Monthly Archives: February 2009

A way to show employers what you can do before you get the job

The Freakonomics blog has this good post:

Todd’s idea:

The site would function as a recruiting network, giving students and corporations an entirely new dimension of access to one another. Corporations would post tasks, real or simulated, for students to work on. These tasks would be organized by subject area or industry, such as computer science, mechanical engineering, journalism, marketing, web design, etc.

Students would create individual or team profiles and work on selected tasks, submitting their completed work in the form of text, images, videos, power point, audio, or any other format that can be uploaded. Companies will have the ability to rate submitted work, allowing students to accumulate a “work score.”

The benefit for the corporation would be their new outlet to recruit students who have a proven ability to excel at the type of assignment they will be faced with on the job.

They will also find that they have a large audience of well-educated students who are quite motivated to impress them with their submissions.

The funny thing is, you can do this already, and without the competiton from having all the other students know about it. Find someone you really admire or respect. Email them. Describe your skills, how you can help them, what you have to offer. Link them to your blog full of quality posts. Then offer to work for them for free. If they accept, take whatever task they give you and knock it out of the park. Go the extra mile. Make it your most important task for the day, or week, or month. Do the work quickly and efficiently. Then, when you’re done, email the person and say that it was a pleasure working for them, and you’d love to help them out in the future if they have any other cool projects lined up.

Now, do this once a month for three years while you’re at university, then see how many job offers you get when you graduate. Such is the power of the internet.

An idea for landlords

Student house-hunting season is underway here in Leeds, and although I found it relatively easy this year, last year was a bitch. There are so many different property agents, private landlords and people handing out advice that it’s hard to know where to start. Last year it took us almost 2 months to find a half-decent house at a reasonable price, and even then we weren’t completely happy with it.

So here’s an idea for you, property companies: transparency. I know it’s a buzzword, but bear with me.

Do you know what would be awesome? If your company’s website had great, in-depth video tours of all your properties, from the front garden, all the way through all the bedrooms, the bathrooms, the kitchen and so on. No more lenghty house viewing sessions that take up all of my saturday afternoon. I browse your site, find which properties I really like the look of, and then come in, you show me round, it’s the same as the video, and bingo. I’m happy. I rent it on the spot. We get the deal done in less than half the time.

It would also be fantastic if you asked all your tenants to fill out reviews, or rate on a 5-star scale, so you know what they thought of your property. It would be great to have a blog where you discussed your business – why you bought property X, why you’re charging more for property Y than you did last year. It would be fantastic if you let me know exactly what you’re doing, and why, so I can make the right choice.

Because all this means that I’d know a lot about you and your business without ever having to meet you. And if I decided I wanted to take a closer look at your houses, I could. I wouldn’t have to waste your time, forcing you to drag me round every property you own that matches my criteria. I can decide all of that beforehand, and you can focus on showing me the properties that I choose. It puts me in control, and allows you to be more productive. Win win, I’d say.

A layman’s guide to the credit crunch, part 5: Confidence is everything

So, when a lot of mortgage-backed securities were found to be close to worthless, companies that were holding a lot of them at the time, such as Northern Rock, found themselves struggling.

The problem is, large swathes of the economy rely on confidence. Banks are happy to lend to you if they are confident that you’ll be able to pay it back in the future; people invest in the stock market if they’re confident that their investments will increase in value; people spend money today because they’re confident they’ll have more money to spend tomorrow.

But when something scary happens, like a lot of people defaulting on mortgages and a burst in a housing bubble, people’s confidence takes a huge dent.

Suddenly, banks don’t want to lend money to you or your company, because they’re unsure about the future and don’t know if you’ll be able to pay it back. Companies, pension funds and individuals don’t invest in the stock market, as they’ve heard lots of scary words on the radio like “recession”, “volatility”, “Ponzi scheme”, and “bailout”. And individuals don’t spend money because they’re unsure about their job stability, and whether tomorrow will finally be the rainy day that they’ve neglected to save for, because who cares, it’s summertime.

And if businesses can’t borrow money, they struggle to operate properly. They can’t buy new machinery, factories or equipment, they might not be able to get short-term finance to pay their employees, and their customers are running scared. They make cuts, lay people off and don’t invest.

People are scared of the stock market. There’s a fall in demand for shares of companies. Share prices fall.

And people decide to save their money instead of spend it. They downgrade their brands at the supermarket. They hold off on that new HD TV. They stick with their old car instead of buying a new one.

All of this leads to economic contraction. And brings about a recession.

Welcome to 2009.

A layman’s guide to the credit crunch, part 4: Mortgage-backed securities

In my last post I talked about securitization – where a bank will effectively package loans together and sell them on to investors. These investors buy securities to try and make a return, and the bank sell them to get the loans off their books and continue making loans to people.

This is basically what happened with hundreds and thousands of subprime mortgages in the US. In the 1990s there was a housing boom in the US (and the UK), and more and more houses were built, more people were lent money than previously, and there was a growing assumption that house prices would continue to rise.

This video explains it all rather well. Skip to 2:55.

Lots and lots of mortgages lent to people who couldn’t afford to pay them on houses that are going down in value. Now there’s a good investment.

Essentially, the foreclosure rate (the number of people who defaulted on their mortgages due to being unable to meet the repayments) increased rather dramatically, meaning that the MBSs weren’t worth all that much, especially as the houses that were repossessed couldn’t be sold for the value of the mortgage that was originally lent out.

This meant that mortgage-backed securities lost a huge amount of their value very quickly, and banks and investment funds that were holding them at the time had to write down the value of them (Writing down value means that, on one day a bank might have had an asset on its books called “MBS 1″ that was valued at £100m, but then a week later the bank found out it wasn’t worth anywhere near that, so they might have to revalue it at, say, £25m, which is an instant £75m loss for the bank).

This led to the huge losses that somebanks had suffered, and this is the reason Northern Rock went under, as far as I am aware. They had a lot of these assets on their books at one point, and suddenly the music stopped, and NR were in the shit.

Apple customer service

Today I had a bit of an issue with a song I downloaded from the iTunes store. Every time I tried to play the song, iTunes shut down. The song was on my hard drive and had downloaded fine, and played fine in Windows Media Player, and Winamp, but not iTunes. This was the third or fourth time this had happened, so I emailed Apple customer service.

They were brilliant. They replied to my query in a couple of hours, told me exactly what I needed to do, and the whole problem was solved with no problems. Plus they refunded the money I’d spent from trying to download the song again.

Bravo, Apple customer service. Well done. Keep up the good work.