Archive for January, 2009
Where are we at
Here I am thinking that I was going to get weeks of blogging out of giving up smoking, and the whole thing turned out to be rather ho hum after the initial shock of not having any nicotine in my system worked its way through. Oh well will see where I am in a month.
The more important news is the negligible number of project management jobs on Seek. There are some 7 ads for project managers today in Sydney across both contract and perm.
Melbourne by the way is booming – well relatively. Is this a case of last one to cross the bridge turn out the light?
Now I don’t know if you young ‘uns remember the tech wreck. Well this is as bad as that. Back then capital development dried up because everyone had just bought new systems and claimed them as Y2K exemptions, which sort of screwed the market for 5 years.
Now there is no capital development because companies can not get money to put in new capital equipment and if the could, they do not need additional capacity.
This is not good folks.
January 29 2009 | Economics | No Comments »
Let’s See What Happens.
Now I am or maybe was a heavy smoker, have been for maybe thirty years. Couple of packs a day is easy if I am working on the computer or am drinking. Anyway long story short I am out of work and spending $12.00 to $20.00 per day on tobacco when I don’t have that much to spend on food doesn’t add up thank you to the governments taxes. So I do my normal thing when I am out of work and smoke roll your own tobacco. Problem is my brand isn’t conveniently available and the nearest thing to it sucks. OK stuff it, will put them down for a while.
BTW if you are expecting this to be an anti smoking tirade bugger off. I like smoking and am very likely to start again.
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January 28 2009 | Personal | No Comments »
A Sobering Thought.
When the threats of peace are greater than those of war we live in dangerous times.
The reason for my concern is that historically nations have a habit of responding to economic crisis by building tanks, guns and marching on their neighbors. The mobilization of “idle men” that I have seen goes back to at least Louis IX and the Crusades as described in Joinville’s memoirs of the early thirteenth century. I would suspect it is a strategy that traces itself to times long before that.
I am not even sure that war is the intentional goal. What we have during such times is an increase in government spend, a build up of matériel and an increase in available human resources.
During times of economic crisis unemployment is high, the private sector is not spending and governments are under extreme pressure to create work. If they don’t their opposition will. They almost have no choice.
One way they tend to do this is by increasing government purchasing of military equipment. It is one of those solutions that would be very hard to avoid. To keep the wheels of industry turning, governments have to spend large amounts of money on something. That something also can’t just be road building or welfare handouts. The spend has to be carefully managed so it doesn’t flow out of the economy, it keeps vital industries alive and it needs to be done in such a way that it has the largest impact.
Deficit Spend
Such spend needs to go in to the top of the economic food chain so that it can flow through the maximal number of industries. A single dollar spent on food goes to a farmer. A dollar spent on a fighter jet flows through a systems supplier, who in turn spends on another technology supplier, who spends on a component supplier and so on until that single dollar touches the hands of hundreds of people before it is finally spent on subsistence items.
The natural solution to this is defense spend. Not only for its broad impact, but also because it can be locked inside national borders for national security reasons. America spending trillions on a bail out that flows to China for clothes and TV sets without touching American hands does not help the American taxpayer who is paying for it.
With reference to current events it must be extremely tempting to bail out General Motors and Chrysler through the purchase of a hundred thousand trucks and cars for the Army and the Marines.
The problem comes when you have a build up of military equipment, high unemployment and international tensions, perhaps created by the military build up itself. When this occurs you have the perfect conditions for war. Not only to you have the motive, but you have the means and opportunity.
Just remember you can not go to war if you do not have the men and the guns to do so. The build up of matériel and of men is a necessary prerequisite.
The Alternative.
The scary bit is to consider the alternative. What happens if there is not massive government spend. What happens if we do not keep the wheels of our manufacturing industries turning. What happens if we have government spend and it pours out of our economies. What happens if we do not have the economic activity to generate taxes to pay for medicine, education and welfare?
In the relatively civilized times we live in an oft asked question amongst the young is “why do countries go to war?”. With the specter of wide scale unemployment, industrial and economic stagnation, governments unable to provide basic services and the polis marching in the streets, we might be about to find out the reason why civilized people take to the field.
Scaremongering perhaps. But it would not be the first time we have done this. And perhaps not the first time the polis has cheered on as the tanks roll off the production line.
The military build up preceding WWII is what ended the great depression. Hitler almost had no choice following the Treaty of Versailles other than to deficit spend. The US was dragged out of depression only when it started it’s own arms build up in response to the European and Pacific tensions.
A megalomaniac is one thing, a heavily armed megalomaniac quite another.
In fact WWII may have been caused by the build up of arms produced by the deficit spend response to the depression rather than the build up of arms being driven by the desire to have a war.
It need not be the US that initiates an arms build up. China, India as well as Russia, Europe and the UK all face slowing economies and all the social ill’s and political instability associated with a deep recession or depression.
It only takes one of them to find themselves in a position where they have no choice but to ramp up military spend or find their political opponents carried into office on the shoulders and cheers of the unemployed polis.
Worth a thought.
As a post scripts, it should be mentioned that this is not the only way to acheive the same thing. A very close alternative without the military risk was achieved by the “Space Race” in the 1960′s where a large amount of US federal funds were poured into the depressed southern states.
January 22 2009 | Economics and Opinion | No Comments »
Crackpot Or Not?
The debate over share market analysis is interesting. On one hand you have the fundamentals guys who state correctly that the market price of a companies shares will tend towards the actual value of the company determined by valuing it’s assets and earnings and that technical analysis can not predict that.
On the other hand the technical analysis guys will make buying and selling decisions based purely on some lines on some charts without any reference to what the company does.
The magic word is “tend”
There are two reasons that it works. One of which is the magic word “tend”. The share price of a company will tend towards the fair market value.
On top of the actual value there is “noise” in the market, where “noise ” means people making buy and sell decisions based on things outside a companies value and announcements. For example someone’s decision to sell one company and buy another, or pay wages, or take a holiday will put more shares on the market and lower the price.
This randomness means the share price bounces around in a random walk or gaussian spread around the price. The technical analyst will buy and sell when the price is at the extremes of that spread. Normally two standard deviations are used around the 30 day average price. They will buy when random walk is at the lowest part of its spread and sell when at the highest.
The second reason is related to the first interestingly. What happens when a group of people make the same buy and sell decision all at the same time. What does that do to your random price movement.
In the above case the mental image I have is of a blow fly bouncing around in a bottle.
The simplest one to understand is probably a trend line. A trend line is a line that is drawn through the highs or lows of a companies price. Share prices tend to bounce along trend lines. The reason for this one is in fact related to fundamental value of a company.
If you look at a lot of charts and compare the long term trend of say the DOW with the compounding interest value of money over the same time you will see that they are fairly close going back many years. Last time I calculated it I came out with about 7% to 8% over 25 years compounding.
Using the rule the fundamental guys have that company prices will tend towards the fair market value, together with the fact that all things being equal capital growth in a company should at least reflect growth in the value of money (ie NPV) you would come up with the idea that when a company hits the long term trend line it is probably a good buy. In other words the value of a company allowing for inflation is as cheap as the original investment.
By the way the latter also explains why it is a big sell signal when a trend line is broken. This means that something has reduced the value of the company out of alignment with capital growth over the time period. You don’t need to know what to know that something is wrong.
Randomness Is Broken.
Now consider that many many people have a rule written on a piece of paper that says when the share price hits the trend line buy (or sell). What will that do to the share price.
OK these rule like things are called signals and in the world of technical analysis there are many different signals. What they are is an informal agreement between participants in the market to do the same thing at the same time according to some agreed upon rule set.
And that is why they work. It would be illegal if I got a group of people to all buy at the same time or all sell at the same time. But there is nothing illegal about the use of technical signals to do the same thing.
And that folks is why the most common indicators such as 30 day moving averages, the MACD, RSI and Stochastic Oscillator are seemingly more reliable than more obtuse ones. Simply because more people use them.
You could in fact come up with some rule that has nothing to do with market value such as a numerical sequence for example the Fibonacci numbers. Provided that there were a number of participants in the market following the same rule, then your random hypothesis of the share market move around true value has been broken.
It is no different to a weighted coin.
So unfortunately for the fundamental guys, there is a grain of truth in technical analysis. In todays world with the proliferation of online trading, accessible charting packages and data you may find that the significance of millions of people all seeing a MACD cross at the same time is far more significant than ever before.
By the way the same rules as normal apply. You not only need to see the signals, you have to have the discipline to follow them….
January 22 2009 | Economics | No Comments »
Will Support Hold?
I haven’t posted a chart for a while and I am afraid there is not a lot new, but with the 4 percent fall in the Dow on the night of Obama’s inauguration and comments on the Business Spectator about the UK economy I thought I would have another look. Alan Kohler at the Business Spectator reports that the UK economy is
“a bigger, more dangerous version of Iceland. The $US4.4 trillion in foreign debts built up by British banks is twice the size of the economy, and 73 times UK’s foreign reserves”.
Looking at the below I will stick with my earlier view that 7500 is still the target. The sooner we get there and find out if we have support, or whether support will break the happier everyone will be. But until the long term 20 year trend has been tested there will all ways be uncertainty.
With earnings reports coming out lower than expected and obvious signs of a slow down such as the backlog of unsold new cars posted earlier we can expect this quarter to also be slow with companies having to lower their profit expectations. That should bring us down to the mark.
Technically until the MACD (second from bottom on the chart) crosses on the monthly view I would be extremely hesitant of making the call that a bottom has been reached. A long way to go yet methinks.
DJIA Long Term
January 21 2009 | Economics | No Comments »
Unsold New Cars
This image to my mind captures the global economic slowdown to perfection. It is a picture of unsold new cars in the UK. It is part of a photo series by the Guardian of similar images across different manufactures that clearly shows what we are in for.
As a mental exercise think about what is involved to sell each end every car in the image and what it means to the manufacturers of every component, and the suppliers who supply the materials for every component while those cars remain unsold….
Unsold New cars In The UK
January 21 2009 | Economics | No Comments »
An Adventure With Cous Cous
Have you seen that Ainsley Harriot guy’s Cous Cous packets. He is another in the Jamie Oliver vein, but black and cool. Ainsley looks like he just crawled out of a club, while Jamie looks like he just crawled out of a pub….
Anyway Ainlsey’s prepackaged Cous Cous is great stuff, quick and easy, tasted good and not bad for a couple of dollars. The trouble is a whole packet of cous cous large enough for many meals is the same price as his prepared ones. Being out of work and somewhat broke at the moment I figured bargain, I can do that and save some money as well.
So off I trot to buy a packet of Cous Cous that only ended up costing a few hundred dollars, thank you to the kitchen appliances section in the wrong store….
Like I said, absolute bargain.
Browsing the interweb you will find mentions of Roast Garlic and Mushroom Cous Cous. Being blokes we don’t need a recipe, the name sounded good so let’s see what we can do.
- Fry up about 3 or 4 medium mushrooms in butter with one shallot. By the way blokes a shallot is a small onion with an expensive name. If you can’t find them use a small onion. Also the usual caution for the back shed fixated, scrape off the last weeks toast and Vegemite from the butter before using. You won’t get away with the crunch in this one… Season the mushies with a little pepper and salt and perhaps a dash of Olive Oil.
- When the mushies are cooked add 1 clove of roasted garlic and half a cup of water.
- Bring it to the boil and add half a cup of Cous Cous. Stir the Cous Cous until the liquid disappears, take off the heat and cover for a few minutes. Finally you can stir through some butter (minus the bread crumbs..)
- Add some parsley for colour, and serve
This ended up making a soup bowl sized serve. Enough for a meal for one or sides for two.
Taste Test: Pretty damned good and only took a couple of minutes. This cous cous stuff is faster than noodles. It’s a keeper.
To Roast Garlic
To roast garlic, grab a garlic “head”. That’s the bulb like thing with all the little garlic’s stuck together on it. Cut about a centimeter of the top off with a sharp knife. You may need to rotate it a bit because of a stringy core in the middle. Squeeze off some of the loose papery skin if you like.
Tear off a square of alfoil, large enough to wrap the garlic in and sit the garlic bulb thing – which must have a name, but nothing I can think of makes sense - in the middle. Add some olive oil, pepper and salt. Scrunch the foil over the top and put it in a preheated oven at about 175 degrees C for 35 minutes. Or easier, do what this guy does.
January 18 2009 | Food | No Comments »
Why It Doesn’t Work.
Have you ever been in a IT workplace where a deadline is approaching and management come up with the idea that if you work twice as fast, the job can still be bought in on time. You probably know it won’t work, but have a real hard time explaining that fact to them.
Where they are coming from is usually a business background. Say a call center, sales or some people oriented skill area where you can reasonably ask people to make twice as many phone calls a day. Just get them to cut short the chatter and just push a little harder.
In a lot of jobs this works and they don’t understand why it doesn’t work in IT. In fact in this day and age most people in IT are not really IT people either and don’t understand the issue enough to explain to their customers.
The reason is thinking time. You can’t speed up the rate that you think. You can speed up the rate you move your arms, talk, move boxes, answer phones etc. Thinking though occurs at finite rate no matter how much of a rush you are in.
To see this, and perhaps get them to understand the problem, give them a pair of three digit numbers and ask them to multiply them together.
Now ask them to multiply another pair of three digit numbers in half the time.
To do the latter they will probably make a mistake.
It’s just like cutting code. The programmer is making thousands of mental, quite often mathematical decisions per unit time. They also are most likely totally engrossed and already running at maximum speed. Which means they are probably in what some call “coders burn”, it’s a sort of “groove” to misuse a 60′s saying where you just loose time as you convert the picture of the software in your head into code.
The trouble is you can not speed things up unless you reduce the number of decisions the coder is making, and that means bugs.
January 16 2009 | Application Development | No Comments »
Recognise This One?
A company that has gone through a sequence of takeovers and management changes with an interesting side effect that and each time it’s IT systems have gone from bad to worse.
It seems to be a common theme. A startup with great dreams and aspirations doing all the right things. A ten year plan, a target IT architecture, the establishment of corporate data models, formal methodologies and the building blocks to get them from the tactical roll outs they need to get revenue running in the door, to the type of architecture they would need long term.
The School Band
To create an analogy, our up and coming startup is like a collection of music lovers with big dreams. They wanted their own symphony orchestra. They knew they could do better than the established players. They know they have to grab a collection of musicians and get them to do some quick and dirty gigs, the odd wedding and some busking in the mall. But the coins in the hat will pay the way while they turn themselves into a worlds best in class organisation that has high levels of stability, the ability to rapidly and cheaply adapt to audience demands and the ability to cost effectively changes over the long term.
At least that was the plan over a decade ago.
The trouble is that our aspirational orchestra started to become successful. It could be seen as a competitor to the established players and became attractive to others with lots of money, but with different goals and aspirations. Eventually along came a high school band with rich parents who bought our up and coming orchestra.
The school band wanted to do things their way. They had always made their own instruments and have never had a need for formal methodology or process, after all they are an effective monopoly in their own town. It didn’t matter if they missed a note or two, the audience has to put up with it, or do without music. They couldn’t understand the need and particularly the costs associated with best in class instruments, conductors and scores. They have never needed them. So in the interest of cost cutting they impose their way of doing things on our up and coming orchestra.
They put their friends and relatives in all the best chairs, remove any dissent and go their own way.
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January 16 2009 | Economics and Infotech | No Comments »
Time to dig in guys.
I found the following in the sector breakdown of the Olivier Job Index. A picture is well worth a thousand words in this case. Not a real good time to be looking for work, but then again my timing is known to suck….
Australian IT Job Advertisements
The second image is from a useful UK website Jobstats.co.uk that takes a snapshot from UK recruitment ads and provides a whole pile of different breakdowns across the industry. This one is project management which gives a good picture of capital development taking place. Support roles and other data is also available.
UK IT Project Management Job Advertisements
Looking at the two it is interesting to see that we exceeded the Y2K peak back in 2006, but that we are heading rapidly to the levels of the tech wreck in 2002 until 2004.
Also worth thinking of is the fact that Nortel who are they guys who make DMS200, DMS300 switches have filed for bankruptcy protection. Motorola is also on the ropes.
The main reason would be the drop in capital spend. No Capital spend, no equipment orders, no projects etc etc.
January 16 2009 | Economics and Infotech | No Comments »
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