Stuff wot bugs me...

Here's a little blend of 2012 insanity for you...

Mobile Phone's: Crapitalism at it's best?

Why's that then? Hokay ... we ready?
First, any mobile you get on a pay monthly is locked to that network. Doesn't need to be. If you had a good network and decent bill's you'd be happy to stay with them. Right? And when you upgrade and get a new phone, what does the old one become? A brick? You can't just stick a sim in it and use it on another network without (usually) an unlocking charge.

Then there's contract length. Every upgrade, every buy in, you get locked in to a contract length. Semi fair enough. They need to cover the cost of that lovely new mobile they just gave you for peanuts. But why isn't there a "minimal payback" option? Why can't you say "Hey I want to move to a different provider and not use any of your services, what's the monthly charge for that then?".

It gets better! "Pay As You Go". I don't know if any of you noticed, but that is now a mythical beast. It's now, pay monthly for a bundle as you go, which is pretty much the same as a monthly contract, but you don't get tied into a contract length .. yay! Er. No. You end up paying as much for a sim over the months and unlocking an old phone as you would going for the pay monthly by contract with upgrade option.

It's a locked in model of crapitalism, from the throw away phone culture to opaque package deals, hidden costs to keep your number, unlock your phone, close the contract, add more data, and mr or mrs happy at the end of the phone line selling you the next fantastic contract, will always without fail try and sell you a contract that costs more and provides more than you need.

Ideal world? The one that doesn't exist? Pay as you go *does* mean something. You pay a flat rate per minute voice and data, if you run out, it stops, you don't get smacked with a huge charge with no warning. No contract to worry about. Absolute transparency. Also? You get your phone on a monthly contract unlocked or free to unlock. Sure let them have a shot at reducing the stupidly expensive monthly deal they sold you to keep you on. Fair enough. But ring this number and free unlock with a sales pitch and we're sorry you want to leave us.

Ink

Got a printer?
Think again.
You've actually got an ink sales device.
For a vast number of printers you've had for a year or so, when it comes to buying a new set of ink cartridges, you may just dig around, swear at how expensive they are and buy a set.
Did you think of checking how much an equally good printer is these days including a first set of ink? Hey! Guess what! Probably cheaper or around the same price you just paid for a set of ink cartridges.

Wait what?

Nope. Doesn't make any sense at all does it?

Oh ok, so I'll refill the cartridges I've got with cheaper ink. Cunning plan! Except ... all ink jet printers I know of now have chipped cartridges, not only do they tell you they have run out very often before they actually have run out, but if you take one out, drill a hole, fill it and replace it? The printer will still say it's empty. It's ok you can get around this. You can buy a complete set of resettable chip cartridges and the ink. YAY! Oh. Wait. That costs more than buying a new printer again.

Ink jet printers are a superb example of crapitalism at it's very worst. Discard-able culture, inventing value in what should be the cheap consumable and a mountain of "dead" printers in the junk yards of the world.

Computer says "No".

In a way, it's not the poor soul at the phone help desk's fault. They just get to deliver a shit service dictated by the company and financial limits... Let me explain...

Phone support for pretty much any company you want to mention is a crap paid job. It's front line against pissed off customers and not very rewarding. The churn rate is generally horrible even if it is off-shored.

So when you and your complex little world meets the phone number of customer support doom? You're basically dealing with someone who has a little more than the FAQ you just had access to on the webpage to ring them, very little company loyalty, and no reason on earth to really care about how the company works because that doesn't pay extra, and "Hey I'm applying for different jobs already!", who can blame them?

So what you get is a little maze of "press #". If you're lucky, that actually matches up with your particular problem. Fairly often, you don't quite fit. You've got a couple of questions that fit more than one menu option, or you just don't fit the template. You end up with generic support person at the end of the phone.

Generic support person cares sometimes that they don't get flak for being crap and unhelpful. That next job application hasn't come back yet, so polite is built in to the pay packet. Sadly knowledge, an urge to actually help beyond the script and FAQ they have, or the time to spend 30 mins on your particular problem, isn't on the menu.

I tend to find, the end result is that the only way to get anywhere with a problem that doesn't fit exactly the cookie cutter answer sheet is to threaten legal action and get very pissed off until they escalate the case to middle management and someone who half gives a shit. Ok. That's generous. One hundredth gives a shit. They may have to add to the company FAQ manual with a non-conformance issue if this gets logged and that means work! Way easier just monitoring the phone pit peons for throughput, length of loo breaks and attitude to earn a living. That stuff is automated.

Basically. It's the crap cleaning, toilet washing glamour end of the industry. You buy the product? It all works fine in 75% of cases? Fantastic. Give us the money. You're in the 20% of foul up that easily fit a problem we know about or don't want to kick up a fuss? Fantastic. Computer FAQ via a voice line that you could have read up on the website for yourself is here to help. You're in the 5% that wants to kick up a fuss or doesn't fit the template? ... Get angry and try and make waves if you like. It'll take legal action to make a difference or you can just bin the company and move on to the next, exactly the same phone support model company in the same industry.

It sucks.

Forex Rambles (A noobs guide)

One of those .. "feel like jotting some thoughts down" moments. So some perceptions / observations on the wonderful world of Forex that I've not seen laid out (hopefully) quite like I'm about to...

The Broker Dilemma

There are hundreds of Forex brokers out there, all wanting your account open with them. Unlike most, I'm going to pitch it like this "Don't trust any of them". They are all out to make money out of your money. That's their job. It's how they get paid.

If you start from that perspective then searching for a Broker becomes an exercise in finding what I call "The Least Worst Option". A concept I find I'm having to use far too often in life these days. Many other sites give good advice on Market Makers, ECN, NDD, STP and all the different types. If you don't know what those are yet, you're not informed enough to choose yet. If they guy ringing you up trying to convince you to open an account today because you opened a demo account doesn't know what they are? .... Draw your own conclusions.

In all of those fields there are "Least Worst Options". I'm not about to recommend any or snipe at any. That's not what I'm getting at here. Many people do seem to trade happily with all the types of brokers out there. Sadly ... some really are plain nasty fraudulent or run on such a shoestring that complaints seem sky high.

Complaints? Uhm. Welcome to Forex review sites. Muddy world. You''ll find novices who lost money and want to blame someone. (Pause for a second. You might be one of those in a few months. You sure you want to do this?) Sometimes these people will post the same tale with a "Don't touch them" review across many sites. So that's your first problem, spotting the unlucky with a grudge from those who really were taken for a ride.

Your next problem with Forex review sites is Forex brokers. It seems a few have enough spare time to not only create entire bogus websites that look like blogs praising themselves in a review format, they'll also put down the opposition with bad reviews and ratings on as many sites as they can. I've seen one review site with three "different" reviewers all exposed as being from the same IP address linked to a competing broker, and that's on a site that bothers to check IP addresses. Most don't.

By this point? You'll be figuring out that ... Forex broker review sites really aren't that useful. Well spotted. Use them anyway, some have good advice and the odd post from genuine users. Glean what you can to help make your choice, but don't ever take a single review site or a single persons opinion as the truth.

Sadly, your best option is to narrow it down to a few by research and reading pages and pages of mixed dross and information. Then you open a few demo accounts right?

You do have the option of giving a false (oops! did I type that wrong?) phone number here. In some cases I'd recommend it. Some brokers can be very pushy on sales once they have your number. One or two can be perfectly reasonable about it.

Take your time, get a feel for what's on offer at your own speed, keep doing the research, don't let them pressure you in to anything.

That's about all the wisdom I have on the hideous task of broker selection.

Doing the dirty...

 

A minimal view on tactics for you aimed purely at risk. Yup. Go elsewhere to learn what all the pretty lines on the charts mean. This is ultra basic stuff and my own personal risk management at work.

First. Understand it's gambling pure and simple. Yes you can win overall, but that's about strategy and tactics. The worst thing you can do is be a bad gambler. Accept there is an urge to "Just make another trade", especially if you just lost one. Accept you might just be sitting there with this burning itch to just place a trade to see what happens. It's gambling. If you're not good at controlling yourself in a gambling environment? Walk away. No really. Do. This won't be a kind environment for you.

I'm a cautious type. Hopefully. So I'll pass on this much:

Get your head around what you are actually doing with the leverage, pips, stop losses, trailing stops and take profits. Some platforms are very good at helping you see exactly what you are doing to your margin. Others will need a handy calculator and some quick checks to see what you're about to get yourself in to by opening the next trade.


Put it this way. After you've placed a trade with a set take profit and your set stop loss, possibly with a trailing stop. You should be able to walk away from the screen without panic. Even if it shoots the wrong way 60 seconds later and hits the stop while you're just making a cup of tea. The worst you should feel when you get back is something like "Oh ... maybe I need to rethink that trailing stop plan", instead of "H*ly Sh*t that's wiped out most my margin! Where's my credit card?"

If your broker will let you (far as I know pretty much all will), keep the demo account and keep using it. Test your new insights on the demo first, ok so you didn't win, but it looks like it worked. Or better yet. Hell that was stupid! Glad that wasn't on the live account! And it's also the best place to figure out your stop & trailing stop positions for different types of market days. It varies over time and some days are just bitches. Get used to it. Better yet, get used to spotting a bitchy day.

Aim for more small wins than small losses and aim to get better at making more wins than losses over time. Apart from figuring how many pips to win or loose on each trade, the single biggest factor in that is how much margin you stake. It's important to know what your position means when you place it in terms of what you can win or loose bottom line and not be in some fuzzy "Well I didn't want to get stopped out so I set it to X pips to be sure, and actually, that's done a fair bit of damage". There's almost no point setting the stop if you can't take the loss.

Log stuff and teach yourself. Yes you have in effect sent yourself back to high school. Brokers vary in the support they will give you trading, use what they offer, but in the end it seems the best teacher is yourself. My weapon of choice is a stupidly large spreadsheet with all kinds of notes on it. Export reports, note them up and go back over them. How often was the problem a news event you didn't see coming? How often is it a stop you missed by a fraction? Could you have stretched that take profit further and why? Would you have been better off just using a fixed stop? Which indicators were you using? Was it your trend line that was out? Do you need to look at an additional way of marking up the chart? The questions are endless. Keep questioning both the wins and the losses. Over time you begin to get a feel for your own style and shortcomings, what to look out for.

It's basic stuff I know and I intended it to be. But it's not stuff I've seen laid out quite like this elsewhere. Hope it helped .. or even dissuaded the right people from tinkering with the world of Forex. In the words of Portishead - "You don't get something for nothing"

Edit: A find the day after I posted this. A rather good guide for noobs can be found here @ BabyPips

Junk

A quick run down on "Junk". Inspired by the news McDonald's is somehow an official sponsor of the Olympic Games 2012. Laugh? I nearly choked on a high fat crap burger...

Because "Junk" ladies and gentlemen is what makes the world go round.
Take McD as a start point. 100% beef is here taken as an exercise in what is the cheapest, most vile, barely edible by humans extract of cow can we put between the cheapest excuse for a bun we can purchase in vast quantities?
Have we got that junk down to a T? Great. Now we need to pay low wages, have low rent outlets and charge as much as we possibly can for selling "Junk".

This makes McDonald's a vast international empire.

Argos? Sells the cheapest tat for the cheapest price. It'll fall apart by the time the warranty comes around, if not sooner, but chances are you don't have the receipt any more. So .. Shift that junk as cheap as you can from a warehouse model with minimal staff.

B&Q? The DIY version of Junk. Propped up on the sales of the least durable cheap crap, paint that barely covers a wall after three or four coats. Sure you *can* buy some reasonable quality stuff there, but at those prices? Nah, you'll try the cheap option and burn you bucks.

Starbucks & Costa (lot) Coffee? Don't be fooled by the fact it's strong as hell with a caffeine kick. It's still the cheapest crap they can filter and pass off as coffee for the highest price they can sell it for. I'm not a big coffee fan. Thought I'd try the Hot-Choccy. Powdered barely mixed crud you don't want to finish. The Tea then! About £1.40 for a 3p tea bag in some hot water that barely makes 1.5 cups.

"Junk" ladies and gentlemen, is what makes a company big. Selling junk at the highest possible price on the back of a "Well known consumer label" is what makes the world of the high street go round and round and round.

Wake up and smell the junk. This is the gift capitalism has finally boiled down to.

The money-go-round

YAY! It's Rehypothecation for Dummies!

Why is Greece actually just a small domino in a trail to a much bigger problem?
Well. Lets see if I can make this nice and simple...

It's all to do with clever banking and this fun thing called "Rehypothecated assets".
What the hell is that then??! Like most things in clever banking. It's got the kind of name that makes most sane people want to hide behind the sofa. But actually. It's fairly simple. I'll try anyway...

Hypothecation is when I want something, and I say I'll put some asset up (collateral) so I can take on the debt for the thing I want. Simple example. A mortgage on a house. The house is the asset, and I take on the debt as the mortgage to pay off. I get ownership of the house while all is going well. But if it messes up, the mortgage people can take the house back. So simple terms. I get ownership of a thing while I still owe the debt at risk of having to give it back if I can't pay the debt.

Simple huh?

Ok now in to money market land. "Rehypothecation" time. Ready?

I put £100 in my bank account. Pretend that £100 is now a house. It's easier to get a grip of it following on from the above if we pretend it's a house. So I've given the bank a £100 house. Lets say, under banking law, the bank can take that asset and pretend 90% of it is their house. So off they trot and put down a £90 house on to someone else's books for an asset they want to take on. That trader / bank takes the £90 house, and under the same laws, they can now keep £9 of that and put down an imaginary £81 house as an asset on something they want ... and so on and so on and so on ...

Righto guys. We can drop the house thing now. You probably get the idea. Instead of houses, it's bonds & equities. Same deal in effect. The various banks / brokers / investment houses have used a sort of mortgage trick to get themselves a chain of assets against that original deposit. That's the simple version of "Rehypothecation".

Like my house in the original mortgage game, the deal is, if someone in the chain can't keep up margin payments, or securities drop and investors can't boost collateral to meet the new financial requirements, then assets can be claimed back by the broker that did the lending. (I'm trying to keep this simple folks, don't bother writing in with detailed technical analysis of why that isn't 100% correct in all cases). Broadly speaking, that's the effect we are dealing with.

In most sane countries. There are banking limits on the assets that should be held by the broker when they are rehypothicating client accounts. This helps (a bit). Clever banks / brokers will find ways to stretch limits within those countries, and big enough banks / investment houses will run to places like ... the UK.

Uh oh. Wait? Why the UK? Because the "Great" in Great Britain largely comes from having an unregulated banking system. That means (amongst other things) in the UK brokers will routinely use 100% of client assets in the rehypothication chain. That's why people like Goldman Sachs, Credit Suisse, Morgan Stanley and many many more have UK based 'investment pools' and 'lateral assets'. We'd call it cheating. They'd call it maximising leverage.

Ready for the fun stuff?

In this global banking industry world, everything is recorded and understood. Right? Wrong. Rehypothicated assets are completely off balance sheets. Basically nobody has a clue who holds what against who's what until something goes wrong and a whole chain of people start trying to claim back assets. "Ohhh that's where it went?" time.

Some talented market guess work suggests actual asset backing may be around 25% of the value at risk. Wait? What? Ok say Bank of Kryptonite has £25 billion of rehypothicated assets. They might be at risk for around £100 billion in off balance sheet transactions. So take that "We may need around 250 billion Euro to sort Greece out" that was banded around in 2011. Now add in your new found rehypothecation knowledge of likely damage caused by 250 billion Euro suddenly vanishing from the system. Sure. Not all of that will fall in to the trap, but damage caused could well be nearer say 750 billion Euro if you don't give them the 250 billion bailout ... Now does the political / financial action on Greece make more sense to you? Cool!

Pause!
Take a breath!
With any luck you just got a pretty simple view of the rehypothication game. Pretty big huh? It's a huge part of the reason it takes trillions to fix billion dollar banking problems, and why there is now more money in the world than can possibly make sense.
Now count to 10 and lets go back to another aspect.

What's happening to the money printed by the Bank of England and the Fed and thrown in to Europe by the ECB? For a start. It's not being printed. It's buying bonds in the main which has the effect of maintaining what you might call the end weight of the rehypothication leverage chain. It's keeping that magical mystery tour of rehypothicated assets floating and stopping the unknown freak out scenario of lots of people (brokers / banks), suddenly having to claim back assets because the system failed and a chunk of money got defaulted on.

See how I snuck that "defaulted" word in there? That was the fear with Greece. A hard default. Not for any particularly humanitarian reasons. Simply because it's an uncontrolled event that would definietly have an effect on at least some of that re-hypothication chain. And as we now know ... Nobody knows what effect exactly .. But lots of people seem scared enough that it's such a big effect, that they'll throw billions at Greece to avoid it happening.

Crisis avoided. Greece did not hard default. YAY!

But ... (booo)

It leaves two rather obvious problems.

First: Inflation.

Chucking all that new money in at the leverage end of the scale is great for keeping the banking industry afloat, and better yet. It doesn't have an immediate inflationary effect. For once, "Trickle down economics" will actually work here though. It does have an inflation effect initially on the larger institutions dealing at government bond levels. Think insurance, pensions, banks, mortgages. The first people to realise money isn't going as far as it was thanks to all the new 'printed' stuff, will be those guys. And those guys will pass costs on in terms of higher mortgage payments, higher insurance premiums, lower pension pot growth, less savings account interest, higher debt charges, etc .... Oh ... Ow!
Those costs, after a few months (in some cases years depending on the bonds initially purchased), when they do trickle down to average citizen, are the initial inflation signs. Keep in mind. Those costs also trickle down to shops, businesses, factories etc. It all .. slowly but surely starts to creep up in cost to maintain, run, insure, finance. Neatly, the heads of banks, fed, finance ministers that pressed the big red button on the cash injection are not obviously implicated. The costs appear gradually over months or years and have an air of political plausible deniability.
The really bad thing? That's already happened. Nothing in the world can be done about it. Watch and wait as it takes a bite out of your fiscal ass in the next few years. By 2016? The worst will hopefully of settled. Dunno about you. But I'm not calling that a good thing.

Second: A broken model.

Scenario One - Lets assume the best for the banking world. Lets assume all the trillions of new cash injected in to the system does keep it afloat and chains of rehypothication nightmare asset collection are never triggered. You're still left with the same system. Give it 10 years or so of crippling hardship coupled with mystery inflationary pressures (see above), and average area citizen begins to get back on track. They start to make a bit of money. They go to the bank and put that £10,000 savings deposit in .. and .. Uh oh. The bank .. they wouldn't? Yeah they would. Starts the whole chain of rehypothication off again safe in the knowledge they'll get bailed out with printed trillions every decade or so ... Dunno about you. But I'm not calling that a good thing.


Scenario Two - Something. Somewhere. Snaps. Seeing as back in 2011 predictions of a European financial crash worse than "The Great Depression" were already surfacing. And .. noting that no one has the faintest clue where all the money really is. Add to that the likes of UBS predicting social unrest and possible all out wars if even just Greece defaulted ... I think it's safe to say .. Dunno about you. But I'm not calling that a good thing.

How to annoy Darwin.

I seem to be in the mood for a rant and a ramble. Origin? Lets see...

There seems to be a repetitive theme of hopelessness. First instance within UK voting. Many people had given up on Tory and Labour by the time of the last election. So the LibDem's did get an unusual shot at power. Only to blow it badly. They don't seem to have any influence at all in British politics at the moment other than to be the Tory lap dog.

Shift over to America. Obama's initial popularity surge based on the initial virtues of truth and integrity are crumbling. Guantanamo is still there despite his pledge to disband it. His attempts to make taxation more evenly spread not just thwarted but derided by a hysterical right wing. On top of that. Goldman Sachs is a main sponsor for both Democrat and Republican.


See? That hopeless feeling I was getting at? Let's expand it a bit. Tesco. A fairly large number of reasonably well educated people in the UK now know that Tesco is a major tax evader with multiple Cayman Island accounts. They also know Tesco refused to even consider Jamie Oliver's caged chicken demands. They also know Tesco takes on unpaid labour thanks to the Tory 'work to welfare' insanity. And they may also remember Tesco was probably the only advertiser in News of the World to not pull it's ads before the paper was axed by Murdoch.

What do such well educated people do about it? Nothing. They continue to shop there and claim it's convenient. Now ok. Tesco does have a vast empire of supermarkets, mini-markets, petrol station shops and all the rest of it. Granted, sometimes it's almost unavoidable that you are going to end up grabbing that pint of milk and some petrol at a Tesco outlet sooner or later. But all the rest of the time? Really? For your main weekly shop? Every week? Why?

APATHY.

The real reason why there's no point voting anymore is voter apathy, nicely demonstrated by that "Yeah I know Tesco is crap, but I go there anyway, I can't change anything. (shrug)" attitude.

We did at one point have a socialist leaning Labour party who did provide an alternative to right wing Tory policy. But apathy of voters leads this to get messed up. As each election passes, more of the disenfranchised anarchist / socialist / left wing voter types simply don't bother.

Step up to the vote evolution. So what happens? The remaining voters are mainly right wing, so a party wanting to gain power fights for those votes. Sod you lefty types, you can't be bothered to vote, so why appeal to you?

Give it a few cycles of election and wooohooo well done all you apathetic voters! Now there really is bugger all point voting, because all the main parties are going after all the same right wing voters with the same agenda, same manifesto, same disdain for any left leaning political values.

Self fulfilling prophecy or what? Slow clap from me. Well done. Not voting at all really worked out well for you didn't it?