Category: thinking too loud

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The End of the Obama Presidency

Today marks the end of the Obama presidency, and in some ways, it seems to mark the end of an era – or perhaps more pessimistically, the respite from the decline of an era that effectively ended with the events of September 11th, 2001.

Perhaps we’d been to unwilling to admit it over the last 8 years, but since 2001, the United States of America turned from being a leader for the multicultural, involve-everyone-everywhere sentiment to the navel-gazing self-interested country that its enemies had always accused it of being; where George W. Bush led the country into misadventures and tipping the delicate balance that had held for the 90s in the Middle East into the dumpster-fire, basket-case of a region it seems right now.

Obama’s efforts to revive American interest in the progressive, outward looking world seem an exception – the first years reacting to the financial crisis of 2008 that was never quite a full-blown multi-year recession, followed by the battles with the Republican opposition that organised into a parliamentary style opposition rather than the loose confederation that had always been the operating standard in the US Congress.

Obama’s efforts to rehabilitate America’s image post-W were for the most part successful – despite the ongoing issues in Syria, and the free hand used with drone warfare around the world, the open engagement with the world community and the level-headed leadership was respected. Adults were in charge. For a few years, it seemed like we could put the Bush years down as the anomaly.

Now… now we’re getting Trump and his henchmen. Bush wasn’t the anomaly, he was the prototype – a deep distrust of intellectualism and expertise infecting a populace convinced that things won’t change. The shame is the distrust of expertise, and the necessary recognition of this utility. Watching confirmation hearings for key executive branch positions, it’s clear the people being put in charge of these things have little to no idea of what they’re getting involved in. We’re going from people with deep knowledge and care to people who openly oppose the very notions of the departments they’re supposed to be running.

It’s like their assumptions are that everyone should have an equal chance at trying things, without realising specialist roles and knowledge are useful; the idea of putting a CEO in charge of an organisation and purpose that he or she does not know is not infinitely applicable; experience and excellence in the field of business does not equip one to consider a fundamentally different purpose in the public service space.

Add in Trump’s own openly declared insular views – withdrawal from NATO being on the table, a deep distrust of the UN and international processes, the childish ideas of a wall on a border, the hostility to global trade – and you see America steadily pulling its head in, repeating the experience of a hundred years ago as the post-WWI America retreated. Where they once led by example, now they disown any position of leadership beyond economic and military, both of which are likely to be overtaken soon by China and its particularly control-heavy model of society.

For most of my life, America’s been a presence that shows the way for a free and democratic society. The respect for law, freedom of speech and press, and the willingness of the people to experiment, try, fail, get back up – all ways in which the country and its culture has attracted people the world over for centuries. Sure, there have been foibles and ongoing failures, but now, it appears a dark curtain is falling across the country, and hope that America leads the way disappears.

Russia talks up hegemony in a oligarchical state led by a virtual dictator; Europe bifurcates as the populist movements tear apart international cooperation; China of all countries – the most successful notionally communist country – is a major proponent of free trade; Australia meanders directionless as leaders abandon leading; what hope do we have of solving big international problems like climate change – barring the fact that China itself recognises the costs, and India too commits to skipping the carbon heavy phase of development. With mistrust of expertise in the west though, I fear we just end up mired in the muck.

Today marks as strongly as November 8th did the decline and fall of American exceptionalism; for all that Trump claims to lead America to new greatness, is there anyone outside America that takes this credibly? The life he’s promising is long gone, the world moving on. Whatever comes next does not resemble the 1950s, but that’s what Trump and his followers hope and dream for – an era of greatness for a slice of the population not adapting to the world’s changing tides.

May you live in interesting times, as the Chinese curse goes.

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Thinking about house prices

Since Time is Money – money representing a token of value for the time you spend doing something – in theory you should be able to substitute either one for the other, right? Like, if you had all the time in the world, you could in theory make the thing you’re buying instead of paying someone else to have made it.

We can apply that to thinking about housing prices. After all, the price of a house should be proportional to how much it costs to build, right?

According to the ABS, median price for a dwelling in Australia is $623,000. Note this includes all houses and units, all over Australia. According to Domain, in June, the median price for houses in Sydney was $1,021,968.

Minimum wage in Australia is $17.70.

Therefore, what the market says at the moment is that a dwelling – a place to live –  in Australia – on average is worth 35,198 hours of work in Australia – barring transaction costs. That’s 4,400 working days (doing a bit of rounding here), or 16 years 10 months of work with only weekends off.

For Sydney, that means the median house is 57,739 hours of work, or 7,218 days, meaning 27 years and 8 months of work.

I can say for sure the houses in Australia don’t take 16, or even 27 years to build. They’re up in like 6 months, max. So the rest of it is time you’re getting from something else – perhaps something ephemeral as the view (time taken to get to a place with a similar view…), or as practical as commute time, or… I’m not sure, but there’s other sacrifices and investments of time that this would represent.

Ok, so it’s a little silly to divide median house price by minimum wage, but if you’ve got a house, or even some kind of dwelling, this is a useful way to recognise the literal effort the walls around you represent.

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Patrick Rothfuss’ Thoughts on Pratchett

Patrick Rothfuss writes on Terry Pratchett’s passing – and interestingly, he’s writing as a fan, not a “fellow writer”:

Odds are, if you know much anything about me, you know I’ve been a fan of Pratchett for years. If you follow me on goodreads you’ve seen me write reviews so gushy that they border on the inarticulate.

I didn’t know him. Honestly, I didn’t even know too much about him. I saw him speak once at a convention in Madison, and got to meet him very briefly. I wrote about it on the blog.

He goes on to talk about the exact impact Pratchett had on him, because of this quote from Pratchett in an interview about why he writes in “fantasy” only:

Pratchett:  Without a shadow of a doubt, the first fiction ever recounted was fantasy… Guys sitting around the campfire telling each other stories about the gods who made lightning, and stuff like that. They did not tell one another literary stories. They did not complain about difficulties of male menopause while being a junior lecturer on some midwestern college campus. Fantasy is without a shadow of a doubt the ur-literature, the spring from which all other literature has flown.

This turns around Rothfuss’ view on his own work:

Even these days, people look down on fantasy. They think of it as kid stuff. They dismiss it as worthless. They say not real literature. People say that *NOW* despite the fact that Game of Thrones and The Hobbit and Avengers and Harry Potter are bigger than The Beatles.

Then I read that article, and it filled me with hope. With pride.

If there’s one thing I’ll say about this, it’s much the same connection – although I’m by no means a fantasy writer, or even a budding one as Rothfuss apparently was when reading the quote – that Fantasy is too easily looked down on as being somehow childish or escapist, when ultimately it is the fiction, the stories that have held through time for humanity. To escape into a world of fantasy is what we’ve done for millennia – and to look down on this is to deny the reality of where we came from.

So I’ll continue to read fantasy, without any pretensions to being more “mainstream”, because really, how would life be without worlds like Tolkien’s, or Jordan’s, or Martin’s to escape to, or wit like Pratchett’s to laugh at?

It’d be boring, that’s what.

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Robin Williams, Vale

Walking into work yesterday, I decide to open Twitter to check for news before I get in, and I see a line I never wanted to see – Robin Williams, RIP. No, no, no, no, no, no, this has to be a hoax, surely? But I get to my desk and check, there’s multiple sources confirming, and it can’t be denied.

Immediately I think of Dead Poets Society, of how that was the first movie I was conscious of crying in. I watched it in a dark room for English class, attempting to study the movie, but it was far too easy to get caught up in the content, mirroring the real world, an English teacher leading his class of boys to greater understanding. Our teacher knew well enough the impact, and was more than happy to watch it again to actually look at the content.

Then I thought of all those others, the movies throughout my childhood that I totally loved – Aladdin, Jumanji, Mrs Doubtfire, Patch Adams, Hook, Flubber, Jack. Growing a little older, Good Will Hunting, Bicentennial Man, What Dreams May Come… and I knew there was no way I wasn’t a Robin Williams fan. I’d watched almost all of his movies, and all of his standup I remember a few years ago he came to Sydney for a single night at the Entertainment Centre, big enough to seat hundreds; I got the best seats I could, on the floor about 12 rows back. Most of the material I’d seen before, but I still left with my stomach hurting from laughter and a smile I couldn’t wipe off my face. It wasn’t close enough by far.

Celebrity deaths don’t get to me, with possibly the only exception being Michael Jackson 5 years ago, but this one struck, hard. I’m not sure I’m over it a day later. Watching Mrs Doubtfire last night was bittersweet, more than the movie is, because just seeing that performance made it hit that much harder. Here was a man who could make anything funny, who could riff off the smallest things – his outtakes in The Crazy Ones were full of infectious throw-away lines, and I was glad to have seen that show even if it had been cancelled.

Farewell, Mr. Williams, you were the clown that made everyone laugh whenever we needed it.

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Rememberance Day

On the 95th anniversary of the Armistice of “The Great War”, words composed early on in that grand folly are recalled:

They shall grow not old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning,
We will remember them

The resonance in these words is powerful, and though we continue to go to war, it is an increasingly civilian world that marks this anniversary for the sake of recalling those lost in war.

Let us hope that one day in the not too distant future this truly becomes an anachronism, and not a day on which more names are inscribed in the halls of the departed.

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Mercantile

Interesting article over on Satyajit Das’s blog on China and its place in the global economy today – especially the opening insight:

China’s economic model is reminiscent of 17th century mercantilist policies. Thomas Mun, a Director of the East India Company, in England’s Treasure by Foreign Trade (1664), wrote that the purpose of trade was to export more than you imported. At the same time, a country should amass foreign ‘Treasure’ that would be the basis of acquiring foreign colonies to allow control of essential natural resources. The strategy required reducing domestic consumption and imports and export of goods manufactured with imported foreign raw materials.

While these days it’s no longer fashionable or politically acceptable to have total control over a sovereign nation, I have to wonder how much Australia is caught in the foreign colony honey trap of China.

With China now our dominant trading partner and Chinese money gradually buying up Australian companies left and right, and the rumoured extent of Chinese investment in Australian real estate driving house prices here, how much have we tied ourselves to the Chinese bandwagon voluntarily and how much of it is through a state-sponsored mercantile policy reminiscent of the European powers in the 17th and 18th centuries?

Will history repeat so soon? I guess it’s an invitation to the question, is the 20th century and its drive for equality and democracy globally ultimately a blip in the history of hierarchical power which ultimately amounts to feudalism?

…

Discuss.

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Crisis! The Mega Musical

You almost want to set a musical to images like those found at this brand-spanking-new tumbl-log.

I’ve largely tried to stay out of saying anything on this “credit crisis” because there are far more credible experts out there, such as Nobel Laureates who blog (a first?). However, it’s getting to the point where I just have to ask one thing – why is everyone in a position of authority seemingly caught unawares?

The Background – or why this matters

The “credit crunch” is taking place behind the scenes far more than it is on measures visible to the public – the equity markets are a mirror to the murky world of money markets, where once billions of dollars flew around the world daily. When I joined DB, I was told almost point blank – the stock market measures you see is a vanishingly small component of what the business of a bank is all about. Brokerage and trading earns tidy sums, but the main reason banks exist is (was?) to handle the flow of money from those who have it to those who need it – creditors to debtors, the flow of capital.

It’s almost the idea that capitalism is built on – someone has extra money than they need, someone else has an idea for which they have insufficient money. The money is lent on the presumption of repayment in future, along with an interest charge to account for the time value and the utility that the money has provided. The borrower will borrow on the expectation that by using it – to buy tools, raw material, whatever – they will earn money from customers, use that to repay debt, and thus complete the cycle.

So: debt is fundamental. But what about shares?

Shares are a way to raise capital without the cost of interest, but in return you give up ownership, and often is limited by the properties of shares. Shares have the advantage to the investor that there’s unlimited upside – when profits are high, it’s returned to the share holders to the maximum value. On the flipside, shares also have unlimited liability – when things go bad, it’s possible to wipe out all your value. Debt is easier: it’s got limited upside – you only get paid back what you lent – and it’s got limited downside – you only lose as much as you lent, and in the capitalist system, you’re also first in line when things go belly-up.

The Crunch

Banks lent. Then they lent some more. Then they thought: I can sell this off and then lend some more again! And lent some more. Eventually, they got so addicted to the profits that they lent to people who really couldn’t pay it off if things turned out less than optimistic.

Which they did, inevitably – and then the crunch began. As default rates climbed, banks started to lose money, writing off values. The loans which had been sold on caused those who bought them to lose money. The haphazardly built house of cards came crashing down, and gradually, over the course of a year from last August, lending – credit – tightened.

Creditors feared that borrowers wouldn’t be able to pay back, so they hung on to their money rather than lending out again, or worse, called in loans. As borrowers sold, the glut forced prices down, and the feedback loop began in earnest. Asset prices falling meant the security against which the debt has been lent was less likely to recoup the cost of the loan, so creditors panicked some more.

As crashes go, the death of the credit market is proportional to the stock market bottoming out at about 1% of the highs.

So now we’re stuck at the point where no-one wants to lend to each other for fear of not getting paid back. Profit margins that were at 0.09% are over 2% for anyone that does lend, but still no-one is lending, and that’s what has everyone spooked – the grease on the gears of capitalism has dried up.

Why didn’t anyone see it coming?

Japan is ahead of the game: they did all this at the start of the 90s.

The Japanese banks lent money with reckless abandon in the 80s, and when the bubble was pricked, it all came to a crashing halt. It led to 10 years of neglegible growth of 1% or less, and petrified Japanese banks with billions of yen of bad debts that they couldn’t write off. The Japanese government attempted make-work programs to kick-start the economy, but failed to do anything other than run up 195% of their GDP as public sector debt. That is to say, it’d take two years of the dollar value of everything Japan made or did to pay off public debt – to contrast, Australia’s at about 14%.

The Japanese bubble was backed on exactly the same thing that the American bubble was – overvalued houses. While we’re skipping ahead to the Japanese solution implemented after nearly a decade – buying into the banks – why didn’t anyone spot the pattern in the first place?

Debt works, but only for so long. As money chased investment opportunities, debt was racked up on the assumption that it would always be as cheap as it was in the early years of the Double-Os, and that payback was a simple matter of selling it to the next sucker. The whole boom was fuelled by debt, not savings, and one day that debt would come due. What’s more, with leverage, the debt was quickly detached from any parity with earnings growth.

The problem seems to be that whenever these things happen, a collective someone thinks, it’ll be different this time.

Alright, but what do we do?

There’s no way to force people to lend money, short of the government taking it off them through taxes and budgets and lending themselves.

Oh wait.

In any case, it seems to me that when something is critical to the infrastructure of a system – like banks to capitalism – you would hope that there’s some level of control and constancy exerted on them. It’s pretty clear free-marketism only works if you’re willing to accept the downsides and the cycles. For a more stable system, you have to smooth the top of the cycle in order to ensure the bottom is smoother too – but that doesn’t sit well with those who cheer free markets (as long as it’s going up) and boo intervenion (unless it’s when their asses are on the line).

I’m an advocate of government involvement and infrastructure investment – critical pieces to the wellbeing of nations should not end up in private hands. To borrow a slogan, you’ve got to keep the bastards honest.

Disclaimers:

  • I work for a bank directly affected by this, and my job may be (is?) linked to recovery.
  • I’m not a US tax payer, and no longer a UK or EU tax payer.
  • I’m no finance or economics expert, so take the above as a crude explanation at best.
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Time flying like a banana

“Mate, it’s almost Christmas soon.”

Shit.

There goes another year. It’s October again, all of a sudden, and I’m just wondering what happened to the months Feb – Sep inclusive. 2007, which feels like I’ve only just gotten used to writing, is about to disappear – a couple of months to go yet, sure but in the context of the year it’s nearly over! What on earth did I get up to this year?

Oh, apart from the whole move-to-another-country thing. I mean, that practically fell into my lap. Sure, the process started in February… didn’t get over here til June… had a little side-trip to Singapore… Oh, the parents moved up early in the year, and my sister moved to Adelaide, but that’s not really me…

Every day ticks over so quickly, and almost sneakily there’s a pile of them marked “2007: expired” behind me. New Years Resolutions? pfft, I think I thought about them in May sometime.

Photographic evidence of the year doesn’t suggest much, either. All I can really tally up is that 2007 was – is – a big year for my liver. I’ve been so caught up in the day to day at work, I think I’ve forgotten entirely the longer-term picture.

Where did your 2007 go? What do you have to frantically cram in to the last couple of months to make it feel worthwhile?

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Theory of Smartness

I have a theory as to why it was the English, and the Europeans more generally, who came to dominate the world, instead of say some racial group from the tropics, say. Something set these guys apart – something made them go out to other places and take over, something made them the inventive people who worked so hard.

The reason? Cold. Miserable, wet, windy, cold weather you wouldn’t want to hang around in too long. Unfortunately enough for these people, that’s where they were destined to spend their whole lives if they didn’t go about changing things. So I say to you, an accident of geography and meteorology is more responsible for the European domination than anything else.

Think about it: when you’re cold, you do things to either take your mind off it, or alleviate your coldness. You invent things, like fire you can carry with you and control at will. On the other hand, if you’re hot, you sort of sit around in the shade, looking for a siesta maybe, until the heat of the day wears off. And then it’s time to go to sleep… and before you know it Europeans are marching around your town.

This theory plays itself out: The Romans dominated Mediterranean Europe/North Africa and a little bit further north, but ultimately the warmth of Rome and Constantinople meant they weren’t as motivated as the barbarians of the north. Some of the most exploratory people were the Vikings, who just wanted a patch of grass for their sheep to graze on. The Mongolians dominated vast expanses of Eurasia, but when they got bogged in Persia they ultimately fell to bits. The Chinese expanded south to Vietnam and Thailand, but couldn’t be bothered going further (seriously, it’s damnably humid down there).

More recently even – the French empire reached across Europe, to Moscow (where they hit people colder and thus more hard-headed than themselves), but reaching into Spain and northern Africa? That’s when they turned around and said, “bugger that, our south coast is warm enough.” The English on the other hand picked a place like Canada and northern America to expand first, and even then when they started to reach what would become the southern states, they let it go. When the USA got to Texas, and California, they took one look over the border to Mexico and said, “You know what? keep it.” The Russians – they hold vast expanses of basically arctic tundra, and they hold it well. The Germans – cold place that – romped across Europe twice before being beaten back from the warmer climes. The Japanese, even with their humid summers, made use of the cold winters to sharpen their skills and quickly brought most of Asia under their control, or at least until they got to Indonesia or the islands of the Pacific.

On the other hand, there was no armies marching out of Africa, the tropics or indeed anywhere where it is far more preferable to just genially lay on the beach. Nothing’s been invented in these places, either. Why do you think South Indians prefer to work white-collar jobs? Air-con! Who can be bothered working in a hot factory?

Call me crazy, but I don’t think I’m wrong here.

Note: Theory based entirely on thoughts plucked out of thin air.