Coding is the new Latin – so what have our kids been doing in ICT for the last 20 years FFS?

The BBC, in this breathless puff piece, lets us all know that apparently they’re now going to start teaching kids coding (=computer programming) at school in ICT. And apparently “Google, Microsoft and other leading technology names” think that’s a Very Good Thing.

Well, yes, I do agree, but then my beady little eyes narrowed somewhat as I pondered the question

So what the bloody hell have we been teaching kids in ICT for that last 20 years then?

One of the advantages of being an ermine is that you can’t see white hairs in a white pelt. So let me share a story of how, as a young ermine at a London grammar school, we all crowded in a cubby hole as the Physics teacher told us that it was now possible to play with a computer.

In the cubby hole was a large grey teletypewriter with attached paper tape reader/writer and a wooden box that opened up to display a lovely purple velour receptacle into which you could plunge the receiver (that’s the separate microphone and earpiece of a land-line telephone) of a standard 746 GPO telephone into. You’d dial a number and when you heard the whistle you’d stick the receiver into this box, close the lid and STFU so that your chatter didn’t corrupt the signal.

This was an acoustic modem – you weren’t allowed to electrically connect to the telephone network in those days so the box had a speaker and microphone to connect to the phone network. At the other end was a timesharing mainframe from the North East London Polytechnic.

Then it was time to share with the class the mysteries of BASIC, and line numers with steps of 10 so you could add things later, and variables and decision loops and all that sort of stuff. I couldn’t type at the time, and so all my half-hour slot was dedicated to pecking at the keys like a hen to enter 10 lines of code. I could see one of the other guys actually got all his program in because he could type, so I resolved to learn to type, borrowing a Pitman book from the library. My Dad got me an old manual typewriter from a skip and cleaned it up (people had moved on to electric typewriters in the late 1970s so there were a lot of these old beaters about, I could just about lift it!)

In two weekends I learned enough to be able to type in a program to calculate basic electrical circuits and optimise the biasing of a transistor. Something you could do with a slide rule(!) and pencil and paper in about 10 minutes, but I learned how to program from there on, using library books and other people’s experience.

So what do modern teachers teach kids about computers these days?

How to use Microsoft Office and word processors, FFS!!!!!

And we wonder why all the frickin’ jobs are going to Asia? Maybe it’s because they teach their kids to Do Original Stuff in computer class rather than how to search Google?  I mean, really? Here is the ICT curriculum, it seems to  boil down to “mess about with computers, class”.

Any damn fool can learn how to drive Microsoft Office. Sit them on their own, with the computer in front of them and give a high-level description of what Word and Excel do and then tell them to have at it. You don’t need ICT classes to do that. These are kids, for chrissake, they learn how to use their smartphones on their own well enough! So why have we been wasting our children’s time teaching them to be glorified data entry operators when our grammar schools taught previous generations the basics of programming with kit that had a computing power vastly exceeded by a modern battery charger?

The BBC are right in that teaching the principles of programming is like teaching Latin, in that almost all modern computer languages are derived from variants on the same principles. Once you’ve learned one, and once you have learned the elements of competent programming, you can adapt to most. Although I learned the elements of programming and did it for a while, at university and then even some while working for the BBC, it was only when I did my MSc that they taught me how to program competently and avoid some of the bad habits of spaghetti coding and the nasty untyped nature of Basic. But that’s fair enough – I had never worked as a software developer up to then, and I tracked the general state of the art as it improved. Some of those skills on how to create algorithms applied just as much to programming in low-level assembler code as higher level  c and web-based Perl, php, java and web client javascript.

I can’t believe they don’t teach kids programming in ICT nowadays. Once you understand how to design simple algorithms you can do so much more in the modern world. Even now at work I regularly see people trying to misue Excel for jobs that would be far better done in a database, but persumably Access doesn’t come in the educational version of Office. As a peripheral skill programming that helped me in electronics engineering, in management, in running my own company accounts, in putting databases of stuff online, all sorts of stuff.

The actual programing language use will be obsolete before the child leaves school, indeed we may not be programming with text editors and lines of code, though people have been saying that for the last 20 years without it really happening. That doesn’t matter, what does matter is learning how to map a real-world problem with a mind-world algortithm that captures enough of the real world to be useful without needing to capture so much that it’s uneconomic to implement.

It is a general problem with how things are taught in the modern world – people are taught process, not principles. It is easier to teach process, but so much more useful to teach people the principles. Just as you feed a man for a day if you give him a fish, but for a lifetime if you teach him how to fish.

So let’s teach our kids a bit of the why in schools as well as the how, OK? So that they have an outside chance of competing economically, and also have a bit of intellectual challenge. I’m really glad to see that they are going to start teaching programming in ICT. It’s only thirty years too late, guys!



Angela, the Euro and Forbidden Planet

Even the doughty Economist is adopting the brace position for the demise of the Euro. The markets have been falling for ten days in a row. And yes, I have poked my snout in there and made some purchases – the tragedy of a market fall is you can’t call the bottom so you have to take a few hits between the eyes. I’d say it’s early days yet.

It’s possibly within Angela Merkel’s capability to save the Euro, and yet she chooses not to, at this stage. I can see her point – she could doom the German nation to become the milch cow for the rest of the Eurozone. There is much harrumphing about modifying the European treaties to stop profligate countries overspending, but you have to ask yourself, how the heck does that work? There is no answer to the Josef Stalin question, where are their divisions? How exactly would you pressurise Greece to stop the early retirement and tax dodging? If you fine them, then the problem gets worse. You have to park tanks on the lawn. After all, in a working transferunion like the United States, they still haven’t found a way to stop California voting to stop taxing but carry on spending. In a democracy there are usually more votes for spending than for saving 🙂

I believe the reason that the federal government can’t park tanks on Arnold Schwarzenegger’s lawn is because the US military isn’t allowed to act on behalf of the Federal government against US citizens on US soil, but it’s probably the only way to stop the economic transfer. In the end the only way to stop one group of people hell-bent on behaving in a way you don’t like is to apply the threat of overwhelming force. Understandably, there is trepidation in Germany about sleepwalking into that kind of situation in Europe.

So it seems that Angela Merkel is drawn into the scenario painted in the movie Forbidden Planet, where in trying to avoid a deep-rooted fear, the energy lends power to unconscious forces that start to destroy something else she holds dear, which is the Euro.

Just leave the housing market alone, Dave

So the taxpayer is going to back 95% mortgages for first time buyers to buy new build homes. Now where have we seen this before? Governments fiddling in the housing market. Such a bright idea, it goes horribly wrong each and every time. You’re grubbing about with what is probably most people’s single most valuable financial asset, purchased on a highly leveraged basis. Small errors can get magnified stupendously.

What on earth could go wrong? Well, for a start the impecunious are usually better off looking to the second-hand market to get better value. It’s why I have never bought a new car. I could afford it, but I have no desire to take the sucker punch for that brand new kudos. Same for houses. I’ve never bought a new one, because the value is so poor. Let other people take the brand-new premium first. So why the heck is the Government screwing the first time buyers by making this mortgage guarantee conditional on them buying a new house? Yes, it’s good for the housebuilders, but why get the most cash-strapped to take the hit too?

There seems to be a belief that it’s every Briton’s human right to be able to buy a house in ther 20s. It isn’t. Some people are too poor to buy a house. That’s tough, but there are alternatives and have been throughout history. It’s called renting, and also sharing with others.

Let’s take a look at the decision-making process in how people buy houses. People look at what they can afford to spend at the time they are buying. If they are really clever they look ahead a little bit and allow for the extra cost of children, should that be a consideration. They then imagine that will carry on for the foreseeable future, and spend right up to that limit.

Make financing easier? Buyers will drive the capital cost of the houses up, as they can finance higher capital sums. Apply distorting measures to starter homes? Starter homes will go up more than second-rung homes. It’ll be harder for those that don’t qualify for the distorting measures, and the distorting measures will go into the pockets of house builders. It will take longer for the ‘beneficiaries’ of the largesse to pay off the increased prices they paid, because the largesse comes in the form of mortgage guarantees, encouraging them to overpay.

It’s about time the government discovered the value of the one of the principles of Hippocratic Oath in meddling in the housing market.

Primum non nocere – First, Do No Harm

Just leave it alone, Dave, let it be. That way existing house owners that benefited from the rising prices in the past get to take the hit, as they have to drop their prices to get a sale at all. The history of UK government intervention in the housing market is littered with epic fails.

Let’s hear it for:

  1. Mrs Thatcher in the 1980s selling council houses for below cost price to buy votes. What could possibly go wrong? Britain has no effective social housing any more, inflated property prices, and people so poor they would never buy houses elsewhere in Europe end up overpaying for houses they can’t afford and can’t maintain properly. They used to be able to rent from professional landlords on a reasonably stable basis. Now they have to rent from BTL amateur landlords on 6 month shorthold tenancies.
  2. Mortgage Interest Relief At Source What could possibly go wrong? Make mortgages less expensive and the punters will bid up the price of houses till the amount they pay is the same. At least this was axed a while back
  3.  95% taxpayer-backed mortgages for first time buyers to buy new build homesWhat could possibly go wrong? So we’ve subsidized foolish banks like Northern Rock that lend people more than they could buy, then flogged them to Richard Branson at a loss. Hey, let’s just cut out the middleman and lose the money straight off. What’s going to happen? People will bid up the cost of first time starter homes and expose themselves to the risk of negative equity, but never mind, the taxpayer will underwrite the losses.

Twits. When is government going to learn to butt out of the housing market. Their job is to provide equitable contract law, building controls, town planning and a Land Registry so that buying and selling houses is safe for both parties and the necessary disclosures and titles are made. Some basic regulation of rents, requiring some professionalism in landlords and taxing BTLers on their capital gains is probably as far as they need to go.

We’re about to enter a second long recession. Jobs will go. The last thing we should be doing is influencing people to take a long term illiquid investment on at a higher price than the market would normally set. It took me 10 years to recover from the cock-up of buying a house at a price inflated by stupid government intervention, Nigel Lawson, you know who you are. I wouldn’t do that now, but you can’t put an old head on young shoulders. I was lucky enough to keep my job and not need to move for those 10 years, the likelihood of that happening to a first-time buyer now is a lot less.

We probably shouldn’t actually stop house buyers acting foolishly in the face of market volatility, but as society we really shouldn’t wilfully add to that volatility. The housing market is a zero-sum game. Make it easier for today’s first-time buyers to buy a house, and you make it harder for the next bunch that comes along. What’s so hard to understand about that?

Early Retirement is all about Spending Less, Not Earning More

That’s an odd assertion to make, and illogical to boot, no? If you need to save £10000 a year, and you’re breaking even at the moment, then you could either spent £10,000 less, or carry on spending at the same rate, and earn £10000 more?

Not so fast. For a start if you earn £10000 more you’ll get to lose £3000 to £4000 to the taxman, so you do in fact have to earn even more. However, there are added ‘soft’ issues. You may have to spend more time at the office or commute further, so your domestic ocsts may rise as you favour convenience over DIY. More subtly, there may be lifestyle inflation pressures.

For instance, when I go to Canary Wharf I stick out as a slob – I’m the guy in the T shirt and no-label trousers where all around me are designer shirts and well-cut suits. I’ve just looked at what engineering jobs pay there it appears that I earn similar to some of these folks or even a little more, however I don’t need to spend the money on the designer gear 🙂 That’s average engineering jobs – obviously if you’re network admin for a big bank I’m going to be way down in the salary stakes!

Mr Money Mustache’s courageous outline of the history of his increasing net worth (‘Stash) reminded me of this. When I first looked at it I thought blimey, I haven’t got anywhere near that figure (USD800,000 ≈ £500,000) so either I am outrageously necky even thinking about early retirement or life in the UK is a lot cheaper. Monevator has a pretty similar value for his baseline reference, though unlike MMM his example income replacement portfolio is pure financial assets. However, digging deeper MMM considers his house part of his net worth, and this is a total 360 degree net worth calculation. I’ve never calculated that because of my income focus, and I have a greater diversity of ‘Stash than MMM, accumulated over three times the amount of time, so I’ve never seen a large amount of it in one place. He did me a favour in getting me to tot this diverse mess up. It’s probably at least in the same ballpark, despite the fact that I personally have never seen a single financial transaction or single asset purchase for more than £60,000 in my life. Ever.

It’s the Spending, not the Earning

More interesting, however, is how he got there. I built my net worth largely on my own (I was single for longer than most people) so he had the edge with having two people bringing in money to the household, and MMM earned significantly more than I have ever done, so he got there in 10 years whereas I have been working for nearly 30.

However, it wasn’t that MMM’s household income was higher than mine. It was that they saved a far higher proportion of their income than I did prior to 2009, and invested it. The so called magic of compound interest hasn’t made a large difference to his wealth, this is pure saving. Apart from the value of my pension, which presumably the Trustees invest and use compounding, I don’t think much of mine is due to compounding either, indeed unlike many I don’t rate compounding as a way to make things easier over a working life, Yes, pension contributions you make in your twenties do appreciate numerically, however they better had do, because inflation means the value of £1 then will be a lot more than the value of £1 when you retire. The differential once inflation is taken out is not huge.

Compound interest ain’t as magical as they say

I experimented with the Motley Fool’s compound interest calculator. Say I invest £1 a month for my working life of 30 years. Without inflation I would have 30*12=£360 at the end of it.

Now if I was in an inflationary environment and scaled my annual savings and got interest to match inflation in real terms I’d still have the equivalent of £360. So if I’d started in 1980 and opened my pot in 2010 I would have £1200 in there, but it would have been worth the same as the £360 in 1980.

Let’s say I’m a savvy investor and get a return of 3% above inflation, I’d be sitting on a pot worth £580 in 1980 pounds. It’s a 61% increase, so worthwhile, but not a total game changer.

money is drawn to money so if you have money it’s easier to save

I started my savings from a standing start in 2009, after three years I have savings of twice my gross salary. The heavy lifting here is done the same way as MMM – spending less than I earn, aided by some investment appreciation, some dividend income and a lot of stopping the Government thieving half of it in tax. It really is remarkable how much you can reduce taxation if you don’t need to spend most of your income…

Unlike MMM, my investment income is pretty poor at the moment, as my ISA is small, and tax-free pension savings are in accumulation mode. Young early retirees need to make their investments pay a decent income quickly, there is the same pattern in MMM and ERE. Mine are operating in the traditional form  of being in accumulation mode right up until they are drawn.

I have the challenge of trying to bring the post-tax investment income up to service my basic living costs between retiring and drawing my pension, a gap of about three years. Because it’s a near-term requirement unsuited to the ravages of the stock market, I have three years running costs as cash, which is galling because this is about half of my post-tax savings. Cash earns no real income, whereas at least my ISA is achieving its nominal 5% dividend  return. I could double that dividend return by committing the cash to it, but the maths doesn’t work out. A 5% dividend return means you need a stake of 20 times the desired income, and I haven’t got that yet.

One way to improve my situation would be to reduce my outgoings. The poster child for how to do this in the UK would have to be Macs, who has managed to get his running costs down to £5k p.a. which is a damn sight less than mine. Interestingly enough, much of the difference would be reduced if I didn’t run a car. On the downside neither estimation accounts for the ~1% of house value you should allocate for maintenace and repairs. As owner occupiers we are probably way less hard on the fixtures and fittings, and yet over the last 5 years I have spent over 1% of the house value on repairs and improvements.

My career profile was much more conventional in that my earnings peak was much, much later in my working career, about 20 years in. However, the common takeaway with MMM and ERE is that you only build up enough capital to get a decent income if you spend much less than you earn – and that much less needs to be about 50% if you want to do something very different to the normal pattern of working.

For me the savings pattern isn’t anywhere  near as different from the norm as those guys. It’s much closer to Salis Grano, who sums it up in this post titled Where Did It All Go Right. I am insanely jealous of course, as I haven’t got there yet. Unlike MMM who retired after 10 years, thus shaving 20-30 years off his working life, my aim is taking a more modest 10-12 years off my working life, I have already been working three times as long as he has.

It is one of those ironies of life that saving money is easier once you have money, when of course the people that really need to save money are those that are in debt. It’s how capitalism keeps most of us debt slaves, particularly those who acquire debt young and warm to the lifestyle.


Where are the leaders who will save Democracy in Europe

Across Europe we are seeing democracy suspended for technocracy. Papandreou in Greece, Berlusconi in Italy, where will the next democratic leader be ejected for the sake of holding the party line on the euro?

For several decades in the West we have become soft and failed to adapt our democracies to modern conditions of a more interdependent world. At the moment we seem to favour suspending elected leaders for imposed ones who can press through ‘reforms’. In the immortal words of Herman van Rompuy

Rompuy to Italians: You need reforms, not elections. Italians to Rompuy: Remind me again, when did we vote you in?

when speaking in Florence, “the country needs reforms, not elections

Now Herman Van Rompuy may well be right, but he’s right in the wrong way, because it’s not his call. It is the citizens of Italy to make that call, thanks very much. In the end if the Italians want to make a right cod’s of their economy, that’s their prerogative. Obviously if they want to borrow other people’s money then there are limits to what they can do, but the decision should always rest with the Italians. They could use reform. They could do with not electing septuagenerian bunga-bunga hosts again and again, but in the end if that’s really what they want to do then so be it.

As for Rompuy, he begs the question Josef Stalin asked about the Pope’s power base. “Where are his divisions?”

Clearly something has gone wrong with democracy in the modern world, and it’s not just limited to Europe. Politicians have discovered they can get voted in more easily by promising more than they can deliver with the resources they can tax. So they simply bung this on the national credit card and hope they’re in the right place when the music stops. Maybe we need to work out a new form of democracy, where a second chamber is voted in for ten year terms, but half are up for re-election every five years. This could be tasked with balancing the long term economic future over the multi-parliament term, things like pensions and energy/pollution/climate change that require thinking over decades rather than years, and controlling say 25% of the tax take. Plus a British version of the Stability and Growth Pact to go into the Constitution that we don’t have. The European SGP isn’t worth the steam off a cup of tea because of the aforementioned lack of divisions to enforce it, but on a national scale it would work well – or highlight that something irregular was going on.

One way or another, we need to improve the way democracy interacts with the long and the short term, so we don’t overburden our grandchildren with the debts to pay for jam today. Outsourcing the problem to unelected technocrats who can dictate solutions without having to face the poor saps that will be working to resource the solutions is a very bad alternative.

As a callow youth I voted for Britain’s continued membership of the EEC in 1975. Faced with the same information I’d do the same again – the freedom of movement and trade I am all for. However, I am not for the United States of Europe. Nor, it seems, are many of those even in the Eurozone. There isn’t enough common cause between the Germans and the Greeks for the Germans to want to sponsor the difference in lifestyle. I heard enough of my grandmother in Germany grousing about the extra taxes levied on her pension to sponsor the unification of  West and East Germany (she was from West Germany). They just ain’t going to do it for the Italians, and Spanish, and the Portuguese. Yes, Germany has benefited from having Southern Europe as ballast to keep the Euro down a little. And the Germans probably did loan a lot of what Southern Europe owe, and they aren’t going to be getting that back. That’s capitalism for you.

It wasn’t apparent at the time to many people, but harnessing the disparate cultures and people of Europe to a single currency was going to cause stresses where they didn’t match up with each other. They got away with it for 10 years, but the tide went out with the credit crunch and we could see who was caught short. It’s time to accept the mistake, and then back off. Carefully. We don’t have to then throw our toys out of the pram and dismantle the Common Market, as some of the EU technocrats opine, let’s hear it once again from Herman van Rompuy:

Let us be clear: we will not “prune” the Eurozone to a more selective club. That would be contrary to the letter and the spirit of the European political pact, as embodied in the Treaties. If the Eurozone’s integrity would not be preserved, one should not take the continued functioning of the Internal Market for granted.

Herman, old boy, sometimes there are no good options. I would rather be free and skint than enslaved and wealthy. If we need to suspend the working of the Internal Market while the eurozone sorts itself out, then so be it. Far better to do that, than to suspend the working of democracy while the technocrats ‘fix’ the economy. For the record, the EU transcript of the text of Herman’s speech is here. There is a lot of good stuff, and I came a way with a greater respect for van Rompuy’s intelligence. However, leading people is not all about intelligence. You have to take people with you, and here the EU leadership seem desperately out of their depth.

Finally, lest we forget what happens when we prize efficiency over freedom, the last time there was humongous economic turmoil in Europe efficiency was brought to bear on the subject with extreme prejudice by one of the most capable of European nations. The trains did run on time but a lot of people died, and this sort of thing happened

German troops march through the Arc de Triomphe, Paris, August 10th, 1940

More recently, Germany has also had experience of a tranferunion, when West Germany raised taxes to buy out the East German mark at par, vastly overpaying by about three to one. The cost of unification caused some grumbling in West German taxpayers who paid for it, and at least there was common cause, family and historic ties and a common language. Inflating the money supply or continual transfer of money to Club Med may well fix the probelms of the Euro, but unique among European nations, Germany had experienced the pain of both courses of action before.

So before the technocrats of Europe badger Angela Merkel to pay up or to permit the ECB to become the lender of last resort that the eurozone so desperately needs, they should remind themselves how it was that the Germans became so good at running an economy, indeed pulling themselves out from the ashes of WW2, with a big hat-tip to the statesmanship of the Marshall Plan.

It is because they experienced what happens when the government borrows on the never never and prints money to make up the difference. I heard my great-grandmother describe what life was like then, and this scar runs deep within the German psyche, that you just don’t print money because no good will come of it.

There are some kinds of knowledge that are won at great cost through experience. This is why the Germans, who are the only nation in the Eurozone that can credibly resource a stop of the bloodletting, is unlikely to release the dead hand of historical experience and go ‘hell, yeah’ to the technocrats advocating a transferunion or ECB unlimited bond purchases.

The technocrats should be careful what they wish for. It is easy for technocratically designed utopias to become dystopias when the simplistic technocratic assumptions about people get smashed on the rocks of human nature in its irrational form.

We need leadership that can acknowledge past mistakes and seek an orderly solution to the strains ripping the eurozone apart. Yesterday, on the 11th hour of the eleventh month, we held a two minutes’ silence in the memory of the Fallen on all sides. I hope that we do not hear the sound of gunfire in Europe in my lifetime, all because some jumped-up unelected twits couldn’t let go of their idea of the United States of Europe, and force the Germans to impose Germanic austerity on Club Med, which will cause horrific social discord and people will fall for the siren song of ‘strong leadership’. Let’s just all accept we cocked up here, roll back to the last known good state and take things slowly forward at their own pace.

The flame of self-determination and democracy is flickering in the wind of technocratic expedience. It needs some hands put around it and some TLC. We’re going to be a lot poorer in future, but we will still have a very good quality of life. Let’s try and make sure we are still free to determine our future, even screw it up royally like the Greeks, rather than be enslaved to economic expediency.

Why the Consensus method of decision-making doesn’t work

There’s a time-honoured method of getting a group to make decisions, it’s intuitive and widespread in clubs and societies. Faced with a decision to use collective resources to achieve X or to pass the opportunity, the chairman calls for a show of hands.

The aim is to discover the view of the majority, and then get on and do it.

Now occasionaly an ermine squeezes his sinuous body into some groupings that lean politically in a different way from his general viewpoints. Most notably the transition movement where I was introduced to the Consensus Decision Making process. It’s a bizarre practice, which appears to be popular in left-of-centre circles. Apparently it originated in the feminist and environmental movements, and as for that I am going to STFU because there be dragons of great passion and strongly held views, and that’s just the environmentalists…

Consensus is the method used by the Occupy Wall Street crowd, that spawned the St Paul’s anti-capitalist protest. Hat tip to the Archdruid Report which led me to this discussion of the fundamental ineffectiveness of Consensus as a way of self-governance or even deciding things.

I was introduced to the technique by a chap who I’ve got the utmost respect for, and it all seemed a good way to prevent minority points of view being railroaded out of the process. Although I’m generally a believer in benign dictatorship and effectiveness being inversely proportional to the number of decision makers, I was prepared to give it a go.

I experienced it as a long winded method of getting a group of people to do nothing at all for a while, all the time pretending to be refining their way to a decision. It was like the worst office meeting, in that dissent was bludgeoned out of the way because dissenters held up progress, which eats into drinking time, and let’s face it, you need a drink after a Consensus meeting. In the end I came to the conclusion that if a grouping used Consensus decision making, I would go and do something more useful, like herding neighbourhood cats or bailing out the North Sea with a teacup.

Once I managed to get such a group to take a decision by urging a show of hands, which happened before people realised that they were meant to be using the consensus method. A load of beer helped dull their awareness of such wrong thinking being snuck into the meeting.

Consensus seems to be a classic case of be careful what you wish for. It stops the railroading of the minority by the majority, by simply letting the minority filibuster the majority view into the ground. As the Archdruid opined, perhaps that’s why groupings that use consensus “have accomplished so little in the decades since that model came into fashion.”

Talking of effectiveness, the St Paul’s crowd puzzle the heck out of me. If you want to picket capitalism, it seems curious to pick on God rather than Mammon. If you want banks in London, the go east, young man, to the urban canyons of Canary Wharf. To be effective, you must take the battle to the enemy…

Canary Wharf Tube Station in London's nouveau-riche financial district



past the point of no return

The original wartime meaning of the point of no return is easy enough to work out. For an aircraft it is when slightly more than half the fuel has been used – in a single-hop journey the craft is then committed to carry on to its destination, for insufficient fuel reserves remain to return to the point of origin.

It isn’t so easy to determine the point of no return for a complex feedback system like the economy. In the Greek and Euro debacle I feel that time has come. Even in the UK economy, it feels like the rollercoaster has crested the rise, and we are staring at an uncontrolled descent. So much effort has been thrown at the Greek problem, and yet still more is required. It seem that the effort to fight the issues have failed – for the Greeks they could never work, and for the rest of the Eurozone the price seems too high.

Some ugly truths are becoming apparent, too. The people of a nation state do not appear to be in control of their own destiny. Yes, they were greedy, their politicians lied on entry to the Eurozone and they spent money that wasn’t theirs to spend.

Somewhere along the line, Greeks seem to have unwittingly surrendered their right to call which of the bad options facing them they wish to take up. The FT offers up a pretty grim scenario for what an uncontrolled exit would look like.

I’m not sure they’ve still got the option. Sitting here in the good ship Europe it looks like every economic indicator is heading towards the red, as the second dip comes our way. If it feels like this in the UK outside the Eurozone, then in Italy or France it must feel pretty dangerous, and as for Greece, looks like they no longer have any control of where they are going anyway. Outside forces even seem to be ready to ping the odious Silvio Bunga Bunga Berlusconi from Italy.

Throughout Europe there seems to be a desperate lack of leadership and direction. Each mini-crisis is fought as if it were an isolated incident. It isn’t. For ten years the West has been living way beyond its means, and in Europe the Eurozone was designed without a lender of last resort. Or perhaps it was always assumed that the lender of last resort was Germany,  which seems the only economy able to create real wealth, assisted by the ballast of the rest of Europe to drag the currency down.

Unlike the aircraft, the point of no return in economic affairs seems hard to foresee, and is only readily identifiable with hindsight. Nevertheless, I’ll stick my neck out and say I figure we will pass it by Christmas. The next year will be a hazardous time, though shot through with opportunities.

There isn’t enough time now to forestall the flameout of the financial system – my financial net worth could be destroyed in the maelstrom to come.  I’ve left it too late to try and convert my net worth into non-financial investments, and these are illiquid and often immobile to boot. I’m not even that sure how well the canonical hedge against financial collapse, gold would hold up. You need something that has value in the immediate aftermath of a financial collapse, not something that has value five years down the line, when there is some semblance of an economy that can value gold, and, more to the point, offer you something of value in exchange for it.

So the only logical thing is to play the second dip as if the financial system will recover. I’me already chuffed and having picked up Tesco in the August crapshoot for less than Warren Buffett paid for his share.

It is at points of great change that opportunities arise. If I am going to play on the principle that the financial system will recover, then I expect that the second dip will hold opportunities…