I've spent some time of late contemplating what life will be like for our four week old son as the hopefully many happy years ahead roll on. What sort of world will present itself to him in 10, 20 or 30 years time - and what sort of things will best help him prepare for that unpredictable future?
Given how fast the world is changing, it's pretty difficult to even establish what norms to expect next week, let alone thirty years forward. The stereotypical view has always been that the older generation has always had it tougher than their children. I love that old Monty Python sketch where the four Yorkshiremen sit around competing about how "in my day it were bloody tough", which paints that mindset perfectly:
FIRST YORKSHIREMAN:
You were lucky. We lived for three months in a paper bag in a septic tank. We used to have to get up at six in the morning, clean the paper bag, eat a crust of stale bread, go to work down t' mill, fourteen hours a day, week-in week-out, for sixpence a week, and when we got home our Dad would thrash us to sleep wi' his belt.
SECOND YORKSHIREMAN:
Luxury. We used to have to get out of the lake at six o'clock in the morning, clean the lake, eat a handful of 'ot gravel, work twenty hour day at mill for tuppence a month, come home, and Dad would thrash us to sleep with a broken bottle, if we were lucky!
THIRD YORKSHIREMAN:
Well, of course, we had it tough. We used to 'ave to get up out of shoebox at twelve o'clock at night and lick road clean wit' tongue. We had two bits of cold gravel, worked twenty-four hours a day at mill for sixpence every four years, and when we got home our Dad would slice us in two wit' bread knife.
FOURTH YORKSHIREMAN:
Right. I had to get up in the morning at ten o'clock at night half an hour before I went to bed, drink a cup of sulphuric acid, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad and our mother would kill us and dance about on our graves singing Hallelujah.
FIRST YORKSHIREMAN:
And you try and tell the young people of today that ..... they won't believe you.
ALL:
They won't!
It almost goes without saying that the coal miners of south Wales in the '60s will tell their office working, latte drinking offspring that the world is a far better place for them than the underground pit work that they earned their crust from. Certainly from a physical perspective average working conditions have moved up a notch or two, along with the quality of coffee available. Nonetheless, as I contemplate our wee man's future I get the sense that in many ways growing up and getting on is actually getting harder.
Life is getting more and more competitive, yet at the same time more unpredictable. The sheer quantity of choice, advice and commentary on solving this great conundrum is almost overwhelming. It is estimated that a week's worth of the NY Times contains more information than a person was likely to come across in a lifetime in the 18th century. We have a lot to take in and to process.
Children starting school today will be retiring around 2070 or beyond. The US department of labour estimates that today's schoolchildren will have 10-14 jobs by the age of 38. The required social upheaval to contemplate even one job change in a lifetime would have been beyond the capacity of many previous generations, let alone 10-14 halfway through a working life. The labour department also estimates that the top 10 "in demand" jobs in 2009 did not exist in 2003.
They are trying to prepare students for jobs that don't yet exist, using technologies that haven't been invented in order to solve problems that we don't even know are problems yet. What sort of educational preparation can you do when you don't know what sort of questions will be on the exam?
Britain used to be a manufacturing country. Miners would toil down pit. Butchers, bakers and candlestick makers were common throughout the land. Times, however, have changed. A piece in The Times magazine this weekend looks at the statistics of the growth or decline in professions in Britain between 1966 and 2008. Big gains have been seen in the numbers employed in the legal, medical and teaching professions, while unsurprisingly there are big falls in the numbers of miners and pitworkers, bricklayers, tile setters, masons and shopworkers. A record 465,000 people are expected to compete for places at university this year, and the biggest increases in new jobs are unsurprisingly in jobs that have always needed degrees, such as doctors or lawyers.
In the next 30 years more people will be gaining formal qualifications through education and training than since the beginning of history. Education and training are now amongst the world's biggest businesses, accounting for more than 6% of global GDP. There is an increasing demand for educational qualifications of every sort. Yet it would seem the ability of the education to adapt itself to a world that is changing faster than ever is questionable. Currently there are 15 million people registered as unemployed in the EU. Yet there are estimated to be millions of jobs unfilled because of a lack of qualified applicants. In a survey of the skills gap that in the European economy, TIME magazine concluded that: "The best encapsulation of the old world labour plight comes not from Marx but from the English poet Samuel Taylor Coleridge - 'Water, water, everywhere, nor any drop to drink'."
Most countries have a dual strategy in approaching education. The first part is to increase the amount of education that goes on. This seems to make sense - now and in the future, more and more people will live by what they know; and what they need to know is changing all the time. The second strategy is to raise standards. This seems pretty wise too, but this part is far more difficult in practice than in theory. The essential problem is that most governments and organisations think that the best way to prepare for the future is to do better what we did in the past - just to do more of it and to a higher standard.
The truth is that as the real world changes so quickly on the "outside" I would view the best skills that a child can be taught are adaptability, creativity and passion - which is less about the actual subject matter, and much more about the how the subject matter (whatever it is) is appreciated.
As I think about the sort of education I want for my children I often recall an old work colleague of mine coming in on a Monday morning slightly more glum than usual. He had spent the weekend looking for schools for his son. He reeled off a list of, on paper, fantastic private schools that he had visited with his wife. Each headmaster in turn had provided details of the exam A grades, and various statistical performance measures that demonstrated their superiority. Instead of being impressed he and his wife were appalled at the academic pressure that would be applied to his son before his 11th birthday. Only one headmaster struck a chord.
He simply said that when leaving their school and moving on in the world his goal with each child was for them to be excited, passionate and confident about life. His view was that all kids have tremendous talents but they tend to be squandered pretty ruthlessly, by a straight-jacketed approach to education. As a child moves into adulthood a confident and passionate sense about life is surely a better recipe for being successful in a rapidly changing world, than having an in depth understanding of Pythagoras' theorum. Both might come in handy though, particularly if you are trying to figure out the length of the long bit of a triangle.
Sunday 26 July 2009
Monday 20 July 2009
Everything changes and nothing changes...
The 1950s in the US saw the arrival of a generation of writers keen to express their post war view of the world in a different way - the so-called "Beat Generation". Their essentials were spontaneity, open emotion and vivid descriptions of harsh world experiences. Their arrival on the scene was perhaps an understandable post-war reaction - the ugliness of the War had inspired a "throwing caution to the wind" liberal attitude amongst this group, that echoed the sentiment of a particular generation.
Lawrence Ferlinghetti is a less-talked-about member of this group - less talked about than the likes of Jack Kerouac or Allen Ginsberg - but it was he who founded the City Lights Bookstore in San Francisco that provided the meeting place for this new generation of writers. He was responsible for publishing Kerouac's "On the Road" in 1956, but was an accomplished poet in his own right. His most famous line in his poetry comes as the the first line of his 1950s collection "A Far Rockaway of the Heart".
"Everything changes and nothing changes".
The sentiment embodied by the line was reflective of many things - not least the fact that even though the Second World War had just ended, there was an on-going likelihood that people and things would not be changed by its awfulness, and that there was a sad inevitability to history repeating itself.
Ferlinghetti's line has an ongoing resonance, but perhaps has a particular relevance to the current point time. While we don't have another world war in our recent past, what we do have is the worst economic crisis in any of our lifetimes. US unemployment is rising by 500,000 per month and the hardship felt by many around the world will be here for many years as governments try to figure out how to pay back the huge debt burdens they now have. Yet, as the policy-makers try to address the circumstances that created this mess, it's hard not to get the sense that "everything changes and nothing changes."
That sense certainly sprang to mind this week as I contemplated the news that Goldman Sachs was "back on track", posting record profits for their second quarter. Current estimates suggest that the Goldman bonus pool come year end will allow the average Goldman payout (a not very mean, mean average) to be around $750,000 per employee. The financial world war may be past its worst, but in the corridors of Washington and this bastion of Wall Street, nothing seems to have changed.
While on the one hand I applaud the capacity of this organization and its people to print money, there is an aggravation that they don't deserve it. Their victories are by stealth and sleight of hand at least as much as through their undoubted intellectual capacity. As I have blogged before, there is a good chance that Goldman would have gone the way of Lehman had it not received close to $13bn worth of taxpayers funds as part of the AIG bailout. Where is the year end bonus for the weary US taxpayer - for it was their "investment" that enabled not just the survival of this bank, but it's ongoing money printing capacity?
In effect Goldman is just a big hedge-fund, with one great advantage over other hedge funds - an explicit backstop guarantee from the US taxpayer. As it turns out - the amount of risk that Goldman is taking currently is at the upper end of the spectrum of the past few years, while their funding costs because of the implicit US government backstop are being kept artificially low. Even though they have paid back their $10bn worth of TARP funds, they still have close to $30bn worth of government backed debt that they raised during the stressed period post Lehman's collapse. They are the ultimate example of the "heads I win, tales you lose" set-up, that is the curse of the western banking system. It's a structure that allows the likes of Goldman to bet the house in the knowledge that if the proverbial hits the fan, retirement to the Hamptons or St. Tropez won't be in jeopardy.
Not surprisingly, there has been an uptick in anti Goldman sentiment within the mainstream media this week on the back of their results. In a widely read article by Matt Taibi in Rolling Stone magazine he managed to take the vitriol out of the mainstream business press and down a more "popular" channel. One particular quote in his article seems to be doing the rounds: "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." Aggressive perhaps, but it's a sentiment that is understandable.
Lamenting the fact that the likes of Goldman continue to win, while the less powerful continue to lose is as tiresome as it is unsurprising. Thankfully there are those who can turn something as serious as this into satire - which is ultimately probably a better form of conscientious objection than serious prose. Joe Wiesenthal's take hits that mark:
"In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the US Department of the Treasury. According to Goldman spokesperson, Jon Hestron, the merger between Goldman and the Treasury Department is "a good fit" because 'they're in the business of printing money and so are we.' The Goldman spokesman said that the merger would create efficiencies for both entities: "We already have so many employees and so much money flowing back and forth, this would just streamline things."
Mr. Hestron said that the only challenge facing Goldman in completing the merger "is trying to figure out which parts of the Treasury Department we don't already own." Goldman recently celebrated record earnings by roasting a suckling pig over a bonfire of hundred-dollar bills."
Everything changes and nothing changes.
Lawrence Ferlinghetti is a less-talked-about member of this group - less talked about than the likes of Jack Kerouac or Allen Ginsberg - but it was he who founded the City Lights Bookstore in San Francisco that provided the meeting place for this new generation of writers. He was responsible for publishing Kerouac's "On the Road" in 1956, but was an accomplished poet in his own right. His most famous line in his poetry comes as the the first line of his 1950s collection "A Far Rockaway of the Heart".
"Everything changes and nothing changes".
The sentiment embodied by the line was reflective of many things - not least the fact that even though the Second World War had just ended, there was an on-going likelihood that people and things would not be changed by its awfulness, and that there was a sad inevitability to history repeating itself.
Ferlinghetti's line has an ongoing resonance, but perhaps has a particular relevance to the current point time. While we don't have another world war in our recent past, what we do have is the worst economic crisis in any of our lifetimes. US unemployment is rising by 500,000 per month and the hardship felt by many around the world will be here for many years as governments try to figure out how to pay back the huge debt burdens they now have. Yet, as the policy-makers try to address the circumstances that created this mess, it's hard not to get the sense that "everything changes and nothing changes."
That sense certainly sprang to mind this week as I contemplated the news that Goldman Sachs was "back on track", posting record profits for their second quarter. Current estimates suggest that the Goldman bonus pool come year end will allow the average Goldman payout (a not very mean, mean average) to be around $750,000 per employee. The financial world war may be past its worst, but in the corridors of Washington and this bastion of Wall Street, nothing seems to have changed.
While on the one hand I applaud the capacity of this organization and its people to print money, there is an aggravation that they don't deserve it. Their victories are by stealth and sleight of hand at least as much as through their undoubted intellectual capacity. As I have blogged before, there is a good chance that Goldman would have gone the way of Lehman had it not received close to $13bn worth of taxpayers funds as part of the AIG bailout. Where is the year end bonus for the weary US taxpayer - for it was their "investment" that enabled not just the survival of this bank, but it's ongoing money printing capacity?
In effect Goldman is just a big hedge-fund, with one great advantage over other hedge funds - an explicit backstop guarantee from the US taxpayer. As it turns out - the amount of risk that Goldman is taking currently is at the upper end of the spectrum of the past few years, while their funding costs because of the implicit US government backstop are being kept artificially low. Even though they have paid back their $10bn worth of TARP funds, they still have close to $30bn worth of government backed debt that they raised during the stressed period post Lehman's collapse. They are the ultimate example of the "heads I win, tales you lose" set-up, that is the curse of the western banking system. It's a structure that allows the likes of Goldman to bet the house in the knowledge that if the proverbial hits the fan, retirement to the Hamptons or St. Tropez won't be in jeopardy.
Not surprisingly, there has been an uptick in anti Goldman sentiment within the mainstream media this week on the back of their results. In a widely read article by Matt Taibi in Rolling Stone magazine he managed to take the vitriol out of the mainstream business press and down a more "popular" channel. One particular quote in his article seems to be doing the rounds: "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." Aggressive perhaps, but it's a sentiment that is understandable.
Lamenting the fact that the likes of Goldman continue to win, while the less powerful continue to lose is as tiresome as it is unsurprising. Thankfully there are those who can turn something as serious as this into satire - which is ultimately probably a better form of conscientious objection than serious prose. Joe Wiesenthal's take hits that mark:
"In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the US Department of the Treasury. According to Goldman spokesperson, Jon Hestron, the merger between Goldman and the Treasury Department is "a good fit" because 'they're in the business of printing money and so are we.' The Goldman spokesman said that the merger would create efficiencies for both entities: "We already have so many employees and so much money flowing back and forth, this would just streamline things."
Mr. Hestron said that the only challenge facing Goldman in completing the merger "is trying to figure out which parts of the Treasury Department we don't already own." Goldman recently celebrated record earnings by roasting a suckling pig over a bonfire of hundred-dollar bills."
Everything changes and nothing changes.
Monday 13 July 2009
Safe as Houses?
On the 1986 tour to the West Indies, the England cricket captain Mike Gatting suffered a broken nose when he was hit by a very quick ball bowled by the legendary fast bowler Malcolm Marshall. Poor old Gatt was left black and blue around his already large proboscis - it looked like he had been punched in the nose by Mike Tyson. In a post hospital press conference an English reporter asked the fantastically obvious question: "So Mike, where exactly did it hit you?"
I'm not sure what has become of this inane hack, but I would imagine that the depth of his inquiry did not stand him in good stead for a long career as a sports journalist. Perhaps he has taken his endless search for the facts into the world of property in 2009 - I was reminded of the bleeding obvious nature of this exchange when reading an article in the Times this week titled: "Housing recovery stunted by 'lack of mortgages'". To the property developers of the UK this journalist had asked the same "Where did it hit you?" tester.
In the last week Barratt Developments and Redrow, two of Britain's biggest housebuilders warned that signs of stability in the UK housing market were being undermined by banks' reluctance to provide mortgage finance to borrowers. Quelle surprise.
Barratt said that it had witnessed a return to the traditional spring selling season this year for the first time since 2007. Visitor levels to new home developments were up 11.9% in the 6 months to June 30 with the previous six months. Similarly, Redrow also saw a "relatively stable" market over the past six months, with private home sales up by 22%. However, both developers said that a lack of mortgage finance was impairing recovery. Mark Clare, group CEO of Barratt, said: "The market is shut for an awful lot of people. It has removed the opportunity for many people to buy their first home." Redrow also noted that: "Without doubt this is a major obstacle to the recovery of the housing market and we are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole."
OK, so we've established that extensive mortgage availability is important for homebuyers. It was also one of the prevailing factors during the boom times that allowed many to purchase homes that under any reasonable expectations they could not afford. Concurrently it is also why so many of the worlds banks are sitting on loan portfolios that don't look so attractive as they did when house prices were at their peak. The likelihood of mortgage lending returning to its highs looks very unlikely any time soon.
To characterize the situation for the banks, let's say that in 2000 the mortgage book of a hypothetical UK bank amounts to £100mm worth of loans, backed by underlying property valued at £150mm (a Loan-To-Value of 66%). Over the next 5 years the value of the underlying property goes up by 20% per annum, which compounded values the property at £373mm. As a consequence the bank is able to lend almost £150mm more in order to retain it's maximum Loan-to-Value of 66%. All fine as long as house prices remain high. If on the other hand they start to fall, the bank needs to reduce available credit in order to get it's numbers back in order. Estimates suggest that house prices have fallen between 20-30% from their peak already - so let's say for this bank the value of the underlying property is back to £250mm. To get their LTV back to appropriate levels they need to reduce their lending by around £85mm. The credit "multiplier" effect seen on the way up, also happens in reverse - we are currently in a period of the reverse multiplier effect taking effect.
For the last couple of years the housing bulls, panicky estate agents and other crash deniers have insisted that property prices won't crash because a) the supply of property can't cope with demand and b) the economic fundamentals are still strong. I would tend to disagree. The prop that held up the markets has been removed - that is cheap and widespread access to credit.
The fact is that it would be good for the UK (and many other countries) to break the notion that house price appreciation is a key part of economic growth. In the UK and elsewhere house price appreciation became the crux upon which consumer spending was based - increased personal borrowing sustained by ever rising house prices - which in turn was a key part of overall GDP growth. All of which was advocated by government action, either through credit agencies (e.g. Fannie/ Freddie in the US) or beneficial tax treatment for homeowners - the fact that UK homeowners pay no capital gains tax on the sale of their primary residence is quite a compelling reason to bet on housing.
The focus should shift away from a dependence on housing as an income generating asset, towards more long term productive interests - whether it be encouraging banks to create credit for "green" technologies or digital media - the two stated target employment growth areas for the current UK government. A zero % capital gains tax on investments in these areas would almost certainly have greater impact on job creation than the zero rate on primary home sales.
That is all very unlikely - it would be very dangerous to meddle aggressively with an already precariously positioned housing market. The likelihood is that Britain's lenders will come under further pressure to provide more finance to consumers and businesses as the Bank of England is widely expected to inject a further £25bn into the economy as part of its £150 billion money printing ("quantitative easing") programme.
The fact is that these lenders will be supporting a property sector that is still over-leveraged and inconsistent with long term affordability. Last October the IMF suggested that homes in the UK were overpriced by up to 40%. The average price of a detached house in the UK is now £315,000, with the average price of all property at £205,000. Average income growth has been anaemic at best in the UK over the past 15 year period, when house prices have appreciated so dramatically, so relative affordability is considerably less that it used to be. If the IMF prediction holds true, then the combined effects of the reverse multiplier effect for bank lending and the expected increases in unemployment should mean that the current cheerfulness in the housing market, will prove to be a false dawn.
As "Mike, Berlin" commented in relation to the article in the Times: "You people simply don’t get it, do you. House prices are too expensive, that’s why banks won’t lend. Maybe in another year it will start to sink in." In Germany, home ownership has never been seen in the same way as it is in the UK, Spain, Ireland and the US. Owning or renting remains a purely economic choice, just like making an investment in the stock market or any other asset. I'm not sure what the German is for "safe as houses", but I suspect it may find it's way out of the vernacular in the UK over the coming few years.
I'm not sure what has become of this inane hack, but I would imagine that the depth of his inquiry did not stand him in good stead for a long career as a sports journalist. Perhaps he has taken his endless search for the facts into the world of property in 2009 - I was reminded of the bleeding obvious nature of this exchange when reading an article in the Times this week titled: "Housing recovery stunted by 'lack of mortgages'". To the property developers of the UK this journalist had asked the same "Where did it hit you?" tester.
In the last week Barratt Developments and Redrow, two of Britain's biggest housebuilders warned that signs of stability in the UK housing market were being undermined by banks' reluctance to provide mortgage finance to borrowers. Quelle surprise.
Barratt said that it had witnessed a return to the traditional spring selling season this year for the first time since 2007. Visitor levels to new home developments were up 11.9% in the 6 months to June 30 with the previous six months. Similarly, Redrow also saw a "relatively stable" market over the past six months, with private home sales up by 22%. However, both developers said that a lack of mortgage finance was impairing recovery. Mark Clare, group CEO of Barratt, said: "The market is shut for an awful lot of people. It has removed the opportunity for many people to buy their first home." Redrow also noted that: "Without doubt this is a major obstacle to the recovery of the housing market and we are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole."
OK, so we've established that extensive mortgage availability is important for homebuyers. It was also one of the prevailing factors during the boom times that allowed many to purchase homes that under any reasonable expectations they could not afford. Concurrently it is also why so many of the worlds banks are sitting on loan portfolios that don't look so attractive as they did when house prices were at their peak. The likelihood of mortgage lending returning to its highs looks very unlikely any time soon.
To characterize the situation for the banks, let's say that in 2000 the mortgage book of a hypothetical UK bank amounts to £100mm worth of loans, backed by underlying property valued at £150mm (a Loan-To-Value of 66%). Over the next 5 years the value of the underlying property goes up by 20% per annum, which compounded values the property at £373mm. As a consequence the bank is able to lend almost £150mm more in order to retain it's maximum Loan-to-Value of 66%. All fine as long as house prices remain high. If on the other hand they start to fall, the bank needs to reduce available credit in order to get it's numbers back in order. Estimates suggest that house prices have fallen between 20-30% from their peak already - so let's say for this bank the value of the underlying property is back to £250mm. To get their LTV back to appropriate levels they need to reduce their lending by around £85mm. The credit "multiplier" effect seen on the way up, also happens in reverse - we are currently in a period of the reverse multiplier effect taking effect.
For the last couple of years the housing bulls, panicky estate agents and other crash deniers have insisted that property prices won't crash because a) the supply of property can't cope with demand and b) the economic fundamentals are still strong. I would tend to disagree. The prop that held up the markets has been removed - that is cheap and widespread access to credit.
The fact is that it would be good for the UK (and many other countries) to break the notion that house price appreciation is a key part of economic growth. In the UK and elsewhere house price appreciation became the crux upon which consumer spending was based - increased personal borrowing sustained by ever rising house prices - which in turn was a key part of overall GDP growth. All of which was advocated by government action, either through credit agencies (e.g. Fannie/ Freddie in the US) or beneficial tax treatment for homeowners - the fact that UK homeowners pay no capital gains tax on the sale of their primary residence is quite a compelling reason to bet on housing.
The focus should shift away from a dependence on housing as an income generating asset, towards more long term productive interests - whether it be encouraging banks to create credit for "green" technologies or digital media - the two stated target employment growth areas for the current UK government. A zero % capital gains tax on investments in these areas would almost certainly have greater impact on job creation than the zero rate on primary home sales.
That is all very unlikely - it would be very dangerous to meddle aggressively with an already precariously positioned housing market. The likelihood is that Britain's lenders will come under further pressure to provide more finance to consumers and businesses as the Bank of England is widely expected to inject a further £25bn into the economy as part of its £150 billion money printing ("quantitative easing") programme.
The fact is that these lenders will be supporting a property sector that is still over-leveraged and inconsistent with long term affordability. Last October the IMF suggested that homes in the UK were overpriced by up to 40%. The average price of a detached house in the UK is now £315,000, with the average price of all property at £205,000. Average income growth has been anaemic at best in the UK over the past 15 year period, when house prices have appreciated so dramatically, so relative affordability is considerably less that it used to be. If the IMF prediction holds true, then the combined effects of the reverse multiplier effect for bank lending and the expected increases in unemployment should mean that the current cheerfulness in the housing market, will prove to be a false dawn.
As "Mike, Berlin" commented in relation to the article in the Times: "You people simply don’t get it, do you. House prices are too expensive, that’s why banks won’t lend. Maybe in another year it will start to sink in." In Germany, home ownership has never been seen in the same way as it is in the UK, Spain, Ireland and the US. Owning or renting remains a purely economic choice, just like making an investment in the stock market or any other asset. I'm not sure what the German is for "safe as houses", but I suspect it may find it's way out of the vernacular in the UK over the coming few years.
Sunday 5 July 2009
A lesson in fairness from Papua New Guinea
As I've made it through the first week of fatherhood, the notion that is most striking about this brave new world is the sense that someone else comes first at every moment, which is incredibly tiring, but rewarding at the same time. This week, while battling to comfort the new arrival at 3am, I read on the internet about how neighbouring tribes in the south Wahgi district of Western Highlands Province of Papua New Guinea were managing to deal with their conflicts. A bit random, I know, but it was a long night.
The tribesmen in this news story had exchanged food at the weekend as they started negotiation to restore peace among themselves and end hostilities in their area. The Ngenika and Kisu tribes have realised that there was an increase in illegal activities in their communities and after much discussion, starting in 2007, the Kisu tribe gave 21 cows, red pandanus fruits, 200 cartons of coke, scone packets, sugarcane and bananas to the Ngenika tribe. They also slaughtered 100 pigs for their neighbours. Last year the Ngenika tribe gave 10 cows with the same amount of food to the Kisu.
The modern world is very strange - it's crazy to think that 200 Coke cartons is part of the tribal peace offering between tribes in Papua New Guinea, and furthermore that I can read about it on the internet. Not sure Coke would be the appropriate solution to a nocturnally inclined baby, but it was an interesting tale in dispute resolution. There seems to be a sense of fairness in the approach of these tribes; that the rights and aspirations of the other tribe were as valid as their own, and treating each other as such could be mutually beneficial.
Elsewhere, in the more mainstream media (I didn't spend long reading the Papua New Guinea Post-Courier online) I read about another relationship that is being tested to its limits - the relationship between the US government and the US workforce.
Americans began firing up their barbecues for the 4th of July weekend in the knowledge that another 467,000 non-farm payroll jobs had disappeared in June, bringing the total number of jobs lost in the Great Recession to 6.5 million and the number of workers in search of jobs to 14.7 million. The unemployment rate has risen to 9.5% - almost double the rate when the recession first hit. In addition to job losses, countless millions of workers have taken pay cuts and reductions in hours. The statistics are more graphic in certain towns - Detroit for example is running at close to 15% unemployment, and local government funds were diverted away from 4th of July fireworks and parade budgets to supplement food banks and other programs to ease situation of the unemployed.
The dispersion of misfortune is not universal, however. For the Wall Street bankers spending their 4th of July weekends in the Hamptons, things are beginning to look better than ever. Goldman Sachs, who received $12bn worth of taxpayers funds as part of the AIG bailout, is on course to pay bonuses of $20 billion, or averaged out, $700,000 per employee. A figure which is twice last year's payout. Morgan Stanley similarly is projected to top last year's average bonus of $262,000 per employee with cheques close to $340,000. Without taxpayer funds, and some regulatory hurdle jumping (the transition from broker dealers to bank holding companies for these two) both would likely have followed Lehman Brothers over the precipice - a fact that shareholders and employees of these firms should be quite humble about.
While it is invariably good news that banks both in the US and around the world appear to be on a better footing, the consequences of this rebound may not be all good news. As Henry Kissinger once said about dispute resolution: “Each success only buys an admission ticket to a more difficult problem.” In this case there seems to be something fundamentally wrong with the fact that the Wall Street Journal can post a headline saying "Big Pay Packages Return to Wall Street" when the blue and white collar workers of middle America feel such anguish, furthermore when that anguish is directly attributable to those same Wall Street bankers.
The give and take in the relationship - in this case between solving a financial crisis and ensuring that we don't foster the same context that created the situation in the first place - doesn't seem to possess the equality of approach of the Papua New Guinea tribesmen. The outlook for the US and global economy remains extremely weak - the recent rally in global equity markets, commodities and credit may soon fizzle out as an onslaught of corporate earnings and financial news takes its toll. In the context of a world of higher unemployment, bigger budget deficits and higher taxes (which must come at some point), the burden of responsibility should be spread across the system in a way that is fair.
When you read the headlines about the non-farm payroll figures next to headlines about big bonuses for Wall Street bankers, the sense of fairness doesn't seem to be there just yet.
The tribesmen in this news story had exchanged food at the weekend as they started negotiation to restore peace among themselves and end hostilities in their area. The Ngenika and Kisu tribes have realised that there was an increase in illegal activities in their communities and after much discussion, starting in 2007, the Kisu tribe gave 21 cows, red pandanus fruits, 200 cartons of coke, scone packets, sugarcane and bananas to the Ngenika tribe. They also slaughtered 100 pigs for their neighbours. Last year the Ngenika tribe gave 10 cows with the same amount of food to the Kisu.
The modern world is very strange - it's crazy to think that 200 Coke cartons is part of the tribal peace offering between tribes in Papua New Guinea, and furthermore that I can read about it on the internet. Not sure Coke would be the appropriate solution to a nocturnally inclined baby, but it was an interesting tale in dispute resolution. There seems to be a sense of fairness in the approach of these tribes; that the rights and aspirations of the other tribe were as valid as their own, and treating each other as such could be mutually beneficial.
Elsewhere, in the more mainstream media (I didn't spend long reading the Papua New Guinea Post-Courier online) I read about another relationship that is being tested to its limits - the relationship between the US government and the US workforce.
Americans began firing up their barbecues for the 4th of July weekend in the knowledge that another 467,000 non-farm payroll jobs had disappeared in June, bringing the total number of jobs lost in the Great Recession to 6.5 million and the number of workers in search of jobs to 14.7 million. The unemployment rate has risen to 9.5% - almost double the rate when the recession first hit. In addition to job losses, countless millions of workers have taken pay cuts and reductions in hours. The statistics are more graphic in certain towns - Detroit for example is running at close to 15% unemployment, and local government funds were diverted away from 4th of July fireworks and parade budgets to supplement food banks and other programs to ease situation of the unemployed.
The dispersion of misfortune is not universal, however. For the Wall Street bankers spending their 4th of July weekends in the Hamptons, things are beginning to look better than ever. Goldman Sachs, who received $12bn worth of taxpayers funds as part of the AIG bailout, is on course to pay bonuses of $20 billion, or averaged out, $700,000 per employee. A figure which is twice last year's payout. Morgan Stanley similarly is projected to top last year's average bonus of $262,000 per employee with cheques close to $340,000. Without taxpayer funds, and some regulatory hurdle jumping (the transition from broker dealers to bank holding companies for these two) both would likely have followed Lehman Brothers over the precipice - a fact that shareholders and employees of these firms should be quite humble about.
While it is invariably good news that banks both in the US and around the world appear to be on a better footing, the consequences of this rebound may not be all good news. As Henry Kissinger once said about dispute resolution: “Each success only buys an admission ticket to a more difficult problem.” In this case there seems to be something fundamentally wrong with the fact that the Wall Street Journal can post a headline saying "Big Pay Packages Return to Wall Street" when the blue and white collar workers of middle America feel such anguish, furthermore when that anguish is directly attributable to those same Wall Street bankers.
The give and take in the relationship - in this case between solving a financial crisis and ensuring that we don't foster the same context that created the situation in the first place - doesn't seem to possess the equality of approach of the Papua New Guinea tribesmen. The outlook for the US and global economy remains extremely weak - the recent rally in global equity markets, commodities and credit may soon fizzle out as an onslaught of corporate earnings and financial news takes its toll. In the context of a world of higher unemployment, bigger budget deficits and higher taxes (which must come at some point), the burden of responsibility should be spread across the system in a way that is fair.
When you read the headlines about the non-farm payroll figures next to headlines about big bonuses for Wall Street bankers, the sense of fairness doesn't seem to be there just yet.
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