Home' Trinidad and Tobago Guardian : October 5th 2014 Contents OCTOBER 5 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG5
Margaret Thatcher, former British prime
minister once said, "Being in power is like
being a lady. If you have to tell people you
are, you aren t." Similarly, if you have to tell
people that you are the leader in your office,
business or community group, you aren t.
Leadership has little to do with power, posi-
tion or title. According to John C Maxwell,
the world s guru in leadership, "leadership is
influence---nothing more, nothing less."
Maxwell said that leadership cannot be
awarded, appointed or assigned. It is derived
only from influence and that cannot be man-
dated. It must be earned. Some mistakenly
attempt to present themselves as leaders using
the trappings of office or title. Office and titles
only make it easier for such people to live in
self-deception. People are not drawn to leaders
who only hold titles and are fortunate to be
put into positions of authority.
Another common mistake people make
about leadership is misunderstanding the dif-
ference between leadership and management;
they are not one and the same. Management
focuses on maintaining systems and processes.
Lee Iacocca, former chairman and CEO of
Chrysler, commented once: "Sometimes even
the best manager is like the little boy with the
big dog, waiting to see where the dog wants
to go so that he can take him there." Managers
maintain directions, they do not change them.
Managers are often like a grenade that did not
go off. They have potential to change things
but they have not exploded.
Leaders on the other hand change directions,
results and performance through their influ-
ence. This is accomplished, not by force or
involuntary acts but by adding value to people
and making things better for them. Maxwell,
in his book, 21 Irrefutable Laws of Leadership,
gave seven tips to project personal influence.
They are presented in question form in keeping
with the theme of Maxwell s latest book Good
Leaders ask Great Questions.
1: "What is your character?" It is who you
are. Mother Theresa was a great woman of
influence, a woman of character without the
trappings of office.
2: "How is your relationship with people?"
The deeper your relationships, the stronger
your potential for leadership.
3: "How much knowledge do you have?"
What do you know and how well do you know
what you know. Knowledge that you cannot
use is just information.
4: "Do you have intuition?" It is not always
about statistics and hard data. Can you recog-
nise and influence energy levels and morale
in others as well as improve momentum?" Do
you have discernment?
5: "What s your experience?" What have
you been through? Leaders are not like travel
agents, who sell tickets to where they have
never been. They are more like tour guides,
who take you with them to where they have
been before. No one doubts the leadership
influence of Nelson Mandela.
6: "Do you have past successes?" What
have you succeeded at that makes you a cred-
7: "What are your abilities?" What can you
do? Ultimately, this is why people follow you.
If they think you do not have the ability, they
will not listen to you or follow you.
You have a unique opportunity to see John
Maxwell streamed live on October 10, 2014
in the L2:LEARN - LEAD simulcast. The event
will be held at the Lecture Theatre E, of the
Teaching and Learning Centre at the University
of the West Indies in St Augustine which
boasts modern facilities with the required
technology for high quality streaming. Visit
the Power Team TT's facebook page for more
information at www.facebook.com/Pow-
erTeamTT ; e-mail the Power Team TT at
email@example.com or call 225-8579 to
learn how you can be part of this event.
John C Maxwell: Good leaders have great influence
what they need to meet their reserve require-
ment. If that is so large, what is the repo rate
going to do to change that?"
The expansionary nature of the 2015 budget,
moreover, will put even more liquidity into a
system that is not adequately structured to
absorb it and Valley said this could have dire
"When the Fed is doing their quantitative
easing and there is too much liquidity in the
US market, they are at the same time, putting
money into the market and selling bonds, long
bonds, so they can soak up that money again.
The Central Bank of T&T has never done that,
the money just keeps piling up like a huge
iceberg and at some point and at some point
it is going to have to be cleaned up, otherwise
it will generally lead to inflation."
As several Sunday BG articles have explored
in the past, inflation is deadly to the aspirations
of those hoping to retire in relative comfort,
reducing the future purchasing power of dollars
saved and invested today.
Valley s proposed solution to this problem
is for the Central Bank to increase the number
of T-bills or Treasury Bills and other Central
Bank notes, such as bonds, issued to affect
monetary policy to contain inflation.
According to the IMF 2011 report, "excess
reserves drove down the interest rate on 30-
day T-bills from 6.9 percent at end-2008 to
0.3 percent in November 2010."
As of 2013, Finance Minister Larry Howai,
put excess liquidity in the system at $6 billion.
Valley said that the Central Bank needs to
have several bond issues, both where they and
the market play a role in setting the price.
"I think they should, instead of having a
single price option, let them have a multi-
price option, so that people who want to buy
the bond, and want to get rid of liquidity, can
buy the bond at the price they want and the
market really clears. And that is how people
with excess liquidity will eliminate that excess
liquidity and then, we will really know where
the price of bonds are and we will have a really
market determined yield curve, instead of a
yield curve that is highly influenced by the
The T-bill's connection to savings
Valley explained that because interest rates
for T-bills and other government bonds are
more reflective of how the market actually
functions than the repo rate, increases in these
interest rates have the ability to carry up the
interest rates of savings and investments, par-
ticularly in the case of items like money market
and mutual funds.
"That is more indicative of rising rates, than
the government changing the repo rate. That
signals that rates are rising."
Effect on pensions and insurance
On this issue, Narine said, "Over the longer
term if we get interest rates on a steady
upward glide path then new bonds issued
will have a higher coupon rate thus leading
to increased cash flows for fixed income
investors. This is good for long-term investors
like pension plans and insurance compa-
The problem lies with interest rates on
current bonds products. Both Narine and
Ramsingh said because the relationship
between interest rates and bonds is inverse,
a higher interest rate on these, will eventually
reduce their value.
"The fund manager s ability to adjust the
portfolio mix will be required, depending on
the sensitivity of the assets or liabilities to
changes in interest rates," said Ramsingh.
Based on this, Ramsingh said defined benefit
pensions will be hard hit as increasing interest
rates will have the effect of reducing their
benefit obligations based on present versus
future value computation.
Meanwhile, he said future retirees with
defined contribution pensions and deferred
annuity plans may benefit from an increase
in interest rates.
However, working with the assumption that
the repo rate will be effective in raising interest
rates on its own, Lloyd Ince, managing direc-
tor of The Consulting Interface, said the meas-
ure would "ultimately benefit pensioners and
pension plans", by preserving pensioners pur-
chasing power and improving "the out-look
for long-term yields from subsequent bonds
and income securities held by pension funds."
He saw the increase in the repo rate working
to reduce the money supply and thereby
decreasing aggregate demand, forcing prices
downward. Meanwhile, rising interest rates
fuelled by a reduction in the money supply,
"the price of money, or interest rates, will
"It reduces a perplexing problem that cur-
rently faces such funds, as the 20-year nominal
bond yield-curve in many cases falls below
certain base-returns guaranteed by certain
pension products. This fact has been even
more troubling, when the said curve is adjusted
Ince said that the adjustment of the repo
rate gave a sense of promise that this long-
standing threat to long-term savings and
investments is finally being dealt with.
From Page 4
A sense of promise
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