What’s a #blockchain?

I posted the above to twitter, but its not really a joke. #blockchain has become the emperor’s new clothes and to some degree, @AARP is right.  The original article may be a little more aimed at humour than technical depth, but it’s not wrong.

A few of my friends have already been cold called and offering blockchain backed securities and similar. We know that’s mostly just marketing BS, but they don’t know. So this is, whatever you think, a good way to get them thinking about it.

For 90+ percent of the AARP readers these are good enough descriptions. The people who are AARP members who need to know about Bitcoin and Blockchain, already do and won’t be influenced by @brucehorovitz full article.

1535400878477-lost_and_foundIf you are really interested in the concept, and a non-tech example of #blockchain, Vice has one of the best examples I know of. It explains how, since 1995, how the theory of a blockchain and public ledger have been used in a non-technical solution. It covers and explains the use of a digital document store. The key to their store, was in fact to publish the unique hash for every document, and rather than use a technology solution as the public ledger, simply to publish the unique hash in the New York Times.

A more technical explanation is by Steve Wilson, on Constellation Research, called Blockchain Plain and Simple, covers the subject, and keeps on topic.

Retail vs Investment Banking

I’ve no idea what long term this change will make, but was delighted to receive this notification from my UK Bank, first direct, and HSBC subsidiary.

Something we are (very) unlikely to see here in the US in the near future.

Letter from HSBC

What is says is

We wanted to let you know that in line with new regulations introduced after the global financial crisis, later this year HSBC will be changing the way it’s structured in the United Kingdom (UK).

The new rules mean all banks with deposits of UKP 25bn or more will have to keep their “retail banking” business seperate from their “wholesale and investment banking” businesses, also known as ‘ring-fencing’.

Of course, this won’t stop another global financial meltdown, but at least in principle, they won’t be gambling with our money. If it happens it will still have as dramatic impact since the stocks, shares, futures, and companies will be hit the same way and everything will lose value as it did before. When all is said and done though, this is a good move.

Your move Elizabeth Warren.

Just checking in…

My disdain for the US Banking system should be obvious to anyone who follows my blog. Their attempts at modernizing, really are just “lipstick on a pig”.

While most countries are looking for ways to get out of the check processing business, and many to avoid it all together, using micro-banking and straight-through-processing to enable both a more effective user experience, and also reduce risk inherent in a real-time banking system. The UK even initially announced an end-date for the use of “cheques” in 2018, although that was later withdrawn. It’s still possible to transfer money between accounts in different banks within the UK banking system almost instantly and within 15-minutes, and for free.

Not so here in the USA. Much to my disappointment, I recently ran out of checks for my Texas FCU. It was the easiest and most effective way to pay some big bills for the construction work we’ve been doing, as well as bills for our wedding. I went online to the FCU and clicked order checks, it took me to an external website, where I was unable to order checks. Turns out the 3rd party had my address from when I first ordered 250 checks back in 2006.

You can’t change the address online, I had to call the FCU, they had to go through the update process and order the checks for me. Sure enough 8-dys later they appeared in my mailbox.

Mobile Ready Checks

Much to my “surprise” the checks have changed, just a little bit. They now include accommodation of the process which allows us to pay cheques in by taking pictures and submitting them on out phones via an app. I’m sure someone is feeling pretty smug, they’ve just invented pig lipstick.

Everything a consumer or non-financial institution does in terms of moving money around depends on the ACH, it’s not just checks, it’s pretty much anything online. Hey, but there’s an eCheck API.

Bloomberg had a good article on America’s addiction to checks back in July, by @kate_robertson – I think though they tackled it from the wrong angle, the reason people are addicted is because they work, and the patchwork of alternatives and restrictions on how they can be used has put them off if they’ve tried them.

My local credit union, Elevations FCU does a pretty good job at working within the confines of the American Clearing House and Federal Reserve straight jackets. Their technology is pretty solid, and their process limits, reasonable. Their mobile app has fingerprint sign-in, a good UI, and access to Popmoney, with useable daily and monthly limit. Their effectiveness and ability to innovate though is still hampered by the “system”.

My Texas FCU, Amplify, so mirrors their roots and seems incapable of escaping them. They started life as the IBM Federal Credit Union in Texas in 1967, and they’ve struggled much like their namesake to move with the times. While they have Internet/Web banking, I’ve had numerous problems and one acknowledged defect between their web and backend systems which frustrated my efforts to avoid paying by checks. They also claim Texas State rules prevent them from allowing various amounts above $1,000 in an out of accounts, especially Home Equity Line of Credit (HELOC) accounts.

Mixed legacy and cultural appropriation

[3/22/17 Edit to add audio from soundcloud]

On Friday I had a half-hearted attempt to explain to our 8-year old why I wouldn’t wear green, and why I could NOT celebrate St Patrick’s Day. It’s really quite staggering the level of cultural appropriation St Patrick’s Day has achieved. A celebration of the worst caricatures of the Irish, drunk, leprechauns, and four leaf clovers

Then today, on reporting the death of Martin McGuinness, former deputy first minister, and A former Provisional Irish Republican Army (IRA) leader. I was listening to BBC Radio, and among the people to be quoted was former British Prime Minister John Major. I never held Major in great esteem but what he had to say, for the most part summed up my feelings.

I do think that is unforgivable and will neither be forgotten nor forgiven when one looks back on the legacy of Martin McGuinness, and I don’t excuse any of that. I cannot find any redeeming quality in what he did over those years.

But I do recognize what he subsequently attempted to do and the part that he subsequently played in building a peace process.

Go 3-generations back and you’ll find Protestant Irish blood, my grandfather’s parents were from Northern Ireland, but that’s not it. Ireland was a non-issue when I was growing up, it was rarely mentioned. sure, we knew what was going on. Events like Bloody Sunday and “the Troubles” had been constantly in the news since 1969.

What followed was years of activity in England and London, throughout my formative years. Starting in 1972 with the Aldershot barracks bombing, and stretching through the Old Bailey Bombing, I was first working at the Rupert St market in London in 1974 on Saturdays. That year was the worst year for IRA bombs, they killed over 50-people, and injured more than 1,000. This included throwing bombs in two London night clubs. Bombs were behind and inside Post boxes, in publish rubbish/trash containers

Through the remainder of the 1970’s it’s hard to explain the content I had for the Irish people. In the summer of 1980, I took my first business trip to Dublin, and during that trip was spat at, and had lighted cigarettes flicked at me while walking down the street, because of my accent. And so it was, that the Irish were just Persona non grata.

We spent most of the 1980’s in the USA, specifically in New York. At that time, fundraising for the IRA in New York and Boston was a big thing. The likes of Adams and McGuinness were often on TV News giving very one sided views of their campaign against the British Government, and the British people.

Having returned to the UK and joined IBM, the random bombings carried out by the IRA continued, while often focussed on military targets, they were not always. Two IRA bombers blew themselves up in our town center while trying to set and detonate a bomb. I was working at the London computer center for the TSB Bank, on an upgrade to their software early morning in London on April 24th 1993, when at 10:27 am, the Bishopsgate bombing occurred. Their office off St Dunstans Hill was just half a mile from the bomb site, we heard and felt the blast. It followed another massive City of London blast in 1992 at the Baltic Exchange(now the site of The Gherkin).

So, no I was never in a bombing, as far as I’m aware none of my family were impacted by a bombing, but somehow it seems like asking a New Yorker to celebrate Al-Qaeda day on September 11th, to expect me to celebrate St Patrick’s Day.

As I said to the 8-year old, I’m happy you are having a fun day, I’m glad there is peace now in Northern Island but I can’t really dress up.

Bring back what jobs?

Look, the jobs that are lost, are not coming back, get over it. When Trump claims he’ll bring back jobs, he either has no idea what he is talking about, or he envisions some dystopian future where Americans are more like slaves than they’ve been since, well, slaves.

China and Mexico are not the problem, automation is. Even if Trump were able to force companies to bring manufacturing back to ‘Merica, through punitive tax and trade barriers, the manufacturing won’t be the same as it was, ever.

Listen to this recent extract from NPR’s All Things Considered. Bertram de Souza of The Vindicator talks about steel mills following a recent visit of Trump to Youngstown Ohio.

The next wave of automation is coming, it’s in driverless vehicles, it will have a dramatic impact on employment. Automated delivery trucks, automated taxi’s, autonomous vehicles will make a large dent in the current employment of some 3-million in America. While many cities are salivating over the ability of self-driving, autonomous vehicles to fix their broken road and transport infrastructure, that’s missing the point.

There are many detailed, and complex reports on the impact of automation, pick your favorite organization and search their website, McKinsey and Company(2014); Stanford Business School(2015); Pew Internet(2016) and on, and on.

Equally there have been a few superficial recent reports in the news media, this one from US Today. One of the better, more recent articles is from Rex Nutting over on Marketwatch.Rex Nutting over on Marketwatch.

I’ve been horrified by the lack of actual policy discussion and examination of the context, detail and and lack of clarity even where there is policy. This is something we should have had a real debate about when, what and how we handle the future of automation.

It’s not as if the impact of automation is new. Depending on how you classify automation, it’s been going on since the invention of mills, but importantly since the computer became pervasive in business.

As far back as the late 1960’s it was a discussion topic. In the early and mid-1980’s automation had become a key issue for governments and businesses. This was a classic of it’s time.

A human teller can handle up to 200 transactions a day, works 30 hours a week, gets a salary anywhere from $8,000 to $20,000 a year plus fringe benefits, gets coffee breaks, a vacation and sick time… In contrast, an automated teller can handle 2,000 transactions a day, works 168 hours a week, costs about $22,000 a year to run, and doesn’t take coffee breaks or vacations. – Bennett, 1983

This is a well used quote from a report called “Bank Systems and Equipment” by Bennett et al 1983 and often misquoted and attributed to Nobel Prize winner, Wassily Leontief and  Faye Duchin, who used it in their seminal 1986 work “The Future Impact of Automation on Workers“.

img_20161107_125230I worked on an IBM Corporate study in 1998, following the release of Dunkerleys book, the jobless economy.  I still have the books on my home office book shelf.

Many of us were uncomfortable with what technology was capable of doing to our society, much more than our jobs. I’d seen it first hand and contributed to the loss of hundreds of jobs. When I first arrived at Chemical Bank in New York city in 1983, there were hundreds of people, mostly women, sat in large rooms, processing incoming credit card authorization phone calls. Within 3-years, they were all gone. Their positions had been eliminated. Replaced by simple automation of the repetitive tasks they did using search and a “database” lookup.

Some of the information and outlook from that IBM study found it’s way into this presentation I gave at meetings and conferences around the world at that time.

Automation was, and is unstoppable without a much bigger debate. Trump alone can’t fix it or stop it. Automation is a result of three, equally powerful trends.

One. The absolute fear and revulsion in America of Unions, their impact, power and influence. Sterns 1963 paper “Automation-End or a New Day in Unionism?” captured the potential impact of automation on Unions.

Two. Big corporations and the way the market values them, their ability to balance investment against revenue and more importantly profit. Investors and the market don’t care how business makes profit, and the tax authorities allow investments to be written off against profit. So removing expense, in the form of employees, and improving profits is always on the agenda.

Three. The continual consumer march towards ever more consumption and disposable, cheap goods. Perhaps more than the loss of jobs, if pernicious tax and trade barriers were implemented by any politician or President, we would see a revolt among the people, who more than anytime in history, want their stuff as a measure of their value.

So, we can’t stop automation, the jobs are not coming back. Where does that leave us?

I’m inclined to agree with Musk. The only way around the impact of automation is a universal basic income. That’s what we should have been debating this election cycle. Not fucking emails, walls, muslims and pussygate, let alone if somewhat left leaning Bernie Sanders proposals were socialism by the back door. Without serious discussion on these difficult topics, America will continue to into social conflict and fear.

Even if Trump gets elected today, those 5-million jobs we’ve already lost, and another 5-million are not coming back.

Everything wrong with the US Financial System in one man

I’ve been avoiding blogging during the election cycle to stay away from turning my blog into another pile of steaming bile.

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Image from occupy.com

The more I learn about Strumpf(any coincidence to John Olivers #makdonalddrumpfagain purely coincidental), the former CEO of Wells Fargo, the more he becomes the poster boy for everything wrong with the “too big to fail” banks.

The head of any organization sets the strategy, and the tone of the implementation of the organizations strategy. Bad ones do only one, or neither. Strumpf seems to be in the later category based on his testimonial to a House panel on the recent Wells Fargo creation of unwanted accounts, charges etc. When a major corporation has to fire over 5,000 lower level employees, the is no way the CEO wasn’t responsible for the culture that allowed this to happen.

As if that wasn’t bad enough, this morning I read Kathy Kristofs article about Strumpfs stock sale, prior to announcement of the settlement over the illegal activities. While reading this it’s worth making a mental note of the numbers and sheer scale. Remember that ordinary bank customers were charged around $2.4-million in charges related accounts they hadn’t asked for. Apart from this at least having the appearance of insider dealing/trading it reveals the absurd and clearly unjustified amounts of money in the system.

Stumpf sold nearly 3 million Wells Fargo shares in 2016, which is almost 10 times the 351,991 shares he sold the previous year, according to SEC filings. His profit on the 2016 sales amounted to $65.4 million.

Strumpf must be investigated for this, and an example made of him. Otherwise, the country and it’s leaders are sending the same message to the financial industry titans, as they would be sending to their organizations, bending and breaking the rules is OK.

For more on Strumpf, Nomi Prins has a list of his “crimes” and failings while CEO.

Shared, Co-operative banking

2897D64F00000578-3077773-image-m-7_1431445606983[1]I’m still mystified over banking here in the USA, some 20-years after leaving the industry in 1986. Arcane rules; differences from State to State; duplication, overlap and the too-big-to-fail banks. I’ve complained here before.

My current frustration comes from trying to maintain two different credit union accounts. One in Texas with Amplify FCU (the ex-IBM Employee credit union) and another in Colorado, Elevations FCU. Elevations web and mobile apps are far better than those from Amplify. But both seem to be “hand-tied” by rules that were credited back in the 1980’s.

Today’s frustration is summarised in these tweets.

This, after trying to move $1,000 online from an account at Amplify, to another Amplify account, only to be told that Texas laws only a minimum of $4,000 to be transferred daily, after you transfer $4,000, you can transfer back $3,000 the same day. Huh ?

Either way, money takes forever to move around, and often comes with a heavy charge. Miss the 2:30pm deadline for transfers in Texas, that’s a different charge if you go overdrawn. Meanwhile, I can transfer money from one bank to another in the UK in less than 15-minutes, no charge. I can also transfer money from a UK Bank to a German Bank within 2-hours, no charge.