Why I didn’t commission anything ahead of Terminal 5’s opening

My email inbox was very busy in the months – weeks especially – leading up to the opening of Heathrow’s Terminal 5. (Actually, the earliest mention in my inbox goes back to December 2005. But anyway..)

As far back as July 2007, BA emailed with the invite:

On behalf of British Airways and BAA I would like to invite you to a media event on 12 July 2007, exploring how the IT systems at Heathrow Airports new Terminal 5 will deliver a new experience in air travel.

On February 5 2008 came another:

Final testing for BA’s Terminal 5 IP communications network is now complete and the network is ready to ‘go live’ in March. Communications Integrator Affiniti discusses exactly what went into the project and what passengers can expect when they go through T5.

On February 14:

You are invited to see the technology that is behind the exciting new Heathrow Terminal 5. In a matter of weeks British Airways will move into its new home at London Heathrow’s Terminal 5.

The site is largely complete and testing of the UK’s largest freestanding building, which at its peak was Europe’s largest building site, is well underway.

I am therefore delighted to invite you to spend the day experiencing first hand the £4.3bn wonder that is Terminal 5 and to experience the technology that supports this marvel.

Marvel, eh?

On 21 February came a more urgent email, because I hadn’t replied in the positive:

Paul Coby, British Airways CIO will be hosting the event alongside BAA both of whom will give presentations on Terminal 5, its development, the creation of a technical infrastructure and how this will deliver a 21st century experience to our passengers.

This will be followed by lunch and the opportunity to speak with key individuals from both BA and BAA that have worked on T5.

Now, if I was a transport correspondent, or a news writer, this would have been a must-go, I accept. So this isn’t any criticism of the people who did go along to get briefings about the marvel, which we now hear about first-hand from Anthony Horowitz in the Guardian:

As the jet-lagged crowd slumped on the floor in the vast baggage claim area (the genius of the Richard Rogers Partnership did not extend to a single chair or bench), BAA officials were keen to impress on us that they had done their job. The lights were on. The conveyor belts were turning. BA officials meanwhile blamed the BAA computer systems. And all the time, every 10 minutes, an Essex voice was cheerily announcing in a loop designed to send even a strong man insane: “British Airways would like to apologise for the delay to baggage collection. British Airways are doing their best to address the situation.”

Related, from Andrew Anthony’s TV review in today’s Observer, about the Apprentice, but widely applicable:

We might no longer manufacture goods, but we know how to manufacture sales clones. And their chief accomplishment in the ever-expanding service industry has been to sell us the concept of no service. They don’t know about anything. That’s why they can turn their hand to everything.

And:

All patter and no matter, the male team managed to flog their load at only a minuscule profit, an astonishing achievement in gastrophile Islington. But at least it gave them the opportunity to demonstrate their impressive grasp of two other great national talents: excuse-making and blame-shifting.

Which seemed very apposite to T5 and its huge cockup, caused by the failure of people interacting with technology.

So why didn’t I go? Three things. I’m mistrustful of transparent attempts to make me write nice things about stuff that hasn’t actually been tested in the heat of (commercial) battle. One’s work becomes an instant hostage to fortune; I wonder how many writers are now sharpening their knives over BA at their feeling at having been misled.

Secondly, BA hasn’t been particularly helpful in the past when I’ve wanted to get some information from it that it has not felt particularly willing to give out. (Details escape just now, but I recall hours spent phoning and being stonewalled.) That stuff cuts both ways.

Finally, though, and most important: I just couldn’t see that there was really a new, enticing technology story there which needed to be told. If it hadn’t been properly tested, how did we know what was going on? Without something like, say, blogs from people on the baggage handling side (the equivalent of blogs from testers of, say, Windows Vista) it’s just the word of the supremely confident people who were standing up there, here to sell us the concept of no service.

Now it’s open, we can see how it works. As you’re already aware: badly.

The end of cheap credit means a big shock for those who grew up on it

Have you noticed how mortgages are disappearing like snows in spring sunlight? Take a look at Money Guardian:

Some borrowers coming to the end of two- or three-year fixed-rate deals could currently be on a rate of 4%. This type of deal is now non-existent.

“Non-existent”. But it’s actually worse than that. The number of mortgage products available has shrunk from 7,726 to 5,700 – that’s a 27% fall, and in some cases mortgage lenders have simply withdrawn fixed-rate mortgages and are only offering variable-rate mortgages linked to the Bank of England base rate (or possibly, worse, Libor – the London Interbank Overnight Rate, which I first heard about in Michael Lewis’s Liar’s Poker: the trainees on their first day, in front of the chief executive at whichever investment bank it was were asked what Libor was. Woe betide if you didn’t know).

OK, so cheap mortgages are gone. And you know what’s next? Cheap credit cards. Credit cards that increase your credit limit endlessly when you spend more on it. That’s over. I don’t need to talk to City folk to feel this happening. You can see that it’s going to happen, like A following B: big-ticket credit (you can call it a mortgage) gets tight. Then small-ticket credit (call it credit cards) gets tight. I think that 0% transfer deals are already dead.

Which means that people who have spent the past ten years or so living off cheap credit – for flat-screen TVs, gadgets, gewgaws, shoes, clothes and of course don’t forget student debts… – are going to get a sharp, sudden shock as the tap is turned off.

That’s going to be ugly. But there is one small recompense: those who have been living off cheap credit are most likely the people who have found it impossible to get onto the housing ladder which has been infested with buy-to-let purchasers taking advantage of the tax breaks that buy-to-live people couldn’t. Which means, once they’ve waited for house prices to crash (yeah, let’s use that word) and saved up the 10% deposit that they’ll need, while having paid off their credit card debts, that they’ll be able to think about buying a house. If that’s what they still want to do.

But face this: the era of cheap credit is dead. It was fuelled by cheap lending generated from the US property market, leveraged by 20, 40, 60 for every dollar actually paid (or lent). Unsustainable, and now over as the banks try to regroup to discover some real money down there amidst all the paper promising to pay the bearer just as soon as it has figured out who actually owns the cash.

The credit crunch is nine months old, but it’s barely beginning in the effects it’s going to have on society.

At the Guardian: Tech Weekly podcast (with Feargal Sharkey!) and a different Microsoft?

The latest? Try the Tech Weekly podcast: Feargal Sharkey on Music Rights and BBC iPlayer

Feargal Sharkey, former singer with the Undertones is now chief executive of British Music Rights. Last week he told internet service providers the music industry was ready for change, and in this week’s programme he answers your questions. Also in this week’s programme the head of the BBC’s iPlayer discusses its latest update

It’s just magic having rock (or if you’re being picky pop) royalty. Come on, the guy who sang the song that John Peel thought was the greatest-ever pop song (Teenage Kicks, if you’d forgotten) and My Perfect Cousin, with its brilliant rhyme:

My perfect cousin/
What I like to do he doesn’

He also told me (outside the podcast) about why the Undertones once got a military escort out of a town where they’d been playing – because, apparently, the band always refused to toe the NI line which was that, depending on the religious affiliation of the area you were in, for your last encore you either played The Soldier’s Song (Catholic) or, um, I’ve forgotten what the Protestant one would be. Anyway, they wouldn’t do that – they’d do Teenage Kicks or similar. Cue, once, riot.

And elsewhere, surfing the latest meme, based on reading Clay Shirky’s Here Comes Everybody (about loose organisations): Can Microsoft be more transparent?

The ‘Vista-capable’ debacle points up how much the company needs to improve its internal communication.

And wonders how it might be if it were radically different – as in, if people within felt free to challenge decisions as people do outside it.

Sub-prime fallout: shanty towns outside LA, and watch the red ink flow

This is amazing, shocking – I find it hard to believe that the voiceover is telling what’s really happening, but there it is: a sort of shanty town outside Los Angeles composed of people whose sub-prime mortgages went bang.

And now there’s the pair of illustrations that I came across showing how American banks’ mortgages went bang. (These look terrible in Firefox and Camino on the Mac; fine in Safari. No idea how they are on Windows – anyone care to tell me? OK, fixed.)

The source is And Still I Persist which has used its own technology, called Boomerang, to disentangle this colossally complex topic. The first graph shows (by bank) the value of mortgages, by bank, where there were payments outstanding by 90 days or more. The number of “late” loans is vertical; the asset size of the bank horizontal; its total loan portfolio is the area of the circle at any point. (It’s bad to be vertical, small and near the x-origin.)

And secondly, total charged-off loans – that is, number of loans that have been written off as “non-performing” (vertical axis), total assets (shouldn’t that be claimed assets?) of the bank on the horizontal, and the area of the circles showing the bank’s total loan portfolio. (Being vertical and not far along the axis and having a small circle is bad.)

So – the question we now have is, why did it all go pear-shaped in 2007? What in particular happened?

More BSE in the banking system: claiming income that wasn’t

BusinessWeek continues to be must-read stuff at the moment (even if its latest paper issue has been overtaken by events, such as Bear Sterns getting bought for less than its building is worth, while the paper version makes encouraging noises about how it could come back..).

The latest example of the Banking BSE is the way that some of the organisations that loaned money for Adjustable Rate Mortgages (ARMs) booked income – even after you’ve dealt with the way that they handed out money to people who didn’t have what you’d loosely call “enough income”.

BW has the dope:

During the housing heyday, banks aggressively sold risky adjustable-rate mortgages known as option ARMs. Under the terms of those loans, borrowers pay less than the total interest owed each month. Yet lenders report the full amount of interest as income by adding the shortfall to the borrower’s outstanding balance. In essence, banks are counting their chickens before they hatch.

Let’s just try that again. I lend you, say, £100,000 (which I’ve borrowed anyway from Some Big Financial Institution). It’s a 25-year loan whose rate will vary from, say, 3% to 8%. That’s going to bring in £5,000 over those 25 years – so, £125,000 over its life.

You book this as income. Great! You’ve made a profit of £25,000 and it’s only 11am! Lattes all round!

A month later, a payment comes due. You don’t pay. I add this to your capital owed. This actually could be counted as even more profit since this extra capital is all yours to keep; you’ve got an agreed payment schedule with the BigFinInst, and the extra money this person owes is good news – it’ll be extra for you to keep.

Another month goes by, and another and the person still doesn’t pay. Fantastic news! Your profits are going up all the time! Pity about the cash flow, but there’s always someone willing to lend you some more money – especially when you indicate to them that you’ve got a really profitable loan which is due to make more money than the normal loan from a BigFinInst. Hey, why not sell them a slice of the loan?

Got the idea? Back to BW:

Companies don’t disclose the full details on such loans. Countrywide Financial (CFC) earned at least $561.7 million on option ARMs in 2007. It was one of the few bright spots for the lender last year, which reported an overall loss of $704 million. WaMu recorded $1.42 billion from such loans during that period.

But those gains at Countrywide and WaMu may soon be wiped out by writedowns. Other types of subprime mortgages already have reset en masse to higher rates, triggering defaults and wreaking havoc on banks’ earnings. At Countrywide and WaMu, option ARMs are only now starting to reset.

Oh-oh.

The resulting situation could be ugly for them judging from the fate of early entrants into the option ARM game, including Downey Financial (DSL) , IndyMac (IMB) , and FirstFed Financial (FED). Frederick Cannon, a bank analyst with Keefe, Bruyette & Woods (KBW) estimates that a third of FirstFed’s Option ARMs now resetting will default this year while similar loans at IndyMac are going bad at a faster rate than other mortgages. Downey began to ease the terms for borrowers in option ARMs last summer. But the troubled debt at the lender jumped nonetheless from 1.53% of assets in June to 4.79% by yearend. IndyMac declined to comment. FirstFed and Downey did not return calls for comment.

If WaMu and Countrywide experience the same sort of problems, they will face significant writedowns and reverse years of gains. “The benefit of hindsight shows that income was clearly overstated,” says KBW’s Cannon. Says a WaMu spokesman: “It’s difficult to project delinquencies, but the credit profile of these loans would not have historically been defined as high-risk.” Countrywide said its financials conform to accounting standards.

Oh, sure, they conform – you’re allowed to book that “income” as money, even though none of it has come through the door yet.

The thing that is different about this finance problem from the shares bust of 2000-2001 is that that one was only that – shares. It was a stock bubble, purely. In this one, houses and finance are intertwined, and that’s far more toxic, because where in previous recessions you might be able to shelter in one or the other (except, of course, the Lawson-created housing bust of 1987/8/9 – which I took part in, dammit – followed by the global recession of 1990/1), this time it’s taking in both. And that’s really hard to work your way out of.

What’s also interesting is that the Americans’ strict religion about money is preventing them from acting in the most effective way – the one the Swedes took. (Yes, BusinessWeek again.)

When the bust hit, it hit hard. Gross domestic product fell 6% between 1990 and 1993, prompting a tide of bankruptcies that threatened to swamp the financial system. The central bank governor, Bengt Dennis, was dubbed “Dennis the Menace” after he briefly jacked up interest rates on loans to banks to 500% in an effort to halt speculation against the currency in 1992. “Everything was so black you almost didn’t dare open the paper,” recalls Lars H. Thunell, at the time the deputy chief of Nordbanken, Sweden’s No. 2 bank, and now CEO of the World Bank’s International Finance Corp. in Washington.

The government’s response: A $14billion restructuring fund and a takeover of Nordbanken, the hardest-hit player. The bank’s bad loans were sold off at a steep discount to a new government-backed company called Securum, which was headed by Thunell. At one point the operation owned 2,000 buildings, controlled industrial companies such as chemical giant Nobel Industries, and employed 30,000 people. “The Swedes were smart, they moved quickly, and they knew how to organize the rescue,” says John R. Macey, deputy dean of Yale Law School, who has written about the Swedish approach.

BSE in the banking system: Bear Sterns is stuffed. Who’s next?

A while back I blogged on how BusinessWeek had done a fantastic job getting inside how Bear Sterns had, if we’re being generous, been overconfident about the reselling of sub-prime mortgages and similar stuff.

Let’s remind ourselves how it worked: they had things called names like “Bear Stearns High-Grade Structured Credit Strategies fund” and “High-Grade Structured Credit Strategies Enhanced Leverage fund”. Sounds copper-bottomed, right? In fact, these were funds which borrowed against any assets they had on the most astronomic scale:

[Ralph] Cioffi [who set up and ran the funds] also used a type of short-term debt to borrow billions more; in some cases he managed to buy $60 worth of securities for every $1 of investors’ money. But he made a critical trade-off: For lower interest rates, he gave lenders the right to demand immediate repayment.

Now, Bear Sterns – after weeks of rumour – has had to get emergency funding after saying that its financial position had “deteriorated sharply” in the past 24 hours. Only the past 24?

But here’s the thing: all the reselling and leveraging of debt, in some cases producing up to $60 of “debt” from $1 of assets (and those assets not always too certain – how much is a house worth? Only what you can get someone to pay for it), was a way of feeding back into the system things that were already contaminated.

Which reminds me of the story that I covered in great detail in the late 1990s and early 2000s: BSE. Cows, fed ground-up cows. Any trace of disease (especially a brain-rotting one, which may have been endemic) gets transmitted throughout the (thundering) herd.

BSE turned out to be very, very hard indeed to eradicate – I’m not sure it’s gone away even now. (I’ll check the stats in a bit.) I think that the financial BSE in the system now is going to prove just as hard to get rid of; only when you flush all the crap that the banks have been feeding each other out of the system can you be sure it’s OK. And how long exactly will that take?

At the Guardian: help! The internet only has 30 years to live!

Oh no! The net has just 30 years to live!

Charles Arthur: In 30 years’ time, the internet will stop working. Or at least, the bits of it that run on Unix

In other words, if the words “Unix epoch” and “2038 bug” leave you cold, then you could try looking at what I’ve written…

So let’s quickly examine another doomsday lurking in our not-so-distant future: that in 30 years’ time, the internet will stop working. Or at least, the bits of it that run on Unix. (For once, this is a tale where Microsoft comes out looking well-prepared.)

This is down to what’s being called the “2038 bug”. It arises because Unix-based systems store the time as a signed 32-bit integer, in seconds, from midnight on January 1 1970. And the latest time that can be represented in that format, by the Posix standard, is 3.14am on January 19, 2038. (It’s a Tuesday. Better make sure your desk is clean on the Monday night.)

After that? “Times beyond this moment will ‘wrap around’ and be represented internally as a negative number, and cause programs to fail, since they will see these times not as being in 2038 but rather in 1901″, to quote Wikipedia.

Early examples of problems have surfaced. The AOLserver web server software tries to ensure that database requests will never time out, not by assigning “0” to the timeout (which would have been sensible, programatically speaking) but by setting the timeout 1bn seconds (about 31 years) in the future. It crashed on May 13 2006.

Worried yet?

Props to John Humphrys on the deaf issue

Doing the Tech Weekly podcast is a lot of fun; in the latest one I’ve gotten to be the interviewer of Kent Ertegrul, chief executive of Phorm, which is being hated (actively) up and down teh interwebs. So I pushed him as hard as I could on the facts of it. “Robust,” they called it in the studio.

Yet it’s still miles away from the live cut-and-thrust that John Humphrys manages seemingly so effortlessly, yet knife-sharp accurately, on the Today programme. He sees through the smokescreens.

Of course we’ve all been discussing the “choosing a deaf child” issue this week; to recap, the deaf parents of a deaf child are looking to IVF, and they want to choose to have a deaf child. The law, as it’s going to be (and already is? It’s not clear) says they can’t choose that; they can only “choose” a hearing child, or at least one which according to PIGD (pre-implantation genetic diagnosis) hasn’t got any major gene defects, which includes “genes for deafness”. (Would that be single or double? If they’re just a carrier like me, does that mean rejection? I can’t find a useful description of quite what PIGD tests for. It tooks weeks for our genetic test to come back. Do they wait that long with PIGD? How many genes do they test for?)

My wife has written rather more eloquently than I on this matter already on her blog:

I am loath to criticise them – especially given the hammering they have taken on the radio today already – but I suspect that the couple’s real resistance comes from fear; fear that they will not be able to communicate or bond with a hearing child as they have with their child who is “like them”.

However it’s only when you read the transcript with Humphries interviewing Mr Tomato Lichy (“that’s not a name, it’s a side dish” snarled someone on Comment Is Free) that you see how good Humphrys is at not getting thrown off the scent.

…JH – I don’t think anyone would say, no sensible person would say that deaf people are inferior to hearing people, but the fact is that they have a disability, a pretty serious disability – they cannot hear. Surely you have no right to impose, effectively to impose that disability on another child. The child does not belong to you. The child is a person in its own right.

TL – You say it’s a serious disability. I disagree with that. We have an interpreter here for you to be able to understand me. If I go to a deaf club or a deaf academic conference with thousands of deaf people, you would be lost; you would be the one with the disability because you can’t use sign language.

JH – Isn’t that a slightly perverse point? I, after all, don’t need somebody to sign for me. I can hear the music of Beethoven or listen to a play be Shakespeare or pop music or whatever it happens to be. You can’t, so therefore you have a disability. Surely that’s simply a fact?

TL – Well I feel sorry for you – you haven’t acquired sign language, you can’t appreciate deaf plays, you can’t appreciate deaf poetry, you can’t appreciate the joy of being part of the deaf community, the jokes that go on. I feel sorry for you.

JH – But I could learn sign language if I set myself to it. At least I assume that I could. You can’t learn to hear.

[Perfect riposte. And pause for a minute: could you have come up with that riposte, in real time, to that challenge? That's what makes him so good.]

TL – Yes. But now it’s recognised that deaf people do have a culture, you know, a community of their own. You know, in the old days people used to say that, you know, deaf people were certainly inferior to hearing people, but recently Baroness Deech said, you know, in Parliament, “I hope that your Lordships will be pleased that the deliberate choice of an embryo that is, for example, likely to be deaf, will be prevented by clause 14.” So in saying that, the Government is saying quite clearly that deaf people are inferior to hearing people and that is should be that deaf people should never have been born. She’s basically saying that she want deaf people to be stopped from existing.

JH – Well, no, she isn’t saying that, is she? What she’s saying is that deaf people have the right to exist because they have been born. It would be utterly absurd to suggest otherwise. But there is a great difference between that and making a positive selection so that somebody is born who is not able to hear, as opposed to somebody who is able to hear.

..There’s more of it. The crux is that point of deciding for someone else that they won’t hear. That’s where it parts company with sense, in my view. It’s ever so slightly scary: a sort of eugenics gone bad.

Whether PIGD makes sense – ah, now, that’s a whole different ballgame. That takes us towards Gattaca, and that sort of strange, “choice” world. It happens already – post-partum, in countries which deem girls to be less valuable than boys, so that strangely fewer girls survive their early years than boys.

Shorthand, obsolete? I think not

There’s a site called Obsolete Skills which seems to have sprung, fully-formed, from Robert Scoble’s brain in which various people have gotten together to ding various “obsolete” skills. Well, duh.

Among them they’ve put shorthand. Its comments:

Field: Office/Communication
Went Obsolete: Mid-1980s; probably late 1980s to mid-1990s on developing countries
Made Obsolete By: Inexpensive recording devices
Knowledge Assumed: Special training.
When useful: This is a useful skill that is, unfortunately, on the brink of extinction.

It does allow for a few situations where it might be useful to have shorthand:

in courts and legislatures all over the world, shorthand writers log the proceedings instead of mechanized tachygraphs.

(Because it means you can get it transcribed a hell of a lot faster.)

Journalists continue to use shorthand for taking notes, especially in places where recording devices are not allowed, such as courtrooms. However, many journalists today do not learn a formal shorthand style but rather use one of their own devising. Such homemade systems often use standard alphanumeric characters but incorporate techniques such as using abbreviations or leaving out letters.

Example: “Jn sd h wld brg th doc 2 m 2dy” for “John said he would bring the document to me today.”

I don’t think any sensible journalist would do that. (Would they?) Not one who could write Teeline (or, better, Pitmans). The fact is that if you need to turn a story around quickly, recording it is a guarantee that you’ll have the absolutely word-perfect quote… half an hour after the person with shorthand, who’ll have the quotes too, but is able to access them directly, and can see where the quotes fit into the flow of the story more easily. The person with a recorder has to get to the place where the person was speaking, and transcribe it, and check it’s right. It’s hellish. I’ve tried it enough times, but never got close to feeling that using a recording device is a real, real pain.

Shorthand still rules – it’s fast, accurate, and you can get the quotes out faster. People are envious of my shorthand. It’s a valuable skill in this game.

Plus it has the advantage that you can doodle “what a complete waste of time this interview is” or “eggs milk flour butter” and the person you’re talking to won’t have the least idea…

Oh, yeah, and they also add journalism into their “obsolete skills” list. Uh-huh. The joke’s kind of over by then.

Bonus link: Angry Journalist, for the ventings of journalists who are, um, angry. I have to say, I’m not, but it’s scary reading through the many comments in there.