Category: People

Consumer ‘safety’ for financial products

Are we missing a lesson that has been applied for years?

I have resisted any temptation to comment on the economic situation on Learning from Dogs. The contributions from others are based on far more knowledge and understanding of the subject then I will ever have.

However, I feel obliged to ask humbly for some clarification about something that bothers me. Are we putting the cart before the horse? Are we ignoring the relationship between provider and consumer in finance?

The regulatory regime applied to the vast majority of products which are allowed to be sold to the public is such that toasterthere are probably more stringent safety standards for an electric toaster than for most, if not all, financial products!

Much of the talk of regulation and restraint, in the current climate, seems to relate to remuneration of people working for financial organisations. But, why does it matter what they receive? In other fields, success is rewarded and the shareholders, admittedly fairly indirectly, have some say on the policy in that area. Why should they not pay what they wish?

On the other hand (to coin an economic phrase!),  the minimum standards of the products are set by regulators.

In other fields, if a supplier cannot demonstrate, to the satisfaction of the regulators, that its product meets specified safety standards, then that product is not allowed to be offered.

It is very simple! I am not referring to contracts, customer service, compensation and so on; I am referring to a threshold level of safety below which the product is not allowed to be sold or operated. Think: “cars”, “aeroplanes”, “electrical appliances”, “children’s toys”, and … well anything else!

To be even clearer, this is not about “perfect safety” which is, of course, not available at any price. This is not about blame. This is not about guarantees. It IS about inspection, testing, certification, regulation … oh and policing!

Can anyone explain why this approach cannot be applied to financial products? (Sherry attempts to here.)

By John Lewis

p.s. as chance would have it the image of the toaster at the head of this Post was taken from an article talking about a recall of the Viking Toaster – point made rather well, don’t you think?

Carts and horses!

“Don’t chase the money! Chase personal development and let the money chase you!”

This was the parting shot that came to my mind a couple of years ago, at the end of delivering a one week training course to a group of new graduates.

In general, my approach to training is less well suited to people at their stage than it is to people who are motivated by the need to get a job done. However, that is, of course, my “problem”.

Nevertheless, at the end of that particular course, I felt the need to pass on something from my years of supposed experience, however irrelevant that experience might seem to a group of young, newly minted, investment banking people.

Cause and effect

Although I do not remember the source of the quote, it seemed quite apt. I liked the way in which the opening exhortation seemed completely opposed to their motivation. That woke them up! Then the second part gave them a different entry point and restored the connection with that original motivation.

Perhaps the strongest aspect of the quote is, of course, that it attempts to clarify the direction of causation between money and personal development.

It seemed neat at the time, and it still does!

By John Lewis

Against “Daylight Saving”!

An ancient idea may have run it’s course?

What is the purpose of “Daylight Saving”? [Interesting history of Daylight Saving on Wikipedia. Ed.]

clock faceThis week we are in a particularly interesting situation as we are in the middle of a one week separation between the dates when Europe and US change their clocks back to “normal” winter time. I.e. Europe changed their clocks back at 2am last Sunday and most, but not all, US States change their clocks back at 2am this coming Sunday.

This is even more confusing than normal. But why are we doing this at all?

Is it to save fuel, to save lives, to save time or to save something else?

In my humble opinion it is all nonsense!

“Time management” is a myth

Time is time! People say that they do not have enough time to do this or that, as if they have ways to make some more; and, of course, there is much talk about “time management”. Yet we all have the same amount of time and no amount of management will change that!

We are certainly able to manage the things that we try to fit into the available time.  That is, we can manage tasks, effort and so on. But, in everyday (Newtonian rather than Einsteinian) regimes, time is an inelastic independent variable. Fiddling about with the clocks and trying to “manage time” have no effect on the stuff whatsoever. Let it be!

There must be a better way!

Yes, I know! Some people make claims of wasted daylight or of the dangers to schoolchildren walking to or from school in the dark. These are valid areas of concern. If adjusting the times of business operations or schooling helps to deal with them, then by all means do so. But, for goodness, let’s not pretend the time is different.

By John Lewis

Unintended consequences – for the albatross!

Using our Planet as a dustbin!

Once again, a piece in Naked Capitalism caught my eye this time courtesy on one of Yves’ readers who came across this:

These photographs of albatross chicks were made just a few weeks ago on Midway Atoll, a tiny stretch of sand and coral near the middle of the North Pacific. The nesting babies are fed bellies-full of plastic by their parents, who soar out over the vast polluted ocean collecting what looks to them like food to bring back to their young. On this diet of human trash, every year tens of thousands of albatross chicks die on Midway from starvation, toxicity, and choking.

To document this phenomenon as faithfully as possible, not a single piece of plastic in any of these photographs was moved, placed, manipulated, arranged, or altered in any way. These images depict the actual stomach contents of baby birds in one of the world’s most remote marine sanctuaries, more than 2000 miles from the nearest continent.

Midway chick

More pictures of this terrible way to treat a magnificent bird are here.

By Paul Handover

A Better Idea: let’s limit TARP legislator pay!

Saving taxpayers some money?

Seems that Congress is hell bent on replacing the best-functioning labor market in the world with their own unique brand of wisdom.  Well, I have a better idea.  Why don’t we slash in half the pay of all those Congressional leaders who came up with the TARP idea in the first place, since they are spending our money, and I think it is clear that they are spending our money unwisely, which is precisely the logic they use to confiscate the salaries and bonuses of the bail-out executives.

Moral of the story?  Government should not be in the business of trying to run a business. The TARP bailout should have never seen the light of day.  With no TARP bailout, Congress would not have had it’s latest excuse for grabbing up yet more of the private economy’s resources for trying to put this country back on track toward improved productivity, output, jobs, income, and security.

By Sherry Jarrell

More truth about this crisis

“Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

Thus spoke Mervyn King, governor of the Bank of England, on Tuesday night, 20th October, to a group of Scottish

Mervyn King
Mervyn King

business people.  Echoing one of Churchill’s many famous sayings, Governor King is probably one of the highest ranking people around to state, at last, what everyone on the Clapham Omnibus (a London bus route) knows to be obvious.  Whether the forces can build to a point where common sense is applied by Governments before we enter another Great Depression is another matter.

Mention of the Great Depression (the last one) triggers a step back in time.

On June 16th 1933 Franklin Roosevelt signed into law the Glass-Steagall Act.  In fact that was the second Act signed

Senator Carter Glass
Carter Glass

into law, the first Act was passed by Congress in February 1932 and was largely designed to stop deflation.  The second Act was, in a sense, much more important because it set out to prevent bank holding companies from owning other financial institutions.  It was repealed on November 12th, 1999 by the Gramm-Leach-Bliley Act. Just a little under 10 years ago.  10 years which have seen the biggest boom-bust probably ever in modern history.  And has much of the Western world slipping into another great depression.

US Senator Carter Glass and US Congressman Henry B. Steagall must be turning in their graves

Steagall
Henry Steagall

But thank goodness for investigative journalism and the role of the Internet in creating a truly open ‘meeting place’.

Read more about this Post

Janet Tavakoli on Warren Buffet

The following is reproduced in full from the TSF website and is reprinted with the permission of Tavakoli Structured Finance, Inc.

It’s a fascinating tale about Warren Buffet in the midst of all the financial turmoil.  And in case you think that Tavakoli Finance is run by the grey suit brigade …

Janet Tavakoli
Janet Tavakoli

Read Tavakoli’s article about Buffet

Climate warming: the debate continues

Alan Carlin believes that rising greenhouse gases are not the cause of warming, on scientific grounds.

Yesterday we published a long guest Post from Patrice Ayme who argued that climate warming is a very serious risk to this planet, as we know it.

Alan Carlin has gracefully given Learning from Dogs permission to reproduce his article that argues, on a scientific basis, that man-made greenhouse gases are not the cause of warming.

Again, this is an article that needs to be read.  Alan’s Blog is here.

Read Alan Carlin’s article

A view of England – from France.

A work trip to Brittany, France and a chance to reflect on the differences.

I’m sat writing this in my hotel room on the outskirts of Quimper in Brittany. Usual overcast and drizzle but considering I’m only a couple of hundred miles south of home, that’s the only similarity with the Devon weather.

Quimper
Quimper

They simply seem to have no comprehension about the recession. There are small signs of some new office building being empty but more buildings seem to have appeared and business appears to be booming. The super market where I have lunch is even busier than last year and the shops are full of people buying things.

What’s the difference?

I’m sure my friend Chris [Chris Snuggs, another author on this Blog] who I used to work for here will be able to say, but I can’t believe it’s all about the main business of food and agriculture, which predominates in this part of the country.

Back home in Devon, the same set of circumstance ought to hold true as it’s mainly agriculture and tourism, just like in Brittany.  However there is a vibrancy in Quimper that I find refreshing.  And a lack of charity shops!

What can we learn from this?

I was bought up in an environment that did not trust the French and it wasn’t until I got an opportunity to work here 10 years ago I realised that it wasn’t all that I’d been told.

I really like Brittany and its people who are friendly and very welcoming. There is definitely something to learn from this.

By Jon Lavin

Climate warming: the debate

Patrice Ayme believes it is real, on a scientific basis.

On the 16th October, we published a Post called Climate warming?.  The sub-heading gave a clue to the content of the Post: What’s the truth about climate warming, e’rr change?

My stance was to express doubt about man causing climate warming. But then, a good friend of this Blog, Patrice Ayme, added this comment:

Lowest ice on record in the Arctic was 2007, then 2008, and now 2009. [More exactly the sea with more than 15% ice reflecting.]
As I pointed out on http://patriceayme.wordpress.com/2009/05/ (May 31, 2009).
The sun has been going down in the last 30 years or so… Watch the nice graph there, extracted from Science Mag…
We are just coming out of a solar minimum so pronounced that cosmic rays, less deflected by the sun’s magnetic field, have become a problem… This explains why greenhouse heating has been less pronounced than some expected in the last few years. Things should pick up in the next 7 years, as the sun heats up. The multiplying factor is 3 or 4…

It seemed appropriate to ask Messrs Ayme and Carlin for permission to reproduce both their Blog articles. Both very kindly agreed – thanks Gents.

These are long articles – but will inform you in a way that the mass media never do.

Here’s Patrice (Alan Carlin’s article tomorrow):
Read more about this important subject