can help with issues surrounding the transition to using Medicaid for long-term care expenses.

Self Funding
Self funding means any long-term care expenses will be funded through distributions from financial assets. This strategy keeps the full risk for the amount of long-term care spending on the household and results in the widest range of potential spending outcomes. Of course, if no long-term care event occurs, the cost of self funding is zero dollars. But without any risk-sharing, the threat of potential costs that could exceed one million dollars hangs overhead.

If you are more risk-averse, you may prefer to pay a premium to better protect your wealth in the event of an expensive long-term care event, even if it carries a relatively small loss should no long-term care event arise. Risks of self funding include potential high costs, investment risks for the underlying portfolio, and difficulties with managing investment assets after a long-term care need begins.

For self funding, ask yourself if you have sufficient financial resources to cover an expensive long-term care shock and still meet the remaining financial goals for retirement. Which specific resources could be used for long-term care expenses? How will they be invested? What impact would these expenditures have on the standard of living for remaining household members and potential beneficiaries? Is this a risk that can be accepted, or could insurance provide a positive impact by helping pool this risk?

Clearly, the self funding option is only possible for those with sufficient discretionary assets to meet potential expenses. With sufficient assets, those with high risk tolerance may prefer the increasing variability in net care expenses by self funding to insurance. Others with a lower risk tolerance might choose to pool some of the risks through an insurance company.

Another risk tolerance consideration: What kind of investment returns could the assets earn if no protection is purchased? The more conservatively these assets earmarked for long-term care are invested, the less potential upside growth they would lose. Those with greater risk tolerance who invest more aggressively may find self funding fits their circumstances, while those who would otherwise invest the assets more conservatively – in cash or CDs, perhaps – may benefit more from an insurance solution.

The self-funding route may also be more attractive to individuals with a family history free of health problems that result in the need for long-term care such as dementia. Also, those with the potential to receive care from family or friends may feel self funding is a safe bet as it could greatly reduce the cost of care.

Self funding could force an individual to rely more greatly on family care, which introduces a number of potential opportunity costs not included in formal cost calculations. Caregivers often experience increased stress and health problems, and they could be forced to make sacrifices in their careers that could result in substantially reduced lifetime earnings. The health problems created by providing long-term care could potentially result in the caregiver needing long-term care for themselves as well.

Medicaid is the most commonly used funding option for long-term care in the United States. It generally serves as a last-resort option once assets and income have fallen to sufficiently low levels. The qualifications for Medicaid – assets, income, and medical need – vary widely by state, which makes it hard to generalize about the process. Some states require relative impoverishment to qualify for Medicaid, while others allow money set aside for a surviving spouse to be exempted from consideration to pay for long-term care.

Medicaid is the main option for those entering retirement with little savings. It is also the go-to for continuing care after available resources have been depleted.

Still others reposition their assets with the aid of an attorney to work around Medicaid limitations and gain access – a somewhat controversial strategic process known as “Medicaid planning.” Some view it as unethical, while others say they are entitled to the welfare benefits through their lifetime tax payments.

Either way, Medicaid is making such planning increasingly difficult by limiting the transfer of assets to avoid using them to pay for long-term care. Also, efforts to recover Medicaid benefits from the estates of beneficiaries have grown more and more complex as states work harder to reduce overall Medicaid expenditures.

Nevertheless, Medicaid planning may be helpful for those with limited resources and health problems preventing them from qualifying for long-term care insurance. Available resources may still need to be spent on long-term care needs in the end, and qualification for Medicaid could occur if long-term care needs persist.

Because Medicaid reimbursement to long-term care facilities is generally lower than the true cost, self-funding patients may receive priority admission – and potentially better quality care – over Medicaid patients. Yet, as an increasing number of people require long-term care, making it difficult for everyone to receive high quality long-term care, those who would otherwise have the ability to self-fund may come to regret using Medicaid planning techniques if they could have funded better quality care themselves.

Wade Pfau: Professor at The American College and Principal at McLean Asset Management. His website: http://www.RetirementResearcher.com

‘Biggest Bond Bubble in History’ is About to Burst

bear-market--My Comments: Broken record time again. The punditry has almost one voice and yet the markets are not listening. I can’t wait until November 9 arrives.

Aug 20, 2016 – The Irish Times

“The market can remain irrational longer than you can remain solvent,” is a famous quote, often attributed to JM Keynes. And indeed we have experience in Ireland of how a market – in our case the housing market – can remain irrational for a long period of time. The “ fundamentals” were supporting it, was the argument. And how wrong it was.

Now we have the same argument being used to support the super-low and even negative yields in bond markets, especially those for Government debt. Some $13,000 billion of bonds worldwide are now trading at negative interest rates, including short-term Irish Government debt. But with central banks pumping billions into the world economy (often by buying bonds), growth remaining at record lows and official interest rates on the floor, we are told, yet again, that the fundamentals are supporting all this.

Looks like a duck

Perhaps they are. But the lesson of our housing market reflects the theory about something that looks like a duck and quacks like a duck. And so enter Paul Singer of Elliot Management, who should know something given that his hedge fund manages $28 billion in assets.

He told investors in a letter this week that, in his view, the turnaround in the bond market was likely to be “surprising, sudden, intense, and large”. He said he believed we were in “the biggest bond bubble in world history”, and advised investors to avoid sub-zero yielding debt.

“Hold such instruments at your own risk; danger of serious injury or death to your capital!” he wrote, according to CNBC.

Of course such warnings have been made for the last couple of years and, despite them, bond prices have continued higher and yields – or interest rates – have continued to decline. It is hard to know what might burst the bubble, with little sign of a big take-off in growth or inflation. But common sense would suggest that investors paying governments to lend them money to cover their budget deficits really doesn’t make a lot of sense.

As Singer said, it could all end with a bang. But when, and why, is the really hard question to answer.

Understanding Social Security Spousal Benefits

SSA-image-3My Comments: these details were found at a site called WiserWomen.com . They are consistent with my thoughts about how to get the most from the Social Security system as you ask questions to find the optimal timing to apply and possibly suspend your benefits. If you want a personal analysis and comprehensive report, talk with me. Their comments follow this first paragraph.

Social Security is a vital source of retirement income for most women. For this reason, it is important to understand how the spousal benefit works and how it can impact the amount of Social Security income you receive. While this fact sheet is written for women, the information here is the same for men who may want to claim the spousal benefit based on their wife (or ex-wife’s) earning record.

As a spouse, you can claim a Social Security benefit based on your own earnings record, or collect a spousal benefit in the amount of 50% of your husband’s Social Security benefit, but not both. You are automatically entitled to receive whichever benefit provides you the higher monthly amount. In order to qualify for Social Security spousal benefits, you must be at least 62 years old and your husband must also be collecting his own benefits. If your husband is of full retirement age and is not yet collecting benefits, he can apply for retirement benefits and then request to have the benefits suspended and receive delayed retirement credits until age 70. Once he has applied for and suspended his benefits, you would then be able to apply for spousal benefits. Additionally, if you are the higher earner, your husband can apply to collect spousal benefits based on your work record. It is important to note that claiming a spousal benefit does not impact the benefit amount received by the worker whose earning record is being used.

Taking Benefits Early

A full spousal benefit is worth 50% of the non-claiming spouse’s retirement benefit at their full retirement age (known as the “primary insurance amount”, or PIA). It does not matter when the non-claiming spouse actually filed for their own retirement benefit. Therefore, even if your current or former spouse is receiving a reduced benefit as a result of early claiming, your spousal benefit will not be affected. What CAN impact your spousal benefit, however, is if YOU claim the benefit before your own full retirement age. For example, if your full retirement age were 66, then the following reductions to benefits would apply:
• At age 65, you would receive 45.8% of your spouse’s benefit.
• At age 64, you would receive 41.7% of your spouse’s benefit.
• At age 63, you would receive 37.5% of your spouse’s benefit.
• At age 62, you would receive 35% of your spouse’s benefit.
It is also worth noting that unlike delaying your own worker benefit, there is no credit for delaying a spousal benefit beyond full retirement age.

Divorced Spouses
You can receive benefits as a divorced spouse on your ex-husband’s Social Security record, even if he has remarried and his current wife is collecting benefits based on his record. However, there are a few eligibility requirements:
• You must have been married to your ex-husband for at least 10 years.
• You must be at least 62 years old. However, if your ex-husband is deceased and you are currently unmarried, you may collect benefits as early as age 60 as a surviving divorced spouse. If he is deceased and you are disabled, you can collect benefits as early as age 50.
• Your ex-husband must be eligible for benefits. If he is eligible but is not currently receiving benefits, you can still qualify for spousal benefits if you have been divorced for two or more years.
• You must not be currently married. If you remarried and your second husband is deceased, you can claim benefits from either your first or your second husband as long as each marriage lasted at least 10 years.

Surviving Spouses
• If your husband passes away, you can collect survivor’s benefits as early as age 60.
• You are eligible to receive his full Social Security benefit amount if you claim the benefit at your own full retirement age. If you claim before your full retirement age, your benefit will be reduced. (You can learn more about this on the Social Security website by clicking here.)
• If your ex-husband is deceased and you remarry before age 60 (or 50 if you are disabled), you cannot receive survivor’s benefits unless the latter marriage ends (whether it be through death, divorce, or annulment). If you remarry after age 60, you can continue to receive benefits on your former husband’s Social Security record. However, if your current husband is also a Social Security beneficiary and you would receive a larger benefit from his work record than you would from your former husband’s record, you should apply for spousal benefits on your current husband’s record. You cannot receive both benefits.
• Regardless of your age or marital status, if you are caring for your deceased husband’s child or children, you would be eligible to receive benefits for raising them until they are 16 years old. These children can then continue to receive benefits based on your husband’s work record until they are 18 or 19, as long as they are unmarried. If a child is still a full-time student (no higher grade than grade 12) when they turn 18, they can continue to receive benefits until 2 months after they turn 19 or until they graduate, whichever comes first. Children who are disabled can also continue to receive benefits after they turn 18 years old.

Applying for Benefits
You can apply for benefits online by going to http://www.socialsecurity.gov. You can also apply over the telephone by calling 1-800-772-1213, or apply in person by visiting your local Social Security office. For more information on how to apply, visit www.socialsecurity.gov/retire2/applying8.htm.

To make the application process easier, you should know your husband’s (or ex-husband’s) date of birth and Social Security number. You may also be asked to provide certain documents as proof of eligibility, such as your birth certificate or other proof of birth, naturalization papers, W-2 forms, a marriage certificate, or divorce papers if you’re applying as a divorced spouse.

The Return of American Exceptionalism

My Comments: We live in a biased world and are likely to remain in a biased world. I find it helpful to read ideas expressed by people who live outside the US and have a different bias filter. This is one of them.

By Edward Luce, August 14, 2016

Until recently most of the world yearned for the US to become a more normal country. It had seen enough of George W Bush’s freedom agenda to put it off American exceptionalism for good. People should be careful what they wish for. Donald Trump may be the most gaffe-prone — and offensive — US presidential nominee in history. But he is also the first to scorn the belief that America’s mission should be to uphold universal values. It is not clear he even thinks such values exist. Hillary Clinton, on the other hand, is their unabashed cheerleader. “I believe with all my heart that America is an exceptional country,” she said in June. “We are still, in Lincoln’s words, the last best hope of earth.”

Long-suffering US realists — those who argue that America should merely pursue its national interests — must wonder what they did to deserve such a champion. Mr Trump vows to avoid foreign entanglements, such as pre-emptive wars in Iraq. That is what realists want to hear. Ditto for Mr Trump’s view that America’s allies should pay for more of their defence, or that China is entitled to occupy atolls in a sea named after it. Why should America always play the referee? But Mr Trump inevitably spoils things by adding his own gloss — promising a nuclear attack on Isis, for example, or claiming that President Barack Obama founded the terrorist group. The key to successful realism is tactical guile and deep knowledge of the world. Mr Trump epitomises the opposite. With friends like Mr Trump, realists need no enemies.

There is also the likelihood that he will lose to Mrs Clinton in November. Mr Trump’s defeat would probably come in spite of his foreign policy instincts, rather than because of them. For years, the US public has said it is tired of military adventures, thinks Nato allies should shoulder more of the burden and that America’s global role should be more modest. Nation-building is no longer an election winner, if it ever was one. Mr Trump’s “America first” slogan might have unfortunate antecedents (it was picked up by Fascist sympathisers in the early 1940s), but many Americans are happy with its current meaning. If he loses it will be because of his manifestly unpresidential temperament and a tendency to insult almost every group in America.

Unfortunately for realists, their ship may go down with him, which means the USS Exceptionalist would set sail again under Mrs Clinton next January. Where was it during the Obama years? Mr Obama’s foreign policy has been neither exceptionalist nor realist but a hybrid of the two. A few weeks after he took office, I asked whether he subscribed to the school of US exceptionalism. Mr Obama replied that he was a US exceptionalist in much the same way that “Brits subscribe to British exceptionalism, and Greeks subscribe to Greek exceptionalism”. His creed, in other words, was avowedly subjective. Given how harshly Mr Obama’s critics have questioned his patriotism, his answer today may be less ambivalent. It is hard to imagine Mrs Clinton saying that. A true exceptionalist leaves no room for doubt. They believe the US stands taller and sees further than other nations, as Madeleine Albright, the former secretary of state, once said.

What would this mean for a Clinton administration? Unexpected events would dictate much of her presidency, as is always the case. Ronald Reagan’s struggle with the Soviet Union’s “evil empire” was rendered moot by the rise of Mikhail Gorbachev. Bush junior took office promising a humbler foreign policy. He pivoted quickly to hubris after the 9/11 attacks. Mr Obama promised to wind down the wars in Afghanistan and Iraq. He will leave office with thousands of US soldiers in each country. Bill Clinton, meanwhile, vowed to uphold human rights and confront the “butchers of Beijing”. To his lasting regret, he turned a blind eye to the 1994 genocide in Rwanda. This was largely because of what he learnt from another event — the “Black Hawk down” debacle in Somalia. He also brought China into the World Trade Organisation. In each case, however, the president’s philosophy shaped how they responded to events.

Many assume that Mrs Clinton would simply pick up the baton from Mr Obama, since she was his first secretary of state. But serving a president is very different from being one. On each military question that arose in Mr Obama’s first term, Mrs Clinton took the hawkish view. Sometimes she was on the winning side, such as on intervention in Libya. At others, such as on whether to arm Syrian rebels, her advice was overruled. In spite of her early involvement in the Iran nuclear talks, it is doubtful if she would have signed Mr Obama’s deal.

Her campaign rhetoric is also strikingly different from Mr Obama’s. In 2008 he pledged to revive America’s moral authority in a world reeling from Mr Bush’s wars of choice. She vows to engage with a dangerous world with all the tools at her disposal. It is a different sensibility.

Mr Obama once summed up his approach to foreign policy as “don’t do stupid shit”. In a rare critical moment, Mrs Clinton said Mr Obama’s maxim did not amount to an organising principle. She was right, of course. But in these hazardous times, the instinct to first do no harm may be worth more than we can appreciate.

Social Security: What to know before claiming benefits

SSA-image-3My Comments: This is pretty basic stuff but for many of you who have yet to seriously think about where the money is going to come from when you retire, this is a must read. I also encourage you to go to the ssa.gov web site and register yourself.

by Diane Archer June 30, 2016

The National Academy of Social Insurance has a new toolkit on Social Security. If you’re thinking about when to claim Social Security benefits, it explains what to know and ask.

When to claim Social Security benefits is an important decision. If you need the benefits in order to meet your daily needs, you should claim them as soon as possible. But, if you can wait to claim them, you will receive higher Social Security income. As it is, on average Social Security replaces only 40 percent of a person’s pre-retirement income.

If you were born between 1943 and 1954, your full retirement age (FRA) is 66, though you may claim benefits any time between age 62 and 70. If you claim them at 62, you get 25 percent a month less each month for your lifetime than you would if you waited to claim until you are 66. To learn about how claiming benefits early disproportionately hurts people with low incomes, click here.

If your full retirement age (FRA) is 66 and you wait until 70, you get 32 percent more in monthly benefits for your lifetime than you would if you claim benefits at 66. You get 8 percent more for each year you delay claiming benefits after age 66 up to age 70.

Of course many factors go into when you should claim benefits. If you’re in good health and can wait, you will ensure a higher monthly income throughout your life. Moreover, if you’re married and earn more than your spouse, delaying your receipt of benefits, will ensure increased Social Security income for your spouse after you pass. On the other hand, if you’re in poor health, it might be wise to claim benefits early so you are able to get back as much as possible from Social Security.

It’s wise to confirm that Social Security has correct information about your income. You can check online by creating a “my Social Security account” at https://www.ssa.gov/myaccount/. Once you do that, you will get a Social Security Statement that shows the income information Social Security has on file. Let Social Security know right away if you find a mistake.

What benefits does your spouse get? Because Social Security is insurance designed to protect families, your spouse, even your divorced spouse if you were married at least ten years, is entitled to Social Security benefits based on your income. The spousal benefit amount is half of the amount of your benefit if that amount is larger than what your spouse would receive based on his or her own income. And, after you pass, your surviving spouse or divorced spouse if you were married at least ten years, is entitled to your full Social Security benefits if that is larger than the amount your spouse would otherwise get based on his or her own income.

The NASI toolkit provides questions to ask based on a range of situations in which you might find yourself, including whether you should keep working and claim benefits. To read the toolkit, click here.

Trump’s Thin Skin Shows CEOs Are Not Made For Politics

Pieter-Bruegel-The-Younger-Flemish-ProverbsMy thoughts on this: We can argue ‘till the cows come home whether Donald or Hillary is more reprehensible. And we can wonder if the other two national candidates will meaningfully affect the outcome next November.

Donald may indeed be a nice guy, but I’m not ready to cede him the prize as CEO of these United States of America. Because the skill sets necessary to be CEO of the USA are very different from the skill sets necessary for someone to be the CEO of a player in corporate America.

Frankly, I don’t think he has the necessary talent. To borrow a sports metaphor, someone may be a talented and very successful athlete, then become a fantastic position coach in football. But time and again, we see people promoted beyond their ability to be successful. In Gainesville, think Will Muschamp to name just one. I’m casting my vote for the person most likely to be a functioning CEO of these United States for the next four years. There is no do-over once the die is cast; it better be right.

Michael Skapinker, August 10, 2016, in the Financial Times

We need political leaders with real world experience. Too many of those who govern us have never worked outside politics. It is a frequent cry. But if we think business leaders are the answer, Donald Trump, the Republican presidential candidate, is providing a near-daily display of how hard it is to leap from running a business to winning elections.

There are two reasons. First, business leaders such as Meg Whitman and Carly Fiorina, who have both lost elections, did not seem to grasp that holders of political office have less control over events than does a chief executive. While a business boss can hire, fire, acquire and sell, even the US president is hemmed in by the constitution and can be stymied by Congress, as the political economist Francis Fukuyama has noted.

British prime ministers have more executive and legislative power but still have to accommodate rivals who might challenge for their job. The aggravation Tony Blair tolerated from his chancellor Gordon Brown? No chief executive would put up with it for a week, let alone 10 years.

The second and more important reason business leaders struggle in the political fray is that they are unprepared for the criticism, invective and ridicule they will have to endure.

The press does sometimes attack chief executives. Politicians occasionally attack them too. Hauled before legislative committees, they react badly to the kind of questioning a political office-holder expects as a matter of course.

Some respond truculently, as did British retailer Sir Philip Green when asked by a House of Commons committee in June to explain the shortfall in the pension fund of BHS, the chain he ran that has since gone bust. Or they blink into the bright lights of a televised hearing and stumble through their answers — which were the reactions of Starbucks, Amazon and Google executives when questioned about tax arrangements by a UK parliamentary committee in 2012, and US car industry chiefs when congressional inquisitors demanded to know why they had flown to Washington in their private jets in 2008.

Few business bosses know what it feels like to face the vituperation endured by politicians or to be caricatured relentlessly. Steve Bell, the Guardian cartoonist, decided that David Cameron’s shiny pink complexion made it look as if he had a condom over his head — and he drew the former prime minister that way for years. Zapiro, the South African cartoonist, always draws President Jacob Zuma with a shower growing out of his head — never allowing him to forget that while on trial in 2006 for allegedly raping a woman who was HIV-positive (he was acquitted), he said he had avoided infection by taking a shower.

Politicians may loathe these depictions but they have to put up with them. Mr Bell says Mr Cameron once said to him “you can only push a condom so far” — which he wrote on the back of the moving truck in the cartoon he drew last month of the Camerons leaving 10 Downing Street.

Chief executives, by contrast, are surrounded by managers and staff eager to win favour. Talking back to the boss does not get people far. Business leaders become used to the admiration but this can make them thin-skinned when outsiders criticise them. A retired business leader once called to yell at me for writing that he couldn’t take criticism.

Politicians’ press officers try to bully critics too but those who successfully run for public office know they often have to let the brickbats sail by.

Any political leader could have told Mr Trump not to attack Megyn Kelly, a Fox News female television presenter, by saying she had “blood coming out of her eyes, blood coming out of her wherever”. A sensible politician would have responded to criticism from the parents of a dead US Muslim soldier by saying how much he respected their sacrifice, rather than suggesting, as Mr Trump did, that the soldier’s mother had been prevented from speaking at the Democratic convention.

Few chief executives are as abusive towards their detractors as Mr Trump. Even fewer speak as recklessly or pick as many fights. Many will, rightly, object to being likened to him. But he is just an extreme example of the narcissistic boss who, once in the public arena, is incredulous that people dare to criticise him.