Tuesday, 20 December 2011

$300M royal tweets from Saudi prince Alwaleed

Prince Alwaleed
So the Saudis have invested $300m in Twitter, and interestingly in a secondary sale. But why would you want to buy shares in the very company that had such a prominent role in the Arab Spring?

Prince Alwaleed, the awesome looking guy in the picture, was quick to report that the investment is not political. Looking over the investments of Alwaleed's empire, one can understand why some people would be suspicious. It include controlling stakes in two Lebanon based media companies, a key propaganda battleground in the Saudi's rapidly deteriorating relationship with Syria. He has also made sizable investment in , and pledged his continual support of, Murdock's News Corporation, an organisation well known for its meddling in political affairs and currently the object of the largest hacking scandal in UK history. So although one can't determine that the Prince's investments are politically motivated, we can certainly conclude he is not averse to it either. However as an investor in my beloved Canary Wharf, I am prepared to give him the benefit of doubt.

According to wikipedia, Alwaleed's Kingdom holdings international investments include (or have included)
  • Amazon 
  • AOL/Time Warner 
  • Apple Inc. 
  • Canary Wharf 
  • Citigroup 
  • Coca Cola 
  • Compaq
  • Disneyland Paris 
  • eBay 
  • Four Seasons Hotels & Resorts 
  • Fairmont Hotels & Resorts 
  • Ford 
  • Hotel George V, Paris 
  • Hewlett-Packard 
  • McDonald's 
  • Motorola 
  • Mövenpick Hotels & Resorts 
  • News Corporation 
  • PepsiCo 
  • Priceline.com Inc 
  • Procter & Gamble 
  • The Walt Disney Company 
  • Twitter 
  • LBCI Lebanese Broadcasting Corporation International 
  • SAMBA, Saudi American Bank 
  • Rotana Group (Arabic: روتانا‎), the Arab World's largest entertainment company 

And let the above be a lesson to you America, if you borrow foreign money to over-consume for a few more decades, eventually 100% of all your priced assets will end up on foreign hands. I wonder what the new Coke logo will look like, or the theme of the next Disney movie?

What a week: Cameron used his Veto, Clegg and Cable turning into political pygmies, Kim Jong-Il gone, Antonio back at Lloyds and choose Co-op as preferred bidder for the divestment, Peter Marks of the Co-op is happy (sort of) and Gary Hoffman of NBNK certainly isn’t.

With everything going on, I didn't have time to comment on it all, so here is a summary of the bits that matter to me. Firstly, welcome back to Antonio Horta-Osório, the Lloyds Bank CEO who suffered from extreme fatigue and therefore had to leave the sinking ship in favour of a recovery centre. The North Korean national TV station also reported that Kim Jong-Il, “the Dear Leader”, had succumbed to fatigue as well, but his absence will be more permanent, so byebye to him.

Kim Jong Un - New North Korean Leader
Now the world looks at North Korea with an equal measure of concern, fear, fascination, relief, sadness and anticipation. The new leader, the so-called "great successor", in my opinion, got himself a pretty poor start with that that name which implies he has no abilities in his own right. But he certainly appear to have all the physical attributes to give him a proper inferiority complex, the hallmark of any great dictator, so there is hope yet.

David Cameron
Our own “fearless leader”, David Cameron, went to Europe to defend vital British interest, his words not mine, and was so pumped-up that it seemed like he almost forgot to explain what he wanted before exercising his veto. Disregarding the pretty shambolic spectacle in Europe, the conservative backbenchers were almost falling over themselves to praise the leader in language that would make even the North Korean’s green with envy.

However the deputy prime-minister, Nick Clegg, was nowhere to be found, presumably still sulking over Cameron not following their agreed negotiating strategy and because he was, according to this great Mirror headline, “left looking like a political pygmy”. And what’s going to happen to the Euro? Your guess is as good as mine, but it is looking pretty messy at the moment. 

Ah. Back to the Lloyds.. The ship didn't sink, yet, and Antonio is back to preside over the divestment of the assets that the EU is forcing them to sell because of irregularities in relation to the acquisition of HBOS. Immediately before announcing the return of Antonio, Lloyds also announced that the preferred bidder for the assets will be the Co-op bank, the Co-op shortly after released a press statement of their own essentially saying, thank you but they are not sure they want to buy it :) well played!! Assuming all sorts of things, the Co-op does seem like a good buyer and could become a real player in the future.

Antonio Horta-Osório Lloyds CEO
Gary Hoffman from NBNK, the other potential buyer, didn't completely agree. He also issued a press statement which was a proper diatribe. I guess he has nothing to lose now, NBNK was formed to acquire Northern Rock and/or the Lloyds assets and as it stands they will get neither. NBNK have spent X million in salaries but can demonstrate no results, why Gary would probably be in line for a spanking. 

Then the financial services "authority" announced... drum roll please.. a recommendation to not approve too risky loans. A recommendation so therefore nothing they plan to in any way enforce. The reaction from the lenders could best be summarized as "would you just fuck off". They are struggling to find anybody worthy of lending to (in particular first time borrowers) as it stands, and are very worried about existing homeowners being unable to move from their current property, if they introduce rules that mean people can't get another mortgage. To which the FSA suggested to waive their recommendation under those circumstances (which are all the risky borrowers). I would think it's time to go back to the drawing board guys!

And finally the government continues to chip away at the John Vickers independent banking commission’s recommendations. Latest by agreeing with HSBC that “ring-fencing” of retail and investment banking would only concern the UK part of the bank. I would be surprised if any of recommendations will actually be realised in a convincing form and they definitely won’t, as Vince Cable oddly still believe, “implement Vickers in full”.       

So how is business you ask? Well people like me feed on the fallen fruit, and some disruption is therefore not always the worst for us. When people decide to change, they need help to actually do it. However at the moment it’s a bit like standing in the middle of a tornado and you don’t really know if you are coming or going, but, the uprooted apple tree might have just landed on my lap.

Sunday, 18 December 2011

Get Rich the Hard Way

Recently I have noticed a boom in get rich gurus. Many of them without a particularly strong track record in business or an obvious skill. They are rich because you and I pay money for their books and courses, because I watch their DVDs and you play their board games. It is fair to say that I am quite sceptical of why closing my eyes, standing on one leg and screaming "I am a money making machine" would put any cash in my bank account. But that certainly doesn't mean I am against a positive attitude and sensible financial planning.

Guy Kawasaki, one of the original and most prominent wealth gurus, preaches a particular brand of money management which can essentially be boiled down to spend less money than you make and invest the surplus cash in revenue generating assets such as investment properties. I've read Rich Dad Poor Dad a long time ago and the advice is pretty sound, just don't believe it will turn you into the next Kawasaki.

Extreme prudence is not the path I have chosen. Rather than worrying too much about what I spend, I worry about what I make. There are two factors in Kawasaki's equation, what you make and what you spend. Kawasaki focus mostly on expenditure as the variable, I focus mostly on income as the variable. WHY? Because I didn't give myself much of a choice.

I have always had an unwavering belief in myself and when I was a student, I saw borrowing to pay for my lifestyle as merely a way to to redistribute some of my life earnings, and when I inevitably used more loans to continue my lifestyle after finishing school and more loans to start my first business, I wasn't worried at all. AND THEN I WOKE UP.

My first business adventure turned out to be a fairly spectacular failure and as there was no more money left to borrow, I had to get myself a job. So I did get a job, a normal reasonably good graduate position in a big brand bank. My problem was that I couldn't afford to stay there, a normal graduate salary wouldn't allow me to even service my debt. I studied the job boards and discovered that the higher salaries were to be found in hybrid roles. For me, at that time, in the country I had ended up in, the big money would be in designing IT systems for banks, not just banking, not just IT but in the area in between. I thought yes, I know something about banking and yes I know IT, but how could I convince people I could glue it together, I needed a framework, so I bought a book about IT business analysis (I remember I thought of it as a big investment at the time), internalised it to the point where I could present all the tools as my own. When I finally got a chance to interview (after many many applications) with a company and the COO asked me the question "whats your methodology" I explained in great detail all the models and techniques "I use". I got the job. Once I had the job I needed to work twice as hard to keep it, because losing it would be an impossible scenario (in a county where I wasn't eligible for any income support), and I think this obsessive need to succeed was why only a year later, I was made head of products and analysis, leading people with 10 - 15 years more experience than me. Over the first year I tripled my income and carved out a niche for myself that I'm still benefiting from today. Looking back, being broke and without a safety net was probably what I personally needed to rid myself of my biggest demon, my own laziness and complacency. After that, I worked very hard to avoid ending up in that situation ever again. The failure of my business was my formative experience; easily both the worst and best thing that has happened to me professionally.

So do I advocate this hazardous approach? I certainly don't recommend borrowing too much, now that I have paid my loans back and am debt-free I am much less stressed and I don't ever use credit cards anymore. What I do advocate is setting yourself ambitious goals, if you know you can do it, don't be upset that other people initially don't share your optimism, you just have to demonstrate it. The only question is whether you prepared to work really hard, because what I am talking about is not a 9-17 job. You can substitute experience with effort if you are willing to pay the price, you are the one who has to stay up all night to study what the other people already know, so you are the best prepared at next days meeting (whoever is better prepared tend to get what they want), day after day, for years, but one day you will become an expert in your chosen field and when you are in the top 5% (which I would argue is a credible goal for everyone of normal intelligence) you can ask for a very good salary.

I have seen, and interviewed, many graduates who seem to expect to be taken care of. After graduating, they expect somebody to give them a job, expect their employer to tell them what to do, expect to be given a career plan. There are so many great opportunities in the world, but it is your own responsibility to seek them out. Look at yourself honestly, what is it you want to do, are there any gaps between your skills and the requirements of the job. Find out how you plan to bridge those gaps and present a credible plan to an employer. If they think you will add value, they will pay you. If you can add a lot of value, you can ask for a lot of pay.

Saturday, 17 December 2011

My scientific study reveal the psychology of gender

So today at my regular coffee shop, while minding my business and going through my usual routine of sparkling water -> panini -> coffee, a little girl (I'm useless at guessing children’s age, but she was a diaper wearing size) suddenly came over. I couldn’t actually understand what she was saying, but she clearly had something on her mind. She came uncomfortably close and almost put her finger in my face, and after a bit more baby conversation I finally realised what the problem was. She had spotted, from a great distance, a couple (or more) crumbs on my shirt. 
Incredible, at the age of 3 (or whatever) they have already developed this nurturing instinct. I tried to think if I have ever seen a boy do something like that. No! The only times I have been approached by a little boy, it's been if he wanted to take something I have, show me something he has or punch me in the nuts. Are we really born that different or is my scientific study not that scientific? Somebody tell me I’m wrong, or better yet, right!

Thursday, 15 December 2011

Bank Regulation for Beginners


I got an excellent comment on another post “Euro summit” from Conrad asking for my view on bank regulation. Conrad is part of the Occupy Wall Street movement, an eclectic group whose objectives I don’t fully understand yet, Conrad has a degree in philosophy and, according to his blog, he is homeless (almost by choice it seems). I can’t claim that I can completely relate to your situation, Conrad, and I don’t exactly know how to pitch this other than just give you a proper introduction into banks and regulation. I have tried to describe in simple terms how banks work, why we need them, and what capital- and liquidity-risk is because without a basic knowledge of this, it is very difficult to understand what could and should be done to improve things.


Banking regulation is important. It is like any relationship, if you don't give your wife/girlfriend/boyfriend or whatever you are into a clear idea of what you are expecting from them, how can you complain when they don't act in accordance with your "unpublicised" expectations? If you read some of my other posts you will probably find that I am quite critical of the regulation and I believe that politicians have been directly involved in creating an environment where risky lending practises were encouraged.

I can't claim to be an expert on the US banks but I am quite intimately involved in the UK and working on finding out what to do with some of these nationalised assets. UK is, although worse off, structurally similar to the US financial sector, so I do think it will provide a pretty good anecdotal story.

In the UK, the government established an Independent Commission on Banking, led by Sir John Vickers, a very prominent figure here. He proposed many things but there were in particular two main suggestions, first to ring-fence a bank’s investment banking and its retail banking activities (means building Chinese walls inside the bank rather than actually breaking them up). Retail banking is what you call it when a bank takes deposits and makes loans to ordinary consumers like you and me. Investment banking is in simple terms when banks are involved with various kinds of trading activities. So Vickers says that we should have a clear separation of these two different areas of banking. What that mean in practice is that banks should not be allowed to use your deposits as funding for their trading activities. I completely agree with this. And I certainly think it is bizarre to complain about bankers bonuses if you keep the structure that mean banks can make big bets with cheap funding. Remember that it is in investment banking you find the big bonuses. So it should not be possible to use retail deposits as funding for investment banking. That will likely make the cost of funding go up a bit, and therefore bonuses go down a bit.

The second is that banks should hold more liquidity and core capital to make them resilient to “shocks” in the market. Core capital is basically shareholders capital, and that is in place to ensure that all deposit holders can get their money, if you liquidate the bank. Basically if you imagine that a bank lend your money to customers that can’t pay back, you obviously have a problem, because there won’t be enough money to pay back everyone’s deposits. My view is that this is also a good idea, but it cannot, as proposed by Vickers, be done unilaterally (by one country alone). It has to be an international agreement otherwise it simply won’t work (more about this later). It MUST also be based on risk profile of the assets a bank holds (i.e. the more risky the loans the higher capital requirement, as opposed to the current regime that is rather inelastic) Otherwise you could actually drive banks to do riskier business by introduction higher capital requirements and I think we have all had enough of that.

If we assume that banks will separate investment banking from retail banking so that it doesn’t pose any systemic risk if investment banks fail, and thus we will just let them fail, we can focus our attention on retail banking and on the liquidity and capital requirements.


If you are one of those people who think it would be better to revert to a natural economy, where Conrad and I would meet somewhere to exchange a jug of goats’ milk for 12 eggs, then I think it is pointless to continue reading. For the rest of us we need a financial system for a number of reasons.

In particular we need to facilitate the transfer of money from surplus units (people or organisations that have more money than they need today) and deficit units (people or organisations that have a need for money to invest today). Likelihood is that we are all surplus and deficit units at different stages in our lives.

The trouble is that you might have £10,000 and need them back next Christmas and I might want £100,000 to buy a house and plan to pay back over 20 years. This discrepancy between the lender’s average balance and the borrower’s average balance and in particular the discrepancy in timing (deposits generally short term, and loans generally long term) is why we need a middleman. We need a bank.


Retail banking is essentially simple, you take deposits from people and you pay them an interest on their deposit. Once you have their money you lend it to other people and they pay you an interest. The difference between the nominal interest you pay and the nominal interest you earn is called the net interest. Retail banking is basically all about making an acceptable net interest.

Okay Conrad, let’s create an example where you and I are running a smallish bank of £10 billion in assets. Our bank is a “good” bank, we keep a low margin and we only lend responsibly to people that we know can afford to pay us back. Quality customers if you like.


Let’s imagine that we have 1 Million depositors with an average balance of £10,000 and we pay them 2% interest per annum.

Interest payable: 1,000,000 * £10,000 *0.02 = £200M


We then lend all the money to 100,000 Borrowers with an average balance of £100,000 and they pay us 3% per annum.

Interest receivable: 100,000 * £100,000 0.03 = £300M

Net interest income equals the interest earned minus the interest paid out to customers.

Net interest income: £300M - £200M £100M

Let’s say that we have annual costs of around £20M.

So if we were completely unregulated and didn’t care about risk we would make a profit of £80 million per year. FYI it’s a pretty pitiful result, but it is just an example.


You might look at the above and think that it looks fairly straight forward but in order to ensure that Mrs Depositor can get her money back when she want to we have to look at two potential risk factors namely, liquidity and capital.


As mentioned earlier there is a discrepancy between Mrs Depositors’ short-term focus and the generally long term perspective of Mr Borrower. If something significant happens in the world (i.e. a super sale on ladies handbags) which means that a lot of depositors choose to withdraw their money at the same time, we can’t tell them to wait 10 years until Mr Borrower has paid back his loan.

So to make sure you can pay back your depositors, the regulators (and any sensible CFO) therefore demand that you always have a minimum amount liquid, or in plain English in cash. This is to protect the customers short term so they can always withdraw their money. This is important. So to the Occupy movement, you can write on your banners “BANKS SHOULD HOLD MORE CASH RESERVES”. But as I’m going to explain a bit later they shouldn’t hold too much either, because that will create other problems. I however don’t know if the less powerful statement “BANKS SHOULD HOLD THE RIGHT AMOUNT OF CASH – NOT TOO MUCH, NOT TOO LITTLE” would work very well as a banner.

The below is taken from the Financial Regulator in the UK if you want to read the official blurb.

"A bank’s role in financial intermediation – transforming the maturity of short-term deposits into longer-term loans – makes it inherently susceptible to the risk that creditors’ demands for repayment may outstrip the bank’s ability to liquidate its assets. So banks rely on ready access to the money and asset markets, where liquidity is reallocated from bank and non-bank participants with surplus liquidity to those with liquidity needs. In an orderly, functioning market, an adequately capitalised bank should always be able to obtain additional liquidity. However, this may be hampered or obstructed by market failures, such as asymmetric information, leading to uncertainty about a participant’s true net worth and creditworthiness. This can occur when the market is uncertain about the primary risks faced by a particular firm or class of firms – such as credit risk, market risk and operational risk – but also because more widespread uncertainty leads a wide range of market participants, including those who would normally be the providers of liquidity, to hoard liquidity due to uncertainty about their own needs. This may severely limit the market’s willingness to reallocate liquidity, at prices which properly reflect the true risks, or even at all

We define liquidity risk as the risk that a firm, although balance-sheet solvent, cannot maintain or generate sufficient cash resources to meet its payment obligations in full as they fall due, or can only do so at materially disadvantageous terms. The corollary is that liquidity risk management means mitigating the risk that a bank is not able to do this. This in turn requires reliable access to enough cash resources, at unpredictable times and to unpredictable extents, to meet uncertain cash flow obligations. Such access – and indeed the cash flow obligations themselves – depends on market and other external events and on other agents’ behaviour. Even during normal conditions this can be far from straightforward; stressed conditions, which are themselves often unpredictable, make it even more challenging and add extra layers of uncertainty to a task already surrounded by uncertainty.

We have three sets of quantitative requirements for three types of deposit-takers. The Sterling Stock regime applies to some UK retail banks and requires banks to hold Bank of England eligible assets to cover their five-day wholesale net outflow and 5% of retail deposits withdrawable over the same period. The Mismatch regime applies to all other banks and aims to assess whether a bank has enough assets to meet its liabilities in different time-bands on a maturity ladder. The Building Society regime requires societies to hold 3.5% of liabilities in high quality marketable assets…"

So what all of the above means that we need to adjust our bank example to keep (at least) 5% of our deposits in cash. Let’s say that we listen to those calling for more liquidity and therefore in our example we put 10% aside.


1 Million depositors with an average balance of £10,000 and we pay them 2% interest per annum.

Interest payable: 1,000,000 * £10,000 *0.02 = £200M


Interest receivable: 100,000 * £100,000 *0.90 * 0.03 = £270M

Net interest income equals the interest earned minus the interest paid out to customers.

Net interest income: £270M - £200M = £70M

With the £20M cost, we are making a £50M profit. I'm sure you noticed that our profit is significantly lower than in the first example.


In addition to the above, we also have to have some money for when shit really hits the fan. If the bank lends money to a large amount of people who can't pay them back, then they might go bankrupt. That we all know was what happened to many banks due to so-called subprime loans.

In a bankruptcy situation of any company, a liquidator takes over, sell whatever assets the company owns, give people back their money, creditors first and thereafter whatever is left is distributed to owners/shareholders. Basically the regulators around the world are concerned with making sure there is enough value in the bank to pay its creditors (i.e. Mrs depositor), shareholders losses are their own problem.

Therefore to protect creditors we ask banks to hold a significant amount of what is called core tier one capital. This is an important concept to understand. Core capital can only come in two ways, either by the shareholders putting their money into the business or if the company makes a profit and the company keep this profit in the business. Core tier 1 capital is cash that the company could otherwise have paid out to the shareholders.

There is an international agreement about how much core tier 1 capital banks should hold, and that is called Basel III. It determines that banks depending on their risk should hold capital in the region of 10.5 to 13 % of their assets. If you want to read more about it have a look at http://en.wikipedia.org/wiki/Basel_III

So, Conrad, let’s say that you and I want to start this new £10 billion bank, that means that we need to inject £1.3 billion (if we assume 13% capital requirement) of our money as collateral. If the regulator decides to increase the capital requirements later we will have to either inject more capital (if we have any) or retain profits (if we have any) or reduce our lending.

Let’s imagine that the regulator suddenly decide to increase the capital requirements to 20%, we need to find an additional £700 million and since our bank only makes a £50m annual profit, it will take us 14 years, which will be unacceptable for the regulator. Then we can try to find investors, but because the return on equity in our bank is so low (£50M on £2B capital = 2.5%) relative to other industries it is unlikely we can find an investor, so short term we can basically only reduce our lending to solve the problem.


As you can see in the examples above increasing the liquidity and capital requirements have a fairly direct impact on our banks ability to make money. In general we are left with relatively few choices. Short term we will reduce our lending to fit the new capital requirements (basically by not lending to any new customers which is what you see happening at the moment), but then we have to deal with the really serious issues of not making a return on equity. If we want to make more money for our shareholders we can either pay less interest to depositors (very difficult because we certainly can’t risk that they leave us), reduce costs (but it actually have a relatively minimal impact on the bottom line) or charge higher interest on loans (and since the other two options dont work this is what we will do). Generally in banking the only way we can earn a higher interest is to get involved in riskier lending so that’s invariably going to be our plan. Hmm but that wasn’t exactly what the regulators, governments and consumers were hoping for.

So Conrad would say to the regulators, precisely because we are trying to create a quality and responsible bank, please please introduce new requirements at a pace we can deal with without destroying our business, and we would of course say that the less risky lending should drive a much lower capital requirement, otherwise we are forced to get into all sorts of shady things to be able to create a return. It would be bizarre that we would be forced to set up credit card and payday loans business simply to fill our capital buffers. We would also say to the politicians, if you want us to act responsibly, don’t complain when we are lending less to risky customers, and if you want to drive unsustainable growth through consumer spending, you have to do the dirty work yourself, and so don’t expect us to be an active participant in underwriting low quality loans.

We would also ask for legislation on lending policy. We would for example be happy to see a maximum loan to value of say 80% (i.e. it would be illegal to lend to anybody who has not first saved up 20% for a deposit). What would happen generally is that house prices would fall initially, but after the initial pain (which the government would have to introduce schemes to help alleviate) very few people would end up in negative equity. Conrad and I would also say that a house is a home first and foremost and we would be in favour of capping the number of investment properties one can own. This will do two things. Again it will make houses more affordable for consumers, and it will also reduce the number of high-risk loans on the bank’s books.

Finally we would be completely against unilateral regulation. As you can see above, these requirements does impact the competitiveness of the banks because they have to hold greater amounts of “unproductive cash”. Foreign banks with branch status could therefore gain an unfair advantage. It has to be a multilateral agreement.

Conrad and I are proud to be bankers, we are proud to be able to help our customers buy their first home, a home they can afford (don’t be upset when we say no), plan their finances so they can put their children in a good school, and make suitable provisions for their own retirement. All we ask is that regulations support our pursuit of proper quality and service. We ask that there is a significant correlation (much more than currently) between risk and capital requirements and we ask the government to not create all sorts of schemes and subsidies to inflate property prices.

Tuesday, 13 December 2011

How to fire people

One of the most useful training courses I've been on was about how to fire people. WHAT you are probably thinking, what kind of sadistic person is he, but it's not that I particularly enjoy firing people, but because it is one of those situations, where so much can go wrong, and it can have pretty grave consequences.

In these training sessions, we went through one employment tribunal ruling after another and I can say that in almost all cases of unfair dismissal, the company lost because they didn’t follow the correct PROCESS.

We learned how important it is to DOCUMENT the reason for the dismissal, when and how to give the appropriate WARNINGS, how to be SHORT AND PRECISE when you deliver message, always BRING A HR REPRESENTATIVE to deal with any complaints in accordance with law and company policy and DON'T EXPECT THEM TO LEAVE ON GOOD TERMS WITH YOU (remember this last one).

We also learned to prepare for the reaction of people which can one or a combination of:

· Cry and plead.

· Get very angry and perhaps threaten you.

· Try to negotiate.

· Accept and leave amicably.

It will do you good to visualise each of these outcomes and how you plan to deal with them. If you do expect a person will react particularly strongly make suitable provisions to ensure it doesn't get out of hand. You can avoid many issues by planning it properly.

The answer for each reaction is to stick to your story, don't get deflected, don't get upset, don't get angry, say what you meant to say, explain that the decision is final and HR will handle any questions/complains they might have.

So I was pretty well prepared when the company hit rough patch and my boss (the COO) and the CEO devised a hit list (yes that’s what they called it) and I was told that I there was some work in it for me.

On the day of my first firing, I stopped by my Boss’ office to let him know what was going to happen. He was fairly new in the job and our 3rd COO in as many years, which would tell you a bit about the kind of company I was working for. But this new boss was a pretty high calibre guy, so the expectation was he would be around a while longer. His personality was also a good fit for the business and I certainly don’t think he was hired for his empathy. So anyway our brief conversation was something like this.

Boss: "How are you, are you feeling good about it? Because if not, I can do it, I don’t give a fuck; they called me the chopper in my old job"

Me: "No I’m not feeling good; if it felt good then I would be an asshole. But I’m the line manager, so it would be most proper that I do it"

Two things to add to the above dialogue. Firstly, that the chopper has himself been chopped since. Second, if you are planning a long career and a healthy stress-free life, it will do you good to not call your boss an asshole.

The girl I fired that day broke down and cried, it was pretty bad. In our company we couldn't afford potential retribution and we therefore asked them to collect personal belongings, any personal files they had on their computer (supervised) , gave them a cheque with all the compensation they were entitled to, and then they were escorted to the reception. It is very tough; she was very upset and definitely blamed me. Not something that makes you feel very good about yourself.

The second guy was very angry, angry at me, angry at the company, angry at colleagues which he blamed for his situation. At some point it looked like it could get a little crazy, but when he realised that there wasn't anything to do he actually left with a handshake. The hardest part was refusing to give him a personal written recommendation.

In both the above cases we followed the process, so they had been given warnings both written and in person, I believed it was justified (although certainly accelerated by the company's need to cut staff numbers), and we had done it in accordance with the law. I felt like shit but I also had a duty to protect the company.

I gathered my team afterwards and explained what had happened. You explain that a colleague has been fired, why, and you tell them about the sequence of events. You don’t sugar coat it and don’t look for sympathy. You tell them that you think that the person who left would probably appreciate a call from his/her fiends. In my case I had a good team that knew I would have done what I could to avoid the situation and generally backed me up (as much as you can expect anyway).

But it certainly didn't always go in accordance with plan. There was for example a manager who got "made redundant" and left on amicable terms, several of the owners therefore wrote glowing recommendations, which he then used to file a suit. The problem is that he knew that somebody else had been given his old position, and you should remember that you make the job redundant, not the person. By the company's own accord he was good at his job, his job was obviously not redundant, and the company simply replaced him with somebody it found marginally more important to keep. You can’t do that.

Through the carnage that was the sup-prime implosion, many more went through the revolving door, and it definitely wasn't always right and proper, and besides the obvious personal implications for both people leaving and staying, it also left the company wide open to litigation, and I have no idea how often it came to that.

Bizarrely the most important lesson I have personally learned is to HIRE the right people in the first place. Some consider me unnecessarily tough in a job interview, but I think I owe them to be absolutely sure they will be able to do the job (I won’t take a punt). Get the right person and, unless they prove antisocial or lazy, if they are underperforming it's your failure as a manager.

Monday, 12 December 2011

Euro Summit – I wonder what Soros thinks, in private

As these Euro meetings were unfolding I, like most people, started to get quite confused about what was what going on, and it was (is) becoming more and more like watching some kind of bizarre alternative theatre. BUT if markets are perfect, essentially governed by simple rules of supply and demand, equilibrium and most importantly PERFECT KNOWLEDGE, then, with all the collective brain power of Europe, why does it seem so hard to find solution, and why do the meetings themselves seem to affect to markets so profoundly (because it shouldn’t really if they are perfect). Then I thought about a book I read a couple of years ago by George Soros. Soros one of the most admired, respected, feared and hated investors of all time, made it from rags to currently 7th richest person in America, by challenging some of the fundamental principles of our market system; that markets are perfect and self regulating. Love or load him, his results do warrant some attention.

In his book “The new paradigm for financial markets, the Credit Crisis of 2008 and what it means” he is attacking the very idea that markets are perfect. Instead he argues that markets are constituted by two processes, what he calls the cognitive function and the manipulative function and because these two processes constantly react to each other, prolonged periods of disequilibrium, or bubbles, can develop. It is a bit heavy reading but one could perhaps view what he is saying like a game of chess between those trying to understand what is going on, and those trying to affect what is going on. Because each player react to the other players move, those trying to understand will never fully understand, and those trying to manipulate will rarely reach the exact outcome they were aiming for, and almost certainly both players are working on assumptions/expectations that are wrong.

It is actually a very interesting concept. Particularly interesting is a piece he is quoting from a Ron Suskind article, which I will re-quote to you.

In the summer of 2002… I had a meeting with a senior adviser to Bush… 

The aide said that guys like me were "in what we call the reality-based community," which he defined as people who "believe that solutions emerge from your judicious study of discernible reality." ... "That's not the way the world really works anymore," he continued. "We're an empire now, and when we act, we create our own reality. And while you're studying that reality—judiciously, as you will—we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors…and you, all of you, will be left to just study what we do."

Soros comments that the Aide, presumably Karl Rove, did not merely recognise that the truth can be manipulated, he promoted manipulation of truth as a superior approach.

More than anything it was the above quote that stayed with me, it is one of the most powerful things I have ever read, and I have thought about it countless times in so many situations since.  

Then what kind of players are Merkozy? How about Cameron? How about the other EU leaders? S&P, IMF and ECB? Are they cognitive or manipulative or both? When I wrote the post "Angela Merkel Kann ich bitte mehr Taschengeld haben?" those were precisely the questions I was struggling with.
So what would George say? Well he has been saying many things, about the risk of defaults, countries leaving the euro, probability for double-dip recession etc. Unsurprisingly not a word about the manipulative function, and his narrative should of course be viewed in the light of his own theory on market formation.  Let’s not forget this is exactly the stuff his fortune is built on, and I will therefore be keener to study his retrospective analysis when all of this is over.

In any case, if you are interested in finance, politics and their interdependence,  I encourage you to read the book. Its only 160 pages, so most people will be able to chew their way through it.

Friday, 9 December 2011

Angela Merkel Kann ich bitte mehr Taschengeld haben?

Like everyone else, I am watching what goes on in Europe this week with great interest. A collapse and the subsequent unraveling of the Euro/EMU, would simply be devastating to the world economy.

First of all whoever decided to give Governments of Ireland, Greece, Italy cheap loans and expected them to exercise prudence didn't do too much homework, and some sort of fiscal oversight would probably have been useful. But even though they were really bad, almost every government in the developed world were also reckless and it's hard to identify a politician, in Europe at least, you could have trusted with the job.

However if I was a conspiracy theorist, then I would also be looking at the potential outcome of this summit with some concern.

A monetary union with a single currency and a single interest rate will inevitably benefit some and disadvantage others. If one country grows by exporting to others, then the money ends up in that country.

Conventionally the less competitive country would allow its currency to devalue (happens automatically in an free floating exchange rate regime) which will then increase their production and decrease their imports. It will make them competitive.

In the absence of this mechanism, there have to be another way to balance the books. If you cant adjust your exchange rate and interest rate alike, you have to adjust everything else, but you show me a politician in the world who will run for office on "lets cut income, lets reduce property prices, lets cut spending on schools, health care and infrastructure development". Even if they could abolish democracy and insert an unelected technocrat like "Super Mario" in Italy,  it is very difficult to sustain in the longer term, and more importantly I believe it will drain the country in a sort of "last man turn off the lights" downwards spiral. It is unclear to me if there is any examples of fiscal prudence and austerity alone will generate growth and restore competitiveness.

But if I was Germany, I would at all cost try to protect the status quo (even if my electorate cant comprehend why I'm doing it). It is a fantastic opportunity for them to transfer fiscal powers to EU and thus sustain the imbalances they are benefitting from, while still protecting them against accumulation of debt in deficit countries. I am actually in favour of some sort of fiscal integration but for the peripheral countries, unless they are happy being turned into great wastelands, it could only only work if accompanied by substantial income transfers, i.e. give them back what they are loosing on the trade, so they can invest in economic development, much like what would be the case in most countries internally. Will they,  when they rush through these changes, remember to implement provisions for large scale fiscal transfer, I think not. Conveniently S&P has put all the Euro countries on "downgrade watch"  and ECB and IMF have declared they are not going to bail out countries, so Germany has an extremely good hand to play. It smells a bit funny though.

Boris Johnson, the Mayer of London, said yesterday that it looked like they were trying to save the cancer and kill the patient. The cancer (in my opinion) is not the Union itself, but more so the selfish interest of some countries, and incompetence of others, that mean vast imbalances in it's implementation. The "peripheral countries" already have the trousers down at their angles and now they are being asked to sign a treaty to keep them there, forever. It might be a good time to brush up on your German.

Thursday, 8 December 2011

Banking in the Cloud and the Data Protection issue

A few years ago, when all this cloud hype started I was working on setting up an R&D centre, utilising Microsoft technology to develop solutions for commercial and retail banking, and I therefore had a number of meetings with the Microsoft evangelists, particularly in the server technology area. I had followed the development of the Oslo project, the Azure platform and Amazon Web Services which were (are) all novel in the way you in the way you build and deploy applications, but in my opinion a bit disappointing, and now suddenly Microsoft, Amazon and many others were with unprecedented (at least since the dotcom days) coordination launching "the cloud" and I couldn't figure out what was new.

So at one of these meetings I asked "if the cloud is a bunch of hardware resources in a network with virtualised servers, then what the hell have we been doing the last 10 years?" and the only answer I got was a crooked smile.

My conspiracy theory is that what Microsoft, and others, had done was, in a year where nobody had any major releases to take the excess capacity and re-launch existing technology, a concept older than the internet itself. They took something that was considered very boring and super geeky (hardware, network, and virtualisation), even by most software developers, and made it cool. Brilliant!

Almost any vendor in the infrastructure space jumped on the band wagon and they could do that quickly (because after all it was basically just a name change). They were now cool!

 But then something strange happened. Because it was suddenly mainstream, IT managers and executives that hadn't been involved hands-on for a decade, started to pick up these things and run various kinds of feasibility studies, technology roadmaps and transformation programs because they wanted to be cool too. Two years before, the guy with the greasy hair and really thick glasses from "network services" would just set up the infrastructure, but now it was an executive discipline.

In the process of simplifying everything so they could themselves understand it and then simplifying it further so it could be presented in a PowerPoint format at a board meeting, some strange misconceptions began to blossom.

The most interesting one is the belief that if you install a server on a cloud infrastructure, you can’t control where your data is, it will flow freely all over the world in this great indefinable soup that is the cloud. You don't know if your customer data is in the UK or Thailand.

Enter the Lawyers! I have been in meetings with two sides of lawyers with a second-hand knowledge of something already simplified and unenlightened, trying to reach an agreement on data protection implications. Lawyers are by virtue of their profession inherently 1000% risk averse and you can therefore never reach a useful conclusion.

Have a look at this piece from Willans Solicitors. It is from their news magazine a few days ago where Partner Simon Brace, an ex City lawyer, highlights concerns regarding cloud computing;

potentially you could find you data chopped up and is being stored on a number of different servers in any number of different countries world wide, leaving you in complete breach of data protection laws.”

Needless to say that it prompted questions for me, because the wrong people read that article. Thankfully the Information Commissioner’s Office (ICO), which is the authority on the area has issued guidelines and if you steer your clients lawyer towards that site, there will be enough ass-covering in it to gain approval.

You may transfer personal data to countries within the European Economic Area on the same basis as you may transfer it within the UK.  However, you may only send it to a country or territory outside the European Economic Area if that country or territory ensures an adequate level of protection for the rights and freedoms of individuals in relation to processing personal data. Read more about what this means in practice.

 Personal data shall not be transferred to a country or territory outside the EEA unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.

Man, all of this because we couldn't just leave the guy with the thick glasses to do his job.

So anyway, for a small company I'm a director in, I decided to put our application on a cloud server, and do it myself so I have a 100% understanding of what I'm talking about.

I chose the Rackspace cloud server because it was a pretty reputable business, they had company and data centres in the UK (and importantly if you are a UK customer your server/data will be in the UK data centre) and it looked user-friendly enough that even I could manage it. And finally I chose it because it would give me completely normal windows server, I didn't have to make any changes to my application, and I wanted something I could access with remote desktop.

Call it cloud, call it whatever, but my conclusion is that it is actually very cool. Installing a server took less time than an average intercourse and that is, I can reveal, incredibly fast.

So this is how you do it.

1) Create an account with Rackspace.

2) Select a server configuration:  Windows, Linux - and if you want a database server.

3) Scale it: How much hard disk, ram, cpu do you want (you can always change this later if you need more firepower, they even have an ipad app that allow you to dynamically change the configuration of your servers. it's great and very useful). You basically pay a monthly charge based on the kind of server you have chosen and the amount of resources you have assigned to it.

4) You can also very easily set it up to do regular backups and it's basically a complete copy of the entire server, with operating system and everything, so you won’t have any strange compatibility issues when trying to restore your backup.

5) Perhaps the best thing was when, after deploying and configuring everything, I realised that I also needed a test environment. Through the control panel I could simply make a copy of the server I already had and now I had two.

Would I be comfortable with financial services apps hosted on a cloud server? Yes absolutely. Would I attempt to install everything on a cloud infrastructure if I was HSBC, Barclays or Lloyds? Probably not. They have too many legacy systems with very complicated configuration that it simply isn’t economically feasible to do.

 I would certainly look for admin functionality like the above, even if it was installing in our own data centres because it makes life so much easier (agile if you like) for the development teams in the bank. For core systems I probably wouldn't go with a standard hosted solution without a very thorough investigation of the physical security at the centres and I would, perhaps, ask for a "ring fencing" of our technical assets. IBM and others are also working hard on promoting what they call a "virtual private cloud", which is an interesting concept that I shall leave for another post.

In summary, if you pick the right service provider, and set it up properly, I believe you should be comfortable banking in the cloud.

Tuesday, 6 December 2011

Groupon – is it fair - will it work for you?

The UK Office of Fair Trading has announced that its launching an investigation into the selling practices of Groupon, normally I wouldn't pay much attention but coincidentally, just a few days earlier, I prepared a report for a company I’m involved with about using Groupon to sell certain financial products.

I'm very pleased to say I advised against it (so the news makes me look really good), but at the same time, I do find the news a bit one sided.

So this is what I said in my report;

"Groupon artificially controls the supply side by limiting the number of ads. There isn’t a fixed price to place the ads; you negotiate it individually with the sales rep. However what they will generally require, is that you first discount your regular price substantially and then you pay them a large chunk of the sales. Like Adwords, Groupon selects the ads based on an auction, what will make them the most money, and since supply is limited, competition for the slots can be fierce. I think it is unlikely they will take us, but if they do expect a major loss on the campaign.  In general my feeling is that Groupon is a marketing tool, it is for people willing to take a loss (or have a very wide margin) on selling products with the longer term objective of turning them into regular repeat customers. Our customers would generally not be frequent repeat customers and I would therefore suggest that this approach won’t be suitable for us."

I think blaming Groupon for the incompetent business decisions of advertisers is a bit rich (I.e. “I lost a lot of money selling my product cheaply on Groupon”). As a business owner you are, I believe, responsible for understanding the basic fundamentals of business, if you sell something for less than it costs to make, you will lose money, you can’t blame anyone but yourself. However you can perhaps discuss if Groupon is worth it. Does it benefit your business, does it benefit the consumer? I suppose the latter is easier to answer, if the consumer gets a bargain and the companies selling through Groupon are able to fulfil the order with a satisfactory service level, then it’s good for the consumer. If not then Groupon will need to tighten up on the kind of companies they allow in. I would argue that a lot of the small shops are overwhelmed with the order quantities and that benefits no one.

I think in general something like Groupon is for companies that have a very good plan for how they plan to convert these bargain hunters into repeat customers. Trouble is that many mom and pop shops signs up to Groupon without understanding magnitude of their potential losses and has an unrealistic belief that these many of these customers will become regulars and, of course, they won’t.

If I was selling Polaroid Cameras, games consoles or anything else where the consumables are proprietary products as well, then I would be the first to sell on Groupon. For anything else I would be a lot more careful. Ask yourself if, after they have redeemed their 70% off voucher, they are likely to come back to your 5* restaurant? I propose that for many businesses you can find better and more targeted advertising channels that will generate more sticky customers and more recurring income, but that doesn’t mean Groupon can’t also be an excellent channel for some, but it is your responsibility as business owner or sales marketing/marketing practitioner to properly think it through.   

Monday, 5 December 2011

Nick Clegg, are you lying to us? “Policy” on income and wealth redistribution is make-believe.

I can’t stand listening to this. The government, Nick Clegg in particular, are frequently on the news, talking about dealing with excessive executive pay levels in the private sector and that how it is unfair that all the “heavy lifting is done by the public sector”. Ok, perhaps, he has a point but how can they deal with it? It is private companies and the owners surely can decide what to pay their staff, unless we are prepared to introduce legislation for “maximum salary” (which would be a very dangerous thing to do unilaterally) but according Clegg this isn’t the case, they just want more “transparency”.

Personally it doesn’t affect me very much, I’m self-employed and 100% of my salary is deposited into the black hole that is my shared bank account and under the tight management of my wife. But it does bother me to listen to this kind of spin, especially since there is no way they could or would implement any real legislation, it would simply be too expensive.

A very simple calculation will tell you why. If you are earning a very high income, you are likely to pay the higher rate tax on most of it. If you ask the companies to retain the income, you would instead receive corporation tax on the money which is about half. It is also fair to assume that banks and other large businesses will use a lot of this additional profit to pay shareholders dividends (and certainly also compensate staff more with share options). Shares that would often be owned by foreigners and therefore the money will leave the country or shares/dividend payments that will be used to transfer income to family members on a lower tax band (and since dividends are franked with a tax credit, it is an excellent tool to reduce your tax liability). Trust me the best, and most transparent, thing is to ask the banks to pay as much in salaries as they can and then take 50% (or whatever) for the common good.  

As long as bankers and other highly paid people continue to burn bonuses on fast cars and strippers, it is more a short term annoyance than a real problem. It is the long term accumulation of assets that is the problem. IF you really wanted to do something for wealth redistribution (not that it’s my personal political opinion necessarily) you would focus on the taxation of assets, not income. That would change things radically.

But I don’t think that will happen either for far less palatable reasons. Although politicians are by exec pay standards earning a low salary, most of the cabinet (23 of 29 I believe) are millionaires. Their families are sitting on vast amounts of assets, typically property portfolios, making tidy sums of lazy income on the side. Nick Clegg himself was born with a giant silver spoon up his arse made by his father in, where else, the City. It might be unfair that some jobs attract higher rewards because of a scarcity of that particular skill, but I believe it is far more unfair that some people inherit huge amounts of income generating assets and never have to lift a finger for it.  So don’t dish it if you can’t take it.

Saturday, 3 December 2011

Living in the rectum of London

So recently I met with some sales people from an IT company, they know I’m responsible for a core banking system selection (if you don’t know what that is, then it’s the main bank system that handles all the accounts and transactions and will set you back at least £20 million if all goes well, and it never does) and therefore they are of course keen to meet. Since I'm a sad person with a shortage of real friends, I tend to accept.

Anyway at some point over the course of the evening the new sales guy, who don’t know me and therefore don’t know that I will hold a grudge longer than an elephant, called my place of residence "the rectum of London". I guess that’s about one inch short of calling me a turd.

What prompted him to make this career ending statement was of course that I had told him about my horrid encounter with the emergency room at the nearest hospital and what he meant, I hope, was that Canary Wharf, where I live, is surrounded at all sides by deprived areas.

However thinking about it, by conventional standards living in Canary Wharf isn’t necessarily that fantastic. Bizarrely though I love it, but if you don’t live in London city centre and perhaps are on an average income, this post might make you feel better.

To meet the demand for accommodation for people working in the area, and particularly in the boom years where property speculation was rife, a lot of residential properties where developed very quickly. They are generally of poor standard. I've driven through real slum in Jamaica and the Philippines, terribly sad living conditions, but it is entirely plausible that the person who built the shantytowns there was selected as the architect for the apartment blocks around Canary Wharf, because of his experience with card board and Gaffa Tape. How on earth anybody in their right minds will buy these places on a 25-30 year mortgage is beyond me. I find it highly unlikely they will be habitable by then and the resale value will be close to zero. Luckily for us the Chinese haven’t realised this and 30-40 pct of the properties are at the moment offloaded to Chinese investors. Well done Knight Frank!! So because I am in my right mind, I am renting.

A two bed apartment will set you back somewhere from 1000 to 3000 pound per month. For this modest amount, you get a couple of small rectangular rooms, and absolutely every closet, drawer, door and whatever are fitted so poorly and with such consistency, that you would have thought it required extra effort.

As a private tenant in the UK, you generally renew/renegotiate your lease every year, and it can therefore only be viewed as a short-term solution. Every 6 months or so we have an inspection, where some tosser from, surprisingly, Knight Frank, comes by with a clipboard, and tell you the importance of using the dehumidifier in the bathroom, even in it's completely useless at anything other than making noise and drawing air in from the neighbour; the ventilation in my bathroom is connected to the kitchen of our neighbour, and they like curry it seems. I can only imagine the smell in their kitchen. I think I'm the lucky one.

We also have some sort of ventilation above the ceiling in our kitchen and living room. Sometimes you can hear little footsteps and scratching, my wife is fairly calm about it, but I am incredibly scared of mice and rats, everything that isn't dead in fact, that I can't sleep, so I go down and ask the porter to poison them, which will then deal with it, for a while.
When our smoke alarm needed its battery changed, it was installed so poorly that we had to replace the alarm itself. So for a couple of days we had a beep sound every few minutes until we could get a handy-man to come (you’re not allowed to do anything yourself so you have to wait for the landlords guy). While living here, we have also had the radiator and toilet flush thingy (it made such a loud noise, I couldn’t flush at night out of fear of waking up the building) replaced.

We have a weird, wooden on top of concrete, decking in the hallway outside, which makes it extremely noisy when anybody walks on it, not helpful if you are trying to run an escort business as I believe is the case with one of the neighbours. Clap clap clap clap every 30 minutes until 3 am.

However, the most incredible thing is the windows. We have windows in the living room that can only open a few inches, presumably for security reasons, so it’s not possible to wash the outside. I enquired the management a few times about getting our windows cleaned and told them I would be happy to pay for it. They would look into it but of course nothing happened.

Then one day I noticed that the block next to ours had their windows washed, so I asked management again. It turns out that when the property was built, in order to get planning permission, the developer had to give one of the three blocks to the counsil and that block therefore has counsil tenants, and the counsil is required to keep the property at a good state (I’m sure they don’t have rats in the ventilation either). Anyway I then asked the guy who was washing the windows over there, if he could do mine as well, for whatever was the charge, but sadly no, he was only allowed to work on the counsil flats. WTF. Of all the moronic things local politicians can come up with this one deservers a special award. Firstly why do they need to stay within walking distance of the banks? As the salesman correctly pointed out there are depressed areas 1 mile in any direction and I am certain that if you took the money and spend them there, you could benefit a lot more people, and potentially, also free up apartments needed for people that actually work here (therefore generating more tax income for the counsil). And then I just found it completely crazy that your living standards are better in the subsidised flats, than if you are one of the people paying the full whack. I can be kicked out with "reasonable notice", counsil tenants cannot, and the owner can unilaterally decide to change to rent when the lease is up for renewal (although I can of course bugger off), but most importantly you get your windows washed with my tax money, while I can’t see anything out of mine.

I decided to look into what you are rights are as a counsil tenant and got the below information from a booklet prepared by Department for Communities and Local Government.   

      You can live in your home for the rest of your life as long as you do what your tenancy agreement says.

      You can buy your home at a discount.

      You can pass on your home to someone in your family living with you when you die.

      You can take in lodgers and sub-let part of your home.

      You can get certain urgent repairs done quickly and at no cost to you.

      You can carry out improvements to your home.

      You can be paid for certain improvements you have made if you move home.

      You can help to manage your estate.

      You can exchange your property for another one.

      You must be consulted on housing management matters.

      You must be given information about how your council runs the homes it owns.

As a private tenant you have NONE of those rights. I am not at all against counsil tenancies, but I think there a lot left to be desired for protection of private tenant’s rights. In continental Europe private tenants are protected by legislation not very dissimilar to the above, and I think we could combat a lot of the mindless property speculation, that have caused so many problems, by simply requiring landlords to comply with rules like the above.

After that diatribe you are expected me to say something like “I can’t wait to leave”, but the curious fact is that both my wife and I love living here. We love it. We wouldn’t buy it, of course, and I could live without the rats, but we are completely at home here. For us it is great. The parks, the houseboats, the skyscrapers with the banks, the shops and cafes are great. However if you aren’t in love with banking, you probably wouldn’t extract the same feeling of awe that we have and, objectively, a little house with a garden and friendly neighbours in the suburb would for most people beat living in Canary Wharf. Just not for us.