Finance and Investments

Are you a DIY investor? If so how are you feeling now? Pretty stressed I imagine and your emotions will swing between denial, fear and blame which is probably resulting in portfolio paralysis. This response is not rational, this is the time to do something and that thing would be to seek advice. If you think you don't need an advisor ask yourself the following questions;

1. What return do I expect over the next 12 months?
2. What was my return for the last 12 months?
3. Do I get independent advice, if so who from?
4. Do I get research or investment suggestions from non-mainstream media?
5. Do I have a structured investment strategy?
6. Do I have a structured exit plan?

If you can't answer yes to all these questions, hie thee not to a nunnery (or a monastery), head in the sand is not an elegant or useful stance; get yourself to a financial planner.

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Womenomics

The world of womenomics can be quite confusing. Two reports one from the UK and one from the USA caught my eye.

In Britain it appears that the average earnings of black women are now 6% higher than that of their white counterparts. This is a reversal of last years figures when white women earned more than 7% more. The Equality and Human Rights Commission said that one explanation for these results was that 50% of black women live in central London where the average pay is higher and many black women work in health and social services where pay has been rising.

This report I juxtaposed with an article in the New York Times under the banner "What has Driven Women Out of Computer Science?" It seems that less than 10% of the recent computer science graduates are women compared with the mid 1980's when women made up 40% of the students who majored in computer systems. One professor of mathematics and computer science at the University of Wisconsin theorised that it has been the rise in the subculture of action gaming which is the cause. There was the sense that computers were "boys" toys and that true girls didn't play with computers. There is also of course the pejorative term of "nerd" or "geek."

I was recently taken to task for talking about the "ghettoisation" of some occupations; these two reports reminded me of that. Health and social services are "womanly" occupations and computer science is not.

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Musings and Amusings

In some books and websites of late there has been a common theme of anger - anger displayed by single young males (SYM's). They are angry at women who they say turn marriage into a raw deal for men. Apparently women see men as a conduit to money as well as being dishonest, self centred, slutty, manipulative, shallow and controlling. The men who complain seem to think this view of women is a new phenomenon. I can only say they must be poorly educated or don't read.

Women have been depicted in this fashion in plays, novels and in the laws which have been enacted in many cultures for centuries,

I suggest the SYM's who complain, most likely seek out women who fit their assessment of our fair sex and who reflect their own characteristics of shallowness, self absorption etc. To these men I say get a life - it is probably time for you to step up to the plate and seek a new equality by taking on the sorts of work that married women enjoy - the cooking, cleaning, ironing, changing nappies etc. After all it is not fair that we monopolise these tasks.

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Who's Counting?

Niall Ferguson is in his recent book entitled "Survival of the Fittest" subtitled "The Ascent of Money: A Financial History of the World."

The financial world is all about counting - counting the risk, counting the money, counting the debits and credits.

Without mathematics there wouldn't be a financial world and we would not enjoy the sophisticated advanced economics of the 21st century.

In his book Ferguson discusses the evolution of "money" and what accounted as valuable in the financial history of the world ranging from large stones, shells to the coinage used almost universally today.

He concludes by saying finance is the mirror of mankind and as such can hardly be blamed if it reflects our blemishes just as much as our beauty.

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Why?

Well actually I would say why not? Why not invest in equities? Yes, in hindsight the best place you could have kept your money over the last year is in the bank, and the volatility of the markets combined with the media reports of the worst financial crisis ever make you feel intimidated, fearful. You want to wait until "everything is stabilised." That is sheer foolishness. There is one certainty that has stood the test of time. By leaving all your money in cash assets you will never reach your financial goals.

One simple way to get started without causing too much angst is to buy into unit trusts on a monthly basis. If you use a good wrap account you can even split your monthly investments. I recommend Europe, Asia and Emerging Markets.

I suggest you take a deep breath and jump in, contact an advisor.

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Everyday Money

10 Places to Find Money
1. Stop spending coins. Collect them. Only pay with notes.
2. Supermarket coupons (don’t spend the $1 that you have just saved!)
3. Cancel SKY TV.
4. Take lunch to work.
5. Limit magazine subscriptions.
6. Increase your insurance deductibles.
7. Lower your thermostat.
8. Set up automatic bill paying (saves money on stamps) and timely payment can give you discounts.
9. Reduce or eliminate ATM and fee-charging credit cards.
10. Buy less coffee (Latte, Cappuccino).

The Latte Effect
Gina, who is 29, came to see me some months ago, she earned a salary of $53,000, and had paid off half of her mortgage, but claimed that she couldn’t save money. She said she hated budgeting although she wanted to save for her retirement. She “wanted to start enjoying life now”. After some discussion we decided that rather than doing a budget we would do an “analysis of her current spending patterns”; if we found areas we could comfortably prune she would focus on those and save the excess. This was our list of expenses we could attack and the monthly savings we could make:

Savings Per Month
Lattes (reduce by 50%) $75.00
Dining out (reduce by 50%) $100.00
Alcohol (reduce by 50%) $57.00
Cigarettes (stop smoking) $170.00
Total: $402.00
This adds up to $4,824 per annum.
Gina became quite excited by this, she had been wanting to quit smoking anyway and this analysis gave her an added incentive. She has stuck to her plan for seven months now, “Saving”, she said “is quite addictive, I have found that I am becoming much more aware of spending in other areas and I’m really enjoying looking for bargains. It’s quite funny – I used to think budgeting was repressive.”

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Musings and Amusings

A famous 19th Century German doctor put it this way “Women is a pair of ovaries with a human being attached, whereas man is a human being furnished with a pair of testes”.

Homer Simpson, that well known philosopher, told Bart that women are like beer, and he’s mighty fond of both!

Somewhere between these two statements lies the reality. Something both sexes are constantly trying to evaluate, perhaps we should concentrate on our strengths rather than our perceived weaknesses.

The only irrefutable fact is that men and women are entirely different – as the French say “Vive le difference”.

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Everyday Money

Given the daily media barrage of disaster and crisis in the financial world what can you do to ensure your everyday money is structured to build a secure financial future?

Follow in the footsteps of those who have comprehensive financial plans. A recent study by the US Financial Planning Association reported that nearly half of those surveyed felt extremely confident in their financial future, with 30% fairly confident.

Interestingly, in these troubled times more and more investors are looking to financial planners to help them manage their finances. Only around 30% of Kiwis have a financial plan, so if you are one of the 70% who don’t, get thee to a financial planner

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Who's Counting?

I love the irony of this – it appears that math wasn’t Einstein’s strong point. A recent book entitled “Einstein’s Mistakes: The Human Failings of Genius” states that Einstein’s doctoral dissertation was “a comedy of errors” based on “zany” physical assumptions. And he continued to commit more math errors in 1905, the year dubbed his miracle year.

What a relief! It is comforting to think that a genius of his ability and stature struggled with math just like us mere mortals.

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Finance and Investment

Buffet says ‘Buy.’

Warren Buffett, the world's greatest investor, has a message for people who have become fearful of today's stock market: Buy stocks now!
In an editorial in last week's New York Times, Buffett says, "...fears regarding the long-term prosperity of the nation's many sound companies makes no sense."
The Oracle of Omaha, as he is known, cautions that he is not calling the bottom for stocks. "I haven't the faintest idea whether stocks will be higher or lower a month - or a year - from now."
But he clearly feels the environment of fear has created great opportunities. "A simple rule dictates my buying: Be fearful when people are greedy and be greedy when people are fearful."
History would certainly say Mr Buffett is right. Through two world wars, several recessions, the great depression, and countless other scares in the market, the market has always recovered. Yes, these times we now live in are different, but so are the global economies and the global opportunities.
We likely have not hit the bottom, but for anyone willing to invest for the mid to long term, history would also say that you won't see a better sale for a long time than that the market is offering right now.

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Why?

Why in 2008 are we still seeing practices which restrict and marginalise women?

In Kuala Lumpur the main body of Islamic clerics has issued an edict banning tomboys, ruling that girls who act like boys violate tenets of Islam.

While in the port at Kismayo, thousands of people gathered to witness 50 Somali men stone a women to death. She was buried in the ground up to her neck and her head was battered with rocks. The local Islamist leader claimed she wanted Sharia law and the punishment to apply following her act of adultery.

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Womenomics

There is no doubt that the world economies look bad. Andrea Learned, a specialist in marketing to women, suggests that the only way to dig ourselves out of the crisis is to model businesses and organisations on typical feminine behaviour. “Women’s way” includes building and leveraging community, being socially responsible, and operating from an “it all matters” perspective. She says that reaching out to women is how brands should be preparing for these questionable times when redesigning organisational policies, products, processes and marketing. To quote Ralph Waldo Emerson “Women are the best index of the coming hour” and who could disagree?

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FINANCE AND INVESTMENT

We are at the point in time when we are faced with a particularly fragile global banking system, a weakening global economy, very depressed and nervous equity and capital markets.

As you are undoubtedly aware, not least from the pervasive and extensive media coverage of recent months, it has been a particularly harrowing time in equity and credit markets. For the quarter, the MSCI Global Equity index returned -4.8%, Irish equity index -31.2% and Merrill Lynch Global bond index 4.5% * with almost all of these losses being incurred in September.

The ongoing bear market that commenced almost one year ago continues to have two overriding elements to it:
• The state of the global banking system?-Systemic risk
• The state of the global economy?-Cyclical risk

Whilst both of these ebb and flow in terms of headlines on a daily or weekly basis, there is absolutely no doubt but that the fear of a systemic failure of the global banking system has been THE key issue that has dominated markets thus far.

The Global Banking System:
The origins of the banking crisis over the last few months were in the collapse of the subprime market in the US, with the recent problems coming from the failure of the global financial system to adapt to the new operating environment.

Funding
Historically the basic operations of a bank involved taking in deposits and lending out these funds to trusted clients, carefully vetted by the internal credit department. The amount lent out was determined by the level of deposits taken in, with these items generally in equilibrium. In recent years, banks saw opportunities to earn additional income from interest on credit cards, brokerage commissions and asset management fees. As a result, there was less of a focus on deposit collection and a significant gap opened up between deposits and loans. European banks on average have a loan to deposit ratio of 130% which means that they need to find €1.5tr from non deposit funding sources. This funding has tended to be from the securitisation and interbank markets.

Securitisation is where banks package and sell off a portion of their loan book and earn a fee in return. Due to the collapse of the US sub-prime market, securitisation markets are closed, with no interested buyers for these securities.

The other source of funding is the interbank market, which is simply where banks lend to one another for a specified time period. The collapse of the sub-prime market in the US created a substantial level of write downs for the financial system. As well as being concerned about their own holdings in these high risk assets, banks were even more concerned that other banks to whom they lent (in the interbank market) would have a similar or even larger exposure to this toxic debt. Hence the interbank market simply dried up with banks unwilling to lend to each other due to a fear of the unknown.

As noted above, banks fund their loan book through deposits, securitisation and interbank funding. With securitisation and interbank funding both unavailable, the banks with large funding gaps were left in a perilous situation. The situation was even more perilous for banks who do not have access to any form of retail deposits. This is what created the crisis in the US investment banking sector, where the companies did not have the security of retail deposits, hence the demise of Bear Stearns and Lehman Brothers.

Capital
Capital is the other issue that needs to be discussed. The losses related to the sub-prime crisis led to a dramatic reduction in global bank capital. The losses were large and were taken as a once off hit rather than spread over a number of years. The banks were subsequently forced to raise additional capital to fill this hole and thus far over $440 billion has been raised. Regulators are likely to re-visit capital requirements following the various banking collapses and there will be further rights issues and placings ahead.

Outlook
Looking into the future, the banking model has undoubtedly changed. Banks will be forced to place an increased emphasis on gathering deposits and lending growth will be curtailed as banks attempt to reduce their reliance on interbank funding and securitisation. Deposit gathering and risk management will recapture their once dominant role in banking activity. The various announcements of public sector support for the financial system should help to restore confidence and over time inter-bank lending will likely recommence. Banks will have to increase the level of capital to support their issue equity capital when markets recover but funding is still the bigger concern at this moment in time. The deteriorating macroeconomic environment will undoubtedly lead to an increased level of bad debts and bankruptcies over the coming years. All the issues discussed above will result in a period of slower loan growth, worsening credit quality and capital raisings and we have seen valuations adjusting to reflect this changed environment.

Market Outlook
• Firstly, we are unquestionably in the midst of THE most uncertain financial environment that has faced the world in many many decades.
• Secondly, it is a time for much disciplined decision making. The volatility and rate of change of material facts is incredible. Take the Irish banking sector’s performance this week alone; despite a 46% fall on Monday, at the time of writing Anglo Irish bank’s stock is up almost 20%!! Global authorities have and are waking up quickly to the challenges currently being faced.
• Thirdly, our key challenge is weighing up the balance between the major uncertainties/risks in the global macro-economic system versus the medium term investment opportunity afforded by assets that are at multi decade lows. At present “risk assets” (equities for example) look cheap, and especially versus cash and government bonds, both of which have attracted safe haven status

Previously outlined events dominating markets:
• The state of the global banking system?-Systemic risk
• The state of the global economy?-Cyclical risk

Over coming months the focus will switch from systemic to cyclical concerns. The two are obviously linked, particularly with the dent to confidence and activity levels that the credit crunch has inflicted on the economy. We are closer and closer to solutions to the systemic banking crisis that should safeguard the system.

Cyclically, the outlook is now most likely for a G7 recession though we will probably avoid a global recession. Cyclical markets and economies are normal and demand lower risk premia than the less frequent systemic crisis scenarios. Our outlook for the next 6 months in that scenario considers:

Negatives:
• The downturn has been led by the banking sector and a deflation of asset prices. Past experience shows that asset deflation cycles take much longer to recover from as deleveraging in itself has very negative dampening affects.
• We face much nastier economic numbers in all western economies. The markets are good leading indicators of what is still to come.
• We face significant earnings downgrades as companies report their earnings and analysts cut their earnings estimates much more than they have so far.
• In a cyclical sense bank funding will remain very difficult to obtain.
• Overall confidence is sapped.
• The levels of uncertainty generally, is causing investors to keep selling equities and demanding higher risk premiums.

Positives:
• Inflation which was a major concern during the early summer as commodity prices soared, is falling quickly.
• Over coming months as in any normal cycle, we expect relatively aggressive interest rate cuts from many central banks including the ECB, BOE and probably the FED.
• Valuations of equities look cheap, even allowing for the poorer earnings outlook. On measures such as dividend yield some of the European equity markets are now yielding more than their equivalent government bonds, which is very unusual and can be argued as very bullish for equities.

In the short term, I believe that the passing of the US bill, depressed levels of fear and sentiment and very oversold technical levels on markets would mean we could see a 10% or so bounce in equities. Beyond that I believe we remain in a cyclical bear market as despite the positives above, the biggest challenge to being positive on equities is to the timing of going positive. I believe we are too early in the cyclical downturn for markets to enter a new bull market as we need time to work through some of the issues outlined above.

Whilst we are not out of the woods yet that we have been through the most difficult and volatile part, and that the next cyclical phase whilst not overly positive is not as depressing as the phase we have come through

Source: KBC Asset Management.
*Source: Merrill Lynch > than 5 year global bond index

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WOMENOMICS

It’s pretty clear that Hollywood pays its male leads more and gives them roles for much longer than women.

This has extended to the world of comics. Five of the six upcoming Marvel movies feature male leads with women firmly relegated to the roles of girlfriends or assistants. Why not a Wonder Woman flick or any true super heroine movie? It’s not because directors and writers lack good material, there are literally hundreds of comic book super heroines, and female characters play integral roles in just about every superhero team and major comic book plots.

We recently saw women flexing their box office muscle giving Sex and the City the highest-grossing opening for an R-rated comedy in movie history; it’s not inconceivable to think that a super heroine flick could draw both the “girls night out” crowd and the already broad fan base for comic movies. That would give the studios a revenue bump of the kind provided by the Spiderman and X-MEN franchises. Don’t the movie moguls want our money? We are an economic force to be reckoned with.

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WHY?

Why does money matter? Money matters because like it or not we live in a money culture where money is the universally acceptable medium for exchange for goods and services. Money buys the things that all people want – and deserve; life, health, food, land, hope, education, sexual pleasure and some peace of mind. From Women, Money and Power. Phyllis Chesler & Emily Jane Goodman (New York: Bantam Books, 1977)

Why do we need to learn about money? Because only the powerless live in a money culture and know nothing about money. Ignorance about money and power is not an effective means of acquiring, redefining, or distributing money. A political, ‘sophisticated’, or religious horror of money dangerously avoids the fact that, in a money culture, it is only money that buys the things that all people want – and deserve; life, health, food, land, hope, education, sexual pleasure and some peace of mind.From Women, Money and Power. Phyllis Chesler & Emily Jane Goodman (New York: Bantam Books, 1977)

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EVERYDAY MONEY

What can be more everyday than marriage? Ask your favourite married couple what makes their marriage work and they are unlikely to say it’s because they found their financial soul mate.

The smartest financial decision you will ever make may be marrying someone who has the similar attitudes to money. This could in fact be your most valuable asset – or your largest liability.

Although we now marry for love, so much of what we want in life boils down to dollars and cents.

Test the following guidelines with your significant other:

• Talk and share goals, ask tough questions, share your financial health and lifestyle dreams.

• Run your home like a business, make a budget and keep track of earnings, expenses and debts.

• Be supportive of concerns, having a supportive partner helps professionally which trickles down to the bottom line.

• Enjoy – but within reason, create a cash cushion and live a lifestyle you can sustain.

• Use a mediator, an independent third party, whether a financial planner or therapist.

• Maintain some independence

• And invest in your marriage – spend time together.

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MUSINGS AND AMUSINGS

In Money, Money, Money Ain’t it Funny I wrote a little about our lack of mathematical skill quoting an entertaining example from The Simpsons:

A psychologist is giving a ‘team talk’. He makes the statement, ‘You are all very good players’. The team members mimic the psychologist, ‘We are all very good players’. Then the psychologist says, ‘You will beat Shelbyville!’. And the team, again in unison, reply, ‘We will beat Shelbyville!’ By this time the psychologist is raising his voice, and he shouts, ‘You will give 120 per cent!’ But the team, still in unison, reply, ‘But hold on, that’s impossible. No one can give more than 100 per cent. By definition that is the most anyone can give.’

A host of new studies suggest that the gut instinct has a surprising role in maths. Imagine you are in the supermarket; you routinely survey the checkout lines and pick the shortest. We use our approximate number system an ancient and intuitive sense we are born with and that we share with many other animals. Rats, pigeons, monkeys, babies – all can tell more from fewer.

When it comes to genuine computation we have to use a very different number systems one that is symbolic specific and highly abstract. This is a recently acquired skill which takes years of education to master.

For an example of flawed computation skills, take Russell Crowe’s recent comments on the US Bailout.

The New-Zealand born actor announced, during a US TV talk show appearance on Jay Leno, a mathematically-flawed plan to cure America’s financial crisis.

Crowe believes the US should give each American US$1.00 million ($1.50 million).

His reasoning is the US has a population of about 300 million, so the US$300 billion outlay is a fraction of the US$700 billion bailout package rejected by Washington DC.

“If they want to stimulate the economy and get people spending so they can look after their mortgage...give everyone US$1 million.:

His plan would actually cost $300 trillion.

The researchers say that they don’t yet have any idea of how the two systems interact. FMRI studies show that the approximate number sense (fewer or lesser) has been traced to a specific neutral structure called the intra parietal sulcus. Symbolic math however activates many of the prefrontal regions of the brain, the “new” brain. Somewhere the scientists suggest that these two areas must be hooked up to a party line.

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WHO’S COUNTING?

I’ve been counting women lawmakers and politicians. It is true that we have made substantial gains in the last decade but equal representation in the lawmaking and ranks of political power still seems to elude us.

Less than 18% of the world’s lawmakers are women and many developing countries have more women in the corridors of political power than Western democracies. Globally, the proportion of female lawmakers jumped from 11% to 17.7% between 1995 and 2006 according to a survey “Equality in Politic” presented to the Inter-Parliamentary Union.

Rwanda has the highest percentage of women in its lower house, with 48% followed by Sweden, Finland and Argentina.

The United States trailed in at 71st place with women accounting for only 16% of members in the House of Representatives. Sudan’s lower house has 18%.

One third of South Africa’s lawmakers are women and all the Speakers of Parliament have been women since the advent of multiracial democracy in 1994.

It seems the old democracies talk a lot about equality but are not doing particularly well at practising it. This gap really matters. Like men, women with the brains, the desire and the perseverance to lead should be encouraged to fulfil their potential and leave their mark.

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Everyday Money

Many of us have life insurance and in well over 90% of cases we have term insurance. Term insurance premiums increase each year to meet the rate for the insured’s age. To date most of us have just rolled our eyes and paid the extra however 2009 could see our eyes watering.

It has been suggested that life insurances are under taxed and legislation is planned to correct this. As always this will reflect on the consumer with premiums looking to increase between 20-30%.

I strongly urge you to talk to your advisor and examine the possibility of a level premium policy – it looks as if this will be the only way to avoid the potential increase in premiums.

And a note on KiwiSaver; on a salary of $70,000, you could have received $2193 in government contributions, and $274 in employer contributions – makes sense.

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Musings and Amusings

I love my bed and I love snoozing – for those of you who feel the same way it is now official – sleep is good for your brain.

Until the mid 50’s, it was assumed that when we slept our brains shut down but are now familiar with the REM (Rapid Eye Movement) cycle evident in your sleeping patterns – the brain waves produced during this period look similar to those produced when are awake.

In fact the effects of sleep on memory are impressive. It appears that while we are asleep our brain is processing the day’s data. It sorts through recently formed memories, stabilising, copying and filing them so that they will be more useful allowing us to recall them for use more effectively the next morning.

Sleep not only strengthens memories, it seems likely that the brain sifts through memories identifying what is worth keeping and selectively maintaining or enhancing these aspects of memory. When a picture contains both emotional and unemotional elements sleep can save the important emotional parts and let the less relevant background drift away – perhaps helping us find the meaning in what we have learned.

It’s great when the latest scientific findings hear out the old adages – if you have a problem – sleep on it!

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Womenomics

A few weeks ago and academic Paul Callister questioned the validity and continuation of specific scholarships for women, given, as we all know that women routinely gain higher educational qualifications than men. An op-ed piece in the Sunday Star Times commented that Mr Callister raised “fair” but “awkward” questions.

At arond the same time Fairfax printed a booklet listing the 100 Business Luminaries who have shaped our nation. Of the 100 business peoples, four were women, yes you read that right – four.

Women’s scholarships should continue until we are further down the track towards economic parity – bearing in mind that the right to education for women is still in its infancy in comparison to that of men. Possibly the reason behind our enthusiasm for learning we don’t accept it as a right.

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Finance and Investments

The stark truth about managing our money these days is that we are mostly on our own.

Few employers want us around for 40 years, so our income is likely to have ups and downs and could disappear altogether for brief periods between jobs. Saving for retirement is now mostly our responsibility, too. Health insurance, for those of us who have it and manage to keep it, requires increasingly large amounts of money out of our pockets. The list goes on and on.

At the same time, all sorts of individuals and institutions have smelled opportunity and lined up to peddle their wares, resulting in an explosion of credit cards, bank products and advisers of various stripes. Some of this is helpful because competition has led to lower costs. But in other instances — say, newfangled adjustable-rate mortgages — the result has been painful.

Complicating all of this is the housing downturn, which has affected the largest asset in many portfolios. Rising fuel and food prices along with tougher loan standards do not help.

Given the stakes, it is hard to avoid the persistent low-grade fear that we have made wrong choices or cannot find the right ones, even though they are out there somewhere. There’s no guarantee that the choices will be available, attractive or appropriate for everyone.

Here are five basic guidelines.

INVESTING IS SIMPLE
Boiling down investing; Save regularly. Reallocate infrequently. Diversify.
For most of us, investing— and sticking with it— is the hardest part of the mantra to accept.

The fact is, however, beating the overall market in most investment classes is nearly impossible over long periods of time. Sure, it may be fun to try. But if you enjoy that sort of thing, do it with a tiny piece of your portfolio. And remember to call it what it actually is: gambling.

IT STILL MAY BE WORTH PAYING FOR HELP
Investing is only one small part of your financial life. Mortgages, taxes, savings, insurance and debt are a few of the hugely important tasks we have to figure out.
Perhaps the best thing a versatile professional — whether it is a financial planner, accountant, stockbroker or lawyer — does is provide discipline. It is difficult to get most of this stuff right. And to get it done at the right time. Professionals help make sure it all happens on schedule.
Most of us would rather avoid paying for help but getting the right structure is well worth the cost.

PEERS MAY KNOW MORE THAN PROFESSIONALS
Financial planners may not have all the answers, or the best answers, all of the time. Moreover, they tend to be stronger on core areas of money management like insurance and taxes and less so on day-to-day budget or purchasing consumer goods type financial decisions.

EVERYTHING CAN (AND SHOULD) BE AUTOMATED
One of the great consumer-friendly innovations in the world of money in recent years has been the automation of bill paying.

This has a number of advantages: no stamps, no envelopes, no late fees. Then you can do things that are a lot more fun.

HAVE THE TALK
As fewer people have pensions and more retirees live longer, an increasing number of people may need financial help from their children. The question is whether your parents will be among them.

Trying to pry financial information out of your parents does not make for a pleasant conversation. But the fact is, we are entitled to demand some answers if our parents do not initiate the discussion themselves.

This is not a case for callousness. They took care of us for 20 or so years, and we will take care of them, too, if it comes to that. But it is not fair of them to withhold warnings of deteriorating finances. If we do not know what is coming, we cannot help them plan for it.

Just as we should talk about money with our parents, we should be less reticent about discussing it with others.

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Why?

Why do I continually meet people who live from payday to payday and why do I have to keep parroting the same lines. Financial freedom is not rocket science. Follow these simple steps.

• Spend less than you earn
• Join a subsidised superannuation scheme or KiwiSaver
• If you are in the position of having short term expensive debt pay it off.
• Take out insurance – income protection is essential.
• Set aside an emergency fund.
• Buy a property and focus on paying off the mortgage as soon as you can.
• Set up an investment portfolio.
• Attend to legal issues such as writing a will.

If you can’t do this on your own, get hold of a financial planner to help you. Less than 30% of Kiwi’s have financial plans.

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Who’s Counting?

I am – and I am up to five – five great ways to find extra money.

One: Slash your credit card rate – you could take a term loan, clear the balance and cut your card up; if you don’t want to do this transfer to a low interest rate card; or alternatively increase you mortgage to clear your card and finally – if you have money in your savings account or term deposit pay off your card! The interest you earn is less than a quarter of the rate on your card.

Two: Lower your entertainment costs; hire a DVD and make your own popcorn, play board games with your family, go for a walk – instead of going out for a meal, prepare your own dinner, light candles and enjoy a bottle of wine which is at least a third cheaper than that at your favourite restaurant.

Three: Have a garage sale, invite your neighbours to join in, you may be meeting some for the first time but making money together is a great bonding process.

Four: Sell your used books to a second hand book shop – and try not to be tempted by buying more!

And finally revisit all your insurances you may be able to prune costs by taking on an excess, you may find that you now have unnecessary insurances BUT remember insurance is the umbrella which prevents financial ruin!

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Finance and Investment

There are numerous books written ostensibly to guide, advise and enlighten us on how to invest or get wealthy – and yes I am guilty! One Ken Fisher, a practical and rich man who obviously loves simplicity wrote a book called ‘The Only Three Questions That Count: Investing by Knowing What Others Don’t.’

In these uncertain times it may pay you to ask yourself the following, in relation to your investments:

1. What do I believe that is actually false? Note what you believe is probably believed by most people.

2. What can I fathom that others find unfathomable? Here we need a process of inquiry allowing us to contemplate that which most people assume simply cant be contemplated at all. It’s the essence of so-called out-of-the-box thinking.

3. What the heck is my brain doing to mislead and misguide me now? To blindside me? Another way to ask this is, “How can I out-think my brain which normally doesn’t let me think too well about markets?” (This is the realm of behavioural psychology. One of my favourite topics).

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Who’s Counting

House sales are down 30 per cent compared with a year ago, with prices expected to fall 5 per cent this year and remain flat for the next five years.

That's the grim prediction from Westpac's economists who say residential property prices have "screeched to a halt, with essentially zero price movement in the past eight months". Prices stopped dead in April last year, they say, after rising by $8000 a month. Had it not been for New Zealand's strong economy, wage growth and a 21-year unemployment low, house prices would have fallen earlier and more aggressively.

Tony Alexander, the BNZ's chief economist, and Nick Tuffley, chief economist at the ASB, both expect price falls as opposed to the current slowing of growth in house prices.

Alexander says that for the first time in four years he is prepared to predict prices will fall probably about 1 - 2 per cent. He's not expecting anything like the 4 -5 per cent fall in house prices in 1998.

Another significant sign the housing boom is over is a comparison of the average number of days taken to sell a property. Alexander says in June last year that was 30 days and by December 2007 that figure was 39 days.

The big issue in the NZ market is affordability, Tuffley says, with house prices high relative to individual incomes. "The market won't do anything spectacular in the next five years." he says.

"If it was my kid wanting to buy a house, I'd be telling him to hold back for a few months to see what happens."

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Everyday Money

University of Chicago economists Kerwin Kofi Charles and Erik Hurst along with Nikolai Roussanov of the University of Pennsylvania, have challenged common assumptions about luxury. Conspicuous consumption, this research suggests, is not an unambiguous signal of personal affluence. It’s a sign of belonging to a relatively poor group. Visible luxury thus serves less to establish the owner’s positive status as affluent than to fend off the negative perception that the owner is poor. The richer a society or peer group, the less important visible spending becomes. So next time you sue someone flashing bling and feel envious, repeat after me, that is a poor person.

Russ Alan Prince and Lewis Schiff describe a similar pattern in their book, The Middle-Class Millionaire, which analyzes the spending habits of the 8.4million American households whose wealth is self-made and whose net worth, including their home equity, is between $1 million and $10 million. Aside from a penchant for fancy cars, these millionaires devote their luxury dollars mostly to goods and services outsiders can’t see: concierge health care, home renovations, all sorts of personal coaches, and expensive family vacations. They focus less on impressing strangers and more on family- and self-improvement. Even when they invest in traditional luxuries like second homes, jets, or yachts, they prefer fractional ownership. “They’re looking for ownership to be converted into a relationship rather than an asset they have to take care of,” says Schiff. Their primary luxuries are time and attention, as a woman I can relate to that.

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Womenomics

A recent article in the Economist asks is the European Union at heart a female project? Margot Wallstrom, a vice-president and thus the most senior woman in the European Commission, rather thinks so. She points to the EU's fondness for compromise and listening, and its rejection of horrid things like conflict. Ms Wallstrom, who is charged with selling the EU project to the public, suggests that this is a good reason for giving women a bigger share of the union's top jobs.

The underlying problem is that “men choose men” for important jobs (and isn’t that true in all walks of life), and this harms the EU, maintains Ms Wallstrom. Men and women “complement” each other. For example, male leaders traditionally define security in terms of “military investments”. Female leaders focus more on security achieved through access to clean water and education or “keeping children and women safe”. This is not just a woman's way of looking at security, she contends; it is the European way.

Beyond the usual feminist propaganda, Ms Wallstrom is right on one serious point: that it is (at least on the face of it) outrageous that no woman is in the running for any of Europe's leading jobs. It is a sad waste of talent whenever mediocre men fill seats that could go to more capable women.

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Musings and Amusings

You probably didn’t know this (nor did I!) but the world’s top eight economists (including five Nobelists) were asked to prioritise 30 different solutions to ten of the world’s biggest problems. I thought it made fascinating reading given some of media obsessions.

Supplying the micronutrients vitamin A and zinc to 80 percent of the 140 million children who lack them in developing countries is ranked as the highest priority. The cost is $60 million per year, yielding benefits in health and cognitive development of over $1 billion.

Number 2 on the list of Copenhagen Consensus 2008 priorities is to widen free trade by means of the Doha Development Agenda. The benefits from trade are enormous. Success at Doha trade negotiations could boost global income by $3 trillion per year, of which $2.5 trillion would go to the developing countries.

The remaining top ten priorities addressed problems of malnutrition, disease control, and the education of women. For example, the number three Copenhagen Consensus priority is fortifying foods with iron and iodized salt. Two billion people do not have enough iron in their diets which results in energy sapping anemia and cognitive deficits in children and adults. Lack of iodine stunts both physical and intellectual growth. The other seven of the top ten solutions include expanded immunization coverage of children; biofortification; deworming; lowering the price of schooling; increasing girls' schooling; community-based nutrition promotion; and support for women's reproductive roles.

So what proposed solutions are at the bottom of the list? At number 30, the lowest priority is a proposal to mitigate man-made global warming by cutting the emissions of greenhouse gases. Part of the reason for the low ranking is that spending $75 billion on cutting greenhouses gases would achieve almost nothing. In fact, the climate change analysis presented to the panel found that spending $800 billion until 2100 would yield just $685 billion in climate change benefits.

The best defense against climate change in the developing countries is going to be their own development.

Also low on the list of priorities are proposals to reduce outdoor air pollution in developing country cities by installing technologies to cut the emissions of particulates from diesel vehicles. Other low ranked solutions included a tobacco tax, improved stoves to reduce indoor air pollution, and extending microfinance. These are not bad proposals, but other proposals were judged to provide more bang for the 75 billion bucks available in the exercise.

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Why?

I have recently read and enjoyed Kluge (Subtitled 'The Haphazard Construction of the Human Mind') by Gary Marcus. Kluge means ‘a clumsy or inelegant solution to a problem.’ His book explains why, despite the fact that humans have been known to be eaten by bears, sharks and assorted other carnivores, we love to place ourselves at the top of the food chain. And, despite our unwavering conviction that we are smarter than the computers we invented, members of our species still rob banks with their faces wrapped in duct tape and leave copies of their resumes at the scene of the crime. Six percent of sky-diving fatalities occur due to a failure to remember to pull the ripcord, hundreds of millions of dollars are sent abroad in response to shockingly unbelievable e-mails from displaced African royalty and nobody knows what Eliot Spitzer was thinking.

Marcus uses evolutionary psychology to explore the development of that "clumsy, cobbled-together contraption" we call a brain and to answer such puzzling questions as, "Why do half of all Americans believe in ghosts?" and "How can 4 million people believe they were once abducted by aliens?"

According to Marcus, while we once we used our brains simply to stay alive and procreate, the modern world and its technological advances have forced evolution to keep up by adapting ancient skills for modern uses-in effect simply placing our relatively new frontal lobes (the home of memory, language, speech and error recognition) on top of our more ancient hindbrain (in charge of survival, breathing, instinct and emotion.) It is Marcus's hypothesis that evolution has resulted in a series of "good enough" but not ideal adaptations that allow us to be smart enough to invent quantum physics but not clever enough to remember where we put our wallet from one day to the next or to change our minds in the face of overwhelming evidence that our beliefs are wrong.

Marcus's finest example is the contraption used by the Apollo 13 astronauts to get home after their CO2 filters began to fail-using a plastic bag, cardboard box, some duct tape and a sock, they were able to cobble together a new filter and get home safely. Despite the fact that it worked, NASA has never been tempted to incorporate that design into its space projects.

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Why?

Why aren’t there more women in science and engineering?

When it comes to the huge and persistent gender gap in science and technology jobs, the finger of blame has pointed in many directions: sexist companies, boy-friendly science and math classes, differences in aptitude.

Women make up almost half of today's workforce, yet hold just a fraction of the jobs in certain high-earning, high-qualification fields. They constitute 20 percent of the nation's engineers, fewer than one-third of chemists, and only about a quarter of computer and math professionals.

Now two new studies by economists and social scientists have reached a perhaps startling conclusion: When it comes to certain math- and science-related jobs, substantial numbers of women - highly qualified for the work - stay out of those careers because they would simply rather do something else.

One test, a standard personality-inventory test measured people's preferences for different kinds of work. Personal preference it concluded was the single largest determinative factor in whether women went into IT. They calculated that preference accounted for about two-thirds of the gender imbalance in the field.

A second study found something else intriguing: Women who are mathematically gifted are more likely than men to have strong verbal abilities as well; men who excel in math, by contrast, don't do nearly as well in verbal skills. As a result, the career choices for math-precocious women are wider than for their male counterparts. They can become scientists, but can succeed just as well as lawyers or teachers. With this range of choice, their data show, highly qualified women may opt out of certain technical or scientific jobs simply because they can.

Despite these studies women still seem to make choices throughout their lives that are different from men's, and it is not yet clear why. For example we don’t know about the role of mentors or experience or socialisation.

These findings on self-selection only open new areas of inquiry. The end result may be surprising - and an equal-opportunity workforce may look a lot less equal than some had imagined.

I would be very interested in your views on this.

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Musings

How many times has this happened to you? You leave work, decide that you need to get groceries on the way home, take a cellphone call and forget all about your plan. Next thing you know, you've driven home.

What gives? Why are we as a species so often so desperately poor at achieving our goals?

The problem is that evolution failed to realize that remembering goals is not like recognizing objects. When your brain sees a lion, the thing to do is to decide, lickety-split, to get out of the way. Run first; ask questions later.

Alas, evolution didn't have the foresight to realise that different kinds of tasks require different kinds of memory, and it used the same basic sort of memory for everything, not just for remembering what lions and tigers look like (in which general tendencies suffice) but also for cases -- like tracking our goals -- where a bit more precision would have been helpful. As a result, trying to remember what to do next can be a little like trying to remember what you had for breakfast yesterday: There are too many breakfasts and too many yesterdays for our biological memories to keep track of.

The same thing can happen with our goals. When you sit in your car late in the day and ask yourself, "What am I supposed to do next?" and all of a sudden the cellphone rings, your brain can easily lose track of which "next step" is the right one. Instead of zeroing in on the specific memory it needs, it may well settle for remembering whatever you've done in the car most often -- and that's drive home. Voila, autopilot you forget the groceries.

Our attempts to pursue our goals are often thwarted by the fact that evolution has built our most sophisticated technologies on top of older technologies. Our “old” brain still bosses the “new brain.”

Yet our brains are structured in such a way that the more tired, stressed or distracted we are, the less likely we are to use our forebrains and the more likely to lean back on the time-tested but shortsighted machinery we've inherited from our ancestors.

Still, all is not lost. Even though our short-term desires are pretty good at grabbing the steering wheel of our consciousness, our more recently evolved deliberate minds are powerful enough to regain at least some measure of control.

Our conscious, deliberate systems will never have total control, and our memories will never be perfect, but as they say in Alcoholics Anonymous, recognition is the first step.

Read Money, Money, Money Ain’t it Funny for more on this relating to investing.

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Finance and Investments

Investors be worried...The next 12 months will provide you with the best returns you are likely to get for some years.

A study of the last eight US recessions shows the US sharemarket (Which is still closely correlated with other world markets) hit their lowest points 3 – 6 months before the economy dips to its lowest ebb.

One commentator suggested the markets should start to recover around June – markets tend to recover before recessions end and, once the recovery begins, for the following 12 months you will get better returns than for the next few years. Remember greed and fear? We are about to swing back to greed.

Staying out of the share markets is a bigger risk than staying in. Oh – and the property market? Not a lot of relief – further drops are likely with a period of stagnant growth until around 2010-2011 seems likely.

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Womenomics

Once upon a time our DIY activities were restricted to cooking and sewing – but not anymore. In the great Kiwi tradition of self sufficiency, manual competence and can doism, we are now joining the hammer brigade. Smart marketers in home improvement companies have latched onto this and are offering courses in home maintenance.

In the States there has been an explosion of women targeted self help books, videos and radio shows – including one called ‘A Repair to Remember.’

It’s not hard to see what is driving the fad; many of us live alone after partners move out taking the tool box with them. Many of us buy our own homes, waiting to marry or merge until our late 30’s.

For your next birthday or Christmas you might find that you get a tool box rather than a cake mixer!

Are you a home improver? Share your views on this.

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Everyday Money

Well I love market research especially that which tell me what I am doing with my every day money – and in comparison with Australian women. You’ll be surprised to know that we spend more than the Aussies, proportionate to our income. But at least we get it right – we spend more on premium products and indulgences such as shoes, designer clothing, haircuts and pamper sessions. What do you spend your money on?

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Who's Counting?

The government is counting. It appears that we have embraced KiwiSaver in numbers which have far exceeded Cullen’s expectations. Initial projections were for 270,000 people to sign up in the first year but to date over 600,000 people have joined.

It’s not surprising because we can count – we count $1000 kick-start from the Government, up to $20 a week, and $40 a year towards fees. What’s not to like? And the funding is coming from the taxes we pay.

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Mike Yardley Presents with Sheryl Sutherland

Please view the 15 minute CTV excerpt from Mike Yardley Presents featuring Sheryl Sutherland speaking about her book 'Money, Money, Money Ain't it Funny.' Enjoy.

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Everyday Money

Everyday I read advertisements which urge me to get rid of my wrinkles, change my body shape or alter my bust size - and the options don't stop there. The advertisers want my discretionary income, my everyday money, to create a new and miraculously better looking person.

The amount of money we spend on skin care and cosmetic procedures (which seem to become weirder and weirder) is phenomenal. Global skin care companies boast science laboratories which are better funded than most universities. The cosmetics industry spends $15-16 billion a year in the US, making profits of around $1 billion annually, it is the seventh largest industry in spending money on advertising - higher than telephones, beer and airlines. The cosmetic surgery spend is around $10 billion a year.

Don't get me wrong I love makeup, fragrance and have no qualms about collagen but I am beginning to feel somewhat uneasy at the cult of beauty which wants an ever increasing share of my money.

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Why?

Why do you need to understand economics and game theory? OK - a qualification, this could be useful information if you are concerned with the man drought. You need to think of the search for your man as a kind of auction. In this auction some of you will be more confident of your prospects than others. In game theory terms the first group would be "strong bidders" and the latter group "weak bidders." You would think wouldn't you that the "strong bidders" (good looking, intelligent, fertile, high earners) are more of a catch and would consistently win this kind of auction.

But this is not the case. In fact game theory predicts that auctions are more likely to be won by "weak bidders" who know that they can be outbid so will bid more aggressively while the strong bidders will hold out for a really great deal. This is even more important than you may think at first glance. The pool (or swamp depending on your mood) of appropriate men shrinks as the "good ones" are married off leaving a disproportionate number of men who are imperfect (short, broke, ugly, inept). And at the same time you have a pool of women weighted towards the attractive desirable "strong bidders."

The good ones are all married to women whose most salient characteristic is decisiveness.

Hazard warning; Game theory deals with how best to win the prize but it only works when you decide what it is that is worth winning.

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Who's Counting?

I have been counting the members of the National Academy of Sciences (NAS). This is an extremely elite and venerable American institution, membership in this academy is second only to winning the Nobel Prize.

The pool of scientists from which the NAS members are drawn numbers about 625,000. Academy membership (by invitation only) currently numbers 2,041. Of the 2,041, 200 are women. Women PhD's number 33% of all graduates. Even in science the old boys reign supreme.

As a P.S on this, the Chronical Review Report logged no posts in relation to this report. This appalling under-representation of women scientists is not remarkable enough to comment on? What do we need to do now? Chain ourselves to railings, slash paintings and break windows, burn our bras, march - oh wait but we've done that.

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Musings and Amusings

As you know I am fascinated with the way our brains function. Human error is often written off as a momentary loss of concentration but it appears that a localised change in brain activity may be involved. The regions which seem to take over our brain function when we make mistakes are part of the so called "default mode network" which show increased use when people are resting or falling asleep. This set me musing of course - what would life be like if we could predict our mistakes and thus live an error free life? We may not be too far away from that reality. Small portable EEG monitors can be integrated into baseball caps. I think however, that the Brave New World be could a tad banal and sterile, a predictable uneventful world.

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Womenomics

I frequently talk about the gender gap but here in the West maybe it ain't so bad? Despite the Prophet Muhammad's first wife supporting her husband financially, women in Saudi Arabia were legally required to conduct business through a male agent until 2004. Although that law has gone its ramifications live on, which makes the male dominated world of banking particularly hard to penetrate.

But on a positive note some forward thinking Saudi banks have set up ladies only branches which allow women to manage their finances independently of fathers, brothers and husbands. (There is no religious law banning women from managing money and laws based on Islam have guaranteed women the right to own property for centuries - unlike the West).

Increasingly wealth managers are realising that women in the Gulf region are sitting on fortunes in cash, land and jewellery. Western female bankers routinely travel to the Gulf to hold meetings with clients.

In the UAE (United Arab Emirates) a government holding company has set up an investment company run by women for women - who rightly scorn the "thinking pink" superficial changes.

I am almost jealous; I have spend a couple of decades trying to convince various players in financial services to market to and support women's investment and banking programmes to no avail. One estimate I read recently suggests that by 2010 half of all private wealth will be in the hands of women. Can't wait.

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Finance and Investment

One of the issues I address when writing a financial plan is that of diversification. And by this I mean diversification across asset classes. Of late I have had numerous conversations with worried "property" investors. Without exception diversification has not been considered at all. The narrow investment schemes (not financial plans) all share the same features;

1) All of their money is tied up in property.
2) All their property is residential.
3) All their residential properties are in the same city (and sometimes even on the same section or street!)

But wait: there is more, they have used the equity in their own home to buy these properties. This puts their own home at risk. Property is cyclical, just as other asset classes are cyclical. Why borrow money, secured against your home, to make a risky investment. Depending on who you listen to the property market will cool by 10-30%. I see more mortgagee sales on the horizon that's for sure.

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Who's counting?

Well I am not at all sure who is counting. Perhaps some people can't count - and I am thinking here about Michael Cullen. We have veered between not counting $700 million or so from tax revenues, to not being able to afford the last lot of tax cuts because of KiwiSaver, to "significant" tax cuts.

Dr Cullen, the right honourable has not defined "significant." We have seen some pretty significant price rises; interest rates, petrol, food for example which has caused many of us to count and recount the dollars in our pay packets and count and recount our costs.

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Musings and Amusings

Like you I always wish I had more will power so I was thrilled to find out that the latest studies tell me I can grow my will power. Yes it's true - something as simple as using your non dominant hand to brush your teeth for two weeks can increase will power capacity. People who stick to an exercise programme for two months report fewer impulse spends, eating less junk food, drinking and smoking less. They also study more, watch less television and do more housework. Other forms of willpower training, like money management work as well - now how did money enter into the conversation!

No-one knows why willpower can grow with practice but doing any activity that requires self control seems to increase will power - and the ability to resist impulses and delay gratification is highly associated with success in life.

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Womenomics

The Human Rights Commission has just released a "Census of Women's Participation." The findings of that report clearly delineates inequality across sectors such as the police, legal and justice systems and at company director level:

• 41.6% of lawyers are women but only 19.34% are partners in law firms.
• 3 of the top 50 police officers are women.
• 54 women sit on boards of publicly listed companies, 8.65% of board membership.
• 23% of public service CEO's are female but women are 59% of state sector employees.

It is now more than 30 years since sex discrimination legislation came into force but our progress towards gender equality seems minimal.

It amazes me given that we mouth the mantra of social responsibility, and the value of diversity, that women are so excluded from the top jobs.

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Everyday Money

I have just read a hugely entertaining book review by one Jessa Crispin, the founder and editor of www.bookslut.com - check it out. Her discussion revolved around those ubiquitous fashion/shopping guides.

The Trinny and Susannahs, the Paula Ryans; she makes an extremely valid point; these guides exacerbate the negative feelings we have about our bodies.

So I have decided to retain more of my everyday money by not shopping for that special garment which will make me look tall, slim and brown. What a saving that will be...just kidding - the shops are open, where is my credit card?

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Finance and Investments

When I think of the finance company sector I am reminded of that scene in Alice in Wonderland where she says "You are nothing but a pack of cards." The assembled company then flutter gently to earth in a flurry of diamonds, hearts, spades and clubs.

Yet another finance company has hit the ground, the 17th, and, I wearily note the story is the same old, same old. Lombards investment strategy is apparently an issue with a substantial amount invested in a Brooklyn Rise Development, rumour has it that around 25% of its capital is at risk, Lombard is only secured as the second mortgage.

This is the 17th finance company to fail or freeze funds in less than two years. Thank goodness for the New Zealand Qualifications Authority initiative which will teach the next generation about personal financial management. I am delighted to be the industry advisor in this instance. We are covering the full range of investment and financial decisions. One area I intend to focus on is the sorts of questions investors need to put to the companies they use; the relationship between knowledge, risk and return and some knowledge of the biases which affect our savings and investment decisions.

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Why?

Why don't we read and write more poetry? A review poem of Money, Money, Money Ain't it Funny follows for your amusement and edification. You might even find yourself agreeing with the poet's sentiment.

A Poetic Book Review of Money, Money, Money Ain't it Funny....

Money, Money, Money written with sex on her mind,
Compare my sexual progress to my money progress and they are the same I find,
If I am going to fail with money, why the bloody hell am I in a job?
If I invest emotionally it will still only be worth two bob.

Ms Sutherland knows her subject, and gives good examples with backup.
Information is concise, quoted research it's an overflowing cup.
Not all boring, injected light relief with a few humourous quizzes,
I made up my own answers which had me in stitches.

Some case studies are really very bloody good,
How does compound interest work - yes we understood.
I have questioned how I behave when dealing with my money,
And I have come to the conclusion - it ain't bloody funny.

By Anon

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Who's Counting?

Certainly the government can’t count correctly.

The IRD, Treasury and Dr Michael Cullen featured in a scenario the writers of Yes Minister would have loved. It seems that the $400 million “deficit” we had for the seven months to January was actually a surplus of $200 million – as Mae West said when she went into the movies “I just love those round figures”. What a massive balls up. Quite apart from the obvious questions – can we trust anything we are told by the unholy triumvirate? The so called “deficit” couldn’t have come at a worse time for those of us who worry about these things – and that would be all of us who have mortgages or buy petrol for example. Many Kiwis have been looking for Cullen’s tax breaks to help make ends meet. A “deficit” makes tax cuts unlikely and there is no doubt that it had helped undermine business and consumer confidence. What an absolute farce – weak comments explaining the mistake as “human error” just will not wash.

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Musings and Amusings

Our brains lust after money with the same neurons that crave sex. And these are the same neurons which give us the high from cocaine. The pleasure of orgasm, the high from cocaine, the rush from buying, are governed by the same neural network.

Furthermore, these primal pleasure circuits can, and often do, override the functioning of the brains’ frontal cortex which governs rationality (read more about this in Money, Money, Money, Ain’t it Funny). In other words folks, money can drive you crazy.

I think I’ll go and buy a handbag, I need a rush!

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