Monthly Archives: February 2009

Feb 27

Diamondbacks Offer a Good Lesson in Being Smart About Information

By kevin | Decision Making

Information plays a big role in decision making.  When we ask people in workshops, “Are you a good decision maker?”, most say some version of, “It depends.”

“It depends on what?”

The answers vary, but at least half the time, it comes down to information. If you “have the information,” you tend to feel good about making a choice.

The obvious trap here is, “What information?”  Well, the information you think matters, or maybe more particularly, the information with which you’re already comfortable.  So if you’re a baseball man, and you’re convinced the critical statistic is “balls hit on Tuesdays,” then that’s the information you’ll look for, and you won’t be comfortable making a decision until you get the answer to that question. Continue reading

Feb 26

President Obama’s 2010 Budget Message

By kevin | Current Affairs

Too few people will even read this, yet alone the budget summary just posted on the OMB website. But let me encourage you to take the FIVE MINUTES you’ll need to read President Obama’s Budget Message (the intro, not the whole thing; that’s much longer). It will give you a good sense, right in his words, what he has in mind for the country. The news cycle and blogosphere is full of misinformation about the man, his intentions, and this budget. Many things stand out, in particular the fact that after years of hiding the true cost of the wars, it’s now all on the books. At least read some of it for yourself.

PRESIDENT’S MESSAGE

Throughout America’s history, there have been some years that appeared to roll into the next without much notice or fanfare. Budgets are proposed that offer some new programs or eliminate an initiative, but by and large continuity reigns.

Then there are the years that come along once in a generation, when we look at where the country has been and recognize that we need a break from a troubled past, that the problems we face demand that we begin charting a new path. This is one of those yearsContinue reading

Feb 26

Is Hedge Fund Just Code For Thievery?

By kevin | Business

In what is starting to feel like an ongoing mortar attack, the WSJ reports today yet another multi-zillion dollar financial fraud . . .

In the latest round of financial-fraud allegations to erupt, two money managers have been accused of misappropriating at least $553 million, and using it to fund a lifestyle of lavish homes, horses and even an $80,000 collectible teddy bear.

The two men, Paul Greenwood, 61 years old, of North Salem, N.Y., and Stephen Walsh, 64, of Sands Point, N.Y., were arrested by Federal Bureau of Investigation agents and face criminal charges of conspiracy, securities fraud and wire fraud by the U.S. Attorney for the Southern District of New York.

Alleged victims include Carnegie Mellon University, which had invested more than $49 million, and the University of Pittsburgh, which put in more than $65 million, court records show. The Iowa Public Employees Retirement System said it had invested about $339 million, or 2% of its portfolio. The Sacramento County Employees’ Retirement System in California said on its Web site that it had invested $89.9 million, or 1.6% of its total fund.

Hold that thought.  Let’s step over to wikipedia and see what the heck a hedge fund is . . .Continue reading

Feb 25

Motorbike Suspensions Explained

By kevin | Rants and Raves

A guy named Chris Longhurst and organized a very impressive site called Car Bibles. A friend alerted me to an excellent section on bike suspensions, as good as you’ll read in one place. He seems serious about his copyright, so you’ll just have to go see for yourself: Good explanations and some nice graphics. Worth a look.

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Feb 22

Men and Women Sin Differently

By kevin | Decision Making

It had to happen.  The nice folks in Rome have decided to share some of the fun and games from the confessional.  No suprise that men and women have different vices of choice according to Monsignor Wojciech Giertych, personal theologian to Pope Benedict XVI and the papal household, buttressed by an analysis of confessional data carried out by 95-year-old Roberto Busa, an impressively tech-savvy Jesuit priest who has also carried out a computerised study of the works of St Thomas Aquinas.

And the winners are . . .

The seven deadly sins are: lust, gluttony, avarice, sloth, anger, envy and pride (as opposed to chastity, temperance, charity, diligence, patience, kindness and humility). Last year, however, the Vatican suggested these might be supplemented with some new sins particularly relevant to the modern age – namely genetic modification, human experimentation, polluting the environment, social injustice, causing poverty, financial gluttony and the taking or selling of drugs (I’m not really seeing how smoking a doobie offends the Lord in a way comparable to deliberately causing poverty, but anyway . . . ).

According to Busa and Giertych’s Vatican-endorsed findings, if you’re a man, then your number one sin is lust, followed by gluttony – and then sloth, since by that point you’re probably too sated, in both senses, to move.

If you’re a woman, the prime sin is pride, followed by envy and then anger, which, I must say, doesn’t paint a very attractive picture. No wonder men sit around eating a lot and watching porn.

Dorothy L Sayers once cleverly observed that the sins ought to be subdivided into the disreputable-but-warm-hearted (lust, anger, gluttony) and the respectable-but-cold-hearted (envy, sloth, avarice, pride) – cold-hearted because they are sins of the spirit rather than the flesh and respectable because they can masquerade as virtues.

Put another way . . .

. . . the list provides a useful insight into the fundamental differences between the sexes today: men eat and shag and then worry about it; women preen and resent, with a little envy and crossness chucked in, and don’t especially like themselves for it either. The “vice divide” identified by the Vatican echoes the societal changes of the past few decades in an unexpectedly modern way – and what initially seems like an entertaining little titbit provides a perfect snapshot of male and female unease.

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Feb 18

Propeller Heads and the Tragedy of the Commons

By kevin | Decision Making

I wish I had been invited to an online conversation on the New York Times website between David Brooks and Gail Collins called The Propeller Head’s Dilemma. Here are a couple of snips and what I imagine i might have added.

David Brooks, speaking about his concern that Obama’s “propeller heads,” consumed by a lack of humility and attachment to reality, might be steering the good ship wrong . . .

This is going to unleash the familiar debate on what should be the role of policy intellectuals in the White House. Some dumb Republicans are going to get some mileage by attacking the idea of a White House run by geeks. Some smug Democrats are going to claim that of course they have intellectuals since they are the party of reason and intellect.

The correct position is the one held by self-loathing intellectuals, like Isaiah Berlin, Edmund Burke, James Madison, Michael Oakeshott and others. These were pointy heads who understood the limits of what pointy heads can know. The phrase for this outlook is epistemological modesty, which would make a fine vanity license plate.

The idea is that the world is too complex for us to know, and therefore policies should be designed that take account of our ignorance. Whether the Obama administration understands this is an open question.

To which Gail Collins responds, after dismissing whatever concerns Brooks and his like have about stimulating in general . . .

As to the banks — and the automakers — so far our problem has been too little faith in government rather than too much. We got into this mess by presuming that the private sector was inherently smarter than pointy-headed bureaucrats. But over and over during the past eight years, from Iraq to prescription-drug pricing, we’ve seen that the private sector is frequently both dumber and less efficient than government.

The private sector got us into the savings and loan crisis during the ’80s, and who got us out of it? Was it … the government?

Leaving aside that as usual, the conservative and the liberal are talking past each other a bit, I wonder if the central insight in the whole argument has been lost?  The point I think is ultimately about “values.”

Pop quiz: When someone in the private sector makes a decision to do something, say loosen credit criteria, what values do they trade for? Probably something like, “more market share,” or maybe “better share price.” But at the end of the day, it’s presumably the criteria used to choose, what I’m referring to as “values,” are all in service of our shareholders. And while that’s not a hugely specific thought, it is more specific than “the public.”

In other word, a nice example of the tragedy of the commons. Every one of the actors is optimizing for their sense of what’s valuable with no regard to the total system.

And what of the reviled public servant? Well they don’t have shareholders. That’s the bad news but it’s also the good news. What the propeller head economists are doing, that the private guys aren’t, is solving for the commons, for the good of the system, for the good of the people.

In both cases, let’s stipulate that individuals acting in both the public and private spaces are equally capable of good and bad thinking, honor and venality, putting personal interests first, and on and on. But in this case, I’m with Gail Collins. The collective we need to focus on the commons at this point.

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Feb 17

Picking the Deregulation Bone

By kevin | Random Walk

I’ve been following with great interest the newly invigorated Republican party doubling down on the very themes that seem to have put the collective all in this mess. One theme in particular that seems particularly stunning is the point of view that says government is bad, government involvement in the private sector is worse and the answer is tax cuts. Just to digress on the last point, how do tax cuts for business make sense when they’re all bleeding red ink?

I get the point about excessive involvement by anyone in my affairs, personal or business, but just stir things up, ladies and gentlemen, I give you Canada. This from Fareed Zakaria in a piece called Worthwhile Canadian Initiative . . .

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn’t grown in size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada’s more risk-averse business culture, but it is also a product of old-fashioned rules on banking.

There’s more. This, on the beast that has apparently consumed us, real estate lending . . .

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn’t deductible up north. In addition, home loans in the United States are “non-recourse,” which basically means that if you go belly up on a bad mortgage, it’s mostly the bank’s problem. In Canada, it’s yours. Ah, but you’ve heard American politicians wax eloquent on the need for these expensive programs—interest deductibility alone costs the federal government $100 billion a year—because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It’s 68.4 percent.

Well drats, that’s inconvenient. Two completely different public policies, one socialist, that subsidizes housing and the other that let’s people make housing choices on their own merits like a proper marketplace, both producing the same levels of home ownership. Oops. Except in this case, the socialists are us.

And then there’s that soggy truth that by keeping a tight rein on the the admittedly much smaller economy, the Canadian government sits now on a surplus, without a single bank upside down, delivering better health care outcomes, at lower cost. But none of that could possibly apply here.

Feb 15

Appreciating Appreciative Inquiry

By kevin | Random Walk

A dear friend and colleague sent me a note directing me towards something called Appreciative Inquiry.  Just when you think you’ve seen every way to effect positive change, you find that you’re not even close.  A couple of really stunning quotes . . .

“The traditional approach to change is to look for the problem, do a diagnosis, and find a solution. The primary focus is on what is wrong or broken; since we look for problems, we find them. By paying attention to problems, we emphasize and amplify them. …Appreciative Inquiry suggests that we look for what works in an organization. The tangible result of the inquiry process is a series of statements that describe where the organization wants to be, based on the high moments of where they have been. Because the statements are grounded in real experience and history, people know how to repeat their success.”

Hammond, Sue. The Thin Book of Appreciative Inquiry. Thin Book Publishing Company, 1998, pages 6-7.

How true.  We do tend towards diagnosis.  In fact, I can think of people with whom I’ve never discussed anything else!  And then this, from the man credited with articulating AI . . .

“[Appreciative Inquiry] deliberately seeks to discover people’s exceptionality – their unique gifts, strengths, and qualities. It actively searches and recognizes people for their specialties – their essential contributions and achievements. And it is based on principles of equality of voice – everyone is asked to speak about their vision of the true, the good, and the possible. Appreciative Inquiry builds momentum and success because it believes in people. It really is an invitation to a positive revolution. Its goal is to discover in all human beings the exceptional and the essential. Its goal is to create organizations that are in full voice!”

Cooperrider, D.L. et. al. (Eds) , Lessons from the Field: Applying Appreciative Inquiry, Thin Book Publishing, 2001, page 12.

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Feb 15

Wandering the Streets of London Town

By kevin | Rants and Raves

Dateline: London

Did a lot of walking yesterday.  I must be the only guy who doesn’t own an Aston Martin. Geez, they’re like Honda Civics over here.  Even the maids drive them.

It takes awhile to get used to seeing cars without drivers coming down the street towards you.

Was walking along Walton Street, runs behind Harrods towards Chelsea, and hear this really wound up sound coming the other way.  Ferrari.  Or course.  Why bother shifting out of first when you can run it down the road at 6000 rpm and scatter the dogs and pigeons?  Exactly.  You would too if you could.

I saw a copper with a digital camera at the head of a row of cars parked along the curb (same street).  Seriously dangerous looking Range Rover HSE in all black everything, Ferrari 430, Aston Vantage, and a couple of other pricey sleds.  I really thought for a moment he was taking snaps for his collection, but I suspect it’s part of the ticketing process.

In neighborhoods like Belgravia and Chelsea in particular, the quantity of high quality cars parked at the curb is just astounding.  Rolls? Boring.  Bentley? Who cares.  Jag XK 120? Saw one.  Current Jags? Whatever.  How many would you like?  Porsche Turbo (various years)? I’m sorry, did I doze off? Like ants at a picnic.  It’s just nutty. Why go to the auto show when you can just walk the streets?

Walking home from the theater last night along Pall Mall I turned to watch some guy in a BMW X5 parallel parking yet another Aston Martin.  I held my breath the entire time.  No he didn’t hit it.  If he had, his bumper would have made contact mid hood, or bonnet as they say.

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