Five Embarrassing Mistakes I've Made In Dutch

So you don't have to...

1)"Mag ik de spleet erwten soep?" = Not, 'can I have the split pea soup,' but 'can I have the split pussy soup.'

(pamusc93)

2)"Jij hebt volkoren gelijk." = Not, 'You're completely right,' but 'You're full-grain right.'



3) "Ik hou van kersens" = Not 'I love cherries' but 'I love cherrieses'


(darwin bell)

4) "Ik doe mijn beest" = Not, 'I'm doing my best,' but 'I'm doing my beast.'

(hanafan)



(After hearing someone's age)

"Oh, je ziet er niet uit." = Not 'oh, you don't look it,' but 'Oh, you don't look good.'





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Obama President!

Ah, I can't stay up late tonight, so I thought I would end the suspense and just call this election early.

My thoughts, at this historic moment? Thanks for not asking, I'll tell you anyhow.

Obama was a strong candidate who had quite a bit of good fortune in running after an extremely unpopular Republican administration; and it was the financial crisis that gave him a landslide victory.

The big picture is that Obama inherits leadership of a nation with grave problems, and he will need another few servings of luck to go with his talent if he's going to make a big difference in setting things right.

The small picture is, today is a good day for race relations.



Thank goodness that after today I will never have to listen to another European lecture me on how incurably racist America is.

Of course it is _ and so is every European country, especially the Netherlands. America is several decades ahead in coming to terms with that problem. Call it our 'original sin'.

What a transformation the U.S. has undergone since WWII. Still, if Obama hadn't come along now, it might have been another 50 years (who knows) before a black person were elected.

But now that he has come, it's inevitably going to be a watershed: after this, anything is possible.

So, congratulations and good luck to you Obama. I give you one day for a media honeymoon, and then it's time to get cynical. You are a politician after all.


(cnn)

Condolences to John McCain. I wish I knew what the world would look like now if you had won the Republican nomination back in 2000, when you coulda woulda maybe shoulda.

(elycefeliz)

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Nuon Posts a Loss? Wake Up, Netherlands

(beat)

The following post, while important in its way, is too boring to read. So be warned. Stop now while there's still time.

It's a sad paradox: there is no industry that's bigger, or more important than the energy industry. Yet it is so deadly boring that it's impossible to get anybody to read about it, let alone think about it.

No matter how much we hate those monthly bills.

The Dutch energy company Nuon posted a net loss for the third quarter.

This despite enacting rate hike after rate hike in the past several years.

What's going on here? And why should we care?

Well, Nuon calls itself a "company" but in fact its is owned entirely by city, province and federal governments.

So in one sense I suppose it doesn't really matter if this "company" makes or loses money. You have very little choice but to pay your electricity bill, and if Nuon loses money, the governments that own it will have to raise taxes to cover the difference. If it makes money, then governments can lower other kinds of taxes.

However, Nuon pays its executives and managers as if they were in the private sector, so to the extent they are doing a poor/ineffective/inefficient job, they are effectively throwing away money or stealing it from the public.

And now we come to the point:

I've read many and many an earnings report in my day, but never have I seen a report more lacking in transparency than what they published today. (Here it is in English, for anybody insane enough to care).

The only facts we are given are that sales were flat, while profit plummeted from EUR179 million profit to a EUR2 million loss.

Why is this?



They say part of the reason was losses on "fair value items" which I think means investments.

Here's another of the reasons for the loss, in Greek. Don't try to understand this, you cannot:

"The efforts in connection with strategic processes including the unbundling of Nuon into a network company and a production and supply company have led to an increase in, notably, ICT and personnel expenses. Other expenses concern the credit crunch, which necessitated a revaluation of an investment relating to a cross border lease."

Nuon spends a fair amount of its press release grousing about a Dutch government decision, that ordered energy companies to split apart their generation plants and delivery network (i.e. wires!) into two separate companies.

The government did that because they are imagining a future when lots of generation companies (read: alternative energy companies) will want access to the grid, and they don't want the big energy co's playing dirty tricks to keep them out.

So, to make sure everybody plays nice, in the future the grid will be run independently.

Nuon fought that decision tooth and nail, like the other 3 generation companies, to protect their monopoly. But Nuon (and Essent) had a special secret second reason.

Here's where it gets complicated, but it's juicy if you can understand it:

(yewenyi)

Before this decision came down the pipe, Nuon had struck a deal with U.S. companies to help them cheat U.S. tax authorities _ sorry, I mean 'take advantage of a U.S. tax loophole' _ and split the proceeds.

How did this work? The exact details and numbers have never been made public, but here's the basic idea:

Nuon sold its network to the U.S. companies, and then immediately leased it back for 100 years. Huh?

Because the U.S. "owners" were able to claim a tax deduction for depreciation of the assets.

An electricity network is a valuable thing, and the tax savings on its depreciation was a huge number.

There's a lot of room for variations on the theme above, but that's the basic idea.



Returning to the idea of Nuon as private "company": this kind of scam, I mean deal, called "Cross Boarder Leasing" is a very much private sector behavior. Organizations on two sides of the Atlantic colluding, I mean, cooperating, to lower their combined taxes. One can wonder why Nuon and Essent were allowed to do this. An answer would be LITTLE OVERSIGHT and LITTLE COMPREHENSION of the deal among their shareholders, i.e., governments; and of course little interest or understanding by the public.

The two things go hand and hand, n'est pas?

There was a buyback clause somewhere in the 100-year lease agreement, just in case Nuon had to repossess the network for some reason. Say, for instance, by order of the Dutch government.

Which is what happened, effective July 1, 2008.

So now Nuon
a) no longer gets the expected benefit of its side of the deal
b) probably has to pay its U.S. partners for the unexpected losses on their side of the deal.

Without the details of the deal, it's impossible to know how much money Nuon lost as a result; things could have been hedged or insured in various ways.

But I believe the company itself bandied about numbers like 1 billion euros as their 'worst case' loss when they were lobbying against the Dutch government doing this.


(yanivg)

How do I know all this stuff? A little bird told me. Otherwise stated: Nuon, feel free to contact me to deny it.

Or maybe I'm dead wrong. Still sure would be nice to understand why it is that Nuon is hiking rates, & energy prices were sky high for most of the 3rd quarter but they are still losing money.

Nuon shareholders, are you listening?
Dutch press? NRC?
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Congratulations, Mr. Hamilton

The name is almost...presidential...

(I have kind of a backlog of posts, but this is one that can't really wait)

I know absolutely nothing about Formula-1, but Lewis Hamilton was in town a few months back. A very impressive person. I predict he will not self-destruct the way so many stars do.





Photos by me!

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Virtual Theft

(these are not the kids. Photo source...unknown).


Two Dutch kids were convicted of "virtual theft" recently. It kind of got overshadowed by a more eye catching headline _ a case out of Japan where a woman was arrested for "virtual murder."

The Japanese woman hacked a computer to delete her virtual husband's character in an online game, so hers was ultimately a hacking case.

The Dutch kids were found to have stolen virtual goods. In my view it probably should have been robbery of virtual goods.

But in any case, I do believe this is a landmark ruling so, my public service for the day is to translate some significant parts. For someone who may stumble onto this at some point in the future.

The essence is recapituated in this AP story:

A Dutch court has convicted two youths of theft for stealing virtual items in a computer game and sentenced them to community service.

Only a handful of such cases have been heard in the world, and they have reached varying conclusions about the legal status of "virtual goods."

The Leeuwarden District Court says the culprits, 15 and 14 years old, coerced a 13-year-old boy into transferring a "virtual amulet and a virtual mask" from the online adventure game RuneScape to their game accounts.

Translation of the bulk of the ruling text after the MORE.



Published Oct. 21, District Court of Groningen.

The suspect, born in 1992
"Denies all the accusations vehemently. He says that he didn't use any violence himself, and didn't see that his co-defendant used the violence he is accused of. The violence and the threats that the accuser says were undertaken by X, are completely at odds with the image that emerges from the report by the Council for Child Protection. It's actually inconceivable that someone like X, as he is described by his references, would suddenly demonstrate such violent behavior."

***

"The Prosecutor has, in short, at the hearing, maintained that the virtual amulet and virtual mask are goods as intended in article 310 of the Criminal Code. The defense has argued the opposite.

The court considers as follows:
In the present case there can be said to be virtual goods, namely a virtual amulet and a virtual mask from the computer game "RuneScape." The court knows the following of "RuneScape." RuneScape is one of the larger online games and primarily popular among youth. Millions of players, so-called online gamers, play the game around the world. RuneScape takes place in a virtual world, in which players with characters can take part in that virtual world. Players can, among other things, fulfil quests, fight against other players and develop other activities.

To do this, people can obtain among other things 'items' such as a mask or an amulet. The items have each an own value. This value is expressed in 'coins' and that value fluctuates on the basis of supply and demand for the items. With these 'coins' a person can as player, develop 'skills.' The more 'coins' the player has, the stronger he becomes in the RuneScape game.




The accuser, suspect and co-defendant each had an account that gave access to playing RuneScape and were also active players of the game. The accuser had in his account a virtual amulet and virtual mask.

Article 310 of the Criminal Code is intended to protect the assets of citizens. In answering the question of whether virtual goods are goods in the sense of that article, this has to be kept in mind.

There are a number of criteria that must be satisfied, if something is to be considered a good in the sense of the article.

First of all, it is of importance whether a good has a value to the possessor. This value does not have to be capable of being expressed in money.

In current society, virtual goods from the online computer game "RuneScape" have become objects of great significance. For a large number of online gamers, these goods have value. The more virtual goods a player has, the stronger he is in the game. Additionally, the virtual goods are bought and sold for money, for example, via Internet or in the schoolyard.

In the current case it appears that the mask and the amulet had value for both the accuser and the defendants.

Of importance, too, is that a good need not be material. In jurisprudence, it has been determined that also immaterial objects _ such as electricity and bank account money _ have been recorded as goods in a legal sense.

The virtual amulet and the virtual mask in the current case are not material goods, although they can be measured. Given the intended jurisprudence this is no reason not to consider them goods as intended in Article 310.

Continuing, it appears from the jurisprudence that an important charactaristic of a good in a legal sense is that he who takes in a theft obtains actual power over the stolen good, and he who is robbed loses it.
The possession of the good must pass from the one to the other.

The virtual goods intended in the current case, namely a virtual amulet and a virtual mask, were in the possession of the accuser. Only he had the actual power over those goods. The possession of the virtual goods can be transferred, for instance by placing the goods from one account to another.

In the current case, the goods were transferred, namely out of the actual power of the accuser and to those of the defendant and codefendant.

Defendant and codefendant transferred the goods from the account of the accuser to the account of the defendant. Thusly the accuser lost the actual power over the goods and the defendant and the codefendant got the actual power.

Given the virtual amulet and the virtual mask as intended in the current case satisfy the criteria, the court is of the opinion that these virtual goods fall under the concept of 'good' as intended in article 310 of the Criminal Code and belonged to accuser.




***
Considering the Evidence

The defense argued at trial that the accused did not illegally take the goods and he should be acquitted...given the playing rules of "RuneScape" allow the behaviors of the defendant and codefendant, and they didn't do anything punishable in any case.

The court is of the judgment that this argument must be rejected, given the actions of the defendant and codefendant took place far outside the context of the game, and thus can have nothing to do with the playing rules of "RuneScape."


Evidence.

The court used as evidence, the witness statement

"On Sept. 6, 2007, *codefendant*, victim and me went to the condefendant's house in Leeuwarden. We all play the ongame line "RuneScape." A day earlier, codefendant and I had agreed via MSN chat to transfer virtual goods from victims account to our account. I saw that codefendant hit victim. I also saw that codefendant took a knife and went in the direction of victim.


On Sept 6, 2007, I put victim in a choke hold by clamping his neck in my elbow. I flexed my muscles so that victim couldn't get any air. We hit victim. I hit victim intententionally with the palm of my hand in his face. Because victim didn't cooperate, I choked him. We forced victim to log onto that computer. Victim didn't want to give his password and log in to play the game. Because we threatened him, he finally did log in and got the game. I threatened him that he had to cooperate. If victim didn't want to cooperate, then I'd give him some more blows ... I took two knives from the kitchen drawer. I rubbed the blades against each other....to make him scared.

***

I've been playing a game on the Internet for years now. I spend an average of four hours a day on it. It's called RuneScape. It's a game in which you are a small puppet that can earn money by working. I'm very rich on RuneScape and because I'm rich I'm also very strong. I'm almost unbeatable in this game. Because of my great wealth in RuneScape in money and possessions, I change my password almost every three days, because I'm worried someone will figure it out and hack me.

I biked on Sept. 6, 207 with defendant and codefendant to the home of codefendant in Leeuwarden...I had to cooperate to transfer the money and goods from my account to the account of defendant. When I said I didn't want to, defendant and codefendant began to hit and kick me. I was apparently hit in the head with fists. They punched me on purpose and very hard against my head and ribs. Because of the beating I got, I fell to the ground of the bedroom. Next I saw that both were kicking my chest and legs, on purpase and hard. I also saw and felt that they stood on my chest, apparently on purpose and with force...I felt a lot of pain. I heard that they called to me that they would kill me. Next I saw and heard that first the codefendant went to the kitchen and got a knife and shortly after that defendant also went to the kitchen and got two knives. With the knives they threatened me with death. I became very scared. I couldn't do anything else but cooperate with defendant and codefendant. I didn't dare to refuse...I had to go with both to a computer in the living room of the flat where I had to log in with my account on the game RuneScape...suddenly I was pulled over backwards in the chair by defendant. I lay on the ground and defendant kicked and hit me again on my head and body. When it stopped, I saw that defendant sat on the stool. I stood up and saw that defendant transferred all my money and goods from my RuneScape account to his own account _ stole from me...Then both put me out of the house.

The facts demonstrated in the case amount to the crime:

Primarily theft, preceded and accompanied by violence and threats of violence, committed with the intent to prepare the theft and make it easy.

Committed by two persons.

Punishment

The suspect has given no hint of understanding the wrongness of his behavior and has a too positive image of himself. The circumstance that he's never had contact with police before and much time has passed since the committing of the act and the trial is mitigating.
The Council for Child Protection has issued two reports over the defendant, from which emerges that at school and at home there are no problems with the defendant's functioning. The Council does not give any punishment advice, since the defendant has taken a position of denial.
Jailtime doesn't make sense for a defendant who was 14 when the crimes were committed.

Yada yada yada. Sentences of 200 community service hours and 160 hours, and a suspended 2 month sentence for each.

This decision is signed by B.J. de Jong, chairman and child judge. MJ Dijkstra and A. de Jong, rechters.

Verdict rendered at open sitting of this court on Oct. 21, 2008.


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Bend on Herengracht, then and now

"The Bend on Herengracht" by Gerrit Berckheyde from 1671.



"The Bend on Herengracht" by Toby Sterling from 2008. Hope I found the correct spot, it doesn't look quite right.

More dog crap, cars and bikes. Plus the trees have grown.



The first painting was bought for at least EUR1.5 million by the Rijksmuseum, if I read the press release correctly.
The digital photo is yours for free...
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Thoughts on the Global Financial Crisis

(flickr's yozza)

Meanwhile, beer is still trading steady at EUR2 1/4



"Time and the hour run through the roughest day."

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Fortis

(flickr's benidormone)

I hope, I think, it's not unethical for me to put together a few thoughts about reporting on Fortis over the past year and a half.

But first, a few bits of comedy _ well, irony _ to lighten things up.

Actual Fortis slogan: "Here Today, Where Tomorrow?"

***

Next, an email exchange. Note the date. I think it's right that I remove a few identifiers here.

From: Xxxxx@fortis.com [mailto: Xxxxx@fortis.com]
Sent: Thursday, September 25, 2008 4:32 PM
To: Sterling, Toby
Subject: RE: 26 June press release

Dear Toby,
Thanks, but I shall not answer your question since this scenario is not on the table.
Bests,
Xxxxxxx

From: Sterling, Toby [mailto:tsterling@xxxx]
Sent: Thursday, September 25, 2008 4:14 PM
To: Xxxxxxxx Yyyyyyy
Subject: RE: 26 June press release

Thanks Xxxxxxx.

One other question: Fortis could always get a loan from the Dutch and/or Belgian central banks if it came to that, no?

Best,


Toby Sterling

***

Finally, I just wanted to note that S&P, Moody's and Fitch all downgraded Fortis' credit ratings on Monday _ AFTER the 12 billion euro cash injection by the Dutch government.

In Dutch they say "Als 't kalf verdronken is, dempt men den put."
In English we say "closing the barn door after the cow has gone."

Once upon a time, I used to respect the ratings agencies...

***

So, the central question I want to address in this post is: what, if anything, should I have done to make it clear I thought Fortis was heading for disaster?

The short answer is, in the moment I didn't think I could or should do anything. After all, it's not the media's job to speculate, and I certainly didn't KNOW there was anything wrong with Fortis. In fact, well-meaning analysts who understand far more about finance than I told me as recently as last week that they thought there was nothing wrong with Fortis' balance sheet.

And in fact, lots of people think there really, truly, was nothing wrong _ apart from a lack of confidence from investors and depositors. And confidence is everything for a bank.
I think, it's my opinion, that the company itself believed it was healthy and did not, could not comprehend that the wolf was at the door until it was too late.

So now I turn on the way-back machine:




From the time that Fortis entered the bidding to buy ABN Amro, it always seemed like a bad idea to me: I'm not a financial wizard, but I would say from what I've seen and read, large takeovers fail as often as not.

Both in minor ways and in major ways.

I remember at one point looking at Fortis' market capitalization _ market value _ and thinking 'they're paying EUR24 billion and they are only worth EUR36 billion themselves? It's like an Elephant eating a Hippopotamus.'

I put the figures prominently in a few stories and including skeptical analyst comment. That's what I did.

By the way I had vague nightmare fantasies that proved incorrect about what would go wrong:
I imagined an exodus of ABN Amro employees and customers walking out over petty national jealousies. Or in anger at the increasing lack of choice in the Dutch market. Or the way ABN and Fortis are always nickle-and-diming their customers. And that these things would lead Fortis to miss its integration targets. I had no idea at the time that it would be a credit crunch that would actually derail the buy.

In fact, as the U.S. economy was starting to run into trouble, I thought very much that it wasn't a bad time to be buying Dutch assets _ Europe was in better shape, and the Dutch market has been outperforming the rest of Europe for several years now.

So, I thought Fortis overpaid, but the most likely scenario was that the integation would be a bit clumsy, and the two would eventually settle in together.

When the shares were down around EUR22, I thought the worst of the selloff was over, the customers who were going to walk had walked, and now the question would be, how well does the integration go?

But as the year went on and markets went down, down, down, and Fortis always falling worse than the market, it did seem increasingly unlikely that it was going to be able to raise much money by selling assets.

Furthermore, I had a kind of uneasy concept, an idea in my mind, that probably only shows my lack of understanding: it seemed to me that if the company's debt remained the same while its assets were shrinking in value by the day, then the amount of $$ it needed to raise would be increasing as markets fell, fell, fell.

When Fortis issued shares and canceled dividends in July, it was treated by most investors as a betrayal and they screamed bloody murder. The CEO resigned (that particular event I missed while on vacation). But funny enough, in retrospect it was one of the most responsible things that the company did.

About 2 weeks ago it got so bad that I personally thought that one bit of really bad news could topple the company.

Whoever I talked to about things agreed that the situation was dire, but no one really thought they would go bankrupt. I agreed _ I guess it was always clear the government was going to bail them out if it came to that. But the details of how that would work...very unclear.

I didn't expect they would have to sell ABN, because I figured it would be too disruptive for them, such a large bank, crucial part of the Dutch economy, to change hands yet again.

Rumors were swirling around about Ping An not going through with its much-needed EUR2B buy of a Fortis asset management arm.

Fortis denied those rumors, but after the fall it appears they were true.

The price they got for selling assets to Deutsche bank _ I thought, if these are market prices right now, Fortis is going to be going BACKWARDS by selling things.

But by late last week, the most amazing thing was the incomprehension among Fortis managers. What's going on? Our numbers show no problem at all! Why are you barbarian shareholders behaving this way? This was clearly not something that business school (or wherever it is Belgian bankers go) prepared them for.

Probably from the moment Lehman failed, their destiny was written. Unless they had pulled out all the stops to find a merger partner on very unfavorable terms, or said 'damn the consequences' and issued more shares, they were going down.

But how does a reporter write those kind of things? With what evidence? Furthermore, by writing about a "crisis" at a bank, you are essentially yelling fire! in a crowded theater. The act of writing a story like that _ unprovable _ can cause a company huge, unfair harm.

What I did? Every time their shares fell, I wrote a brief story saying "shares fell on fears their plan to sell assets won't work."

Was there a better approach? In the financial world, you run into analyst opinion pro versus analyst opinion con pretty quick. And they know infinitely more about finance than reporters. (Reporters who know too much tend to become analysts themselves, or at least move into in-house PR).

And it goes without saying that all companies not only reflexively deny any trouble, but they also indisputably have better information about their own business. So it's easy for them to refute skeptics with "facts."

But sometimes, facts can obscure the forest with trees.

Well, I leave this line of thought in aporia. What's done is done.

***

Sometimes I criticize Dutchies on this blog, but I want to say that in this crisis they showed off one element of the national character that I love.

When the bailout was announced, I heard more than once "yeah, that's what you get when you let Belgians run things." But _ and this is essential _ the joke was told with no ill-will, just to relieve the tension.

It's a friendly rivalry, and if anything I think the Belgians have slightly more of the inferiority complex _ there was a little too much gloating when Fortis was buying ABN.

Lapwing. Icarus.

***

For weeks now I've been thinking: wouldn't the fallen ABN Amro CEO Rijkman Groenink be the ultimate interview right now?

Rijkman, where are you?

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