warden woods, fall 2008

cheltenham badlands, fall 2008

December 31, 2008

I once read somewhere that, despite the fact that safety features on skydiving equipment are always improving, there is no noticeable decline in mortality rates. At the time, I thought the phenomenom can be explained by the abundance of crazy idiots. In light of recent events, I now think it is a manifestation of the human spirit. Yes, people are greedy and institutions that potentially need to be bailed out should be regulated. But, without human greed, I would probably be participating in rice farming right now. So, with this bubbly thought, Vendy will go back to tweaking safety features.

Economist on UBS: “FAIL fast, fail early” is a management mantra in many industries. Identify the projects that will not pay off quickly, and the costs of failure are capped. Banks have developed their own version of this rule—“fail completely, fail catastrophically”—but one of the earliest victims of the crisis may yet be among the first to recover.

December 30, 2008

Economist: Fuelled by a deluge of Obama products from commemorative coins to hand towels, from bobbing-head dolls to glossy books, the Obama industry is one of the economy’s bright spots. // The publicly financed glorification of serving leaders, once practised only by the likes of Saddam Hussein and the Turkmenbashi, is now being extended to America’s president.

Economist: Equally certain is that the downturn will lead to the emergence of financial scandals, along the lines of Enron and WorldCom in 2002. Recessions uncover what auditors do not, as the old saying goes. // For much of late 2007 and early 2008, many people in the “real economy” wondered what the financial sector was panicking about. It was only in the autumn that business conditions turned savagely down. By extension, it is quite possible that in the course of 2009 company executives will be bemoaning a slump in both demand and profits at a time when stockmarkets are rallying in anticipation of recovery in 2010.

Economist: When a Danish mortgage bank grants a mortgage it is obliged to sell an equivalent bond with a maturity and cashflow that matches those of the underlying loan almost perfectly. This may not seem very different from the “originate-to-distribute” securitisation models that flourished in America and parts of Europe in recent years. But the Danish system has two characteristics that change it almost completely. The first is that the issuers of mortgage bonds remain responsible for making payments on them. This avoids a flaw that was so painfully exposed in America’s mortgage market: lax lending is encouraged when the link is broken between those who sell mortgages and those who bear the risk of default. // The second feature of the Danish system is that mortgage-holders can also buy the bonds in the market and use them to redeem their mortgages. This is useful if a rise in interest rates (or a fall in house prices) causes mortgage-backed bonds to trade at a discount. Redeeming their bonds allows homeowners to reduce the amount they owe. In America, for instance, mortgage-backed securities have fallen far below their fundamental value in thinly traded markets, partly because the people who would benefit most from buying them have no mechanism to do so. “Everybody can buy that bond at a discount except that one guy who is most involved with the loan, the homeowner,” says Alan Boyce, a mortgage expert who has worked with George Soros, an investor and philanthropist, on promoting the Danish model in emerging markets. In Denmark, by contrast, a fall in the value of mortgage bonds usually encourages homeowners to snap them up to redeem their own mortgages, as is happening now.

December 29, 2008

Monday, caught up with Rach and Jenny at Nota Bene. They moved up 10 floors in our apartment building and got a really good deal. They got a gym membership but the pool is too chlorinated. Jenny talked about this Indian wedding that she just attended. The bride and groom performed a one hour musical with backup dancers. The guys that I have been working with have been great but I miss the girls >.<

December 27, 2008

A cloud delivers a drop of water to a distant peak in Central Nevada. The drop joins a flood, dissolving minerals along the way. Sodium choloride, calcite, gypsum, and borax. At Death valley, the flood rests and only minerals remain.

Finished "The return of depression economics" by Paul Krugman on the flight back to Toronto. A bit shocked to realize that most of my time on earth has been categorized as a bubbly period.

I used to laugh at people that say housing prices can only go up and the VIX will stay under 20 forever; I don't any more because it's no longer funny. Now I wonder if all my expectations regarding the future are based on outlying data.

December 25, 2008

Wednesday, saw a burlesque show with Mum + Dad. Dad almost fell asleep. Mum was disappointed that some of the dancers were not very well endowed. I personally thought that was a good thing: if burlesque dancers don't need plastic surgery, why would the rest of us? All in all, I was pretty impressed. Pole dancing looks harder than rock climbing.

Thursday, lined up for two hours for Le Village, the buffet at Paris. Thanksfully, people watching kept me busy as I was surrounded by cute Japanese girls. The duck and the bouillabaise alone made the wait worthwhile.

Paris, not surprisingly, is my favorite Las Vegas theme hotel. If you walk around with your eyes half closed, the blinking lights on the slot machines blend into the art deco ordering elements, evoking La Ville-Lumière.

December 23, 2008

Grand Canyon was a winter wonderland. We hiked down and up the first section of the Bright Angel Trail. We didn't make it to Bryce Canyon because of a snow warning. Most of Monday was spent in the car, but the drive was rewarding: painted dessert, Lake Mead, tunnel in Zion ... Since we made it to Hurricane by Monday night, we had extra time to visit the Valley of Fire on Tuesday and what a sight!

C'est la vie? C'est la chance.

December 20, 2008

Monday, catching my connection at O'Hare, I felt a rush of sadness that I can no longer call Chicago my home. Today, waiting at the OC airport, I found myself standing next to the restaurant where Sam and I grabbed a bite in the fall of 2005.

Hard to believe that I have been at my new job for five months. I spent the first month reading decks from various projects. The second month, working on a market entry project. The third and fourth months, helping out on a risk management project. The fifth month, starting a marketing project.

My favorite thing about my new job is the emphasis on understanding the situation facing the individual at the client that hired us and doing what we can to help him or her. It seems the obvious thing for a consultant to do but, being the result oriented person that I am, I tend to focus on defined deliverables.

I think the challenge for me is to be able to empathize with different kinds of people. I am not confident that I can do this, since I dedicated my formative years to being as unique as possible. Here is Vendy's New Year's Resolution: stop doing things just to be different.

December 18, 2008

Tuesday, grabbed sushi for dinner at the hotel, since we are on a tight deadline. Tom says that a consulting career is like an hourglass. To be a good manager, you need to specialize and become an expert at something. To be a good partner, you need to generalize so that your value proposition can adapt to the changing environment.

Thursday, ran up and down a few hills to reach Bilbao Island. Christmas house contest + wild storm = lots of cute toppled over decorations.

Economist: The Fed’s policy panel, the Federal Open Market Committee (FOMC), announced that it had cut its target for the federal funds rate to between zero and 0.25%, the lowest on record; it indicated it would stay there “for some time”; and having used up its conventional monetary firepower, it promised an unconventional strategy, such as the buying of mortgage-related securities and, possibly, Treasuries to lower long-term borrowing costs. Psychology does seem to matter. The Fed has not yet bought any MBSs, but their yields have dropped from 5.45% to 3.9% since it proposed doing so.

December 14, 2008

Wednesday, morning jog around the wildlife preserve a hop away from my hotel. In a tank top. Southern California is looking really good right now.

Sunday, had another go at rock climbing. I was literally on this one route forever, falling over and over again. But I made it to the top. Go, Vendy!

Later in the day, partook in Inflow's second Christmas party. I contributed pastry cups of smoked salmon with a cherry tomato on top, as well as blueberry wine. Stephen and Louis shared lots of great ideas for next year. Teresa showed some wonderful graphics for rebranding.

I have to say that I am super jealous about their client feedback. I wish my clients say things like this to me: "Your Awesome! MWAH!" Yes, spelling errors can be cute.

December 8, 2008

Friday, met up with Sheng, who interviewed me years ago as part of the coop process. He has worked for two life insurers, a consulting firm, the regulator, and now a bank. Definitely interesting to hear the contrasts and comparisons.

Sunday, finally got a chance to go rock climbing :)

Monday, caught up with Eddie and Andrew at Jump. Eddie is changing jobs; joining Milliman actually. Andrew is looking forward to his first rotation at Manulife. Does time jump or does it rotate?

November 29, 2008

Thursday, dinner with Denise and June at Thai Basil, where the curries are irresistibly rich. June is getting married next year and planning a four week hike in the Himalayas. Wow. Wow. Wow.

Saturday, Carl is visiting from Montreal. The two of us + Stephen + Benny + Denise had a blast at Taste the Season, a program organized by the wineries around the Niagara Escarpment. Gwurtztraminer at Chateau des Charmes was the best. Vendy bought some blueberry wine.

November 20, 2008

Thursday and Friday, attended the job manager workshop. We did a simulation exercise where you come back from a long weekend the day before the steering committee meeting and everything falls apart. Supposedly, the lesson is to learn to say no. My personal preference would be to under-commit in the first place to avoid falling into such situations. Loved the networking and presentation sessions. Gotta read Minto's book.

November 15, 2008

Friday, AGO opening with Wei, Hong and Xi. Long line up therefore a great opportunity for people watching. The abundance of blonde wood panels creates an intimate setting, which I prefer to the uber modern super dead feeling that some galleries possess.

Saturday, got my NEXUS pass, which required iris scan as well as finger printing. The interview was slightly scary. Note to self. Do not bring food across the border. Do not use the pass when I renew my TN. Go to the NEXUS office as soon as the TN expires. Keep all info updated online. Phew.

November 11, 2008

Wow. I wish I were in Chicago. Mrs O wears my favorite designer on election night. But Carla is still my favorite first lady.

Listening: Tu es ma came

November 8, 2008

Tuesday, super crunchy jicama salad at Agave Grill. Huge serving of ceviche. Wednesday, the same :)

Saturday afternoon, rainy walk through Mount Pleasant cementary with Denise and Stephen. Saturday night, gorgeous dinner by Teresa and Louis.

Economist report on global economy: The most promising avenue of reform is to go directly after the chief villain: excessive and excessively procyclical leverage. That is why regulators are now rethinking the rules on banks’ capital ratios to encourage greater prudence during booms and cushion deleveraging during a bust. It also makes sense for financial supervisors to look beyond individual firms, to the stability of the financial system as a whole—and not just at the national level.

Leverage can be tackled in other ways too. For a start, governments should stop subsidising it. America, for example, should no longer allow homeowners to deduct mortgage interest payments from their taxable income. And governments should stop giving preferential treatment to corporate borrowing as well. Private-equity firms and the like are encouraged to load up companies with debt because tax codes favour debt over equity.

November 5, 2008

Tanya's article on potash mining has been published by dominion.

November 4, 2008

"So I went online," he says, "and Googled the 10 hardest things to do in the world."

That's when he discovered the Badwater Ultramarathon—the legendary 135-mile race from the floor of Death Valley to Whitney Portal. He called race director Chris Kostman to see if he could get in. Kostman asked Goggins how many 100-milers he'd run. None. How many marathons? None. Kostman told him to get some ultramarathoning experience if he wanted to run Badwater.

Days later, he entered a 24-hour race in San Diego. The ordeal left him with broken metatarsals in both feet and a case of kidney failure, but he did crank out 100 miles in less than 19 hours. Ten days later, he ran the Las Vegas Marathon in 3:08. And for ample measure, he entered the H.U.R.T. 100-Mile Endurance Run, one of the hardest ultras in the world. Goggins finished ninth. All this was in the span of two months.

November 2, 2008

SOA sent out a vague request for essays: The current financial crisis presents a horrific case study on what can go wrong. Its ramifications are far reaching and the lessons learned will be embedded in risk management practices for years to come. As risk professionals we have substantial insight into what went wrong and the implications for the future. In an effort to solicit this perspective and share it with the public, the Society of Actuaries (SOA), the Casualty Actuarial Society (CAS), and the Canadian Institute of Actuaries (CIA) propose to publish a series of essays similar to what was recently done by economists. Their finished product and a Wall Street Journal article discussing the essays are attached. We are, therefore, asking for essay contributions from you on the following topic: Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications

The fact that all the economists agree with each other is surprising. Nothing against them (I rather enjoy reading Avinash Persaud) but whatever happened to intellectual diversity?

November 1, 2008

Wednesday, delish lobster pot pie at Dish.

Friday, took the bus to New Haven. Walked around Yale. Surprisingly few political posters. Yummy sashimi bi bam bop.

Saturday, nice jog around East Rock Park listening to a fine frenzy. Train to New Jersey for Nets Game.

Financial Times: Bancassurance can be split broadly into two models. The first, which was all the rage in the 1990s, has seen banks buying insurers or insurers buying banks to create financial conglomerates. The second and less ambitious form of bancassurance involves forging partnerships and joint ventures whereby insurance products are sold and distributed through a bank's network. In some cases, insurers have also acquired a stake in their banking partner.

The first model has seen its day. Merging insurers and banks never really worked. There was always too great a cultural divide between banks and their shorter-term approach and insurers with their 30-year time frame. The promised benefits of diversifying soon turned into a pipe dream. Even in bad times, banks could not dip into the cash reserves of their insurers because of the strict rules protecting the capital of insurance companies. As for the insurers, buying or being part of a bank exposed them to all the risks of a big banking crisis.

The second and more limited form of bancassurance is coming under stress. But it is unlikely to disappear altogether because banks will continue to seek to sell classic insurance products such as life assurance or household insurance that they do not want to build themselves. Insurers, too, are bound to remain interested in using the extensive retail networks of banking groups to distribute their products.

Until now, the banks have tended to hold the upper hand in these relationships. Insurers normally pay banks upfront to distribute their products. In good times, the system works relatively well with insurers getting decent returns. But in bad times - and times have never been so bad for banks - the relationship breaks down.