I, for one, hope that Alain de Botton is right that 2009 will become best known as the year that the western world (and some of its followers?) welcomed and even heralded the redefinition of 'wealth' and happiness.
Botton's article in the latest issue of Monocle (a collector's item when you consider how 2008 is ending and how this will affect the opening of 2009) opens with his saying:
"I believe 2009 will be the year when the question of how society should be arranged will cease to be an idle, abstract topic, dwelt upon by ivory-tower-intellectuals after a few glasses of wine, and will instead enter the workday mainstream with a vengeance."
And then he goes on to add the following commentary on the transition of western culture from a flock of CNN ingesting sheep to a more politically sensitive beast:
"Everyone will become a political philospher; and all of a sudden, some of the great issues facing our world will be up for grabs. It will be a frightening, exhilerating time. Expect to see record numbers of people reading political blogs, attending classes in political theory and turning once again to Karl Marx, Adam Smith and John Ruskin."
And later on Botton incites John Ruskin because his definition of 'wealth' (contrary to stereotypical images of investment bankers hoarding bonuses) involves growing wealthy in kindness, curiosity, sensitivity, humility and intelligence - a set of virtues he referred to as life". A far cry from the house, SUV, purse and watch wielding patrons of status that many of us in the West have become. I, like Ruskin, hope that I can begin to forget all of the trappings I have been inculcated into during my lifetime. I want to lapse into an amnesia which obliterates my selfish gene so that when I wake, it is to a blue sky which makes me feel alive and human once again. Are we so far gone that we don't see we have become Romans punch drunk on our own wealth mythology?
May 2009 usher in the year of the honest man and the generous woman. As Pentagon Principal, Paula Scher, explains in her own Monocle contribution, 'the seriousness of the times demands serious dialogue. We need teachers, not demagogues, we need reason without apparent bias, and we need to be called to action by self-evident truths and not blind faith or what's in the leader's gut. The times will make (or break) the man'. Obama is one positive step in the right direction, and a presentation last night by Canadian Malcolm Gladwell on his latest book, 'Outliars' opened to a packed theatre auditorium confirming the fact that many of us are hungry, even starvin, for some honest, intelligent truths.
Another year and another fantastic MIT conference that I am missing. This year's Futures of Entertainment 3 is quickly approaching on November 21st and 22nd in Cambridge, Mass. This year's themes include Consumption and Value, Wealth, Value and Social Production, Making Audiences Matter, Social Media, Global Flows and Global Deals, When Comics Converge, Franchising, Extensions and Worldbuilding. I for one continue to hope that I will one day make it to one of their content packed programmes.
For more information please go here.
To say that I am delighted that Obama is the new President of the United States is an understatement. I awoke at 6 AM GMT, checked the online version of the International Herald Tribune, and swooned. Rob's first rhoughts turned to blood; unsollicited, he offered up his services as a body guard so that a repeat of the Kennedy assassinations is impossible. I told him vegans don't really seem ferocious enough for that kind of line of work.
And all I can say is welcome back America. We've missed you.
In the town of Mach people don't run, they walk wherever it is they're headed. I'm not sure where they live, but they appear from around the corner and find their way to the warmth of other human bodies. Young mothers with children and prams, older women who look like they have soldiered both wars stroll through the streets their wind beaten rosy faces peering out of scarves. Their bodies speak of patience. There are no tense knots in their limbs except from arthritis and it's a reminder of the infrequency with which I cross paths with this same lot in London during rush hour. And where are the brethren? They seem to be working either in garages or as carpenters with one eye on the job and one eye on the mountains. How can you resist reaching back in time on on the foothills of Snowdonia.
Something that I have come to realize is that you need time to write and time to blog. Blogging for me is best when there is no time pressure and then there is the time and space to reflect. So, here I am in the Tincan office near the Snowdonia National Park.
It is a clear, crisp autumn day. Rob had to practically drag me out of bed, because the B&B where we are spending three nights had the most comforable slay bed. I slept one of the more peaceful sleeps that I have slept in weeks. The absolute thick silence was as comforting as our blanket. I had arrived on the train in darkness and was unable to see much of my surroundings, so this morning when we wakened I asked Rob to open the drapes so that I could see what lay around us. The sky was still grey and overcast as the sun had not yet burned its way through, but eventually when we were having breakfast overlooking the green mountains speckled with white sheep and snow we got a glimpse of red autumn when the sun broke through.
It is a wonderful but simple pleasure to wake up to the beauty of green mountains, the feeling of clean air and the smell of leaves turning brittle. This afternoon and tomorrow we hope to make the best of the sun and stretch our legs in search of signs of land and King Arthur. After all, we are in Arthurian and Celtic territory as a banner at the local cafe affiliated with the centre for alternative technology pointed out. Tonight is new year for the Celts and a local celebration is being held in town hall; subtle reminders that these trees and mountains have been around a lot longer than me.
Last night I attended a lecture given by Rotman finance professor John Hall on the credit crunch. After all of the hysteria I thought it would be good to get my head around what actually transpired. Here are my notes:
The Credit Crunch: A brief overview:
There was a quantum difference in the US housing market prices from 2000 to 2006. During this period it became much easier to obtain mortgages and this fuelled the demand for homes and kept pushing prices up. The housing market and financial engineers created new products which would pull people into the US housing market. Products became much more imaginative and saw the introduction of various new products such as teaser rates which were extremely low in the first 2 to 3 years and then resumed their real rates for the ensuing 27-28. NINJAS (no income, no jobs, no assets) were able to aquire loans, and even liar loans were approved (people lying on their applications about income and job status). The constant need to bring in new buyers into the market was the only way to push up prices and this created an artificial bubble.
AAA rated tranches were popular with banks but eventually financial products backed by mortgages that were previously thought to be safe became much more risky. It is difficult to pin this on any one player for behaving irrationally. Asset Backed Securities worked until people began to default on their payments and the structure began to collapse. The repackaging of mezzanine tranches into senior tranches and the redesign of these financial products to negotiate a better rating with the rating agencies became part of the course. Financial engineers kept redesigning the structure until they achieved a AAA rating. Essentially the financial structuring of ABS CDOs was too aggressive. Mortgage lenders stopped worrying about the quality of the credit and were just focused on ratings. Another challenge is that structured products require an assmuption about correlation. Rating agencies had to make assumptions about correlation. And during stressed financial situations correlations are more likely to go wrong. Correlations are high on mortgage defaults (several US states experiencing mortgage defaults) during financially stressed times. There's also evidence that mortgage originators used lax lending standards because they knew the loans would be securitized. For a rebirth of securitization it's necessary to align the interests of originators and investors. In fact professor Hall would suggest that originators should keep some percentage of each tranche and Allan Greenspan suggests that securitisers should retain a meaningful part of the securities they issue. Another problem was that originators and investors were trading and buying within the same bank without exchanging full information. There is also the overall trend of short-term decision making on the part of originators/bankers. Perhaps bonuses should be based on longer-term performance (eg. 5 years) as short-term based bonuses influence decision-making (especially in the US in 2006). In general investors were relying on credit ratings and did not understand the products they were trading. These structured products are among the most complex credit derivatives that exist.One suggestion by professor Hall was that lawyers should provide software that is freely available to investors and researchers. Most financial institutions at the time of the housing bubble did not have models to value the tranches they traded. Without valuation models risk management is virtually impossible. And another problem is that during booms no one listens to risk managers. There needs to be a way to prevent this.
Ultimately most people knew the subprime mortgage bubble would burst but not how bad the ramifications would be. And now what we are seeing is the contagion effect between financial institutions no longer trusting each other and unwilling to lend to each other.
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On humor:
Sarah Silverman is funny, sometimes obnoxious but always deliberately so.
Sarah Palin is funny because she's scary. Also funny when interpreted by Tina Fey. Not so funny as VP and really not funny as potential US president.
On terrorists:
What you call a terrorist calls you a terrorist right back.
On Female Role Models:
Role models are subjective. Hillary Clinton fills those shoes for some of us, and not for others. Tina Fey in spades for those of us who know that perfection is not what it's cracked up to be, and that having a sense of humour is priceless.
Sarah Palin is NOT, I repeat NOT, a role model for those of us who believe in evolution, the right to choose, and that US republicans are out of touch and driven singularly by dollars.
Over and Out. It's up to you voters in the US to finish the job.
The black morning breaks to the clatter of foxes.
She squealing in fear,
he humming with the certainty of the here and now.
When all is done and done,
does he make excuses about the busy day ahead,
or does he wait until she falls asleep to leave.
Worse, does he sleep quietly through the night by her side hinting at stunted promise.
Or is it a pact.
I'll bring you misery but stability, he tells her flicking his whiskers.
And she, she howls at his darkness,
because the alternative is nothing.
I could not write you
instead you came:
disgruntled kindness
wondrous pain.
I did not know you
and yet I did,
a mother's songbird
of love and gain.
There she goes crossing the ocean, airborn fish skimming the water's edge. She leaves no trail in the sky, the air moves then settles back into its previous state. Along the way she carries oceans and countries like shiny pennies in her bottomless pockets. Beyond the edge of reason anything is possible.
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