Month: April 2010

Having recently studied, in a rudimentary fashion, the causes of the recent economic crisis in an exo-Sauder course, I was a little taken aback by some of the dialogue during the ‘introduction to finance’ lecture. Firstly apparently not everyone knows what short selling is, hedging, securitization, or collateralized debt obligations. I guess this should not surprise me but apparently I need some new hobbies… Getting back to the point, I was a little taken aback by the manner in which hedging was introduced. Traditionally this tool allows one to mitigate risk; yet, in reality it is often used to purchase rights to futures and thus exponentially increases risk.

What I am trying to get at is the ideal manner in which to introduce students to the study of finance. Should we get the 1950s version of investment, or be introduced to the reality of the situation. Derivatives markets are in the trillions of dollars. Personally I believe that students need to properly understand the development of recent financial tools. If this is ignored and a traditional teaching approach is taken students may find themselves as unprepared for real trading and ignorant to the inherent dangers of many modern forms of investment.

View John Lanchester’s cityphobia for a brief introduction to recent financial tools, and their role in the economic crisis.

Nils Frahm Down Down

Musical inspiration for this post: Descent from from simplicity into increasing cacophony and disorder.

“To define perpetual growth on a finite planet as the sole measure of economic well-being is to engage in a form of slow collective suicide.” Wade Davis

On top of business courses I have been studying geographic interpretations of globalization and Anthropology. Both seem a little more sceptical of CSR than the average business class. I have been asking myself recent if the term ‘Corporate Sustainability’ is any less ridiculous than ‘Clean Coal’. With the latter, yes it is better than the alternative, but clean is a gross overstatement.

In a recent New York Times article regarding men living in complete isolation one stated, “People use the word ‘sustainable’ a lot, especially if they are in business, and it means nothing.” At this point I would have to agree. The abolition of space by time has created a world in which production is largely related to distinctive geographic or political advantages. When any region is forced to differentiate in order to survive how can sustainability really exist? One will always be more desperate, willing to undercut standards set elsewhere. Educated consumers can certainly affect the market via niche demand but realistically price is the economic signal, and externalities are rarely adequately factored in.

09 Fantasy in C, D760 (Wanderer)- 2. Adagio

Musical inspiration for the post.

I sincerely believe that my favourite lecture of the year was regarding non-profits and social enterprises. The subject manner greatly interested me; however, it was the guest speaker that really got me intrigued. I may only paraphrase at this point but I distinctly remember him saying something along the lines of ‘I didn’t really mind leaving my job, I mean why would I?’ Although a seemingly nonchalant statement, this greatly impacted me. There is often a much too accepted path, notably in Sauder but present elsewhere as well, where university education is to lead to internship, which is to lead to career. The speaker was certainly not of the same opinion and seemed to be asking many of the same questions as myself. Where am I going with this? What is my place is business that will allow me to be both happy and fulfilled?

The same day I was overhearing a conversation, ok maybe listening in, where a middle age man of, I believe, Indian decent made quite a brash statement while looking around, “These kids are just slaving away to have the honour of being someone’s slave—what is the point?” This is a question I have to keep in mind.

Great Lake Swimmers: Passenger Song.

“One thing to say for the less traveled way
Doesn’t have subtlety,
Has twice the gravity.”

I just took the online test from http://go-beyond.ca/calculator-results and appear to have a carbon footprint of 7.229 tons. To be blunt, this numerical value in itself means very little to me. I am surprised to see that they don’t compare to an average in my geographic region. In another similar test I have previously taken there was a clause that stated how many planets would be needed if everyone were to consume like you. This was, in my opinion, a much more direct manner of getting the point of reduction across. For the short and long-term commute options there is not really much I can affect. I already bus and walk at least 90% of the time. Moreover in the summer I tend to bike to work. As for long-distance trips, the federal government usually pays for the ones I take. Moreover this is something I am unwilling to go without.

The one portion of my footprint I could really ameliorate is the dietary aspect. A more vegetarian diet would certainly be one way to go. As for organic produce much is available at my work; however, the cost is often substantially higher.

Of Montreal: The Past is a Grotesque Animal

Musical inspiration for this post. An eleven minute long introduction to existential non-significance, love, and tragedy: addictive.

Right after 486g I have recently been attending a night course on practical finance as applied in investment banking. Although many of the financial concepts are well over my head, it is interesting to be thrown into the deep end of financial modelling and appraisal. One of the consistent topics brought up is compensation in this industry. The speaker is often quite blunt in regards to the broken nature of the program, and self-beneficial deals often undertaken. At one point he went so far as stating that having properly done his job and saved his company over a hundred million dollars had been a mistake, because they avoided a deal that would have paid him many times more than his annual base salary. This was said with a tine of sarcasm but the point remains.

Nevertheless despite the acknowledged problems with current models he consistently explains that finding successful alternatives is often more expensive, alienating, and time consuming. The question remaining is that although it is generally acknowledged that bonus structures undeniably contributed to the recent economic crisis, what is the alternative?

Air France: No Way Down

Musical influence for this post. Title says it all, no way down. Is there no way to bring down excess in this industry?