Ivory Terminal

 There is a huge debate (at least being portrayed by the media) about what to do with Credit Default Swaps (CDSs), the pesky financial instruments that made AIG and others impotent, and have forced the US to put insolvent firms through anything but conventional bankruptcy. Since the US has put themselves on the hook to these firms, and to the firms that would stand to lose in swap payouts, they are taking the far cheaper bailout route.

Lately, many are calling for the banning of CDSs, and just as many are identifying them as a vital hedging tool. Since most people never look under the first layer of the financial onion, they come off as a tool of the insincere. Like short selling, it is “not nice” to bet on failure, so their purpose is not understood. However, the complete removal of CDS offerings would make investors much less likely to take on large corporate debt positions, hurting the bond and loan industries. In a sense, the existence of CDSs allows capital markets to be more “open”, a politically and economically important part of our current national agenda.

It seems to me that the obvious solution is also a relatively simple one. Make CDSs incredibly boring. Savings account boring. Regulate the market until nothing exciting can be done. Require dealers to be licensed, dictate the size of the market, and in one way or another require a debt position to be held to hold a swap. CDSs are much more like insurance than options or short selling shares. Equity shares (long or short) and options are generally instruments with evenly dispersed payouts. CDSs are betting on a (usually) improbable event, and that low probability is matched with a massive payout.

When limited to covering a risky investment, a CDS switches from an aggressive bet to a conventional tool. This also limits the size of the market, eliminating situations where is far more profitable for investors to have a firm go under. Instead of attacking what is difficult to understand, spend some time looking at the incentives these instruments offer, and build their future in a way that limits morally hazardous opportunities.

                With the recent attention on the economy, it is difficult to go more than a couple of days without seeing articles giving tips to job seekers.  My favorite articles are always the ones with tips from recruiters talking about their pet peeves, like this one found on the front page of Yahoo! today (I consider Yahoo!’s front page to be a general barometer of what the “average” Internet user cares about).  After spending more time than I would have liked over a lifetime dealing with HR as both a candidate and as someone attempting to hire, I think it is high time that we start seeing some articles about how to make the process better from within.  Here are some of my suggestions:

1.  Stop lying about open positions:  In an attempt to prevent sub-optimal hiring from within (a valid concern), many firms have instituted policies that require openings to be advertised prior to promoting or moving an internal candidate.  This practice has so many problems that it deserves its own list:

a.  This practice floods the market with bogus job listings.  “Entry programmer, salary $12/hr.  Would prefer Ph.D. in Anthropology, fluency in dead languages, and ability to carry up to 250lbs.  Must provide own transportation and computer”.

b.  The process wastes everyone’s time.  The hiring manager wants a person right now, and knows who it is.  An interview process can take weeks.  The time of interviewees is also wasted.

c.  The practice makes it more difficult to be promoted from within, which is a huge problem for employees in an economy where they are not getting significant raises or bonuses otherwise.

2.  Recognize job hunters who are and are not fishing with dynamite:  After returning to school and looking for an internship for the summer, I applied for four positions after doing a ton of research.  One was a position at a huge company that several of my peers applied for, and the others were positions at small or unconventional companies that were not even specifically looking for interns.  Because I did my homework, knew about the companies, and knew that I could fill true gaps in their workflows, I was able to physically interview for all four positions.   After meeting them, thanking them, and being told that I would be updated on their hiring process, I only received further uninitiated contact from the firms where I was given an offer.  I view the remaining firms as unorganized and unprofessional not because I was not chosen as the best candidate, but because a verbal agreement was broken by their HR representatives who inconvenienced me by not letting me know that they found a better fit.

Many of my peers applied for dozens or even hundreds of positions, and were hardly able to keep track of them.  Admittedly, this is a turn off described in almost every article, but the important difference is that many of the most qualified candidates do not attempt this type of application.  I feel that if you take the time to apply for a position that you are qualified for (and there cannot be that many), then it is the responsibility of the searching firm to acknowledge your application.  A non-response should only be used as a clear indication that you are not qualified for a position.  This practice could discourage candidates from fishing with dynamite.

3.  Recognize that job applications are time-sensitive:  In one case, I applied for a position, and received a call close to a year later from a hiring manager who was then upset that I was no longer interested in the position.  Qualified candidates are not applying for positions for fun, and there needs to be a relatively short statute of limitations for contact.  Once I left the corporate world for school, I received calls asking if I was looking for full-time work because I was no longer listed at my old company.  Ironically, this was well after I had begun looking for an internship.

4.  People that left a promising career to go to a full-time competitive graduate program likely did not get laid-off:  I am asked if I was laid-off at almost every interview.  Many people do not seem to understand the 9-12 month process of applying to a physical graduate program.  I cannot help but blame the uncompetitive for-profit online degrees for cheapening my academic pursuit.  If you are a recruiter, take five minutes to browse the website of the graduate school on an application.  This can tell you a lot very quickly.

  5.  You are not a detective:  Until you catch a candidate being dishonest, drop the ridiculous attitude.  Odds are, you are not going to break someone talented at lying to you, and you are guaranteed to turn off genuine candidates.  The ones in the middle that are bad at lying will reveal themselves long before the end of the hiring process, so the combative demeanor is not needed.  More than once, I have had to ask HR screeners if I am wasting my time applying based on their attitude when questioning me.  Based on my experience, lying employees will reveal themselves.  When in doubt, give them a simple computer skills test, regardless of the position.  I have been asked extensively about computer skills in almost every interview, regardless of the position.  I have only been on one interview where I was asked to demonstrate them.

 I am not an experienced television viewer. I got my first “very large computer monitor” in 2009. Being an audio freak, I attached my panel to a fairly high-end audio system. Watching the occasional program, I have noticed that many of the commercials omit a very high pitch tone. Thinking that I was just trying to find information in noise, I wrote the frequency off as an artifact of the compression used to make commercials sound louder than the regular programming.

This evening, when I was watching some programming with a couple of friends, I found myself bothered by the frequency, thinking that I had some equipment malfunctioning when the frequency first appeared. No one else seemed to hear any other noise, but I found the signal to be more perceptible than normal.

I decided to take a couple of minutes and use my DAW to compress a couple of signals until they sounded like television commercials to see if I could replicate the results, and I came up empty toned. I created some of the most obnoxious soundscapes in the world and still did not come up with any sustained high frequency tones.

Unable to create the tones as artifacts, I let my paranoia run wild. I am curious if the high frequency tones are used for devices like Nielson boxes to communicate whether or not commercials are being watched. Obviously, there is big money invested in television advertising, and the model will be turned on its head if DVRs are truly impacting television viewing. Months ago, I heard someone talking about Nielson Soundscan, and I am curious is this technology is also being used to measure viewership of some commercials. Coupled with Nielson’s ability to track advanced demographics, a time-coded signal over commercials would give market researchers an amazing amount of information, which could be used to valuate commercial time in the digital world.

Television advertising is still functioning as an old-world industry, and there are many people with a lot to lose if it turns out that quantitative measures show that advertising is ignored or ineffective. With the demographic information and a time code, the data could show who watches which commercials on which shows. If it turns out that desired demographics are tuning out commercials, rates could plummet even though general viewership is good. My worry for the advertising industry is that it will turn out that the demos targeted for advertising ignore the commercials, especially when they embrace DVR technology (for which adoption would likely rise with income). Lower rates would lead to even crappier programming, and a revenue loss that would likely lead to an increasingly hostile stance towards technology and the Internet (which is often blamed for the decline of old-world media). Regardless of why my commercials sound like garbage, advanced tracking will eventually come to pass, likely leading to some serious rate adjustments.