Northern Rock is the Government's surrogate for lending money to revive the economy. They're going to up their lending by up to £14 billion or so in the next couple of years. The BBC report says that the new money will be a mix of new deposits, repaid loans AND GOVERNMENT MONEY.
Although the last part is, of course, my capitalisation (sic), it's a clear indication that the Brown administration is going to waste more money. Only a government would want to increase a mortgage portfolio at this time.
Ok, it's only a fraction of the £127.3 billion the UK Treasury will borrow this year but it's a bad signal for the market. At least we know it won't be the 100% loans, as dear old Gordon's decided this is a really bad things. But just how bad will it be when the Bank of England starts printing money & the government of Her Majesty of the United Kingdom chip in from the sidelines with a few more bob.
I say that HM Queen Elizabeth II should step in and appoint a caretaker government right now as the current lot have proven themselves to be utterly useless.
Sunday, February 22, 2009
Tuesday, February 3, 2009
The UK Needs more Public Holidays
Yesterday's dump of snow brought an impromptu day off to many in the South of England. Most of us enjoyed stomping around in 15 to 30 centimetres of soft, fresh snow, making the most of the unexpected day off. In the parks, people built snowmen, tobogganed down any available incline and marveled at the drifts of snow hanging on the tree branches.
Today as I trudged into work, albeit on an emptier than usual London Underground, the thought slid into my brain that here in the UK we could do with a couple more sanctioned days off. The English and Welsh get two days for Easter, the first and last Monday in May, another day in August, two more for Christmas and Boxing Day and one to celebrate Janus. A grand total of 8. Going back in time, at least on Wikipedia, we used to get 37 days (a mixed bag of religious observations), but I guess that back then we didn't have employment rights guaranteeing us time off.
In the other nations of the Union, Scotland get nine days while Northern Ireland get ten. Even the old USofA get ten days of public holidays. A quick troll through No. 10's website (note how prettily the party apartchiks use the BETA term to indicate this isn't really a live site, only it is because it's in the public domain and therefore "live" to everyone!) reveals how many petitions are out there for these extra days. Even two years ago, the BBC was in on the act.
To date, Government spin has suggested that additional days off celebrating national identities, like St George's day or St David's day, make it difficult to create an agenda that meets everyone's liking. I'd like to suggest that the Government has "done nothing" (a familiar phrase trotted out these last few months) to put forward one or two more days off for the "hard working families" in this country.
I guess that leaves us still in the "hard working" category with no additional benefits in sight. I wonder if el Gord will use his remaining days in power to gift us extra days off to enjoy his recession?
Oh dear.
Today as I trudged into work, albeit on an emptier than usual London Underground, the thought slid into my brain that here in the UK we could do with a couple more sanctioned days off. The English and Welsh get two days for Easter, the first and last Monday in May, another day in August, two more for Christmas and Boxing Day and one to celebrate Janus. A grand total of 8. Going back in time, at least on Wikipedia, we used to get 37 days (a mixed bag of religious observations), but I guess that back then we didn't have employment rights guaranteeing us time off.
In the other nations of the Union, Scotland get nine days while Northern Ireland get ten. Even the old USofA get ten days of public holidays. A quick troll through No. 10's website (note how prettily the party apartchiks use the BETA term to indicate this isn't really a live site, only it is because it's in the public domain and therefore "live" to everyone!) reveals how many petitions are out there for these extra days. Even two years ago, the BBC was in on the act.
To date, Government spin has suggested that additional days off celebrating national identities, like St George's day or St David's day, make it difficult to create an agenda that meets everyone's liking. I'd like to suggest that the Government has "done nothing" (a familiar phrase trotted out these last few months) to put forward one or two more days off for the "hard working families" in this country.
I guess that leaves us still in the "hard working" category with no additional benefits in sight. I wonder if el Gord will use his remaining days in power to gift us extra days off to enjoy his recession?
Oh dear.
Monday, February 2, 2009
Snow Time
As an unusual wintery weather pattern rolls across south east England it's reassuring to see the country grind to a halt once more. That's right, it's snowing again in London and it's considered to be the "worst" flurry since 1991, when I remember being in the office pretty much on my own as the permanent staff living in the commuter belt couldn't get to the office.
Today, I couldn't get into the office; according to our fabulous Mayor Boris we've had the right snow, just too much of it! It's a great economic conundrum for this country. After all, the number of days lost to "extreme" weather in the south is, on average, one or two days a year. So businesses and the government don't invest in costly infrastructure using the assumption that disruptive days don't come round very often. This seems the pragmatic option, the stoic British stiff upper lip and carry on regardless.
Mind you, the people of the south are also ill-prepared for such weather. When we were out for a walk today we wore hiking boots, ski-gloves, winter water-proof jackets, scarves and hats. Many of our neighbours were wandering around in sneakers or fashionable shoes not designed for the icy sludge on the footpaths. Quite a few of them stumbled and slid at the merest hint of an ice patch.
It's unlikely there'll be more snow tonight, such a shame. I've enjoyed the day at home throwing snow balls at my kids, taking photos of our yard covered in snow and popping to the supermarket to secure our food supplies for the day.
I consider this to be the best type of day; tomorrow we'll be back at work.
Today, I couldn't get into the office; according to our fabulous Mayor Boris we've had the right snow, just too much of it! It's a great economic conundrum for this country. After all, the number of days lost to "extreme" weather in the south is, on average, one or two days a year. So businesses and the government don't invest in costly infrastructure using the assumption that disruptive days don't come round very often. This seems the pragmatic option, the stoic British stiff upper lip and carry on regardless.
Mind you, the people of the south are also ill-prepared for such weather. When we were out for a walk today we wore hiking boots, ski-gloves, winter water-proof jackets, scarves and hats. Many of our neighbours were wandering around in sneakers or fashionable shoes not designed for the icy sludge on the footpaths. Quite a few of them stumbled and slid at the merest hint of an ice patch.
It's unlikely there'll be more snow tonight, such a shame. I've enjoyed the day at home throwing snow balls at my kids, taking photos of our yard covered in snow and popping to the supermarket to secure our food supplies for the day.
I consider this to be the best type of day; tomorrow we'll be back at work.
Tuesday, January 27, 2009
IT Development & the Tory Proposal
Today's announcement by the Tory party on the capping of expenditure for IT projects and reviewing the way they are run is good news for some, including those consultants who've made a living out of plugging the ISO 9000 standards for systems documentation.
I'm all for this proposal by the Opposition, for the sake of future generations we're going to need some Agile thinking to reduce the burden of debt left by the incumbent spendthrifts.
Government projects are great at delivering 2,000 page documents that describe, in somewhat eye-watering detail, what the system is supposed to deliver. Apart from creating a physical hazard for those designated to carry these tomes around, or those unlucky enough to trip over 4 inches of high quality paper left lying in a corridor, this type of document does little to deliver a quality system. Studies claim that delivering this type of traditional requirements only 25% of the specified features are used frequently, and the rest of the system is used either infrequently or not at all.
The basic problem is that it's very difficult to write down in unambiguous detail how someone is going to interact with a system. You often find that words don't work well and even the best pictures only tell part of the story. Developing software is a creative process, more like creating a piece of art or writing a novel or poetry. There's a great deal of skill and craft involved in asking the right questions, capturing the, sometimes non-obvious, interactions between the people in their various roles and their use of the system.
An example of this interaction is the beloved ATM, as told by a friend of mine who's done this before. Ever noticed that when you go to the machine and take out cash, you get your card back first? Think about what would happen if the cash came out first? What are the chances you would take the cash and leave the card behind in the machine? Pretty high right? Think about how many times you've left a receipt behind when you asked for one to be printed.
Think of building software in the same way that a director takes a great book and turns it into a movie, or perhaps a long running TV drama. The written word does not translate well to the visual. You can't always reflect the nuances of a character, nor can you burden the viewer with the drudgery of a narrative discussing how tortured the hero of our story is. A good director is sympathetic to the original text but savvy enough to make it work in the visual world. There needs to be compromises made along the way that allow those who've read the book to feel that the story is a fulfilling realisation of the story. Compare the film Pride and Prejudice with the book; a reasonably good rendition of a great book. On the other side, think about Frank Herbert's Dune. A great book scared by David Lynch's bizarre and poor interpretation.
A big issue that faces software development is that managers believe you can take engineering project management disciplines and apply them to developing software. This is the traditional "deliver it by this date" approach. Sponsors want detailed estimates that go out for months and years in advance. They want certainty that your plan will deliver what you said, when you said and then they flog you when it all goes wrong at delivery. Time and time again the waterfall approach of extended analysis, design, development and testing fails to deliver the goods.
The reason for this is that building software is completely unlike building a house or office block, yet we in the projects industry still try and pretend that we can apply the same rules.
Firstly, people have built houses for about 10,000 years so there's an agreed set of steps that you need to take. To build a decent sized house, you need a foundation, or it falls down. You need properly supported walls, or it falls down. You need a good roof or you get wet in the winter, and then it falls down. And so the list goes on.
For tall buildings, it's a little more complicated and cost overruns occur because the wrong things happen at the wrong time. For example, you want the electricians to cable up a floor and this needs to be done before the dry rising is installed. If someone decides to install the dry-rising first, then the management contractor will then need to sort out who did what in the wrong sequence and deal with it. The upside is that without the electrics, you can't use the building. The contrast with software is that we try to pretend that delivery 0.1 that doesn't have any electricity is useful. At this point the battle's lost.
One of the big differences with buildings is that until the entire house or floor is fitted out it's difficult to use it. With software, you should deliver working components along the way that are ready for use; this also allows both the developers and business users to ensure that what's delivered meets the specification. If not, and you should discover this long before you reach the test driven UAT (User Acceptance Testing) stage, then you need to decide if you're going to fix it in the current cycle or defer it to the next one if it's too much work.
This might sound easy but it's not. Developers always underestimate how much they will deliver and business users also overestimate what they're going to get. A smart and agile project manager will ensure that both sides expectations are met.
I'm all for this proposal by the Opposition, for the sake of future generations we're going to need some Agile thinking to reduce the burden of debt left by the incumbent spendthrifts.
Government projects are great at delivering 2,000 page documents that describe, in somewhat eye-watering detail, what the system is supposed to deliver. Apart from creating a physical hazard for those designated to carry these tomes around, or those unlucky enough to trip over 4 inches of high quality paper left lying in a corridor, this type of document does little to deliver a quality system. Studies claim that delivering this type of traditional requirements only 25% of the specified features are used frequently, and the rest of the system is used either infrequently or not at all.
The basic problem is that it's very difficult to write down in unambiguous detail how someone is going to interact with a system. You often find that words don't work well and even the best pictures only tell part of the story. Developing software is a creative process, more like creating a piece of art or writing a novel or poetry. There's a great deal of skill and craft involved in asking the right questions, capturing the, sometimes non-obvious, interactions between the people in their various roles and their use of the system.
An example of this interaction is the beloved ATM, as told by a friend of mine who's done this before. Ever noticed that when you go to the machine and take out cash, you get your card back first? Think about what would happen if the cash came out first? What are the chances you would take the cash and leave the card behind in the machine? Pretty high right? Think about how many times you've left a receipt behind when you asked for one to be printed.
Think of building software in the same way that a director takes a great book and turns it into a movie, or perhaps a long running TV drama. The written word does not translate well to the visual. You can't always reflect the nuances of a character, nor can you burden the viewer with the drudgery of a narrative discussing how tortured the hero of our story is. A good director is sympathetic to the original text but savvy enough to make it work in the visual world. There needs to be compromises made along the way that allow those who've read the book to feel that the story is a fulfilling realisation of the story. Compare the film Pride and Prejudice with the book; a reasonably good rendition of a great book. On the other side, think about Frank Herbert's Dune. A great book scared by David Lynch's bizarre and poor interpretation.
A big issue that faces software development is that managers believe you can take engineering project management disciplines and apply them to developing software. This is the traditional "deliver it by this date" approach. Sponsors want detailed estimates that go out for months and years in advance. They want certainty that your plan will deliver what you said, when you said and then they flog you when it all goes wrong at delivery. Time and time again the waterfall approach of extended analysis, design, development and testing fails to deliver the goods.
The reason for this is that building software is completely unlike building a house or office block, yet we in the projects industry still try and pretend that we can apply the same rules.
Firstly, people have built houses for about 10,000 years so there's an agreed set of steps that you need to take. To build a decent sized house, you need a foundation, or it falls down. You need properly supported walls, or it falls down. You need a good roof or you get wet in the winter, and then it falls down. And so the list goes on.
For tall buildings, it's a little more complicated and cost overruns occur because the wrong things happen at the wrong time. For example, you want the electricians to cable up a floor and this needs to be done before the dry rising is installed. If someone decides to install the dry-rising first, then the management contractor will then need to sort out who did what in the wrong sequence and deal with it. The upside is that without the electrics, you can't use the building. The contrast with software is that we try to pretend that delivery 0.1 that doesn't have any electricity is useful. At this point the battle's lost.
One of the big differences with buildings is that until the entire house or floor is fitted out it's difficult to use it. With software, you should deliver working components along the way that are ready for use; this also allows both the developers and business users to ensure that what's delivered meets the specification. If not, and you should discover this long before you reach the test driven UAT (User Acceptance Testing) stage, then you need to decide if you're going to fix it in the current cycle or defer it to the next one if it's too much work.
This might sound easy but it's not. Developers always underestimate how much they will deliver and business users also overestimate what they're going to get. A smart and agile project manager will ensure that both sides expectations are met.
Sunday, January 25, 2009
Hubris
Gordon Brown's amazing ability to not answer questions is starting to look like he's hiding something. If you've the stomach for it, spend a half hour wading through the latest version from last week at PM Questions
At about 4 minutes in, he's promising jobs for people who lose them. Let's put this in context.
Say I've brought home a box with six cakes inside. I've not made them myself, they're extracted from my hard earned salary. Now that I've eaten a cake from a box it's gone; putting back the empty wrapper doesn't replace it, nor does it make it look like there are still six cakes in the box. In order to replace the cake, I'm going to need to make another. Without the basic ingredients, such as a manufacturing base that's run by the private sector and generating more cakes, I'm not going to be able to do so. The biggest problem is that it's not just me who wants more cakes, there are at least 50 other people looking for them. As the country loses the ability to make cakes there are fewer available and still more people looking for them. That will be around 3.5 million people looking for new cakes this time next year. Not something that this country will want to see.
On the extension of lending; Gordon's very confused on what he's asking our banks to do. He's saying "keep up the 2007 levels" but wants them to fill the 1/3rd gap left behind without specifying how we, the tax payer, are going to cover this. He also acknowledges that those Johnny Foreigner's who lent too much and now left the country are gone. So what's it going to be Gordon? Are our banks lending at 2007 levels? Probably. Can they plug the gaps of the others? No. Are there any details in the plans to solve the problems? According to Gordon, it requires additional consultation with the banks involved. In summary then, Gordon, you don't have a clue, do you?
In one fell swoop, Gordon's scared the pants off the market by stating that he has a solution to the problem without knowing what exactly is the problem. No wonder the UK stock market is crashing around our ears.
Finally, the Rt Hon. D Skinner's Tory Fat Cats jibe is priceless. Remind me, who is Sir Fred Goodwin again? That's right, he's Scottish banker who knows the current PM as well being on chummy terms with both the former PM and Chancellor and was knighted by Labour for "services to banking".
Hubris indeed.
At about 4 minutes in, he's promising jobs for people who lose them. Let's put this in context.
Say I've brought home a box with six cakes inside. I've not made them myself, they're extracted from my hard earned salary. Now that I've eaten a cake from a box it's gone; putting back the empty wrapper doesn't replace it, nor does it make it look like there are still six cakes in the box. In order to replace the cake, I'm going to need to make another. Without the basic ingredients, such as a manufacturing base that's run by the private sector and generating more cakes, I'm not going to be able to do so. The biggest problem is that it's not just me who wants more cakes, there are at least 50 other people looking for them. As the country loses the ability to make cakes there are fewer available and still more people looking for them. That will be around 3.5 million people looking for new cakes this time next year. Not something that this country will want to see.
On the extension of lending; Gordon's very confused on what he's asking our banks to do. He's saying "keep up the 2007 levels" but wants them to fill the 1/3rd gap left behind without specifying how we, the tax payer, are going to cover this. He also acknowledges that those Johnny Foreigner's who lent too much and now left the country are gone. So what's it going to be Gordon? Are our banks lending at 2007 levels? Probably. Can they plug the gaps of the others? No. Are there any details in the plans to solve the problems? According to Gordon, it requires additional consultation with the banks involved. In summary then, Gordon, you don't have a clue, do you?
In one fell swoop, Gordon's scared the pants off the market by stating that he has a solution to the problem without knowing what exactly is the problem. No wonder the UK stock market is crashing around our ears.
Finally, the Rt Hon. D Skinner's Tory Fat Cats jibe is priceless. Remind me, who is Sir Fred Goodwin again? That's right, he's Scottish banker who knows the current PM as well being on chummy terms with both the former PM and Chancellor and was knighted by Labour for "services to banking".
Hubris indeed.
Sunday, January 4, 2009
Where are our Liberties?
Imagine living in a country where your civil rights are restricted by the people running the country. One where political opponents get arrested for asking questions. One where obeisance to the party is the primary rule and speaking out against it will cost you your job. One where the ruling party continually reprint their latest version of the truth.
Yes, that's right you're living in the United Kingdom.
Mind you, 33 years ago in Australia the Governor General, being the representative of Her Majesty Queen Elizabeth II, sacked the incumbent Prime Minister, one Gough Whitlam.
I remember watching on TV as Gough Whitlam (Labour) stood on the steps of the Australian Parliament House in Canberra uttering the words "We may well say 'God save the Queen', because nothing will save the Governor General". The ABC article below highlights the problem; here was a Prime Minister who had lost the trust of his nation; the coffers were rapidly emptying because the Liberal/Conservative dominated Senate refused to approve the spending of money following a scandalous attempt to borrow USD 4 billion (quite a lot in 1975). In steps Her Majesty's representative, John Kerr, who Whitlam asked to dissolve half the Senate to resolve the problem. Instead, Whitlam ended up sacked and delivered his famous quote (YouTube clip below).
In the current crisis, where we have a Labour leader who, formerly as Chancellor and now as PM, is leading this country into Banana Republic territory and denying that any of it is his fault. He criticises those who point out that the economy is bad, looking to blame the nay-sayers as the news worsens every day. He simply fails to realise that when the IMF is mentioned that that organisation is THE lender of last resort and that he will need to speak to them when other countries and investors are unable or unwilling to buy the debt his government needs to issue to fund this countries problems.
I grew up believing that the Governor General had more power than the Queen, mostly based on hearsay. Until now. I've done a little bit of exploring and discovered that most of the Magna Carta is now repealed but unearthed this concept of the "Royal Prerogative".
So, starter for 10, can the Queen Elizabeth II choose to sack a Prime Minister and his government?
The ABC covered the story here.
as a result of a Loan Scandal
In the UK the Queen seems to have the power to do the same.
Yes, that's right you're living in the United Kingdom.
Mind you, 33 years ago in Australia the Governor General, being the representative of Her Majesty Queen Elizabeth II, sacked the incumbent Prime Minister, one Gough Whitlam.
I remember watching on TV as Gough Whitlam (Labour) stood on the steps of the Australian Parliament House in Canberra uttering the words "We may well say 'God save the Queen', because nothing will save the Governor General". The ABC article below highlights the problem; here was a Prime Minister who had lost the trust of his nation; the coffers were rapidly emptying because the Liberal/Conservative dominated Senate refused to approve the spending of money following a scandalous attempt to borrow USD 4 billion (quite a lot in 1975). In steps Her Majesty's representative, John Kerr, who Whitlam asked to dissolve half the Senate to resolve the problem. Instead, Whitlam ended up sacked and delivered his famous quote (YouTube clip below).
In the current crisis, where we have a Labour leader who, formerly as Chancellor and now as PM, is leading this country into Banana Republic territory and denying that any of it is his fault. He criticises those who point out that the economy is bad, looking to blame the nay-sayers as the news worsens every day. He simply fails to realise that when the IMF is mentioned that that organisation is THE lender of last resort and that he will need to speak to them when other countries and investors are unable or unwilling to buy the debt his government needs to issue to fund this countries problems.
I grew up believing that the Governor General had more power than the Queen, mostly based on hearsay. Until now. I've done a little bit of exploring and discovered that most of the Magna Carta is now repealed but unearthed this concept of the "Royal Prerogative".
So, starter for 10, can the Queen Elizabeth II choose to sack a Prime Minister and his government?
The ABC covered the story here.
as a result of a Loan Scandal
In the UK the Queen seems to have the power to do the same.
Tuesday, December 30, 2008
Xmas Present
A splendid volume of "Words In Air" is now in my hands. Edited by Thomas Travisano and Saskia it contains the entire correspondence of two great American poets - Robert Lowell and Elizabeth Bishop.
At just over 800 pages long, this hard back edition is thoughtfully annotated and brings together three decades of correspondence that reveals the innermost secrets of the authors. Namely, they suffer from procrastination, uncertainty, and inner doubt just as much as the rest of us.
Both of them are flawed; she was an alcoholic, he suffered from well publicised bipolar breakdowns. Yet out of these events came poetry of immense power; the detail in Lowell's work grips you. The lime and cool earth of Uncle Devereux is real, I can feel and smell the softness of the lime, the cool gritty feel of freshly dug earth, portents of death and a reflection of his Uncle's state.
Bishop is relentless in critiquing everything she reads, and not afraid to criticise Lowell. In her time, Bishop's work was underestimated and different from Lowell's. The crossing of letters, some of them poetic in their own right, is like watching a long running tennis point where the athleticism of the two players makes it impossible to turn away.
I'll post a full review when I get through the book, so that will be mid January I hope. In the meantime I'll be back online buying copies of Lord Weary's Castle, EB's complete poems and rereading Life Studies to fill in the blanks when they discuss each others works.
At just over 800 pages long, this hard back edition is thoughtfully annotated and brings together three decades of correspondence that reveals the innermost secrets of the authors. Namely, they suffer from procrastination, uncertainty, and inner doubt just as much as the rest of us.
Both of them are flawed; she was an alcoholic, he suffered from well publicised bipolar breakdowns. Yet out of these events came poetry of immense power; the detail in Lowell's work grips you. The lime and cool earth of Uncle Devereux is real, I can feel and smell the softness of the lime, the cool gritty feel of freshly dug earth, portents of death and a reflection of his Uncle's state.
Bishop is relentless in critiquing everything she reads, and not afraid to criticise Lowell. In her time, Bishop's work was underestimated and different from Lowell's. The crossing of letters, some of them poetic in their own right, is like watching a long running tennis point where the athleticism of the two players makes it impossible to turn away.
I'll post a full review when I get through the book, so that will be mid January I hope. In the meantime I'll be back online buying copies of Lord Weary's Castle, EB's complete poems and rereading Life Studies to fill in the blanks when they discuss each others works.
Monday, December 29, 2008
World Peace & Fraud
Peace in the Middle East. Will this ever happen? After 5,000 or so years of continual fighting, where all sides claim that the other is the problem, can we just stop? Now please?
I know it's not that simple; I'm not so naive to believe that if everybody sat down in a circle and held hands we'd all bond deeply and love each other forever. What's happening is tit-for-tat Old Testament style eye-for-an-eye, tooth-for-a-tooth bombastic nonsense. In the middle of the current round of escalating tub thumping, commonly known as war, innocent people getting killed and maimed for simply being born in the wrong place.
Is it right to use these people as collateral to prove a point? Is it right that America and Iran continue to fund the two sides who are constantly at each others throats? Is it right that, ultimately, it's the least able who end up paying the highest price of losing loved ones? Is it right that people, like you and me, living in Gaza struggle to get bread and water while those in power continue to push their agendas but don't give up on their luxuries?
All of this makes me want to weep as I realise that humans are unable to treat each other with dignity or respect. I fear this will never change; we will continue to breed the habits of fear, distrust, and greed.
In the meantime, back in the Uncivilized Developed World, we're going to see more fraudsters outed over the next twelve months. During the last downturn icons like the late Robert Maxwell revealed that they had no money, it was all a scam and they were relying on the revolving credit machine to keep their empires afloat. Today we have Bob Madoff in an allegedly similar position. By the end of the week we should know the extent of Mr Madoff's personal fortune but it's going to be many months before the true extent of the losses are made public.
So we await the next fraudulent installment of greed to hit the streets. Will it be the buy-to-let schemes that promised investors millions if they stumped up no money, borrowed 100% of the investment on an interest only basis and rented it out? Will there be other quasi-pyramid schemes unveiled as empty shells with no money left?
I know it's not that simple; I'm not so naive to believe that if everybody sat down in a circle and held hands we'd all bond deeply and love each other forever. What's happening is tit-for-tat Old Testament style eye-for-an-eye, tooth-for-a-tooth bombastic nonsense. In the middle of the current round of escalating tub thumping, commonly known as war, innocent people getting killed and maimed for simply being born in the wrong place.
Is it right to use these people as collateral to prove a point? Is it right that America and Iran continue to fund the two sides who are constantly at each others throats? Is it right that, ultimately, it's the least able who end up paying the highest price of losing loved ones? Is it right that people, like you and me, living in Gaza struggle to get bread and water while those in power continue to push their agendas but don't give up on their luxuries?
All of this makes me want to weep as I realise that humans are unable to treat each other with dignity or respect. I fear this will never change; we will continue to breed the habits of fear, distrust, and greed.
In the meantime, back in the Uncivilized Developed World, we're going to see more fraudsters outed over the next twelve months. During the last downturn icons like the late Robert Maxwell revealed that they had no money, it was all a scam and they were relying on the revolving credit machine to keep their empires afloat. Today we have Bob Madoff in an allegedly similar position. By the end of the week we should know the extent of Mr Madoff's personal fortune but it's going to be many months before the true extent of the losses are made public.
So we await the next fraudulent installment of greed to hit the streets. Will it be the buy-to-let schemes that promised investors millions if they stumped up no money, borrowed 100% of the investment on an interest only basis and rented it out? Will there be other quasi-pyramid schemes unveiled as empty shells with no money left?
Wednesday, December 10, 2008
Feeling 90s
In keeping a track of the miserable state of my investments I've realised that UK plc is now giving up on 15 years of stock market gains. This is an impressive achievement. There was a time when I felt, a little smugly, that I'd invested wisely and put aside enough money each month to ensure a comfortable retirement.
In the later part of 2007 I read Nassim Taleb's "Black Swan" and began to fret about what I'd actual exposed myself to. His premise is that the perceived wisdom of investing monthly in stock markets that always rise is a fallacy. In the end it's all going to end in tears.
For those of you thinking about or coming up to retirement, it probably will be a painful recognition that there's no other choice but to keep on working. Unfortunately that means I need to consider other plans that will allow me to stop working for money earlier.
Before you get too downhearted, spare a thought for the people living in Iceland. They're really going backwards up the creek, fully kitted out with barbed wire canoe and a sieve to bale out the water. Latest predictions are their economy will contract by 10% next year. That's a truly worrying statistic; imagine the rest of the world's economy contracting by that much.
Here in the UK, our darling Chancellor finally admitted that we're going into a recession. You really don't get many prizes for stating the bleeding obvious.
While our Prime Minister made the greatest political gaffe seen in some time; in a unique moment of hubris he described how he had "saved the world". Terrible choice of words, it's going to haunt him between now and the next general election. We'll see it played over again so many times he's going to want to cry into his truly well funded state retirement.
In the later part of 2007 I read Nassim Taleb's "Black Swan" and began to fret about what I'd actual exposed myself to. His premise is that the perceived wisdom of investing monthly in stock markets that always rise is a fallacy. In the end it's all going to end in tears.
For those of you thinking about or coming up to retirement, it probably will be a painful recognition that there's no other choice but to keep on working. Unfortunately that means I need to consider other plans that will allow me to stop working for money earlier.
Before you get too downhearted, spare a thought for the people living in Iceland. They're really going backwards up the creek, fully kitted out with barbed wire canoe and a sieve to bale out the water. Latest predictions are their economy will contract by 10% next year. That's a truly worrying statistic; imagine the rest of the world's economy contracting by that much.
Here in the UK, our darling Chancellor finally admitted that we're going into a recession. You really don't get many prizes for stating the bleeding obvious.
While our Prime Minister made the greatest political gaffe seen in some time; in a unique moment of hubris he described how he had "saved the world". Terrible choice of words, it's going to haunt him between now and the next general election. We'll see it played over again so many times he's going to want to cry into his truly well funded state retirement.
Saturday, October 11, 2008
Simply barking
Started writing this post before heading off on hols but never had the enthusiasm to finish it. Decided to whirl away and see where this takes me; there's no agenda here, just what they call in writing books "stream of consciousness". One great thing about the internet these days is that browsers come replete with spell checkers. This is good for someone like me who can't remember how to write words out properly anymore, or take the time to bother looking them up to check for both spelling and meaning. It does mean that writers become lazier and perhaps don't take the time that's needed to vet their work.
One blog I particularly like is Editorial Anonymous; sharp, witty and sometimes plain honest, it tells the story of one editor's fight with the would-be hoards of writers out there, all who have the one-good-story story in their fight for publication. The one I've highlighted quite tickles me; it tells the story of human nature. We all want to say we're connected to someone important. That our father's second cousin twice removed who hitched a ride to NY on a tramp steamer is now the 2IC (second in charge) of a major hotel chain. Translated, that might mean they're responsible for the night shift in a youth hostel and as there are only two staff members they are technically correct in that statement. So we claim to be connected to people. I've met Mick Jones from The Clash and he's a lovely bloke. It's unlikely that we'll meet again and I don't think I did much to change his life.
This week I'm feeling supremely happy. Over the last twelve months I've felt totally crap. As in can't get out of bed, can't sleep properly at night, struggle to stay awake at work, no energy and just general malaise. Two weeks ago I stopped eating bread and drinking beer. I still enjoy wine but I've totally cut all yeast based foods from my diet. The results are astonishing to me. I'm full of energy. Tonight I've cycled 22km to get home from work and am just bursting with happiness to the point that this blog may roll on and on. I can't believe how much of a difference it makes being and feeling fit and healthy. Long may it roll on. Next I'll be filling out list of things to do and actually doing them.
One blog I particularly like is Editorial Anonymous; sharp, witty and sometimes plain honest, it tells the story of one editor's fight with the would-be hoards of writers out there, all who have the one-good-story story in their fight for publication. The one I've highlighted quite tickles me; it tells the story of human nature. We all want to say we're connected to someone important. That our father's second cousin twice removed who hitched a ride to NY on a tramp steamer is now the 2IC (second in charge) of a major hotel chain. Translated, that might mean they're responsible for the night shift in a youth hostel and as there are only two staff members they are technically correct in that statement. So we claim to be connected to people. I've met Mick Jones from The Clash and he's a lovely bloke. It's unlikely that we'll meet again and I don't think I did much to change his life.
This week I'm feeling supremely happy. Over the last twelve months I've felt totally crap. As in can't get out of bed, can't sleep properly at night, struggle to stay awake at work, no energy and just general malaise. Two weeks ago I stopped eating bread and drinking beer. I still enjoy wine but I've totally cut all yeast based foods from my diet. The results are astonishing to me. I'm full of energy. Tonight I've cycled 22km to get home from work and am just bursting with happiness to the point that this blog may roll on and on. I can't believe how much of a difference it makes being and feeling fit and healthy. Long may it roll on. Next I'll be filling out list of things to do and actually doing them.
Friday, October 10, 2008
Where's my shorts?
Short selling. The practice of selling a security that you don't own, borrowing it to cover your position, and then hoping to either buy it back for less than you paid or, in the best situation, the company goes bust, you return the shares you borrowed and trouser the sale of shares that never were yours.
Even in the good times of a bull run, this is a morally dodgy practice. I agree that it helps drive out issues with a company, it allows the investment industry to focus on the underlying performance of the shares rather than holding them in the hope they'll be ok. Yet I can't help but feel that the ability to sell something you don't own and make a profit of it is wrong.
Of course, borrowing from an argument the good Robert Peston at the BBC used, there's the interesting moral dilemma that those encouraging the practice were the ones doing the most bleating when the practice started to hurt their businesses.
In the current turbulence, the short sellers returned with a vengeance, intent on driving down stocks and making money. But there's more to it than that. Ordinary share holders want to sell out of their positions. They've seen companies like Bear Stearns and Lehman go bust and people have lost all their money. In the UK, other banks nationalised and the savers who were given shares in them have lost all the money they were given. Perhaps none of the "value" was real but these people felt rich, they felt like they had some money put aside for a rainy day. Now most of them have nothing. As the market fall, others feel it might be best to get some real money out while they can.
Don't blame the shorts for the trouble the banks are in, they're just doing what the markets allow them to do. If you're looking for culprits in this bonfire of the insanities, you should like to the men in sharp suits.
Even in the good times of a bull run, this is a morally dodgy practice. I agree that it helps drive out issues with a company, it allows the investment industry to focus on the underlying performance of the shares rather than holding them in the hope they'll be ok. Yet I can't help but feel that the ability to sell something you don't own and make a profit of it is wrong.
Of course, borrowing from an argument the good Robert Peston at the BBC used, there's the interesting moral dilemma that those encouraging the practice were the ones doing the most bleating when the practice started to hurt their businesses.
In the current turbulence, the short sellers returned with a vengeance, intent on driving down stocks and making money. But there's more to it than that. Ordinary share holders want to sell out of their positions. They've seen companies like Bear Stearns and Lehman go bust and people have lost all their money. In the UK, other banks nationalised and the savers who were given shares in them have lost all the money they were given. Perhaps none of the "value" was real but these people felt rich, they felt like they had some money put aside for a rainy day. Now most of them have nothing. As the market fall, others feel it might be best to get some real money out while they can.
Don't blame the shorts for the trouble the banks are in, they're just doing what the markets allow them to do. If you're looking for culprits in this bonfire of the insanities, you should like to the men in sharp suits.
Thursday, October 9, 2008
Feeling lucky?
I'm contemplating what might happen if I won a major prize in a lottery draw in the next week or so. Let's suppose, for the sake of argument, it's £2 million GBP. At the moment, that's about USD 3.5 million or about EUR 1 million.
The first worry is, would the prize fund be able to send the money to me? After that, would I be able to get the money out of my bank in time to spread around the risk? But thinking about that makes me realise that in the UK there are only eight banks I could safely deposit my money in, and that the maximum guarantee is £50,000 per bank holding company. So that rules out one of RBS and NatWest.
So I'd probably need to find a few European banks that I could open accounts with and slosh some money over to them. Perhaps an Irish bank would be alright as they're fully covered for the next two years.
Then what? I'm sitting long cash when the world's banking system is going to the dogs. Perhaps I could just withdraw £1,000 per day from each of these accounts and stuff it in a safe spot in the house. After all, no one would know it's there.
If I've done all of this, I'll have plenty of money and it won't run out. But what happens if the banking system breaks down completely? What use will there be for money? Will it be possible to take these crisply printed pieces of paper with their sophisticated fraud prevention and use them for anything?
What if the financially worst happens? We'll still be here the day after but will it be like those Armageddon films of the 80's like Mad Max where the world goes to pot and it's everyone for themselves?
This keeps me up at night. I think I'll build a chicken coup in the backyard.
The first worry is, would the prize fund be able to send the money to me? After that, would I be able to get the money out of my bank in time to spread around the risk? But thinking about that makes me realise that in the UK there are only eight banks I could safely deposit my money in, and that the maximum guarantee is £50,000 per bank holding company. So that rules out one of RBS and NatWest.
So I'd probably need to find a few European banks that I could open accounts with and slosh some money over to them. Perhaps an Irish bank would be alright as they're fully covered for the next two years.
Then what? I'm sitting long cash when the world's banking system is going to the dogs. Perhaps I could just withdraw £1,000 per day from each of these accounts and stuff it in a safe spot in the house. After all, no one would know it's there.
If I've done all of this, I'll have plenty of money and it won't run out. But what happens if the banking system breaks down completely? What use will there be for money? Will it be possible to take these crisply printed pieces of paper with their sophisticated fraud prevention and use them for anything?
What if the financially worst happens? We'll still be here the day after but will it be like those Armageddon films of the 80's like Mad Max where the world goes to pot and it's everyone for themselves?
This keeps me up at night. I think I'll build a chicken coup in the backyard.
Wednesday, October 8, 2008
Hey Darling, where's the money gone?
Mr Darling, what a great name to call the man in nominally in control of the UK's purse strings. Darling what are you good at? This might be the question you ask of him.
The man's clearly under old Gord's thumb. Doesn't seem to be able to make a decision for himself and when the big announcement came today that we, the undersigned tax payer of Her Majesty's Government of the United Kingdom, are going to foot an unspecified bail out of the banking sector, there stood Gord making sure he was in the limelight for this one. Our beloved Darling was just a passenger; he couldn't even get the agreement hammered out in time for the market to digest it. This all seems quite amateur. But then the guy's a lawyer by training, so he's clearly not used to the idea of doing a proper job properly. Day after day of dithering and today we're delivered a document that dithers about handing out money to the banks. There are no specifics in the document. Merely a statement that says the Government will hand over £50 billion or so of my money to some wunch of bankers in return for which they want to say how the banks are run and who gets paid what.
This will work, but only because people want to believe it. Because we need the confidence to ensure that we're not back to bartering chickens and livestock. If you want to look at the origins of money, read this article from Exeter University.
Back to reality, we're going through a period of "deleveraging". To the average person on the street, this simply means that the banks are going to pay back lots of the money they've borrowed. Only it's happening slowly. And it's quite painful. Eventually the banks will return sufficient money to their depositors and shareholders and shrink down the size of their overall debt. This process will take about ten, that's right 10 ten, years to achieve. In the meantime, you and I, the taxpayer, will be footing the bill to prop these banks up.
The problem with Mr Darling's proposals, apart from the mere detail of how they will be implemented, is that it's going to be very hard for the banks to make much money out of the system. This is good and it means that we're not going to be making money like we used to. More to the point, we're not going to be making UP money like we used to. The Government is going to print it for us, not the banks.
Then there's the question of Tier 1 capital. What does this mean? For those of us lucky enough to own a house, it's quite similar. If you "own" a house, you probably took a mortgage from the bank. So technically it's yours the day you make your final repayment. If you're living in that house you know that there's always money going out, utilities, rates, refurbishments and whatever else you spend on keeping your house in order, so it costs money to own it. Tier 1 capital is similar; it's the basic investment a bank makes to keep it going. So if you continue to add more money to your mortgage, the net amount of money you get back will be diminished and if you take too much, you'll owe money to your lender. This is just the same for Tier 1 capital. This money allows the banks to fund their daily operations and needs to be readily at hand to cater for the lumps and bumps in the process. Spend too much of this and you run out of money, then you go bust.
Right now, us ordinary folk on the street can just hold our breath and hope that Mr Darling's not lost our money down the back of the sofa.
The man's clearly under old Gord's thumb. Doesn't seem to be able to make a decision for himself and when the big announcement came today that we, the undersigned tax payer of Her Majesty's Government of the United Kingdom, are going to foot an unspecified bail out of the banking sector, there stood Gord making sure he was in the limelight for this one. Our beloved Darling was just a passenger; he couldn't even get the agreement hammered out in time for the market to digest it. This all seems quite amateur. But then the guy's a lawyer by training, so he's clearly not used to the idea of doing a proper job properly. Day after day of dithering and today we're delivered a document that dithers about handing out money to the banks. There are no specifics in the document. Merely a statement that says the Government will hand over £50 billion or so of my money to some wunch of bankers in return for which they want to say how the banks are run and who gets paid what.
This will work, but only because people want to believe it. Because we need the confidence to ensure that we're not back to bartering chickens and livestock. If you want to look at the origins of money, read this article from Exeter University.
Back to reality, we're going through a period of "deleveraging". To the average person on the street, this simply means that the banks are going to pay back lots of the money they've borrowed. Only it's happening slowly. And it's quite painful. Eventually the banks will return sufficient money to their depositors and shareholders and shrink down the size of their overall debt. This process will take about ten, that's right 10 ten, years to achieve. In the meantime, you and I, the taxpayer, will be footing the bill to prop these banks up.
The problem with Mr Darling's proposals, apart from the mere detail of how they will be implemented, is that it's going to be very hard for the banks to make much money out of the system. This is good and it means that we're not going to be making money like we used to. More to the point, we're not going to be making UP money like we used to. The Government is going to print it for us, not the banks.
Then there's the question of Tier 1 capital. What does this mean? For those of us lucky enough to own a house, it's quite similar. If you "own" a house, you probably took a mortgage from the bank. So technically it's yours the day you make your final repayment. If you're living in that house you know that there's always money going out, utilities, rates, refurbishments and whatever else you spend on keeping your house in order, so it costs money to own it. Tier 1 capital is similar; it's the basic investment a bank makes to keep it going. So if you continue to add more money to your mortgage, the net amount of money you get back will be diminished and if you take too much, you'll owe money to your lender. This is just the same for Tier 1 capital. This money allows the banks to fund their daily operations and needs to be readily at hand to cater for the lumps and bumps in the process. Spend too much of this and you run out of money, then you go bust.
Right now, us ordinary folk on the street can just hold our breath and hope that Mr Darling's not lost our money down the back of the sofa.
Tuesday, October 7, 2008
No confidence
While this combination of tsunamis, cyclones, hurricanes and other man made disasters hover over our financial markets it's easy to feel that tomorrow we'll be back to hunting and gathering to make a living.
At least, that's the view from here in the UK as our febrile government continue to cluelessly dick about while the country's economy goes into meltdown. There's a rotten core in the ruling party which leaks information like a dripping tap. Only the tap's now gushing forth half-baked plans and grand statements that offer no substance about how to solve this crisis.
The BBC's workaholic financial editor, Mr Robert Peston, is doing a great job of grabbing hold of the data and blogging to the world. It's like he has inserted an intravenous drip that's fed by the inner workings of this government. While his scoops are the result of hard work, one starts to wonder how much the public interest is served by what he tells us. We could do with a let up in the rate and morbidness of these publications; perhaps Mr Peston could wait for the Government to make a decision before he tells us what it's going to be? At least this way Gordon's boys might think a bit and decide they actually need to do something as opposed to the current sound bites of crap flowing Downing Street.
With the Brown government on the ropes in the opinion polls, the national debt approaching 60% of GDP and not offering any clear way out of this mess, perhaps Parliament will have the gumption to call for a confidence vote. There's a constitutional precedent for this, set in 1782 when the Brits took a beating at Yorktown in the first American war. The wording was that Parliament "can no longer repose confidence in the present ministers". Words that are still apt today.
We, the citizens of the United Kingdom, should not look to our Parliamentary leaders for a solution to this crisis. The solutions will come from others. From the opposition political parties, from the leaders of the business communities, including our financial institutions, and from ordinary people who need a change from the leaden footed fools in charge.
There can no longer be confidence in the ability of the Prime Minister of the United Kingdom and his Chancellor to solve the economic nightmares we are living. After all, serious times demand serious people to make serious decisions.
At least, that's the view from here in the UK as our febrile government continue to cluelessly dick about while the country's economy goes into meltdown. There's a rotten core in the ruling party which leaks information like a dripping tap. Only the tap's now gushing forth half-baked plans and grand statements that offer no substance about how to solve this crisis.
The BBC's workaholic financial editor, Mr Robert Peston, is doing a great job of grabbing hold of the data and blogging to the world. It's like he has inserted an intravenous drip that's fed by the inner workings of this government. While his scoops are the result of hard work, one starts to wonder how much the public interest is served by what he tells us. We could do with a let up in the rate and morbidness of these publications; perhaps Mr Peston could wait for the Government to make a decision before he tells us what it's going to be? At least this way Gordon's boys might think a bit and decide they actually need to do something as opposed to the current sound bites of crap flowing Downing Street.
With the Brown government on the ropes in the opinion polls, the national debt approaching 60% of GDP and not offering any clear way out of this mess, perhaps Parliament will have the gumption to call for a confidence vote. There's a constitutional precedent for this, set in 1782 when the Brits took a beating at Yorktown in the first American war. The wording was that Parliament "can no longer repose confidence in the present ministers". Words that are still apt today.
We, the citizens of the United Kingdom, should not look to our Parliamentary leaders for a solution to this crisis. The solutions will come from others. From the opposition political parties, from the leaders of the business communities, including our financial institutions, and from ordinary people who need a change from the leaden footed fools in charge.
There can no longer be confidence in the ability of the Prime Minister of the United Kingdom and his Chancellor to solve the economic nightmares we are living. After all, serious times demand serious people to make serious decisions.
Tuesday, August 12, 2008
Fallacy of Borrowing
I thought I'd knock this out before George Osborne's speech this week at the UK's Tory Party conference beats me to it.
Back at the beginning of our human existence someone figured that they were better at making well balanced spears with a good sharp flint on the end of them. In fact, they probably realised that instead of spending all the time traipsing around hunting for food, and getting the odd kicking when it went wrong, that it was easier and safer to stick around the home to boot. In exchange for their craft, they would be rewarded with food for contributing to the success of the hunt.
Buoyed by the thought of being a craftsmen, it's not hard to take the next logical step of offering your services as a pointy stick maker to a larger group, or perhaps groups, in return for a share of the spoils. This really smart idea removed the associated risk of a life threatening maiming.
Then some other really, really bright spark invented money and started to use an artifact as a store of value. This meant that they could buy weapons from the pointy stick makers and sell them to the hunters. Of course they needed to live properly themselves, so they decided that buying a stick would cost them one money unit and selling a pointy stick would cost two money units. Hey presto, we've invented the world of finance.
Then the really, really, really big wheeze was invented. Lending. "I'll give you three units of money today if you pay me back four units of money next month."
Suddenly the human need to get more kicks in and about twenty thousand years later we've borrowed so many units of money that there's little chance of us paying it back. Some banks were so clever in the way they invented money that suddenly they found they had no money at all. Their computer systems said they had boat loads of the stuff, but when the lid was lifted the cupboard was most definitely bare.
These bright banking people had borrowed so much money that they didn't realise none of it existed! How clever is that?
Here in the UK, our government has binged on borrowing over the last few years. Initially everything was going well. The previous Tories had managed to run up a few bob owed to pretty much everyone going, then the economy picked up and Labour decided they'd start spending all the tax money that came in. Then the economy started to slow, Labour borrowed money to spend it on civil service jobs and suddenly the national debt is making us look like the Titanic. When the wheels come off with Government spending this time, it's going to take generations to pay it back.
Now we're in a situation where everyone's having to spend more money to keep the economy going. That means most likely they'll need to borrow more.
I think of my late father-in-law. He saved frugally to pay cash for his own house and borrowed very little. In the early 1900's policeman and civil servants were not allowed to borrow money. Banks did lend money, but only to those people they felt could afford it.
We can't afford to borrow more money. To say that we can is just foolish.
Back at the beginning of our human existence someone figured that they were better at making well balanced spears with a good sharp flint on the end of them. In fact, they probably realised that instead of spending all the time traipsing around hunting for food, and getting the odd kicking when it went wrong, that it was easier and safer to stick around the home to boot. In exchange for their craft, they would be rewarded with food for contributing to the success of the hunt.
Buoyed by the thought of being a craftsmen, it's not hard to take the next logical step of offering your services as a pointy stick maker to a larger group, or perhaps groups, in return for a share of the spoils. This really smart idea removed the associated risk of a life threatening maiming.
Then some other really, really bright spark invented money and started to use an artifact as a store of value. This meant that they could buy weapons from the pointy stick makers and sell them to the hunters. Of course they needed to live properly themselves, so they decided that buying a stick would cost them one money unit and selling a pointy stick would cost two money units. Hey presto, we've invented the world of finance.
Then the really, really, really big wheeze was invented. Lending. "I'll give you three units of money today if you pay me back four units of money next month."
Suddenly the human need to get more kicks in and about twenty thousand years later we've borrowed so many units of money that there's little chance of us paying it back. Some banks were so clever in the way they invented money that suddenly they found they had no money at all. Their computer systems said they had boat loads of the stuff, but when the lid was lifted the cupboard was most definitely bare.
These bright banking people had borrowed so much money that they didn't realise none of it existed! How clever is that?
Here in the UK, our government has binged on borrowing over the last few years. Initially everything was going well. The previous Tories had managed to run up a few bob owed to pretty much everyone going, then the economy picked up and Labour decided they'd start spending all the tax money that came in. Then the economy started to slow, Labour borrowed money to spend it on civil service jobs and suddenly the national debt is making us look like the Titanic. When the wheels come off with Government spending this time, it's going to take generations to pay it back.
Now we're in a situation where everyone's having to spend more money to keep the economy going. That means most likely they'll need to borrow more.
I think of my late father-in-law. He saved frugally to pay cash for his own house and borrowed very little. In the early 1900's policeman and civil servants were not allowed to borrow money. Banks did lend money, but only to those people they felt could afford it.
We can't afford to borrow more money. To say that we can is just foolish.
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