Heidi spricht kein Deutsch

One of the things freshers have prominently in their ‘to do” lists, when they arrive in Zug is to enrol in a German language course.  Breathless with enthusiasm to be part of the scene and fit in with local life, they excitedly anticipate that learning “the language” will lead to being accepted, loved, making friends, and enjoying the native culture.

However, in three years I have yet to hear of an ex-pat who has learned the local language well enough to hold a fifteen minute conversation with a local.  In fact, the better your command of Standard German, the more frustrated you will be as you find yourself failing to amuse and engage the local populace in the kind of chit-chat you enjoyed at home.

I am not referring to the kind of basic German which any idiot can pick up in a few weeks. Or the equivalent level of English an au pair will command after a few months immersion in the UK. 

Many times you will have proudly requested “ Können Sie mir bitte  helfen?” to be served in a Zug shop, only to be met invariably with the reply  “ Of course, what are you looking for?”, from the sales assistant, who probably also wished you “have a  nice day” as you left.

The reason for this is that Heidi communicates in Schweizerdeutsch , and after three months of lessons (the average most endure before giving up the struggle) all you will learn at the German class you have enrolled in is lots of German grammar and enough vocab to order a taxi.

If you stick it out for a year or so, you may well have enough German to understand what’s going on around you in a German city, but the language spoken in Zug will continue to be as mysterious as Chinese.

When we originally arrived from London, we took the precaution of bringing our German au pair with us.  We thought it would be very useful having a someone with the language as her mother tongue, on tap for the first month so that we could quickly negotiate the inevitable transactions where fluent German was needed and our limited German inadequate.

However, after a couple of days she admitted defeat.  Although she was born and lived in Munich all her life she could barely understand a word.

Frankly, unless you are immersed at work every day  in the 100% company of  Schweizerdeutsch speaking, Swiss born co-workers, you might as well save the effort and stick to English, because nearly everyone under 40 speaks it fluently here.

Snow, but not as Heidi know’s it

I have just returned from UK-lite, having got snowed in, in Kent on day two, then snowed out of the my eurostar return on day three, then snowed away from my London City airport escape flight the next day.

Finally arrived in Zug to find it had also been snowing,  the right kind of snow apparently – it was all cleared away and things were running normally.

My theory is its the cholesterol in the UK snow that causes it to be such a problem.

Heidi is more reliable than Elizabeth

In the UK the train was usually my last and reluctant choice, though the UK performance isn’t too bad, after all, 90% of British trains arrive on time.

In Switzerland the equivalent is 98% of trains.

But that 8% difference !

Considering a trip from Lindenpark, Zug, to Basel?

 The journey time by train is one hour and thirty-six minutes.  Although this is eighteen minutes longer than the average Zug/Basel journey by car, me and Heidi would always take the train.

Bahnhof/Haltestelle	Datum	Zeit	Gleis	Reise mit	Bemerkungen
Baar Lindenpark Zug	Mo, 07.12.09	ab 10:17 an 10:19	1        4	S1 22141	S-Bahn Linie 1
Zug Luzern		ab 10:29 an 10:49	4        6	IR 2325	InterRegio ,
Luzern Basel SBB		ab 10:54 an 11:53	7        7	IR 2170	InterRegio ,    R

 

Check out the risky connection intervals.

There are only 10 minutes between the arrival of the Zug train at 10.19, and the departure of the Luzern connection 10.29.

…and  just 5 minutes between the arrival of the 10.49 Luzern train and the departure of the Basel train. Yikes!

But even gaps of 2 0r 3 minutes are comfy to the Swiss. You may not be able to set your watch to the trains in Heidiland anymore, but that’s only because the electronic watches are now more accurate than the traditional spring driven instruments 

In the UK this margin would rule out rail travel as an option compared with the car. You would have to build so much safety margin of into the schedule (at least 45 minutes between scheduled  arrivals and scheduled departures), that  the car would be a better bet.

Provided your journey didn’t include the M25, or the M1, or it was on a Sunday morning before 7 am perhaps…..

Lex needs a new calculator

“In the UK interest rate cuts since the start of the crisis have delivered the average £103,000 floating rate mortgage holder an annual saving of £4,635.Against that the government estimates the net cost of bailing out the financial system at £10bn or £400 per household.”  Lex in the Financial Times today.

There are 26m households in the UK.

But only 11.1m of households have a mortgage and of those, only 55%, or 6 million, are on variable rates.

In other words 100% of households paid £400, but only 23% received savings of £4,635.

Plus all households shared (via pension and other indirect and direct holdings), in the loss of £5bn of dividend income from Royal Bank of Scotland (£3bn dividends in 2007, nil in 2009) and Lloyds (£2bn dividends in 2007, nil in 2009) = £192 per household.

All households via pension other indirect and direct holdings, shared in the loss of billions of market value of the UK quoted bank sector. The £30bn loss of market value of Royal Bank of Scotland alone amounted to £1,150 for every household.

So without really trying I am already up to £1,742 for every household.

Is Lex spinning or being economical with the truth?

Who gains from the gross misrepresentation of the facts?

Follow the money?

Lex, care to calculate what the total reduction in the value of UK bank shares was, divided by households? Who do you think bore that cost? Maybe you need new batteries for your calculator?

Bun rating – Zero,  too much smoke and too many mirrors to see if there is a pattie

When Heidi met Aladdin in Menzigen

Menzigen, Kanton Zug,  has a population of 4289, and it surged by 8% for the afternoon,  as the matinée audience for the English Theatre Group’s version (very good indeed) of the trad panto, Aladdin, took their seats.

Most of us in the audience were the usual flotsam and jetsam of ex-pat career boosters, tax exiles, hedgies (the ‘adults’), and our delightfully behaved offspring, the majority of whom knew when to shout and shout loudly they did.

There was a minority of curious Swiss who distinguished themselves by dressing as if it were the Royal Opera House at Covent Garden, exhibiting the air of a team of anthropologists visiting a pocket of darkest Africa to make a study of tribal life there. The Swiss children were impeccably behaved when they weren’t confused by the mayhem, but only began to join in the shouting towards the end.

You can take the pantomime out of England but you cannot take England out of the panto.  Patrons queued for 20 minutes during the 20 minute interval to be served a cuppa and a bun, but the buns ran out.

I loved it.

The Financial Crisis as a 30 year Bi-cycle

Interest rates and inflation peaked in the UK and US in 1980. Over the following 29 years interest rates declined in the US and UK from 20% to 1% generating a long uplift in the value of equities and other assets.

 Japan became a global source of very cheap investment capital in the mid 90s as a consequence of ultra low-interest rates, the declining value of the Yen and the emergence of hedge funds meant that it became risk free to borrow Yen and invest in investment assets with much higher yields.

The Dow closed at under 1,000 in 1980; twenty-seven years later it reached nearly 14,000.   The FTSE rose from 500 in 1980 to nearly 7,000 in 2007.

By 2000, monetary policy was being used to avert possible recessions, rather than as had been the practice, to stimulate the way out of one. This policy created additional credit, at a time when credit was already cheap and plentiful

The super liquid conditions stimulated the securitization of loans by banks and the creation of many new financial derivatives outside of the control of central banks  .

Inflationary consequences of the asset boom on consumer prices were absent probably because of the unprecedented productivity enhancement effects of computerization and the internet reinforced by the availability of ultra-cheap manufactured goods from China.

The point was reached where no more financial air could be blown into the bubble and it began to contract.

Interest rates have now been declining for nearly thirty years, In the case of the UK and US they cannot go any lower.

The last upward cycle in interest rates began in 1950 and lasted thirty years and coincided with an era of great prosperity and growth, although the Dow ‘only’  increased 275%  in those thirty years.

Here’s to the next  thirty years…..

Heidi doesn’t waste wax on her legs…

But tons of it gets used each year during the Kerzenziehen (“candle dipping”) season.

There are all these heated cylindrical reservoirs of molten wax scattered around the floor of the church hall, and swarms of children from about four years old run around dipping string into them. They hold the string with their bare hands (I kid you not, no safety goggles or protective gloves or signs on the wall saying the wax is hot).  After a dip the string is cooled in the air for a few moments (i.e. the children then run around with the waxed string) before being dipped again.

This procedure is repeated until a decent candle shape emerges. The candle is then improved and decorated in a dedicated area and then wrapped and weighed. The wax used is paid for by weight. The whole thing takes about an hour or more and the atmosphere is fanbloodytastic!

I love this time of the year but……. there is no wind in Zug. After three years I think I have only noticed wind two or three times. When it rains the rain comes down, cloud to ground, in a straight line, unlike in London where it will feel like being in a car wash.

But one consequence of this is a persistent mist throughout the city during the first half of many days in the winter.  So on misty mornings like today, when I am desperate to see Sammy sun, I switch to the TV channel which is dedicated to the Zugerberg webcam and check if the sun is visible there. More often than not, the cam will scan over Zug (you can’t actually see the city, only the blanket of mist covering it) and show the bright sunny uplands above it.

Twenty minutes later I am parked and walking, all sun-glassed up, with my kids to the play area. Another thirty minutes and I have a good fire going and the kids are working up an appetite for the Würst I am about to cook on it.

Lex – no point to make with a blunt pin

Lex, today attempts to prick the commodity bubble with a blunt pin.  In “Reading the commodity leaves”,  Lex suggests that the relationship between actual changes in  demand for commodities and the prospects for growth in world manufactures mean that there is scant justification for the current commodities price level.

But Lex could make this observation currentlyabout most other investment capital asset indices.  Neither does he show awareness that it is only relatively recently that the prices of commodities have been determined to a unquantifiable but significant extent by  ’investment’  demand, and not just end-user demand.

The one year commodity index chart (S&P/GSCI), looks just like most  other capital asset indices one year charts, i.e. united by similar levels of capital asset price inflation.

Common sense suggests that the driver that links all investment asset classes price levels must be liquidity and credit levels.  Since Lex (nor anyone else) does not understand precisely how credit and  capital asset price inflation act on each other,  it would be helpful if Lex would just shut up.

Bun rating: 0 but waffles are available instead.

Crystal balls

Why do we deride crystal ball gazing, palm reading, and even (some of us), astrology, and yet base our investment decisions on the predictions of financial analysts? How accurate are forecasts? Why should we believe that one specific area of futurology is a science? And how much forecasting is really being done?

 Quoted companies are under an obligation not to knowingly allow a false market to develop in their shares. In practise this means that they issue frequent statements about current trading and outlook, and sometimes even issue a specific statement if they need to correct an over optimistic or pessimistic consensual view of their trading performance.

This means that if you are a financial analyst making a bad guess, you will have your work corrected in time to stop you looking foolish.  Here are a couple of examples out of many:

Which illustrious broker said of Barratt Developments in May last year when the share price was 177p “hold, price target 302p” and in May this year “sell, target 75p” when the price was 105p, and in September “hold, target 172p when the price was 172p?

Or which major international financial institution said of Land Securities in June 2007 whent he share price was 1557p ”Buy, target 2250p”, and in November of the same  year when the share price was 1400p “Buy, target 1735p”?  The same institution that said in July 2009 when the price was 500p “Hold, target 500p” and last month when the price was 530p “Neutral, target 645p.

Land Securities share price closed at 725p yesterday- 13th November !

If analysts can continuously adjust their estimates of earnings to reflect changed actual conditions as they become apparent, what forecasting is being done? What is the difference between continuously updated forecasting and a continuously changing share price?

Ordinary mortals can’t place bets on a race once it has begun. The analysis game is different. Analysts can keep switching their bets to the horse most likely to win, right up until the last few furlongs, and then claim credit for prescience.

 Clever stuff?

Publish and be damned?

Most of the publishing proposals I see are safe, inoffensive and guaranteed to upset no vested interest or cause too much excitement or endanger academic careers. But I would prefer Free Association Books to be the publishing partner to courageous writers with something new and controversial to communicate.

Years ago, I lived with an editor for a well-known publisher who used to spend many of our evenings at home reading through manuscripts at the same time as watching tv, drinking and talking to me.  I was with her as the pencilled a “reject” on the last page of the ms of Valley of the Dolls.

 Stephen King, William Golding,  Rudyard Kipling, J K Rowling, Richard Adams,  and William Faulkner, are amongst the many eventually famous authors repeatedly rejected by publishers.  But there must have been vastly greater numbers with equal or better talent who were rejected and remained in obscurity.

I will do the publish and be damned bit,  if you just send me the damned good (non-fiction) stuff please!     www.fabooks.com