Mutual societies and apocalyptic events


Back at the dawn of time (2006), I wrote a series of posts to record some things I believed in. These were things I believed without being able to prove they were true – naked belief.

I’m happy to say I still hold all these beliefs. Not that I cling to opinions when the facts change – I’m with Keynes on that one. But history has not demonstrated that any of these beliefs are wrong.

In fact, history has started to provide some evidence in favour of some of these beliefs.

Mutual societies

Today news emerged of the Dunfermline Building Society‘s failure as a going concern. I claim this actually reinforces my belief that mutual societies should be some sort of protected species.

What went wrong seems to be the the Dunfermline stopped acting in the long-term interests of its members and started behaving as if it had shareholders. Making aggressive commercial loans and approving risky mortgages is not what a mutual society should be doing (unless it’s a mutual society of capital markets professionals).

So my belief is refined somewhat: mutual societies should be encouraged by (for example) favourable tax legislation but their activities should be constrained by some sort of covenant that members are made aware of when they join.

Apocalyptic internet event

You’re mad! was the usual reaction when I tried to persuade the pezzonovanti at my last company that there was a seismic event waiting to happen in the financial services industry.

Turns out I was right, but I’m not claiming to have predicted the sub-prime crisis. My event was to do with data security and it hasn’t happened yet. But the bots are gathering, and they are being expoited commercially in an ever more sophisticated way.

The datapocalypse is coming. Don’t say I didn’t warn you. There’s more than one black swan.

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