Why Budgets are Dangerous

In the last week or so, the International Monetary Fund released another of its major economic outlook statements. Business and financial media all over the world earnestly pored over the numbers as if the future had been foretold by some all-knowing wizard. The strong sense was that, with this new-found certainty, decisions could finally be made.

Which would all be well and good except for one thing: the IMF is a false prophet.

Even a cursory review of the IMF’s fortune-telling performance reveals that their predications are, at best, a reasonable guess. IMF forecasts typically come close to the mark during relatively stable periods. But they nearly always fail to predict major economic adjustments which is, of course, when they would be most useful.

Tweeting out around the World: discovering Twitter

What’s a bandwagon if not for jumping on? So it is that I’ve found myself quite regularly tweeting, retweeting and even twooshing over the last few weeks. So it is that I find myself joining nearly every magazine and newspaper in the Western world and writing about the newest kid on the internet block: Twitter.

What’s the twhype all about?

When Disaster Strikes Close to Home

We are all used to disasters. Modern communications bring images of disaster from all over the world, directly to our living rooms, as they happen. You would think this relentless exposure to the cruelty of both man and nature would prepare us for when disaster strikes close to home. It doesn’t.

Saturday, February 7, 2009 was a hot day in Victoria. Unbelievably hot. As they had the week before, temperatures ramped up to levels three and four degrees higher than had been recorded in any previous year. That’s the meteorological equivalent of taking a full second off the 100m sprint record.

These temperatures combined with hellish winds, dry air and an already baked countryside to create the most bushfire conducive circumstances in living memory.

Inspiration from a Clown and a President

The night before Barack Obama’s inauguration we watched the 1998 movie ‘Patch Adams‘. It turns out that Patch has a bit in common with Mr Obama. Both can provide us with inspiration for dealing with challenging times and for getting more life out of life.

Patch Adams is an American doctor who believes, literally, that laughter is the best medicine. He was made famous by the aforementioned film which was inspired by his life. You may remember it starred Robin Williams. Patch eschews what he sees as the over-seriousness and false hierarchy dominating western medical care. He also likes acting the clown.

Barack Obama is President of the United States. (I know that you know that, but that’s the first chance I’ve had to write it as a statement of fact rather than hope). Obama has a great respect for the traditions which keep history alive. He has little respect for conventions which kill off innovation and original thought.

Why Bernard Madoff is a name you should have in mind over the New Year

A good friend comes to see you. He’s setting up a securities company and is looking for investors. This friend has impeccable credentials: former chair of a major stock exchange, senior and well respected member of the financial world. Simple decision? Of course. You jump at the chance to invest and you spread the word to all your friends.

As it turns out, your investment with this friend is a winner. The fund starts providing you with consistently solid returns; it’s astonishing how clever this bloke is. The fund’s reputation grows. Soon everybody who’s anybody wants in – even more so when admission to the fund is restricted by invitation only.

Things continue in this comfortable vein for some time. While the market is strong, the performance of this fund is greenbacks on the cake. Whenever the market starts to head south – and this is the best bit – the fund continues to grow at over 10%! It seems too good to be true.

And it is.

Learning about Web 2.0

I’m playing with a new toy (ping.fm) which allows posting to multiple networking sites at once. This is on the back of playing with LinkedIn, Facebook and Twitter. Not sure what benefits these things might bring to management, but when I work it out I’ll be sure to let you know!

Barack’s Busy Week

So how was your week? Mine? Busy. Started out casually enough with a game of basketball, dropping the kids at school, a trip to the gym. I did have to do that speech to a couple of hundred thousand cheering people but hey, I’ve been doing those for a couple of years now – no big deal.

Things hotted up after that though. The ‘to do’ list quickly got very long. Apart from finding a puppy for the girls and organising a basketball ring for the White House, you wouldn’t believe how much work there is to do to get ready for the top job.

How to Survive Complexity

Seven years ago, in the first of almost 100 articles for this newsletter, I wrote of the modern complexities surrounding the once simple task of packing an overnight bag for a business trip. I noted that I often spend “more time making sure I have a full set of batteries and power cords than I do making sure I have enough clothes”.

This, I suggested, was an example of a broader complexity we are faced with in our lives, particularly our working lives. “Modern evolution almost requires complexity as a matter of course.” Feedback from many of you over the years has reinforced that I wasn’t alone with these thoughts.

Has anything changed? That depends on your point of view.

Simplicity’s Magic Word

The red rash around the top of the collar gives it away. The urgent tone of his voice only confirms Kate’s hunch. Mark is angry.

‘You said “no” to that urgent order I sent through,’ says Mark sharply.

‘That’s right. We can’t do it in the time you want.’ Kate surprises herself with her outward calmness.

‘But we … you … we … never say “no”. We’re all about service, remember. Service. The customer as number one and all that. Isn’t that what we talked about only last weekend at the retreat?’

Home Truths of a Financial Collapse

 

Spare me the dramatics. Spare me the countless column-inches of ‘how did it happen?’ analysis. The most surprising aspect of the recent financial market crisis has been the surprise itself. It was always going to happen. Now that it has, perhaps we can remind ourselves of a few home-truths.

At its core, the current economic situation is no different from any previous collapse. It boils down to too many financial institutions lending too much money to too many people in excessively risky situations. 

It’s been an orgy of lending. Not only have banks been injudiciously lending to house-buyers. Financiers have been injudiciously lending to the banks so that they could lend more to house-buyers.