one big pyramid scheme

I have not written a blog entry about the recent financial upheavals, although I have been meaning to.

At first things had the grim logic of a horror film, of course the clues had been there, we had been cocky and arrogant, and now was the time of our come-uppance. Every morning the news seemed to be reporting something that was impossible, Northern Rock, Bradford and Bingley, and most shocking to me Halifax Bank of Scotland. You had dealt with these businesses all your life, you knew people that worked for them.

Then the news got a bit boring, basically the same sort of story every day, generally without any real insight or understanding.

Now the news media have turned the page, and are starting to do the human interest type stories, there is talk of JK Galbraith, 1929, and Keynesian economics. The latter on Radio Four granted.

We have started to hunker down for the long term.

I work to the assumption that markets following a gently rolling sine curve, with a general tendency to move upwards. However you can easily lose money by buying high, and selling low. The opportunities to make real money, rather than just trade on a rising market, require quite particular insight and opportunities.

With hindsight it is obvious that the rate of acceleration was diminishing, we were nearing the peak. Now we have even more obviously reached the peak, and like a cartoon character, after running fruitlessly on the spot for a second, we are now starting to plunge down.

The statistics are slow coming, but the old model, of borrow, spend, borrow to buy on a rising market, dinner parties and an end to the economic cycle, are now clearly gone.

More telling is the attitude, I can see it in myself, I have weaned myself off the desire to spend. Spending is a transitory pleasure, but in uncertain times it is safer to just leave that money unspent. We have that sort of extreme nervousness that means we don't know what to do, in uncertain times, often doing nothing is a pretty good option. Indecision reigns.

Suddenly we all feel poor.

We are all starting to re-balance our attitudes to spending, to having, to what we want. Perhaps we might begin to see more clearly that money is not an end in itself, and that we are capable of more than simply accumulating and passing on money. Strangely that score does not seem to count for so much now.

The test of any theoretical model is just how long it lasts. I have been patiently buying shares for a few years now, and sensed that we were at the top of the market, but still could not quite believe it. The recent upheavals have totally wiped out some of my shares, and left others worth vastly less. Generally you have not lost the money until you actually sell, or in the case of bank shares, till they get nationalised. Therefore there is some degree of theoretical comfort there. However my portfolio will never be quite the same again, and moving back into profit territory will need to await shares reaching rock bottom then climbing back up to current valuations. My older purchases will be in loss for a long long time, however anything that I buy now will hopefully turn a profit much sooner.

I reckon that the current recession will last around five years. Not exactly five years, but that sort of ball park figure. In the meantime the best strategy seems to be just buy big blue chip type shares. Now boring is good. Not every business will still be around in five years, but many of them will and they will be making profits. So diversity is good, boring is good, blue chip is good. Volatility is there for a reason. Volatility reflects uncertainty and ignorance. Small investors are simply not nimble enough to make money on volatile markets, they make money through pound cost averaging, buying shares when they are low, and out of favour.

We live in uncertain times, where once risk brought reward with little likelihood of failure, now risk simply means exposure to catastrophic consequences.

If we are not buying things because they are cheap, or they will make us a profit, then we need to think more carefully about what things are actually worth to us, and have the courage to continue to make those choices.

We were all caught up in a glorious pyramid scheme, we all bought in, and as long as more and more people kept on buying in, we all made money. But it was all bound to end. We had abandonned common sense. More and more people bought houses thinking that it was a one way bet, until house prices reached insane multiples of income, and traditional first time buyers were priced out of the market, replaced by highly leveraged buy to let investors. As with property, so with so many other things. We were caught up in a frenzy, thinking the old rules no longer applied. Buying into things we did not understand, thinking that investment was a one way bet, that credit was good, and capital was bad.

Looking back it seems so quaint now. Maybe it all will be different next time. Or maybe it will just take us a longer time to forget the lessons we have learnt.

lessons from game design for making work more engaging

Just a thought, if you look at what makes a computer game interesting and engaging, then what does that tell you about

• what kind of job you might enjoy most
• how employers should design engaging jobs

So I asked my daughters about what made a good computer game
includes activity or activities that you enjoy

• it changes or develops as you go on
• includes an element of challenge, for example to beat others, or to beat your personal best
• not too short
• not too long
• not too easy
• not too difficult
• should have a goal or point to it
• includes an element of problem solving, but not too much
• includes a competitive element
• it is easy to actually understand what the aim of the game is
• but the challenge lies in achieving that aim
• like chess, takes a short time to learn, but a lifetime to master - has depth
• provide new content that meets your curiosity and desire for novelty

Looking at these features, different people will have different preferences and these will inform that types of games that they like.

• For example your tolerance of failure, do you see a setback as a challenge, or are you sufficiently demotivated to give up
• For example, how patient are you
• For example, what is your attitude to risk, in a games context you are balancing risk with reward, are you content with how these are balance

And so, you might have the patience for games that take a long time to complete, feeling that the rewards of new levels are compensation for the time you have invested. Alternatively you might prefer games like the Sims where you are nurturing and creating, where failure is less of an element of the gameplay. Your investment of time ends up bringing you additional responsibilities.

This is actually a pretty useful lense through which to look at different employees. Some people have very little desire for new challenges, as with Tetris, they have a straightforward task, which they find sufficiently engaging. Some people feel a need to compete, and value promotion beyond any of the other intrinsic qualities of the work, being willing to do pretty much anything if it advances them in their career ambitions. Some seek to build a role for themselves, achieving recognition and extra responsibilities.

Others seek a challenge, constantly seeking a task that is unfamiliar and difficult, not always expecting to succeed, but relishing the struggle.

The shortcoming of using this particular lense is that games are voluntary, whereas for most of us, jobs are compulsory. So although the model is pretty good on what motivates us, using it to consider what it is that demotivates us is a slightly different task.

I'll maybe have a think about why we give up on games in another posting, and consider what that tells us about what makes jobs unsatisfying.

The Irresistable Inheritance of Wilberforce by Paul Torday

I will just take this opportunity to jot down a few impressions about the last book that I read,
The Irresistable Inheritance of Wilberforce,

by someone rejoicing in the rather unusual name of
Paul torday author of salmon fishing in the yemen,

which is clearly something of a mouthfull.

Normally I manage a blog entry a week, but I must be way short lately, hence this rather random blog. I don't read a lot now, but honestly this is not the first book that I have finished since starting this blog.

Also worth noting, I am surprised when I pick up a proper book now at just how many words there are, my fiction writing, as demonstrated in the downloads page, is tending towards the jewel like, seldom a thousand words on the same story, so a whole grown up book on one subject is something of a shock. Nevertheless I like what I am writing now, and intend to persist in my own style.

Anyway -Wilberforce - it is about a man who drinks himself to death, told in four chapters, which are in reverse chronological order.

Having said that, it really does not come across as a realistic account of alcoholism, I certainly enjoyed the book, but the overall sense was of someone with a certain sense of reality and their place in it, rather than the emotional helter-skelter of any serious addiction.

The main character came across as adolescent or slightly autistic, like Adrian Mole at stages, slightly baffled by the world around him,

I think that the main character actually is autistic as he does not accept the reality of other people, he merely sees them in terms of what they offer him, or as possessions. His childhood is loveless, but later he does make friends, but when offered the choice of friendship or something material he consistently fails to choose friendship.

So he betrays his business partner by selling the company from under him, then breaks away from him. He finds a father figure in Francis, but ends up buying his largely worthless wine, and leaving him to die neglected. He enters a circle of friends, and ends up marrying the fiance of a friend, and alienating them.

He never accepts responsibility for his choices, and does little to make amends or make the best of things.

In essence Wilberforce is a weak man, who mistakenly thinks that what you have is more important than who you actually are. He gains another man's wine collection and another man's wife, but fails to learn what it is that he truly responds to in them, a simple openness and offer of friendship.

Random Quote -
“I love wine. I have not always loved it, but I have made up for the woeful ignorance of the first thirty years of my life by the passion and intensity of my relationship with wine ever since. I need to be more precise: I very much like white burgundy, I am fond of some red burgundies, I have flirted with some excellent and intriguing wines from Tuscany: but I adore Bordeux.” page 26

the price of peace

I am just back from a short visit to Belfast. It is fair to say that it is a city of huge contrasts. I cannot think of anywhere else where I have been made to feel more welcome, or where I have been more apprehensive. Driving round the streets tells you one story, huge bridge shaped cranes at the docks, big enough to lift a ship, the loss of shipbuilding must have ripped the heart out of the place. Sectarian murals on the walls and gable ends, beautiful but deeply disconcerting. From the air it looked leafy and beautiful, on the ground much of it had an air of staunch working class-ness.

The taxi drivers, when asked, could tell you about when no one dared drive a taxi, when not knowing the name of a pub meant you came from the wrong side of the divide and could be fatal. There was still a wariness, but the more usual concerns of drunken students, and stag parties were starting to rear their head. The papers had a sense of heightened reality, there was an edge to disputes, government seemed to hang by a thread, but then it had hung by a thread for so long now, it was not alarming.

Speaking to people there was a lot of talk about growing maturity, recognising that a process might take decades. At first the opposing sides sit round a table, mainly trying to provoke each other, or rehearsing familiar arguments for the benefit of their electors. And in fairness that might never quite end. But as politicians are given real things to debate, and engage with, they have to start to work with each other.

Perhaps the price of peace is sitting round a table with people you have every reason to hate.

Perhaps the price of peace is the cost of regenerating areas, expensively creating hotels and attractions.

Perhaps the price of peace is the cost of early retirement for vast numbers of public servants to allow for the recruitment of staff better reflecting their community.

Extremism can only really flourish where people feel no other way of making their voice heard. When people stand by, in favour of a lesser evil. When people feel so completely disenfranchised that they feel no part of society.

I am sure that the lessons learnt in Northern Ireland could equally be applied across the world, patiently working towards a form of peace, re-establishing democracy as something with meaning, letting those who want to speak for their people do it through the ballot box and the husting. Putting opponents round the same table, and letting them start to shape their own future.

It was easy for the West to operate gun boat diplomacy, it will be harder, but ultimately more rewarding to try and create the sort of social change that puts democracy back in the hands of the people, brings people round tables, patiently rebuilding society. The strongest of men are those quietly and patiently working for peace, even when it does take generations.