Mar 31, 2009
Figures obtained by The Daily Telegraph show an estimated 7300 new dwellings will be built in Sydney this year, the lowest rate of growth in more than 50 years and roughly a third of the homes built in 2003.
The bleak projections are in stark contrast to Melbourne, where an estimated 23,000 new dwellings will be built this year.
Across the border in Adelaide - a city boasting a population one quarter of the size of Sydney - about 7500 new homes are scheduled, while Brisbane expects 13,450 new homes to be built.
The outlook gives credence to economists' fears that Sydney rents will shoot up a further 12 per cent in 2009, on top of last year's 8 per cent rise. Such a rise will take the average rent for a three-bedroom house over $400 a week.
An independent audit of the hospital's reporting found staff began the "systematic manipulation of data" and "falsification of elective surgery waiting lists" in the late 1990s and continued until last month. It's not known who directed the practice or helped it continue.
Health Minister Daniel Andrews on Monday refused to act against the board, despite the fraudulent practice.
"If anyone has any claims that the hospital management or board was complicit, they should come forward to my office so it can be investigated and I will not hesitate to take the necessary action against those responsible," he said.
"This is absolutely unacceptable behaviour for anybody in the health service, senior or junior, small or large hospital, this is unacceptable," he said.
He announced random audits of all hospitals as one way to try to stamp out the manipulation of data.
Interviews with Royal Women's staff found they were concerned about data manipulation but were "firmly of the belief" that senior/executive management knew about it and condoned it.
The Women's chief executive Dale Fisher last week questioned whether it was simply inappropriate data entry rather than "manipulation".
Mar 27, 2009
The move is the Web search leader's latest effort to cut costs amid a tough economy and a broad slowdown in advertising spending. In January, Google laid off about 100 recruiters and it said up to 40 people would be laid off in February, when Google pulled the plug on its radio advertising effort.
"When companies grow that quickly it's almost impossible to get everything right and we certainly didn't," Google Senior Vice President of Global Sales and Business Development Omid Kordestani said in an announcement posted on Google's blog.
"In addition, we over-invested in some areas in preparation for the growth trends we were experiencing at the time," he added
Mar 26, 2009
Layton Burroughs Residents' Association in Mansfield, Nottinghamshire, is using the lights to discourage troublesome youths from hanging around in underpasses on a housing estate.
Residents found the pink light was regarded as "uncool" by some teenage boys, but also sent them fleeing in embarrassment when it highlighted their skin blemishes.
Layton Burroughs Residents' Association chairman Tony Gelsthorpe said action was needed after a string of complaints about foul-mouthed youths.
"We've had problems with underage drinking, drug dealing, anti-social behaviour and general intimidation," he told the The Daily Telegraph.
"I was a little bit dubious about the pink lights at first but it's done the trick."
Another association member, Marianne Down, said the lamps - the same kind beauticians use to check for skin abnormalities - had made a difference.
"There were large groups of young people hanging around in the underpasses drinking, which felt quite intimidating," she said.
"The groups aren't there as much and it feels safer walking through there now, particularly at night."
Other measures adopted in Britain to combat anti-social behaviour among youngsters include a so-called "mosquito" device which emits a high-pitched squeal that can be heard only by those aged under 25.
Playing music unpopular with teenagers such as Barry Manilow or classical pieces has proved successful, while some local authorities have painted areas where youths gather pink.
The new technology used by Google search engine is used to "better understand associations and concepts related to your search," Google's Ori Allon and Ken Wilder wrote in a blog post.
The new technology will soon be available in 37 languages. The feature enables the search engine to identify concepts and link terms related to queries. This technology greatly improves the list of related search terms.
For better understanding, if a user searches for "principles of physics" on Google, the search engine will return results such as "angular momentum," "special relativity," "big bang" and "quantum mechanics," according to the blog post.
"This is a new approach to query refinement because we're finding concepts and entities related to queries while you do a search, so everything is happening in real time and not [pre-assembled]," Allon said.
Mar 25, 2009
DETECTIVES are investigating an ATM skimming scam - the second reported in Victoria this week - after a spy camera was revealed by chance at a suburban shopping centre.A mobile phone attached above a Commonwealth Bank ATM screen fell to the footpath at Patterson Lakes Shopping Centre in bayside Chelsea about 9.30am (AEDT) today, police said.
The phone was set up to record video, while a skimming device had been attached to the ATM.
Yesterday, the ANZ bank reported more than $500,000 had been stolen from up to 5000 cards using a skimming device attached to an ANZ ATM for at least a month at the corner of Collins and Elizabeth streets in central Melbourne.
The high-tech devices are typically attached near the card slot in a position customers do not readily notice, with an optical mechanism to view PINs and record financial details.
Investigators suspect the scam is the work of an international syndicate from southern Europe operating in Australia.
Detective Senior Constable Brett Colley said three devices had been discovered at unnamed ATMs in King Street, adding it was likely more would be detected across Melbourne.
"I have a strong fear that there will be many others out there," Senior Constable Colley said.
Similar devices have been detected in NSW, Queensland and New Zealand, he said.
Police are looking for three men seen near the ATM in Chelsea moments before a woman tried to use it.
A man dressed in a black jacket, denim jeans and a white hat is thought to have installed the skimming device.
Two other men - one wearing a light-coloured short-sleeved shirt, the other wearing a hat and dark sunglasses - are believed to have installed the camera.
Police recovered the camera but say the offenders returned to the ATM to remove the skimming device before police could get there.
Mar 22, 2009
Asked yesterday when he expected spending by agencies to increase after the review, Tanner had no answer at the Australian Computer Society briefing he gave.
"I can't in effect answer that because we have projected a savings profile that becomes, at maximum, $190 million across the government — that's $190 million out of what will by that stage be over $6 billion," the minister responded.
Tom Stianos, chief executive of IT services and consultancy, SMS Management and Technology, which derived 15 per cent of its $128 million in revenues from Defence and federal agencies in the half year ending in 2008, told ZDNet.com.au that Canberra remained its toughest market in the country, which he didn't expect to recover until the next financial year.
"Canberra is probably the toughest market for us right now because federal government spending has been affected by the Defence and Gershon review, and so, the number of new projects is reduced," said Stianos.
Stianos said he was not hiring in Canberra, and while there were opportunities, there was no sign of large transformation deals of the past decade, the likes of which include the Australian Taxation Office's Change Program/Agenda, Centrelink's IT refresh, and the Department of Immigration and Citizenship's Systems for People program.
Cris Nicolli, CEO of UXC's Business Solutions Group, which employs around 100 staff in Canberra, told ZDNet.com.au it was hard for companies like his, one of the largest ASX-listed IT services companies in Australia, to keep throwing resources and remaining positive about the market when Canberra had gone quiet.
Mar 20, 2009
Rodney Charles Collins appeared briefly in the Melbourne Magistrates' Court this morning after detectives charged him with the pair's murder.
Hodson, a small-time career criminal, was killed alongside his wife in May 2004, shortly after confidential police documents detailing his role as an informer were allegedly leaked to Melbourne's underworld.
Officers from the Petra Taskforce this morning withdrew a court request to interview Mr Collins after his lawyer indicated his client would give a “no comment” interview. They charged him minutes later.
But Mr Collins did not want to stay silent when he appeared during his filing hearing. He wanted to read out a statement in reaction to the police allegations but Magistrate Duncan Reynolds refused to allow him to do so.
“I don't see that I should not have the right to make a statement,” he angrily yelled at the magistrate.
Mr Reynolds remanded Mr Collins in custody until June 19 for a committal mention
For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.
His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.
Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li's formula hadn't expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system's foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.
David X. Li, it's safe to say, won't be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics as something to be celebrated rather than feared. And Li's Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.
How could one formula pack such a devastating punch? The answer lies in the bond market, the multitrillion-dollar system that allows pension funds, insurance companies, and hedge funds to lend trillions of dollars to companies, countries, and home buyers.
A bond, of course, is just an IOU, a promise to pay back money with interest by certain dates. If a company—say, IBM—borrows money by issuing a bond, investors will look very closely over its accounts to make sure it has the wherewithal to repay them. The higher the perceived risk—and there's always some risk—the higher the interest rate the bond must carry.
Bond investors are very comfortable with the concept of probability. If there's a 1 percent chance of default but they get an extra two percentage points in interest, they're ahead of the game overall—like a casino, which is happy to lose big sums every so often in return for profits most of the time.
Bond investors also invest in pools of hundreds or even thousands of mortgages. The potential sums involved are staggering: Americans now owe more than $11 trillion on their homes. But mortgage pools are messier than most bonds. There's no guaranteed interest rate, since the amount of money homeowners collectively pay back every month is a function of how many have refinanced and how many have defaulted. There's certainly no fixed maturity date: Money shows up in irregular chunks as people pay down their mortgages at unpredictable times—for instance, when they decide to sell their house. And most problematic, there's no easy way to assign a single probability to the chance of default.
Wall Street solved many of these problems through a process called tranching, which divides a pool and allows for the creation of safe bonds with a risk-free triple-A credit rating. Investors in the first tranche, or slice, are first in line to be paid off. Those next in line might get only a double-A credit rating on their tranche of bonds but will be able to charge a higher interest rate for bearing the slightly higher chance of default. And so on.
"...correlation is charlatanism"
Photo: AP photo/Richard Drew
The reason that ratings agencies and investors felt so safe with the triple-A tranches was that they believed there was no way hundreds of homeowners would all default on their loans at the same time. One person might lose his job, another might fall ill. But those are individual calamities that don't affect the mortgage pool much as a whole: Everybody else is still making their payments on time.
But not all calamities are individual, and tranching still hadn't solved all the problems of mortgage-pool risk. Some things, like falling house prices, affect a large number of people at once. If home values in your neighborhood decline and you lose some of your equity, there's a good chance your neighbors will lose theirs as well. If, as a result, you default on your mortgage, there's a higher probability they will default, too. That's called correlation—the degree to which one variable moves in line with another—and measuring it is an important part of determining how risky mortgage bonds are.
Investors like risk, as long as they can price it. What they hate is uncertainty—not knowing how big the risk is. As a result, bond investors and mortgage lenders desperately want to be able to measure, model, and price correlation. Before quantitative models came along, the only time investors were comfortable putting their money in mortgage pools was when there was no risk whatsoever—in other words, when the bonds were guaranteed implicitly by the federal government through Fannie Mae or Freddie Mac.
Yet during the '90s, as global markets expanded, there were trillions of new dollars waiting to be put to use lending to borrowers around the world—not just mortgage seekers but also corporations and car buyers and anybody running a balance on their credit card—if only investors could put a number on the correlations between them. The problem is excruciatingly hard, especially when you're talking about thousands of moving parts. Whoever solved it would earn the eternal gratitude of Wall Street and quite possibly the attention of the Nobel committee as well.
To understand the mathematics of correlation better, consider something simple, like a kid in an elementary school: Let's call her Alice. The probability that her parents will get divorced this year is about 5 percent, the risk of her getting head lice is about 5 percent, the chance of her seeing a teacher slip on a banana peel is about 5 percent, and the likelihood of her winning the class spelling bee is about 5 percent. If investors were trading securities based on the chances of those things happening only to Alice, they would all trade at more or less the same price.
But something important happens when we start looking at two kids rather than one—not just Alice but also the girl she sits next to, Britney. If Britney's parents get divorced, what are the chances that Alice's parents will get divorced, too? Still about 5 percent: The correlation there is close to zero. But if Britney gets head lice, the chance that Alice will get head lice is much higher, about 50 percent—which means the correlation is probably up in the 0.5 range. If Britney sees a teacher slip on a banana peel, what is the chance that Alice will see it, too? Very high indeed, since they sit next to each other: It could be as much as 95 percent, which means the correlation is close to 1. And if Britney wins the class spelling bee, the chance of Alice winning it is zero, which means the correlation is negative: -1.
If investors were trading securities based on the chances of these things happening to both Alice and Britney, the prices would be all over the place, because the correlations vary so much.
But it's a very inexact science. Just measuring those initial 5 percent probabilities involves collecting lots of disparate data points and subjecting them to all manner of statistical and error analysis. Trying to assess the conditional probabilities—the chance that Alice will get head lice if Britney gets head lice—is an order of magnitude harder, since those data points are much rarer. As a result of the scarcity of historical data, the errors there are likely to be much greater.
In the world of mortgages, it's harder still. What is the chance that any given home will decline in value? You can look at the past history of housing prices to give you an idea, but surely the nation's macroeconomic situation also plays an important role. And what is the chance that if a home in one state falls in value, a similar home in another state will fall in value as well?
Here's what killed your 401(k) David X. Li's Gaussian copula function as first published in 2000. Investors exploited it as a quick—and fatally flawed—way to assess risk. A shorter version appears on this month's cover of Wired.
Specifically, this is a joint default probability—the likelihood that any two members of the pool (A and B) will both default. It's what investors are looking for, and the rest of the formula provides the answer.
The amount of time between now and when A and B can be expected to default. Li took the idea from a concept in actuarial science that charts what happens to someone's life expectancy when their spouse dies.
A dangerously precise concept, since it leaves no room for error. Clean equations help both quants and their managers forget that the real world contains a surprising amount of uncertainty, fuzziness, and precariousness.
This couples (hence the Latinate term copula) the individual probabilities associated with A and B to come up with a single number. Errors here massively increase the risk of the whole equation blowing up.
The probabilities of how long A and B are likely to survive. Since these are not certainties, they can be dangerous: Small miscalculations may leave you facing much more risk than the formula indicates.
The all-powerful correlation parameter, which reduces correlation to a single constant—something that should be highly improbable, if not impossible. This is the magic number that made Li's copula function irresistible.
Enter Li, a star mathematician who grew up in rural China in the 1960s. He excelled in school and eventually got a master's degree in economics from Nankai University before leaving the country to get an MBA from Laval University in Quebec. That was followed by two more degrees: a master's in actuarial science and a PhD in statistics, both from Ontario's University of Waterloo. In 1997 he landed at Canadian Imperial Bank of Commerce, where his financial career began in earnest; he later moved to Barclays Capital and by 2004 was charged with rebuilding its quantitative analytics team.
Li's trajectory is typical of the quant era, which began in the mid-1980s. Academia could never compete with the enormous salaries that banks and hedge funds were offering. At the same time, legions of math and physics PhDs were required to create, price, and arbitrage Wall Street's ever more complex investment structures.
In 2000, while working at JPMorgan Chase, Li published a paper in The Journal of Fixed Income titled "On Default Correlation: A Copula Function Approach." (In statistics, a copula is used to couple the behavior of two or more variables.) Using some relatively simple math—by Wall Street standards, anyway—Li came up with an ingenious way to model default correlation without even looking at historical default data. Instead, he used market data about the prices of instruments known as credit default swaps.
If you're an investor, you have a choice these days: You can either lend directly to borrowers or sell investors credit default swaps, insurance against those same borrowers defaulting. Either way, you get a regular income stream—interest payments or insurance payments—and either way, if the borrower defaults, you lose a lot of money. The returns on both strategies are nearly identical, but because an unlimited number of credit default swaps can be sold against each borrower, the supply of swaps isn't constrained the way the supply of bonds is, so the CDS market managed to grow extremely rapidly. Though credit default swaps were relatively new when Li's paper came out, they soon became a bigger and more liquid market than the bonds on which they were based.
When the price of a credit default swap goes up, that indicates that default risk has risen. Li's breakthrough was that instead of waiting to assemble enough historical data about actual defaults, which are rare in the real world, he used historical prices from the CDS market. It's hard to build a historical model to predict Alice's or Britney's behavior, but anybody could see whether the price of credit default swaps on Britney tended to move in the same direction as that on Alice. If it did, then there was a strong correlation between Alice's and Britney's default risks, as priced by the market. Li wrote a model that used price rather than real-world default data as a shortcut (making an implicit assumption that financial markets in general, and CDS markets in particular, can price default risk correctly).
It was a brilliant simplification of an intractable problem. And Li didn't just radically dumb down the difficulty of working out correlations; he decided not to even bother trying to map and calculate all the nearly infinite relationships between the various loans that made up a pool. What happens when the number of pool members increases or when you mix negative correlations with positive ones? Never mind all that, he said. The only thing that matters is the final correlation number—one clean, simple, all-sufficient figure that sums up everything.
The effect on the securitization market was electric. Armed with Li's formula, Wall Street's quants saw a new world of possibilities. And the first thing they did was start creating a huge number of brand-new triple-A securities. Using Li's copula approach meant that ratings agencies like Moody's—or anybody wanting to model the risk of a tranche—no longer needed to puzzle over the underlying securities. All they needed was that correlation number, and out would come a rating telling them how safe or risky the tranche was.
As a result, just about anything could be bundled and turned into a triple-A bond—corporate bonds, bank loans, mortgage-backed securities, whatever you liked. The consequent pools were often known as collateralized debt obligations, or CDOs. You could tranche that pool and create a triple-A security even if none of the components were themselves triple-A. You could even take lower-rated tranches of other CDOs, put them in a pool, and tranche them—an instrument known as a CDO-squared, which at that point was so far removed from any actual underlying bond or loan or mortgage that no one really had a clue what it included. But it didn't matter. All you needed was Li's copula function.
The CDS and CDO markets grew together, feeding on each other. At the end of 2001, there was $920 billion in credit default swaps outstanding. By the end of 2007, that number had skyrocketed to more than $62 trillion. The CDO market, which stood at $275 billion in 2000, grew to $4.7 trillion by 2006.
At the heart of it all was Li's formula. When you talk to market participants, they use words like beautiful, simple, and, most commonly, tractable. It could be applied anywhere, for anything, and was quickly adopted not only by banks packaging new bonds but also by traders and hedge funds dreaming up complex trades between those bonds.
"The corporate CDO world relied almost exclusively on this copula-based correlation model," says Darrell Duffie, a Stanford University finance professor who served on Moody's Academic Advisory Research Committee. The Gaussian copula soon became such a universally accepted part of the world's financial vocabulary that brokers started quoting prices for bond tranches based on their correlations. "Correlation trading has spread through the psyche of the financial markets like a highly infectious thought virus," wrote derivatives guru Janet Tavakoli in 2006.
The damage was foreseeable and, in fact, foreseen. In 1998, before Li had even invented his copula function, Paul Wilmott wrote that "the correlations between financial quantities are notoriously unstable." Wilmott, a quantitative-finance consultant and lecturer, argued that no theory should be built on such unpredictable parameters. And he wasn't alone. During the boom years, everybody could reel off reasons why the Gaussian copula function wasn't perfect. Li's approach made no allowance for unpredictability: It assumed that correlation was a constant rather than something mercurial. Investment banks would regularly phone Stanford's Duffie and ask him to come in and talk to them about exactly what Li's copula was. Every time, he would warn them that it was not suitable for use in risk management or valuation.
David X. Li
Illustration: David A. Johnson
In hindsight, ignoring those warnings looks foolhardy. But at the time, it was easy. Banks dismissed them, partly because the managers empowered to apply the brakes didn't understand the arguments between various arms of the quant universe. Besides, they were making too much money to stop.
In finance, you can never reduce risk outright; you can only try to set up a market in which people who don't want risk sell it to those who do. But in the CDO market, people used the Gaussian copula model to convince themselves they didn't have any risk at all, when in fact they just didn't have any risk 99 percent of the time. The other 1 percent of the time they blew up. Those explosions may have been rare, but they could destroy all previous gains, and then some.
Li's copula function was used to price hundreds of billions of dollars' worth of CDOs filled with mortgages. And because the copula function used CDS prices to calculate correlation, it was forced to confine itself to looking at the period of time when those credit default swaps had been in existence: less than a decade, a period when house prices soared. Naturally, default correlations were very low in those years. But when the mortgage boom ended abruptly and home values started falling across the country, correlations soared.
Bankers securitizing mortgages knew that their models were highly sensitive to house-price appreciation. If it ever turned negative on a national scale, a lot of bonds that had been rated triple-A, or risk-free, by copula-powered computer models would blow up. But no one was willing to stop the creation of CDOs, and the big investment banks happily kept on building more, drawing their correlation data from a period when real estate only went up.
"Everyone was pinning their hopes on house prices continuing to rise," says Kai Gilkes of the credit research firm CreditSights, who spent 10 years working at ratings agencies. "When they stopped rising, pretty much everyone was caught on the wrong side, because the sensitivity to house prices was huge. And there was just no getting around it. Why didn't rating agencies build in some cushion for this sensitivity to a house-price-depreciation scenario? Because if they had, they would have never rated a single mortgage-backed CDO."
Bankers should have noted that very small changes in their underlying assumptions could result in very large changes in the correlation number. They also should have noticed that the results they were seeing were much less volatile than they should have been—which implied that the risk was being moved elsewhere. Where had the risk gone?
They didn't know, or didn't ask. One reason was that the outputs came from "black box" computer models and were hard to subject to a commonsense smell test. Another was that the quants, who should have been more aware of the copula's weaknesses, weren't the ones making the big asset-allocation decisions. Their managers, who made the actual calls, lacked the math skills to understand what the models were doing or how they worked. They could, however, understand something as simple as a single correlation number. That was the problem.
"The relationship between two assets can never be captured by a single scalar quantity," Wilmott says. For instance, consider the share prices of two sneaker manufacturers: When the market for sneakers is growing, both companies do well and the correlation between them is high. But when one company gets a lot of celebrity endorsements and starts stealing market share from the other, the stock prices diverge and the correlation between them turns negative. And when the nation morphs into a land of flip-flop-wearing couch potatoes, both companies decline and the correlation becomes positive again. It's impossible to sum up such a history in one correlation number, but CDOs were invariably sold on the premise that correlation was more of a constant than a variable.
No one knew all of this better than David X. Li: "Very few people understand the essence of the model," he told The Wall Street Journal way back in fall 2005.
"Li can't be blamed," says Gilkes of CreditSights. After all, he just invented the model. Instead, we should blame the bankers who misinterpreted it. And even then, the real danger was created not because any given trader adopted it but because every trader did. In financial markets, everybody doing the same thing is the classic recipe for a bubble and inevitable bust.
Nassim Nicholas Taleb, hedge fund manager and author of The Black Swan, is particularly harsh when it comes to the copula. "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked," he says. "Co-association between securities is not measurable using correlation," because past history can never prepare you for that one day when everything goes south. "Anything that relies on correlation is charlatanism."
Li has been notably absent from the current debate over the causes of the crash. In fact, he is no longer even in the US. Last year, he moved to Beijing to head up the risk-management department of China International Capital Corporation. In a recent conversation, he seemed reluctant to discuss his paper and said he couldn't talk without permission from the PR department. In response to a subsequent request, CICC's press office sent an email saying that Li was no longer doing the kind of work he did in his previous job and, therefore, would not be speaking to the media.
In the world of finance, too many quants see only the numbers before them and forget about the concrete reality the figures are supposed to represent. They think they can model just a few years' worth of data and come up with probabilities for things that may happen only once every 10,000 years. Then people invest on the basis of those probabilities, without stopping to wonder whether the numbers make any sense at all.
As Li himself said of his own model: "The most dangerous part is when people believe everything coming out of it."
Mar 17, 2009
The paper will print its final edition today after its owner failed to find a buyer.
The website will be run solely as a source of local news and opinion, rather than an internet incarnation of the former newspaper.
There will be an editorial staff of 20, compared to the previous 150, and the remaining editorial staff will be expected to write, edit, take photos, and shoot video.
The American newspaper industry has been hit by falling advertising revenue in recent years.
HERE'S how I think the recession will affect each of today's working generations.
NOW in their 50s, the baby boomers have watched in horror as the value of their superannuation has plummeted over the past 12 months.
"There goes my early retirement," has been their collective riposte.
But I'm not so sure that boomers are all that confronted by these events.
Over the past few years boomers have made eye contact with retirement and have worked out that, even during the boom, they had not saved enough to live in the manner to which they had become accustomed.
Their frugal Depression-era parents can happily live on an age pension -- and save money!
But not the consumer generation's baby boomers. They are finely tuned machines designed from an early age to spend on electrical goods, exotic travel and branded clothing.
They can't possibly retire on a pension's pittance or on a modest super annuity and that means boomers were never going to retire early.
The global financial crisis has merely confirmed the work trajectory of boomers' lives.
But instead of having to invent an excuse such as "I like the balance of having some work in my life" they can now blame it on the recession.
I AM quite sure there's a certain schadenfreude about the Xer's view of recession.
Perhaps at last those pesky, upstart Generation Ys might stop being so footloose and fancy-free with their work commitments.
They might just have to, like, settle down and accept a less than perfect work situation because, you know . . . it's a job.
But this is small comfort for 30-something and early 40's Xers who are right in the recession's firing line.
Australian households revert from two incomes to one generally between the ages of 33 and 43.
During this decade the average household is often largely dependent upon a single income.
And just to add to the pressure, this decade is invariably accompanied by the arrival of children and a mortgage.
In life's journey what you really want is to have this decade drop slap-bang in the middle of an era of prosperity.
And this is pretty much what the boomers got over the past 15 years.
But not the Xers. This unlucky generation has careered headfirst into a global financial crisis precisely at that time in life when they most need stability in the wider economy.
And I say unlucky Xers because they also happened to "present" to tertiary institutions from the late '80s onwards at the end of a 15-year window of fee-free education.
Xers copped HECS fees, then they had to pay extra to enter a housing market that had been hyped by boomers.
And now they face the Global Financial Crisis. I'd be mad as hell if I was an Xer. Although I'm not sure who or what is to blame for this unhappy circumstance.
MOSTLY in their 20s, Gen Y are at a different stage in their life cycle.
As a rule this lot are not committed to marriage or mortgage or children and many in fact still live with their parents.
And why wouldn't they, since it makes perfect sense: mum and dad pay for all the basics, which enables Gen Y to spend every cent they earn on phones, computers, clothes, eating out and travel.
But there's a problem looming for Generation Y. It is true that the concept of a recession is foreign to their life experience thus far and this fact is confronting enough.
But it might just be that the haven of their parents' home is threatened by redundancies in middle and senior management.
One possible outcome for Generation Y is that they apply their famous capacity for lateral thought by adapting to the crisis.
In other words they learn new behaviours. And in which case the GFC for Generation Y might signal the end of their youth and the beginning of commitment to the workplace, to a partner and perhaps even to a mortgage, insurance, superannuation and having children.
Bold thinking, I know.
The one thing that we can be sure of about the global financial crisis is that consumer and generational values that come out the other side of this crisis will be different to those that prevailed during the boom.
Those who understand how society is changing will be best positioned for the recovery.
Bernard Salt is the keynote speaker this Thursday at the Herald Sun marketing breakfast during the L'Oreal Melbourne Fashion Festival. He is a KPMG partner; www.bernardsalt.com.au
THE statistics are well known — one in five people will experience depression in their lifetime. I had paid scant attention to this fact until I became one of the one in five and experienced a crippling episode of depression. Suddenly the statistics became more than numbers on a page.
It hits me like a sledgehammer. One day, I am able, light of heart and outgoing. The next I am tipped into a pool of blackness that robs me of life. Joy is replaced by futility, optimism by hopelessness, pleasure by despair. Sleep becomes non-existent. The hours to dawn drag slowly, filled with anguish and torment. Yet when the sun rises, I am immobilised, unable to get out of bed. I force myself to get up, to put one foot in front of the other to make it through another day.
Mar 13, 2009
Australian Competition and Consumer Commission chairman Graeme Samuel says in an opinion piece published in The Age today that it is no longer acceptable for phone companies to wash their hands of dodgy text message operators, some of whom have charged customers hundreds of dollars for subscriptions they did not sign up for.
Among other things, the SMS companies promote competitions, quizzes, games, match-making and ring-tones. They advertise in magazines and on television, usually late at night and use "high-energy advertisements, distracting visuals and hard-to-read fine print disclaimers", Mr Samuel says.
"Australia's telecommunications sector has become so riddled with rogue operators, deceitful behaviour and scams, it can no longer be ignored.
"Unless the industry recognises it has a problem and acts decisively to correct it, it may find change forced upon it by the courts, the Australian Competition and Consumer Commission and its disgruntled customers," he says. Mr Samuel accuses phone carriers of taking a slice of the profits while looking the other way as text message pests try to gouge customers.
He also hits out at companies that engage in misleading advertising and promote unfair contracts and deceptive mobile phone competitions.
The ACCC receives about 4000 complaints a year about telecommunications services, making it the most-complained-about industry.
In the 2006-07 financial year, the ACCC had 13 major investigations into consumer protection issues in the telecommunications industry underway. In 2007-08 that number had grown to 22.
Telstra customer Helen Rzesniowiecki told The Age yesterday she was puzzled when billed for $60 of text messages. When she rang Telstra last week, she was told the messages had been sent by a company called Sol Mobile, and that she should contact it
Scientists in the United States have invented a battery that can charge in seconds, promising a revolution in power storage that could also help green cars and renewable energy.
The advance allows lithium-ion batteries, the standard variety used in consumer electronics and cells for electric or hybrid vehicles, both to charge and discharge stored energy more quickly than at present.
This should lead to smaller, lighter batteries for mobile phones and other devices, which can be fully charged when plugged in for a few seconds.
The researchers, from the Massachusetts Institute of Technology, have already made a small prototype cell that charges fully in 10 to 20 seconds, compared with six minutes for cells made in the standard way.
“If you can charge your phone in 30 seconds, that becomes a life changer,” said Gerbrand Ceder, Professor of Materials Science and Engineering at the Massachusetts Institute of Technology (MIT), who led the research. “It could change the way we think about technology like this: you would literally be able to charge up while you stand and wait.”
The technology has been nicknamed the “beltway battery”, after the orbital motorway in Washington DC, because it uses a bypass system to let lithium ions that carry charge to enter and leave the battery more quickly.
As it involves a new approach to manufacturing lithium-ion battery materials, rather than a new material, it could be ready within two to three years, the researchers said.
Electric car batteries may be able to charge in less than an hour, removing one of the main barriers to wider uptake of the vehicles. Solar and wind power generation could also benefit as better batteries could be used to store surplus energy.
Rechargeable batteries store and release energy as charged atoms, called ions, from between two electrodes called the anode and the cathode. Their charge and discharge rates are limited by the speed with which these ions move.
Professor Ceder and Byoungwoo Kang, his colleague, established that ions can move quickly across the lithium iron phosphate that is used as the cathode in lithium-ion batteries. However, the ions are effectively held up because they must find their way through channels in the material.
“It is like a freeway, but if the ramps are congested you can't get on to it very fast,” Professor Ceder said.
The scientists found that by coating particles of lithium iron phosphate in a glassy material called lithium pyrophosphate, ions can bypass these channels and move more quickly. “It works like a beltway around a city,” Professor Ceder said.
Mar 10, 2009
A flaw in the system meant that the documents of some users of the service were marked down as collaborative items, allowing third parties who are also signed up to the system to access and amend them.
The flaw has now been fixed said the company.
“We’ve identified and fixed a bug where a very small percentage of users shared some of their documents inadvertently,” said the company in a blog posting.
“The inadvertent sharing was limited to people with whom the document owner, or a collaborator with sharing rights, had previously shared a document.”
The flaw did not work on all functions of Google Docs. Text documents and presentations could be accessed by others but spreadsheets could not. Google is contacting everyone who was hit by the problem.
The company said that 0.5 per cent of their customers were affected by the flaw and that users would have had to have taken “a specific sequence of user actions” to get access to the documents.
Mr Lee, who runs one of the largest search engine marketing groups, said search advertising spending by his US clients so far this quarter was flat or down year-over-year, with some clients showing marked drops due to "click supply issues".
"Ad spending is notably lower than we expected during planning last fall. Overall, we would imagine that Google's revenue growth is slowing markedly and if economic contraction continues there might actually be a year-over-year decline," said Mr Lee.
Mr Lee's pessimism was echoed by an advertising agency executive who, asking to not be named so that he could speak freely, said his clients' search budgets were down 10 per cent to 20 per cent in the first quarter.
The observations raise questions about Google's premise that its business is more resilient to a downturn because consumers are increasingly likely to go online to search for the best deals.
Most cases were found to relate to life insurance. In one instance, a man with a faulty gene linked to a greater risk of breast and prostate cancer was denied income protection and trauma insurance that would have let him claim if he developed other forms of cancer.
The findings have led to renewed calls by experts for policies to ensure the appropriate use of genetic test results by the insurance industry.
The director of the Centre for Genetics Education at Royal North Shore Hospital, Kristine Barlow-Stewart, said the research also showed consumers needed to be better informed about their rights.
"Eighty-five per cent of the people in the study didn't know where to go to seek assistance if they had been discriminated against," she said.
Associate Professor Barlow-Stewart and her colleagues surveyed more than 1000 people who had attended clinical genetic services about their experiences of discrimination.
In a long, complex process that was only possible because of the assistance of organisations and companies that had carried out the discrimination, the researchers were able to verify 11 cases of genetic discrimination, and their results are published in the journal Genetics in Medicine.
Mar 8, 2009
Every now and then, some visionary individuals come along with a concept that is so original and so revolutionary that your immediate reaction is: ''Those individuals should be on medication.''
Today I want to tell you about two such people, John Baur and Mark Summers, who have come up with a concept that is going to make you kick yourself for not thinking of it first: Talk Like a Pirate Day. As the name suggests, this is a day on which everybody would talk like a pirate. Is that a great idea, or what? There are so many practical benefits that I can't even begin to list them all.
Baur and Summers came up with this idea a few years ago. They were playing racquetball, and, as so often happens, they began talking like pirates. And then it struck them: Why not have a day when EVERYBODY talks like a pirate? They decided that the logical day would be Sept. 19, because that -- as you are no doubt aware -- is Summers' ex-wife's birthday.
Since then, Baur and Summers have made a near-superhuman effort to promote Talk Like a Pirate Day. As Baur puts it: ``We've talked like pirates, and encouraged our several friends to, every Sept. 19, except for a couple where we forgot.''
And yet, incredibly, despite this well-orchestrated campaign, the nation has turned a deaf shoulder to Talk Like a Pirate Day. In desperation, Baur and Summers turned to me for help. As an influential newspaper columnist, I have the power to ''make or break'' a national day. You may recall that almost nobody celebrated Thanksgiving until I began writing about it in the 1970s.
I have given Baur's and Summers' idea serious thought, looking for ways to improve it. One variation I considered was Talk Like a Member of the Lollipop Guild Day, on which everybody would talk like the three Munchkins in the film version of The Wizard of Oz who welcome Dorothy to Munchkin Land by singing with one corner of their mouths drooping down, as though they have large invisible dental suction devices hanging from their lips. But I realized that would be stupid.
So I have decided to throw my full support behind Talk Like a Pirate Day, to be observed this Sept. 19. To help promote this important cause, I have decided to seek the endorsement of famous celebrities, and I am pleased to report that, as of today, Tom Cruise, Julia Roberts, Britney Spears, Brad Pitt, Oprah Winfrey, the Osbournes, Tiger Woods, Ted Koppel, the Sopranos, Puff Doody and the late Elvis Presley are all people who I hope will read this column and become big supporters. I see no need to recruit President Bush, because he already talks like a pirate, as we can see from this transcript of a recent White House press conference:
REPORTER: Could you please explain either your foreign or your domestic policy?
PRESIDENT BUSH: Arrrrr.
To prepare for Talk Like a Pirate Day, you should practice incorporating pirate terminology into your everyday speech. For example, let's consider a typical conversation between two co-workers in a business office:
BOB: Hi. Mary.
MARY: Hi, Bob. Have you had a chance to look at the Fennerman contract?
BOB: Yes, and I have some suggestions.
MARY: OK, I'll review them.
Now let's see how this same conversation would sound on Talk Like a Pirate Day:
BOB: Avast, me beauty.
MARY: Avast, Bob. Is that a yardarm in your doubloons, or are you just glad to see me?
BOB: You are giving me the desire to haul some keel.
As you can see, talking like a pirate will infuse your everyday conversations with romance and danger. So join the movement! On Sept. 19, do not answer the phone with ''hello.'' Answer the phone with ''Ahoy me hearty!'' If the caller objects that he is not a hearty, inform him that he is a scurvy dog (or, if the caller is female, a scurvy female dog) who will be walking the plank off the poop deck and winding up in Davy Jones' locker, sleeping with the fishes. No, wait, that would be Talk Like a Pirate in The Godfather Day, which is another variation I considered (``I'm gonna make him an offer that will shiver his timbers'').
But the point is, this is a great idea, and you, me bucko, should be part of it. Join us on Sept. 19. You HAVE the buckles, darn it: Don't be afraid to swash them! Let's make this into a grass-roots movement that sweeps the nation, like campaign-finance reform, or Krispy Kreme doughnuts. I truly think this idea could bring us, as a nation, closer together.
But not TOO much closer. Some of us will have swords.
Mar 5, 2009
The ThinkUKnow program, coordinated by the Australian Federal Police is hoping to reduce the instance of cyber bullying, scams and grooming for child sexual offences through education. The website and seminars are pitched at reducing the knowledge gap between parents, teachers and students and giving them the tools to prevent crime.
AFP High Tech Crime Operations acting national manager Neil Gaughan said one of the primary aims of the project was for parents to communicate with children about their use of the internet.
''The dangers that exist in the cyber world are no different from the dangers in the real world,'' Commander Gaughan said.
''Like we were risk-takers in our youth, children will be risk-takers in this environment and this is about informing parents of the risks out there.''
The program, in its pilot stage, is starting with 100 schools including nine in Canberra, Yass and Jerrabomberra.
Volunteers from Microsoft, the Australian Federal Police and Australian Communications and Media Authority have already held seminars at the schools with about 500 parents, teachers and carers. The seminars include explaining how social networking sites work and their potential dangers.
Among the program's initiatives is a website where parents, educators and children can find out more on the safe use of the internet.
The thinkuknow.org.au website includes a button on each page where people can report abuse or suspicious material.
The Australian program is based on a model developed in Britain, the Child Exploitation and Online Protection Centre.
That initiative was begun after research indicated one in 12 children was meeting up with someone they had met online. Commander Gaughan said in most cases those children were not accompanied by an adult.
He said the AFP hoped the system would help contribute to information about the prevalence of online crimes against children. ''This hopefully will go some way to having greater knowledge about how many instances of [child] grooming are happening online.''
We love premium SMS services here at Troubleshooter.
They're the gift that just keeps on giving when it comes to problems that need fixing.
If there ever was a more iniquitous, deceptive industry we've yet to come across it. And if you think we're being harsh, don't just take our word for it - ask the nearly 14,000 customers who last year were so incensed by outrageous mobile bills that they took the matter to the Telecommunications Industry Ombudsman.
Which brings us to John Pulella and his wife, Joanna. Some time in February last year, like so many other people, Joanna subscribed to one of these premium SMS services without being fully aware of the implications and costs.
"She thought it was pretty harmless," John said. "She somehow then activated a process where more and more messages came."
And of course those messages came at a cost - a hefty cost.
In fact, she was paying an extra $45 a month for the trivia-type messages she didn't even want.
This was nearly double the cost of her plan and left both John and Joanna alarmed.
They tried calling the SMS company with no luck. They tried calling the service provider, Vodafone, with no result.
"We tried sending stop messages to the SMS when they came through," John said. "Message was not able to be sent," quickly came the reply.
"We even asked the local Vodafone store manager to help out," John said. "He was great but could not fix it."
Out of desperation, they switched to Optus in September and refused to pay the outstanding amount for the unwanted "service". Then things got really serious - a lawyer's letter arrived insisting Joanna enter a payment plan and, even more sinister, a default notice was placed on her credit rating at the two main credit-reporting agencies, Dun & Bradstreet and Veda Advantage.
"We just kept getting these letters saying she owed $430 on the account and then the lawyers sent a letter and she was forced to make an arrangement to pay," said John.
Worried about the legal implications and angry at the way they had been treated, John brought his case to Troubleshooter.
We called Vodafone and suddenly the wheels were put very swiftly into motion.
The account was closed with no more to pay, the default listing was rubbed from Joanna's credit history and Vodafone even offered to refund about $400 in charges.
John was full of praise for the speed with which Vodafone (finally) acted.
"From a PR point of view they have been fantastic to deal with," he said.
Vodafone refused to comment on the Pullelas' case, citing privacy issues, but a spokeswoman said its policy was only to lodge default notices as a last resort.
She also said customers were encouraged to discuss their concerns "so we can resolve the issue before it reaches a default stage".
Mar 1, 2009
The contract, which will run for four years at a cost of $13.8 million, will be managed by Telstra and will run on its Next IP network.
Mr Tanner said the deployment will help the Government reduce the cost of travel, improve productivity and lower the impact of carbon emissions.
It is unclear how much the Government will save with the Cisco TelePresence system but Finance Minister Lindsay Tanner has in the past indicated that he wants to slash at least $15 million from the bill.
“From a finance minister point of view the most important issue is saving money. We currently spend about $280 million a year on domestic airfares across government,” Mr Tanner said.
“The savings we make on airfares alone will pay for this system.”
Mr Tanner is also hoping the roll-out will help retain staff.
“I’m conscience that a lot of people tend to move away from very senior positions both in the public and private sector because of the burden of travel. This will enable us to get better value from people and achieve a better work life balance.”
Mr Tanner said there were robust security measures to make sure sensitive government meetings would not be breached.
“We have a secure phone system that we currently use and TelePresence is at least as secure as that,” he said.