Net Present (Lack of) Value

Once again I sat through a meeting about NPV calculations and the assumptions behind them. This time NPV's are being used to calculate sales bonuses. Huh? You assign the loan to the gal who sold it: every month the loan instalment is paid, she gets a percentage, just like a regular salesman does. Who needs NPV's?

There is one circumstance when you do. That's when you want to sell a commercial building with a known and reliable rental income from a tenant who isn't going anywhere until the end of the lease. Then the NPV of the cash stream is the capital sum you would need to invest now in a quarterly-paying bond at the discount rate you chose to generate a cash flow with the same NPV. (Quarterly because commercial rents are usually payable on quarter-days.) And that is only possible because the cash flow from a commercial lease is basically the same as from a bond.

In this example, the forecast of the net income stream can be done accurately and has a high degree of probability of being true; while the NPV itself has a real interpretation, as the value of a bond, and as the purchase price of the building.

Now consider a mortgage or personal loan. This has a net income stream, payable monthly. It is much more difficult to forecast: loans are closed early, the default rate is very high (banks make loans to people with a 30% chance of defaulting and think it's good business – the people who financed your neighbour's sofa live with default rates of 50%) and the timing of a repayment or default is erratic. The bank can calculate averages, but the variances are high and the tails correspondingly fat.

But here's the real difference: for a commercial building, the net income stream repays the capital amount, but for a loan, the capital is repaid by the gross income. So if you discount the net income from a loan and call that the NPV, whatever meaning it has, it is not the amount you would pay for the loan. If you wanted to own the net income stream from the loan, you would have to buy the whole of the outstanding capital at the time of purchase, less a discount equal to the expected default on the remaining term of the loan. So if the discounted net income isn't the purchase price, what is it? It turns out to be the amount the shareholders would need to invest in a monthly bond offering the rate of return used in the discounting calculation to yield a cash flow with the same NPV as the loan. So it's the value now of the net income stream to the shareholders. It's what the loan is “worth” to the shareholders.

Or at least that's what everyone around me keeps saying. It sounds convincing. Except it isn't what the loan is worth to shareholders. What the loan is worth to shareholders is the contribution it makes towards their annual dividend payments, and that is measured by the gross margin (net income minus variable costs) of the loan taken year by year. As a rough guide, most of the value of any reducing-balance instrument is in the first half of its life.

Do not ask me why they calculate the NPV – I suspect it's because they're in banking and calculating NPV's is what you're supposed to do when you're in banking, like taking ecstasy when you go clubbing. That the discount rate they use is around 12% - good luck getting that in the money markets – makes the whole exercise silly.

So aside from the fact that it's the wrong measure, what else is wrong with using NPV's? It's a distraction from the job of finding the right measure for the job; it gives them the undeserved feeling that they are being sophisticated and clever; and it soaks up analysis time doing monthly lifetime factorisations of all sorts of things that should be left as totals: defaulting, bad debt, early closures. It creates an air of utterly spurious accuracy. But hey, get with the programme. This is, after all, the same industry who thought that lending money to people with no incomes was a good idea.

William James - Part One

"...if you want an absolute duffer in an investigation...take the man who has no interest whatever in its results; he is the warranted incapable, the positive fool. The most useful investigator...is always he whose eager interest in one side of the question is balanced by an equally keen nervousness lest he become deceived." (William James, The Will To Believe)

I've been reading William James this week. A very long time ago, when I was a teenager discovering philosophy and libraries had Real Books in them, I tried to read James' Psychology, but I don't think I got very far. I'm reading the Pragmatism and Other Essays Penguin Classic and I have The Varieties of Religious Experience in the stock-cupboard.

Pragmatism is the book A J Ayer modelled Language, Truth and Logic on - the use of a single simple principle to cut swathes through metaphysics, morals and pointless disputes. I'm not too sure they don't cover much the same ground. James's bluff, breezy, conversational writing style influenced the authors of the "Big Book" of Alcoholics Anonymous (a work with which I am very familiar). The idea that we weave new information and experience into an existing web of belief and knowledge, possibly rejecting it if it doesn't fit, is one of Quine's Big Ideas - though Quine's formulation is usefully more detailed. It's also been travestied as "the coherence theory of truth".

Anyway, I found the quote rather apt in the light of my interest in mistakes. I'd slowly come to the realisation that one reason I didn't see wrong numbers is that I had no expectations as to what the numbers should look like - I wasn't looking for a particular result, and I wasn't looking because I didn't care about the result - I was more interested in the method of getting there and how to get there more quickly next time. So mistakes just sailed on straight past me.

Being "the warranted incapable" is not such a good position for an analyst to be in.

A couple of photographs of London, snatched during an inter-office trip...

Seven Dials, Covent Garden in the afternoon

St Paul's Courtyard, lunchtime

By the Tate Modern...

80 / 20 Development

That old Pareto rule applies to software development: you can get 80% of the user's desired functionality for 20% of the effort needed to produce a proper application. One iteration of the rule means that you get 96% of the requirement for 36% of the total effort, which is pretty much as far as most people go. Especially when the application is being developed in Office.

There's an excellent essay called From Windows to Cocoa in which Peter Bright describes three kinds of programmers. The first kind are really business analysts, the second are the guys working your company's big programs, and the third are the real craftsmen. Here is Peter's description of the first kind:

“...basically business analysts; they're using Access or Excel or VB6 to write data analyzing/number crunching applications. These things are hugely important in the business world, totally unexciting to anyone else, and the people writing them aren't really "programmers." I mean, they are, in the sense that they're writing programs, but they're not especially interested in programming or anything like that. They don't really care about the quality of the libraries and tools they're using; they just want something simple enough that they can pick it up without too much difficulty. They'll never write the best code or the best programs in the world; they won't be elegant or well-structured or pretty to look at. But they'll work. Historically, as I said, these are the kind of people who Access is made for. Access is a great tool, quite unparalleled. Sure, it's a lousy database engine with a hideous programming language, but the power it gives these people is immense. So Access and VB6 and Excel macros are where it's at for these guys. ”

That's pretty much me and all the people around me. Except there are two levels within this first group. There's the 80/20 developers and there's those of us who try to write robust applications. What's an 80/20 developer? He's the one who writes 80/20 applications.

An 80/20 application dumps you into the middle of the VBA editor with an error message like “Get Range method of current object failed”. When you call the guy (have you ever met a girl who cuts VBA?) who developed it, he says: “You should have removed the “?” from the data” or “Oh, you can't do that with this, it doesn't make sense”.

An 80/20 application has user forms where all the buttons are active and have names that don't quite describe what they do. It is possible to push one of these buttons and get obscure error messages and not be able to get back to where you were. When you call the guy he says “you can't press that button until you've loaded the csv file and entered the magic password. I did explain that.” That's not how a user interface is supposed to work.

An 80/20 spreadsheet has range names that don't describe what the range is for or has in it; it has un-commented code, functions that replicate something that there's a method in the object model to do, non-descriptive variable names, no error-trapping, no exception-handling... and it's hell to maintain.

Sure the 80/20 application does what the users want it to do. Almost. If treated with kid gloves and fed only carefully-prepared data.

For reasons I don't understand, people think that just because it's Microsoft Office, they don't have to read anything. There is more to learn about the Excel object model than there is in the usual first-year undergraduate course of mathematical methods. Learning Java with all its main libraries as well as finding your way round Eclipse or NetBeans will fill up more space in your head than a geology degree. There are 700-page books full of the tricks and annoyances of Excel, Access and Word.

You need time to develop an application which will let you find your way round the object models. That's what you don't have. Bash this report out, run that simulation, cut that query, attend this meeting, make up that presentation. Busy work that benefits nobody. We're not here to learn things, we're here to fill in forms, work processes and make the company money.

Well, you can't do what you don't know how. You can't be innovative if you don't get time to think, read and talk with other people. You can't do things smarter if you're permanently dumb.

Steve McConnell's Code Complete is pretty much everything most people will need and want to know about good programming style. Buy, read, enjoy and digest. Even picking three things from it to improve your programming will help.

The Philosophy of Mistakes: Interlude

I'm going round and round in circles on the subjects of mistakes and testing. As ever, it's because I'm arguing with a voice in my head that doesn't belong there. It belongs to a previous manager I had who had a very low level of technical skills and knowledge and paranoia way into the red zone. What he wanted was the assurance that nothing would ever come out of our pricing engine that would ever cause him embarrassment. Nothing. Ever. But it all had to be black-box testing, because if he (and others in the team) looked inside the box, they would not really understand what they were looking at.

Now everything I have read on software testing says that the vast majority of mistakes and omissions are found by a thorough code review conducted by two relevantly skilled people. Black box testing is a very bad way of finding mistakes. Why? Because you don't need many input variables with a reasonable range of values before a “perm all the values” test suite becomes a billion or more records long. You can't construct it, let alone have the time to run it. So you have to run a subset – a very small subset of maybe a hundred thousand records. What are the odds that a random flaw will be in that subset? That would be less than 0.01%. This is not going to work. Plus, you have to construct the test cases, which means you need an engine to produce the “answers” for the cases – in software, since no human being is going to be able to work out the answers to more than about a hundred cases accurately – so you get stuck in an infinite regress of checking the checking.

What, in other words, my paranoid manager needed to do was sit with the programmers and get a detailed walk-through of the code behind the pricing engine and how well they had foreseen problems and dealt with them. He would then have an idea of where specific problems might arise and what he should be testing for. But no, that was never going to happen.

Testing goes back to the days when people tried to pass off low-grade precious metal currency on each other – so you needed to test that you really were getting a genuine shekel or twenty-carat gold or whatever. Testing for that is simple. So is testing that the latest batch of cannon aren't going to blow up all over your soldiers – that's why it's called proof-firing (on the Abderdeen Proving Grounds). Any gun that survives a dozen shots is unlikely to blow up later – it's in the nature of the beast. As the system gets more complicated, so does the testing. In the end, you have to accept that if you're going to have anything as complicated as a nuclear submarine or a Boeing 747, some things are going to be less perfectly finished than others and it may even sail or fly with a couple of non life-threatening snags. That's the nature of the real world. The same goes for software – though the desired standard is more XP SP1 than Windows Vista. Perfect, error-free programs are either very few if complex, or very small if plentiful. What we get in ordinary business applications is going to be well short of perfection, unless it's fairly simple.

Testing is and always was there to prove that under normal circumstances your widget works, not that under some weird conditions it doesn't. If it's a mechanical widget, those weird circumstances may not be too hard to find – too hot, too cold, too much dust, but who foresaw “the wrong kind of snow”? If it's a software widget, those weird circumstances might be there, but may never occur. Software isn't like a fugaze coin – which shows up bad when it tries to be good – rather, software can work just fine, except when...

And no amount of black box testing will ever find it. What you need is sensible peer-review. Like that's going to happen in a modern organisation where everyone is a single point of failure.

Which Lady Is The Tramp?

The other morning on the commute I was listening to the Pure Jazz Moods 2-CD (it's the commute, you're allowed to listen to anything that puts you in the right mood) and on came Ella Fitzgerald singing The Lady Is A Tramp. And with the last lines “I'm alone when I lower my lamp / That's why the lady is a tramp” I realised what a neat bit of ambiguity Rogers and Hart had pulled off. You're supposed to think, well, I always had thought, that it's the singer who is the tramp, because she likes the beach at Coney Island, can't eat late, doesn't play craps with barons and earls and is a “hobohemian”. Except she turns up on time for the opera, stays awake all the way through, actually “reads every line” of Walter Winchell, doesn't do bitchy gossip (“won't dish the dirt / with the rest of the girls”), is quite happy with boating on Central Park (as opposed to a yacht off Newport) and when she goes to bed there isn't a lover there. None of which is true about “ladies” - so it's the Lady who is the tramp, because her manners are fake, rude and expensive. In fact, the Lady is a moral tramp, while the singer is only a social tramp.

It's end of the Bank Holiday - deep thoughts are suspended for a day.

Countdown to July

It does not matter how many times I sit through a re-organisation, the waiting does not get any easier. You know they are plotting to get rid of everyone they don't like and who doesn't fit in, while lying about how it's all about organisation, skills and office locations.

I'm worried about losing the salary, of course. The possible eighteen-month job search is not something I'm looking forward to either. But I have some money – even though it's supposed to be for my pension – and I know I'm not going to lose my mind or identity being out of a job. Not out of work, my work is as a philosopher, logician, human being (washing, cooking, keeping a pleasant house – this is work) and all-round creative person. When I have a job, I'm usually out of (my) work.

What is really irritating me is the thought of having to listen to a load of patronising bullshit, while the HR department “support me in my transition” and explain that I shouldn't take it personally. This is claptrap: if it has my name on it, it's personal. The only things that aren't are circulars addressed to “The Householder”. The moment they tell me, I want out. No handover (what's to hand over – if they don't need me, they don't need what I do or what I know), no hanging around: give me the Compromise Agreement, the breakdown of the severance payment, structure it to be tax-free and I'll sign and return it as soon as my solicitor says it's okay. Otherwise, I'm outta here. Pack my case and go – right then and there. Before they can even start their box-ticking speech.

I am fifty-five years old and this is the fourth time I will have been made redundant in July. My pensions were worth not much last year and even less after what's happened to the markets since. You don't want to know the unemployment figures for men over fifty-five. They want me to sit still while they run through a speech that makes them feel good about what they're doing: they need me to sit there and nod along, or they won't feel justified in themselves. The hell I intend to give them that satisfaction.

Walk around our offices and you would not know all those people think they have a good chance of losing their jobs. Management say they think it's because we're all being “professional”. They don't think it's anything of the sort – they know it's because everyone is in denial. It hasn't happened to some of them, so they don't know it's real yet. They still think they are needed. They have yet to learn that no-one is needed, that everyone is fodder and management think that whatever you do can be done better by someone else or didn't need to be done at all. It's after it all happens that the mood will turn sour and the “professionalism” vanish. By then, I'll be gone.

While I have had myself “out there”, I haven't been that vigorous in finding something. Now I have to go through some motions – not because it will result in a job offer, but because it will make me feel like I'm being pro-active. We're going to hear in the next two-four weeks and I'd like to be running when the ground hits me. Maybe it was just about okay to believe that I had a job in the new organisation until last week, but now it isn't. The odds have swung. If I leave the serious search any longer, I will feel bad about myself.

That's what this is really all about. It has nothing to do with them. It has to do with me: I'm not acting as I need to be. I have to not “judge myself mercilessly” but to start the work. If only I didn't hate job-hunting. And it's only just hit me why. You, gentle reader, may think that the next job is going to make your life better and be fun or interesting or give you lots of travel or whatever it is rocks your boat – but I don't think that about my next job. I can't make money from my work, I can only make it, as so many of us have to, from my job.

On Being an Analyst In A Bureaucracy

For reasons beyond me, people want to be managers rather than analysts. I regard the title 'analyst' as a badge worth wearing, whereas I'm not so sure that 'manager' is really worth it – these days, managers in large organisations are little more than bag-carriers for the senior guys, “messengers, sent by grocery clerks, to deliver a bill”, as Colonel Kurtz describes Captain Willard in Apocolypse Now.

There are jobs with 'analyst' in the title which are more concerned with processing, say, prices for commercial accounts from the salesman's proposal into the computer systems – these are really administration roles. Then there are the poor bloody infantry sorting out the errors in vast databases - these are data administrators, and no less valuable for that.

The role of an analyst is to source, interpret and report information and provide an informed view on what that information means for the future. It's to dig into the numbers and then assemble a picture: which is both analysis and synthesis. If this is done at all now, it's done by top-flight investigative journalists when they write books, and maybe a handful of stock-pickers in the financial industry.

That can be difficult to do well or with integrity when the information and evaluations are contrary to the chosen aims and ambitions of the executive. CIA analysts had this problem in a big way with the Bush administration. An analyst whose interpretations don't fit the current policies is usually told to get with the program: in most organisations, raising money or gaining management support is everything, and figures and anecdotes are plucked from thin air to support the policies.

You can't be an analyst in a bureaucracy. Bureaucracies are inherently political, and politics is the opposite of honest, creative scientific, artistic or technological endeavour. Managers in bureaucracies do one of three things: push initiatives they believe will advance their careers, resist changes pushed by career-advancers, or act as the willing servant of their senior managers. Everything they do is with a political end in mind, everything has an ulterior motive, which is why their annual appraisals are dishonest and hypocritical. Bureaucracies are not knowledge organisations: knowledge implies truth and an authority independent of rank and personality. That is incongruous in a bureaucracy: a manager does not have to be right, they just have to be senior. If your Director says that making loans to high-risk individuals so that you can book the up-front insurance premiums and a bunch of income in the next three months is the way to go, and damn the bad debts later, then by golly, that's they way all the under-managers will go and it's the song they will all sing.

Bureaucracies are not skill-organisations: skills, technical ability and expertise, have the same implication of truth and independent authority, and are therefore anathema. That's why big organisations don't train people in transferable, market-valuable skills: not because “they might leave” but because then those people would know something that could not be contradicted by management to suit some bogus policy.

An analyst needs seven things: knowledge of their industry and market; a broad general knowledge of economics and demography; a grasp of technicalities from statistical analysis through cost accounting to SQL query writing and programming; the ability to present information clearly and concisely; a clear-eyed understanding of the way the world works; a grasp of the principles of formal and informal logic and of epistemology. Oh, and a sense of humour.

Bureaucracies take analysts and reduce them to jargon-spouting, cliche-scribbling number-crunchers, because the value is in the organisation, not the people, so the people must not have unique skills and knowledge. If there is a need, such as in IT, it must be devalued as much as possible by being outsourced and off-shored. The only thing of value to the management of a bureaucracy is the ability to source and present figures that support their positions.

What I'm doing working where I am, I don't know. Oh, yes, I do. The location is one of the best in the world. No kidding.

Three Scenes On The Way Home

Tuesday evening between seven thirty and seven fifty in the evening. It's worth clicking on the photographs - there's a heap of details there.

1. Chinatown

2. Upriver from Hungerford bridge

3. Onto the South Bank

I've had the lurgi for the last couple of days. I shouldn't have gone into work on Tuesday, but I had mysterious things to do in the early evening.

(Taken with a Canon A590IS)

Sex, Science and Profits

I read through Terence Kealey's Sex, Science and Profits over the weekend, wearing my philosopher of science hat. Prof Kealey is the Vice-Chancellor at the University of Buckingham and a proper scientist in his own right, so his is a practitioner's view. He's arguing that science funding is best left to the private sector (the University of Buckingham is a private university) and the State should keep its nose out. He doesn't like patents and IPR much either.

The book is worth reading even if you think the State should be funding science. It's one of those books where the evidence is more interesting than the theses. Prof Kealey has two theses. First that all worthwhile advances in science and technology are made in the private sector by practitioners, and that academic theoreticians lag behind the experimentalists and industrialists, not run ahead. Second, that the idea that science is a public good, available to and benefiting all, is a serious mistake.

Let's look at the first thesis. Unless you count royalty and aristocracy as “the State”, when most of the best mathematics has always been funded by the State, there was no State – in the modern sense of an all-pervading, intrusive, executive bureaucracy taking a sizeable chunk of earnings in taxation – until after the Second World War. Hence almost all of the advances in technology and science had to have been made by people of independent means, funded by aristocrats or wealthy merchants, or working in a trade because that's all there was. “Big Science” was born in the Second World War, with the Los Alamos programme and the development of radar and associated technologies in the Rad Labs. These were the most expensive and successful research efforts in the history of mankind – and both depended on a theory so abstruse it is best understood through the mathematics: Quantum Theory and Relativity. And those were developed by a bunch of university academics with no connection to business at all (a Swiss patent clerk was a civil servant).

Since then, the record of State-funded science has been pretty dismal – especially in the countries that now form the EU: the only exception is in high-energy physics, which can only be funded by the State. By definition, high-energy physics can have no commercial applications (because there's a super-collider in every office...). The record of much European technology is also pretty dismal, and one reason might be that the major industries in Europe were until recently owned by the State. Another might be that Americans know how to organise research and Europeans don't.

A swift word about Bell Labs. This legendary research centre, part of AT&T, was the home of radio spectroscopy, the transistor, the discovery of cosmic background radiation, the Unix operating system, the C programming language and the idea of object-oriented languages, amongst others. But it was run as the best engineering department in the USA. It employed people who were bright and original and didn't expect them to fill out grant applications, objectives and progress reports. When it turned into Lucent Technologies, and did expect the progress reports, it ceased to be the legendary Bell Labs. Nothing interesting came out of Lucent, which was absorbed into the French company Alcatel in the oughties.

So it's not about public and private, it's about the way the institution is run. It just so happens that there are more private-sector people who are better at it than public-sector people (the difference between the two kinds of people is real and I swear it is genetic).

The real insight is delivered in the chapter “There is no such thing as science, only scientists”. Kealey's point is that modern science is so complex that it can only be understood by people who specialise in it. Science is not a public good because the general public have no hope of understanding it (the technical papers, not the pop science books). A senior manager or board director is not going to be able to pick up some fabulous idea from the journals because they don't speak the language. So they have to employ scientists to review the journals, attend the conferences and learned societies because only the scientists can understand the work of other scientists and translate it into a product. Now here's the really neat bit. Why do companies let their own scientists publish? Partly because publishing scientists are happy, productive scientists - Kealey says it's something to do with status and making time with pretty girls – but mostly because if your people don't publish, no-one talks to them and they don't get many invitations to conferences. The real benefit isn't from reading the journals, it's what you pick up while networking. No-one is going to network with people from a company that only wants to learn from but not contribute to: free-riders not allowed.

This might do as a definition of a “knowledge industry”: one in which there is a net advantage to allowing the smart people to publish substantial research (if delayed a little to give product development a chance). Financial markets are a knowledge industry, but retail banking is not: telecoms engineering is a knowledge industry, but telecoms operations is not. The law (with one exception) is perhaps the ultimate knowledge industry – it's all published (see the Incorporated Council of Law Reporting in the UK) – while the UK's secretive local government, social services and Family Courts are probably the ultimate “ignorance industries”. (We're talking about useful research here, not the carefully PC textbooks for social workers.) By the way, Kealey mentions businessmen talking about “best practice” as a way of sharing knowledge: in my experience, the more people talk about “best practice” the further they will be from it after they've finished their seminar. “Best practice” exercises are usually futile, because there's never any budget for making the IT changes needed to support any changes – they are there to scratch an itch, not to make progress.

Returning to the thesis, by the same argument, there's no such thing as fashion, there are only designers. Because just as most people can't make an antacid after hearing a seminar about recent work on stomach acid production, they can't make a dress or suit by looking at the photographs either. Some can, and they make a good living ripping off catwalk fashion for the high street, but there are probably no more of them than there are digestion scientists. But you're not going to deny there is such a thing as “fashion” - there is, and only a few can do it. It's the same with science. There is science, but it's as accessible as, oh, Michelin-star cooking and needs about the same length of apprenticeship. But that doesn't mean it doesn't exist – just ask anyone who has to pay for either a Michelin-starred supper or the development of a new drug.

The value of any argument or book is not that it's right, it's that it make you think. And Prof Kealey's book is well worth the time it takes to read it.

Kind of Blue + In A Silent Way = £5 Huh?

My local Fopp was offering these two albums at that price recently. If you don't know either, read the reviews on Amazon. Then ask what relationship price has to quality when Kind of Blue goes for £3 and the latest Lily Allen album for £12. None, of course.

The value for the buyer isn't in the music, but in what that choice of album says about the buyer. You're not just buying music, you're buying – what? Participation, emotional connection, identification, a groove, a lyric that resonates with you (yes, this even applies to Lily Allen, though I'd rather not know too many details).

Still and all, pricing Miles Davis at that level sends the wrong message.

Here's an idea: jack the price up. Include both albums in a series called “Directions In Music” (but nothing like “Timeless Classics” or “Great Records” - which are cheesy) and make sure Timeless and the first Renaissance triple-album are in the series, along with Sgt Pepper's and Mingus Ah-Um. You get the idea. £10 a shot. 

Of course, all the record labels would have to co-operate with the brand or it would not get the range of artists and music it needed to be credible.

The Mysteries of Pricing: The Hourly Rate of Recreation

A few weeks ago I went to the Peacock Theatre in Holborn: the theatre itself is just across a side road from the London School of Economics. On was a troupe called les 7 Doigts de la Main with their latest show Traces (see You Tube for details).

The Peacock is pretty expensive: most seats cost £38, with a few at the back at £28 or so. The show was seventy-five breathtaking and charming minutes and I'm now a complete Heloise Bourgeois fan. 

I couldn't help but do the math: £30 an hour. I've had a similar thought when handing over £10 for a ticket to an exhibition at the Tate Modern: it's rare that anyone will spend more that an hour looking at a bunch of paintings. I think I was in the Rothko earlier this year for about eighty minutes one Friday evening, but I've seen people go in and out in thirty minutes: £20 an hour.

At the other end of the scale, you can sit in the Prince Charles cinema just off Leicester Square for £5 and watch a two-hour movie: £2.50 an hour. A rental DVD runs about the same, and a first-run movie in peak time is about £10 for maybe one hundred and ten minutes, around £5 an hour. Mainstream theatre in London's West End runs about £20 per seat hour and a fringe play runs about £12 for ninety minutes or £8 an hour. Oddly enough, tickets for Wagner are double the price of mainstream West End, but the operas are double the length, so per hour Wagner is no more expensive than Benjamin Britten and a damn site easier on the ear. When I cancelled my local gym subscription it was running almost £80 a month and I was making maybe ten visits a month of about an hour each, making about £10 an hour.

It took me about twenty hours to read Proust's Sodom and Gomorrah (and even longer to read The Guermantes Way) and that cost £10-ish, so at 50p an hour ol' Marcel is pretty good value. Computer manuals weigh in around £20-30 for the same length of time (but frankly I read them faster than I read Proust). At the other end of the spectrum, I think the most I ever paid for a meal was about £320 for a two-star Michelin in Rome, which was three hours for two of us, for about £27 an hour. 

Go watch Chelsea for ninety minutes and you will hand over between £40 - £65 for a ninety minute match, making £27 an hour at the lower end. If you count the drinks before and after, and add in the waiting around with your mates, I bet it comes out to about £10 an hour. Watching Nottingham Forest may be cheaper, but they don't win as consistently. 

Tickets for a Big Name Rock Band can run £100 an hour, but that's just silly. Only high-end hookers, so I've heard, charge that kind of money and get away with it.

So mass entertainment is around £5 / hour. High-culture events are around £10 / hour. Luxury and minority interest runs around £20 - £30 an hour, and after that "big name" events (Pink Floyd concert, EUFA match, Cup Final) run from £50 / hour upwards. 

No-one thinks about the price / hour when they cost these things. But see how it works out?

The Perfect Philosophy Course: History of Philosophy

Every now and then I distract myself with devising the perfect philosophy course. I did a joint honours Mathematics and Philosophy degree in my youth, and, well, this is what I'd do if it were me.

For the first two years there would be three strands common to single and joint honours: 1) Logic, Rhetoric and Epistemology; 2) History of Philosophy; 3) Morality, Law and the Good Life.

So here's the History reading list – and this is over two years. It's all the originals – no secondary works. There is no substitute for reading the Masters in the original. It isn't the Big Name Classics from each author (with a couple of exceptions) because those will turn up in the other sections.

The Symposium – Plato; The History of Animals – Aristotle; Dialogues and Essays - Seneca; Confessions – St Augustine; Selected Writings – St Thomas Aquinas; Guide for the Perplexed - Moses Maimonides; Novum Organum – Francis Bacon; The Prince – Machiavelli; In Praise of Folly - Erasmus; Discourse on Method – Descartes; Some Considerations on the Consequences of the Lowering of Interest and the Raising of the Value of Money – John Locke; Observations on the Feeling of the Beautiful and Sublime – Immanuel Kant; The World as Will and Representation – Arthur Schopenhauer; The Philosophy of History – G W F Hegel; The Subjection of Women – John Stuart Mill; The Gay Science – Nietzsche; The Varieties of Religious Experience – William James; Laughter: An Essay on the Meaning of the Comic – Henri Bergson; Tractatus Logico-Philosophicus – Ludwig Wittgenstein; Being and Time – Heidegger; Language, Truth and Logic – A J Ayer; The Effective Executive – Peter F Drucker; The Art of War - Sun-Tzu; The Structure of Scientific Revolutions – T S Kuhn; Against Method – Paul Feyerabend; The Meaning of Evil - Jean Baudrillard.

The Philosophy of Mistakes: Friends and Enemies

Make a mistake and the majority of people won't notice or won't make an issue out of it. This is indifference, and in this context there is a lot to be said for it. Other people, a small, valuable minority, will point it out in a quiet voice with the intention of helping you. The rest, a much larger minority, will trumpet it at the tops of their voices and to a cc list a hundred people long. Their tone will question your competence (muttering something like “can't even get one simple thing right”), they make a production out of it in meetings, use it to cast doubt on all your other judgements, wreck your appraisal and hold back your bonus. These people are The Enemy and you must know who they are. They must never see a working draft. They must only see the release version.

The catch is this: there comes a point when you can't see your own work anymore. You have to have someone else look at it. And for this task, you have to choose carefully.

The Enemy includes your supervisor or your manager because they are judging you at all times. The nature of the working relationship between you is that you are their servant. If you make the mistake of asking them for help, they will think you have submitted your work for their judgement. That's the nature of the relationship between you and them.

It can't be anyone who is an intended receiver of the document. They won't be able to stop themselves behaving as if they have the release version. They will get irritated when they see the glitches you can't see anymore.

It can't be anyone who is looking for promotion or other advancement. There are companies where people are promoted for the help they provide and told off when they sabotage other people, but neither you nor I have ever worked there. Advancement needs a demonstration that you can take someone down and are therefore to be reckoned with. Co-operation is for the weak.

It can't be anyone who knows nothing about the subject of the report or little about the products or business. They won't have enough expectations about what content they should be seeing to spot oversights and wrong numbers and statements.

It can't be anyone who is too busy to spend the time you need them to spend. Or who is suffering from detail fatigue as well.

Good luck finding anyone, because I've just ruled out everyone in my team.

If you do find someone, what they don't do is “check” your work. Too often “checking” means “scanning for a mistake, pointing it out and getting off the task as quickly as possible”. One of my team calls this “sense checking” - looking for silly numbers that might indicate a wrong formula or query. He will happily sense-check something. Ask him to “check” it and you get a case of the grumps. Because “checking” means line-by-line, it means, in effect, doing the work over again.

I don't like the word “checking”. It puts you in the position of pupil, them in the position of teacher and it becomes all about how many out of ten you got. So they are not sharing the responsibility with you, and they get to dodge out halfway through. This is neither collegial nor does it get the job done.

What does get the job done is the subject of the next couple of posts.

Niki de Saint Phalle

I've recently finished reading, though will be looking at the illustrations of for some time, Pontus Hulten's book on the French artist Niki de Saint Phalle. The book started as an exhibition catalogue, so the illustrations are wonderful and the artist's working life is outlined well, but the text is just a tad, errr, fawning. All the books on her are catalogues and there's a Foundation to look after her artistic estate and reputation, so for a while a real biography is out of the question.

(Photo mine, Nice 2002)

Some things have to be read from, rather than in, the text. Married and a mother at twenty-one, a few years as a conventional mother gave her a nervous breakdown and she took up painting as a therapy. Now I don't believe in lifestyle-induced nervous breakdowns. Having a life you can't make work doesn't help, but a full-fledged breakdown needs either an unstable personality or chemical assistance. An unstable personality would show in other ways. Perhaps in becoming an artist, separating from your husband and not having much to do with your children. This is not unconventional behaviour, but it is irresponsible. Either that or having two children when you really did not want to live your mother's life over again was irresponsible. It's also clear that she underwent some kind of episode during the years she spent making the Tarot Garden. Refusing to take painkillers and treatment for arthritis to the point where your hands become almost unusable is not, as they say, “normal behaviour”. People don't do that unless they are drinking too much or taking non-prescription drugs. Or of course going mildly doo-lally. She mentions years feeling “stoned” from the medications the doctors gave her.

(Photo mine, Nice 2002)

At one stage she considered suicide, but that is nothing. Not to have considered suicide at some stage of your life just proves you are a block of wood. As long as you are considering it, comforted by the thought, sustained through whatever emotional hell it is by the possibility that you could end it all here and now – as long as you're feeling the pain and considering it, you're not going to do it. Suicides are not done in a wallow of emotion, they are done when the emotion is over and can't get in the way of the practical preparations and the final moment when some banal act will take your own life. You can't be feeling to do that.

(Photo mine, Nice 2002)

The book doesn't examine the commercial side of her life – an artist's commercial life being until recently rather more mysterious than their sex life. She was one of the more successful artists in Europe – though her friends chipped in to provide the $4m she spent on the Tarot Garden over a twenty year period. In 1982 or thereabout she was asked to create a perfume (choose one made by a nose and design the bottles and packaging) and one of the copy-lines is “As controversial as the artist who made it”. Scanning the blogs it seems that those who liked it, are wild about it.

(Photo from Atalier Naff blog)

I remember seeing a documentary about a French art dealer, who was a little sharp around the edges, and in one scene he's wandering round an exhibition, picks up a little figure from a stand and says “It's a Nana, he (the stand's owner) doesn't know what he's got”. Her "best known" work is the Stravinsky Fountain for the Pompidou Centre in Paris.

(Photo from Niki de Saint Phalle Foundation website)

Niki de S-P is one of those quirky artists whose work you either get or not and like or not. If I lived along the Mediterranean the bright colours and rounded shapes of the Nanas would be perfect. In the grey light of suburban London they would look as out of place as Penelope Cruz in a Burger King. If you haven't run across her work before, it's well worth the look. And let's face it, anyone who makes paintings by filling various containers with paint, plastering them onto a canvas and then shooting at the containers with a .22 rifle, has to have something going for them.

Another July, Another Redundancy

You may have noticed I mentioned a re-organisation in a recent post. This is because I work for what is temporarily the largest retail bank in the UK. It wasn't when I joined it, before the sub-prime thing, when it was too big to take over or to be taken over. The Monopolies and Mergers Commission would not have allowed it. The sub-prime thing and the possible collapse of a Scottish bank found the government offering the CEO and Chairman – a good buddy of the Prime Minister – the chance to do a deal that would be nodded through. Their egos could not say no – and besides they and the other bank had been talking about it for some time. So the deal was rushed through, with, at the CEO's own public admission, about a fifth of the due diligence they would have done if the deal hadn't been politically-driven.

The re-organisation proceeded apace – a quite startling apace as well. They decided on systems (we won) and a board (we won). Within a few weeks they had decided on the next tier of management (the other side won) and then it reached the peons – me.

The decisions at the top level were about people. They actually got interviewed. We peons won't be interviewed unless it's a tie-breaker. Which means the decisions are about which parts of the organisation are going to be in which town and buildings, which roles are going to be moved from this group and moved to that group, which call centres are going to be closed and the like. The people will decide if they are willing to move or accept a changed role, and the management will get to choose from those who want to stay and are in the Pool. Ah yes, the Pool. So if Property have made the really big decisions, HR get to set the selection rules. And how difficult is it to say “You're in the Pool if you got a Satisfactory or better in your last two reviews”. There, I just said it. Between Property and HR, the decisions will be pretty much easy. In fact, the management may find themselves with fewer people than they want.

One of those fewer people will be me. I have been getting mediocre reviews. Probably rightly, as my heart isn't in the job and I don't fit in with large organisations, let alone large banks. There's a limit to how far you can be “professional”. I just finished the employee engagement survey (that's really what they call it and about which in another post) and I marked my job, equipment, training and development opportunities and overall satisfaction down at “are you kidding!” level. I've been looking for another job, but the market is slow. I'm only staying because I can't get out and I'm only being picky because the office is right in London's West End and I don't hate it that much to want to work in some industrial estate outside Bracknell. I don't like it so much I would be prepared to follow it to Bristol or Chester or Brighton or some industrial estate outside Hove. To mention some towns at random. I know exactly how much I will be kicking myself if I rented my house, found a flat in Lower Cokeatington and carried on in a similar role in a 1970's office block in Swindon. Within three weeks I would be wanting get the hell out and, being me, it would be showing in my behaviour.

This is the last time I make a decision to join an organisation because I'm going to be safe and get a shot at building up a pension. I've been made redundant three times already, each time in July, and this is going to be the fourth – unless the planets line up just right. If there's no chance to build up a pension in one of the country's largest banks, then there's nowhere to do it, for me, at all. You may be different, but I'm stuck with who I am. I can't make decisions about now based on a future that is uncertain, so I have to make today's decisions based on what's happening today. (That's how you reduce a middle-class lad like me to the same level as a corner boy in Baltimore.)

I woke up at half-past four this morning because this stuff was troubling me. It's going to be a long day.

The Philosophy of Mistakes: How Software Makes It Worse

In the previous post, I advanced the rule that mistakes only exist in the release version. If it's work-in-progress, there are no mistakes, though you may be irritating yourself with your slow progress, frequent re-writes and reference to the manuals. The cure for this is more practice, fewer late nights, less booze, more exercise, reading more technical manuals and going on more courses.

Back in the day no-one looked at the work-in-progress because it was a hand-written mess, needing the skills of the good typist to be made a “release” version. Lawyers had “travelling drafts” - literally a document that went back and forth between the two sides' offices with all the deletions and additions on it. Everyone knew the “travelling draft” was not the release version: it was hand-written and only the insiders could be bothered to read the handwriting.

Software changes all that. When the document exists only in the computer, the distinction between work-in-progress and release version blurs to disappearing. At any given time you can print your spreadsheet, word-processing document, presentation, flowchart, floor plan or whatever. Printed out, it looks like a final version. Worse, you can email it. There's nothing to say “this is not finished yet, so don't bitch and moan about stuff that ain't done yet”. Like it or not, it's going to be treated as the release version – especially when it goes to your manager or someone outside the team. That's just how people treat software documents.

When you had to get the handwritten document typed up, you had a deadline: leave it later and the typing pool would close or you would miss getting the memo out on time. You had to stop revising, adding and futzing and get the thing into the typists.

Software changes all that as well. Because printing the thing takes a moment, you (and more dangerously, your manager) can add, twiddle and futz right up to any sensible idea of a deadline. Running that query will only take a couple of minutes, as will knocking up a pivot table and working up some graphs. And can you show the percentages as well as the values? By region? Oh, didn't I mention I wanted it by region? Is that a problem? After all, at any given time, whatever you have can be printed and is faultless – right? Well, we just discussed that. So you never get a chance to check the damn thing through because the boss is adding, twiddling and futzing to her cold heart's content. There are no deadlines with software. That's just how people treat software documents. No deadlines means no time for proof-reading. Anyway, you do that on the screen, don't you?

It turns out that a computer screen is a lousy place to do serious proof-reading and fact-checking. It just is. The research says we do not treat content on the screen as seriously as we treat it when it's on paper. There is no substitute for paper copy when checking. Strike three for software.

By making it easy to produce huge reports, software provides more opportunities to make mistakes: nobody produced thirty page reports with sixty graphs and tables back in the days before spreadsheets. Nobody would have dreamed of asking for tweaks, revisions and additions to it if they had – but now they do. If you're dealing with very large workbooks with lots of interlocking sheets and large amounts of data and calculations, it will be several iterations before you get all the bugs (the polite term for what are going to be called “mistakes, oversights, omissions, errors and embarrassments” when your manager wants to be rude) out of it.

Which means that if you're doing anything at all complicated, even the release version will have mistakes, oversights and omissions. And it's going to go to a managerial type. Who is going to want to use it to advance their career. So if there's a glitch, you threatened her career, and she's going to threaten you. Dealing with that is the subject of the next post.

"Senior Management"

A friend of mine was recently told they were part of “senior management”. Of a company, granted of seven-figure turnover, employing fewer than fifty people and with offices in the basement of a shop on a south-west London high street. Next to the fish shop. Oh. And they're a part-timer: three days a week.

In my book, a manager can hire-and-fire and spend on their own authority up to certain limits: approving expenses doesn't count. If you have to get approval to get on a plane, book a hotel and go to that industry show in Copenhagen, you are not a manager. You are a senior manager when you can do all that, sign contracts, effect re-organisations and spend quite sizeable sums either on your own authority or because the Board (not some other manager) said okay. If you didn't negotiate the terms of your contract of employment, and not just the salary, then you are not a senior manager.

Needless to say, my friend could not do any of that. What struck me as silly, pretentious or both was the idea of a small company having “senior management”. It's even more daft than the idea that a school has “senior management” - and they do, you know (the Head and his / her cronies, I mean, team). The idea of "senior management" in local government is equally risible. It's sheer pandering to vanity and would be hilarious if these people weren't paid six-figure sums for underpaying and under-training their staff, whom they try to make as insecure as possible. 

How did the concept get so devalued? Why on earth do people want to be called “senior management” when they have none of the powers and perks? And if a bunch of men and women in open-neck shirts in an open-plan office are “senior” what do we call the guys with their own offices who can hire-and-fire?

Oh. Yes. They would be “Directors”. Not real directors whose names are down at Companies House and who have to approve the Annual Report and Accounts – but titular “Directors”.

Just who is fooling who here? I suspect the answer is that no-one is fooling anyone, but they all have to pretend that they believe.

Why would anyone impose that kind of psychic double-thinking idiocy on other people? Well, because they are fooling themselves as well as everyone else.

Which it turns out is exactly what my friend's employer was doing.

How To Spend - Sunday

Aside from the bit where I woke up at 6:45 – that's 06:45 in the morning and had finished the weeks ironing by 08:30. I had steak, toast and coffee for breakfast and set off driving into London at 10:45, parking just off Piccadilly at 11.20 (try doing that by public transport). The intention was to see Helen and then Little Ashes at the Apollo. A quick stop into the Royal Academy to look at the Kuniyoshi exhibition, which bounced right off my eyes this time: on the previous visit, I'd got it.

I spent an hour browsing among the gardening books at Waterstones, coming away with two that seemed to have the right balance of sensible advice in print and pretty pictures that might just be something you and I might just one day grow – as opposed to a roof garden on the Upper East Side. In the hour or so between the movies, I wandered into HMV and found the latest Seether CD and chanced across the Keith Jarrett Bremen / Lausanne Solo Concert, which I had on vinyl but hadn't rushed to get on CD. Silly me - it's two of the best piano concerts ever in the 2oth century. Follow the shopping by a Pizza Express (I told you it was a simple day) and then seeing this lot on my way back to the cinema.

Monday evening, I'm going to see Duplicity at the Empire Leicester Square.

Hell, if they're going to re-organise me out of a job, I'm going to have my idea of a good time right up until the moment the axe falls.

The Philosophy of Mistakes: Work In Progress Has No Mistakes

I have been thinking about mistakes recently. How I make them, why I make them and why I seem to make so many of them on spreadsheets, presentations and code. That would be me and you and everyone you know as well.

The guru of errors is Professor Raymond Panko at the University of Hawaii. His site, which is well worth a detailed read, contains many reassuring figures, amongst which is that even experts make mistakes in 22% of their SQL queries (on a text editor rather than a Access-style designer, I assume).

This sounds right. I start with a business problem and “write” the query. At this point I'm really thinking about what fields and calculations I want and what conditions I need in the WHERE and HAVING clauses. I am not thinking about SQL syntax and so what I've written is full of SQL solecisms, but I can't see them because I'm not looking for them, I'm looking at field names and dates and conditions and other content. I'm not looking for commas, un-paired brackets and other such things. Plus I forgot that “salesvalue” has an underscore “sales_value”. So I hit run and the complier hits me with all the solecisms, and the next time I get the 'can't group on an aggregate' and related errors. Damn. Left out the City name. So I add that and run the query – ooops, forgot to change the “group by” clause to include the new field.

What I'm really doing here is clarifying and then solving a business problem by writing an SQL query. As a result there are a lot of false starts, as I correct the syntax, then correct the content of the WHERE and HAVING clauses, then change the calculations for some of the aggregate fields I want, then realise I need more or different fields... and so on.

Of course, I was supposed to clarify the problem and then specify the query first, before cutting the code – but that just shifts the false starts to a scrap of paper. Plus I can guarantee that even when you do write the thought-through, specified query, there will still be a comma missing and you will realise you needed an extra field.

Now, while I'm in this loop, concentrating neither on the SQL syntax, nor on the correct spelling of fields names, nor on the content of the query, but flicking from one to the other, I'm in a work-in-progress. While it's a work in progress, there will always be stuff that is not done yet, mis-spelled, not formatted nice and badly coded. These aren't “mistakes” because you're not finished yet. Mistakes only exist in the release version – though there are people who will look at your work-in-progress and loudly announce all the things you haven't gotten round to yet as if you forgot them. (Those people are destined for a long time in the grey wastes of Purgatory.)

There may be no mistakes, but there can be a lot of frustration as I wonder why it's all taking so long for my poor, tired brain to cope with it. Which will be what the next post on this subject will be about.

What's Your Excel Party Trick?

The very wonderful Helen Kohr told me she had been asked this question when she had gone for an interview. Every industry will have a couple of Excel functions it really hammers: in telecoms it's VLOOKUP and some financial people told me their most used function was SUMPRODUCT (okay, they weren't really financial people, they just worked in a bank). Outside the Industry Party Trick and the usual SUM and IF, I don't think I'm exaggerating if I say that most people do not use the full suite of Excel functions frequently. I mean, just when would you use WEIBULL anyway? 

What the question admits is that learning Excel or Open Office Calc or Numbers is not something you can do in a week. These are huge programs, packed with features and facilities, the learning of which exceeds any one-semester course you and I did in maths, theoretical physics, electrical engineering or computer science. Start with the Excel object model – how many times have you seen people write code to write a recordset into a worksheet range? And then coo with delight as the numbers stream across the sheet. Well, there's a method in the Range object that does it so fast you can't see it and without re-calculating each time it writes in a number. No – you can look it up yourself. Now here's the catch – it only works if you declare the variable holding the recordset as a variant, not a recordset. And no, you won't find that in the manual, I had to to trawl the web forums before I found it. Or take the financial functions: you can pretty much figure out what NPV, IRR, RATE and PMT are for without knowing too much. How about NOMINAL? Or COUPDAYSNC? You'd have to know something about bonds before you could use them. And how about WEIBULL? It's safe to say that you are never going to learn about this unless you were hired in part for your experience in statistics. Learning about the functions means learning about the reasons you would use them: that isn't trivial.

Excel is used by business analysts and they are paid to be interested only in their business. Most commercial businesses use a handful of functions – hence the party-trick approach. Why would they pay their people to learn stuff they won't use and don't need?

Because the more your people know, the better they can solve your problems. They feel more confident, they will try different approaches to problems and maybe come up with smarter solutions. Learning this stuff is good for the brain. The company is paying these people to be smart: why would it encourage them to be dumb?

They Call Me The Snake

I know I'm not supposed to buy CD's from stalls in Camden Lock because it infringes copyright and kills music and reduces profits for the industry and... Yep, I don't buy that BS either. If the music industry doesn't want people buying dodgy CD's, it should keep its back catalogue open. That the two Saraya CD's (Saraya and When the Blackbird Sings) could possibly be out of catalogue is beyond me. But that wasn't what I found.

You know those blues albums you hear in cafes or clubs but you can never find in a record store? Funky, dirty, a thick guitar sound and a deep voice half-speaking, half-singing? The guitar licks kinda thrown away, flicked out between the vocal lines? An indisputable groove? Well, such is They Call Me The Snake by Luther 'Snake Boy' Johnson. You can find mp3 downloads on Amazon, but what I have is a double-CD. £10 – a bargain.

He's not to be confused with Luther 'Guitar Junior' Johnson (see You Tube for video) and there's a brief biography here on Answers.com - but no Wikipedia yet.

Swine flu - Scare Me Again

You don't believe in Swine flu. That is, you don't believe it is a full-on, population-decimating, world-circling pandemic. You'll never say so if a reporter asks you, and of course you'll nod along when the company stops you travelling, or makes you take your laptop home in case commuting is banned overnight, or when the headteacher closes your daughter's school... but you don't believe a word of it. It's the belief that dare not speak its name – that all these scares are hyped.

You have this vague feeling that if it really was that deadly, they'd only know what it was after the first eight thousand dead bodies had been buried; that the Mexican village where it started would have a population of three by now; that international flights would be cancelled. You've heard that new viruses start deadly but only survive if they turn less deadly, because if they stay deadly their host population dies too fast and takes the virus down with it. Since they know what this thing is, it must have reached the “less deadly” stage. You've heard of the 1919 flu outbreak, which killed more young men across the world in six months than World War One did in just over four years. That's a pandemic.

But editors have to sell newspapers (not that Swine flu is obliging them with headlines); pharmaceutical companies have to sell medicines; politicians and corporate honchos have to be seen to be saying “the right thing”; bureaucrats and scientists in the WHO, CDC and other health organisations get to look important and maybe protect their budgets for next year. And the one border the USA really, really, wants an excuse to control? Oh, right, that would be the one with, yep, Mexico. Sadly Swine flu isn't going to be a good enough scare.

At the back of your mind, you're saying “better safe than sorry”. Really? The flu is the only risk around? At the front of your mind, you're saying “who cares? It's not going to affect me, no-one believes it anyway and I don't pay it any attention.”

But it does affect you. You pay taxes to fund all these people. They are wasting that money on nonsense when they should be spending it on something useful. They are wasting their time on this rubbish, when they should be using that time on something useful. It's a distraction from the real work of those involved.

Here's Your Bonus - In Subordinated Debt

There are many reasons I'm glad I'm not a manager in a large British company. The fact I don't have to bullshit my staff is one of them. Bullshitting your people is as bad as lying to them and just like lying to them, it makes everyone hold each other and themselves in contempt. Everyone tells each other that of course they had no choice but to talk that nonsense: keepup  morale, stamp out gossip, sing from the same hymn sheet – but of course they did have an alternative: the truth.

Our Director broke the news about last year's bonus payments: 2008 bonuses will be paid in three tranches of subordinated debt starting in June 2010. This applies to anyone earning over £40,000 a year or head office middle managers and above, not to the retail staff and sales people. Since the bonuses are never more than £2,000, this means those who get them will get their last £700 in 2012, when it will be worth 15% less than it is now. And that's the debt instrument they'll get from 2010 to 2012, not the cash.

Hello? Subordinated debt? For four-figure bonuses? Did no-one hear themselves saying this and stop to wonder how silly it sounded?

He “delivered the message” because he's a pro and the message wasn't worthy of his delivery. It was twaddle about how the public thought bankers shouldn't be getting bonuses and this was responsible governance. Let's stay focused on the customer, it's really business as usual, we carry on with our day jobs and try not to let the Press and the rumours distract us from achieving our H1 objectives.

The truth is that the public know the difference between an ordinary mortgage-ridden middle-manager and a six-figure salary trader or seven-figure bonus Board member.

Why did the company do it? Never try to figure out why people do dumb things – you're trying to make sense where there is none.