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Is the credit crunch already over?

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The data says that APRA’s restrictions have done their job. Time to let the market run free again.

It’s looking to me like the credit crunch might be about to ease up.

Let’s remember how we got here. Right now, the national property market is in the midst of an orderly and mild consolidation.

And consolidations are expected. The property market moves in cycles, up and down.

Most times that’s driven by dynamics in the cycle itself. Left to it’s own devices, the property market, just like the broader economy, will run hot, then cool and then run hot again.

But that’s the thing. The property market wasn’t left to its own devices. Since 2016, APRA has been getting involved, creating limits, particularly on investor lending. It started with making sure lending to investors wasn’t growing too quickly, and then became about cutting back the pace of Interest Only (IO) lending.

This clamp down on IO lending was across the market, but was particularly focused on investors.

Predictably, as the credit taps were squeezed, price growth began to stall, and over the past year or so, prices actually started to come-off, little by little.

And that’s where we are today.

So obviously if we’re interested in finding out when the market is going to start growing again, then the first question is really, ‘when will APRA back off?’

This is a little hard to predict. One of the things that came out of the Royal Commission was that APRA – who is responsible for regulating the banks – seems to have been a bit asleep at the wheel.

Given the huge list of crimes, misdemeanours and affronts to human decency that emerged from the Royal Commission, you do really have to wonder what APRA were doing.

APRA has been made to look a little silly. But what worries me now is that they might over-compensate – try to play the tough wild west sheriff. And that might mean that conditions remain tougher for longer than they need to.

And the truth of it is that right now, I’m seeing a case for letting up on the restrictions.

Take a look at this chart here from the RBA. It shows what has happened to IO lending since the restrictions came in in 2016.

The orange lines – new lending – is the one to be watching here. As you can see, IO lending pretty much fell off a cliff when the restrictions came in, particularly to investors in the bottom panel there.

But what you see here is the banks very quickly bringing themselves into line.

And after the initial adjustment, things just sort of levelled out – the share of new lending has remained fairly constant in recent months.

If it remains constant, the share of outstanding lending – the blue line – will keep trending lower, and until it re-joins the orange line.

And the structural change in the market that APRA was looking to create, will be complete.

Mission accomplished.

The thing I would note is that once this transition has been made, then the normal cyclical dynamics should start to reassert themselves.

That is, even if the share of new lending remains at around 30%, after a year, that will be the new reality we’re working with – so our annual growth rates (which compare this month with the same month 12 months ago), there won’t be any impact left in there at all.

And so that should mean that we should see price growth should realign with the cyclical trend.

It is possible that these restrictions have caused the cycle to turn. There’s a good chance of that. So I don’t think we’ll see positive growth numbers this year or in the first half of next, but after that, I’d be looking for things to start moving again.

But I’d also be saying to APRA, since you’ve caused the cycle to turn, and you have done what you set out to do with IO lending, maybe it’s time to cut investors some slack.

We certainly don’t need any more restrictions. We don’t need no sheriff out there shooting from the hip.

Here’s hoping cool heads will prevail.

No BS Friday: What your underpants say about you

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Budgeting isn’t about spending as little as possible. It’s about valuing things in the right way.

What do your underpants say about you?

“At some point we must all stand naked before the Lord and explain our tastes in personal grooming.” – Louis CK

To me, they say a lot. Show me the underpants and I will show you the man.

(I say ‘man’, because I do know a lot less about women’s underwear. Although, when I was seventeen I did teach myself to undo a bra with two fingers in 0.4 seconds… in the dark… hanging upside down… while my friends attacked me with wiffle bats.)

Your underpants say a lot about who you are and what your values are.

I reckon there’s two dominant underpant philosophies.

The first sees it as an area where you can save some money. Almost no one ever sees your underwear, so why invest much in it? Buy a twelve pack of jocks from Coles, and wear them til the arse literally falls out and they dissolve in a whiff of smoke and mushroom pores.

Bargain.

The other school of thought says that underpants are literally the most intimate thing I own. No one ever sees them, but they literally house the most precious inches of me. I need a gilded treasure chest, not the equivalent of a weather eaten cardboard box.

I will invest in my underpants and invest in myself. I will give myself that gift because I am worth it.

That’s how I think about it. What about you?

Now you might say, well, that’s all well and good for you Jon. Easy for you to say as a cashed-up millionaire. What about us poor plebs, looking to save a few dollars where ever we can?

And look, I get that.

But this is the key thing to remember about budgeting. Budgeting is not about spending as little as possible. A lot of people think that’s what it is, but it’s not.

Budgeting is about assigning the appropriate value to everything in your life, and bringing your spending into alignment with that.

To do budgeting well, the first thing to do is to track where you are spending your money. The next question you ask then is, does my spending reflect my values?

So you might notice that you’re spending $180 a week Mars Bars and Tim Tams. You could then look at that and say, “You know what, I don’t I really value Mars Bars that much. Not when I’m only spending $30 a week on insulin.”

And so you spend less on the things you don’t really value.

But the flip side of this, if we’re honest, is looking at the areas where you are under-spending. So you might say, ‘I really value health and fitness, but I’m only spending an average of $2 a week on sport and recreation. I need to increase my spending there.”

If you just did a budget and you didn’t increase your spending on anything, then you did it wrong.

And so this is how I think about underpants. Something so important should receive a decent allocation come budget night.

Now you might say, but hang on Jon, that’s just your values. I just don’t value underpants as much as you do.

And maybe that’s true. But my bet is that most people who say that have bought into this idea that money spent on yourself is wasted money. That money is scarce, and suffering is righteous.

They have never let themselves buy themselves gifts that weren’t about impressing the neighbours – that weren’t about changing the story they were telling.
They have never bought themselves gifts simply because their inner child just enjoyed the feeling of being nurturingly held by a high cotton count breathable bamboo blend.

And they have never known the elevating affect on the psyche that comes with a daily ritual that involves pulling a loving, slightly extravagant gift out of the underwear draw – a special something from you to you.

Something that says, I value you. I want you to have nice things.

Self-love. Acceptance. Pride and self-worth. Abundance. All these things are found in my underwear draw.

And I’m here to tell you that they could be in yours.

Go on. You’re worth it.

Trump to blame for bad sex?

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Trump is making people crazy. Literally. But I’m not sure it’s actually Trump’s fault.

So it seems that Trump is stopping people having sex.

There’s a lot of ink been wasted on how crazy Trump is. Not it seems he’s making other people crazy too. From Politico:

CNN before love-making is not his idea of a turn-on.

But she can hardly turn it off—engrossed as she is in the latest unnerving gyrations of Washington.

Who else to blame but Donald Trump? A president who excites hot feelings in many quarters has cooled them considerably in the bedroom of a Philadelphia couple, who sought counselling in part because the agitated state of American politics was causing strain in their marriage.

The couple’s story was relayed to POLITICO by their therapist on condition of the couple’s anonymity. But their travails, according to national surveys and interviews with mental health professionals, are not as anomalous as one might suppose. Even when symptoms are not sexual in nature, there is abundant evidence that Trump and his daily uproars are galloping into the inner life of millions of Americans.

During normal times, therapists say, their sessions deal with familiar themes: relationships, self-esteem, everyday coping. Current events don’t usually invade. But numerous counselors said Trump and his convulsive effect on America’s national conversation are giving politics a prominence on the psychologist’s couch not seen since the months after 9/11—another moment in which events were frightening in a way that had widespread emotional consequences.

Empirical data bolster the anecdotal reports from practitioners. The American Psychiatric Association in a May survey found that 39 percent of people said their anxiety level had risen over the previous year—and 56 percent were either “extremely anxious” or “somewhat anxious about “the impact of politics on daily life.” A 2017 study found two-thirds of Americans’ see the nation’s future as a “very or somewhat significant source of stress.”

… Jennifer Panning, a psychologist from Evanston, Illinois, calls the phenomenon “Trump Anxiety Disorder.” She wrote a chapter on it in a collection by mental health experts called “The Dangerous Case of Donald Trump.” In an interview, she said the disorder is marked by such symptoms as “increased worry, obsessive thought patterns, muscle tension and obsessive preoccupation with the news.”

Yeah, nah, I’m not buying it.

I mean sure. I think people probably do genuinely think that Donald Trump is screwing up the entire world, and that makes them incredibly worried.

Poor buggers.

But I’m not pinning this on Trump.

I’m pinning it on the media.

I don’t think people realise just how quickly the media landscape has changed.

The Fairfax and Murdoch dailies have been the cornerstones of Australian media for generations, but these days they are hanging on for dear life. The internet knocked their business models right out from under them.

But ‘online’ was just phase one.

Phase two was the creation of a ‘thought bubble’ industry. Partly driven by economics, partly driven by social media algorithms that feed you more of what you like, almost all of us now live in thought bubbles – where we’re soaked in the things we agree with already, and shielded from the things we don’t.

And since we believe ourselves to be fair and balanced, we didn’t notice our media institutions pivoting to particular niches. You didn’t think you were part of a market, you just stopped reading ‘The Age’ because ‘The Australian’ just had a better grip on the issues, and more columnists you liked.

Or you didn’t realise you were part of the push by The Guardian to eat into the progressive fringe of The Age’s turf. You were just relieved to finally see a paper in Australia ‘tell it like it is.’

And so in America, just like in Australia, people live in self-reinforcing thought bubbles. As a result half of Americans think Trump is doing a good job, because that’s what they see in their media – because they believe it already.

The other half think Trump is a monster, because their media tells them he’s a monster… again, because they believe it already.

I don’t know what the actual truth is. Right now, it doesn’t matter.

All that matters right now is that people’s hunger for the shock and horror of Trump is being served with stories of how shocking and horrible Trump is, and as a result, people are feeling shocked and horrified…

… to the point of dysfunction.

These are very strange days. But right now, the health of your mindset depends on this:

Don’t let your thought bubble drive you crazy.

See the game for what it is. Protect yourself. Inoculate yourself.

And if you won’t do it in the name of success and happiness…

… do it for your sex life.

Where Will ‘Boom 2.0’ Drive Property Prices?

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Nobody saw this boom coming, but its big news for property.

The mainstream media is surprisingly quiet about it, but here’s a secret:

The mining boom is back on.

I know, right? I would have thought this would be front-page news. Perhaps they’re still feeling silly about pinning all their hopes on a ‘century-long’ boom that only ended up lasting 5 years.

But the truth of it is, commodities are booming again, and Australia has suddenly found itself with an unexpected windfall.

Here’s a few charts so you can see what I mean:

First up, export volumes and values are cruising on to record highs, with projections for the coming two years looking bumper:

And this lift is broadly based across our commodity exports. First there’s iron ore, where prices are coming back in a serious way.

Then there’s coal prices, where both coking and thermal coal prices are back at record levels:

At the same time, Australian LNG exports are going absolutely gang-busters:

That LNG is one to watch. There’s ample capacity now around the world right now, but many analysts reckon there’s a massive shortage looming in the market, which will drive prices through the roof:

Part of the reason we’ve been blindsided by this is because all eyes were on China. But China is only part of the story.

In the case of coal for example, the big story is really India, and surging demand there:

Now I’m not saying the mining boom is playing out again, and it’s time to go and buy property in a regional mining town like it was 2010 all over again.

But this does have real implications for the Australian economy. It’s going to be a major lift.

And not least of all through the channel of the public purse, where government receipts have had an unexpected boost, and the budget is surprisingly rushing back towards surplus.

From the AFR:

The federal government could return the budget to balance this financial year, 12 months earlier than forecast, but that would require spending restraint ahead of the federal election, leading budget economist Chris Richardson said.

Finance Minister Mathias Cormann confirmed on Sunday that the budget bottom line for the first two months of this financial year – to the end of August – was already $6.6 billion better than expected.

…The deficit for the 12 months to the end of August was $8.9 billion, well ahead of the $14.5 billion deficit forecast for this financial year in the May budget. The budget forecast a return to balance of $2.2 billion for next year, 2019-20.

The key take-away there is “On track for a surplus… but that would require spending restraint.”

Oh yeah. Politicians are famous for that.

My bet is that with an election round the corner, both parties are going to plough this unexpected surplus straight into the pork-barrel. Whatever you think of that, it’s going to be a boost for the economy in the short term.

I also think this puts a bit of safety net under house prices.

House prices are under pressure right now, and it seems that we’re in the process of an ‘orderly’ consolidation.

But if something were to happen, which it does from time to time, then there is a small chance that this consolidation could get “messy”.

But if that were to happen, then we could take comfort from the fact that the government will have something of a war-chest to stop things getting too messy.

No government has ever been shy about throwing money at the housing sector – whether its first home owner grants or stamp duty concessions or whatever is flavour of the day.

So any way you cut it, the resurgent mining boom is a positive for property.

Here comes the cavalry.

No BS Friday: Ever Wanted To Jump Off A Skyscraper? (Me Too!)

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Sometimes our mind splits into cross purposes. The results get pretty wacky…

Have you ever felt the drive to do something totally reckless?

Like, have you ever found yourself standing on a cliff edge or at the top of a tall building, hearing a voice inside you say, “Go on, jump.” Do you find yourself fantasising about what it would feel like to step out into air, feel the wind on your skin, the split seconds just before the impact splits your skull?

And I’m not talking about suicidal ideation here. That’s a completely different thing.

I’m talking about something that’s completely location-dependent. The thought has possibly never crossed your mind before, but then once you’re at the cliff’s edge, it’s right there – a seductive, reckless and almost joyful urge.

You’re not alone. It’s apparently very common.

And the context isn’t always so dramatic. It could be about saying something stupid, keeping a secret, throwing tea on someone… anything you know you really shouldn’t do.

There was an episode of the old ‘Spin City’ where the mayor is going to meet the Governor. He says to Michael J Fox’s character,

“But what if I punch her in the face?”

“What? Why would you do that?”

“I don’t know! I say to myself, ‘don’t punch her in the face’, but then I just start obsessing on it. ‘Don’t punch her in the face. Don’t punch her in the face. I go crazy with it.”

(He ends up punching her in the face.)

Or I had a friend, a keen footballer, who had a new-born baby. He noticed one day that wrapped up in its swaddle, the baby felt just like a football. So he imagined drop-kicking it through the uprights. Wouldn’t that be silly?

It was a joke at first, but he surprised himself with how vivid the image was – how clearly he felt it in his own body.

He says to himself, “Oh my god, don’t do that.” But then every time he picks the baby up, the thought comes, the feeling comes. He feels horrified.

He stops trusting himself.

And this is another common feature of this phenomenon. You feel split in two – in your conscious mind you know it would be terrible thing to do to jump over the cliff or punch the mayor in the face. But, the feeling seems to come from another part of you – a part of you that doesn’t share your outlook on right and wrong, cause and effect.

(Who’s got their hands on the steering wheel here?)

It can be a strange and terrifying experience. But as I was saying, it’s actually very common.

In psychology the phenomenon is called ‘The imp of the perverse.’

The reason it has such a flamboyant title and isn’t called something like ‘regulatory impairment syndrome’ is that it was first articulated in the west by the poet Edgar Allan Poe in one of his short stories: The Imp of the Perverse.

In this piece, someone concocts a perfect murder, and inherits the victim’s estate. At first the murderer is incredibly pleased with himself, and proud to have come up with such a fool-proof scheme.

But in time, the thought of the murder starts to haunt him. His first response is to come up with an affirmation: “I am safe”, and he repeats this anytime the memory of the murder occurs to him.

For a long while this works, until one day, for some reason, he adds to it: “I am safe, if I be not fool enough to make an open confession.”

At that point, the thought worm enters his mind, “Don’t make a full confession, don’t make a full confession.”

It eventually drives him mad, until finally he does indeed make a full confession, and is hanged.

Poe says that this is an impulse that every human has and calls it the imp of the perverse – a demon egging you to do exactly the wrong thing.

(Poe was such a ray of sunshine wasn’t he?)

But we now know that this is not a case of demonic possession – it’s just one of the quirks of having a complex and multi-layered mind.

The key to understanding it is remembering that our mind has conscious and automatic processes.

So you walk into a restaurant you’ve never been in and have to choose something to eat off the menu. You weigh up the different options and make a choice. That’s a conscious process.

Everything else in life – like the remaining 95% – is done automatically, based on instinct, learnt behaviours, habit and training. It’s done without ‘thinking’.

Like, say, the habit of having a cigarette after sex. You know how it goes. You finish a beautiful round of lovemaking, then you ask if anyone there has a cigarette, decide if you want menthol or regular, ask the quartet to tone it down a bit so you can ask if anyone has a lighter.

You know how it goes. It’s all just automatic. There’s no thinking involved.

And this is how we work – our automatic systems on autopilot, and our conscious minds getting involved sometimes, but only when they have to.

Most of the time, the two work hand in glove and it all seems to work as one happy, cohesive whole.

Sometimes though, and actually reasonably often, the automatic and conscious processes come into cross-purposes – in to a sort of conflict. The imp of the perverse is one of those situations.

The way I’ve heard it described is that the automatic processes are responsible for ‘calibration’.

So take driving a car. Unless you’re 16, driving the car has probably become automatic. You’re not consciously thinking about gears, you’re not consciously steering. You’re thinking about dinner and singing along to the radio.

It feels like it’s easy because there’s no effort involved, but driving a car is still an incredibly complex task.

And what the automatic mind is doing in the background is constantly checking itself against its objectives.

So maybe the objective is ‘stay between the white lines’. The automatic mind is constantly measuring your performance against this goal: “Am I between the white lines? Am I between the white lines?” and then adjusting your driving accordingly.

It is constantly calibrating.

Most of the time this is a very efficient division of labour. It seems to get a bit weird though when you set it a ‘negative’ goal. Do NOT jump over the cliff. Do NOT punch the mayor. Do NOT kick the baby.

When the automatic mind gets a goal like this, the calibration questions change. Am I not jumping over the cliff? Am I not falling through the air? Is the wind not rushing on my skin?”

By framing the goal in the negative, you become fixated on the exact thing you are trying to avoid.

And what the conscious mind then gets to witness is the automatic mind testing itself against the felt experience of the goal.

And so you watch it imagine (in a felt and very vivid way) stepping over the edge, falling, hitting the ground.

To know whether it is NOT doing these things, it needs to conjure them up in a very vivid and visceral way.

And you then find yourself surprised that the thoughts don’t make you feel more frightened. But that’s because the automatic mind is doing it in a value neutral way. It’s not saying that falling is good or bad. It’s just imagining the outcome so it can calibrate its performance against it.

And because you are almost watching someone else’s dream, it’s surprisingly exhilarating.

But you don’t know all that, so you think that the automatic mind is an imp who wants you to kick babies.

The horror.

But as I said, perfectly natural and very common.

Now that we’re all on the same page with that, I think this has a few interesting implications for the journey of success and self-mastery.

The first is what it says about ‘will’.

In many we ways we can understand will as the conscious mind’s attempts to control the impulses of the automatic mind.

Your habits are urging you to have a cigarette, but consciously you know you shouldn’t. You give the lighter back to the triplets and go out and get some water. You exercise your will power.

However, ‘will’ is the mastery of the 5% over the 95%. (I’m making those numbers up, but you get the point.)

Since your automatic mind is responsible for so much more than your conscious mind (breathing, driving, chewing, most of shopping etc.) it is naturally allocated much more power.

So the conscious mind gets tired quickly. You are dragging a T-Rex around on a chain. Willpower is a limited resource.

The other implication here is that it helps us understand the power of positive versus negative affirmations and goals.

So if you say to yourself, “I will be rich”, then 100% of you becomes focused on the task.

If, however, you say, “I will not be poor”, then 5% of you is focused on making money, while the other 95% of you starts fantasising about what it would be like to be poor.

“Am I wearing rags? Am I eating dog-food? Am I performing show-tunes in a cast with other 19th Century English orphans?”

Your focus becomes split, but not in an even way. In a massively unbalanced way. Like 95% of you has their eye completely off the ball!

If you set yourself negative goals, if you work with negative affirmations, how can you possibly hope to succeed?

There is great power in the body and in the automatic mind. Self-mastery involves making sure that the conscious and the automatic minds are in alignment.

Then the magic happens.

Becoming fully conscious – aware of our conscious mind – that’s only the first step. We have to become aware of our automatic mind as well.

Then we are on the road to self-mastery.

Bill Gates: “The economy is bullsh!t. Buy property.”

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The penny has dropped for Bill Gates. The economy is not real. Now what does that mean for property?

Bill Gates is going into statesman mode.

More and more I’m seeing him out there having a ramble about economics or philosophy or politics or whatever.

And some of it’s not actually bad.

Like this piece I stumbled on the other day, where he talking about the rise of the intangible economy.

As he remembers, when he first tried to explain Microsoft’s business model to investors, they didn’t get it. They’d never seen anything like it. It was a company built entirely on intellectual capital – on ideas.

That’s literally all they had.

Fast forward twenty years, and this has become the foundation of the global economy. It’s a big change in a very short time.

By the second semester of my freshman year at Harvard, I had started going to classes I wasn’t signed up for, and had pretty much stopped going to any of the classes I was signed up for—except for an introduction to economics class called “Ec 10.” I was fascinated by the subject, and the professor was excellent. One of the first things he taught us was the supply and demand diagram. At the time I was in college (which was longer ago than I like to admit), this was basically how the global economy worked:

… The second assumption this chart makes is that the total cost of production increases as supply increases. Imagine Ford releasing a new model of car. The first car costs a bit more to create, because you have to spend money designing and testing it. But each vehicle after that requires a certain amount of materials and labor. The tenth car you build costs the same to make as the 1000th car. The same is true for the other things that dominated the world’s economy for most of the 20th century, including agricultural products and property.

Software doesn’t work like this. Microsoft might spend a lot of money to develop the first unit of a new program, but every unit after that is virtually free to produce. Unlike the goods that powered our economy in the past, software is an intangible asset. And software isn’t the only example: data, insurance, e-books, even movies work in similar ways.

The portion of the world's economy that doesn't fit the old model just keeps getting larger. That has major implications for everything from tax law to economic policy to which cities thrive and which cities fall behind, but in general, the rules that govern the economy haven’t kept up. This is one of the biggest trends in the global economy that isn’t getting enough attention.

I’ve made this point before. The current global economy is a fantasy-land. More and more it lives in abstract space – in our heads.

It’s not real. The money driving it is not real. The rules and laws governing it are not real.

We are practically little bots running around in organic computer simulation.

And for me, this is why I take such an interest in ‘real’ estate. Like, it is literally real.

And as the ‘intangible’ economy expands, the ‘real’ economy becomes relatively more scarce, and therefore, more valuable.

The price goes up.

And everyone talks about the bubbles in the property markets – like somehow pretty much every nation on earth happened to find themselves in a property bubble at the same time.

What a co-inky-dink.

They miss the root and common cause. The empire of fantasyland is expanding.

This, more than anything, is driving the long run explosion in property prices.

And it’s only running in one direction from here.

NO B.S.FRIDAY: How to be a master of complexity

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If you don’t realise this about yourself, the growth journey could just be very frustrating.

How complex are you?

You know, in the scheme of things…

Like, a clock is complex. There’s probably a couple of hundred moving parts, some electronic circuitry, a battery that stores power and that slowly releases it at just the right rate.

Clocks are fairly complex.

But they ain’t got nothing on you babe.

What else? Computers are fairly complex, but still, humans can build computers. They can’t build other humans yet (except in the old-fashioned way).

And then even consider other organisms. Plants, insects, beavers, pelicans, bonobo monkeys… even bee hives and ant colonies.

All doing some pretty complex crazy stuff, but then hey, you’re doing all that stuff too AND you’re reading a bunch of scribbles on your phone, translating it into a voice in your head, and using the sound that voice makes to discern meaning.

Titty-sprinkles.

You are really about as complex as it gets.

Now if that’s the case, how hard is it to ‘fix’ you?

Now I don’t like the word ‘fix’ because it implies ‘broken’. And if you’re not hitting your life goals, if you haven’t build a powerful abundance mindset that’s making your life a ticker-tape parade of dreams and yummy things, there’s nothing wrong with that. There’s nothing ‘broken’ about that.

It’s the journey we all have to take. In some ways, I wonder if life is set up just so we can take that journey, as a way of learning how weird and complex we are, and how wonderful and strange the universe is.

So there’s no ‘broken’.

But I’ll use broken as a metaphor because we don’t tend to care about the performance of our stuff unless it is actually broken.

“My watch is great, but I still wonder if it is really actualising its full potential. It seems happy, but is it ‘really’ happy?”

No, we only engage with our watch’s performance if it just not doing what it is supposed to do – if it’s broken.

Ok, so let’s imagine our watch – a relatively complex thing – is broken. How do we fix it? Well, we try and pull it apart, isolate the problem, and sort it out.

What you would find though, when you did that, is that many pieces of the watch are interconnected. You can’t get to the gears unless you remove the battery. You can’t remove the gears until you de-tension the springs. You can’t de-tension the springs until you get the little lady-bird off the bike.

(Yes, that is totally how watches work.)

The defining feature of complexity is inter-connection.

If its parts aren’t inter-connected, then it’s just not a complex thing.

Ok, now let’s talk about you again. As I said, you are one of the most complex creations that has ever existed. (No I mean it. You’re special).

If that’s the case, how many of your parts are inter-connected?

Like, all of them?

Your hormones respond to stimuli, travel around your blood stream, give signals to your organs who then turn stuff into other stuff. And there are literally like thousands of lady-birds working the pulleys of your muscles.

And now how complex is your psyche?

Like, totally?

You drive is connected to your self-belief. Your self-belief is connected to your self-worth. Your self-worth is connected to the imprinting you received from your parents as a baby. Your imprinting is connected to your knee bone, and praise the name of the lord.

Now if that’s true, if your psyche is massively inter-connected, how tricky is it to ‘fix’ yourself. (Again, not the right word, but you see where I’m going.)

You can’t work on any one thing in isolation. You can’t just go, I think I need to work on my drive. You drive is connected to a hundred other things, embedded in the complex web of your psyche, and will manifest in different ways depending on what’s going on in your life.

It’s not a gear you can just pull out and polish.

The reason I’m saying this is people can often get frustrated with themselves.

“I’ve been working on my abundance mentality for 18 months now, and I’m just not getting anywhere.”

But sometimes it is hard to know. To get to you abundance mentality, you probably had to cut through a dozen different beliefs about yourself and how the world works.

Each of these will need to be brought into alignment, until finally the target of your work itself can be brought into alignment.

It’s just the nature of working on complex things.

So my advice is this: keep pushing, keep going. Once you know what you what you want to do – the areas of your life where you would like to grow and mature – just hold it in your mind and keep going.

And remember it’s probably not going to be a linear journey. You’ll have to fiddle with a dozen different gears before you get the one you want.

But stay focused. Just hold it in your mind, and do the work that presents itself to you – even if you don’t get what the connection is. Just keep working.

There is a deeper intelligence at play – the intelligence of complexity.

You’ll create the change you want eventually. It will happen. Just keep going.

Because no one said being complex was easy.

Elon Musk pulls a Trump, goes to prison.

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Elon Musk’s brain fart provides some interesting insights into the challenges of leadership.

I don’t know if you’ve been following the fortunes of the charismatic lead vocalist for Tesla, Elon Musk.

The SEC has just forced him to resign from being Tesla’s chairman for three years, but is allowing him to stay on as CEO… for now.

It’s all part of a settlement, and there’s still a chance he could do some prison time for fraud.

What did he do wrong? This tweet:

That is, he was saying there was a firm offer on the table to buy Tesla at $420 a share.

That’s some big news for a public company.

Only problem was, it wasn’t true. There was no firm offer on the table. It wasn’t even clear if he was actually in talks with anyone. He later reckoned that he was talking to some oil money dudes from Saudi Arabia, but the SEC reckons that phone call only lasted 30 mins, and you really need to have something on paper before you go announcing anything to the market anyway.

The SEC also reckon that Musk just made the price of $420 up. Musk said that he applied the usual 20% premium on current market rates to get to $419, and then just rounded it up a dollar.

The SEC reckons it was an allusion to 4:20 Cannabis Culture (Musk smoked a joint on a recent podcast), and was mostly aimed at amusing his rock-star girlfriend.

(Such a bad boy billionaire).

Anyway, in sum, they reckon, it amounts to making false and misleading statements and market manipulation. Both are punishable with jail time.

We’ll see. The thing I find interesting about this is the double standard that seems to be applied here.

I mean, take Donald Trump. He pulls this kind of business all the time. He’s famous for dropping bombs all over Twitter all the time.

He called the North Korean president, and a potential nuclear enemy, “little rocket man”.

Twitter is made for mouthing off whatever is on your mind. That is literally what it’s designed for. It’s not the place for prosaic, “official” communications.

But then Trump did blur that line. If you wanted to keep up to speed with the POTUS, you needed to follow him on social media.

And Musk must have known it would have a huge impact on Tesla’s share price. He must have known that, which is why it was so monumentally stupid. It really looks like he was high when he wrote it.

You get the sense that Trump (who has never had a drink in his life) is pretty measured and calculating with his Tweeting.

But the other question with this is, what is Tesla without Musk?

Tesla is an aspirational company. It’s got a lot of promise, even if it isn’t making money yet.

But to get to the point where it starts making money, it needs everyone backing it to hold the faith. To keep believing.

In that sense, Musk is the cheer-leader in chief. He is a compelling and fascinating character. He makes Tesla sexy.

And without him, they could become just another tech company or auto-maker.

As I’ve said before, leadership isn’t entirely technical. In large part, it’s about keeping talented and driven people inspired and motivated.

You’ve got to use whatever tools necessary…

… but maybe not Twitter so much.

Shock! Can your tenants sue you now?

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New “renter’s rights” don’t make sense… until you understand where they’re coming from.

Why are we now so concerned about “renter’s rights” all of a sudden?

In the last month both Victoria and NSW introduced new “reforms” to “protect” renter’s “rights”.

Victoria led the way (as it always does):

Premier Daniel Andrews announced 130 reforms will be introduced into parliament this week…

Every rental home will have to meet basic standards including functioning stoves, heating, deadlocks, gas, electricity and smoke alarms.

Rental bidding will be banned and rent increases will be limited to once a year.

Renters will be given the right to make minor modifications without landlord consent, such as nailing a hook on the wall or installing anchors to stop furniture falling on children.

People will also be able to keep pets with landlords only able to refuse the right of a tenant to have a pet by order of the Victorian Civil and Administrative Tribunal.

The changes will also allow for quicker returns of bonds, which will be capped at four weeks’ rent…

Ummm…. Were there really many rentals out there that didn’t have electricity or functioning stoves? I thought we already had legislation around that… and smoke alarms?

And that pets one… man, that is a doozy. What if my tenant wants to keep a horse in my two bedroom unit? What about Great Dane, which is really just a horse pretending to be a dog?

Have I got no capacity to say, I really don’t think a pet is appropriate? Where do you draw the line?

Anyway, NSW then followed up with a similar bunch of reforms:

NSW renters are set to see the biggest shake up of rental laws in more than two decades.

The major changes will include limiting rental increases for periodic leases to once a year, set fees for breaking a fixed-term lease and no penalties for domestic violence victims who break a lease.

Other changes include introducing minimum standards like basic access to electricity and gas, that buildings are structurally sound, and have adequate natural or artificial lighting and ventilation…

Better Regulation Minister Matt Kean on Thursday introduced long-awaited amendments to the Residential Tenancies Act, labelling them “sweeping reforms for tenants’ rights”.

“Under these common-sense changes, renting families will be able to make minor alterations, such as installing a picture hook to hang their family photos, and will benefit from a new set of minimum standards to ensure properties are in a liveable condition,” Mr Kean said.

Again with the “minor alterations”… what does that even mean?

I mean, everyone is going to have a pretty different definition of ‘minor’. Am I going to get a call from a tenant:

“Hi Jon, just wanted to let you know I made some minor alterations to the walk-in pantry…”

“Oh…?”

“Yeah, I just turned it into a hot-tub and sauna. Nothing major.”

“What? That sounds like a pretty major alteration actually.”

“Oh… Well, you’re probably not going to be happy about the new meth lab then either.”

Seriously though, does the legislation cover every definition of what you could possibly do to a place and what could be considered minor or major? Are we going to tie up the courts deciding if the changes to the light fittings were excessive or reasonable?

Madness.

But that’s all a problem for the legislators.

But I come back to the original question. Where has this come from?

Were there a spate of deaths in rental properties without fire-alarms? Were there thousands of people desperately wanting to put in picture hooks, petitioning the government?

Were there rental properties without electricity?

No. I don’t think so.

Rather, this happened:

The number of rental households has been steadily increasing, and broke 30% nationally at the last census.

At the same time, higher house prices have meant that many wanna-be home-owners are realising that they may be renting for a lot longer than they thought.

In the past, I think people knew that renting didn’t give you the same privileges as owning, but that was ok because you didn’t think you’d be renting for all that long. Just long enough to get your deposit together before you bought.

Now though, as house prices remain out of reach, people realise they’ll be renting for a while, and so find that they do actually care what rights renter’s have, in quite specific detail apparently.

And so put these two together: a growing number of households renting plus a growing interest in renter’s rights – and you’ve got the making of a serious political block.

30% of the population is huge, in political terms.

And so there were votes to be won in playing to the “renter block”.

And that’s exactly what Victoria and NSW have done. This is where this is coming from.

And I’m afraid it probably won’t be the end of it either.

The art of making meaningful change

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Holiday down here in Melbourne today. Something to do with some type of sporting event. Footy grand final they call it, and of course the Victorians get a day off.

Not to worry, it’s only costing the local economy about a Billion dollars.

…But I am still hard at it and there’s no rest for the No B.S.

Let’s get into it

Ok, I want to tell you a tragic story. There’s no happy ending here, but I promise there’s some interesting lessons.

It’s about an American woman I met one time – a personal trainer. This is about her journey from riches to rags… and then more rags I guess. I lost track of her, but it seemed like her fate was sealed.

In her twenties and thirties she had it all. She was young and hot. She had a successful personal training business, a hot boyfriend, and a stylish inner-city apartment. This was the late 90s, but if there had been Instagram she would have had quite a following.

She also had an entrepreneurial streak, and she came up with a weight loss system that she was getting some good results with.

She wanted to take it global. Be the next Jenny Craig or whatever.

But she realised that if she was going to get that kind of reach, her brand needed to be more relatable. Women weren’t going to take weight-loss advice from a woman who had never been bigger than a size 8.

So she decided to be her own proof of concept. The idea was simple. She’d put on a tonne of weight, and then use her own method to shed it all.

In one swoop it would have been both the proof of the pudding and the inspirational back-story she needed – it would have sent her relate-ability factor through the roof.

And so she engaged a film crew to document the whole process for her. She raised investment funding from some rich friends, and gave her self eighteen months – 15 months to do the journey up and down the scales, 3 months in post-production, and then bam. Launch time.

It was all a great idea. Genius in fact. In theory…

Only it didn’t work out that way.

Putting on weight was easy. This was New York in the 90s. There was no shortage of unhealthy eating options available to her. She also had a body-type that was amenable to weight gain.

She piled on the pounds.

But there is healthy weight gain and there is unhealthy weight gain. There’s being a Viking and eating whole sheep for dinner every day of your life. And then there’s suddenly stuffing yourself with deep fried chicken and ice-cream sundae’s every day of every week.

Her body really wasn’t ready for it. In the end it triggered a hereditary liver condition, and she even ended in in hospital for observation for a week.

No worries, she thought. This is perfect. This is where I hit rock bottom. We’ll get some awesome footage of me in a hospital bed with a drip in my arm.

Now it’s time to bounce back.

Only bouncing back wasn’t so easy. Her system had been designed for women looking to lose a few kilos – not obese people with ongoing liver conditions. She found she just wasn’t up for the regime she had prescribed her self.

Partly it was just beyond where she was at, but partly it was about motivation. She wasn’t a perky fitness instructor with energy to burn anymore. She was now someone who broke a sweat getting up off the couch. Sometimes she just couldn’t do it – couldn’t get off the couch at all.

A big part of her work as a fitness instructor was giving people the motivation they needed. But who was going to do that for her now? She was too proud to let anyone help – that would have undermined the hero narrative she was building – but she wasn’t winning every battle with her will either.

And so the tight schedule she had set for herself and her production team – it started to look iffy. She tried to project confidence, but her team was starting to doubt her.

And her personal confidence was taking a hit too. She didn’t love the way she looked – not at all. And the world responds in a particular way when you’re a perky fitness model, and in another way when you have fried chicken stains on your singlet.

Her boyfriend was a case in point. Seems he realised that a large part of his attraction to her was physical, and she somehow found out that he had started banging another one of the gym bunnies down at the club.

It was a pretty crushing blow. When he moved out, she took it pretty hard, though she tried to put on a brave face for the cameras.

Ok, new rock bottom.

But then nothing comforts depression like food, and in her sorry state, she found herself making excuses. Maybe fried foods could be part of her diet. Maybe her regime could allow space for special treats – at 3 a.m, staring into the freezer.

Maybe if you have the right affirmations and beliefs, chocolate wouldn’t actually translate into weight gain.

Long-story short, she was no longer the same person. She was no longer a fitness model trying to lose a few kilos.

She was someone with depression, self-doubt, eating disorders and an ongoing liver condition, trying to lose what was now quite a few kilos.

It had become a monumentally bigger challenge.

And this now triggered a crisis of purpose. Do I really want to be the next Jenny Craig? What’s so great about being thin anyway? Why can’t we just love each other for who we are? Why is everybody so superficial? Why is the world just so horrible and nasty?

Maybe I don’t want to be a fitness guru. Maybe I want to be a love guru.

At this point, the camera crew just stopped showing up. It was clear that there was no way they were going to come close to meeting their schedule, and the funding had dried up anyway.

She also had to move out of her apartment. She had no income coming in and she had burnt all her financial backers – though they were very understanding and sent their well-wishes.

She also needed to find an entirely new line of work. She didn’t look the part of fitness instructor any more. Her old clients had all moved on. New clients weren’t interested.

And so she left New York. Moved back home to the small country town she came from. Got on to disability benefits with her liver condition, and started working some part time gigs cleaning houses or down at the convenience store.

And that, as far as I know, is where her story ends.

She rolled the dice. She lost.

Poor love. It’s a sorry tale. The least we can do is try and learn something from it.

What I find interesting about this story is what it says about our ability to make decisions and create meaningful changes in our life.

In theory and in isolation, it’s easy. Lose weight. Give up cigarettes. Quit your job and do a Cert IV in Interior Design.

But these things are never in isolation. There are always multiple currents pulling your life in one direction or another. A liver condition. A bad break up.

But it’s not only that. Our capacity to make decisions and execute them is also in flux. They swing with our mood and energy levels.

And this is the crucial mistake I think this woman made. It was easy to envision herself doing the hard yards involved in losing weight when she was in peak form – when she was energised, motivated and full of self-confidence.

But these things aren’t incidental. They are key ingredients in success. If depression hits and your motivation goes, you’re not in a position to tackle anything, no matter what task you’ve set yourself.

But having always enjoyed good health, having always enjoyed strong drive and self-confidence, this woman just failed to realise how important these things actually were…

… until they were gone.

I saw a really interesting TED talk the other day. In it, a guy name Rutger Bregman argues against the idea that poor people are poor because they make bad life choices.

Rather he argues that causality runs the other way. Poor people make bad life choices because they have no money.

When you don’t have a job or job prospects, when you have no stable social network, when you have no self-esteem or respect, hey, why not do meth?

… or any of the lesser evils like smoking or fast food?

It is much easier to make good financial decisions, and good life decisions, when you’re standing on stable financial ground already.

Anyway, I think this has two important implications for us.

The first, is remember to be compassionate. Someone might be making some life choices that you strongly disagree with – that you would never do yourself.

But maybe they’re making those choices because they’ve never enjoyed the privileges that you’ve enjoyed in life.

Decisions don’t exist in isolation. Our entire personal histories come to bear on each and every one.

The second is be careful not to think of the success journey in purely technical terms. Yes, strategies and techniques are important. But mindset, energy levels, motivation and commitment – all these things are crucially important.

I mean hey, that’s the whole reason I do these No BS blogs. It’s not for my benefit.

(Ok, it’s partially for my benefit, but this is about you, ok?)

If you are trying to turn your life around, be prepared to think holistically. Be prepared to look at our relationships, your fitness, even your diet! – as well as your finances.

I can’t promise you a happy ending. Fate has a role to play as well.

But this is will maximise the chances of success.

And that’s as much as any of us can hope for.