[Continued from yesterday's Part 1.]

Continuing the recap of December’s post, during December we looked globally (Dubai’s shadow bankruptcy) and locally (New York City’s public toilets).  Gotham City, the cradle of American apartments, also served as the setting for an Experiment in urban micro-living: Part 1, the pluses, and Part 2, the minuses:

It’s quite clear that the Prokops have made a conscious choice – foregoing large elements of what you and I would consider minimum acceptable living in exchange for security of tenure and controllability of occupancy cost, some potential for appreciation, and above all reduced occupancy cost.  They then have taken the resulting savings and spent it on things they value more than their mousehole apartment.

The welcome mat marks my territory

In making that choice, what have they renounced?

* Children

Unlike cats, they cannot be left alone all day, and unlike dry cleaning, they cannot be parked elsewhere overnight.

* Entertaining guests

She joked that the tiny apartment gets her out of hosting duties and dissuades long-term guests.

“No one ever stays too long,” she said. “It’s too small.”

Am I the only one who hears enforced brightness in their comments?

9. Christopher, 35, and Zaarath, 37, pop open a bottle of champagne.

The Big Apple also hosted a tussle over personal behaviors in the privacy of one’s own home, in Not illegal, merely despised:

And Audrey Silk, the founder of Citizens Lobbying Against Smoker Harassment, a nine-year-old advocacy group, said the trend was troubling from a civil liberties perspective.   “If we’re talking about annoying odors, where do you draw the line?” she said. “What about cooking odors, from fish or curry?”

In A Wild and Crazy Guy (1978), Steve Martin explained how, when asked by a fellow passenger on an airplane, “Mind if I smoke?” he would answer, “No, mind if I fart?”

“It’s one of my habits!”

“Yeah, they got a special section on airplanes for me now.”

These issues of urban cohabitation and coexistence are critical, for during 2009 humanity passed the majority-urbanization mark, homo urbanis overtaking homo agricolas, and whether or not we like it, we are hurtling toward the future city, such as the ultimate future city: Trantor:

Continuing our occasional series on the Ultimate Future City:

The Caves of Steel, by Isaac Asimov, 11/07

The Naked Sun, by Isaac Asimov, 11/07

The World Inside, by Robert Silverberg, 12/07

Diaspar, The City and the Stars, by Arthur C. Clarke, 3/08

Displaying our technology for the universe to see

The half-century in which we are living, which opened in 1975 and will close in 2025, will be without equal in human history for its urbanization.  In both its rate and scale, this fifty years will permanently remake our planet, as homo agrarius gives way to homo urbanis.  We are moving to the cities, and our world will never be the same.

Coruscant from Star Wars, modeled on Trantor

Shifting from the cities to the Mission Entrepreneurial Entities that develop, own, and operate affordable housing in those cities, I reported on my ULI Affordable and Workforce Housing Council meeting, where I moderated a debate on the Low Income Housing tax Credit, and where I also heard from long-time housing consultant Helen Dunlap, who offered Rumfeldian organizational suggestions in Knowing your unknowns: Part 1, real estate, and Part 2, organization and governance:

“Mission” (multiple bottom lines) is achieved when the business works, not the other way around.

Amen.

All you little mission Hulkamaniacs, take note

Too many MEEs think that mission will carry them, and that business principle and systems are to be avoided, at least an allergy, more often a positive infectious rash to be scrubbed out. 

An MEE is a business that pursues mission and redeploys its profits into expanding mission.  Any other orientation eventually fails.

Make the money first, then reinvest it in good works

Freshly back from a gates Foundation convening in Durban, South Africa, I posted what was for me the most personally moving event, my Pictures at an enumeration:

What is important is not principally what happened – it totaled a few hours’ work, and resulted in a stack of papers with information.  Papers that had legal validity to the city of Durban, hence economic, judicial, and political consequences. 

I realized with a shiver that I’d seen this dynamic before – at real estate closings.  The same curious convergence: months of work, negotiations, bringing people together, culminating in a gathering where papers are filled out and signed, then taken to government for recordation. 

Information becomes part of the legal reality.  A bargain is struck, a bargain with consequences. 

In a closing, it’s about property and money and future obligations.  So too in an enumeration – property and money and future obligations.

The city has now taken cognizance of this neighborhood, its people, and their property. 

Enumeration is the inauguration of urban citizenship.

Enumeration creates citizenship rights

Finally, Sherlock Holmes took time out from his intertemporal schedule to explain What makes a good consultant? Attributes of character, Part 3a and Part 3b:

It was always Watson’s place to listen actively

Continued from the previous Part 2b and Part 2a, which dealt with services and activities.]

[A previous trio, Part 1a, Part 1b, and Part 1c, covered the rules of engagement with clients.]

Quick to absorb and process new information

Holmes feared subconsciously anchoring his or his client’s expectations through half-baked theorizing and prescribing.  For that reason, he sought to ascertain and enumerate the whole ecosystem of facts surrounding a particular case before making any deductions:

“You don’t seem to give much thought to the matter in hand,” I said at last, interrupting Holmes’s musical disquisition.
“No data yet,” he answered. “It is a capital mistake to theorize before you have all the evidence. It biases the judgment.”

A Study in Scarlet, Part 1, Chapter 3

Start by examining the evidence

Voraciously he sought data:

“I am an omnivorous reader with a strangely retentive memory for trifles.”

The Adventure of the Lion’s Mane

Is constantly learning

 “Education never ends, Watson. It is a series of lessons with the greatest for the last.”

The Red Circle

So is a blog.

There is yet more to learn, Watson

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[Previous Months In Review available here: Nov 09, Oct 09, Sep 09, Aug 09, Jul 09, Jun 09, May 09, Apr 09, Mar 09, Feb 09, Jan 09.]

When the history of our global credit crunch is written, the last two weeks in December will be seen as an outbreak – the Patient Zero, as it were, of an epidemic of sovereign shadow bankruptcies, as posted in a five-part series Sovereign bankruptcy: Part 1, the Dubai double standard, Part 2, the bank has a problem, Part 3, the watershed moment, Part 4, the invention of bankruptcy, and Part 5, whither Islamic finance?:

Everyone’s credit is infected?

This multi-part post covers the upcoming sovereign bankruptcy of Dubai World, a shock of the first magnitude whose consequences that will reverberate for years if not decades.

Part 1 deals with the Dubai double standard of relations between debtors and creditors.

Part 2 reveals while the banking system, and by extension the world, now has a massive new problem.

Part 3 shows why this is a watershed event from which there is no going back.

Part 4 covers why the invention of bankruptcy in seventeenth-century Massachusetts was a critical advance in finance.

Part 5 asks the question, whither Islamic finance?

From the beginning of this extensive post, I’ve been positing that one should ignore all the warm words emanating from the emirates, which are mere palliatives, and instead look at the brutal facts:

1. Dubai World has repudiated its debts and announced a monetary default.

2. Abu Dhabi is not making any commitments to guarantee the shortfall.

3. Creditors have miserable alternatives since they cannot repossess the collateral and will have to sue the sovereign.

4. The enforcement provisions of Islamic finance are untested.

How much cash is that worth?

Scarcely a week later we got a partial answer, as posted in Dubai World: flinching or maturing?:

Capital is the world’s fastest asset, even faster than people.  By announcing its intention to repudiate the debts of its offspring, Abu Dhabi and Dubai are telling the entire world they are tricky counterparties.  People who have choices, and the capital they have, will flee.

Last week, the Islamic capital markets stated clearly that they were fleeing:

We’re afraid of the gnus

Dubai rocked world markets in late November when it requested a freeze on $26 billion of debt payments by Dubai World in order to restructure the conglomerate.

“I think Abu Dhabi saw the adverse market reaction to Nakheel debt restructuring news play out over several days and perhaps decided they had seen enough,” said Saud Masud, head of research at UBS AG in Dubai.

Clearly the AHI blog post was the tipping point.

If David writes one more word …

Analysts said Abu Dhabi’s decision to provide a further $10 billion to Dubai restored confidence in the federation.

With the default, Dubai World had been trying the same trick that George IV tried with his creditors: borrowing against the bond of blood, and seeking to welsh by denying the bond’s validity.

Though many in the capital markets relaxed, in our view it was just the Tip of the iceberg: Part 1, hitting submerged deficits, and Part 2, sinking the currency?:

Ay, there’s the rub – is there any reason to believe Greece will do so?

You should believe that I will lose weight after I eat

The treaty on monetary union banned bailouts of euro members, but senior European officials say there are ways around it.

Rules you don’t enforce are worse than useless.  If the EU does bail out Greece, it will have zero fiscal credibility, and who is to say that Iceland, Ireland, or Portugal will not feel like chumps for their not asking for a bailout? 

One option would be a loan from a financially strong country such as Germany.

Oh, they’d love that.

Sure, let’s lend money to Greece, okay chief?

Another constituency hoping to tiptoe away from accountability is the rating agencies, whose role in all this has been thoroughly documented and who are now hoping to Wriggle out: Part 1, what should happen:

Making this so exasperating is that the solution lies at hand, if only we had the wit to see it and gumption just to do it.  Capital markets are a large multi-player game with ever-changing participants.  Games have rules, and rules must be interpreted, adjudicated, and enforced by referees.  Referees, in turn, must be capable, disinterested, and accountable. 

The rating agencies could be the Referees of Risk Assessment, if their business model were circumscribed to make them capable, disinterested, and accountable.  Like this:

Simple, isn’t it?

It’s easier to remember that way, too

We do need rating agencies:

and Part 2, why it won’t:

Is that milquetoast soft enough for you?

Could you make it less scary,  please?

Academics and former rating agency employees who have been warning lawmakers about the Big Three for years say Congress is tiptoeing when it ought to be charging ahead.  

“I’ve had a few hedge funds call and ask me what I think of the rating agencies as investments,” said Frank Partnoy, a professor of law and finance at the University of San Diego School of Law, who has written extensively on the rating agencies. “If the dysfunctional regulatory structure stays put, the rating agencies soon will be back to business as usual, which will mean a continuing monopoly and sky-high operating margins approaching fifty percent.”

Partnoy’s complaint: so rotten it’s gotta be profitable

Translation: they’ll wriggle out of any meaningful punishment or restrictions.

Can nothing be done?  Look to unlikely heroes:

While Congress may be happy with cosmetic surgery, law enforcement officials are getting more aggressive. Dozens of lawsuits have been filed against the rating agencies, including a case filed on Nov. 20 by the Ohio attorney general on behalf of public pension funds. The Ohio suit, as well as the earlier suits, seeks billions of dollars in damages from the rating agencies and accuses the firms of negligence and fraud.

Though it’s hard to believe, I’m rooting for the tort lawyers.

Here’s for the tort lawyers!

At the other end of housing’s spectrum, we dealt with the simplest of questions, like how can we cost-effectively provide public toilets, in the battle of Wetware versus hardware:

Public toilets are the epitome of two classic problems in economics: the free-rider problem and the tragedy-of-the-commons risk.  Port-a-potties are sometimes unavoidable, but no one’s favorite:

Man’s best friend indeed – above and beyond the call of duty

New York City, the cradle of American apartment living, also served as the setting for two other posts:

[Continued tomorrow in Part 2.]

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[Previous Months In Review here: Oct 09, Sep 09, Aug 09, Jul 09, Jun 09, May 09, Apr 09, Mar 09, Feb 09, Jan 09]

The more I write about housing, the more entangled it becomes with the fabric of cities, formally and informally.  Housing is what makes places into cities, because cities are where people live in close proximity, and when the people move to the city faster than the city is willing to cope with them, the result is an explosion of informality and slums. 

A global phenomenon

In the formal city, the government defends my property – police, firefighters – and services my property – roads, utilities.  In the informal city, the government at best ignores my property – Kibera, Africa’s largest slum, is on no city map.  Because of this, political nature abhorring a vacuum, when government is absent, other power structures occupy the space, which as we saw creates more enemies of slum upgrading within the slum itself, as profiled in Slums, the enemy within: Part 3, Illicit landlords, and Part 4, fifth columnists:

In yesterday’s post, we discovered that despite its many palpable benefits, and the visible reality of its construction, many Kibera residents are greeting Kibera’s first slum upgrading with fear.

Kibera in 2005: Whom can you trust?

Background: A while ago [Early September – Ed.], Kenya’s newspaper The East African Standard published a great and extensive series on the proposed upgrading of Kibera: Africa’s largest slum, which I visited in 2005.

Kibera in 2005: photo taken during my visit

The articles covered community resistance in the Standard, Kenya, the indignity of having no toilets, slumlord exploitation, slumdweller fears, an idealist’s critique, the power of savings, the potential to reform building codes, and an editorial endorsing affordable housing (which the Standard mistakenly but understandably calls ‘rent control’).  Woven throughout the series were the main themes that show why slums, though hard to eradicate, are also hard to upgrade. 

Although the program will provide the lucky relocates with much improved housing at only a small increase in rent from what they are paying structure owners, these residents – some of whom have known little else their entire lives – have a seemingly inexhaustible supply of fears.  Where do these fears come from?  From those who win from a slum, such as landlords – or, as they prefer to be called, structure owners.

Kibera in 2005: Most of what you see is owned, according to somebody

You might expect such slumlords to be embarrassed, or to voice their objections through useful mouthpieces like the residents.  Instead they’re visible and belligerent:

As we saw in November, sometimes the best thing that can happen to a slum is for it to suffer a physical catastrophe, like a fire, that strips away the utterly inadequate housing and reveals thousands of people who suddenly have an urgent need, as we profiled in a four-part post on the conflagration that destroyed the Joe Slovo slum in Cape Town, in The urban palimpsest: Part 1, wiping the slate:

The man for whom the settlement is named: Joe Slovo, South Africa’s first democratic housing minister

The best thing to happen to the informal settlers of Cape Town’s Joe Slovo township began with a spark:

March 9, 2009

On 9th March 2009, a fire razed 500 shacks to the ground, and left 1,500 homeless. 

(Unless otherwise captioned, all photos are from iKhayalami and cover the March 9-11 rebuilding days.)

What evolved was a partnership between the community and iKhayalami, where an entire section of Joe Slovo was planned, cleared and rebuilt using materials and expertise supplied by the NGO, and the labour and community access supplied by the leadership – all done at just 10% of the cost of more formal housing developments.

The story that follows (a large set of pictures is here, from which this post’s images are drawn) is remarkable for what happened but even more for what it demonstrates about why slums are both resilient and change-resistant, how they become political and economic stalemates, and what becomes possible when tragedy cracks options open.  It also flashes insights into the role of Mission entrepreneurial entities (MEEs) and the responsive power of networks.

Part 2, gridding the vision, Part 3, building the grid, and Part 4, writing the lessons:

The story has a happy ending:

In conclusion

While these shelters are not perfect, and certainly dissimilar to more formal housing projects, iKhayalami was able to re-shelter a significant number of people:

Joe Slovo, March 2009

1. In conditions far above what they had before

2. In situ

3. In a way which prepared the site for future introduction of basic services. 

All these are enduring achievements.   Because slums are places where private investment has outrun public infrastructure, the rationalization of informal private settlements should lead public investment – in fact, it should induce public investment.  The city has granted the Joe Slovo residents tacit citizenship by handing them disaster packages and working with them in their deployment; it will be hard for them to retract it when the infrastructure can now be laid down logically.

Joe Slovo, March 2009

This was all done at a cost of less than 10% of what more formal structures cost and in just a few weeks.

Self-built means self-labored, which means cheap.

Remarkably given the circumstances, it was the community that came to the table in this instance and not government. 

Not remarkable at all: networks and markets always move faster than government.

Joe Slovo, March 2009

In South Africa, decent housing is a fundamental right enshrined in the ANC Charter, but that doesn’t mean everyone is well housed.

Estimates suggest a government house may only be delivered 30 years after being on the waiting list. 

Or until there’s a cleansing fire, which creates the urban palimpsest.

Joe Slovo, March 2009

An alternative approach to tragedy is the one being adopted by Manila in its efforts to bring the city to the people:

In a similar way, the typhoon-battered city of Manila is now proposing to grow by relocation, moving those who lived on its squalid and polluted river banks out to a new city a-building.  As reported in Bulatlat:

16 Oct 2009: Relocation Solution Poses a Dilemma to Slum Dwellers Made Homeless by Ondoy

Days after Ondoy struck, the government declared that it would no longer allow these poor Filipinos to return to their shattered homes.

Manila waterway slums before the typhoons

What is the ‘home’ to go back to?  Disaster can create an urban palimpsest, wiping away everything but the land itself.  So, as in Joe Slovo in Cape Town, we have the tension – an urgent need to do something very quickly, and a unique opportunity to do something very profound.

MANILA – In the aftermath of typhoon Ondoy, many were quick to blame the urban poor living along the creeks, waterways and riverbanks of Metro Manila. Their shanties and their garbage block these sewage systems, hence worsening the impact of the typhoon, so goes the familiar criticism.

Nonsense.  While I have not toured the now-destroyed riverbank slums, the pictures I saw at the Asia-Pacific Housing Forum, coupled with the scale of flooding, make this claim just about impossible. 

Days after the disaster, the government declared that it would no longer allow these poor Filipinos to return to their shattered homes.  Vice President Noli de Castro, who also chairs the Housing Urban Development Coordinating Council, confirmed in a news report that the families who were living along waterways and riverbanks would no longer be allowed to rebuild their homes in those areas.

Mr. de Castro’s long been interested in housing and slums

Anti-poor, or another reason?

Once the city embraces our exurbs, it makes an economic trade – the city will provide services, and the property owner will pay taxes, the arithmetic of which can be made transparent, as provided by my own city of Cambridge in our fair city’s fair taxes:

If only municipal government came with one of these certifications

In Our Fair City of Cambridge, as Click and Clack like to call it, nothing is as fair as our taxes are fair – and that’s fair enough, isn’t it?

Not just a law firm, a motto: the Harvard Square offices of Click and Clack

Roughly a month ago, there was mailed to our house a handy and glossy pamphlet, Understanding Your Taxes (link in .pdf, and highly recommended) that lays out, in English so plain it might as well be soporific, the basic facts about Cambridge’s city budget, and the role that local real estate taxes play in it.  As we’ve seen before, the basic budget algebra of real estate taxes requires the municipality to raise as much in annual revenue as it spends on city services. 

As Understanding Your Taxes puts it:

Basic facts about the real estate tax levy

Three major factors are responsible for calculating a tax bill:

1. The City Budget

2. Commercial-Residential Property Tax Classification

3. Property Values (Assessment)

That order is not happenstance: the city’s budget is built up uses first:

In city budgeting, you eat the pie before you pay for it

At the other end of the spectrum, when a neighborhood ceases to generate meaningful tax revenue because its property values are in decline, the city government can be dazzled by the prospect of using eminent domain to sweep away the hodgepodge of declining uses in favor of a master-planned upscale revitalization, only to miss its economic launch window, as shown in Collective failure: Part 1, the city loses, and Part 2, the company loses:

Who won in New London?  As far as I can tell, nobody.  New London lost: the jobs crossed the river to Groton.  Pfizer lost: it spent $294 million on a property that is now vacant and on which it will lose $75 million or more.  Ms. Kelo lost:

“In all honesty, I’m not happy about what happened to me,” Ms. Kelo said. 

Financially, she would have been better off selling when NLDC came calling.

But, she added, “With 43 states changing their laws, in that sense I feel we did some good for people across the country.”

Everybody lost.

The little house that became a symbol: relocated and refurbished

Naturally, when the real estate markets seize up, government tries to lubricate them, occasionally without success, as explored in mutual stalemate:

If to a hammer everything looks like a nail, to a government everything should be solved by lawyers, guns, or money.  So when the government factory wants to achieve particular public-policy results, it manufactures either or both of its products – laws and money – to motivate private participants, principally Mission Entrepreneurial Entities (MEEs), as essential actors in affordable housing delivery to do its work for it. 

I’ve given you every chance to move, Black

As revealed in a recent Guardian (UK) article, if the private participants don’t move, the government can find itself stalemated.

Why aren’t you moving?

It was a £1.5bn cash injection that was supposed to make a dent in England’s 5m-strong housing waiting list.

Five million waiting list?  In a country of 60 million total? 

The NHF, which represents housing associations, estimates that households on the waiting list in some areas would have to wait 280 years for a home.

Time to wake up, Rip; your home is ready

As the city’s economy grows, housing affordability shrinks, and the city’s finances improve, which combination gives elected officials a chance to bestow largesse, or even better, to promise to bestow largesse, as did Boston mayor Tom Menino in Praiseworthy intentions:

Is there harm in trumpeting something one has not done?

The city has not yet negotiated a price with Bank of America, but the money to buy the five buildings will come from $8.2 million in federal funds set aside to buy and renovate foreclosed homes.

Here we have an advanced form of political vaporware: a pledge to do something in the future, in exchange for your votes – your political equity – today.  That’s outstanding political calculus, of a type I’ve encountered before, most memorably in Egypt, when as a subcontractor to a USAID prime contractor, I designed and built financial projections for a 500,000-home affordable housing production program that President Hosni Mubarak announced one Pharaonic day on the campaign trail, seeking to keep his winning plurality above 90%.  I designed the program; I wrote the financial model; I highlighted the key decision variables; I sent the proposal forward.  President Mubarak got elected overwhelmingly, and I never heard further if the program ever advanced beyond that initial conception.

“What did his models say it would cost?”

The properties will then be resold to homeowners, nonprofit groups, or private developers.

Otherwise known as “people we haven’t located yet.”

City officials said they have also applied for [A deflective version of 'maybe we will get' – Ed.] another $39 million under the federal Neighborhood Stabilization Program.

Otherwise known as “money we haven’t got yet.”

Can we apply for money too?

City officials aren’t the only ones playing fast and loose with consistency – our Federal government showed remarkably flexible situational ethics, insisting on executive compensation caps for all banks – except the one we really, really need bailed out – as revealed in Do as I say, not as I did: Part 1, what I say, and Part 2, what I did:

Yesterday we had brave words and sound logic from Kenneth Feinberg, Treasury’s ’special master for compensation,’ who as quoted in the Wall Street Journal (quotes in blue Times Roman), hopes his new standards “will be voluntarily picked up” throughout corporate America.

You’ll pick it up if you know what’s good for you

He might’ve tried starting with Freddie Mac:

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

We also featured the return of Sherlock Holmes in What makes a good consultant? Part 3a, attributes of character:

[Continued from the previous Part 2b and Part 2a, which dealt with services and activities.]

[A previous trio, Part 1a, Part 1b, and Part 1c, covered the rules of engagement with clients.]

Now we come to the most interesting part of my narrative.  Not all those who are clever are cut out to be consultants.  One may learn the skills, but one does not spend thirty-three plus years in affordable housing finance, as the Compleat housing finance consultant, without being temperamentally suited to the role.  That my friend was, sometimes to my exasperation:

But with me there is a limit, and when I find a man who keeps his cigars in the coal-scuttle, his tobacco in the toe end of a Persian slipper, and his unanswered correspondence transfixed by a jack-knife into the very centre of his wooden mantelpiece, then I begin to give myself virtuous airs. I have always held, too, that pistol practice should be distinctly an open-air pastime; and when Holmes, in one of his queer humours, would sit in an armchair with his hair-trigger and a hundred Boxer cartridges and proceed to adorn the opposite wall with a patriotic V. R. done in bullet-pocks, I felt strongly that neither the atmosphere nor the appearance of our room was improved by it.

The Musgrave Ritual

He never threw anything out …

And the much more practical problem of water intrusion Only when it rains: Part 1, leaky roofs, and Part 2, pricy torts:

The queen of torts was out of sorts

Evidently building code does not require a property to be leak-free – if it did, probably no property anywhere would meet code.

When it becomes clear that a building has problems that go beyond punch-list items — a kitchen drawer, say, that won’t stay shut or a closet door that sticks — the first thing owners should do is hire an engineer.

Or a capital needs assessor.

“You have to get a top-to-bottom assessment of the building — the interior, the exterior, all the systems,” Mr. Sladkus said. “That creates a record and tells the board where things stand.”

The sooner this is done, the better, he added, because it takes away a sponsor’s potential claim that problems were caused by the apartment owners. Depending on the size of the building, an engineering report could cost $10,000 to $50,000.

It’s not cheap – and you get what you pay for.

“Why are you complaining?  All your limbs are reattached!”

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[Continued from yesterday’s Part 3a.]

[Continued from the previous Part 2b and Part 2a, which dealt with services and activities.]

[A previous trio, Part 1a, Part 1b, and Part 1c, covered the rules of engagement with clients.]

“What one man can invent another can discover,” said Holmes.

The Adventure of the Dancing Men

As we conclude this lengthy examination of my great friend, the Compleat housing finance consultant, we dig deeper into his character.  Some of thee elements, like his commitment to principle, I am convinced were always in his very marrow; others were consciously adopted over his thirty-three plus years as the world’s foremost affordable housing finance detective:

That any civilized human being in this nineteenth century should not be aware that the earth travelled round the sun appeared to me to be such an extraordinary fact that I could hardly realize it.
“You appear to be astonished,” he said, smiling at my expression of surprise. “Now that I do know it I shall do my best to forget it.”
“To forget it!”

“You see,” he explained, “Depend upon it there comes a time when for every addition of knowledge you forget something that you knew before. It is of the highest importance, therefore, not to have useless facts elbowing out the useful ones.”
“But the Solar System!” I protested.
“What the deuce is it to me?” he interrupted impatiently: “you say that we go round the sun. If we went round the moon it would not make a pennyworth of difference to me or to my work.”

Holmes cared not a farthing for knowledge without purpose to his work.

C8.       Is knowledgeable and erudite in service to the goal

Even as Holmes admitted total ignorance of things I would have thought essential for any adult Londoner, he knew absolutely everything about topics critical to his work, from footprints to the shape of ears, to his monographs on tobacco and typography:

“But this is my special hobby, and the differences are equally obvious. There is as much difference to my eyes between the leaded bourgeois type of a Times article and the slovenly print of an evening half-penny paper as there could be between your negro and your Esquimau. The detection of types is one of the most elementary branches of knowledge to the special expert in crime, though I confess that once when I was very young I confused the Leeds Mercury with the Western Morning News. But a Times leader is entirely distinctive, and these words could have been taken from nothing else. As it was done yesterday the strong probability was that we should find the words in yesterday’s issue.”

The Hound of the Baskervilles, Chapter 4

Not many detectives can read the paper and see first its fonts

C9.       Sees details

A consultant’s value in lightning diagnosis often arises from his ability to perceive details that others overlook, and then to correlate them with known species.  There is as much difference in the physical configuration of a Section 221d3 and a Section 221d4 as between a giant and a dwarf, yet to the average lay person the two programs sound much the same.  Just as a ceramics expert can identify and date the vase from its fragments, time and again Holmes surprised a visitor by identifying his origins or profession from the myriad small clues that we all carry with ourselves:

“The fish that you have tattooed immediately above your right wrist could only have been done in China. I have made a small study of tattoo marks and have even contributed to the literature of the subject. That trick of staining the fishes’ scales of a delicate pink is quite peculiar to China.”

The Red-Headed League

This was no mere parlor trick but a core element in his skills.  Evidence is fleeting, markets change, opportunities must be seized.  Give me a forty-five field strip of each asset in an affordable housing portfolio, he said more than once, and I should be able to date its vintage, value its management contracts, and provide a reasonable projection of the aggregate residual proceeds.  That speedy insight is part of what clients pay for:

“To the trained eye there is as much difference between the black ash of a Trichinopoly and the white fluff of bird’s-eye as there is between a cabbage and a potato.”
“You have an extraordinary genius for minutiae,” I remarked.
“I appreciate their importance.”

Chapter 1, The Sign of Four

To Holmes, seeing was paramount; which allowed him to see when something was absent:

“That was the curious incident.”

“Is there any point to which you would wish to draw my attention?”
“To the curious incident of the dog in the night-time.”
“The dog did nothing in the night-time.”
“That was the curious incident,” remarked Sherlock Holmes.

Silver Blaze

C10.     Is imaginative

Holmes never allowed himself to be permanently stymied.  He had the patient certainty of a zen mystic, that the truth was out there, waiting to be found:

“Holmes,” I cried, “this is impossible.”
“Admirable!” he said. “A most illuminating remark. It is impossible as I state it, and therefore I must in some respect have stated it wrong.”

The Adventure of The Priory School

“I must in some respect have stated it wrong.”

Imagination – what in another age will be called ‘business vision’ – is so critical in a consultant whose field is unique.  Such consultants do what has never been done before.  They create the future world by imagining how the value chain could come together, designing financial products for that world, and then growing businesses to deploy those financial products.

“See the value of imagination,” said Holmes. “It is the one quality which Gregory lacks. We imagined what might have happened, acted upon the supposition, and find ourselves justified. Let us proceed.”

Silver Blaze

“The real murderer is standing immediately behind you.” He stepped past and laid his hand upon the glossy neck of the thoroughbred.

C11.     Quick to absorb and process new information

Holmes feared subconsciously anchoring his or his client’s expectations through half-baked theorizing and prescribing.  For that reason, he sought to ascertain and enumerate the whole ecosystem of facts surrounding a particular case before making any deductions:

“You don’t seem to give much thought to the matter in hand,” I said at last, interrupting Holmes’s musical disquisition.
“No data yet,” he answered. “It is a capital mistake to theorize before you have all the evidence. It biases the judgment.”

A Study in Scarlet, Part 1, Chapter 3

Voraciously he sought data:

“I am an omnivorous reader with a strangely retentive memory for trifles.”

The Adventure of the Lion’s Mane

When he had the data, he would not rest until he could assemble it into a coherent theory that explained all the facts.

“Perhaps, when a man has special knowledge and special powers like my own, it rather encourages him to seek a complex explanation when a simpler one is at hand.  I trust that I shall soon have to congratulate you upon a successful conclusion. Come, Watson, I fancy that we may employ ourselves more profitably at home.”

Holmes could not shake off his disquiet over the third glass.

During our return journey, I could see by Holmes’s face that he was much puzzled by something which he had observed.

The Adventure of the Abbey Grange

C12.     Mutable; suits his demeanor to the situation

A good consultant uses his emotions and his behavior as tools to a solution.  If negotiation is required, he will be talkative, comforting, and reasonable.  If confrontation is called for, then the consultant’s face will be as stone.  If resolution is required, an implacable silence can be best.  Or when facing an irate enemy, best is to be lighthearted:

“Ha! You put me off, do you?” said our new visitor, taking a step forward and shaking his hunting-crop. “I know you, you scoundrel! I have heard of you before. You are Holmes, the meddler.”

My friend smiled.
“Holmes, the busybody!”

His smile broadened.
“Holmes, the Scotland Yard Jack-in-office!”

Holmes, in fact, was stronger than he looked.

Holmes chuckled heartily. “Your conversation is most entertaining,” said he. “When you go out close the door, for there is a decided draught.”
The Adventure of the Speckled Band

I’ve also seen him try to close a trap:

Holmes sprang from his chair.
“Get behind him, Watson! Don’t let him out! Now, sir, let us see the contents of that notebook.”
Milverton had glided as quick as a rat to the side of the room and stood with his back against the wall.

The Adventure of Charles Augustus Milverton

Milverton escaped Holmes then, but he could not escape the hand of fate.

C13.     Never does anything that violates his personal code of character

Jobs are uniforms we don and doff, Holmes once told me.  Character is bred in the bone.

“The matter does not rest with Colonel Ross. I follow my own methods and tell as much or as little as I choose. That is the advantage of being unofficial. ”

Silver Blaze

Holmes was true to his character, even if that meant taking risks to trap a criminal whom the law could not touch:

“My dear fellow, I suppose that you will admit that the action is morally justifiable, though technically criminal. To burgle his house is no more than to forcibly take his pocketbook–an action in which you were prepared to aid me.”
I turned it over in my mind.
“Yes,” I said, “it is morally justifiable so long as our object is to take no articles save those which are used for an illegal purpose.”
“Exactly. Since it is morally justifiable, I have only to consider the question of personal risk. Surely a gentleman should not lay much stress upon this, when a lady is in most desperate need of his help?”
“You will be in such a false position.”

The Adventure of Charles Augustus Milverton

Our first goal was to be undetected; our second, to be unrecognizable.  Who would expect Sherlock Holmes to burgle a flat?

A consultant should never do that which he believes to be wrong, no matter how earnest the client nor how high the fee.

C14.     Is constantly learning

 “Education never ends, Watson. It is a series of lessons with the greatest for the last.”

The Red Circle

So is a blog.

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[Continued from the previous Part 2b and Part 2a, which dealt with services and activities.]

[A previous trio, Part 1a, Part 1b, and Part 1c, covered the rules of engagement with clients.]

Now we come to the most interesting part of my narrative.  Not all those who are clever are cut out to be consultants.  One may learn the skills, but one does not spend thirty-three plus years in affordable housing finance, as the Compleat housing finance consultant, without being temperamentally suited to the role.  That my friend was, sometimes to my exasperation:

But with me there is a limit, and when I find a man who keeps his cigars in the coal-scuttle, his tobacco in the toe end of a Persian slipper, and his unanswered correspondence transfixed by a jack-knife into the very centre of his wooden mantelpiece, then I begin to give myself virtuous airs. I have always held, too, that pistol practice should be distinctly an open-air pastime; and when Holmes, in one of his queer humours, would sit in an armchair with his hair-trigger and a hundred Boxer cartridges and proceed to adorn the opposite wall with a patriotic V. R. done in bullet-pocks, I felt strongly that neither the atmosphere nor the appearance of our room was improved by it.

The Musgrave Ritual

He never threw anything out …

C.        Attributes

Naturally, Holmes was an introvert:

He was the only friend I made during the two years I was at college. I was never a very sociable fellow, Watson, always rather fond of moping in my rooms and working out my own little methods of thought, so that I never mixed much with the men of my year. Bar fencing and boxing I had few athletic tastes, and then my line of study was quite distinct from that of the other fellows, so that we had no points of contact at all. Trevor was the only man I knew, and that only through the accident of his bull terrier freezing on to my ankle one morning as I went down to chapel.

He never threw anything out …

“It was a prosaic way of forming a friendship, but it was effective. I was laid by the heels for ten days, and Trevor used to come in to inquire after me.

The “Gloria Scott”

But that is the superficial trait.  A good consultant has personality and character bred in the bone, as Holmes showed time and again.

            C1.       Loves his work

When unchallenged, Holmes lapsed into ennui and had recourse to his one weakness, the cocaine bottle.  Yet given the slightest new puzzle, he was up at the scent, ready to throw aside all other considerations in pursuit of those stimuli without which life to him was gray:

He looked from one to the other of us, and under our gaze of inquiry he became conscious that some apology was needed for this unceremonious entry.

Holmes would always interrupt his breakfast for the thrill of a new problem

“I’m sorry, Mr. Holmes,” he cried. “You mustn’t blame me. I am nearly mad. Mr. Holmes, I am the unhappy John Hector McFarlane.  I am the most unfortunate man at this moment in London. For heaven’s sake, don’t abandon me, Mr. Holmes! If they come to arrest me before I have finished my story, make them give me time, so that I may tell you the whole truth. I could go to jail happy if I knew that you were working for me outside.”
“Arrest you!” said Holmes. “This is really most grati – most interesting.”
The Adventure of the Norwood Builder

It must be admitted that some clients found it difficult to accept that to Holmes they were merely problems, and not always human beings of flesh and blood. 

Without having a tinge of cruelty in his singular composition, he was undoubtedly callous from long overstimulation.  There was no trace then of the horror which I had myself felt at this curt declaration; but his face showed rather the quiet and interested composure of the chemist who sees the crystals falling into position from his oversaturated solution.

The Valley of Fear, Chapter 2

As he aged, Holmes became gradually more accommodating of human foibles.

C2.       Is honest and frugal

People in a panic will say anything, promise anything, to secure the assistance they desperately need.  At such time they are careless about money.  Holmes is not: he always accounts faithfully.

No matter how preposterous our client’s deportment, Holmes treated him with deference.

“There are three hundred pounds in gold and seven hundred in notes,” he said.
Holmes scribbled a receipt upon a sheet of his note-book and handed it to him.

A Scandal in Bohemia

            C3.       Is interested in the results, not the credit

Singled-minded in his quests for truth, Holmes concentrated the whole of his being upon the task at hand – pursuit of the client’s interests.  As good consultant, he told me, cares not how it is done, nor who claims the credit afterwards, provided the client is satisfied.

At least, that is what he would say upon reflection.  In the heat of the moment, he sometimes resented the hangers-on, those who plagiarized his writings or claimed for themselves intelligence or activity performed by Holmes.

“What you do in this world is a matter of no consequence,” returned my companion, bitterly. “The question is, what can you make people believe that you have done?”

Yet he realized that his willingness to share credit, his positive indifference to it seizure, meant he would be brought in on many more matters than had he been one to hoard his insights, knowledge, or standing.

“Never mind,” he continued, more brightly, after a pause. “I would not have missed the investigation for anything. There has been no better case within my recollection. Simple as it was, there were several most instructive points about it.”

A Study in Scarlet, Part 2, Chapter 7

When the goal was in sight, the closing at hand, Holmes could be temporarily magnanimous:

Holmes smiled, and clapped Lestrade upon the shoulder.

In their early days, Lestrade was often derisive of Holmes’s amateur approach, but a few encounters convinced him that Holmes was a fellow worth following about.

“Instead of being ruined, my good sir, you will find that your reputation has been enormously enhanced. Just make a few alterations in that report which you were writing, and they will understand how hard it is to throw dust in the eyes of Inspector Lestrade.”
“And you don’t want your name to appear?”
“Not at all. The work is its own reward. Perhaps I shall get the credit also at some distant day, when I permit my zealous historian to lay out his foolscap once more–eh, Watson?”

The Adventure of the Norwood Builder

Credit always comes to rest at the feet of its rightful owner in the end.

C4.       Is the greatest expert in his specialized field(s)

A consultant must be an expert.  Never be merely average in your field, I recall Holmes advising a young South African aspiring to be a detective.  Always be the best.  If you are not the best, narrow your field of specialization until you are dominant.

Sherlock Holmes closed his eyes and placed his elbows upon the arms of his chair, with his finger-tips together. “Problems may be solved in the study which have baffled all those who have sought a solution by the aid of their senses. [P]ossession of all knowledge, even in these days of free education and encyclopaedias, is a somewhat rare accomplishment. It is not so impossible, however, that a man should possess all knowledge which is likely to be useful to him in his work, and this I have endeavoured in my case to do.”

The Five Orange Pips

“This I have endeavoured in my case to do.”

The result, as he observed on numerous occasions, is that within his field he has no competition.

“Well, I have a trade of my own. I suppose I am the only one in the world.”

That uniqueness he found not intimidating but exhilarating.

“I’m a consulting detective, if you can understand what that is. Here in London we have lots of government detectives and lots of private ones. When these fellows are at fault, they come to me, and I manage to put them on the right scent. They lay all the evidence before me, and I am generally able, by the help of my knowledge of the history of crime, to set them straight.”

He made a study of housing finance ecosystems:

“There is a strong family resemblance about misdeeds, and if you have all the details of a thousand at your finger ends, it is odd if you can’t unravel the thousand and first.”

A Study in Scarlet, Part 1, Chapter 2

Cases are variations on a theme, as it were

C5.       Creates specialized tools

A specialist creates tools.  The right tool makes the job easy.  Many of Holmes’s relied on information, such as his personal docket.

For many years he had adopted a system of docketing all paragraphs concerning men and things, so that it was difficult to name a subject or a person on which he could not at once furnish information.

A Scandal in Bohemia

He was also adept at disguise …

Or in his structured research into matters likely to prove relevant.

“Here is my monograph upon the tracing of footsteps, with some remarks upon the uses of plaster of Paris as a preserver of impresses. Here, too, is a curious little work upon the influence of a trade upon the form of the hand, with lithotypes of the hands of slaters, sailors, cork-cutters, compositors, weavers, and diamond-polishers. That is a matter of great practical interest to the scientific detective–especially in cases of unclaimed bodies, or in discovering the antecedents of criminals.”

Chapter 1, The Sign of Four

… whatever suited the situation.

C6.       When it comes to making transactions work, is both optimistic and skeptical

Holmes was a skeptic when it came to strangers appearing and offering help, yet he was always an optimist both regarding the great British public and with respect to finding solutions.  He never conceded defeat until it was impossible to reverse, or until the client relieved him of further duty.  In this pursuit, he asked endless questions, worrying the problem as a terrier worries a rat.

 “Oh, it is as well to test everything. Our inspection was not wasted. ”

The Reigate Puzzle

Shall we ascertain for certain that he is dead?

            C7.       Is courageous and true to his principles

Holmes was not a man to flaunt his morality upon others, yet his principles were bedrock.  Often his abstracted pursuit of the truth led him into dangerous waters or incurred the ire of powerful antagonists, men of whose lack of scruple neither I nor Holmes had any doubt.  Yet he never wavered.  When first we met I thought it was simply that in his excitement he was oblivious to danger, but the more I saw of him, the more I realized it was part of his character.

If Holmes thought his cause right, he was fearless.  If we hold our principles only when it is safe and comfortable to do so, he told me once, then we have no principles, merely the self-delusion of them … and that is worse than being consciously unprincipled.

Nowhere was this courage better demonstrated that in his duel with Professor Moriarty.  As Holmes himself told it:

Moriarty’s eyes were deep-set with all the death he had seen.

The fact is that upon his entrance I had instantly recognized the extreme personal danger in which I lay. The only conceivable escape for him lay in silencing my tongue. In an instant I had slipped the revolver from the drawer into my pocket and was covering him through the cloth. At his remark I drew the weapon out and laid it cocked upon the table. He still smiled and blinked, but there was something about his eyes which made me feel very glad that I had it there.

Moriarty’s entrance brought an aura that made one reach for one’s pistol

‘You evidently don’t know me,’ said he.
‘On the contrary,’ I answered, ‘I think it is fairly evident that I do. Pray take a chair. I can spare you five minutes if you have anything to say.’
‘All that I have to say has already crossed your mind,’ said he.
‘Then possibly my answer has crossed yours,’ I replied.
‘You stand fast?’
‘Absolutely.’

The Final Problem

Even after Moriarty was dispatched to his Maker, Colonel Sebastian Moran was no man to trifle with.

A message to the percipient reader

[Continued tomorrow in Part 3b.]

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