June 29, 2013 · 20:10

About that house you wanted!

It seems the Dutch are ready to take on the advice the Wijfels commission is giving. Even though not direct, it will end up that you have to pay 20% cash up front for any house or apartment you desire. And indeed, there was the subtle ‘line’ that if you do not have that kind of cash, you should address your pension funds. Interesting on how they are willing to open up pension funds to fund that.

Am I against it? There are two sides to this. On the one hand investing into your own future is perfectly sane. If only there was some level of certainty. You see, the fact that banks leave its taxpayers with their risky investments is one thing, the issue on your house is another.

How does this differ? Actually, it should not. A good house is a good house. However, consider some of the housing. How these houses are currently so much over any normal affordable income. It is nice to see a newscast in comparison with Germany; however, when we look at the quality and square meter price, then these prices are far from average. Of course, when seeking apartments in places like Munich, then yes, the prices might seem comparable. Yet, where we see average Munich prices, that is pretty an average price for living anywhere in the Netherlands. I agree that it is not fair that those factors are accountable to the banks, yet, they were at the centre of events when the prices were artificially pushed upwards.

As they sold mortgages no one cared too much about prices as the interest was tax deductable. When that 7%-9% is no longer part of tax deductibility, then we have a situation where the consumer now pays for it all. Add to that coming up with 20% (in due time) and someone slyly mentions the need to access ones retirement funds, we see another political play to get pensions into the banking equation. There is supporting evidence from all kind of sources. An interesting read was how on average house prices went down in US/UK and other places by well over 20%, whilst in the Netherlands the prices lowered less than 8%. It is unfair to just name one factor, as several economic factors had been in place in other nations too. The US crash never hit the European sides that hard, Europe might still fighting the backwash from those days, but on average Europe never had too much of the hardship the US faced. Another reason is the fact that the Netherlands is pretty much ‘full’. Whilst many nations have plenty of housing space outside of the great cities, the Netherlands has become a connection of large cities, with next to nothing to separate them.

Still this play as such to push people towards their retirement finds is slightly less than acceptable. There is however the other side that must be highlighted too. According to Ernst & Young, between 1996 and 2012, the outstanding mortgage has gone from 138 to 650 billion Euros, That means that outstanding mortgages currently have risen half a trillion Euro’s in just 15 years. Some might think that this is not a lot, yet, consider that that the Dutch population is under 17 million, which seems like the banks remain dealing with 100% of unpaid mortgages. If these numbers are correct, then it bears reason that these numbers should be looked at. Is that actually true? You see, feeling it is wrong, and knowing it is wrong (even with supporting evidence) seems nice from the writers point of view, however what about the reader?

There we get the issue that gives us the crux. When comparing apartments in the Netherlands and comparing them To Sweden and Germany, I noticed something. I lived in two of these locations, so I know what to look for. I compared the Dutch http://www.huizenzoeker.nl, Swedish http://www.bovision.se and German http://en.immostreet.com/germany. When comparing an apartment in Rotterdam and Kista (outskirts of Stockholm) we see a comparable raise of prices, yet overall we get a lot more apartment in Stockholm then in Rotterdam, for comparable prices (30%-40% more living space). This comparison takes an astute dive when we look at Germany, especially Bavaria; where all over the place we can buy 5 bedroom villa’s for a lot less than a two bedroom crinkly monkey apartment in Rotterdam. As such we get a first inkling; if we need 40K to buy a 5-bedroom villa is one thing, needing the same for a 2-bedroom apartment becomes a whole other matter. Interesting how this was not mentioned.

So why so much issues about the mortgage changes? We see a political engine too eagerly bowing to the needs of banks, bowing to a group that has visibly forsaken a population, a group that have left many billions in debts and we still bow to their ‘needs’? Now with the additional need to open up retirement finances that had remained relatively safe until now.

Yet, with the massive outstanding mortgages, what is left?
In addition, knowing that level of outstanding debts, are their demands out of proportions? That question becomes a whole lot more interesting when we consider the following from Bloomberg (source: http://www.bloomberg.com/news/2013-04-23/dutch-mortgage-bond-market-threatened-by-capital-rules-dsa-says.html).

This part throws a whole new hole in these issues. Banks are pushed to outside influences, and even though the government pretend to be fighting the good fight to protect this market, it is interesting that this part was not that visible on the news. It might be that the Wijfels report shows this, but I have not read it, so I cannot tell.

My issue is now with this part of the Bloomberg article “Dutch banks are the second-largest issuers of RMBS in Europe, relying on sales of the securities to help fill a 452 billion-euro funding gap between deposits and loans, Dutch central bank data show.” Excuse me?

Looking at some quick 2011 population numbers:
Germany 81.8 million , France 65.43 million, United Kingdom 62.74 million, Netherlands  16.69 million.

EXCUSE ME?

How (or better why) exactly are the Dutch banks the second largest in Residential mortgage-backed securities (RMBS)? Even if 100% of the Dutch population is now under mortgage (which is statistically impossible), those numbers are showing an enormous gap. What are we not told? Even if we consider the 25% difference in mortgage funding there are a few questions that should be asked out there. What have the banks been up to, and exactly what questions are not being asked, or better, what part are people and perhaps even politicians not getting information on? Half a trillion Euro funding gap reads like that there is a deficit of half a trillion Euro. That could never be covered by 6 billion in cut backs. Before you think that this has nothing to do with governments then think again, if that shortage is not addressed then that money will have to come from somewhere else. What are the odds that this needs to come from taxation in one way or another next?  More important is the news that people saw over the last year. What buffers do banks have, and if so, how come the Bloomberg (a respectable bringer of news) information was not part of the newscast?

Is this an orchestrate play? It seems to me that a clear yes is in play, however, there are sides to this that do not make sense and they are outside of government controlled sources, sources that currently seemed to remain largely unmentioned. To me it seems that both banks and politicians might need to publicly answer some questions in regards to some of these issues and it would be nice that this is done before banks are given any more leeway or options to shift certain finance issues around.

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June 28, 2013 · 13:02

Exploitation fears for tax-payers

The Dutch NOS reported another go with banks in the view of business. Bernhard Wientjes has been voicing the opinion that some of the banks (ABN/AMRO and SNS Reaal) should be sold. It was brought in the air of ‘when you have no more money you start selling the silver cutlery’ would be the next step. As the Dutch government needs to cut 6 billion, the cutting spree could be a lot less. Well, in this matter I personally stand with Finance minister Jeroen Dijsselbloem who is not that eager to do that. There is logic for not doing this, as this relief would be for one year only and after that the cuttings would still need to be found next year. I am worried that certain business men are now in a state to strong hand certain political decisions. I leave it up to the reader whether those decisions are purely for the need of greed.

If business is linked to greed (often called ‘enterprising solutions’) then that would clearly fit in the views of Bernhard Wientjes. As chairman of the VNO-NCW it would be an enterprising solution that is right up his alley. The VNO-NCW is a fusion of the VNO (League of Dutch Commercial Enterprises) and the NCW (Dutch Christian Business Society). Their mission is to support and further the needs of Dutch corporations both on a National and international level. In this he is doing exactly what he is expected to do.

Yet, in this light, at a point where two banks would be sold far below value and at the expense of the tax-payers, one should clearly ask and look at the possible windfall for Bernhard Wientjes and his friends should this work out in that way.

There is a clear valid question whether the Dutch Silver cutlery is currently in a safe position. The reality of 6 billion of cutbacks will start to show a strangling result, yet, this was the danger all along when previous political alliances (2006-2010) were clearly pushing the outstanding invoice forward. Now that there are no more options, the consequences are likely to be dire, and as such in his position Bernhard Wientjes is clearly trying to look forward for Dutch corporations. I see this specific step as a dangerous one and until Dutch banks are clearly on a minimum set standard nothing should change. In addition, I am all in favour at present to keep these institutions nationalised to prevent their boards to just seek additional high risk gains at anyone’s expense to meet personal commission goals, whilst ignoring local needs (mortgages and such).

Even seeing these banks as possible training steps for younger jobseekers on the dole, to give them short term jobs whilst staying on the dole, would give them additional food for job experience. The answers that some view that this is not how it is supposed to be, I would counter, with ‘what solutions do you have?’. We need to change the way we think and operate. Instead of trying to balance which pocket the money is coming from, we should accept that the money is coming from the suit the government wears and see how far we can walk with this suit. Instead of staying on principle of keeping tabs what pocket it comes from, use the principle of it comes from us anyway and focus on instilling knowledge and experience. That will strengthen the young to get a good shot in getting something better with a decent chance. If you have any doubt, then consider that the Netherlands is only one of 3 countries where youth unemployment rates are below 10%. Many of the Southern European countries are way over 40%. If the future of youth employment is about experience, then make sure that the youth are getting a running start now is going to be important down the line. If their future could be a decent job in Germany, then giving them an edge as they compete with desperate youthful jobseekers from Spain, Italy or Greece is essential. Do not think that those kids are any less. Those who graduated from Universidad Complutense de Madrid are more than top Notch. 7 of their graduates ended up with a Nobel price and graduates from there ended up with 2 dozen of other internationally acclaimed awards. So, if we are looking at future events, getting the youth ready NOW will be an essential step.

Yet, this week has even more issues involving banks. A report that is due to be released tomorrow on advised banking changes. The ‘advice’ is to change the mortgage market. In the Netherlands it is currently possible to get a 105% mortgage so that the house and the notary costs and change of owner registration can all be covered. The commission chaired by Herman Wijfels is now advocating that the mortgage cannot be any higher than 80%. This is to prevent that the debt of selling a house at loss would end up hitting the banks. It seems that the banks are all over their need for ‘securing’ for the little man (read the average consumer). Taking into account that the average house in the Netherlands is around $350,000 the question, especially in this era of lack of funds is where on earth will a person get $70,000 in savings when the Dutch taxation system makes it almost impossible to get that kind of money saved up. They also mentioned that this should not be done until the housing market is stronger and prices are on the rise. Like that will help people to get the money. It is interesting that there is no mention of the much more reliable and fair Swedish system. Perhaps the report due out tomorrow will mention it, but I have not been privy to the full report. In the Swedish system a house often has a two tiered mortgage. You have the bottom part which envisions the gross off it (let’s say 80% for argument sake) at a low base percentage. The rest goes into the top part. Now that part (in my case) was almost 2.5% interest higher, but the mortgage was 105% covered. So instead of the unaffordable savings needs, we have a slightly higher mortgage. So, even if we have to accept a slightly cheaper house, we at least can get a house and not be looking at houses, never being able to afford any of it. The question becomes on what it was about. The fact that a report leaks is no news, but that the report leaks just around the same time Bernhard Wientjes is making a play to sell banks is a rather convenient coincidence.

These events are important to consider. This is because the same issues are playing in the UK. Consider that Lloyds is in need of an extension as they are selling 631 branches. This and the issues around the Royal Bank of Scotland do have links, as the UK government needs to cut cost by a lot more than 6 billion (having a Trillion in deficit makes that an awkward necessity). So will we see the same play as some are now seeing if they can sell banking interests at no more than tuppence on the pound? There is absolutely no known plans at present (in case you got scared or overly enthusiastic), but the issues remain, and the solution as such would be there in equal measure. To allow the young unemployed to become part of the bank on internships and training places, so that we can offer a solution where those seeking jobs will have actual work experience in their CV. These measures might seem small, yet the confidence boost that the younger jobseekers gain, could be the winning factor. In addition, extra hands, helping to boost the value of these banks would mean that when sold, they will go for a much better and more realistic value then they are currently set at. All this in a combined effort to strengthen commonwealth economy and their assets, for the simple reason that the European Economic outlook remains grim at best and relying on overly confident reports of economic prospects, that get downgraded quarter after quarter is not doing anyone any good.

 

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June 27, 2013 · 20:53

Opportunities to lower spending

The Dutch have a new observation drone. It is called the Scan Eagle (by Boeing). Unlike the Raven, this little pretty pretty can fly at 1000 meters for 17 hours and is able to observe and find those who they need to find. Even though some are now overly screaming privacy, it is not about those people. This Super Drone as Gerard Schouw from D66 (Dutch Democratic Party) called it. It needs legislation. Who will it observe? For which purposes will it be used? Where is the data stored? There are no answers at this point. To some extent this part surprised me. The Belgium police had been working with camera mounted helicopters for a while (DSAS). They have been doing this for almost 10 years. The Dutch were not? These questions have never been raised before? Nope, Mr Schouw seems to be correct (not that his statement was ever in doubt). Even though as was observed by others that section 3 of the Dutch Police act gives them leeway to use this solution, with these current levels of assumed invasion of privacy, legal questions would and should be asked. (Thanks to blog by Rejo Zenger at www.rejo.zenger.nl)

Yet, is this just about this observation drone, or just about privacy laws? We see a massive growth in the deployment of drones, some with weapon capacity. What are the real issues? The Dutch like many other nations have CCTV, they have helicopters that could observe and with the eye on admissible evidence in case of prosecutions, the idea that the issues of digital image capturing has not been a legal issue before is slightly puzzling to me at present.

No matter how we see these drones. They are not toys and these devices have a clear need. It does not initially matter whether we are dealing with an armed version, or a mere observation version of the drone. The idea that nations have an effective air force without the need to endanger troops is more than just appealing. In addition, in an age where we MUST lower costs, where a predator costs under 5 million and the average fighter jet is almost 1000% the cost of a predator, can we even consider NOT implementing such options? An option that will keep pilots safe, and in addition offer a solution where extensive costs of training fall largely away. How can this solution be a bad thing to consider? Questions will remain, no doubt and we will always need pilots and actual planes, even if it is to get goods and support systems into place. This little pretty pretty can easily be launched from a small launcher and does not need the infrastructure the Global Hawk needs, making it very versatile and could be a great additional asset to non-military support needs.

My first thought was to take these Scan Eagles, add Israeli FLIR technology and the result could be a first actual effective line of defence that South Africa needs to hunt down Ivory poachers. Especially considering the current dangers to the elephant population and their almost assured future of extinction.

The issue of privacy laws remain as Dutch politician Gerard Schouw observed. That need should actually be considered on a European scale. If these drones are making headway, then exploring the laws and rules of observer drones and the current privacy laws then we see the need to address it from both Civil and Common law views. If we can believe last month’s news, then these issues are very much in play in Germany too. Even though they are now dealing with the issue of US drone strikes as these drones seem to have been operated from Germany, issues on privacy laws as observation drones are operated in other countries will be food for legislation in more than just equal measure, especially as several European defence forces are now in talks/finalising stages for acquiring drone technologies.

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June 26, 2013 · 16:01

Senator Davis filibuster ignored

So, here I am, sitting down, working on an essay and even after one blog, I now get introduced to the weirdest news by other means. I have several news channels that I take notice of. There is Sky News, Sky News UK, CNN, Fox and BBC World News. However, the latest political news did not reach me through any of these channels. The latest news came through the Twitter account of Gamespot product manager Lark Anderson.

Democrat Senator Wendy Davis (Texas, Fort Worth) has started a filibuster. This filibuster is about stopping legislation that would give Texas the toughest restrictions on abortions in the US. Some of these restrictions include banning abortions after 20 weeks. Doctors would only be allowed to do abortions, if they have admitting privileges at a nearby hospital. There are a few more regulations added to this.

This is in first instance not about the bill itself. The issue is that a filibuster is big news; the fact that Fox (being more ‘republic’ minded then most others) might not make it headline news is to some small extent understandable. Yet, the fact that CNN, Sky and BBC World keep on yapping the same reels and this news did not pass by once is a massive issue. Is this potato too hot to handle? Is this not news?

I am baffled at what makes the standard of what is news, especially as we get repetitive views on Snowden, Paris strikers, Haiti tourism and another bomb in Kabul. I admit that the critically ill Mandela is big news, yet with all the repetitions a 20-45 second reel on the filibuster and bursting out some of the minimum facts would have been too much of an effort?

So, now that I have shamed the press to some degree, it is time to present some of the facts:

Senator Davis has stated her opposition to Republican Senate bill 5 (Source: http://www.davis.senate.state.tx.us/pr13/p20130625a.htm). I admit that this statement is a little too vague and political here (like a politician would), yet the NY Times had this interesting fact to quote “The bill’s opponents said it would most likely cause all but 5 of the 42 abortion clinics in the state to close, because the renovations and equipment upgrades necessary to meet surgical-centre standards would be too costly.”

(Source: http://www.nytimes.com/2013/06/26/us/politics/senate-democrats-in-texas-try-blocking-abortion-bill-with-filibuster.html)

So basically, the bill is not just about limiting abortion, it is a basic form of misconception into trying to ban it all together. I personally reckon that the admitting privilege was added to strangle any sympathetic doctor to step away from this real fast. (That’s just how I see it).

It reads like politics, but to be honest I see it as a dirty variety of politics. Let’s call a scalpel a scalpel, shall we?

To be honest I am on the fence when it comes to abortion issues. I am not against it, yet I feel that it seems to me (from what I read, not from any form of personal experience) that it is at times way too easy to get them.

The issue to me is that if it is legally allowed, then why waste resource on resource on these backstabbing methods, especially as the US has massive economic issues, perhaps some politicians should use their tactics on furthering the economy (or is that too tall an order?)

I am personally in awe of Senator Davis. Not just for the filibuster, but if you consider that when she was as just a teenager (19), she became mother and then still graduated with honours from Harvard Law School. An achievement most do not get when they get to spend 100% time on their studies. This proves that she is more than a tough cookie. She has received at least 2 dozen awards from all walks of life, making her a public servant with sizeable renown.

INTERRUPTION: Just now I see the message that the abortion bill has passed (Foxnews), yet more questions are now being asked, which makes me wonder whether the bill actually passed (I honestly do not know). There was only one other tweet on how the filibuster was halted.

So, this is not just about the bill (which is actually important), yet the fact how this ‘passed by’ newscasts so unnoticed makes me wonder what these news channels are all about. Thank heavens that gamers are about more than games. If not, more would not have been aware.

Information about Senator Wendy Davis at: http://www.senate.state.tx.us/75r/senate/members/dist10/dist10.htm

Those who support her can tweet so with the hash tag that I see reappearing all over the place ‘#StandWithWendy’

The only statement left for me is: “News channels shame on you!“

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June 26, 2013 · 11:01

Are banks now too much in control?

I mentioned some of this yesterday, some people are just too unwilling to learn and they are very willing to sell you a too pretty a picture. This is what is now starting to become clear and in a dangerous way. Again, not unlike previous events, this blog was inspired by the Dutch NOS (www.nos.nl).

Political parties are now starting to ‘panic’ and are quickly grabbing to solution wherever they can. The issue is that the Dutch economy is apparently even worse then was initially predicted by the Central Bureau of Statistics (www.CBS.nl). Their initial prediction of -0.1% is now -0.4%. Interesting fact is that I predicted something like this in my blog ‘A noun of non-profit‘ on May 15th, just over a month ago. So is this bad news management? To me it seems to be more and more the case.

Diederik Samson of the PVDA (Dutch labour party) is now trying to kick-start the economy by offering alternative sources to spend from. Well, Mr Samson, there are two issues with that idea. The first one, most people do not trust bankers and politicians, now they are seemingly joining hands many have reason to trust both of them even less. The second reason is that the unreliability of the current economy is stopping people to spend anything as long as they are in debt.

The basic issue is that there is too much uncertainty for the next two years. As such people pay their mortgage and essential bills as much as possible. The people are paying off their debts as banks cannot be trusted to play nice. This is the consequence of not containing the massive wave of simply put insane investment sprees. Perhaps some will remember how SNS Reaal needed to be nationalised?

So as the Dutch need to cut 6 billion in expenses, they now seek other way to find spending options to raise the economy and next on their list is the attempt to use pension funds to do this.

Basically, quoting Arjan Noorlander from yesterday’s NOS newscast “The people managing these funds are often investing abroad to get their dividends. This does not help the Dutch economy” He then further states “These funds should invest tens of billions by taking over mortgages from banks, so that they can offer new mortgage investments“.

How is this anywhere near a good idea? Banks, remember them? They are not to be trusted at present, or anywhere in the near future for that matter!

As we have all these bad bank mortgages out and floating, relieving banks from these burdens by losing upcoming retirement funds is more than just a bad idea. Arjan Noorlander did continue and did end with the fact that this is dangerous and retirement funds might get lost in this way, and that it might be an option if the government underwrites these loans so that they will pay the losses if those occur. To me it reads that in the end that another bill will be given to the taxpayers one way or another.

The issues of keeping the retirement funds safe was also mentioned by Alexander Pechtold (D66 = Democrats 1966), he continues by saying that first and foremost there should be clarity on how and if this should proceed.

 

You see, there are two sides to that part. In the first part the Dutch officials shot themselves in the foot for a long time by keeping housing too expensive for way too long a time. It was left to certain groups to keep the prices artificially too high. I myself viewed it as an artificial push to keep housing prices beyond acceptable as it increases the capital position of banks. Then there was the issue of preferential treatment for some places, as there were ways that the ‘right’ people got into those places. I myself experienced these events first-hand. Too many issues played and in a time when incomes were good, people got what they could and as such they are now stuck in a solid position, where moving away will cost any person a fortune. To illustrate this, my former, small, 2-bedroom apartment in Rotterdam would buy me an apartment almost twice that size in Stockholm, Sweden. So considering these facts, moving is not an option for many, which means that people are paying of their mortgage as much as possible.

The second part is that up to 2005, it was way too easy to get all kinds of credits and payment deferrals. These options all come at some percentage expense and as incomes were good, no one really cared too much. Now, to not end up in a situation where these people will have to eat their mortgage, or sell their house (making them destitute), they are now all paying off their debts as much and as fast as they can.

These two factors add to the fact that people will not spend money. Not unlike the government, too much money was taken in advance, and unlike the government, they are not getting to push it forward, so there is no spending. These factors had been known for a long time (at least 3-5 years), so when politicians are all so amazed that economic infusion plans are not working, then that amazement seems somewhat disingenuous to me. The fact that the Dutch are so about housing corporations, to be given the funds to grow is tying the cat to the bacon in more than one way.

This is not allowed to become an ‘opportunity knocks’ situation, especially when they are playing with retirement funds. If they really want to do something that adds up, then give people the option to use their retirement plan to pay of a mortgage of a new house. Those young enough will then have a building future. And it should be managed by a banking branch of those who keep those funds at present. Yet, I reckon that it will raise voices that this is not opening the economy enough. So is this about the banks, the people or the economy? I wonder how quick objections will loudly rise when banks are kept out of the equation. It would give rise to my suspicions that the banks are in more control then people realise.

Again, that risk is very real in the UK as well. Instead of keeping a decent flow of affordable housing, we see an economy in neutral whilst the hill it is up against seems to be rising more and more.

This was discussed in the Guardian, April 27th (http://www.guardian.co.uk/money/blog/2013/apr/27/pensions-system-failed-what-answer) When we look at this in regards to a failing amount of retirement savings as the predicted cost of living has been incorrect for at least a decade, likely closer to 2 decades, we now see a dangerous development. This is a market where over 40% of those approaching their elderly need will have to sell their residence to afford future care.

Suddenly ‘The Best Exotic Marigold Hotel‘ doesn’t sound like the worst idea for people to consider.

This again brings me to the idea of solutions. It is always nice to kick a parliamentarian (a therapeutic form of soul food), but we should consider options and opportunities for solutions.

There was an idea in South Australia several years ago that was quite remarkable. To solve housing, the government gave away land on loan. So basically, you got to buy a plot for $1. The conditions were that you had to place a house on it, and the value of the land was payable when you sold the house. So basically you had a house on free land as long as you lived on it. This solved two parts. One, the housing issues fell away for some, second a house needed to be build, so that was good for jobs and economy. I always thought that was a good idea to get people into their first house. The second part is the retirement issue. Now many prefer to remain where they are. This is fair enough. Yet, consider that instead of eating your house, you are leasing it away or renting it out. Consider that live in places like Greece, Spain and even India could be more rewarding (and warmer) as you live in a place where the cost of living is a lot lower. Lower cost means a better quality of life. I am not stating that this is an option for all, but perhaps it could be an option for a decent amount, giving breathing space to create new ideas and options. Whatever people choose, I hope it is one people will be able to live with in a comfortable way.

 

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June 25, 2013 · 14:49

Repeating lack of retirement insight

We have seen many plays in the past and present, where some are so short sighted on getting their own margins set, that they seem to be in short supply of common sense. Where is this coming from?

I remember issues evolving in 1997 that politicians did not heed the words of people in the know when it comes to the issues of retirement. It was stated within the corridors of those who work there that the retirement funds were not getting enough money to build the buffers needed for that generation to enter retirement. Those words were ignored by those who could do something about that.

It was not until the Dutch Central Bureau of Statistics warned of the upcoming dangers of shortages in retirement funds a year later. (Source: http://www.cbs.nl/nl-NL/menu/themas/arbeid-sociale-zekerheid/publicaties/artikelen/archief/1998/1998-0129-wm1.htm ) This specific article warns the reader that the amount of people going into retirement up to 2015 will drastically increase as this will be the time frame where the baby boomers will go into retirement. Other documents gave the same warning. There was even additional warning that the group that follows was a lot smaller, as such the then current non-retiring population would not be growing the retirement funds to the degree it needs to grow. The consequence would be that the funds would grow dry really fast.

In addition, this was all before the crashes of 2004, so the reality was even grimmer then most thought it to be. That reality became truth as the retirement funds started to pay less in 2011. Whatever the reason that got voiced by those involved, in the end it was about an increasing lack of retirement buffers.  Now, today (OK, yesterday), advertisements by groups like the FNV (Dutch Union of workers) is warning people about the dangers to retirements. Why?

Political parties are now in the mindset to lower retirement payments by people. They are hoping that fewer costs mean more income into the streets. Also, as retirement payments are not taxable, lowering the tax deductibility will result in more taxation entering the coffers of government. So, there is now a clear impression that certain people in government are really willing to betray those who need retirement later on and base that risk on the ‘I need to look good now’ option.

Am I exaggerating? Is it about their view, their look? That is a fair question, yet messing around with long term pension building, not just the basic fear that people might end up with no more than 55% of their retirement funds is a dangerous act. This is not even taking into consideration dangers of additional future bank and investment failings where the buffers are currently still way too small and too much danger is placed upon funds that needs to feed a generation is just short sighted and completely unwarranted and therefor unacceptable.

What is the opposite side? Well, if we pay a little too much now, then we do get into a field where pensions will be a true safety net, especially in ages where all costs keep on rising and rising. The AOW (Government paid pensions) will remain a true safety net and could be a future foundation of safety. All that should not now or ever be endangered by unproven and assumed options for revitalising the economy. This looks like an upcoming excuse where the statistics of a better economy in 2014 (a claim that is nowhere near any level of certainty) should not be fed with long term securities. I personally see that any politician signing of on this one is to be held liable. There is the crux; they will not care as it is all about the now! Can we allow politicians to remain in office as they overspend for such a long time, not being able to balance their accounts and now are willing to endanger the next generation?

This is not just about the Dutch system. We should investigate these issues as they are likely to emerge in the UK, Canada, Australia, France, Italy and other nations. These nations are all in a state of deficit and as such, politicians in those nations would also seek a way to look good. Playing poker with the retirement funds of a next generation is an unacceptable gamble which should publicly be stated as null and void.

It is very tempting for the young, restless and party generation to not care about those issues now, but those who are not in a field where they are assured of long above average paying employment will soon thereafter learn the hard way that they are looking towards working another 15 years just to make the bare minimum.

If a politician has one clear responsibility, then it is not about getting by now, but to create safety, stability and security for the future. We are used to the short-sightedness of ‘Excel managers’ managing the needs to their next commission with a lack of long term vision, we should not allow politicians to do the same to the future of so many.

 

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June 23, 2013 · 19:55

Who are the real watchers?

It is 02:00, SpyHardwareI slowly move into the building that is owned through puppet corporations. The true owner is no one less then Vladimir Kumarin, the most powerful man in St. Petersburg. Entering the building is relatively simple. I avoid the guards, one almost saw me. It is tempting to use sentry killing, but the body will be found. There can be no trace. I install the small remote webcam. Hacking into his wireless router is relatively simple. It is military grade, but my link to the Cray Titan in Langley soon has that fixed. The router got hit by 400,000 requests a second. It cries for its mamma in less than 7 seconds, a new record. I am in and ghost accounts are set up less than 15 seconds later. The scripts run without a hitch. a low tech wireless microphone is set up 3 minutes later. That is the one they will have issues finding, but it will be found, so the rest remains invisible. I leave silent as the night, no trace left and less than 2 hours later I look like a drunk American exchange student studying in Sweden, on a train to Helsinki.

Yes, it reads like such a nice story, but none of it is true! Thinking of Splinter Cell’s Sam Fisher, I am not even that good a spy writer, so I will leave that skill to Mr Clancy. The closest I get to action is the Xbox360 edition. Suits me just fine!

If we look at today, then all we need is a little box that fits into the palm of our hand. We sit in a coffee shop where the ‘privileged young executives’ tend to show off their expensive mobile, laptop, slightly overcharged suits and they look for that young lady dressed to… ‘Impress’. He then logs in does some basic wizardry stuff and considers himself in the running for a possible afternoon of great sex. That was his plan, will she bite? Nearby is a guy who no one notices. He wears a polo-shirt, likely cargo pants too, has a crossover bag and is typing on his laptop. He looks like many Uni students that get casually ignored. He was waiting for the guy (or anyone like him) to show off. He did just that, and less than 3 seconds after the information is typed in, he has link and login details. He now knows what network he can invade. Perhaps the young executive is lucky and he is of no value. If not, his account is broken down and thousands of dollars on internal communications, price agreements, customer’s details and many more details are now duplicated. It would be worth quite a few coins for the right competitor. As such the quiet student will have all his Uni debts paid off long before he gets his degree. So, what is this about?

You see, the Guardian today is having another go at the intelligence industry. I am referring to http://www.guardian.co.uk/uk/2013/jun/21/gchq-cables-secret-world-communications-nsa. Here they discuss several acts that GCHQ has allegedly involved in. My issue is with this part of the sentence “process vast quantities of communications between entirely innocent people“. Is that any different from what Social media and market research is doing? Let us not forget it is all about the latter part of that same sentence “as well as targeted suspects“.
If there was a way to just focus on that 0.0003% of that population, then it would be easy. But life is not that easy as we learn ourselves on a very daily basis. The only issue I truly have with that article is “Snowden told the Guardian. ‘They [GCHQ] are worse than the US’”. Really Mr Snowden? Let us go over those facts again. First he betrays his country. He is not some guy who got into the thick of it. He first does not make it past basic training. He then gets a chance to serve in the CIA (whomever gave him that brake is truly regretting that act I reckon). He then walks away and joins the NSA. Is there anyone not having any questions at present? So, he knows what is required and then he walks away and not just to anybody. He runs off to Hong Kong. In my mind, he must have thought that the Chinese cyber division would want to offer him a cushy job. But these boys would see through him in no time. Those savants know every in and out of every bit a Cisco system routes, how it does that, why it does that, and where the threats are. Snowden does not instil that level of ingenuity to me. So again, he did not go to some non-extradition country out of conviction (like Ecuador), no he went straight for the ‘enemy’ and is now allegedly enjoying Borsjt and Blackbread in Russian company.

Let us get back to the issues that really matter. This is not about those who claim to be ‘entirely innocent’. This is not even about your average criminals that much. GCHQ is one part to keep England safe. As described earlier, security is no longer done through a backpack full of tricks. The bulk of today’s danger comes to individuals we know not where, and it arrives to them in the simple form of a message. It could be an e-mail, an SMS or even a chat message left on a gaming site. To find them GCHQ needs to get to them all. Do you think they read these messages? That is not humanly possible, every second internet information is created that would take one person a lifetime just to get through. So it becomes about flagging. We can look at two flags. 1 flag is green and is zero threat. That is well over 95% of all communications. This also includes all the dicey and spicy spam messages we get. In effect, they know where it came from, where it is going to. The people they seek are of a different variety. They are all about not being able to detect, or to detect the origin. That is already less than 0.3% of all these messages. Then we go on and on. 1% out of that 0.3% is now a possible threat. Is it? They do not know yet, but the amount is now so small, they can actually start taking a look at the facts. Even then it could be harmless, yet many millions were crunched into less than 1000. That group might be part of the second flag. Even that number is still too high. As time progresses more is crunched and then those people at GCHQ will really go to town and pass on what might be a threat. So, was there an issue? You might think that it is, but if you are entirely innocent then the chance that they saw your data is actually so small that winning the lottery has a much better chance. Do I worry? Hell no. My usage is even less than that. Many download movies, some download pirated games. None of that interests the Intelligence community. They want to learn one thing. Where is the threat to us coming from?

The bulk of us will not even register on their radar. If we rely on the numbers in the article “By May last year 300 analysts from GCHQ, and 250 from the NSA, had been assigned to sift through the flood of data.” that is 550 people to sift through amounts of data that is so much that 1 minute of generated internet traffic will require them all to work their entire careers to sift through that much. Reading our emails? We are just not that important and we likely never will be.

If you are worried, then worry about real threats. The real non-terrorist threat out there today, are the many normal people, not using Common Cyber Sense as they use free internet to do what they need to do from the comfort of their non-desk. Those are the people endangering YOUR data, because they are out to get some personal gain.

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June 22, 2013 · 16:57

What is an economy?

Yesterday we saw all kinds of movement in the markets. The start of this was a violent sell off in almost direct answer to a message be Ben Bernanke (Source:  http://www.guardian.co.uk/business/2013/jun/20/stock-markets-violent-sell-off ). It is a name that ‘shines’ to some extent when we watch the movie ‘Inside Job’. Mr Bernanke has been involved with the Federal Reserve for over a decade and has been the chairman of the Federal Reserve since 2006. Bernanke’s message that started a whole lot was to end QE (Quantitative Easing). Is it wrong? That is the debate that many want to start, yet we are currently in a phase where this approach to bond buying must stop, the question is not just why, it is also current to ask why not sooner, or why would this have such a strong effect on global markets to this effect.

Does this event show that the US is actually getting stronger, or is the rest of Europe’s so much weaker? My initial voice goes to the second part and I will explain why. If we consider the outstanding debts then we must agree that the US remains now and for some time to come on the utter brink of bankruptcy. The total US debts are well over 120 trillion (almost 17 trillion national debt), which is so much outside of the reach of repaying for a long time to come. There is the valid question why the US should support Europe to the extent it is doing at present. Europe is so not getting a handle on their spending and many nations are showing more and more delay to getting it all under control. This is not just fuelling UKIP and the reason that the UK population is more and more intent on leaving the European Community, parties within the US are validly asking, why are we paying for all this? As the US pays the IMF and they keep on pouring money into bottomless pits like Greece, more and more are asking questions as to why this should continue.

It gets even better. If we add the sums of payments by the different parties into getting the economy going (jump starting was the label they used) , we end up with an amount well over the sum of all outstanding mortgages in US and Europe. So if we consider that amount, then consider the option of paying of the mortgage of EVERY household making less than $70K. That amount would be less than the amounts paid to get the economy started. In effect, no mortgage means that people would be spending money everywhere and the US (and also the European Community) would have an economy that is up and running.

So as Ben Bernanke stops QE and as the US is buying back the outstanding bonds the markets will not suffer, but they will reflect the poor position everyone is in.

If we see the past of Rothschild we see: “Amschel Rothschild’s (1773–1855) definition of economy saw this as financing national projects such as wars, goods and infrastructure”. Economy would be defined as a national economy as a classification for the economic activities of the citizens of a state. So our view of economy (you and me in general) sees this in relation to the citizens. As such, the US economy is seen as extremely poor as one out of six lost their house; one in ten had no job. This has now improved to one in 12 (which is really not that good yet), yet the overall considering healthcare (or lack thereof) and other topics mean that the economy is not yet in a state of health. It is only barely starting to be on a road to recovery. The Federal Reserve is considering that dropping QE would enable a stronger wave of recovery. Is that wrong? When we read about the economy in many places, and how much better the economy is doing, we feel we are being lied to, yet, is that true?

that point of view only hangs on what the definition of economy is. In a global market where we look on how corporations are doing in their markets we see a definition devoid of citizens as they only consider the consumers. I think that their definition is wrong, yet it is not incorrect. Many of us seem to look with at the same picture with wrong (different) standards and values.

If the market drops (as it did yesterday) because these sellable items are no longer there, then this is another matter. If a shop loses one item and it drops to such an extent, then we see evidence that are (or have been) living for the most of the ROI of one successful item. Today’s message on the Guardian (source: http://www.guardian.co.uk/global/2013/jun/21/global-markets-stablise-crisis-euro) only gives strength to my views. It shows on how Greece needs another 3 Billion, how can this continue?

The article shows the following quotes that are important for the next part: “EU leaders in Luxembourg are holding a day (and probably night) of talks to create rules that force losses onto large savers when banks fail.”

So like Cyprus, those who saved money for their retirement will see it dwindle? Because in Cyprus those over 100K Euro lost a bundle. After working up to 45 years, their retirement all based on joy of working hard is getting cut because no one has either the guts or the insight to actually deal with the banks and the governments behind these events?

Sweden’s Finance minister Anders Borg emphasised on the dangers of those moves. Also stated in the article by the Guardian was “A draft bill has suggests bank shareholders should suffer first, followed by bondholders and then savers. A new fund could also be set up to oversee new tighter rules.”

Now, I get the shareholders suffering side of this. When you invest in shares, you invest in risk. Yet the one part that needs an overhaul, the banks and their board of directors are still not properly dealt with. So whatever draft will be created on dealing with banks and their path of recovery is still not laid out in full. However, with the promotion of bad bank separation only gives pressure on taxation and tax payers. Who wants to live in such an environment, where what I see as unacceptable levels of risk-taking remaining undealt with. To me it seems that it is more humane to legalise drunk driving as that will only kill of a few people, the fact that banks and risk-taking financial institutions can dump these levels of risk on a population group many times the size over is just absurd.

We see all these ideas and patch jobs, yet the instigators of the harm we witnessed since 2004 keep on getting a pass by ‘the deans of industry’ to walk, talk and deal wherever they want. Especially after Cyprus, where we now see the legal proposals to force losses somewhere, seem to be less vocal on jailing the board of directors of banks when these levels of loss become visible. They apparently did not break any laws. If being drunk in traffic is no defence in court, how can irresponsible short-sightedness in financial institutions be legal? This level of high stakes poker where losses are not punished and winnings go to the individual must stop. In that same regard where the European Community (EC) is adding nation after nation, and when these places start to overspend as banks and politicians that the EC stamp is a free for all for name and fame making is short term and the outstanding debts are all dumped on the tax payers in the end. Perhaps it is no longer about saving failed banks. Perhaps any failing bank should be nationalised. The members of the board are investigated for negligence, whilst their belongings are sold at auction and they are scrapped from the banking and financial industry where they may never work again on any level of authority.
Yes, I agree this is equally an overreaction.

Yet, currently nothing seems to be effectively done. Greece remains a slice of evidence in that regard. It is nice for the Greek population to blame others (especially Germany), yet these levels of non-control into the Greek debts come from Greece. It is their own previous government being so utterly irresponsible, not to mention some of the financial institutions who were residing there. From Bloomberg this quote came: “Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders“. There is logic in that statement. Can we however also mention that Goldman Sachs had given the assistance to hide the levels of Deficit in Greece? So there were more elements in play. Perhaps, when the Greek banks do go into a toxic bank solution, they should consider adding their entire Greek mortgage portfolio and add that to the bad bank. If you truly want to start an economy, taking away their fear of homelessness will go a long way. Especially when the monthly mortgage could then be spend on items that truly jump start an economy.

When nations and conglomerates are talking about the economy, then you should ask them ‘what is YOUR definition of an economy’. It is the same issue as companies hiding behind revenue. Revenue sounds nice, but the reality is profit and contribution. It is what is left after the costs are removed. You will see that many places are not in a good position and they are not getting better any day soon.

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June 20, 2013 · 12:42

RBS of the Clan Goldman Sachs?

Well today the light shines a little brighter. As I was watching Sky News, I now see a stronger and more enthusiastic run to get these bankers under some kind of rational control. Will it work? Time will tell, however there is a start, and it might not take long until a strong voice could stem the tide of greed to a small extent.

We are however nowhere near a good solution. Mr Osborne (the Chancellor of the Exchequer) is about to take a page from a legally valid solution to divide the bank into 2 parts, a good and a bad bank. Yes, Mr Osborne, that will really help to take these billions of bad debt and add them to the tax payer’s burden! Not really a solution, is it?

To add other news moments that the UK economy is out of intensive care is not just wrong; it is a bad insight close to that of the Titanic playing chicken with an iceberg. No, I stand corrected. This decision is worse. You see, the Titanic had a few survivors; this approach might leave people alive, but destitute for a very long time.

So yes, there is a chance that the Royal Bank of Scotland will join Clan Goldman Sachs.

The idea of shares, making public and so on are ideas. I am not in favour of them, but perhaps Mr Osborne does not have a choice. You know, it is unfair for me to just complain, lay blame and not have a solution. What could be done is to keep the RBS nationalised, and remain an operating bank. Do a proper bank job by giving out small loans, do banking functions for those with jobs and create jobs. Also, the money that the RBS bank makes is used to pay off the debts, the bad loans and even create tax fortunes this way. Why not?

It is not like the banks at present are doing anywhere near a decent job.

The so called stated fact that the economy is in a better shape by stating: “Nothing better signals Britain’s move from rescue to recovery than the fact that we can start to plan for our exit from Government share ownership to private ownership.” is in my view horribly wrong. The fact that the UK is not in the red at present is just fortunate (and at less than 0.5%). The fact that most of Europe is down and there is no realistic view that this will improve within 18-24 months is not realistic. I read the claims that some made over the last two years. Good news was always bad news in the end and results had to be corrected downwards every single time. To rely on that a belief that the UK is now in a stage of recovery is in my humble opinion a case of really bad judgement.

How about playing it safe? Instead of quickly selling the good bank so that irresponsible banks can continue to endanger the lives of too many, hold on to it, make it stronger and get it into a shape where it is worth a lot more than it is now.

The current ‘noise’ that bankers are being chased for criminal charges are nice claims to make, yet the true culprits did what they did, and they never broke the law. Until the law changes, they are out of reach. The small fry we do get to prosecute will get nowhere near the punishment that is due. It is best reflected by Paul Moore, former head of Risk, HBOS. “The banking crises drove 100.000.000 people into poverty“. He is correct, what was done should be criminal and those involved require insane levels of punishment. Yet, as I reflected earlier, that will not happen. Lawyer Sidney Myers seems to be in agreement (or more precisely, I am in agreement with him). Mr Myers is not just a somebody in this field. As the head of Berwin, Leighton and Paisner this man wield a formidable legal cricket bat. It would make Colin Cowdrey instantly humble. Mr Sidney Myers is listed as one of the top 500 lawyers, this in a field that has over 120.000 practising lawyers, so we are in well informed top tier company.

To get a person convicted is near impossible. Getting the group convicted must proof all guilty, neither seems to be a realistic possibility at present. So we need to see a legal overhaul that changes the game, and selling of Lloyds and the RBS before that moment is in my humble opinion not a good idea. Sir George Mathewson, former CEO of the RBS has that same view (in regards to the legal prosecuting). He did however state an interesting line. “Where the information is made clear to the board and the shareholders” this comes to collected responsibility. The interesting part is what information? To get a clue on that, we should look at a book called ‘how to lie with statistics‘ written by Darrell Huff in 1954. It is a gem, an eye opener and it actually shows today’s problems. If we react to numbers and if numbers are ‘not incorrectly’ tweaked, then how is managed risk not anything less than misrepresented risk?

The bulk of data miners will look at profitability, but profitability of whom and how?

Uniting the views of Paul Moore and Darell Huff gives us part of this problem. Separate the data miner from the board of directors and we create a Star Chamber situation that lacks accountability for the simple reason that no laws can be proven to be broken. That danger, until countered gives reason for the now nationalised banks to remain as they are. SNS Reaal in the Netherlands is in that same scope. Until legal secure measures are firmly in place, protecting the taxpayer from irresponsible risks, other banks should not be allowed to continue, especially AFTER they move part of their failures into a bad bank.

The idea that the PM David Cameron has mentioned about selling the RBS at a loss is just not an option in my view. They should continue in the setting they are now, offering financial solutions to the UK citizens at lowest base +1% could over time turn the RBS and Lloyds into banks that are no longer in the red. Other banks have no reason and right to complain. They have been making customer services nearly impossible. To get a grip on that, take a look at The Netherlands where getting a mortgage reads like a tale no less imaginary then ‘the Hobbit’. As banks have been banking on higher levels of return on investments, smaller businesses and individuals suffered. They have no issue with credit cards as they charge 11-12%, however getting a mortgage seems to be a lot harder. So as customers come to the rescue of the RBS as they switch credit cards for 6-7% which will aid the government to get RBS back on their feet and even add some coinage into the treasury’s coffers (with a 1 trillion deficit), this could be a possible good solution. Are there any banks complaining? Well, that is the way the cookie crumbles. It is time for them to face the consequences of unadulterated greed.

The issue of holding bonuses for 10 years does sound nice in theory, however, how about appellant case HQ09X04007 and HQ09X05230. A case settled in the Court of Appeal by Lord Justice Elias and Lord Justice Beatson? A case where 104 members, were due their 50 million Euro in bonuses.

In that case I found this: “Bonus awards for all front and middle office employees who received a letter in December stating their provisional award, which was subject to Dresdner Kleinwort’s financial performance targets, will be cut by 90% pro rata to the stated provisional amount.”

However their contract had this little hidden gem “It is common ground that all the claimants, including the three whose employment agreements did not contain any provision with regard to payment of a discretionary bonus, Messrs Sacre, Honeywood and Daley, had a contractual entitlement to be considered for the award of a discretionary bonus.” (Source: Case note)

How soon will that case get quoted in another court case to get a bonus freed up? Some miscommunication through contracts where no one is accountable, yet the bonus is immediately payable? Another option could be that these senior members will start playing musical chairs with friendly banks, switching each year all protecting one another stopgapping large bonuses on an annual basis (in their favour of course).

So how long until we get some level of miscommunication going on? If we accept the journal of Ronald Green from 1993 ‘Shareholders as Stakeholders: Changing Metaphors of Corporate Governance‘ and if we accept that banks and financial institutions fall in that category, then their responsibility is to profit, not to accountability, which means that their acts will focus on non-accountability to endure ruling of profitability. The latter part would be my take on the works of Milton Friedman.

There is the crux. Until serious changes are made to separate the banks, the profit in regards to  stakeholders and shareholders, whilst increasing a banks social responsibility, the cut-throat business they now do and the taxpayer currently pays for will continue.

 

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June 20, 2013 · 00:38

Discrimination or Segmentation in gaming? (UPDATED!)

Some might have heard of the issues that gamers are about to get. It has been blogged and it made all kinds of media. The console war have begun, but there are more then a few indications that the was has been decided even before the consoles launched.

The war between Xbox One (XB1) and PlayStation 4 (PS4) kicked off during the E2 in the beginning of June, now it is on in earnest.

The story as it came to me was that a new game, to be launched on both systems called the Witcher 3, will not be playable in Poland, the country that is developing it, piqued my curiosity.

My initial thought was that it would be some kind of censor rating. Yet, that was not the case. It turns out that the XB1 will launch in 21 countries. You must log into the XB1 once a day, so if you are not one of those 21 countries, then you cannot play games. Is this an overly dumbfounded form of control utterly stupid?

So Poland did not make that list, neither did Japan (not that Japan was ever warm for the Xbox anyway), Greece, Portugal, Monaco (where the truly wealthy are), Czech republic, Hungary, Several South American nations, India, Pakistan and a few others, all missing! Now there could be the issue that those markets are not big, yet to cut them off in all ways means that questions should be asked. I found that CNet reported the fact that Asia will get the machine late 2014 (source: http://news.cnet.com/8301-10805_3-57588702-75/xbox-one-asia-launch-set-for-late-2014-no-word-on-japan/), so almost a year after Europe. Reason enough for them to not consider a Microsoft product in the first place, especially as many games will come to both.

The Playstation 4 does not have these restrictions.

For gamers the clear impression is that Microsoft has lost the plot. However, Microsoft is not painting this as a gaming console, but as a ‘home entertainment system’. It is about TV, Movies and Games. The question then becomes how stupid, or how clever they are (depending on their intent, either or even both might apply). You see, the gamer states that Microsoft acts are stupid, the rest does not know. Yet, if the reports in regards to project PRISM are true, then what to make of the XB1? All that information moving through 200,000 servers Microsoft mentioned that they were setting up for the XB1. Did they not comply with the NSA requests? If so, how much registration are you adding by watching via their box? Even if the NSA does not care, all that data, all that information, so how secure is your privacy? Will these machines be an ‘opt in’ device, where you must give permission before anything starts, or an ‘opt out’ where they collect until you say no.

Questions that have been an issue before and Microsoft have stated that you can set the privacy you are comfortable with. Yet, we do and should wonder about security breaches that could impede your privacy. If windows requires almost daily updates, then what about the XB1? A system this large in architecture will have flaws; this is unlikely a big deal as any system this complex has them. Sony will likely have them too. If we must register every new game, then certain data will be there, so how secure is that? This is however not about privacy (at present). It is more about the cyber criminals. How long until a security breach gets game lists wiped or scrambled. Then what? Wait days or even weeks for things to get fixed? Remember the issue Sony had with credit card details? What happens when your game list is the target?

Microsoft stated in the wall street journal on the 11th June: “that the device would only be available in select Asian markets in 2014. They are pegged as high-growth markets for the region’s booming gaming industry“. Really? But it is not a gaming console, but a home entertainment system according to Microsoft. So, these emerging markets are better off with a PlayStation 4.

This has every notion that at Microsoft the left hand has no clue what the right hand is doing. That is the conclusion I get when I see these ‘conflicting’ messages from Microsoft. No matter what it is labelled as, it leaves us with a load of questions. The important one is ‘What on earth does Microsoft think it is doing?’

1. There are questions on the hardware

a. Ridiculous small internal drive considering the market it is supposed to be supporting.
b. Mandatory daily login. Consider that even in Australia hundreds of thousands (even in the capital cities) do not have quality broadband. (Source: Sydney Morning Herald, March 7th 2013).
c. possible additional charges for pre-owned games.

With the last one I hope that the governments keep in mind that Tax laws must be altered on a global scale as this fee should be corporate taxable at the location of the consumer, not in the non-taxable location where their servers reside. (personally the excuse that this is an issue for the publisher of the game just does not hold water with me).

2. Possible issues with software

a. Censoring. Interesting here is that an example became visible just last week on the Xbox 360. An arcade game called ‘State of Decay’ for the Xbox 360. Apparently it missed some review board, even after so long of hassles to get an 18+ rating in Australia. The result was that this game which is a sort of ‘walking dead’ kind of survival game cannot be purchased in Australia at present. This might be a minor title and many might not care. Will we get this with major releases on the XBox one because one of the following was missed: Review, Server registration, release lists, database part number check, release codes per nation and time zones?

Those issues could lead to the point that the $120 you spend on a new game, will have to wait until after the weekend, as someone ‘forgot’ to do one of the aforementioned things. That is a daily risk in the Gaming industry, even more in gaming products then other software forms. So, why should we have to accept these risks?

We can speculate for all we care, but if this is all about saving costs, then how long until buying an XB1 game is nothing more than buying a credit card with a license number at EB Games (or some other game store)? Then we end up having to download 5 – 50 Gb depending on the game, which means broadband costs could go up between $30 – $50 a month. That is an additional $350+ a year. Will that happen? Many do not know at present, but the level of registration Microsoft is forcing on us has a definite reason, and I do not believe it is about piracy. My speculation was countered by Microsoft at E3 where they did mention that they will continue with discs. For how long is the question from my side. You see, the simplicity is that all these efforts would not be an issue they started with, unless there was a long term plan. Several futurists are all about the cloud. The cloud provides, the cloud refines, the cloud defines. No product to sell, no tax-ability for many and games are no longer a product you buy, but a license you rent until the conditions change. It is a business future; it should never be an entertainment future.

Is this just my view? Well, not sure how most felt about the XB1 before. I, like many other gamers enjoy my 360 a lot. I was already in the know about some facts, so I remained cautious during the E3. Yet, soon after, as we saw confirmation, many gamers moved loudly swearing on the internet away from the XB1. I feel the same way. For now, if only one system will be my choice, then the PS4 will definitely be on my Christmas list and I am not alone with that sentiment. Currently

What is important is to know is that this field could still change. I am still hoping that Microsoft might get a clue about the market they are about to lose for one.

However, should nothing change then it will be my prediction that 2014 might be an amazing good year for Sony.

On June 19th, Microsoft made public the following anouncement. In light of what I wrote, it would be utterly incorrect not to inform you!

An internet connection will not be required to play offline Xbox One games – After a one-time system set-up with a new Xbox One, you can play any disc based game without ever connecting on-line again. There is no 24 hour connection requirement and you can take your Xbox One anywhere you want and play your games, just like on Xbox 360. (source: http://news.xbox.com/2013/06/update)

There is the one question whether that one time set-up requires you to be on-line, but that seems to be minor compared to the huge step that Microsoft made towards its current extremely upset customer base.

 

 

An internet connection will not be required to play offline Xbox One games – After a one-time system set-up with a new Xbox One, you can play any disc based game without ever connecting online again. There is no 24 hour connection requirement and you can take your Xbox One anywhere you want and play your games, just like on Xbox 360.

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