Posts filed under ‘Personal’
Banco Santander: a rising star (but not that bright)
If you’ve been reading in the news on how Banco Santander is covering its customers over Madoff’s losses, and how it’s been cherry picking some banks in distress, as well as not using the Spanish’s government toxic assets relief measures you’ll be thinking that they are a rising star. And they are, I won’t be the one to deny that, but maybe they are not rising as much as it might look like. In any case, in comparative terms, their are enjoying a privilleged position, especially because the rest of competitors are worse off. The star ain’t that bright.
Santander, a beautiful port city in the north of Spain
Let’s focus on the bank’s last announcement where they claim to be covering their customer’s losses. Let’s go deeper into the figures for some interesting hints.
The bank is including in its 2008 books an extraordinary expense of €500 million with that purpose. Wait! Weren’t they €1,680 million?
Okay. Here’s the trick. Santander is emitting new preferential shares, creatures born half-debt half-shares. Those, in 10 years will be worth €1,680 million less any increment of the initial fund deposit and the earnings to the present date of those funds (whatever that figure might be). What is insured is the initial investment, nothing else. It will be recovered not now, but in ten years. And with no actualisation at all.
For any investor that means bearing a couple of huge opportunity costs: the one already borne and the one that lays ahead. That’s how €1,680 million transform into 500€. The preferential shares will be liquid in ten year’s time. In the meantime yielding a mere 2% per year.
So, what should an investor do? Some will think about it, if its true that, when they invested, Santander was selling these funds as their own trademark, not referring to the real custodian behind. It’s great to sell something that works well solely under your name, as long as it keeps working well! And that entails a responsibility.
But many will simply sign this rebate deal and forget about it. And with the deal the compulsory renounce of any legal claims against Santander, and the curious obligation to keep working with them for the next decade. Not too bad for many considering the alternative of entering a judicial quagmire that will carry expenses for sure as uncertain the outcome may be.
And here comes the final reflection that, from my point of view, explains many things about the Spanish banks. People in Spain, unlike in the US, take their time to assume their losses. At the moment there’s not property market in Spain as people are not selling, waiting for hint of hope to recover what they paid for it. And, as long as there are no transactions, there are no prices.
With raising unemployment covered by benefits that won’t last forever, eventually, many people will have to face reality. So will the Spanish banks. If Santander is betting that, when this moment comes, the worst will be over and the economy will be going upwards, I’m really sorry to bet in the opposite direction.
Are we in a liquidity trap? (am I blind or is this another black swan?)
Liquidity traps are one of those obscure concepts hidden into macroeconomics books. Obscure enough to occupy some marginal comment only and disputed enough to be denied by the Austrian School of Economics. Ludwig von Mises would label them as myths. But, as mytical as a black swans that have recenty decided to come out of their closets and start teambuilding in the Thames, are we going to face this myth soon as well?
When Sir John Hicks thought of the IS-LM model, he already thought of liquidity traps somehow, but it was the first Baron Keynes (also known as John Maynard Keynes) who shaped the concept (did Ludwig von Mises need a better reason to label them as myths?).
The idea is simple. With the IS-LM model, cutting the interest rate is the scape from any recession, as we make more money available into the system to boost growth and employment. But, does more available money always equate more growth?
There’s a obvious limit to this: interest rates cannot be negative (hmmm, let’s leave it like this for a minute…) so there’s obviously a limit to monetary policies, that is when rates reach zero. Are we there yet? Well, the following table borrowed from Bloomberg can help:
Regardless of the fact that we are getting there, what if the rate where monetary policy became ineffective was not zero but higher? That’s in fact the idea behind liquidity traps. What if the banks and the firms -in short, people- became risk averse enough that they preferred the liquidity of cash to offering it to others at low rates?
In other words, what happens if the free-risk situation is no longer perceived as risk-free? How should this extra aversion to lending be rewarded?
The conclusion from Keynes was that there would be a point where monetary policies would be ineffective and the economy would remain trapped in recession. Then only fiscal policy, that would be a lot of government spending, would do the trick. But are we psicologically prepared for this extra spending and increased budget deficit and debt? Will the debt attract enough financing? Will the solution even deepen the liquidity trap by substracting even more money from the private sector?
There’s still a way to have negative interest rates and that’s thanks to inflation. After all with inflation our money inside the sock loses value every day. And an expansive monetary policy should raise inflation. (hmmm, look at inflation dropping and that other scary, even mytical word too: deflation) Even though, with a low enough interest rate, and with the current global scare, many people may choose to still leave it there.
Yes, a liquidity trap is a rare think. It may have happened in Japan long ago, even in the US in the previous recession (Krugman would say, and Reisman deny). May we already be into one?
Back from Switzerland (and missing it already)
Back from Switzerland and missing it already. One week of skiing and cheese eating is not enough. I’m going to miss those great valleys, the Geneva Lake, the snow: Champery, Avoriaz, Morgins, Torgon, Chatel, the people, the order, the commitment to having the roads and the trains ready regardless of the weather (in Barcelona our distant-managed-from-the-capital trains just stop when it snows too much). Yes, I’m missing Switzerland already.
To my amazement I’ve discovered I speak an peu du French. We Catalonians are born bilinguals, breathing both Catalan and Spanish since we are born, so learning a third language is not that difficult as we are already wired for it. In my case my third language is English, which I am proud to say I am able to use it effectively. But when I was a kid, and TV channels were still a scarce resource, we lived close enough to the French border to watch French TV and Jean Paul Belmondo’s great action movies. (Catalonia spans a bit further north into France, cut by nation-states seeking natural limits, cutting that only a few countries survived: Switzerland is the most prominent example).
Sorry for the mental rambling. The fact is that I could understand French very well, and even managed to communicate. At the end of the week I even dared to make my first jokes in French 
Now, I have decided to improve my French. More things to do, still the same time. Business as usual for an MBA student. 
The great view is from Torgon, in the top of the Jorette piste. If you looked backwards you could see the Mont Blanc not that far aways, if you look down you can see the Genève (or Leman) Lake. The picture was not mine as mine wasn’t that good. On the other hand we had a lot more snow.
Now, time to work again. An airport and an MBA are waiting, so is my soon-to-improve French.
Blogging from the Opera (blogging with Figaro)
Less than two weeks into an important milestone for the airport’s operational readiness and less than three weeks from my marketing and business environment exam, I find myself blogging from el Liceu, Barcelona’s opera house. Amidst this quagmire that my daily job has been turning into, I still could scape to enjoy Mozart’s The Marriage of Figaro. It really sounds strange in English instead of Italian’s: Le nozze di Figaro, ossia la folle giornata.
Yes, the second name for the opera is “the day of madness”. That’s how I live my days at work now. Trying to cope with unmatching requirements, trying to sync reality with political requirements. But, as I like to say, reality is too stubborn for that. And we always end up crashing with a concrete wall which we could have avoided. But that’s second nature to us, humans. Why is it that reality ends up resembling just another opera buffa?
Yet here I am. Everyone needs a place to hide. And that’s mine today. I even could open my computer in the bar in the basement, use my HSDPA connection and write this lines while sipping a coffee. Watch the old ladies ingest huge quantities of sugar and chocolate in different shapes and colours. Isn’t life nice after all?
The thing is that when I began the MBA I promised to reflect. And these latter days have been so amazing. So many different things happening from a global perspective, at work and even a personal perspective. And I don’t want to feel that the many things that flow around me just do that: flow. I need to capture some of them. I need to retain, absorb, think, grow.
They say that experience is everything, that you actually learn by doing. And that is a blatant lie. Well, you learn, true, but only in a mechanical way. As Figaro doesn’t actually learn about Almaviva until he actually sees him fishing in his waters, or Almaviva doesn’t learn about behaving until his infidelity is publicly exposed. The aristocracy depicted, ridiculised here didn’t learn on time to change. Until it was too late. Pierre Beaumarchais saw his play censored in France, only to be played in 1778, with the French Revolution almost at the doors…
You learn when you think about what you live. When you think of improving what you’ve already learnt to do mechanically. When you make it grow inside of you. When you go one step further to accepting what is already established, what is already known. When you apply something more than common sense. When you’re not scared of rethinking something that is already working (apparently).
When I give project management classes, I always stress how important is the “post-mortem” analysis at the end of the project to clarify not only what we have done well but also what we could have done better and what we have learnt from the experience. Now I feel that the end is too far, too late. It must be done now and again, in a continuous process of taking a step back, getting perspective, digesting, and then going in again with regained strengths that will not hold us back from stepping out of the comfort zone. Every manager should take some time to learn now and then.
And now, let’s enjoy this opera
The ant, the grashopper and the interest rates
I sincerely wished I could write about something else, but these days I’ve been spending a great deal of the time I don’t have absorbed by the financial markets.
And I’ve come to think of Aesop’s fable (click here for the Wikipedia entry): the ants and the grasshoppers, and the way they would have related to interest rates.
Since the ants are the hard-working ones in the fable. They are the ones that build the real economy, the ones that have their savings in the bank, in the safest financial products. On the other hand the grasshoppers don’t really worry about working hard, they are prone to risk and they aim for quick profits, regardless of the consequences.
Okay, now with the interest rates. Reasonably low interest rates benefit the ants because they can access funding with a reasonable price and still get a basic return for their savings while keeping them safe for the future. After all they are risk-averse creatures.
But if the interest rates go too low, close to nil, then it’s the time for the grasshoppers. Who cares about saving, who cares about the long term while short term is cheaper and you can still carry-trade. Short-term benefits are in order, even castles in the sand if they can be sold somehow, and when there’s no limit to the castles in the sand you can build, there’s no limit to growth. Screw Kondratiev!
In the end, it seems that the ants will end up saving the grasshoppers, just like in the fables. Lesson learned… or is it not?
The holidays are over (still here after a busy summer)
Another year is over, and I’m left cold sober. That’s how a song from Queen begins. In my case it has been an interesting but feverish year. I’ve done so many things that I can’t recall them all.
My first year in the Henley MBA is over. I have passed all three exams and I feel relieved, I had my doubts that I’d pass them all. Henley Management College has just become Henley Business School in the University of Reading. That means a lot for the future prospects of the school as it will make new additional resources available to reach new heights. It’s good news.
We had a workshop about global business environment and strategic marketing. I especially liked the first part, reflecting about the global economy and how the different economic areas in the world compare, and the current macroeconomic trends.
Later, reflecting about it, I envisioned myself as an agent of globalisation. After all I had been a few days earlier seeking business in Delhi. I can’t write much about it but Spanish companies do need to go out and compete, and who is going to do that if it is not ourselves?
Yes, that’s the Taj Mahal as captured by my mobile phone. That was one outstanding moment of the summer. I will never forget this image.
In the meantime things are on track for Barcelona’s new terminal. The building is almost complete and we are testing the first systems. The last sneak peek is from one of the busiest commercial areas. A few systems are already installed and the first system trials will begin in one month. Below is an image of the first screen ever working there, still on the floor although the support structures are already installed.
The bottom line: I’m still here. I’ll keep you appraised
Upgrading my MacBookPro’s hard drive (tweaking some hardware)
Yes, I’ve been busy lately. I know. Building an airport and acting as a globalisation agent is hard sometimes. If you also need to find time to study, things even get trickier. And then your loyal ally tells you that its hard drive is full… well, you get the picture.
Don’t ask me how I managed to fill my 160 gigs hard drive. I just did. And while I was away I realised I wanted a windows emulator at hand because interchanging files between Mac’s Office 2008 and PC’s Office 2004 is not that easy. Sometimes weird things happen (thank-you Microsoft) and you need a bridge inbetween.
Yes, I do need to carry most of my music with me wherever I go. And I like watching StarGate and Yes Minister from the computer while I’m flying somewhere. I am not ashamed of that!
The thing is that I needed a bigger hard drive. And instead of going to the closest Apple center and paying 300€ for the operation I decided to buy a 60€ Fujitsu drive, the same quality that Apple offers of course, and do it myself. The tools: a torque 6 screwdriver, a Philips ++ screwdriver and a sound methodology not to mix and lose the screws.
The first two you can find in any hardware store. The latter at this website: www.ifixit.com, as well as any accessories you might need.
First of all I made a copy of my hard drive. SuperDuper is the application to use. You can find it here. Encase your new hard drive in an external USB or Firewire unit, format in GUID, copy the whole drive and you are done. After you have an external copy verify it by booting from it holding the “Option” key at boot.
Opening a MacBook Pro to change the hard drive is trickier than one might think. Thanks again to ifixit for this comprehensive foolproof guide. I won’t bother you with the procedure, some highlights may suffice:
Opening the case after removing almost every screw, scary, huh?
The guts of a MacBook Pro. The hard drive is on the left. That’s the moment when you have to detach the wires connecting the keyboard (top center) and hard drive (left). Will they ever work again?
The final moment of glory: when you swap the old 160 gigs Hitachi for the new 320 gigs Fujitsu. In any case the hard drive is still Japanese.
Then I did the same steps in opposite order to put back every single screw in its right place, crossed my fingers and voilà, the thing simply worked. I love my Mac. Even with a virtual PC inside it, that I only needed to copy from my other computer. Right now my virtual PC is upgrading to XP service pack 3… and I’ll need an antivirus…
Back from India (and from a cultural impact)
I’ve just arrived from Delhi. In fact it has been 24 hours but, in the meantime, my mind kept wandering inbetween all kinds of different landscapes, smells and tastes until it settled back again. So many different faces, so many different paces: our hectic effort of preparing a presentation on the club lounge of a five-star hotel, the five-year-old child making his frenzied small monkey shout and dance to attract our attention and a few coins, the slow-moving cow trying to take a nap in the middle of the street and the agitated drivers trying to pass as close as possible. Definitely distances are measured differently in this huge place.
The billion cattle estimated to be alive today are more less one sixth of the estimated human population on Earth. The lucky ones live here, where they are revered and spoiled, where they can live tranquil and blissful lives, where they can thrive and be loved. It’s a wonder that there is no cow immigration process to this beautifully colored lands. If the other cows knew!
Humanity. This word takes new meaning here. So many people. We Europeans have tended to grow aseptic, almost inhumans. We hide within huge buildings of concrete, glass and steel, like the new terminal I’ve nurtured along with my peers, and we become insignificant below our not-so-functional monuments. We want them to serve as a rule to measure our cities and civilisation, instead of ourselves, our little selves.
In India you see so many people, so many happy -and not so happy- faces. The wonder is that it’s not easy to infer which faces will be happy and which won’t. Usually you won’t see that in the colours -or cost- of the robes. Humans… sometimes so happy owning nothing but conceiving nice thoughts… you never know.
This column, blog, page -whatever this is- wouldn’t be complete without the management reflection. And today it comes from Professor Geert Hofstede, of Maastricht University: “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.”
Are they? I’m personally a cock-eyed optimist and I tend to see the positive side to it. If we kept narrow mindedly to our own culture and background, the learning process would surely be impaired. Nonetheless cultural divergences must be managed.
As a reference, it is very interesting to examine Hofstede’s cultural dimensions, built from a handful of parameters:
- Power distance or the degree of acceptance of the less favoured members of one society of the inequalities they are subjected to.
- Individualism versus collectivism, or the degree to which the members of a society are integrated into groups.
- Masculinity versus femininity, or the degree of distribution of roles between genders.
- Uncertainty avoidance or degree of tolerance to uncertainty or ambiguity.
- Long-term orientation versus short-termism.
As an example, the former dimensions applied to the Indian, Spanish and British cultural dimensions, according to the available data by Hofstede. Of course generalisations are unfair, and the Spanish profile was never actually completed, but the exercise is still interesting.
Operating Systems strategies (why Windows and Mac OS are going in opposite directions)
Vista has not accomplished its expectations. Albeit more than 140 million copies sold, that only represents around 13% of the installed base. And if you take into account that Vista has been around since november 2006 and an average lifespan of five years for any computer, only because of natural growth that figure should be around 20%. What’s happening?
When a company has such a great market share as Microsoft, and a killer and omnipresent product like Windows, it wouldn’t be fair to say that those figures mean trouble. Not really, only unfulfiled expectations, that’s all.
But users are not massively upgrading to Vista. Many prefer their new computers with XP (and still get counted as new Vista licensees) because it’s simpler, faster, and you already know your way around. I myself like the aqua, sorry aero, look in Vista, but still struggle to find my way to simple things. I’d rather use a simpler system: I get tired of so many questions and confirmations and having to navigate tortuous paths.
Simplicity gets its reward in speed. Ask any Linux geek and he will tell you how he manages without lots of small utilities incorporated in your software that you use daily. The good thing is that he also manages without hundreds of utilities that you seldom or never use, and without hundreds more that you never knew they existed and, if you ever had needed them, you wouldn’t have even sought. (Do you really know how to insert an horisontal line in Microsoft Word or how to query an ODBC source in Windows?)
Then, there’s us, people that use MacOS. A sometimes despised and bashed minority (around 3%) that happens to be growing above average with a dangerous tendency to be self-conscious. In a mass consumption society, isn’t it great to be special in something? More stable than Windows, more usable, a better user experience (yes, that is completely subjective, but believe me in this one) but still not bomb-proof in its latest version: Leopard. And more visible than ever because of iPods, iPhones and, of course, the incumbent’s spoofs.
But, following the initial reasoning, which are the strategies behind the operating systems? Which should be next move? Apple has recently uncovered a few words about their new version of MacOS: from Leopard to Snow Leopard. Doesn’t sound very different, does it? What’s behind it and why is it important? It’s not easy to deny that Apple knows a lot about emerging trends that tend to be imitated by the rest of the market.
I’ve drawn the following model thinking about operating systems in two axis:
- on the horizontal axis the sophistication of the operating system, measured in terms of “eye candy”, as it is easy to observe and doesn’t focus on the utility of that eye candy (that would increase the analysis’ complexity and introduce a lot of interpretation), but it’s obviously correlated with the utilities offered to the user.
- on the vertical axis is the complexity and size of the code what counts: the system weight.
First of all, the dangerous zone is on the top level: heavy systems. Heavy systems tend to be unstable, usually because they build on foundations laid out many years ago by legacy systems that don’t exist anymore but that they need to preserve. This is the case increasingly both by Windows and MacOS: the first because it has compatibility with a sheer list of devices and still with good old MSDOS, the second because, albeit being much more selective with hardware, still hasn’t recovered from the trauma of having two very distinct CPU platforms: the PowerPC and the Intel platform. Vista still is far higher in this classifications making a very heavy system, to the point that requires the latest hardware to fully function while still being compatible with everything else. That’s why many prefer XP.
The massive side for an operating system is not that good either. XP was clearly short of functionality, while with Vista the effort has been made to try to compensate, but jumping too far away, adding cumbersomeness to the menu. Vista is only a street away of being annoying, and that’s another reason to still prefer XP. In any case it’s also a proof that with XP you’re going to miss things too.
MacOS stays in a comfortable middle position. Still, Leopard increased functionality and usability, as well as eye-candy, but paying a price for it: increased system sophistication and weight. That means, of course, instability issues.
Linux users sit in a comfortable corner table: a simpler system that is lighter than anything else, with good and bad consequences.
Where is the future going to be?
This is the part that is supposed to be explained in Nostradamus’ prophecies, but I think I have a clue to offer. Many Vista users are still downgrading to XP, and there must be a reason for that: the seeking of simplicity. We need more stable operating systems, not nicer ones. Don’t get me wrong, we like eye candy, but we are ready to trade some off in exchange for better performance. Windows should aim back, somewhere in between Vista and XP, going down in the stability road… and down the chart back to the safe green zone, still losing some screens and complexity in its way.
That’s what Snow Leopard is all about. The same animal, only changed by a couple of colours, but ready to live in a much hostile environment. Trimming the OS, making it more hardware selective, only optimised for the newest hardware platforms. No human-machine interface overhaul but a lot of kernel and essential applications rewriting. That’s, in my humble opinion, the way to go. And the way Microsoft should follow too.
Because, when with a laptop, energy consumption depends on CPU consumption, and thus in the cleanliness of the code, and the megabytes taken by programs to run. After all, those bytes need to be read from the hard disk, paged in and out of the memory, and can potentially make your computer run out of fuel faster.
Taken from Roughly Drafted, a web you cannot miss if you want to know more about Apple, this is what the apple folks have been doing to the Snow Leopard basic programs:
Interesting backoffice work, don’t you think?
Kobayashi Maru (a no-win situation)
Star Trek is not the encyclopedia of life. Even though it contains so many interesting ideas about leadership and management, with different styles depending on the series, that is worth knowing about.
One of the scenarios that is a reference in the Star Trek world is the Kobayashi Maru scenario, which is a “lose-lose” or “no-win” scenario. Regardless of what you do, you’re doomed. We can see this kind of scenarios in everyday life: from organisations that have a couple of conflicting objectives to pursue at all costs, pyrrhic victories or military victories that are so costly to win that are not worth-it (ring a bell?), or the kinked curve of demand for oligopolies, that can only begin competing between itselves bearing huge losses. Even the Spanish Inquisition’s confessions were like that: torture until pleaded guilty and then executed: every move made it worse.
The original Kobayashi Maru scenario was a test for Star Trek commanders. In the simulator they received a distress call: a ship had been stranded on the other side of the border. They were subsequently faced with the decision of whether or not entering into enemy zone, underpowered, to try to rescue the crew of the Kobayashi Maru.
There was no escape, the only option was not to try the rescue.
One briskly student devised a solution: cheating. Cadet Kirk did in his third attempt. Strangely enough, tweaking the simulator was considered original thinking. Probably that was only because it had not been attempted before. In time Cadet Kirk became the infamous Captain Kirk.
Sometimes, regardless of what you do, defeat is unavoidable.
Yes, I’m exagerating a little, but this has been a hell of a Kobashi Maru week. And to you all there that have Kobayashi Maru weeks once in a while, there’s still a message of hope. The Kobayashi Maru scenario had a meaning and purpose.
Because it wasn’t an intelligence or ability test. It was a character test. How do we face odds and specifically unsurmuntable odds? After all managing death is a way to learn to manage life.
Paraphrasing another Star Trek classic, Mr. Spock, “fear is the mind killer”. Sometimes the worst might simply happen, and what’s important then is how to handle the situation, how to keep your own control and integrity under adverse or inauspicious circumstances.
Making the most out of it. That’s how you learn to be better, and how to bounce back and subdue the next possibly conquerable odd. Don’t let circumstances drag you down, because you need to keep fit for the next, possibly unforseeable, challenge. And it may well be one you can cope with.
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