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A €38m lesson with my latte

Yesterday, I stopped for a coffee in the lobby of one of Amsterdam’s more upmarket hotels. I settled into a stylish yet surprisingly comfortable armchair next to a wrought iron room divider, and cracked open Fay Weldon’s The Life and Loves of a She Devil. Before I knew it, though, I had stopped reading, and instead tuned in to the intriguing conversation on the other side of the divider.

At a coffee table was a man with a shaved head, who looked of a similar age to me, wearing a white shirt, and a somewhat over-tight unfastened blue suit jacket, pale blue denim jeans, and black suede shoes. Opposite him, with their backs to me, were a man and a woman, each in smartly conservative suits, with leather folios of notes and papers before them. All three were served cappuccinos.

My ears pricked up when the conversation revealed that the man in jeans was confirming and signing the paperwork for a €38m personal loan: that’s not a conversation one hears every day, and not one that I would have expected to hear in such a public place. It turned out that the loan was to fund the purchase of a luxury boat from the man’s father, at below market value as it was partly being offered as a gift. The man intended to use the boat for general recreation, but also had designs on renting it out commercially for cruises, as acquaintances with similar boats were reputedly wont to do.

I know very little about luxury boats. I’ve seen articles in newspapers and magazines about million-pound super-yachts, but I can’t even conceive of what sort of vessel €38m buys you – let alone the full amount including the ‘gift’. I’d believe you if you told me this was a conversation about a four-bedroom yacht that one might sail into a small harbour, and I’d also believe you if you told me this was a conversation about a mini cruise ship with tens of rooms that would require dedicated port facilities. I’ve really no idea. And I’ve also no idea on what sort of terms a €38m personal loan would typically be offered: it’s never a conversation that’s crossed my mind, let alone one that I’m ever likely to take part in (especially if I spend all my money on expensive coffees in posh hotels). And so I was intrigued. Fay Weldon was not going to receive much attention as I sipped this particular latte.

As the conversation progressed, the man in jeans explained that he was confident in the arrangement because he was near certain that his pay cheques would cover the loan repayments whether or not he got round to renting the boat out (goodness only knows what his job was), and if he should fall on hard times, he could sell the boat and easily pay off the loan given that it was for less than the market value. So to this nosey parker, listening through the divider, the deal seemed as sensible as a loan to spend €38m on a boat ever could.

Yet just as he was on the verge of signing the paperwork, the man asked a question which confounded me: “Given that there are no arrangement fees, why are you charging me such as low interest rate?”

The man went onto explain that he was concerned that he had misread the wisdom of the deal. The loan provider had sent two members of staff to meet him in Amsterdam from their offices elsewhere in Europe, at presumably high cost to their firm. The amount of money being borrowed was substantial. The low interest rate meant that the profit they would make on the deal would be small in comparison with the outlay. Why, the man wanted to know, weren’t they pushing for more? Were they expecting that he would default on the loan, and that they would recoup a greater financial prize from the fallout? Were his assumptions about the safety of the deal wrong? What did they know that he didn’t?

This question confounded me because it’s not common to hear someone clarify the reasons for suspected undercharging. I’m not sure I would have done so—not that I’m ever likely to borrow €38m—because I think I would have been concerned that the lenders would raise their price to meet my expectations.

Yet on my way to Amsterdam, I’d just finished reading Thanks for the Feedback by Douglas Stone and Sheila Heen. This book makes the case that receiving feedback is an interactive process, and we should always seek to understand the point of view of the person giving the feedback. The interest rate on this loan is clearly a type of feedback from the lender.

By discussing the rate with the lenders, the man in jeans could either avoid a huge and costly financial miscalculation on his part, or could set his mind at rest. If the lenders had jacked up the rate in response to his question, he could always have taken his business elsewhere—and, of course, the lenders were unlikely to do so for exactly that reason.

The decision by the man in jeans to have this conversation could have only positive effects: and yet, it is a conversation that I would naturally have shied away from. I suppose, given that he was taking out a €38m loan, the man was probably more used to large scale financial transactions than me. It wouldn’t be an absurd supposition that his day job may be in the financial sector. Perhaps that is why he had he confidence that I would have lacked to initiate this conversation.

But that’s a very easy get-out for myself. What other conversations do I shy away from for illegitimate reasons? Do I avoid asking things that could help prevent me from making unwise decisions because I lack the confidence to ask them? There’s some food for thought and reflection.

And the answer to the man’s question? Simple, really, according to the lenders. Pricing for loans is risk-based. The loan is secured on the boat which is worth more than the total value of the loan regardless. The terms of the loan state that appropriate insurance must be in place. Even if the man fails to make his repayments, the risk of the lenders not receiving their capital back is very low: such low risk investments for such large amount of money are rare. And besides, even at a low interest rate, the lenders stand to make hundreds of thousands of Euros in pure profit, because a small percentage of a very big number is still a big number.

Before long, the paperwork was duly signed and all three were on their way. The meeting lasted twenty, maybe thirty minutes. If I were one of the lenders, travelling internationally for such a short meting would feel like a waste of time, even though I’d just brought in a huge amount of profit for my firm. But as someone travelling solely for pleasure, I think this was possibly one of the most thought-provoking and educational coffees I’ve sipped in a very long time.


Most of the pictures in this post are not my own, though I did post a nice picture I took at the Rijksmuseum in ‘real time’. In this post, the first picture (Amsterdam) is by Boudewijn “Bo” Boer; the second (a ship’s wheel) is by Maximilian Weisbecker; the third (Amsterdam again) is by Javier M; and the fourth is my own picture of a boat’s wake, co-incidentally taken from the back of the DFDS ferry to Amsterdam (though not on this trip). All are used with grateful thanks, and under the terms of their Creative Commons licences.

This 2,468th post was filed under: Headliner, Posts delayed by 12 months, Travel, , , , .

The Tyne Pedestrian and Cycle Tunnels: eight years on

In May 2012, I blogged about visiting ‘the Ped’, more formally know as the Tyne Pedestrian and Cycle tunnels, which first opened in 1951. A year later, the tunnels closed to undergo a two-year, £7m refurbishment.

The refurbishment didn’t go according to plan: it ended up taking over six years and costing £16m. After adjustment for inflation, that’s about 60% of the cost of building the tunnels in the first place.

Today, I thought I’d revisit and see what had changed.

Both the north and south entrances to the tunnel retain their rotunda-like buildings, that have something of the feel of stations. Entrance remains free of charge. In 2012, the south end was looking perhaps a little tired.

Tyne Pedestrian and Cycle Tunnels south entrance

Today, the paving on the approach has been considerably improved, with much clearer cycle paths. The overall appearance has been smartened up, though the heritage plaque seems to have been lost and a TV screen of questionable function has been installed. The shutters are also of note, not only for being new, but also because the tunnels are no longer open 24 hours as was previously the case. They now only open 6am to 8pm, at least “until further notice”.

Note that the entrance is labelled ‘Jarrow’: this on the Jarrow side of the river. One might have thought it more logical to make it plain that the tunnel is for Howdon, but that would I suppose conflict with the station heuristic for which the designers seem to be reaching.

On entering the rotunda, one was formerly presented with two historic wooden escalators, each labelled with its intended direction of motion, and each labelled with one of the historic county crests of the two historic counties the tunnel connects. At the time of installation, they were the world’s longest escalators, and were only overtaken in the UK by those installed at London’s Angel tube station some forty years later. In 2012, they were the longest remaining wooden escalators in the world.

Tyne Pedestrian and Cycle Tunnels south escalators

Today, only one of these remarkable escalators remains in place at each end of the tunnel, the other torn out to make way for an (as yet uninstalled) inclined glass elevator. At the southern end, the ‘County Durham’ escalator is the lucky one… I forgot to check the northern end.

The remaining escalators, which didn’t work in 2012, have now been fixed in position: note the open ‘gate’ with its post driven in a step at the top the escalator below. They are now, I suppose, unique heritage staircases rather than escalators.

Note too that the safety information posted next to the unopened glass lift is unusual: the imperative is not to avoid lift use in the event of a fire, but to listen for instructions as the lifts may be used for evacuation. The ‘mood lighting’ is eye-catching, but not especially to my taste.

As I walked down the escalator in 2012, the strong scent of damp rose to greet me. Not so in 2020. The atmosphere barely seemed to shift. The considerably brighter (and working) lighting made the experience feel considerably less unnerving.

At the bottom, one reaches a sort of ‘lobby’ at the entrance to the slightly wider cyclist tunnel and the slightly narrower pedestrian tunnel. In 2012, this was a grimy space.

Tyne Pedestrian and Cycle Tunnels

Today, these spaces are considerably cleaner, brighter and more welcoming, but still retain the essential character of the space. Today’s photo is of the ‘lobby’ at the opposite end of the tunnels: they haven’t switched positions!

In 2012, the tunnels didn’t just smell damp: the ground was physically wet. The lighting was in a poor state of repair, too. The atmosphere was dingy and unwelcoming.

Tyne Pedestrian and Cycle Tunnels

Today, the experience could not have been more different. The tunnels were clean, dry and well lit… and perhaps mildly ‘other worldly’.

In 2012, there were a number of upsetting and unnerving damaged bits of wall along the way, which felt to me as though they were raising uncomfortable questions about the structural integrity of the passage.

Tyne Pedestrian and Cycle Tunnels

By contrast, today there are a number of new emergency help points with flip-down seating, sensitively designed to blend in with the curvature of the tunnel wall.

The midpoint of the tunnel is clearly marked, as one passes from the historic County of Durham to the County of Northumberland. In 2012, this was marked by some weird rusty metal plates.

Today, what I assume may always have been ventilation shafts are capped with a more aesthetically pleasing metal grid.

In 2012, for those with bikes (or those who couldn’t face the hike up the broken escalators) a vertical lift was provided on a branch off the main tunnels at each end.

Tyne Pedestrian and Cycle Tunnels

These remain in situ, though I think they may have been replaced with newer models.

The works have also retained the ugly, but probably historically relevant, fish sculpture outside the northern rotunda.

All things considered, I think this is a good job. It’s disappointing that two historic escalators have been ripped out and two turned into staircases, but it is probably unreasonable to expect 70-year-old machinery of this type to keep on working forever.

The difference in the feeling of the tunnels is night and day. They now feel bright and welcoming, and the modernisation hasn’t sacrificed the essence of the tunnels. From the care taken over the retention and repair of the tilework to the way that the historic painted signage has been kept and restored, this has clearly been a project on which respect and love for the craftsmanship of the original workers has not been in short supply.

Of course, it’s a shame that circumstances dictated that the restoration took so much longer than planned at such an increased cost. I hope that they get back to being continuously open soon enough, and that the restricted hours “until further notice” doesn’t turn into permanently restricted hours. I hope, too, that the inclined lifts enter service in the not too distant future.

But, overall, I’m left with the impression that this was an elegant and sensitive restoration of a mighty piece of civil engineering beneath a historic and beautiful river.

This 2,462nd post was filed under: Headliner, Travel, , , .

The Nativity × Gaudí

I don’t think I truly understood the meaning of kitsch until visiting the Sagrada Familia today. It’s an architectural wonder. I found it breathtaking, spectacular, beautiful and hideous all at once. I’m very glad I visited.

This 2,383rd post was filed under: Headliner.

Winter sunshine in Paris

I’m increasingly of the belief that Paris is best visited on crisp, sun-drenched winter days, with fewer crowds, a cosier feeling to the café on every corner, and the optimism that comes of spring being just around the corner.

This 2,359th post was filed under: Headliner.

A brief history of bingo

Elderly woman playing bingo

In sixteenth-century Venice, some long-forgotten enterprising businessman came up with a new way to make money. Customers would buy tickets for a fixed price which would be put into an urn. Tickets representing things that people wanted to buy—“precios”, or “prizes”, such as silk, beads, cats, and horses—were put into a second urn, along with some simply marked “pacientia”, or “patience”.

After a while, sales of tickets would cease, and the trader would simultaneously draw tickets from each urn: those whose ticket came out at the same time as one bearing the name of a prize would win it; those whose ticket came out at the same time as one bearing “patience” would win nothing.

This became known as “lotto”, and before long, everyone was obsessed, as captured in the famous diaries of Marin Sanudo:

At present, in this Rialto district, nothing is done except put money on the lottery. First anyone who wished to adventure had to give 20 soldi, then it grew to 3 lire, then to a ducat. And the prizes were carpets and other things; now there are money prizes, 200 ducats, and a piece of cloth of gold has been offered.

As this business grew and grew, the draws got bigger and bigger, sometimes lasting days at a time and drawing huge crowds. Before long, people worked out how to piggyback on the lotto market to make a secondary profit: selling the rights to tickets at inflated prices once the draw had started, with the twin advantages of: the in-play ticket having a higher change of winning because of the elimination of smaller prices (essentially, sixteenth-century Deal or No Deal); and capitalising on the fact that people didn’t have the time to stand around to wait for the culmination of a multi-day draw. This market in second-hand tickets become known as “bagarinaggio”.

This game had sticking power, and—despite an early decline at the hands of over-zealous Italian tax reforms—is the foundation on which everything from the National Lottery to charity raffles to Christmas tombolas is built.

Lottokugeln fliegen auf blauem Hintergrund

Perhaps the closest modern analogue to sixteenth-century Venice’s favourite game is bingo. Unlike most other descendants of the idea, bingo retains the aspect of bringing large crowds together at one time in one place to apparently compete in an activity whose winner is randomly determined.

Before we go on… a personal confession. I don’t enjoy bingo: I find it interminably dull. We used to play bingo at home with relatives at Christmas when I was little, and I always wanted to be the bingo caller because being the player was so very boring. It just does nothing for me at all.

After a period being played underground—especially in the First World War—bingo was finally legalised in Britain in 1960. At once, the craze swept the nation. By 1963, something like a third of the adult population—14 million people—were members of bingo clubs. As high street picture houses and dance halls became unprofitable with the rise of television, they were often converted into bingo halls.

Perhaps because gambling was still a little unseemly, or perhaps to extend their reach, bingo halls often called themselves something else entirely: two large operators, Top Rank and Granada plumped for “social clubs”. It’s hard not to notice the similarity to coffee shops today: these frequently try and sell themselves as community hubs or venues for groups to meet, rather than merely shops that sell hot beverages. Perhaps it’s a necessary part of winning “heart and minds” to facilitate a rapid expansion.

Over the next two decades, bingo halls went from strength to strength. By the 1980s, national bingo games were being launched which networked clubs across the country together, and the first purpose-built bingo halls were appearing on the scene.

But in the 1990s, things changed. Bingo started to decline. This seems to be most commonly attributed to the National Lottery, but—to my mind, at least—this seems an unlikely association. It strikes me that there is a considerable difference between attending a bingo club with friends and the solitary activity of buying a lottery ticket at the corner shop. The bigger problem may have been that the average age of a bingo club member in 1990 was 62, and tastes had simply moved on.

Bingo hall after bingo hall closed—a fifth of all halls closed between 1995 and 2000. The decline continued into the new century, arguably hastened by the introduction of the smoking ban in 2007: industry experts estimate that some 50% of players previously smoked while playing, and many of them left when this was banned.

Also in 2007, in response to claims that the National Lottery’s huge jackpots had harmed the bingo industry, the Gambling Act allowed clubs to introduce games with rollover prizes for the first time. This led to much bigger jackpots: just months after the new rules were introduced, there was widespread media coverage of a £1.1million win.

Despite this—and perhaps giving the lie to the idea that National Lottery jackpots were behind the decline in the first place—the bingo sector continued to shrink, serving just 3 million customers in 2011. By June 2012, just 468 bingo clubs remained—and 16% of those closed by June 2013.

In March 2014, Chancellor George Osbourne cut the tax on bingo halls from 20% to 10% “to protect jobs and protect communities”—though given the moribund state of the industry, it’s hard to imagine there was much left to protect. It has had some effect: chains new clubs are opening, albeit in the single-figures after many years of double-digit decline. I suspect that club number have continued to fall on an industry-wide basis, but can’t find the figures to confirm this. Commentators claim that chains opening new venues is evidence of revitalisation of the bingo industry; I’m afraid I simply can’t see it. I can’t foresee bingo halls being more than a historical curiosity in a decade’s time. Perhaps I’m wrong.

geld

But, of course, there’s a whole other side to this story. Online bingo has grown exponentially over the last decade: there were 20 UK bingo sites in 2004, while there are 350 today. The lack of venue overheads has transformed the cost structure of the game: online games cost as little as a penny, and rarely more than 10p. And the industry’s expansion has heralded new operators, perhaps better equipped to compete in the digital world that bingo hall operators of old.

Many of the market leaders, such as Foxy Bingo, Costa Bingo and Cheeky Bingo are entirely new operators. It has been said that The Sun makes more money from its online bingo operation that it does from selling newspapers.

Allow me another personal confession: I don’t understand the appeal of online bingo. When given a free trial of a couple of sites, I could not have been more bored. At least in physical bingo, one does have to keep up with marking one’s tickets. Not so in most versions of online bingo, where either tickets are marked for you, or you are declared to have won whether you keep up or not. All of the sites also had chat rooms, but these were qualitatively no different to those that can be found anywhere online: they certainly didn’t strike me as a compelling reason to log on to the sites. The experience isn’t one I’d recommend.

The online bingo market seems like it is still nascent. The explosive growth of advertising for bingo sites is necessary as indications are that brand recognition and loyalty seems fairly poor: when Google changed its search rankings in 2013, it transformed the market. 888, which used to be everywhere, was one of the big losers of this change.

It’s curious that some bingo sites—much like early bingo halls—are starting to position themselves more as online social venues that gambling sites. It’s hard to tell whether this is a reflection of genuine demand, or a fig leaf to cover the desire to gamble as it seems to have been in the 1960s.

With the lack of interaction necessary in online bingo games, I wonder whether they are really “bingo” in the traditional sense at all. Perhaps sixteenth century Italian lotto has taken another evolutionary step; or perhaps online bingo—bingo without the time and concentration commitment—is today’s “bagarinaggio“.

In a case of history repeating itself yet again, politicians seem to be starting to consider online gambling as a possible source of tax income: just like the Italians centuries ago and the bingo halls of the 1960s, the market might be harmed by burdensome tax rates.

Really, I’ve no idea what the future holds. But one thing is certain: I’ll enjoy standing by and watching more than I’d enjoy a game of bingo.

You can read far more on the history of bingo in Britain in this fascinating report written by my friend Graham Soult for Two Little Fleas.



I was invited (though not paid) to write this post by a company marketing a report on Britain's bingo market written by Graham Soult for an online bingo comparison site, Two Little Fleas. Much of the content of this post is based on Graham's report: it is repeated in this post with kind permission. You can see the report in full on the Two Little Fleas website.

This 2,295th post was filed under: Headliner, .

BMA wrong to call for repeal of Health and Social Care Act

The BMA is asking members to sign a petition asking Government to repeal the Health and Social Care Act 2012. The leadership’s rationale is that the Act requires providers to compete, while the BMA believes that “collaboration and not competition is more likely to allow a greater integration of community and hospital services”.

I could not agree more: collaboration is more clearly in the interests of individual patients than competition, and collaboration seems at odds with competition. Yet I don’t think the BMA’s position should be to call solely for repeal of the Act: after all, the Act is not solely about competition. The legislation brought about many changes, some of which are working well.

For example, we are beginning to see the value of a new local authority perspective on influencing the wider determinants of health, as shown by the exemplary nominees for NICE’s local government public health award. This sort of progress can be found in many Local Authorities across England. To campaign for repeal of the Act is to surround this progress with a fog of uncertainty: repeal would reject this progress outright and move staff back into PCTs.

The Act limits the Secretary of State’s powers to intervene in the day-to-day running of the NHS. While the success of this has been questionable at best, we are beginning to see push-back against Government diktat. No one, except perhaps Lansley and Hunt, would argue that the NHS benefits from the Health Secretary holding operational control; yet repeal would reintroduce this.

The Act confers new responsibilities on NICE to support evidence-based social care. The Act provides the first (baby) steps towards regulation of healthcare support workers. The Act gives an unprecedented level of legislative support to research in the NHS. These may be small considerations in comparison to the problems of the Act, but outright repeal would (if I may mix metaphors) cast the baby and the bathwater both into uncertain territory.

How quickly the BMA seems to have forgotten the pain inflicted on our profession through restructure, job uncertainty, and redundancy. Excellent professionals left medicine — and especially public health — to pursue other careers, while others lived for years with the stress of the uncertainty of their positions. For the profession’s trade union to argue for yet another overnight reorganisation “so big, it can be seen from space” seems utterly perverse. Perhaps this is why, despite the BMA’s repeated urging, fewer than 4,000 people have signed the petition. Even if every signatory were a BMA member, this would represent less than 3% of the membership.

Repeal represents only a return to the past. It behoves professionals to put forward an alternative vision. For example, politicians refuse to discuss the threat to universal healthcare of having fewer taxpayers per patient as a result of an ageing population; yet the BMA is uniquely placed to devise a considered, collective, professional vision of the future of the NHS. To campaign only for repeal of what exists, and allow the next government propose and introduce yet another short-term model, seems to me to be a sure route to unhappiness.

The BMA should not call for repeal of the Act: this is opposition without a position. The BMA should identify the most insidious parts of the Act, and work tirelessly to scrap or rework them. But, more importantly, the BMA should thoughtfully advocate for the future health of the nation, not for a return to the systems of the past.



Versions of this post also appear on the BMA website and Medium. It's like it's hunting you down wherever you look, begging to be read.

I took the photo at the top of this post at BMA House in September 2012.

This 2,249th post was filed under: Headliner, Health, News and Comment, Politics, Tweeted, Writing Elsewhere, , , .

BBC’s Eurovision vote seems misleading

Mea culpa (13/05/2014) – Having sat down with a pen and paper, I now realise that I’m wrong on the below. The fact that the televote is used to decide between entries with a tied ranking means there are extreme results in which a country placed bottom with the jury can still score. I regret my mathematical error.

– – –

In 2008, the BBC had to dramatically halt the voting in the semifinal of Strictly Come Dancing. They realised that the judges’ scores meant that Tom Chambers’s position in the competition could not be affected by the phone vote. No matter how many votes he received, he’d still be in the dance off. They stopped the vote as it was deemed to be unfair.

Last weekend, the BBC repeated the error on a much larger scale. The judges’ scores in the Eurovision Song Contest Grand Final meant that Poland could not receive points from the UK, no matter how many votes they received from the public.

Asking people to vote when they have no chance of affecting the outcome is clearly wrong. Will they be issuing refunds to the thousands who voted for Poland – the UK public’s top choice?

This 2,235th post was filed under: Headliner, Tweeted, , .

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