Why can't we see that life is still very good?

We don't know how good we have it.

We Australians have a very good life.

The fundamentals of the Australian economy are very good.  Most people have a job.  Businesses are still profitable. Health care is the best it has ever been.  The quality of our food is high.  So why is there a pall of gloom hanging over us?

We compare ourselves to what we had 

Rightly or wrongly, humans evaluate our state in terms of gains and losses. Rather than looking at how wealthy we are or how much food we have, we instinctively assess whether we have gained or lost.  During the mid 2000s boom, most people had more money (even if a lot was on credit), jobs were very easy to get, asset prices were booming and confidence was high. 

Now, everyone feels like they have lost (unless you are one of the small number who work in mining).  We are all a little behind what we were at the peak.  Oddly, although our logical brain knows that Australia is in a strong position, and much better than the rest of the world, our emotions win the day. We feel the losses. It is those feelings that dominate. 

Unfortunately, our emotions then have a big say in our decisions. Our logical brain says "everything is fine - we have plenty of money, just not as much as 2008".  Our emotions say "look at how much money we have LOST. Let's batten down the hatches."

Sentiment then feeds off itself 

Once the emotions win the battle, the negative feedback turns into reality. People stop spending. Businesses start failing. People lose jobs.

Job hunters queuing for 50 jobs at London Zoo

We can override these emotions. We need a different frame of reference. Rather than comparing to the past, we can compare to other benchmarks. We can compare ourselves to the British or the Americans. These are western nations that we can relate to. 

We need stories comparing the average Briton, or American to the average Australian. We need to see our current state as a WIN not as a LOSS. 

If we don't do something quickly to defeat our emotions, they will make our very fears a reality. 

Let me know what you think

Mark S

Government report on micro-betting misses the mark again

Today the Federal Government's draft review of the 2001 Interactive Gambling Act was published.  I have a particular interest in this legislation as I used to be in the online gambling industry.  Now I am just an interested observer, and I'm still surprised at the misunderstandings that exist, like this big one...

Recommendation 25: Because of the greater harm associated with ‘micro-betting’ from a problem gambling perspective, ‘micro-betting’ should be prohibited irrespective of the electronic medium (that is, telephone, internet, etc.) by which the bets are placed.

You'd think this would be based on some research, or merit, wouldn't you?

Fear trumps evidence, again

In the same section of the report,

• Racing and Wagering Western Australia noted that: ‘in-the-run micro-betting’ ... would be akin to games of chance for the majority of the target audience and expose greater risks of problem gambling ...

AND

• Betfair noted: According to a report conducted by the UK Gambling Commission in 2009, there is no evidence that online in-play betting (including ‘micro-betting’ after an event has commenced) poses a “specific, identifiable risk to problem gambling as opposed to other forms of betting or online gambling.

So, a government department makes a scary claim, and a private organisation quotes a reputable study, but the report chooses to go with the scary claim with no evidence.

It's no wonder I got frustrated when I was in this industry.

The scary claim is wrong.  Plain wrong.

After the release of the report, various people have come out to have their say, including "independent gambling researcher, Sally Gainsbury" on the ABC.  She said:
"If you are looking at something that's like ball-by-ball betting on outcomes that are popping up within a game, this is a form of gambling where gamblers could chase their losses, could spend more than they intended, and it really could be an excessive form of gambling,"

Sorry Sally, but you are just guessing.

A screen shot of our micro-betting - live, real, online

Why do I know? Because I am the only person in Australia who has actually operated micro-betting, legally on the Internet.

Our company provided microbetting services to Ladbrokes, the UK's largest betting company.  And the results were clear.  These microbets were just novelty bets.  The punters placed small wagers.  They didn't increase their bets, and everyone just treated it as a bit of fun.

Our business made a very small profit - much less than we had expected - because the bets were small, and the punters' losses were very controlled.

Eventually, Ladbrokes replaced our service with an in-house product, and because we couldn't offer our service to an Australian operator, we went out of business.

You can lose more, faster, with the TAB!


What really makes me shake my head about all of this is that the betting we were offering is no faster than what is available right now with the TAB in any of the States.  Any day, you can place a bet every couple of minutes on a race.  On a Saturday, that would be at least every minute.

The microbet that we were offering is only available every 4 minutes or so - the average time it takes to play a game of tennis.  So, it's actually less likely to be a form of betting where punters will chase their losses than our beloved horse racing.

I have no qualms about being out of this business, but I do have concerns that wild claims will be believed over solid evidence.

We should be able to rely on our public servants to make considered decisions based on fact and not fear-mongering.



Let me know what you think


Mark S

Joe Hockey lies on Sunrise

Joe Hockey: you didn't tell the truth on Sunrise

This morning Joe Hockey blamed the increased cost of electricity on Labor's carbon tax. This is an outright lie.

He said to Tony Burke that people are "concerned about rising electricity costs, and it's because of your carbon tax"

The facts about electricity price increases

Here are the key facts about the electricity price increases:

• Electricity prices began rising from 2005, when the Liberal government was in power
• Electricity prices have risen 30% over the past four years
• The largest factor in price increases is the need to replace and upgrade the ageing poles and wires of the national electricity grid, some of which have been in service for more than 40 years.
• Increases in demand have increased wholesale prices and transmission and distribution prices
• Renewable energy certificates (RETs) must be purchased by energy retailers (nothing to do with the carbon tax) which have increased costs
• State and federal governments regulate the price of electricity through the National Electricity Market (except WA which has a separate regulator). They consider the cost increases incurred to set the prices.

References:

Clean Energy Australia
Reserve Bank of Australia
Roger Dargaville, Uni of Melb


Joe Hockey knows the facts

These facts about electricity pricing are well known to Joe Hockey, he just chose to ignore them when he made his claim this morning. He must be brought to account.

Politicians and other public figures cannot be allowed to make statements that are blatant lies

Let me know what you think.

Mark S

We underrate the fast thinking of footballers, nurses and police

Doug Hawkins - famous in AFL for footy smarts despite low IQ

What are the fast thinking qualities that make a great poker player, midfield footballer, chess player or many other pursuits where there is very limited time for complex decision making? What we do know is that traditional intelligence doesn't measure it very well at all. Football (all codes) is littered with examples of players with  football smarts who are very unintelligent in the "real world". Chess success is also less correlated with IQ than you might imagine.  So what are these smarts?

Let's take a look at what makes good decision making.  

There are four key elements. 

1. Background knowledge.
For example, in football, you really need to understand the rules and the various strategies. If the coach talks about a zone v man on man defence, you have to have all of that knowledge stored away. You need to know which side your opponent prefers to kick with, and a champion Chess player needs to know all of the main opening lines.

2. You need to capture the relevant information at the time.
Scientists and analysts conduct research to collect their data (I'm in that category) but footballers need to gather a lot of critical information in a few seconds. Where is the ball, where are the players, where are they all moving to and more.  Collecting the relevant information quickly is vital. 

3. Processing the information. 
When the high IQ people in the world process information they often use statistics, computers, data models and a whole range of techniques. You can't do that in football and unless you are a computer you can't in Chess either. There isn't enough time.  So, smart players have an alternative method of processing this information that they've captured almost immediately. We know that some of this is innate and some is learned.  We also know that the thinking system they are using is a completely different one to the system I use when I am doing rigorous analysis. 

4. Act on it
The best players sum up all this information and make a decision - generally within one second. Once they have made that decision they have to execute it. A kick to a player, a tackle, a chess move. Actually picking up a chess piece and placing it where you decided to is pretty easy. Kicking a ball through a small gap when you are running full pace is not. 

So what is all this about?

We know that different thinking styles exist and are relevant to different careers. Nurses and police are more like footballers than analysts.  We need more nurses and police, so we need to understand more about this fast thinking style.  We are only scratching the surface but rather than focusing only on analysts like me, let's make sure our education and societal systems recognize the importance of these fast thinking approaches. 

This area hasn't had enough study. I will keep looking out for more information and let's all start to champion these differences as equals.

Let me know what you think

Mark S

Studying Apple is useless for business

Apple's share price has increased from $3 in the '80s to nearly $600

AAPL:Apple is one of the most valuable companies in the world.  It is now valued at $528 billion. Its products are loved by millions. Steve Jobs is revered as one of the great visionaries of our time,  So why is Apple irrelevant for business study?

Precisely because it has been so successful.

Apple is a fluke

When I wrote The Complete Guide to Australian Gambling in 1991 I told a story of how if Moses and Jesus had both been playing Lotto since they were born that by now Moses would have been likely to have won Division 1, but Jesus would not (he is younger!).  Winning the major prize in Lotto is a fluke.

What's that got to do with Apple? Let's consider how many InfoTech start ups there have been in the USA since 1970.  According to the US statistics bureau, there have been a bit over 500,000.

Now consider how many spectacularly successful InfoTech companies there have been since that time.  Microsoft, Apple, Google, Cisco, Intel, Oracle.  So, that's SIX.  We can argue the toss over a few others that have stood the test of time, but in terms of massively successful InfoTech enterprises that have launched since around 1970 in the US, there are about SIX.

So, ladies and gentlemen, there are your odds of being an Apple - 6 out of 500,000!

So why not shoot for the stars?

I hear you.  OK, even if you have only got a 1 in 80,000 or so chance you still want to try.  Fine.

I think there is a better way than trying to be an Apple.

Let's go back to the US census bureau data,  The most recent data shows that there were 34,543 Information companies that have survived since 1993 or earlier.  And there are only 117,000 in total (so about 400,000 of our start ups have closed down).

Take a look at the 34,543 success stories.  Now you have about a 1 in 15 chance of being one of those.  The odds still aren't great, but they are realistic.  Study these companies.  Rather than hitting it big with iTunes, these companies have developed and maintained solid businesses through the ups and downs of business cycles.  Some are quite large, and others are mom and pop operations, but they have all stood the test of time.

Smaller, resilient businesses didn't have the incredible luck of Gates, Jobs and Co. to be born at the right time and fall over the next big thing.  That's why their lessons are meaningful to you.

Behring Breivik shows how racism must not be given any air

I really don't like writing about evil people, it only gives them oxygen. Yet on the other hand, not commenting allows their evil to grow quietly. Anders Behring Breivik is evil. We need to talk about this.

I don't think he is insane. 

In fact, he was very successful.  It's a terrible conclusion I've had to come to.  To be insane requires a lack of normal mental functioning. That's not the case with Behring Breivik, he is considered and very logical. He thought about why he was taking action, how to do it, and what would stop him from achieving his goals. He executed his plan extremely well. Indeed, as horrible as the thought is, there are many lessons to take from his approach that can be applied to the successful execution of other projects. That's not insane. It's intelligent, sophisticated, rigorous and tough. All of the qualities we would want on our own side.

He is the latest in a long line of killers in the name of race or religion

Srebrenica massacre memorial

When Osama bin Laden masterminded the September 11 attacks, most of the world launched a war against him. But not all, he had tens of thousands or millions of supporters for his killing in the name of Islam and against the West.  When Slovodan Milosevic ordered the genocide of 8,000 Bosnian Muslims which was meticulously carried out by Radovan Karadzic and Ratko Mladic the world was horrified.  The UN and international community have engaged in years of investigations, trials and convictions against the perpetrators. Yet again though, there were thousands prepared to support and carry out this atrocity directly against Muslims, because they were Muslims.

These are just two examples through time.  Most major racial groups have been guilty of shocking racial/religious crimes and often they have been victims as well, at different times in their history.  Christians, Jews, Protestants, Catholics, Hutu, Japanese, Turks, Indonesians, British, Germans, French, Russians, Chinese... Race, religion, ideology - all combining into considered deliberate attempts at genocide.

Breivik is no better or worse than all of them. We must stop all racial/religious intolerance. 

So Behring Breivik is just the same. He had a considered agenda. There are many Europeans with his Islamaphobia. He was the most recent to carry out a heinous act in the name of racial intolerance. We must stop all racial intolerance or we allow ourselves to be slaughtered, or to become the slaughterers.  Marine le Pen must be stopped in France. Ahmadinejad must be stopped in Iran. Rick Santorum must be stopped in the USA. But more importantly all the snide racial comments and jokes must be stopped in our living rooms.

Racism and religious fear and hatred must be stamped out before it takes its first breath. 

Let me know what you think

Mark S

Why Gen Y are holding us back

I don't really want to believe this, but the evidence is building.  Gen Ys might be responsible for the economic slowdown in Australia's non-mining States.  Let me explain.

Mortgage rates are low but mortgagees are worried

Over the last month some interesting data was released.  First, the Westpac/Melbourne Institute consumer confidence figures showed that mortgage holders are much less confident than they were. At the same time, the ANZ published some stats showing that housing affordability was its best for a few years.

This doesn't make much sense really.  Interest rates are low by long term standards.  Even though the banks put their rates up last year, and ANZ put theirs up a smidgem recently, the Reserve Bank cuts mean that home loan rates are lower now than they've been for a long while.  This isn't the sort of situation that should make home owners less confident.

House prices are down - maybe that's it

The best reason I can find for this loss of confidence is that house prices are down.  Hmm, that would make sense if they fell in 2012, but they didn't. House prices fell last year, and confidence is down this year.

I can't believe that everyone was blind to the falls in prices in 2011.  Every newspaper was talking about it - we all knew our house prices were sliding.

So what have Gen Ys got to do with falling confidence then?

My daughters are Gen Y, so like any parent I don't want to believe anything bad about these perfect angels, but then again, they've had it rather good!  Seeing the world from their point of view, over the last decade, they've had jobs, had a place to sleep, someone to bail them out and a booming economy.  Of course, they haven't always used those parental safety valves - but they've appreciated them being there.

Now, rather than the economy being a 10 out of 10, it's only an 8 out of 10.  For those of us old enough to remember 4 out of 10 economies, 2012 is pretty good.  yes, unemployment is pushing into the high 5s, but most people still have jobs, and even with issues in Europe, the world isn't falling apart.

For Gen Ys though, any whiff of a problem is scary.  Euro debt problems - aargh! China is slowing - Nooo! Tony Abbott says prices will go up because of the carbon tax - Yikes! If there is one thing that Gen Ys want it is certainty, and even though the fundamentals in Australia are strong, these are uncertain times.

You have shown a link to mortgagees

Gosh, you are right.  So let's get to that.  First of all, a lot of these Gen Ys are the ones who have bought the new houses in the 'burbs over the last few years.  They are loved up, and taken out their first mortgage, and suddenly have responsibilities.  You mean the bank wants me to pay this money EVERY MONTH?? So, it's perfectly understandable if the little dears are a bit worried about everything.

No wonder Gen Y parents look worried!

What about all those young renters, they aren't mortgagees? Well, no, but their parents are, and that's where the parental safety net kicks in.  The kids are getting worried, and what do you think they are going to do - that's right - put their hands out for free rent.  Not my kids of course, it's your kids. And that must make you worried, surely.

There we have it, because the world isn't perfect anymore and Gen Ys have to stand on their own two feet, its their parents who cop it.  Thanks kids!

Let me know what you think

Mark S