economics finance politics

The Joy of Self-Employment in Ireland

An ironic title as such joy is largely confined to the freedom to pick your work hours that exists in a quite limited sense if you’re providing services to people and you have to fit around their schedules.
Let’s look at the positive side:

  1. You’re the boss. Customers or clients may harass or harangue you but at least the boss won’t bully you.
  2. You have some flexibility regarding place and time of work that you may otherwise not be afforded as a PAYE worker.
  3. Expenses. You get to factor in some expenses associated with a home office into your tax bill. More on this later.
  4. Job security in the sense that you are ultimately responsible for whether you have it rather than a VP or SVP with no personal stake in your life deciding you need to be downsized because your division doesn’t look good on his spreadsheet or you’re at a grade where his costings suggest he could bring in someone younger to bugger up your job.
  5. The sense of achievement that comes with making it on your own.
economics finance

Skin in the game – why banks are blowing up

King of the Quants, Paul Wilmott, has a great blog post on his very popular site about the current financial crisis. If you’re wondering how popular a site about quantitative finance can be then consider there’s about a 65,000 subscribers engaging in debate (some heated, some light-hearted & some perhaps ridiculous) on his forum.

Wilmott is the author of the authoritative textbooks on the subjects relating to financial modelling of derivatives. So you’d be thinking “it’s all his fault” and you’d be wrong. In his writings and courses you’d be hard pressed to find a “rocket scientist” more skeptical of the limitations of risk management using financial models. Unless you happened to be Naseem Taleb but that’s another story.

economics finance

Definitions for the novice investor

I’ve been reading Liar’s Poker recently and it’s given me a better understanding of how market’s don’t work. To save time for novice investors I’ve created a few helpful definitions to guide them in their investment choices. In no particular order:

Bank – the generic term for an organisation that seeks to profit by controlling the flow of money.

Market – a mechanism to exploit the foolishness gap (often slim) between someone who has the means and desire to buy something and someone who knows what it’s worth. Innovations in the market have effectively rendered the “means to purchase” an outdated concept. Markets have the trappings of formality and the veneer of structure.

Risk Management – The process of substituting a relatively reputable product like insurance for bonds of indeterminate risk with the objective to save money over a specified term.