Danny Ocean, Financial Crisis, Office in Farmhouse, Marriage and Startup Advice

If you are trying to make sense out of the title, please don't, there is a reason I christened this blog as Assorted :-). As expected, 2009 is turning out to be pretty hectic so far, and I guess the rest of the year would be on similar lines. Last year was great fun with all the travels and the rally, but for this year, as of now only Stok Kangri looms on the horizon. And chances of it happening do not appear too bright to me (so far).

In between all the usual humdrum, I read some good stuff in recent times, and thought of sharing them here. Here we go.

Real life Danny Ocean

In February 2003, Notarbartolo was arrested for heading a ring of Italian thieves. They were accused of breaking into a vault two floors beneath the Antwerp Diamond Center and making off with at least $100 million worth of loose diamonds, gold, jewelry, and other spoils. The vault was thought to be impenetrable. It was protected by 10 layers of security, including infrared heat detectors, Doppler radar, a magnetic field, a seismic sensor, and a lock with 100 million possible combinations. The robbery was called the heist of the century, and even now the police can't explain exactly how it was done.

The loot was never found, but based on circumstantial evidence, Notarbartolo was sentenced to 10 years. He has always denied having anything to do with the crime and has refused to discuss his case with journalists, preferring to remain silent for the past six years.
Until now.

The article has been written fantastically well, read it on Wired.

Financial Crisis
One of the finest explanations of the US economic and financial crisis has been given by former chief economist of IMF here.

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

The Way Out
Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support.

If you want to know who actually wrote the software that in a way facilitated the entire financial market crash, read this account by the man himself – Michael Osinski.

I quickly learned how fishy this world could be. A client I knew who specialized in auto loans invited me up to his desk to show me how to structure subprime debt. Eager to please, I promised I could enhance my software to model his deals in less than a month. But when I glanced at the takeout in the deal, I couldn’t believe my eyes. Normally, in a prime-mortgage deal, an investment bank makes only a tiny margin. But this deal had two whole percentage points of juice! Looking at the underlying loans, I was shocked.

“Who’s paying 16 percent for a car loan?” I asked. The current loan rate was then around 8 percent.

“Oh, people who have defaulted on loans in the past. That’s why they’re called subprime,” he informed me. I had known this guy off and on for years. He was an intelligent, articulate, pleasant fellow. He and his wife came to my house for dinner. He had the comfortable manner of someone who had been to good schools—he was not one of the “dudes” trying to jam bonds into a Palm Beach widow’s account. (Those guys were also my clients.)

“But if they defaulted on loans at 8, how can they ever pay back a loan at 16 percent?” I asked.

“It doesn’t matter,” he confided. “As long as they pay for a while. With all that excess spread, we can make a ton. If they pay for three years, they will cure their credit and re-fi at a lower rate.”

That never happened.

Office in Farmhouse
If you read Michael Osinski’s story above, he ended up being an Oyster farmer in his summer house, after kind of retiring at the age of 45. I don’t know about other professions, but this great desire to move to a tranquil place close to nature, seems pretty high on the list for a lot of good programmers. May be it’s the years of slogging and time spent on trying to do infinite things, that just makes them have this urge a bit more than others. I try and explain this to many, that programming is craftsmanship, but alas there are few who understand it.

Here is another fascinating story of Lars Bak, the lead programmer for one of the very key components of Google’s web browser – Chrome.

He created this very impressive piece of software (V8 JavaScript Engine), sitting from his farmhouse in Denmark. Top programmers command that independence and good companies always provide them. So if you think you are a top programmer then that dream farmhouse of yours can be a workplace as well. :-)

About five miles outside Aarhus in Denmark – the country’s second- biggest city and the unofficial capital of Jutland – sits a converted farmhouse. Inside, in a large wood-floored space with vaulted ceilings – once part of the stables – a big brown leather sofa is positioned a few feet from a DVD player. From the outside, with its rough cobbles and small, recessed windows, the farmhouse still seems steeped in the past; yet this is the place where a key part of the future of the internet first took shape.

The drive from Copenhagen has taken longer than expected, and the farmhouse is hard to find. Lars Bak, its owner and a programming genius to his peers, made his home here for a reason – he doesn’t particularly want to be found. His Alsatian, Mickey, isn’t pleased to see us either: the dog has to be restrained before I even think about stepping out of the car

And some advice …
Not from me definitely :-), but to all those eager people with varmala’s (or vadhumala if you like) in their hands, here is some advice from a counseller. Don’t get blown over by the title, the article is actually quite decent.

But the real useful one is on what things to take care of when starting a company with a friend. Things can go wrong even if you know a person for a long time, and sometimes even the friendship doesn’t survive the testing times. Do give it a read here, in case you plan to run your own business with a friend some time in future.

Okay, this was fairly long, and I tried my best to keep out the technical stuff as much as possible. Not sure, when I would be posting again, so till then take care, and keep rocking.