Thoughts on Financial Turmoil

I've been following the latest developments in the financial crisis with some interest this week, and trying to work out what they mean. Surely credit will be tight enough to cause a fairly big recession in the developed world over the next couple of years, but it's a bit harder to judge the longer term effects. Still, here goes.

Presumably there will be much tighter regulation of the financial sector. In other industries companies are mostly competitors, so that the remaining companies are strengthened when a firm goes bankrupt. In finance the competing banks are also counterparties to a whole range of deals, and a corporate collapse actually weakens the remaining entities. It's an amusing paradox that you have to limit competition in the capital distribution system, which is really the heart of a capitalist economy, but there you go. The countries with loose lending standards, weak capital requirements and innovative financial firms (US, UK) have been the source of the upheaval, to the extent that their governments are having to bail out the market and take over large chunks of it. Better to have stricter rules to begin with.

Tighter financial regulation will be a good thing, but will probably encourage excessive government intervention in other parts of the economy. This could really look attractive if some of the Asian economies remain strong over the next few years e.g. China, Singapore, Korea. That could hold everybody back by limiting useful competition and creative destruction in industries other than finance. Not to mention that widespread government control of the economy would encourage repressive politics as well.

On a geopolitical level I see the present crisis hastening the end of the United States' global dominance. The American economic system was recently seen as effective and capable, albeit somewhat harsh, but now it's seen as the source of all the problems. The United States will be weakened as the rest of the world doesn't invest in its economy to the extent that it has over the last 2 decades. I think China will take over as the obvious superpower around 2020, whereas I used to think that would happen some time in the 2030s. I'm not looking forward to the transfer of world leadership from a democratic government to an autocratic government, but it's starting to seem inevitable.

Mild Amusement from Council Elections

Today was local council election day. After checking the results in my current municipality on the ABC website, I had a look at a few other places where I have some connection. Rather a waste of a time, but I had to smile at the following:

• Turnout seems to be 60-65% in most districts, even though voting is compulsory. Obviously a lot of people go ahead with their regular weekend plans and treat the $50 fine as an additional expense.
• In the area where I grew up (Blue Mountains council, 4th ward) the Liberal Party ticket was Fiona Creed, Graeme Creed, Michael Creed. I guess family dinners double as party branch meetings.
• In the area where my parents currently live (Oberon council), there are 9 councillors to be elected from 3540 electors. That's about one elected official per 400 voters, and there must be even less populated areas than Oberon.
• For example, the 2015 person electoral roll of Bogan Shire Council. That's the actual name, I'm not referring to Sutherland. Can you imagine being introduced as the Mayor of Bogan Shire?
  

Intelligent Movie ... with Explosions!

It's been a while since I've able to say that. Not since the first Matrix movie, probably. Anyway, this afternoon I had a great time watching Tropic Thunder. It's rather violent and profane, as you would expect for a movie about making a Vietnam war movie, but very clever at the same time.

The main targets of the satire are method acting and self-absorbed Hollywood actors. However the film makes jokes at the expense of many other groups: sentimental environmentalists, heroin users, troubled war veterans, cute children, black rappers, white people imitating black people, Australians, even Jews. What impressed me was that the humour worked without being cruel, and it did illuminate some of the stereotypes underlying Hollywood culture.

New Job Going Well

I've been an analyst at AME Mineral Economics for a couple of weeks now, and I'm enjoying it so far.

Initially they've had me working on two consulting reports, providing general overviews of particular commodity markets for clients that want to raise capital for a new project or sell their stake in an existing project. Some of the relevant material was already written for the regular quarterly and monthly market analyses, so I could reuse these graphs and text. Where new work was required, I had to talk with the more experienced analysts to get up to speed, then write some of the new bits myself and leave other sections for the real experts. It was a good way to learn what services AME provides and how they maintain all their information. I also learnt that my co-workers are generous and helpful people, as I had to rely on them a lot! Soon I'll get to work on researching and collating the underlying data, which should keep me busy for a few months.

I'm amused by the company name, which used to be Australian Mineral Economics. The marketing director realised that this was too parochial, as we analyse projects around the world and deal mainly with the implications for international trade. Since the company's initials already had brand recognition, the official name was changed to AME Mineral Economics. So now the A in AME stands for AME. Completely unintentional I'm sure, but the nerd in me likes working for a recursive acronym.

Another funny thing is how the job matches up with some of my early tendencies. I learnt to count at quite a young age, maybe even before starting school. We lived near the main train line running west from Sydney, and I used to count the freight carriages on passing coal trains. Now I'm doing a more sophisticated version of the same activity, trying to summarise all the supply and demand sources for various minerals. I'll soon be assigned to update one of the annual Mine Cost reports, and it might even be coal. Note that I also went through a youthful phase of looking up at the stars and wanting to be an astronaut, before spending most of my twenties as a research astronomer. I'm starting to wonder if growing up made any difference to me.

Off the Cuff

This evening I engaged in one of my least favourite activities: shopping for trousers. I like to have the cuffs on my trousers fairly high, so they don't get dirty from puddles, messy floors etc. However the fashion is to have the cuffs quite low to avoid revealing too much of your socks while sitting down. Add in the fact that I have pretty short legs, and I find it near impossible to get the length I like.

Note to annoying fashionista shop assistants: I like my socks, and my feet tend to be hidden under a desk when I sit down anyway. That's why I wanted you to pin the cuffs higher for alterations and left when you kept trying to change my mind. I'll try a department shop in the next couple of days: hopefully they'll have a range of leg lengths so alterations won't be needed, or at least few enough shop assistants that I can try a few pairs without receiving persistent unwanted advice.

Overlapping Identification Numbers?

I supplied a lot of personal details when starting my new job today, and it got me thinking. The Australian government keeps tabs on its citizens using a 9 digit tax file number. Meanwhile Australian phone numbers consist of a zero followed by 9 variable digits, if you include the area code. So now I'm wondering: is there anyone whose tax file number exactly matches their phone number? Or is there some unfortunate person who has most of the digits in common and keeps mixing the two numbers up?

Good Job News

I've found a real job! It's an analyst position with a company called AME Mineral Economics, which does analysis and costing of mining projects and the commodity markets. I'll get to plow through all sorts of data (company documents, the news, geological analyses, who knows what else) and synthesise it into reports and predictions.

I heard about the company after talking to a friend from high school. It made sense to look at the mining sector, given that it's doing so well at the moment. Apparently AME have to take on generically smart people and train them in the industry because all the geologists and mining engineers have been snapped up by the actual mining companies.

I'm starting next Monday, and really looking forward to it. There will be a lot to learn, so I'll be very busy and may be neglecting this blog over the next few months.