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GoC Dynamic Model presentation 2020-04-10

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Government of Canada covid-19 Projections presentation 2020-04-09 (pdf)

Written by Colin Henderson

April 10, 2020 at 10:58

Posted in Uncategorized

Five years of innovation coming in eighteen months

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Quotes and takeaways from very broad based pieces in The Times and Economist

Charles Parton, a former British diplomat, now at Rusi, a British think tank, called China’s efforts “a deep propaganda campaign” intended “to obscure the fact it caused the virus in the first place”.

Emergencies “fast-forward historical processes”, says the historian and philosopher Yuval Noah Harari. “Decisions that in normal times could take years of deliberation are passed in a matter of hours.”

The author Robert Kaplan adds: “Crises like wars put history on fast forward. And history is now on fast forward.” So just weeks into the pandemic, are we witnessing the shape of the world to come?

The pandemic, warns Robin Niblett, of Chatham House in London, could be “the straw that breaks the back of economic globalisation”. Stephen Walt, of Harvard University, fears that it will bring about a world that is “less open, less prosperous and less free”.

Malcolm Chalmers, of the Royal United Services Institute, counsels that the pandemic is so changing the “foreign policy baseline”

“This is not a minor moment in international security. It’s comparable to 9/11 as a shock to the international system, in some ways bigger, but it’s going to have some very big impact on our thinking. It will generate a new debate about whether we are giving enough priority to homeland security,” he notes, which could even include new consideration of the diversity of our supply chains and a greater need for national self-reliance.

– increased Balkanization and countries going it alone at expense of Globalisation and International institutions (Hungary, US, EU failure)
– Security considerations and underlying threat to deploy military exists
– devolved groups are losing control to national institutions (e.g. UK Health)
– a bigger national state will become a new normal
– technology has become an assumed goto solution at expense of earlier concerns on privacy and security of information
– use of cash is dropping – touchless payments are rapidly becoming normal
– the utility of old people is discounted against the legacy of debt young people will inherit
– working from home efficiencies supported by technology will create a rethink about how information work is resourced and deployed
– Universal Basic Income is being discussed again (Spain)

There is initial talk in Europe of CoronaBonds as a means to fund the costs of supporting the Pandemic and deferring payment into the future. This idea has merit.

Canada is talking about invoking Emergency Powers Act.

China is ahead because of forward planning with SARS/ H1N1 and integrated automation with WeChat and AliPay.

Written by Colin Henderson

April 10, 2020 at 10:29

Posted in Uncategorized

To wear a mask or not

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The discussion on masks is crazy. I really do not understand why a group of intelligent people running WHO, CDC, US Government, Canadian Government, etc etc cannot come to a common conclusion for something so simple.

Now they are shifting position to a yes; please wear a mask.

My position is unchanged since January when I ordered masks.

If I wear a mask:
1. I have some protection from other peoples nasal ’droplets’.
2. Other people have some protection from my nasal ‘droplets’.

It is not perfect but it is always better than no mask. I have heard arguments such as:
– mask usage is compromised if not worn properly
– droplets might sneak around the edges
– only professionals know how to wear a mask

None of these discussion points would suggest to any intelligent person that masks do not work. In the hands of amateurs they are not perfect but the protection afforded is always greater than the zero benefit of wearing no mask.

This is the kind of debate that introduces conspiracy theories on mask availability, cover up of poor planning and other operational issues. At best the ‘no mask’ brigade were being disingenuous.

Written by Colin Henderson

April 6, 2020 at 09:26

Posted in Uncategorized

Banks’ considerations for the end of covid-19 lockdown

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As mentioned by Zanny Minton-Beddoes, Editor-in-Chief, The Economist, today on Fareed Zakaria, (CNN) most people understand the logic and need for the Lockdown. But she went on to say, there is no clear way out of it, and a return to normal.

The defining model that shook the UK and US governments was produced by Imperial College by the team led by Dr Neil Ferguson. That document indicated with no mitigating effort, the US would see 2,200,000 deaths, and UK would see 550,000 deaths.

I will not attempt to compete with the analysis of the models performed by academics and some excellent pieces by Wired magazine.  Instead I remain focussed on banks and banking. My employer has had a high percentage of employees working from home for over three (3) weeks now.  How long will this continue?  What are the decision options on the table for Bank management across all Banks.  How many will remain on Work from Home status for an extended period?  This impacts all businesses not just Banks.

First some discussion on what the models tell us and what they do not.

Discussion on the models

The models have different sets of assumptions and outcomes.  However one constant is the focus on mitigation. Using the 2,000,000 deaths taken from the Imperial College paper this assumes zero mitigation effort.  By applying mitigation the peak is not only reduced it is spread out over a period of time. Mitigation will reduce spikes in need for ventilators, ICU and general call on medical resources.

Mitigation efforts are all at the Government Planning level, and include:

  • lockdown using physical distancing of at least two (2) metres
  • stay at home except for use of essential services.  Only go straight to essential service and return home
  • government defined essential services such as groceries, drug stores
  • border controls
  • travel controls
  • etc

Background for business consideration for returning to work

How does a Bank or any business think about the end of lockdown and returning to workplace for employees.

There is no shortage of news that works against returning to work, some specific, some introducing confusion (e.g. herd immunity):

  • Government of Ontario reference to secondary and tertiary peaks of covid-19 appearance
  • Dr Tony Fauci, considered to be an expert indicates the lift of lockdown is dependent on testing with rapid result in 15 minutes. [Ed: this is a reactive support option]
  • herd immunity debate described by Sir Patrick Vallance, the U.K.’s chief scientific adviser.
    • “To avoid a second peak in the winter, Vallance said the U.K. would suppress the virus “but not get rid of it completely,” while focusing on protecting vulnerable groups, such as the elderly. In the meantime, other people would get sick. But since the virus causes milder illness in younger age groups, most would recover and subsequently be immune to the virus. This “herd immunity” would reduce transmission in the event of a winter resurgence.
  • perverse impacts of lockdown making reference to out of season pandemics which along with migration efforts can result in additional waves of the pandemic
    • Social distancing can be so successful that when summer comes with its warmer temperatures and high humidity – conditions the virus doesn’t like – transmissions might trail off.
  • recent talk of an antibody test that would identify those individuals who had the virus and fought it of naturally.  Incidentally this could be an indicator of the hard to define herd immunity, which was predicted to see up to 60% of the population infected and get over it naturally

These considerations are at best confusing and at worst introduce health risk that is very hard for a Bank to digest as defined decision lints and to properly introduce their own mitigating efforts with informed business decisions.

Business Options for end of work from home

Here are the available options that I can see. Please feel free to ad yours in the comments.

  1. wait for the antidote (Q2 2021)
  2. wait for the antibody test (Months away)
  3. muddle through: slowly re-introduce working in the office for low risk staff.  Possibly introduce random or systemic testing of employees who have returned (if such is available)
  4. UBC on/ off approach based on Government indication that hospital capacity, particularly ICU, is adequate to accept new cases.  Other ICU options are at the Government policy planning level and probably beyond control, or meaningfulness for business options

Relevance to Bankwatch

The options that can be derived are not clear.  The references contained in this small post are a fraction of the analysis that exists.  Each business can never make adequate decisions based on the volume of data and information available.  Certainly the decisions each business makes will be unique to themselves, yet the risk is systemic affecting all business similarly.

As we indicated during the introduction, there is no clear end to lockdown/ working from home other than possibly the antidote.  But even the physical logistics of deploying the antidote and policing the result at the individual business level defy description.  Will individuals require a cover-19 passport identifying the holder as having been treated?  Interestingly China has already introduced a QR code covid passport.

There are no clear dates or events that business options can be associated with.

An unknown will be the Policy Planning actions taken by each Government.  In Canada we have the additional confusion of City, Province and Federal Government planning. The degree of planning integration over time will no doubt see some fracturing given the involvement of human nature.

Business options will come down to each FI determining that the need to return selectively (or en masse) in the interests of business and customer imperatives, will outweigh the assessment of health risk.

Written by Colin Henderson

April 5, 2020 at 14:58

Posted in Uncategorized

P2P Lending catches up with Canada


This from the FT highlights the direction of P2P lending is closing in on the direction set in Canada in 2008.

His frustration stems from the consultation paper published just over a week ago by the Financial Conduct Authority, which proposed placing the same restrictions on peer-to-peer lenders that already apply to high-risk platforms, such as equity crowdfunding sites. 

This would mean that to invest in peer-to-peer loans, investors would in future have to be certified as sophisticated, be very wealthy, be advised by an authorised person, or certify they will not invest more than 10 per cent of their net assets. 


Basically the direction says that P2P cannot be made available to regular people becase they are not capable of evaluating the risk due to their inexperience with investing.

i would never challenge that direction.  I would challenge that “sophisticated” investors are capable.  Credit risk judgement is a science and not something easily learned.

Alternatively the regulators are suggesting that sophisticated investors are sufficiently well diversified in their investments that they can absorb the risk of P2P Loans going to zero.  If that is the case why do the regulators not require a diversifcatoin policy for sophisticated investors?  Once you start this type of prescritoive regulation it never ends.

if the final answer is that “sophisticated” investors are sufficiently wealthy to absorb any portfolio loss, that is a fair point.  However it suggests that “non-sophisticated” investors should be restricted not just from P2P, from many other investment types, such as real estate, film, etc.

It is not a convincing argument to restrict P2P.

Written by Colin Henderson

August 5, 2018 at 23:22

Posted in Uncategorized

Finally someone in the community acknowledges Blockchain challenge for Banks

I have done a fair bit of research on Blockchain technologies as an alternative to SWIFT and that is really what we are talking about when it comes to international payments. This story caught my attention.

NEW YORK (Reuters) – Banks are unlikely to use distributed ledgers to process cross-border payments for now because of scalability and privacy issues, according to Ripple, one of the most prominent startups developing the technology

If we look at SWIFT it is no more than a messaging system that is accepted by banks to trust each other a payment has been made and to go ahead and debit/ credit each other using their nostro/ vostro accounts. No money changes hands with SWIFT. That clearing is old school using basically bank accounts that each bank hold with each other amongst the community of Banks who have together agreed to trust each other. Don’t get me wrong, SWIFT handles it well, but it is a messaging system.

What is Blockchain in this context then: it is a messaging system. It is the ability to provide a shared online record of messages that would disintermediate SWIFT. Always good to have competition and propose new more efficient or cheaper alternatives.

Blockchain is currently:

  1. Heavy and resource dependent
  2. Slow
  3. Lacks any method to provide financial clearing

On the third point, Ripple are giving it the old college try and more than anyone else. Other Blockchain applications are dependent on moving your money into bitcoin and moving that coin through a vendors bank account. Yes international transfers still need money to move, and archaic as banking is this is a truism. Show me the money in my account.

There is something there with Blockchain but to me it remains a solution looking for a problem, particularly in a Banking context.

Written by Colin Henderson

June 14, 2018 at 19:13

Posted in Uncategorized

FaceBook challenges run deep and are fundamental

Back in 2007, then in 2016 I looked at the FaceBook business model and compared it to AOL.

Here is the thing. AOL which was the US #1 internet source at one point, lost out because its mission was to retain users within the walled garden. It is not the first time this argument has been used but consider …. AOL strategy was all about building tools within their own garden, and as early as the 1990’s they even had their own browser and their own markup language (think proprietary version of HTML). They had their own CD which let you install AOL on your computer. The AOL ‘platform’ was a CD. Platform, tools, apps; the parallels are remarkably close.

My context then seems narrow now. But FaceBook remains a walled garden which expects to attract users and is required to continually provide reasons to be attractive to users, and yet make money.

The attraction FaceBook provided was to challenge traditional views on privacy and imply that they had that covered. Zuckerberg continually challenged traditional views on privacy and was rewarded with 2 Bn users.

Fast forward to now, and the walls are tumbling. Sandberg comments today tell us Mark will no longer be at the helm in short order.

Relevance to Bankwatch:

I have always been critical of internet and web as a media tool. I remain steadfast on that. I believe in pay as you go subscription models for news. I know who I trust and I know who I mistrust.

Facebook has no attraction for me as media. I understand the attraction of my relatives sharing family pics but I do not understand the relevance for news.

I know and trust Lionel Barber, Rana Foroohar and Gillian Tett (look them up). They carry weight and credibility. That is what distinguishes actual news.

Meantime FaceBook has been attracting users beyond the friends and family people based on spurious information that is not even called news. Those people were attracted under false pretences. Sandberg noted today that “To this day, we still don’t know what data Cambridge Analytica have”

Finally this from 2009 from 2009 where I summarised the coming media crisis using pieces from several others.

In 2004 people were asking about blog business models. Now it is social network business models. I have suggested other ways to deal with business models, but the mob continues to aim directly at advertising as the answer. It will pollute the web, and result in the opposite result than what is desired. It will not bring sustainability for them using advertising.

Written by Colin Henderson

April 5, 2018 at 23:34

Posted in Uncategorized

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