With the ghost of a smile on his face

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?

Having recently been focusing on accounting, I read an interesting article yesterday regarding the ‘creative accounting’ practices that were used by American banks in order to hide the extent of Greece’s debts. With the upcoming spring payment of over twenty-five billion Euros to be made by Greece to various debt holders, fears of default are now rising. Even with the likely bailout from the European Union (despite Merkel’s opposition) the market appears to be demanding interest rates of nearly seven percent in order to buy bonds. With this level of interest and a stagnant, at best, Greek economy, even without the massive (12% of GDP) annual debt Greece’s debt ratio may lead to great instability and further devaluation of the Euro.

It was interesting to investigate manners in which American banks – notably Goldman and Sacks as well as JPMorgan Chase hid Greek debt from EU authorities in recent years using derivatives that allowed debt to be accounted for as a form of currency trades – allowing them to not be disclosed as liabilities. As such investors in Greek bonds have been propping up the state without accurate knowledge of its true financial position.

Imogen Heap: Hide and Seak

“Where are we,
what the hell is going on,
the dust has only just begun to fall”

Greece playing hide and seek with its debt and the EU.

Ok so it is time to delve into real business – hockey: Olympic hockey. With the Olympics now in full swing the real competition begins today. Lets be honest, we wish the best for all of our athletes, but, if Canada doesn’t win gold in men’s hockey it won’t matter if we own the podium. In the minds of most, the Olympics will have been a loss. With the goaltender question now know – at least for the first two games, the conversation has to progress to the first real game, knock on wood, that Canada will be involved in – against the Americans. It is difficult to determine favorites and figure out whether the immense pressure on the Americans is an asset or more so a hindrance. Let us be honest, Atlas had it light.

With chemistry so difficult to develop in the short tournament existing pairings, most notably the intact San Jose line, may be one of Canada’s biggest advantages. Since the Summit Series this will likely be the most important hockey tournament in which Canada has ever taken part.

All I know is that I’ll be watching every moment.

Ólafur Arnalds: 1953

Musical inspiration for the post: begins lightly and slowly builds up into bliss.

Well this was quite a interesting Valentine’s Day. I spent a large portion o the day locked in a small room with three other guys: as much as it was enjoyable, not exactly the ideal situation. We were participating in the West Coast Case Competition at UBC. We were to analyze a case regarding Apple Inc. More specifically we were to determine whether to emphasize traditional, or more recent, Apple products. We were also supposed to determine how the unique retail strategy put in place by Apple could be used to further success.

We decided to emphasize more recent products such as the iPhone and iPod. This would be done through a product extension strategy and marketing strategies focused on these products. However, the intent was to use these products as a bettering ram of sorts to sell other products. By selling a cheaper warranty with guaranteed priority service individuals having purchased these products would be incited to go to Mac stores for repairs where they could be introduced to the ‘iLife’ as a whole.

There was also an element that focused on training the retail staff of partnering organizations in-house at Mac stores themselves.

Cut Copy: Lights and Music

Musical Inspiration for this post.

resonating within my mind. Firstly Zara’s culture is described as one of “immediacy”. How often are important corporate decisions debated to exhaustion prior to any decisions being made? On a more individual level how often do I avoid making difficult decisions—choosing instead to deal with simple aspects of a task first? By centralizing design activities at the central office the common excuses of being unable to find the appropriate coworker, or adequate resources, are rendered invalid.

This quotation segues nicely into the second: “Zara’s process allows designers the chance to fail quickly and relatively cheaply”. This cultural leniency further promotes the original point of immediacy. I will be less likely to put off a decision if I do not fear the repercussions of a mistake. This will allow creativity and quick decision making to occur with out the ever-present question of ‘if this goes wrong, will I get blamed’? By seeing success and failure of individual items as functions of the equation rather than final results the corporate culture is able to complement the supply chain in allowing decisions to be made with the same rapidity that distinguishes their production process.

Ray Lamontagne: Lesson Learned

Musical Inspiration for this post.

We were somewhat vaguely asked to write an entry having to do with business ethics—I have decided to shed light on the ethics of and element of business school: more precisely the indoctrination effect leading to a reduction in charitable donations by non-economics majors having attended intro and mid-level economics courses. Yoram Bauman, an economics professor at the University of Washington, in his study, tracked voluntary charitable donations by undergraduate students and compared results over time and across faculties. His hypothesis was that economics students would contribute less than other arts and sciences faculty members. What was yet to be determined was if this was due to a selection or indoctrination effect?

His conclusion was that economics majors were not affected over time; however, students with other majors sharply reduced donations if they studied intro-level economics. As he states, “Profit-maximization is a fine assumption for businesses, but a narrowly defined ‘selfish’ version of utility maximization and is neither accurate nor appropriate for modeling individual behavior.” Furthermore with numerous studies indicating that those displaying selfless behaviour are likely to progress further in their careers, and are generally happier, one must ask if economics education for non-economics majors makes individuals, and society, worse off.

Jason Molina: It Costs You Nothing

Musical inspiration for this post:

“The truth don’t hurt,
the truth don’t work,
it costs you nothing,
that’s what it was worth.”