What Colour is your Parachute

I read my first copy of Richard Bolles’ seminal job-hunting tome What Color is your Parachute in the late 1990s. The big cheeses at The Firm had decided to move away from research, and out of electronics towards development and software. I was wondering if I should stay with my first love, which was electronics design, or stay with the Firm.1

Parachute is a great resource and a good read. At the heart its message is as old as the Delphic Oracle itself – know thyself. Around that message, however, is a good periphery of tactics and perspective. There is only one problem. Parachute is a weapon of contemplative reflection. You can’t use it under fire, IMO, and when do most people turn their attention to looking for a job?

When they either need a job right now, or are fearful of losing the one they have already.

I’m not looking for a job, despite Monevator exhorting the early retiree to get their sorry ass back to the workplace for a day a week. Although Britain is a post-Christian country, the feeling that the devil makes work for idle hands seems to run deeply through the personal finance community. I’d fingered Calvin for the problem, but it seems the ‘work and suffering is good for you’ meme runs deeper than him

Here in the West we have a lineage of puritanical belief systems that still leave their mark, and all forms of Christianity teach that suffering brings us closer to God.

Niall Ferguson made the case a few years ago that this Protestant work ethic is the reason that the West is cock of the rock, his crystal ball didn’t show that the fire was burning out rapidly. Sic transit gloria mundi.

Read widely – library ebooks don’t have late fees

The Ermine reads widely, particularly as the library lets you borrow ebooks for free, and a little munging with Calibre gets that onto a Kindle which makes it easier to read in the park, or a particularly favourite little beauty spot near me with a swing seat and a glorious view. So when I saw a copy of WCIYP 2018 I thought I might take a look at what’s changed over 20 years

Billed as a practical manual for job-hunters and career-changers, it is an interesting read. It has been nearly thirty years since I last applied for a job in the open market2, and getting on for eight since I applied for an internal job, so much has changed. The first part of the book is about the conventional approach, and why this doesn’t work. This is the method the DWP push the unemployed into – registering with Monster jobs and scattercasting CVs3. I’ve only actually ever once had a CV work, and this was at the very beginning of my career, and even that was responding to a newspaper small ad which invited applications with a CV.

The problem with resumés and CVs is that they only work when employers are finding it tough to fill jobs. Continue reading “What Colour is your Parachute”

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BofE’s Ben Broadbent inserts hoof in gob, message gets tossed in can

Poor old Ben Broadbent, second in command to the suave Canadian fellow Mark Carney at the Bank of England. Mark’s a chap who can fall out of a boat without making waves, unlike his deputy.  In the hoopla about Ben’s  perhaps unwise choice of words – did you know climacteric1 was a thing? his message got lost. but it’s pretty straight between the eyes. In an article for the Torygraph in the guise of Edgar Allen Poe’s Raven, the harbinger of doom says

compared the current slowdown in growth and wages to a lull at the end of the 19th century, when the height of the steam era was over but the age of electricity was yet to begin.

Today’s economy could be experiencing a similar trough as it passes the boom of the digital era and awaits the next big breakthrough, possibly with artificial intelligence.

Ben Broadbent to British economy – you’re over the hill, every which way is down from here for at least a generation

Oy vey. And among other things it’s good to know that the ermine is doing his bit2 for this incoming doom:

something similar happened in the late Victorian era. Towards the end of the 19th century, British productivity “slowed pretty much to a halt” after peaking, as it entered what he labelled a “climacteric” period.

The word “climacteric” is, according to Mr Broadbent, a term that economists have borrowed from biology and means “you’ve passed your productive peak”. It has the same Latin roots as “climax” and means “menopausal but it applies to both genders”, he said.

Mr Broadbent added: “I once got an economist to explain the origins of the word ‘climacteric’. As soon as he started talking to all these middle-aged men – about [how] it means you’re past your peak and you’re no longer so potent – they all said: ‘We understand’.”

Hehe. I understand that climacteric bit, after all I am no longer a productive member of society. For those lucky enough to have the choice, it comes from the age-old arc of a human life, poetically summed up by Carl Jung thusly: Continue reading “BofE’s Ben Broadbent inserts hoof in gob, message gets tossed in can”

Retired accountant fails to understand interest only mortgage, loses house

It must have been so simple when he was a nipper. You buy a house with a mortgage, and you got to pay back a shedload of interest and a teensy bit of the capital. 25 long years later and this happens

how a traditional mortgage builds equity

as the dynamic balance between interest and capital repaid shifts in your favour. The downside, of course, is that you have to pay off the capital. You pay roughly twice as much1 for your house if you buy it with a mortgage than with cash, due to paying interest for 25 years. Which is why some bright spark dreamed up the interest-only mortage.

Although we now think of them as ways to enable the BTL brigade to shaft everyone younger than themselves, the IO mortgage was originally dreamed up to make houses more affordable by halving the mortgage payments. Easy peasy. What actually happened for a while was house prices went up2, because every time you make the existing price more affordable the price adjusts so it becomes only-just-about-affordable, because that’s where premium scarce goods reach equilibrium in a market economy. It’s only the punters that can’t afford the prices and fall out of the market that puts a brake on house prices, but UK governments have never acted on this because most voters want high house prices. Governments will change that when the increasing age people buy their first property means there are as many non homeowners as there are homeowners of voting age.

Enter stage left, an accountant, age 77, mithering about his IO mortgage being called in

who didn’t realise you had a pay off an interest-only mortgage in this lifetime, rather than the next. Len, this post is for you. There’s pathos in this story on so many levels, I mean, FFS, this dude worked as an accountant for a living. It’s fair enough for the interest-only mortgage to catch out young whippersnappers like Joe and Josephine in the hands of Mr big Bad Wolf, but grizzled greybeards of 77 who have only just wised up to the fact that they have aught to pay off the capital have no excuse. These guys had the temerity to complain to the Financial Ombudsman and then when they got the finger from the FOS because of the pickle they got themselves into through overspending in retirement, bleat to their local MP. The MP spins this as a tale of dreadful ageism by Santander. No, they’d just like to get their fricking money back before you die. I’ve done this story too many times before, WTF is it with the British and housing?

I know it’s impolite to mention the Grim reaper but it’s a fact that every 24 hours you live you get a day closer to death. I am nearly three decades closer to death than when I took out that mortgage, which is why I paid the bugger down, and that’s even without the benefit of a life of accounting to see the problem rushing up to meet me. The MP puts this spin on it

Lloyd called on Santander to either increase its age limit for mortgage borrowers or abolish it, and said: “Without such a move, Mr and Mrs  Fitzgerald will lose their home. Is that really what the bank wants to see happen? I will also be raising this vital issue in parliament. I am sure there are tens of thousands of other families potentially facing the same, desperate situation in the coming years, which is unacceptable.”

No. It’s a situation that has been developing over decades, and they can’t say they weren’t warned. The Fitzgeralds chose to stick their heads firmly in the sand, and that’s why they are in the shit. It also shows the folly of another innovation in mortgage finance, the short-term fix. These guys remortgaged in 2007 for 8 years. It’s fair enough, when the 8 years are up, you need to ask again if you can stay in that house if you don’t have the money to redeem it.

You have the option to borrow from someone else I guess, but nearing 80 you just aren’t a good prospect, because you have zero human capital left. If you financial capital isn’t enough to keep you in your house, then you don’t get to stay in that house, and you can’t earn any more financial capital. You are stuffed. The moral of the story is pay your bloody mortgage off in your early retirement, or be prepared to move or rent.

This is not a sob story of somebody who was taken out by events beyond their control. This was wilful overspending on a big scale for decades. I could have had many fine holidays with the money I used to pay down my mortgage. The fact this guy plied his trade as an accountant takes the biscuit. Continue reading “Retired accountant fails to understand interest only mortgage, loses house”

The Global Auction – why learning isn’t earning any more in the West

There have been some interesting studies of work of late, and I took a read of some of these because the general picture I am getting is that the world of work has been steadily getting more and more horrible since I quit the workforce in 2012. A gem of a book that explains a lot of what is happening to work and what happened to my job is this book, which I discovered while web-ratholing via George Monbiot’s recent column. I was always going to be a sucker for his lede

It’s untenable to let salaried work define us.

although perhaps not so much for his line on volunteering 😉

The book is called The Global Auction: the broken promises of education, jobs and incomes, and as I started reading it I immediately thought of a couple I am vaguely acquainted with who have two children. They’re not rich enough to support their desired lifestyle and send both children to public school, so they send just one. This puzzled me as it seems an obvious way to fund an army of therapists in the troubled adult future of the child who is deemed unworthy, but I suspect that it’s a terrible misallocation of capital even in the case of the Most Favoured Child. It’s not particularly that the Most Favoured one is particularly clever or the Most Unfavoured particularly dimwitted. They’re both probably slightly to the right of the bell curve, for all I know they may well be sharper than I am, but the problem is in the conventional assumptions of their parents, that learning is earning.

The prognosis in the book for Most Favoured Child1 is horrific –

We believe that everyone has a right to know that the opportunity bargain based on better education, better jobs, and better incomes can no longer deliver the American Dream.

Continue reading “The Global Auction – why learning isn’t earning any more in the West”

Taking back control

How the holy heck did we get from this

to this

There was once upon a time when Britain had a reputation for diplomacy and pragmatism, but I guess that died with the generation before the boomers who are in charge of things now. This seems like a slow surrender, a bizarre interpretation of Taking Back Control. While I didn’t agree with Brexiters, I could see there were values  there – but oh how easily they are tossed aside. The FT has a point that Brexit is a cargo cult for gentlemen of a certain age.

Hardly any of today’s Tories actually remember Britain’s golden age of ruling India and winning the second world war. Even the party’s ageing members are merely the children of the Dunkirk generation. Economically, they have been the luckiest cohort in British history. But they and many other Tory MPs feel the shame of late birth. They disdain the UK’s tame, vegetarian, low-stakes, Brussels-based, post-imperial incarnation, which in 70 years offered nothing more glorious than the Falklands war. Now they have their own heroic project: Brexit.

A collective incompetence seems to have afflicted  the British body politic. Usually before going somewhere it pays to work out what the preferred destination is, whereas at the moment we are stuck with an ‘anywhere but here’ narrative. The parallels are more with the Psychology of Military Incompetence

arrogant underestimation of the enemy, the inability to learn from experience, resistance to new technologies or new tactics, and an aversion to reconnaissance and intelligence.

Although there’s much to be said for the drunk’s adage that to go there you wouldn’t start from here, it’s possible to envisage a successful Brexit, either in terms of the economy and some sovereignty or in terms of sovereignty and repelling immigration. Sadly at the moment we seem to be headed for a general clusterfuck that will cheer nobody at all. Drafting a view in government of what a successful Brexit looks like would be a damn good start. At the moment I am reminded of Chuck Colson’s poster

If you’ve got them by the balls, their hearts and minds will follow

and at the moment the sack-holder isn’t anywhere near London by the looks of it. Get a grip and get a clue, guys.

Investing for Brexit

The Ermine has two retirement resources. One is my DB pension, which is easily enough to live on at the moment – it is deferred for only a couple more years, because the Ermine is grizzled of fur and will reach normal retirement age for most of that pension accrual, some time after Brexit, sadly. But it’s denominated in pounds, and there’s an inflation cap on it. Neither of these had been a particular concern until June 2016.

The other is my stock market holdings, which are in two ISAs for platform diversification. I hold equities and ETFs with TD Direct, which by a quirk of fate don’t incur platform fees because TD make its money on the buy and sell commission. The ermine is not a source of rich pickings here, as my aim is to never sell in the case of the HYP or a world index ETF. Sadly TD Direct have been bought by iii, and I fell out with them a while ago for stupidly hiking fees in an attempt to make us all churn our portfolios. That good fees fortune may not stand.

I also hold funds with Charles Stanley, or rather a single fund, the excitingly named B2Q6HW6, which tracks the FTSE World (ex UK) Index. The original aim of this was to lean against the home bias of my HYP.

Brexit changes the risk balance

The classic view is a DB pension is steady as she goes, as close to gold as you can get, whereas equities are an exciting but unreliable floozy on the side. Brexit changes that because it is likely to hammer the value of the DB pension in real terms by devaluing the pound. It’s a massive risk to the UK. The rest of the world will probably tootle along just fine. Now it’s entirely possible that the Brexiteers are right and nothing of note will happen, or having flung off the yoke of the EU we will do well. Trouble is, I am very heavily exposed to the UK – the ISA is worth only about half the notional value of the DB pension, so even if it was all in foreign assets I’m more than half exposed to the UK. And what I’ve experienced so far of Brexit is inflation, and we ain’t even left yet. Now on a contrarian basis there’s an argument for buying the UK, but I felt a bit bad writing that last time, and @hosimpson and @Neverland  weren’t sold. No, I can’t really convince myself either. There might be a case to do that if I weren’t in the eye of the storm – a Frenchman could consider a small contrarian punt on the UK, but the trouble is if the  UK goes titsup so does my main pension. I don’t need any increase in UK exposure.

There are some things I could do with the pension – I could draw it a couple of years early, shovel those years into my ISA. But then I get to pay tax on my SIPP that I haven’t cleared out yet. I could take a pension commencement lump sum, which commutes some of it to cash, and invest that, but the rate isn’t terrific.

Doing nothing is iffy, I am sitting on half a house worth of cash much of it borrowed from my ISA and a Brexit steamroller coming to pummel the value of that into the ground.

The Ermine takes a sneak peek behind enemy lines

Most of what I hear of Brexit boosters comes from the Brextremist wing of the Tory party, for the simple reason that they seem to be doing most of the running these days. I obviously hear the endless barrage of whiny Remoaning, to which I am adding here, but it’s always good to hear other voices. I thought I’d look wider, and in amidst a lot of Googling, I came across these guysI confess that I quite like the cut of their jib on a lot of things, since it appears that I share some of the sovereignty issues1, though I am nowhere near as worked up about them as they are, and weight the economic hit much greater which explains why I am still a pusillanimous Remoaner.  I also kinda like North’s descripton of blogging as a way to learn 😉

In the search I came across all sorts fo flotsam and jetsam, I was tickled by this piece by an anti-fangirl of Jacob Rees-Mogg, as a cheerful interlude before we get on to what Peter North thinks Brexit will mean, as led on by the no deal wingnuts. In some ways people who voted Brexit seem almost more pissed off by the mess May and her crew is making than Remainers. At least the latter know they lost the fight.

The phoenix must burn to emerge

Bloody hell, and I thought it would be bad, and North is still a fan of the process.

all JIT export manufacturing will fold inside a year… Across the board we will see prices rising… Britain is about to become a much more expensive pace to live. It will cause a spike in crime…  lot of engineering jobs to be axed since a lot of them are dependent on defence spending. It will kill off a number of parasitic resourcing firms and public sector suppliers. it will wipe out the cosseted lower middle class and remind them that they are just as dispensable as the rest of us. 

major rationalisation of the NHS and what functions it will perform. It will be more of a skeleton service than ever… a lot of zombie projects will be culled and the things that survive on very slender justifications will fall. We can also expect banks to pull the plug in under-performing businesses. Unemployment will be back to where it was in the 80’s…. Anyone who considers themselves “Just about managing” right now will look upon this time as carefree prosperity. There are going to be a lot of very pissed off people.

young people actually start doing surprising and reckless things again rather than […] tedious hipsters drinking energy drinks in pop-up cereal bar book shops or whatever it is they do these days. We’ll be back to the days when students had to be frugal and from their resourcefulness manage to produce interesting things and events.

A few years in and we will then have started to rebuild EU relations […] we are looking at a ten year recession. Nothing ever experienced by those under 50.

I really recommend you read the whole thing, I like his style, but I think he graduated at the Nietzschean school of dialectic, perhaps with coaching from Tim Gurner regarding da feckless yoof, who seem to have dropped some smashed avocado into his beer at some stage.

That which does not kill us, makes us stronger.

Mind you, I need to be careful what I say, I was/am part of the cosseted lower middle class and an engineer to boot, so already up against the wall in his world. He’s saying that the economic fallout from Brexit will blight a third of the amount of life I have left, statistically speaking. The bear case always sounds smarter. 2It’s poles apart from keep calm and carry on, and it’s a more dramatic story. But this narrative of woe comes from a fan of Brexit. Leave alliance has the most cogent takedown of the no-deal it’ll all be OK with WTO rules stance of the wingnuts – it’s not all about the tariffs guys. But in the end it’s for the Brexiteers to sort out what Brexit means, beyond the gnomic tautology of Brexit means Brexit.

In the time we have left, is there a brace position?

Foreign assets, basically. That FTSE World (ex UK) Index. There’s not enough time and I don’t have smarts enough to do anything better. It’s the world according to Lars  Kroijer but I get to atone for my seven years of nonchalance in not anticipating that my fellow countrymen would suddenly perform an act of economic hara-kiri with the ex-UK slant.

I did have a look to see if I could buy that in a L&G ISA to get rid of Charles Stanley’s platform fee but sadly the L&G ISA index funds list doesn’t include the L&G fund I want. Go figure.

It won’t be enough to compensate, but it may slow the fall a little bit. I will probably have to pay health insurance to make up for the fact the NHS will be eviscerated and life will be a bit more shit in many ways, but we will have taken back control. The same sort of control of the pilot taking a hammer to the autopilot and getting in a flat spin, but goddamn it, it’s his own flat spin till the crunch comes.

OTOH it may well go all swimmingly, bluebirds will be tweeting and there will be the fine sound of leather against willow on a thousand village greens in the joyful sunlit summers that will come when the foul yoke of the EU superstate is thrown off.

Fair enough – so what’s the worst that will happen out of my attempt to brace for Brexit if it all goes swimmingly? I will end up with a ISA that is more or less balanced according to the advice of Monevator’s tame ex-hedge fund manager, albeit oddly with the old HYP core. I guess there are worse things that could happen.

Plus I increase my risk of devaluation due to a stock market crash, since valuations are high, but then I am almost guaranteed another value of cash sort of crash with Brexit, so I’m stuck between a rock and a hard place. A market crash usually comes good in a few years, whereas Brexit looks like it will hammer the pound for a decade – and that’s according to parts of the Brexit camp, they have so little faith in the competence of Her Majesty’s Government to know their arse from their elbow. I need to pay back my ISA from the cash from the house sale, pay this year’s 20k in and get me some Brexit ballsup insurance in the form of foreign assets while the pound is still worth more than a bucket of spit.

There aren’t any good answers here. Unlike Rees-Mogg and his band of happy Brextremists I am not rich enough to come out of Brexit unscathed. I will go down with it, it’s a question of how much. I need some light relief. Let’s hear some Moggmentum from Madeleina Kay, JRM No 1 fan – not.

 


  1. I haven’t searched all the Leave Alliance, but I note they don’t really say much about immigration 
  2. It seems to be a more general case in more than investing 

workers will retire from five million jobs in the next 10 years

Government figures tell us that over the next five years people will retire from 12.5 million jobs, and there will be only 7 million young people to fill them. Somehow the authors of the report also assume that another two million jobs will be created. Oh yes, and last year our blessed fellow countrymen decided that they didn’t want Johnny Foreigners coming over ‘ere and taking our jobs. The inference seems to be that we need to get our ageing baby boomers out of retirement to go fill these jobs.

Now a cynical Ermine thinks to self firstly ‘when Hell freezes over’ and secondly – a number of things that are wrong with this scenario. It’s not just investments where past performance is not supposed to be a reliable guide to the future. I’d say there’s this problem with economic prognostications too.

Let’s take a look at what’s been happening with jobs over the last few decades, shall we?

Once upon a time, like when an Ermine first rocked up for work in the early 1980s, you could apply for a job, and you’d actually be working for the company on their payroll. That was the case whether you were a graduate engineer or if you were the toilet cleaner. Said firm would also invest in you – they would train you, which was of particular relevance if you had a generalist degree or the company worked in a technical specialism that had unusual quirks. They would also pay into your defined benefit pension – for The Firm at least this even applied to the janitors until the mid 1980s.

The something called neoliberalism showed up, and communications and IT improved significantly. A whole bunch of blowhards like Peter Drucker came along and pretty much said that pitch everybody against everyone else, let the devil take the hindmost and may the best man win.

As a result, CEO pay shot up as a multiple of the average employee’s wage, and that was after they hived off the janitors et al to supply services companies and drove wages down to the lowest levels, so the average employee is drawn from a smaller pool of higher qualified staff. That CEO ratio still shot up, not because CEOs add any more value to companies now, indeed looking at stock market returns they’re adding less than before the millennium, but because they are top dog and they can.

A quick detour through Globalisation, BPO and All That

Then in the 1990s and early 200s we had wave upon wave of business process outsourcing which sent anything you could send off to lower wage economies, this afflicted the English speaking world more than others because of a ready global pool of decent English speakers. This has very materially improved global pay and reduced global poverty in a big way, as the the right-wing nutjob Tim Worstall correctly opines. And repeats himself thusly. As do the not left-of-centre Adam Smith Institute.

It isn’t true that everyone benefits from free trade and globalisation. The net effect on all humans is vastly positive, but there are still those that lose. And that’s a political problem, not an economic one. For the people who don’t win are, largely speaking, those below median incomes in the already rich countries.

Now Tim’s probably rich enough not to give a shit, I figure TW is well over the median income in a rich country. So was (and possibly am) I, but I am far closer to the edge than him, so I am more twitchy. None of these fellows are wrong. All other things being equal, for the sum total of humanity globalisation delivers the goods in the way Bob Geldof and so-called aid just didn’t. It probably wasn’t Sir Bob’s fault – the sort of corruption and baksheesh that aid generates is remarkable, there are many problems in the world that helicoptered money just can’t fix. But even the distorted version of free market capitalism that goes now left all that do-gooding in the dust when it came to alleviating global poverty.

Globalisation also needed a population explosion because it needs growth.

There is some argument to be made that it also enabled a shocking population explosion which has made a lot of things like food, water and climate change a lot tougher to nail in future than they were when I was at school, when there were half as many people in the world. I suspect globalisation only works when there is economic growth, and to have economic growth you need growth in the number of consumers, but I am not smart enough to say that is categorically the case. At the moment the score is Oxfam-nil:Globalisation-1

Communism was also a great idea in theory. Trouble was it went against the grain of human nature. So the trouble with globalisation is that people don’t care evenly about humanity in general. They care about the humanity that is closest to them. Within rich countries we have institutions that sort of temper this instinct, but when the people who are getting the uplift are far away, then the people below median incomes in rich countries who are drifting backwards economically get really, really, pissed off. They let people know, through Brexit and Donald Trump among others. In general they want to put a spanner in the works, because nothing pisses people off more than not getting ahead while seeing other people are.

The effect of globalisation on First World Jobs

It makes lovely jobs lovely, and pretty much the rest of them shit. Q: What’s worse than a zero-hours contract job? A: A ZHC job where you get fined £250 a day if you can’t find a replacement if you’re sick. Or only £150. Welcome to the lousy jobs. I am glad that I had my career while the Iron Curtain was still down – true, we had to watch films like Threads and worry about being nuked in four minutes but at least I wasn’t competing with Vladimir and 1 billion in India, and I was working in an analogue world where the cost of replication was higher than now. That suited me very well, because while I am on the right hand side of the bell curve I am not that far to the right of it, and I am an introvert which is maladapted to the interconnected and always-on world of work now. Collaboration and teamwork – meh. You get ahead by having an edge, and you get an edge by spending time understanding what is going on IMO. Chatter on SMS and social media is for gossip, and meetings aren’t much better 😉

Back to the original premise – a deficit of 7 million jobs?

Well they’re not going to be getting old gits like me back out of retirement to go into the bear-pit of zero hours contracts, are they? The second word would the -off. Because all in all, working is increasingly a pretty shit proposal, and it’s particularly crap compared to my experience of working in the past. Fortunately, a whole different bunch of guys is telling us that Humans Need Not Apply and that the robots will be doing all these shit jobs. Hopefully this deficit of people desperate for crap jobs is going to do some good then, and people will automate the crap jobs they can’t get the retired baby boomers to fill. This will finally lift capital productivity in Britain although possibly not per-capita productivity. Pret a Manger say that 1 in 50 of their workers in British. Well, tough luck – Londoners are going to have to pay more of their bonuses for their coffee and snacks or brown-bag it, and some teenagers in London are going to get breaks they couldn’t get before, until the robots come. Or they will set up camp somewhere outside the citadel and bus in the serfs. I am not so sure I find that such a terrible thing.

There, Mr Government and your hired guns. Fixed that for you. Taking 7 million shit jobs out of the economy is A Very Good Thing in this humble Ermine’s opinion. There’s now’t wrong with encouraging those old gits to punch their cards one last time and clear off, even if there aren’t enough worker drones to fill their shoes. The balance had been swinging from Labour to Capital ever since the 1970s. There are too many crap jobs in the UK, and retirement of the Baby Boomers could be just what the workplace needs at the bottom end.