82,891
edits
Employment derivatives: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 13: | Line 13: | ||
Now, thought Barkley: if a single worker has but one unit measure of this risk the firm she works for her has ''thousands''. | Now, thought Barkley: if a single worker has but one unit measure of this risk the firm she works for her has ''thousands''. | ||
A corporation employing tired multitudes to turn its turgid wheels — a good-sized bank, say — is locked in constant struggle with this tide of batty expectation just to stop its [[human capital]] | A corporation employing tired multitudes to turn its turgid wheels — a good-sized bank, say — is locked in constant struggle with this tide of batty expectation just to stop its [[human capital]] washing away. | ||
At fault were the exciting but stupid technology enterprises whose sails the voguish delusion filled. | At fault were the exciting but stupid technology enterprises whose sails the voguish delusion filled. | ||
In times of giddy optimism, stemming this outward tide could cost a bank ''billions'' of dollars. Then, as inflated expectations foundered, the tide would turn. Throngs of good workers would be suddenly available on the cheap. Firms could rebalance by tactical redundancy, but it was expensive and tended to dent morale somewhat. | |||
In times of giddy optimism, stemming this outward tide could cost a bank ''billions'' of dollars. Then, as inflated expectations foundered, the tide would turn. Throngs of good workers would be suddenly available, on the cheap. Firms could rebalance by tactical redundancy, but it was expensive and tended to dent morale somewhat. | |||
In any case, this “employment cost volatility” bore little relation to the bank’s own performance and none at all to its employees’. The bank’s personnel needs had not changed across the cycle. Surely it would be better just to keep the same staff throughout? | In any case, this “employment cost volatility” bore little relation to the bank’s own performance and none at all to its employees’. The bank’s personnel needs had not changed across the cycle. Surely it would be better just to keep the same staff throughout? | ||
| Line 22: | Line 23: | ||
{{drop|H|unter Barkley’s experience}} as an [[interest rate swap]]s trader gave him an idea. ''Why not hedge this volatility?'' | {{drop|H|unter Barkley’s experience}} as an [[interest rate swap]]s trader gave him an idea. ''Why not hedge this volatility?'' | ||
Different sectors were “long” or “short” this crowd madness, which he labelled ''[[π]]'', at different points in the cycle. (“[[Π]]” came from the Greek παράνοια, (''paranoia''). It conveyed the pleasing ideas not just of collective madness but circularity, running on a hamster wheel, | Different sectors were “long” or “short” this crowd madness, which he labelled ''[[π]]'', at different points in the cycle. (“[[Π]]” came from the Greek παράνοια, (''paranoia''). It conveyed the pleasing ideas not just of collective madness but circularity, running on a hamster wheel, Ourboros eating its own tail, and so on — all fundamental properties of the employment relationship.) | ||
At its onset, “[[Trad fi|trad-fi]]” firms are [[Short|''short'']] and potty start-ups [[Long|''long'']] ''[[π]]''. Eventually the lunacy levels off, reality sets in and employment relations [[Mean reversion|revert to the mean]], whereupon the ''[[π]]'' curve flattens and then inverts. | At its onset, “[[Trad fi|trad-fi]]” firms are [[Short|''short'']] and potty start-ups [[Long|''long'']] ''[[π]]''. Eventually the lunacy levels off, reality sets in and employment relations [[Mean reversion|revert to the mean]], whereupon the ''[[π]]'' curve flattens and then inverts. | ||
| Line 30: | Line 31: | ||
In one of those ironies to whose martial cadence our lives keep bitter time, before he could monetise his idea, Barkley was laid off and, shortly afterwards, imprisoned for manipulating [[LIBOR]]. | In one of those ironies to whose martial cadence our lives keep bitter time, before he could monetise his idea, Barkley was laid off and, shortly afterwards, imprisoned for manipulating [[LIBOR]]. | ||
“Employment derivatives” would thus lie fallow | “Employment derivatives” would thus lie fallow while he served out his porridge. But their time would come. | ||
while he served out his porridge. But their time would come. | |||
==== A chance encounter at a bar in West London ==== | ==== A chance encounter at a bar in West London ==== | ||
| Line 79: | Line 79: | ||
An observable, objective measure of “prevailing startup insanity” approximating “''[[π]]”'' was needed. Barkley supplied it. | An observable, objective measure of “prevailing startup insanity” approximating “''[[π]]”'' was needed. Barkley supplied it. | ||
Under the auspices of the British Human Capital Managers’ Association (BHCMA), a committee of fashionable startups would meet each afternoon in a WeWork in Shoreditch and over kombucha martinis to state publicly, in front of a panel of [[venture capitalist]]s, how much they would be prepared to pay an underperforming settlements and reconciliations clerk to join them | Under the auspices of the British Human Capital Managers’ Association (BHCMA), a committee of fashionable startups would meet each afternoon in a WeWork in Shoreditch and over kombucha martinis to state publicly, in front of a panel of [[venture capitalist]]s, how much they would be prepared to pay an underperforming settlements and reconciliations clerk to join them to “drive customer engagement”. They expressed this as a premium or discount to ''[[π]]''', being the equivalent value for the preceding day. The venture capitalists would vote by throwing money — literally, from a stack of bills on the table before them — at the “pitching” start-ups. | ||
The BHCMA would weight the submissions by reference to the volume of cash the venture capitalists | The BHCMA would weight the submissions by reference to the volume of cash the venture capitalists lobbed at each startup, trim the top and bottom estimates, average the remainder and compile and publish the trimmed arithmetic mean rate as the [[London Inter-Employer Basic Offered Rate]]. Quickly “[[PIEBOR]],” as it was known, became the ''de facto'' measure of ''[[π]]'' and was soon factored into the “floating” leg of [[employment rate swap]]s as standard. | ||
==== Credibility spread ==== | ==== Credibility spread ==== | ||