Why I will be voting Labour, having never done so before

Labour are a shambles, and Jeremy Corbyn is a terrible leader, who would probably be a disastrous PM. Yet I will be voting Labour on Thursday.

Why?

The reason is the Conservative government in general, and Theresa May in particular. This government will be defined by Brexit. Let us recap. Cameron called a referendum to appease people in his party. The vote was between Remain and a disparate bunch of possibilities loosely termed Brexit. There was no contingency plan if Remain lost. It did, the government fell apart and the part of the Tory party who won were too cowardly to take up the mantle and so we got May.

May’s main USP is that she is calm, strong and sensible. She keeps her cards close to her chest and doesn’t discuss her strategy. Unfortunately, it has become patently clear that she has no cards and no strategy. The Brexit vote has left Britain in a disastrously weak position in negotiating with Europe.

The whole process will take years of negotiation, where our government will be unable to work on proper issues that the British people might care about like jobs, schools and health because it’s too tied up with Brexit. And, at the end of the process, we will be worse off with no foreseeable gain. If May had any integrity, she would say sorry Britain, we made a mistake, we’re not doing Brexit.

Then there are her attempts at domestic policy. The dementia tax. After the terror attacks May said “enough is enough”. What this means is I don’t want there to be any more terror attacks but I don’t have any ideas on how to stop it. Just as in her years as home secretary she told us she was going to clamp down on immigration. But didn’t. She has no ideas. She has no clue.

If the Conservatives were heading for a large majority, or other parties were doing better, I would vote Green or Lib Dems because this is not a competent Labour party. A Labour coalition might very well pull out of Brexit, they would probably get a better deal as they would be a bit more humble, not go out to antagonise the EU to make cheap political gains and they would probably go for a more reasonable Brexit with free movement and free trade.

My reason for voting for them is that the Tories might lose. This is what I really think of the Conservatives – I rate you lower than a party who are an incompetent shambles and want to turn Britain into Venezuela. And I don’t want to just vote for you to lose the election, I want to vote for you to be put in care homes and made to sell your houses to pay for the care.

This current government are sans teeth, sans eyes, sans taste, sans everything.

Advertisements

Why Europe should pull out of NATO

The GDP of Russia is $1.3 trillion, about the same as Spain’s. The GDP of the European Union is 15 times the size. Angela Merkel’s speech the other day quite rightly surmised that the EU can’t rely on USA and, to a lesser extent and to our great shame, the UK.

The logical conclusion is that the EU should pull out of Nato and defend itself. It is to the shame of Europe that they feel threatened by a backward declining ex-superpower on its doorstep.

The EU, led by Germany, needs to build up it’s military strength. In terms of military spending as a proportion of GDP, it would only need to spend a tenth of what Russia does to have a much more powerful military, and added to that Europe is one of the most technological advanced regions in the world it’s military would be far in advance of anything Russia can muster.

This military should be situated mainly in the Eastern EU countries. Russia always claims that they are being threatened by the US and its NATO proxies, but the EU is entitled to defend itself and making a clean break with the USA and NATO would signal this. I am sure Russia does not want to pick a fight with a technological superior army on its doorstep run by the heirs of Frederick the Great and Von Moltke.

Russia’s weapon of choice at the moment is the cyber-attack. From what I know about cyber security, this is almost impossible to defend yourself against. The only strategy that works in this situation is counter-offence.

The way to do this is invest heavily in cyber counter-offensive technology, if and when a patriotic Russian or North Korean citizen hacks an EU institution, they have to immediately launch a massive counter-offensive against anything Russian you can find – and then officially say that this was the work of EU patriot. Putin might get angry, but what’s he going to do? Russia might then have to rethink their strategy.

The other threat that the EU military is defending itself against is the USA. The US has, until recently, been the World’s hegemon. The catastrophe that is the Middle East is to a large extent the responsibility, directly or indirectly, of the USA’s policies over a long term.

They supported religious extremists in Afghanistan who eventually morphed into Al-Queda and ISIS. They overthrew the democratically elected President in Iran, then supported the murderous Shah, which resulted in the Iranian revolution. They backed murderous military dictators in most Middle East countries, until they were overthrown in the Arab Spring, resulting in chaos or even worse regimes. The war in Iraq – enough said. This was a pattern of behaviour in supporting nasty dictatorships throughout the world or even worse rebel groups (Pakistan, El Salvador, Chile, Nicaragua, Vietnam, Philippines, etc, etc).

And now the USA is run by a lunatic. If the EU builds a strong military, it will snooker the USA from the Middle East and potentially limit the damage it can do. The fact that the Germany and the EU feel threatened by an economy the size of Spain, and are relying on a crazy twitter-troll for security, is a great abnegation of responsibility by our leaders.

Crazy Money

Monetary systems have to address conflicting problems which make any design a compromise. A monetary system needs to make sure that the quantity of money approximately matches the level of economic activity.

This was the failing of the gold standard, when there was often a shortage of money as the levels of gold in the economy could not adjust fast enough to match demand. Then there is the problem that whoever is in charge of the printing press can create money to suit their own ends. Governments can temporarily boost output by running loose monetary policies, to the long-term detriment of the economy.

It is in this context that Radix has been allowed to see a secret memo, we think written by the special policy advisor to the deputy minister for specie.

Here is an extract:

“…A proposal has emerged which claims to be able to address these problems using new-fangled technology. One of these computer-thingies can measure the amount of transactions and then create and inject money into the economy to meet the needs of the economy. The people who came up with this nonsense idea also claim that it would boost the economy by an unfeasibly large amount. Fortunately, this was proposed by that loony organisation that no one takes seriously – the Bank of England.

“I have a much better policy proposal. We should let the private sector create money, because they do everything best. Of course, we can’t let any old riff-raff be in charge of the printing press, so we have to carefully select the right class of institution to have this responsibility. I want to propose the lightning-doesn’t-strike-twice principle – we should only give this power to institutions who are so inept that they have failed and been bailed out by the government. Because of this its jolly unlikely that they’ll fail again.

“But in case they do, we had better give them a guarantee. Well, not an explicit one, but a nudge-nudge wink-wink guarantee; everyone knows we will have to bail them out, because they’re so important, and anyway they’re bloody nice chaps who give great parties and donate generously to our political campaigns.

“But we need another safety measure. These institutions need a first-class knowledge of regulations and the law. The people who we can be sure have this knowledge are institutions who’ve already been fined, at least £1 billion in the last few years – we don’t want small fry managing our money. If they have faced criminal prosecutions, this will be a bonus. This will ensure these chaps have a bloody good understanding of the law and regulations.

“We will let these institutions create money when they lend it out, as we want these people to become too-rich-to-fail. What they lend against is really important, and what this country’s economy really needs is – a property bubble. So, we will set the rules to ensure that most of the lending is against property. After all, we wouldn’t want people in trade to be able to borrow money!

“Finally, unlike that stupid Bank of England proposal, we need to ensure that the creation of money is linked to debt. This will create a huge number of high quality jobs – debt collectors, bankruptcy lawyers, depression councillors, etc, etc.

“As another safety valve, we need a policy instrument to manage this. Having a policy instrument is a moral hazard: if anyone misbehaves, they don’t want to think that daddy government can come and sort everything out. So, we’ve come up with a policy instrument that has been proven time and time again not to work – the interest rate…”

And this is the system we have now. Just because we are used to something, it does not mean it is not crazy. New technology, in the form of electronic money, may not solve entirely this age-old problem, but could potentially massively improve upon the current status quo; we should embrace it as soon as possible.

2040! Is this a joke?

So the government have decided to ban new diesel and petrol cars and vans from 2040. In the immortal words of John McEnroe: “You cannot be serious!” On many fronts.

If you polled a random selection of industry experts, I wonder how many of them would think that any petrol or diesel vehicles would be being built by 2040? I imagine not many. I take that back, some petrol cars might be being produced but they would be small quantities of nostalgia items, for collectors harking back to the good ol’ days.

Scientists now tell us that we have actually had 1.2C global warming since pre-industrial times, so by 2040 we will have passed the global community’s ambition of 1.5C and be well on the way to the dangerous 2C level.

Transport currently accounts for 27 per cent of global emissions. With the rapid development of emerging markets, the emissions from transport is going up quickly and we need rapidly shift to electric vehicles to reverse the trend. There are currently a billion cars in the world, and this is growing rapidly. By 2040, greenhouse gas emissions have to be somewhere between zero and half of what they are today.

To avoid catastrophic climate change, not only do we have to stop selling new petrol cars, but we need to replace the existing stock. This will take a long time, so we need to start doing this now.

Air pollution is thought to be linked to about 40,000 premature deaths a year in the UK (according to the BBC). Let us put that in context: between 2000 and 2015, 90 people were killed by terrorism. And think of all the curtailments in our lives we have to suffer and the money spent on the latter trivial number, whereas switching to electric cars would be comparatively no trouble at all.

What the car industry needs is genuine ambition from government to set incentives which are way beyond what they would do just because of economic reasons – something like a reduction in sales of 10 per cent every year of petrol and diesel vehicles, starting now.

Rather than send a signal to car manufacturers that they should ramp up production of electric vehicles and phase out petrol cars, this policy sends the signal that business as usual is OK and they should ramp down production because the government cannot be serious.

Finally, how long is this government going to last: one month, a year, till the next election? And they are setting policies for 2040. Imagine of the French government had decided early in the twentieth century to ban horse-drawn vehicles in 1940, how would they know that in the meantime they would face two world wars and be under Nazi occupation? How effective would that policy have been?

Michael Gove is a clever man with a sense of humour. Is this his idea of a joke?

How to reshape the financial system? First ditch the idea of the free market

Ten years ago, the financial system began its collapse before governments intervened to save it. Much of the subsequent legislation, regulation and angst has been directed at attempts to make the system less risky, so it does not collapse again. But what is the social function of the financial system and does it do this well?

Over many years, the finance industry has developed a set of powerful tools which could be used to improve well-being and to solve our environmental problems. For example, to avoid dangerous climate change, the required rapid shift away from fossil fuels requires enormous levels of investment into low carbon infrastructure.

We mostly know how to do this technically, and the funds are available; there is a savings surplus where trillions of dollars are sitting in government bonds earning negative returns which could be mobilised into the low carbon economy. So why is this investment not happening at the scale required?

The truth is that these powerful financial tools have been co-opted by the finance industry for the purpose of growing its own revenue and importance, with resultant collateral damage to society and the environment.

Blame is commonly attributed to the neoliberal rule of the market, greed and deregulation. My diagnosis (in my new book) is different: financial markets are the creation of society, and we have set them up in the wrong way based on faulty economic theories.

Governments have outsourced the management of societies’ assets to the finance industry and set the industry the wrong incentives. We now need to rethink how we want our assets managed and reset the incentives to achieve this.

The tools of finance are powerful because they are used to allocate society’s capital, and this determines the future direction of the economy. So, China, for example, has decided to direct finance, in co-ordination with other government support, towards manufacturing-export industries, and these sectors have grown rapidly.

In the UK economy, this decision has been entrusted to the finance sector, which invests people’s savings, for example via pension funds and bank accounts. The justification is that free markets will make the best decision on where to allocate resources. The most efficient users of capital will be able to pay the best return so everyone will be better off.

Yet, the reality is that we don’t actually have free financial markets. People mostly save via capital markets because they are induced to do so by the government. The most important financial variable is the interest rate, which is set by a government agency, the largest asset class are government bonds, only a restricted group of government-mandated banks can accept deposits, and government regulation shapes the way markets work.

For example, there are over 100,000 pages of pension regulations alone. Oh, and the whole system owes its existence to the 2008 bail-out. So, seeing that financial markets are not free, the theory that free markets are efficient and reflect peoples’ social preferences is not applicable.

It is evident that the financial system does not efficiently allocate people’s money. The finance sector has grown to an enormous size and looks anything but efficient: half of all savings are ultimately eaten up by charges, less than 4 per cent of savings are actually invested at all, the rest spends its life as perpetually traded abstract financial assets, the system is prone to asset bubbles and crashes, returns have been driven down to close to zero making a pension unaffordable, and the level of debt in the economy has increased unsustainably.

Instead of stewarding the corporates they oversee, investment managers encourage corporates to make short-term decisions to boost their share price. The example of banks’ behaviour in the run up to the financial crisis was a dramatic manifestation. More pernicious are incentives for companies to return money to shareholders rather than invest in staff or infrastructure, undermining social cohesion (through inequality) and the long-term prospects of the economy.

So how could we achieve a better system? The government currently supports, promotes and sets incentives for finance based on an inapplicable economic theory to perpetuate a system that doesn’t work. Instead, we need to decide on what we want finance to do and set incentives to achieve the outcomes we want.

For example, in return for the continued support of the finance system, the finance industry should have to demonstrate that it is socially useful. Banks that have the right to create money and are guaranteed by governments should preference lending to create jobs and other social benefits (the proportion of lending to the “real” economy by banks is negligible).

To benefit from a tax rebate, pensions and savings products should have to demonstrate a positive social benefit or invest in sustainable infrastructure and R&D. The sustainable finance tools to do this exist and have been tried and tested over an extended period.

Defining what is socially useful is problematic, but it is not a problem that we can duck. Currently the government support for finance has an ethical basis — theoretically efficient free markets to ensure that the economy runs at maximum potential. This may be a worthy value, but it does not apply to our current non-free financial markets. We need to decide what values we want finance to embody, and then set the rules to achieve these.

The wretched of the earth: Labour and antisemitism

How can a party as committed to anti-racism as the Labour Party find itself floundering under accusations of anti-Semitism?
There are deeper roots than the obvious incompetence of the current leadership. The Wretched of the Earth, written in 1961 by Frantz Fanon, is the key Marxist text on colonialism. It identifies two kinds of colony, the first is where the colonial power mainly administers the colony and is relatively easy to oust, think the British in India. The second is where there is a large population of settlers who self-identify as being from the colony. In this type of colony, the system is upheld by violence and can only be overthrown by a prolonged violent struggle. Fanon argued that violence is essential, colonised peoples will have internalised an inferior status and only by engaging in a violent struggle can they overcome this and overthrow their oppressors. Fanon was living in Algeria when he wrote the book, which very much fit that model of colonialism, the resultant violent liberation struggle is brilliantly portrayed in the film The Battle of Algiers.
In this context it is easy to understand Corbyn and Livingstone’s antithesis towards Israel. In their eyes, Israel is a case of Western settler-colonialism, based on violence, which can only be overthrown by violence, hence their embrace of Hamas. I am sure that Corbyn’s possibly accidental equation of Israel with Isis reflects his underlying beliefs; one is an oppressive colonial regime, the other a Fanon-type liberation movement gone horribly wrong.
Fanon also describes what happens after the overthrow of the colonial government. The former colony can take one of two paths. The first is towards socialism. This has been tried, in places like Cuba, Venezuela and North Korea, but unfortunately hasn’t worked out as well as Fanon imagined. LivingCorb have been faithful to Fanon, generally supporting these regimes. The other path is where the colonial elite is replaced by a native elite, in Fanon’s words where black replaces white, and things go on much as before in a quasi-colonial state. From the perspective of the peasantry and the lumpen proletariat, this is just as bad as a colonialism. Unfortunately, most former colonies have followed this route, and Fanon’s predictions proved all too prescient.
Let us take Ken Livingstone as a test case. He has always been hostile to Israel, as a follower of Fanon should be. But if we look at a country such as Saudi Arabia through the eyes of a socialist, this is just as bad or worse than Israel. It is misogynist, homophobic, oppresses minorities, has a terrible human rights record, has been accused of genocide in Yemen , etc. Ken’s record here is consistent, he once suggested that the Saudi royal family should be publicly beheaded.
But the problem with Ken is that he has a bizarre, fetishist fascination with the Nazis and Hitler. I think this comes from a mental model which views racism, colonialism, fascism and Nazism being on the same continuum. The Nazi period is almost useless as a historical lesson, a unique set of circumstances gave rise to “a monstrous tyranny, never surpassed in the dark and lamentable catalogue of human crime” in the words of Churchill. Before and since the Nazis there have tragically been too many incidents of genocide, but the Nazis were a special case, in a league of their own and hopefully will always stay that way. But in Ken’s eyes they are just a more extreme form of colonialism and so of course would have had a meeting of minds with Zionism at some point, according to him this happened in the 1930s. I am sure Hitler considered ethnically cleansing German Jews and dumping them in Palestine, as this would have been as good a place as any. For Ken this makes Hitler a Zionist as a matter of historical record.

Interestingly Israel’s ruling Likud party are also obsessed with the Nazis, highlighting the fact that the Palestinian Mufti allied himself with the Nazis and spent the war in Berlin. I think that this is irrelevant to the current Israel-Palestine conflict, but it should be of great interest to Ken, with his Nazi-obsession, yet strangely he has never mentioned this, even though it’s a matter of historical record.
Ken is entitled to his views, but the problem is that Zionism and Israel are core to many Jews’ identity. This presents a dilemma; is it OK to say things that offend a minority, when the minority hold on to views which you find offensive? I think this is OK, as long as you are consistent. And here LivingCorbyn are on dodgy grounds; for example Ken Livingstone invited Dr Yusuf al-Qaradawi to come to London, despite his openly racist, misogynist and homophobic views. Jeremy Corbyn’s friendship towards Hamas is hypocritical, not because of their desire for armed struggle against Israel, but for all of their other beliefs which Mr Corbyn should find offensive.
Give that Ken is so outspoken and speaks truth to power, I am sure that there are many beliefs that other religious minorities hold, which he could easily offend these minorities by speaking his mind. Yet he has failed to do so, there is no Fatwa against Ken. And this is problematic close to home, for example, the Labour part have been accused of staying silent on sexist behaviour by Muslim members within the Labour party.
Fanon was a remarkably prescient thinker, but he died over 50 years ago, and his cures have not worked in practice, violence begets more violence, socialism has generally been a disaster in the 3rd world.
Ken should not be thrown out of the Labour part for being anti-semitic or for sloppy, prejudiced thinking – if they did that there wouldn’t be many people left in any political party. There are lots of forward looking, radical ideas from left-thinkers which seek to address the problems of the contemporary, thinkers such as Manuel Castells, David Graeber or even Paul Morley. Ken should be thrown out for having senile ideas.
Other countries have radical new left wing political parties such as Podemos and Syriza which for all their flaws seek to look to the future, not the past. Perhaps Labour, which is currently euthanizing itself, could be replaced by a new, vibrant genuinely radical party of the left.

Interview: The evolving actuary

By Kelvin Chamunorwa, published in The Actuary 6 February 2014

Nick Silver_2

Nick Silver started out as a traditional actuary, but now focuses on helping developing countries and promoting green investments. He talks to  Kelvin Chamunorwa about working for the public good.

I arrive somewhat intrigued at the address Nick Silver had referred to as “my office”: a private members’ business club in the heart of the West End of London. It later turns out that this is where the influential actuary prefers to work and host business meetings when he is in town.

I can see why the club provides a conducive working environment – its secluded location, colourful furnishings and flood of natural light give it a calm and convivial aura – much like my impression of Silver himself.

Being an actuary and an economist, Silver’s CV is not typical. He is managing director of Callund Consulting, where he advises developing countries on pension and social security policy, and co-founder of Climate Bonds, providing institutional investors with access to ‘green’ investments for either hedging or speculative purposes. Silver is also a visiting fellow at the London School of Economics and Cass Business School, a member of Council of the Institute and Faculty of Actuaries and a member of the IFoA’s Resource and Environment Group, which he has previously chaired.

I look on while The Actuary’s photographer takes snaps of Silver before we began the interview. He engages the photographer throughout the shoot, questioning him on lighting, colour balance, profile and other photographic aspects. Silver’s questions are far from self-centred – his inquisitive nature seems to come from a genuine desire to expand his knowledge. This characteristic is confirmed as we speak about his wide-ranging experiences and how they have evolved over time.

He explains his personal motivation of working directly to benefit society, saying ‘What gives me meaning is working for the public good’.

Silver tongue

Silver started his working career in 1991 as an actuarial consultant with Punter Southall then PwC in London, specialising in UK private sector pension schemes. He qualified as a Fellow of the Institute of Actuaries in 1995.

So how did the transition to international and green issues come about? He responds by explaining his personal motivation. “What gives me meaning is working for the public good,” he says.

He goes on to describe the steps he took to start advising governments and other public bodies on the reform of their pension and social security policy. In 2002, he embarked on a Masters’ degree in Public Finance Policy at the London School of Economics. Silver recalls: “After graduating in mid-2003 I pursued David Callund, chairman of Callund Consulting at the time, in a bid to get involved with international public sector consulting work.”

It took a while, but eventually Silver’s persistence paid off when he was assigned to his first project in Bosnia and Herzegovina in late 2003 and has been at Callund Consulting ever since. Silver views this role as his “bread and butter”.

The way Silver got involved with public policy is in contrast to how he developed his work on climate change, which started with a voluntary role for the IFoA. In 2004 he joined the Resource and Environment member interest group. As one of the initial members of the group at a time when climate change was only just emerging into the public eye, Silver had the opportunity to build a network within the industry. He was one of only a few actuaries involved at the time and was often invited to speak at conferences. Perhaps inevitably, he began securing consultancy work. “I got into it by accident really as I was not actively looking for work,” he admits.

Many of his projects on sustainability now find him because of his knowledge of insurance, risk and pensions. In hindsight, Silver thinks he was able to start work in the public policy and climate change areas at a higher, more influential, level than he would have had he not been an actuary. He declares that it’s because of “the gravitas of an actuarial qualification”.

I suspect that his willingness to learn and his way with people also played a significant part in the  successful transition.

 

 

Silver lining

So what does the future hold for professionals in the pensions industry? Silver’s view is that the UK pension environment is highly regulated and hence there is a need for a large number of qualified professionals in the industry, including actuaries. He also believes that while the defined benefit pension market is shrinking, the ageing population means there will be a role for actuaries working in this space for many years to come. He asserts that much of it will be legacy work though; his view is that actuaries should be ready to apply their skills in related areas where there is financial uncertainty and risk that needs to be managed.

From a global perspective, Silver points out that there are many emerging economies in need of actuaries: “Each one of them has pensions and savings challenges, but with few qualified actuaries working in that space”. He is currently working on a project with the National Social Security Fund in Uganda, and uses that country as an example: “The fund has 500,000 members and assets of around $1 billion, predominantly invested in Uganda government bonds. In the next few years, membership and assets are both expected to double. It is a booming economy with increasing demand for actuarial advice.”

Surely actuarial work in developing countries also comes with its challenges, particularly where capital markets are not as advanced and data is scarce? Silver agrees and highlights the difficulty of developing long-term assumptions for actuarial valuations. He gives the example of risk-free rates of return, which can be “difficult to determine as some governments’ bonds are in no way risk-free”. In addition, there have been cases where there was no national mortality data to work with and he recalls that “in one small country we had to use the English Life Table rated up by 15 years as a  starting point”.

Silver sees the technical challenges of performing actuarial valuations as relatively minor compared to the soft skills required to persuade stakeholders to take the necessary action. “Unlike in the private sector in the UK, where legal requirements ensure that action is usually taken, it is more difficult with public sector work in any country. That’s where experience and a deep understanding of the culture helps to influence key decision-makers,” he says. On the whole, he thrives on dealing with the varying and complex issues in each country, a lot of which are taken for granted when working in the UK.

In Silver’s experience, many countries try to emulate Western regulatory models, like Solvency II, and this presents opportunities for him as an actuary with UK experience. He believes that the actuarial skillset is highly regarded, almost to the extent that stakeholders are prejudiced towards UK qualified actuaries.

In a lighthearted moment I take the chance to ask if the actuarial ‘premium’ is reflected in his consultancy fees. He sidesteps the question by talking about some of the perks that have come with his work, like having an audience with influential individuals.

The previous week, he attended a lunch event on food security at St James’s Palace and had a conversation with Prince Charles. I ask what they spoke about. Never one to miss an opportunity with those who have the power to drive change, he says: “Rather than talk about food security, I told him his speech at the recent National Association of Pension Funds conference was very helpful (where he urged institutional investors to better address sustainability issues in their portfolios), and he should keep pressing on this issue.”

Earlier this week Silver was in the government office’s in the palace of the Emir of Abu Dhabi where he is advising on the reform of the pension system.

Silver also takes time to experience the countries he works in. Unsurprisingly, he says he mostly enjoys engaging with local people, arguably the ultimate beneficiaries of his expertise.

 

Silver bullet

I was curious to hear more about climate bonds and how the initiative addresses climate change. Silver describes its objective as: to provide institutional investors, particularly pension funds currently invested in the fossil fuel economy, with an opportunity to invest in ‘green’ initiatives. His view is that in many countries, particularly those with sunny climates, the economics of energy supply is tipping towards solar energy. Thus the initiative provides access to investments that will generate renewable energy. He believes that as London is a major financial centre, it is a good place to start.

I ask him why the focus of financing sustainability ventures is through bonds. He uses the example of the cash flow profile of a wind turbine, which requires a large upfront investment to build and then once it starts producing electricity generates a regular stream of income. The bond can then be refinanced quite cheaply, or repackaged like a mortgage-backed security.

Climate bonds are a relatively new asset class and the idea is to make them investment grade and thus move them into the mainstream of institutional investors’ portfolios. Silver believes that this is a significant part of the solution towards a low-carbon economy.

As for the actuarial profession, Silver’s view is that it is not enough for actuaries to be technically astute, as that is generally taken as given. He gives the example of the declining number of actuaries on boards of insurance companies, which demonstrates the need for strong leadership and communication skills, but more importantly, a more adventurous attitude towards assuming responsibility in areas outside our comfort zone. He believes that only then will actuaries be able to increase their influence and relevance, resulting in a more significant role to play for the benefit of society.

Silver is a warm and very likeable personality. We spoke at length until there was just enough time left for him to pack up for the day and pick up his daughter  from school.

With such a busy work schedule including regular international travel, I ask whether he manages to find time to read The Actuary. He tells me he peruses articles as he travels. Pre-empting my next question, with a gleeful smile he adds, “and I always recycle my copy after reading it, of course”.

– See more at: http://www.theactuary.com/features/2014/02/interview-the-evolving-actuary/#sthash.m2QFmPEF.dpuf