By Amanda Morrall
1) The State of Finance
Something is rotten in the state of finance to be sure but is throwing the baby out with the bathwater the answer?
Robert J. Shiller, author of Finance and the Good Society, in this piece published by the Globalist, says while the system is broke it's not beyond repair.
Financial capitalism, he argues, will fulfil its mission and purpose in society when it has arrived at a point where it gives people the ability to participate in the financial system as equals.
Clearly, we still have a long way to go but as Shiller correctly points out having full access to the information and resources will help. Here's an excerpt:
To get to that ultimate goal will mean designing new financial inventions that take account of the most up-to-date financial theory, as well as the research revolution in behavioural economics and behavioural finance that has explored the real human limitations that inhibit rational and humane decision making.
Creating and implementing such inventions will be the best tactic to deal with economic inequality. And, amazingly, this is true in advanced nations just as much as developing ones.
2) Q&A with Zoellick
World Bank president Robert Zoellick, winds up a five-year term in his post next month.
In this Q&A with Wall Street Journal's Sudeep Reddy, Zoellick shares his thoughts on the euro-zone crisis, how it'll impact emerging and developed markets elsewhere, U.S. debt and the challenges facing his successors.
3) Shorting FB
Amazing the power of one individual to move the markets. The following item, followed by CNN.com, looks at the US$96 billion impact two hedge fund managers had on Facebook's shares.
4) $1 million bucks
A million dollars sounds a fortune however it won't go far for those who enjoy the finer things in life.
Forbes Money takes a closer look at how far a million will stretch and what it takes to get there. Some good reminders on the importance of goals, living within your means and the ability of average folks to join the millionaires club.
Retiring with a net worth of one million dollars in investable assets might allow you to withdraw $50,000 a year for 20 years — using the simplest calculation — but an annual income of $50,000 in while living in the United States would probably not provide the lavish lifestyle historically associated with the idea of the millionaire. If you want to live the life of the upper class, you’ll need a net worth well north of one million dollars to generate annual income in six or seven digits.
Yet the concept of the millionaire still carries some mystique. The success of the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko is evidence of this. The 2010 edition of book is ranked 29th in personal finance by Amazon.com. The book’s subtitle is, “The Surprising Secrets of America’s Wealthy,” but the authors didn’t seek out the wealthy for their advice and tips for this book, they interviewed mere millionaires. The premise is that today’s millionaires achieve their status by living below their means, spending less than they earn, and making financial choices that weigh future possibilities against today’s media-driven desires.
The authors show that the neighbour with an old car still running well is more likely to be financially secure than the neighbour whose fancy car requires unaffordable lease payments. People become millionaires by owning small businesses rather than working for a large corporation in middle management.
5) Happy at work
Don't worry, be happy just doesn't fly with some folk. Fair enough, if you're genuinely unhappy, it's pretty hard to convince yourself otherwise through a mantra. Just remember, carting around a bad attitude at work isn't going to help your career. So how do you get happy when you're miserable at work?
This blog by the Harvard Business Review offers some practical solutions. Importantly, if you can't find your bliss at work, they suggest you find it outside. Cultivating a positive outlook and happier frame of mind has a resonating effect on all facets of one's life, they argue.
To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter@amandamorrall
42 Comments
Well if your looking for happiness...?.....Youv'e come to the wrong place !.......we do aprehension, anxiety, financial pitfalls ,depression, gloating on, I told you so misery, impending doom ,distant doom , and general doom that surrounds our daily existance.
Happiness is many different things to people......but if you want a real dose of it...your looking for a sublime moment of contentment, free of ....physical or mental discomfort.
Your method of transport is for you to choose.
I think happiness is a destination.....Yes...! it's just ,I can't always remember how I got there and I have to give the key back when I'm done.
For your Happiness
This woman applied for a job as a lemon picker in Kerirkeri but seem far too qualified for the job given her arts and education degrees and job experience as a teacher and social worker. The foreman frowned and asked "Have you any actual experience at picking lemons" "Well as a matter of fact I have! I've been married three times, have owned two Skoda's, support both the Auckland Blues rugby and the NSW rugby league team, invested all my money in Bridgecorp and I voted for John Banks." Have a most excellent weekend..!
Gummie's Contribution ( forgive me if this joke's already been aired here ) :
3 guys in a pub , each arguing as to whose profession is the oldest ... " Naturally " says the solicitor " lawyers are the oldest profession ..... after all , who helped God get a conviction against those scrumpy thieves in the Garden of Eden "......
...... " Fiddlesticks " , says the guy from the Apple & Pipfruit Growers Association , " ... who grew the apples that got stolen ... a horticulturist ! "
" Pah ! " retorts John Key , " Politics is the oldest profession , bar none . ... Go back to the very first sentence of Genesis , ' In the beginning was chaos , and God created the earth and the heavens out of the chaos ' " ......
" Well " says JK , puffing his chest out with pride , " and whom do you think it was that created the chaos ! "
" People become millionaires by owning small businesses rather than working for a large corporation in middle management."
Seems the author is missing the point of wealth creation for the corporate peoples out there - earn your wage and invest the surplus. It is in essence no different to the small business owner who should be theoretically paying himself a 'wage' followed by investment of 'dividends' - the fact the reinvestment is into his own business is neither here nor there.
The surplus that I've worked bloody hard at ensuring there is the potential for one followed by living a relatively frugal life to ensure I can save about 40% of my wage per month.
But I do forget I live in a country where having a mobile, sky, a f-ing big TV, a 3 litre late model car, a boat, branded clothing, take-away eating and broadband are considered essential.
Robert J. Shiller sounds like just another huckster to me. Does anyone really believe that we can keep consuming at anything like the current rate, especially with China and India racing to catch up.
Is "Financial capitalism" going to give us the ability to keep growing the economy indefinitely? I doubt it. Life is already too complicated. The last thing we need to add are "financial inventions that take account of the most up-to-date financial theory".
Please give us all a break. Like obesity we all know the answer: less consumption, more exercise. Same for the economy. Ditch the second car and walk to the shops: you and your community will be the stronger for it. Stop being fast adopters... we don't need the latest gadgets as soon as they hit the shelves. In fact, many of them we don't need at all.
We're over-burdened with choice, buried under a mountain of possessions. Break free. Friends, freedom, and an analyzed life... the secret to happiness. We're in thrall to a toxic lifestyle of imagined ease, where the true costs are externalized, hidden. This isn't freedom: it's bondage.
.... perhaps a tadge unfair to label Shiller as " another huckster ".... he has a track record , having correctly called both the tech bubble of the late 1990's , and the housing-subprime bubble ...
The guy does suffer a little from " Steve Keen syndrome " ( a puffed up sense of superiority ) ... but his opinions are ( as Keen's are ) worth the time to read & consider ...
Point taken. On the other hand, what is the point of all this economic theory? I would posit that it is a better quality of life for the most people. I would also suggest that this should include the health of future generations. I mean, who doesn't care about their children and grandchildren?
So, the first thing is to decide what a life well-lived looks like.... and I wouldn't take this question to an economist. Yes, there are lots of different opinions about what constitutes a good life but this is the discussion we need to be having, before we start to focus on the health of our financial institutions.
When I hear an economist preface their pet theory with questions about pollution and climate change; when I hear them acknowledge finite resources and limits to growth; when I hear them talk about Gross National Happiness as well as GDP; when I hear caution about our mindless consumption and the flood of crap that surrounds most of us; when I hear them discuss our disconnection from community, from the land, from work that has meaning.... well, then I might not start off so rudely.
Yes, I have made a few assumptions about what *might* make up a good life... by all means contradict or disagree with me... but this is the discussion we need to start with. Otherwise we are racing to who-knows-where... and Steve Keen could lead us as blindly as Robert J Shiller.
It's not a matter of understanding... it's a matter of unintended consequences. Do you have absolute certainty that a particular path is correct? Well, neither do I. The most we can do is work out where we want to go. Then we steer as best we can towards that goal.
I suspect that we currently have the cart before the horse... we have a myriad of economists, each with their particular take on things, each suggesting that they have the secret for getting this battered old economy back on the road. But where is the public conversation that is trying to work out where we, as a society, should go. Where our our philosophers and thinkers? Most of us can't see beyond the next balance sheet. I'm sick of hearing about pay gaps, stock markets, bank profits and losses, etc. All of this is transitory noise.
I am sure that economists have valuable knowledge... but I don't automatically equate a healthy financial economy (e.g. GDP growth, increased productivity, increased consumption, whatever) with happiness or even satisfaction.
If you do then all power to you. Diversity of opinion is a great place to start :-)
To be honest I don't really believe in un-intended consequences, I think that the un-intended consequences are, in almost every situation assigning blame, frequently incorrectly. There is frequently a case to be made that the consequences were intended in fact.
In fact I think you have me wrong. Economics is politics, there is no difference even though it calls itself a science. I think the economy would be better run if the country was run as a democracy, rather than an economy. Very few economists will talk about this kind of thing, its the difference between higher pay and higher profits. Unfortunately you need to wade through jargon just to understand what economics is saying. Actually I think thats kind of intentional.
I don't understand your comment, "its the difference between higher pay and higher profits." I don't need higher pay OR higher profits... and it's not because I have a lot of money. I have food, and I have shelter. The rest of my wants and needs can't be bought with money. In fact, too much money might even get in the way of some of them.
I don't think we're arguing... I can see that, in person, we might agree on more than we disagree on. It's hard to convey everything in a few stacatto sentences.
I still believe in unintended consequences. People can do things with the best intentions, only to find that they have made the problem worse. Maybe this is only because they didn't have perfect knowledge but, apart from GBH, I don't know of any omnipotent being. This worsening of a problem despite the best of intentions is, ipso facto, proof of an unintended consequence.
I agree that there can be many hidden agendas but this doesn't negate the idea of unintended consequences.
Yeah, I thought that was a bit obtuse when I wrote it. I think at some level you have to believe that consequences are undercontrol however, especially the obvious ones. I think a very obvious thing is, it you are paid more compensation, you could work less probably would do so. Thats bad for profits on a collective level, especially financial ones. There is a very particular form of growth which is good for profits however, you work harder, get paid a bit more, and consume more. Thats the kind we have seen. I think at the least you have to assume that was intentional on some level. The best case scenario, you can say that the people who have done this to the political environment just didn't care about the about the quite visible consequences, and often in fact they obviously didn't care because they ignored them.
Think about say why we have student debt, I mean its obvious that if you make students pay for education up front they will leave the education system with a large debt. At the point this was introduced there was a choice, either you keep paying for their education through taxation, or you make them pay for it. But there is nothing unintended about the consequences of this, just maybe you care more about low taxes than young people in debt. There are obviously people who saw the consequences, e.g most students and student unions at the time. You can't call that un-intended consequences in any way.
You will need to give a concrete example of unintended consequences I am afraid, but despite what most of the economics profession wants to believe its very rare for incentives to be aligned, whats good for me is frequently bad for you, thats the norm, and thats all I think unintended consequences are in my opinion.
"good food, clean water, nice shelter, clothes, trasnport and some entertainment"
I have all these things and more. The biggest thing I need an economy for out of this list is clothes. I am not talking about no technology but we already have more technology than we need. I definitly don't work 24/7 either. I haven't had a "job" for nearly a decade... and I still have enough to help other people. I made a concious decision to not worry about money and to freely share what I have. Since then, even though sometimes I worry a bit, everything has always come out ok.
OK, I don't have a new car and don't often use the one I have. My clothes are mostly 2nd hand, gifts, or homemade, the clean water comes off the roof and is *delicious*, and I have had more fun over the last decade then I had in the four previous decades.
There will always be an *economy*. What we're talking about is whether this economy needs to be an infinite growth economy based on a fractional reserve banking system. I suspect that infinite growth is not a happening thing.
I also suspect that we have a level of luxury and ease which is way more than we need to be happy... in fact, gets in the way of being happy. I'm happy for you to have as much *wealth* as you want... but don't expect me to buy into the deluded dream of infinite growth, infinite resources, infinitely resilent planet, and the need for a million toys to be happy.
But the real push I going for, is that I didn't have enough to finish my first university course.
What do you want? Violins? Ever considered that you're chasing the wrong things? 40 years ago a degree meant something. Now education is just the latest bubble.
Consider: for the last 40 years the middle-class have lost ground. They are being squeezed left, right and center. What makes you think that we're just about to enter a golden age where all this will be reversed?
wealth is choices. lack of wealth is no choices.
I agree. It's just that you and I define wealth in very different ways. Please feel free to collect as many pieces of funny coloured paper as you like. I would prefer something a little more substantial. The best security is a strong community, exactly the things that the current paradigm destroys. We now have lots of interconnected networks that we mistake for community but they are really just a shadow of the real thing.
Yes a fractional reserve can actually be indefinately extended.
I think you mean infinitely extended. Either way, you attitude is full of hubris. Infinitely extended is a very long time.
It's not even hard
Cool! Are you also faster than a speeding bullet, more powerful than a locomotive, and able to leap tall buildings in a single bound? I presume you'll have all the current world-wide problems sorted by lunchtime. As above, see hubris
hard to justify a decent charge rate when the expert looks like a ragman
Cool. You're an expert. You must be in high demand. However, in most of the places that I've worked, they value what a person can do more than what they look like. But maybe you're a car salesman, insurance agent, or even a realtor? If so, I agree. When you're trying to fleece someone it always pays to dress as sharply as possible.
Also there are factors such as time, energy and consumption; which are constantly being injected into the system.
The REAL economy is primary production based on the endless exploitation of natural resources. The ultimate limit of such a system is the degradation of those resources to the point that they can no longer maintain the system built on top of them. We are bumping into such limits right now. Energy prices are sky-rocketing and consumption is stalling. The funny thing is that, if we could massively lower energy costs and get consumption really pumping, we could get to the ultimate limits that much quicker. Smart thinking Batman.
true if looking like a bum and looking trashy works for you, fine. no reason others can't look trim and healthy
Who said I look like a trashy bum? Who said I'm not trim and healthy? That's your prejudices coming out.
computing science (data mining) and finance at Massey Un
I also took computer science at Massey but english was my double. What makes you think that you're the only one with an education? Not everyone with an education has the same opinions. Get used to it.
Human primary need is a small part of the real economy (might work if you're all wanting to be Chinese peasant farmers of the lowest classes
Uhmmm... I wasn't talking about human primary need. For instance, let's take oil, coal, gas, food, clean water, and fresh air out of "the economy" and see how long it lasts. It's not such a small part.
No. roof over my head and food on the table seem pretty important stuff. As does utilising talents for the benefit of society.
Strawman. This wasn't my argument.
Oh I dont collect pieces of paper - I collect education and knowledge
That's good. So what's your problem? How many billions of dollars of debt does it take to collect education and knowledge?
Infinitely. yes like I said. Let me know when we run out of numbers. And well we could always shift the currrency (drop the one's and twos, the ha'pennies, groats, etc).
This is called inflation. If you're not careful the rate of real inflation might be faster than your income growth. Countries like Weimar Germany, Argentina, & Zimbabwe have experimented with trying to run out of numbers. It didn't work so well for them.
But I have seen some "Strong communities" powerful in their ignorance
And I have seen inspirationally "Strong Communities", full of wisdom, energy, and strength. Your point is? Your anecdotal evidence is better than mine? How about we fall back on...
"well, I've seen more than you."
"no you haven't"
"yes I have"
"blah blah blah"
"the most up-to-date financial theory"
Are these theories on the same level as the theory of gravity, the theory of evolution, Kepler's Laws of Planetary Motion, etc...?
I thought that new financial instruments were (at least in part) what got us into this mess.
Robert J Shiller is full of gobbledegook. He's not talking about theories in the scientific sense of the word. This is just more of the same, dressed up to confuse.
Mathematical models like the nobel prize winning Black-Scholes formula, which allowed for a more scientific approach to valuing options (making them much more useful) are an example of innovations in financial theory.
At the same time, over-reliance on the models and an improper understanding of them can lead to financial disaster - witness the LTCM crash, financial instruments (derivatives in this case) can be misused.
In the same way, scientific discoveries like Rutherford splitting the atom can lead to useful outcomes: nuclear power (=valuing options); mistakes from misuse: Chernobyl (=LTCM); or leveraging power: Hiroshima/Nagasaki (=speculating with derivatives).
Scientific progress in financial theory is only as good/bad as how it is used.
Ah, the old "technology is neutral, it's how you use it" argument. A lot of people would argue that, on balance, ALL nuclear fission applications are wrong.
You also confuse theory with application. For instance, an understanding of atomic structure and possibilities is seperate from its use. We can understand how something works and decide that we don't want to go down the path of exploiting our knowledge of this thing.
The Amish are the obvious examples of slow adoption. They evaluate new technology and decide whether it enhances their communities and their life. If it doesn't then they reject it. It doesn't mean that we all have to live like the Amish, or that the Amish are perfect. It's just an example of people who feel that technology is NOT neutral.
If you want some more theory try Marshall McLuhan:
“We become what we behold. We shape our tools, and thereafter our tools shape us.”
“First we build the tools, then they build us.”
No technology is neutral. It's just that most of us don't (want to) look for the ways in which they affect us.
.... I was actually defending the man , above ..... when someone called him a " huckster " , and the editor deemed that to be the comment of the day ....
Shiller correctly called the tech bubble and the housing/subprime bubble ....... he is very far from a " huckster " ......
[ .. i am happy to retract my comment about the guy's " humbleness " ...... my bias towards stereotyping of Americans in general , perhaps ! .. ]
Yah.
I didn't want to express my thoughts on making that the editors comment of the day.
For someone writing about finance to make that the comment of the day, to my mind, beggars belief. Makes you wonder about anything else that particular editor recommends
Seems we are on the same page for once GBH (fully..100%!)
And, I thought of you GBH when I wrote the post re "The Happiness advantage".. ..
Amanda,
You might want to peruse "The Happiness Advantage" for some further ideas on how to be happy at work (and maybe prompt BernHard to have a read as well - there is study quoted in there that gives the % advantage to a business of having a happy worker)
Practical tips. Based on research into positive psychology. Just found a TED talk by the author. Will have to watch it and see if it is any good.
I loaned "The Happiness Advantage" to a tightwad friend of mine who has recently become a head of department. And I know that he thinks it is good value as he has purchased his own copy....and has even spent $50 out of his own pocket to implement one of the suggestions (if you knew him, you would understand the signifigance of that act....)
Along the same vein. If you like "The Happiness Advantage". Check out "Positivity" by Barbara Fredrickson....
Cheers
Later... Found a podcast (with transcript) of an interview with Shawn Achor.
My contribution is Alain de Botton's " How Proust Can change Your Life " ..... although only a small volume , you need to take your time over it , and have solitude to fully luxuriate in the message ....
[ Shawn Achor's book is considerably cheaper on Amazon UK than Amazon USA , if anyone is after it ]
Cheeers Gibber.
Here's my inteview with Shawn, you might be interested:
http://www.stuff.co.nz/the-press/lifestyle/4413170/Why-happiness-is-elu…
As a yoga practitioner and teacher I always practice gratitude. It's No.1 for me. I have a million things and people to be grateful for and try to return to that during bumpy times.
There are a number of principles that I try to incorporate at work and that was before reading Achor's book. Has more to do with my personal philosophy and values.
Email me directly if you would like to hear more. amanda.morrall@interest.co.nz
Amanda
Growth growth growth we aim for more growth...and yet more growth...best make work game in town...up with the rates I say...
"Mayor Alistair Sowman said the council did not want to do those schemes at tremendous cost, but the Government's requirements were that all New Zealanders should have access to the same high quality water supply and treatment.
It was potentially possible something would have to be done in the timeframe of the 10 years of the long-term plan, which was why the council had to include it in the plan, but there would be significant consultation before anything happened, and cheaper alternatives might be able to be found. " marl express
The question is: why does washing and bathing water, garden and car washing water, need to be of the same standard as drinking water!...doh.
Home UV treatment units are efficient and affordable for those who want to drink 100% pure water...so why not leave it to home owners to decide
Agreed. Set the standard, leave it to folk to meet it.
But you do need to set the standard.
Actually, it may get cheaper in some respects - solar PV is now so cheap, that it is cheaper than grid-power for the likes of water-heating. Below the permit voltage, non-tradespeople can install it. I think they do in Aussie already.
That cheapness says no more dams, interetingly, but it may signal a headache for transmission-balancing in the grid.
I do not understand what you are saying here....are you suggestng the council deliver "water" to your door and leave it to you to treat?
NB. UV treatment units are dodgy at best.....
Certainly there is a reasonable case to make getting your own bore water for household / domestic scale use easy (virtually no, or simple resource / planning requirements)...but I thought that was done in Marlborough anyway?
Trouble is what is the effect of users over-using bore water, collapse of the aquifier letting sea water in?
In some ways allowing ppl to do things/works is like smoking, you dont get the neg impact for decades...and then its severe....
regards
The farce that was the Euro...a nannycrat farce!
"Switzerland is threatening capital controls to repel bank flight from Euroland. The Swiss two-year note has fallen to -0.32pc, not that it seems to make any difference.
Denmark’s central bank said it was battening down the hatches for a "splintering" of EMU. It has cut interest rates twice in a matter or days and pledged to do whatever it takes to stop euros flooding into the country. Contingency plans are on the lips of officials in every capital in Europe, and beyond.
On a single day, the European Commission said monetary union was in danger of "disintegration" and the European Central Bank said it was "unsustainable" as constructed. Their plaintive cries may have fallen on deaf ears in Berlin, but they were heard all too clearly by investors across the world.
Joschka Fischer, Germany’s former vice-Chancellor, said EU leaders have two weeks left to save the project.
"Europe continues to try to quench the fire with gasoline – German-enforced austerity. In a mere three years, the eurozone’s financial crisis has become an existential crisis for Europe."
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