Archive for the ‘Finance’ Category

Happy Birthday

December 2, 2017

On the first day of this year, the euro turned eighteen years old. In the West, that’s a significant birthday—in other parts of the world, where life expectancy is much lower, an eighteen-year old is an older person—schooling is compressed, often down to zero, hard work and children are by then both abundant.

Currency is a fundamental part of finance—money, as defined by Philip Coggan, is the promise someone will pay you back. It therefore goes without saying that if a nation possesses a strong currency, one perceived to hold its value, this is major asset.

A corollary is that, like the nuclear club, the strong currency club is zealously, and jealously, guarded.

Until the First World War, roughly a century ago, the British pound sterling had been the top of the crop for a couple of hundred years. British debt in WWI, much of it contracted with US banks, together with the rise of huge American conglomerates in banking and oil, propelled the dollar onto the currency throne.

At the end of the XIXth century, men like Rockefeller, Vanderbilt, Morgan, and others created the business giants that catapulted the US economy onto the world stage.

Then, at the end of the XXth century, a new currency appeared. It happened in the heart of Europe, and the Brits didn’t like it at all. Many in England still long for an empire that  evaporated three generations ago, and the thought of an upstart replacing the pound was the last straw.

But replace it it did, and together with the renminbi—literally the people’s bill, or banknote—it has pushed the pound off the podium, which like any proper podium, only has space for three medals.

One indicator of success is the number of nations pegged to the currency—the list for sterling reads like the last cronies of a dictator: Falkland Islands, Gibraltar, Guernsey, Jersey, Isle of Man, Northern Ireland, St. Helena, Scotland.

The euro steamrolled through the peg list, in good part because of the French influence in West Africa—currencies pegged to the CFA franc jumped onto the new EU currency in 1999.

Country Currency Name Peg
Bahrain Dinar USD
Benin West African CFA Franc EUR
Bosnia and Herzegovina Convertible Mark EUR
Bulgaria Lev EUR
Burkina Faso West African CFA Franc EUR
Cameroon Central African CFA Franc EUR
Central African Republic Central African CFA Franc EUR
Chad Central African CFA Franc EUR
Cuba Convertible Peso USD
Denmark Krone EUR
Dijibouti Franc USD
Equatorial Guinea Central African CFA Franc EUR
Eritrea Nakfa USD
Gabon Central African CFA Franc EUR
Guinea-Bissau West African CFA Franc EUR
Hong Kong Dollar USD
Ivory Coast West African CFA Franc EUR
Jordan Dinar USD
Lebanon Pound USD
Lesotho Loti ZAR
Mali West African CFA Franc EUR
Namibia Dollar ZAR
Nepal Rupee INR
Niger West African CFA Franc EUR
Oman Rial USD
Panama Balboa USD
Qatar Riyal USD
Republic of the Congo Central African CFA Franc EUR
Saudi Arabia Riyal USD
Senegal West African CFA Franc EUR
Swaziland Lilangeni ZAR
Togo West African CFA Franc EUR
United Arab Emirates Dirham USD
Venezuela Bolivar USD

And all this happened in just eighteen years, during which time I watched the London-based CNBC show diss the euro in every which way, and the London merchant bankers, along with their friends in New York, and the Anglo-Saxon rating agencies, do everything in their power to destroy the currency union.

In the process, they caused untold distress to families in Greece, Italy, Ireland, Spain, and Portugal—anything and everything to throw those countries under the train, and sow discord in Europe. Their legacy is profound: fringe parties on the far right and far left, dealing in the same crappy mumbo-jumbo that placed Donald Trump in power—I don’t often plug books in these pages, apart from my own, of course, but treat yourself this Christmas, and read The Making of Donald Trump.

David Cay Johnston, a man with unusually large testicles, grabs you by the very same right from the first sentence—he’s known mumbo-trumpo for decades, and does a superb job of deconstructing America’s new and much lamented leader, reducing him to the selfish and ignorant conman he’s always been.

The second legacy of UK and US investment banks was unexpected: despite the pain—and inexplicably in the greedy and selfish corridors of Goldman Sachs, Morgan Stanley, and the other noble houses—all but a small minority of the people in those nations wish to stay in the euro.

And these are not PIGS, the generous sobriquet given to hard-working nations by Blackberry-twiddling, Excel-fondling children in London and New York—these nations, my little friends, are the cradle of European civilization: these are the peoples who invented, adopted, and disseminated philosophy, democracy, astronomy, and yes, history. Words that rhyme with money, but there the similarity ends: money, like yourselves, is merely a tool.

One of the obvious characteristics of this new kid on the block is the speed with which it became a mainstream player. I’ve written about that non-linearity when it comes to technologies—the eons it took for prehistoric cave art to turn to writing, and the lightning speed of media development in recent years.

Digital has changed everything, and the new new kid on the block, who everyone is trying to kill, recently touched ten grand—this child is secretive, clever, devious, and profound.

And thoroughly unpredictable—she must therefore be a lady, and her name is bitcoin.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.



Three Buses

September 30, 2017

There’s a well-known British gripe about the bus service—you wait forever, then three come at once.

I’m using that to go a little further down the automation road. The UK Labour Party conference took place last week, and Jeremy Corbyn, who since the June 2017 election fancies his chances, spoke to his audience about plans for a robot tax.

The reaction from the manufacturing sector and the Tory press was swift—the word Luddite was very much in evidence.  The left, of course, was quick to support the idea. When we compare the two articles (using the Private Eye sobriquets), the Torygraph one is just demagoguery, the Grauniad piece is better thought through.

Corbyn diluted the message for political reasons, but it’s an important discussion.

First out of the post was South Korea, which is currently ruled by the liberal Min Ju party. In early August, the Koreans announced that tax incentives would be limited on automation investments.

This is not a ‘robot tax’ as such, but it does recognize that if the state provides a safety net for its citizens, that service must be funded by society.

Traditionally, this has been paid for by corporations and job-holding citizens, and a strong shift toward automation means that more citizens will lose their jobs—if we assume for this analysis that demography remains unchanged, then governments will find it increasingly difficult to support their citizens.

The choices are stark, but partial options could be combined.

  • The Luddite option—freeze automation
  • The Robot Tax—increase revenue from companies which reduce their workforce
  • Increase debt—business as usual, pretend the problem doesn’t exist
  • Reduce benefits—when a threshold is broken, there will be blood on the streets

The alternative view to all this is that Artificial Intelligence (AI) will create more jobs than it destroys. That’s one area where the debate is particularly hot.

The three buses problem. Transport researchers have built mathematical models to study this problem (hint: it never happens on the underground).

PwC put out a press release on AI and jobs in March 2017, which is disturbing on two counts—the numbers are compelling, but the interpretation is weak.

The study states that up to 30% of UK jobs will be gone by 2030, but ‘this should be offset by job gains elsewhere in the economy.’

The only suggestions for that last part are that a higher level of education will be needed for those new jobs, and they will be more social in nature.

PwC also tells us that in the US, the job loss number is 38%, and in Germany, 35%.

So there’s one key question—which side is right: AI job gain or AI job loss?

To find out, I asked a machine.

“Google, what new jobs will be created by artificial intelligence?”

A study by Accenture helped me out. Apparently, there are three fascinating entirely new job categories. These are:

  • Trainers
  • Explainers
  • Sustainers

I’ve abridged some of the explanatory text below, because in humans, tedium can easily set in.

Humans in these roles will complement the tasks performed by cognitive technology, ensuring that the work of machines is both effective and responsible.


This first category of new jobs will need human workers to teach AI systems how they should perform…
…they teach AI algorithms how to mimic human behaviors.

Customer service chatbots, for example, need to be trained to detect the complexities and subtleties of human communication…
…Yahoo engineers have developed an algorithm that can detect sarcasm on social media and websites with an accuracy of at least 80%.

Consider, then, the job of “empathy trainer” — individuals who will teach AI systems to show compassion…
…Humans are now training the Koko algorithm to respond more empathetically to people who, for example, are frustrated that their luggage has been lost, that a product they’ve bought is defective, or that their cable service keeps going on the blink even after repeated attempts to fix it.

Without an empathy trainer, Alexa might respond to a user’s anxieties with canned, repetitive responses such as “I’m sorry to hear that” or “Sometimes talking to a friend can help.”

The second category of new jobs — explainers — will bridge the gap between technologists and business leaders. Explainers will help provide clarity, which is becoming all the more important as AI systems’ opaqueness increases. Many executives are uneasy with the “black box” nature of sophisticated machine-learning algorithms, especially when the systems they power recommend actions that go against the grain of conventional wisdom.

I can think of a couple more categories ending in ‘ainer’ for the guys who wrote the study. I would also say that all these amazing jobs are centered on humans helping machines, not machines helping humans—maybe the report was written by a robot.

Enter Eric Schmidt, your man from Google. Speaking at the Viva Tech conference in Paris in June this year, Schmidt quoted a McKinsey study that states 90% of jobs are not fully automatable.

Two points come to mind: the first is that if 90% are not, 10% are—add that to the present jobless rate. The second is the definition of fully. If we think very conservatively, and speculate that fully means only 20% (i.e. you still do the other 80% of your job, presumably for 80% of the pay), then the added employment loss is a further 18%.

Of course, you might do 100% of what you did before in 80% of the time, because AI is helping you out.

For instance, let’s say you have a job processing expense claims. When you get to work, you say good morning to your three colleagues and sit down at your desk. There’s a stack of paper invoices in front of you.

AI now provides a machine where you dump the lot, sort of like a juicer.

The machine sorts through everything, regardless of size, scans and reads issuers, dates, and amounts, and produces a spreadsheet with the results. It compares that with a sheet you’ve received from the claimant, and attempts a match. It flags any inconsistencies.

Your job is to run through the line items, query any expense that seems unjustified, or any amount entered that doesn’t match. A job that took one hour is done in fifteen minutes, so you can now process four such claims per hour—congratulations, your productivity just quadrupled.

But wait… for this to work, you need four claims on your desk every hour, and the limiting factors are: (i) how many claims you actually get; (ii) whether the speed with which your department processes them (pre-AI) introduces delays.

If your team is working well, then with the introduction of AI it now has four times the productivity, but unfortunately, not four times the work, because expense claims are not going to quadruple.

Your company is pleased as punch. You’re their star operator. It fires your three colleagues, and the departmental productivity quadruples. Actually, now it even goes up a little more—because you have no one to chat with, you can now manage a claim every twelve minutes, so you’re doing five times better.

Your new robotic colleague always says: Hi! I’m done with this batch, please feed in the next documents. It doesn’t know about your lunch hour, so it repeats this mantra at regular intervals when you’re munching your sandwich. Since it gets no input, the pitch of the automated voice shifts from cocktail lounge seductive to low-cost airline lounge wife.

Over the last few months, the damn thing has been driving you nuts. This afternoon, you weren’t quite yourself, and smarty-pants AI (you call it SPAI) said it once too often.

You hurled it out the window, two floors down—it landed on top of a parking robot and shattered its triangulation vision unit. SPAI’s last croak was “Hi! I’m done…”

Your section head wanted to keep you on—anyone can make a mistake, it’s known as human error. Unfortunately, Health & Safety had the last word. After all, if the claims robot had killed a human, can you imagine the publicity?


So there we are—all four jobs gone, but the good news is the new machine is far more advanced, and benefits from a cutting edge AI training algorithm, so it doesn’t need a human at all. And when it’s done with this batch, it turns itself off until the next one arrives.

That’s excellent for carbon emissions, and the new spy never says a word.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.


No Pension

September 23, 2017

Paradigm shifts don’t often happen at great speed—usually, change gathers momentum, circumstances around you begin to diverge from the old norm, and then quite suddenly you realize you’re in a different world.

It happened with electricity, the motor car, and the internet, and it’s in full force with robots.

In The Hourglass, which I’m presently writing in earnest, governments find a new social contract that builds in the workforce paradigm shift (telling you more would spoil things).

Let’s see how many people I put out of work when writing this article.

During the week, a couple of interesting topics for my weekend chronicles invariably pop up. If I’m traveling, it’s easier, sometimes fate intervenes, more often I read or hear something which merits a text and do a screengrab.

This week, out of three or four possibilities, robots back came on the radar with a vengeance, partly because of a newspaper article. I can’t remember the last time I bought a newspaper—analog that is, because I’ve never bought a digital one.

So there’s the vendor out of business, although in the US and elsewhere, the profession died decades ago with the appearance of newspaper vending machines.

I guess the fact I don’t buy papers is not unusual, so there’s another bunch of people out of work—reporters, editors, distribution jobs. News organizations have been slimming for years, in any case. Pieces written on a computer (bye-bye typists), auto-correction for typos and grammar (so long copy editors), digital image libraries (see you illustrators and photographers), automated layouts and printing (ciao typesetters)… the list goes on.

All my research is done online. After this brief intro, I’ll re-read the Elon Musk article, hunt around for other sources, and type up my thoughts. No library, no coffee on the way, no photocopies, no writer’s notebook, no pens, no pencils or erasers, zilch. Add ’em up.

Finally, publication, review, and distribution—Wordpress and I take care of all that. And how about you? We (WordPress and I) only ask for your time. Once in a while WordPress fields you an ad, but that’s fine. So do the papers I read online.

The time I take to research, write, re-read, and publish is my contribution. Since each article takes about four hours all told, and I’ve been publishing weekly for ten years, we’re at about one hundred days and counting—believe me, that’s nothing compared to the number of full-time jobs lost along the way.

Whenever a paradigm shifts, the naysayers come out of the woodwork—when trains appeared, cows would stop giving milk (false); with the advent of calculators, kids would be much worse at arithmetic (true); aquaculture would be the end of fishing (false); computers would replace humans (well…). It’s a long list.

Innovation has always changed the way we do things, and often changed the pace. And society is usually slow to deal with change, as manifest this week by politicians talking about legislation on algorithms. Most people have no idea what an algorithm is—and that includes lawyers and lawmakers. My definition? It’s a quantitative approach to a problem—so good luck with that.

Elon Musk, most famous for the Tesla electric car, considers artificial intelligence (AI) the biggest threat to mankind—he baldly states that ‘robots will be able to do everything better than us.’ Actually, haircuts might be an exception for a while—I can see kids getting teased at school for getting a real robot haircut.

Musk says transport jobs will be the first to go—the US Department of Transportation tells us that’s one in every seven. Unemployment in the US is at 4.3%. Employment is therefore at 95.7%. One seventh of that is 13.5%, so unemployment fairly quickly shifts to 17.8%, which is a three hundred percent increase—and AIV (vehicles) will not spend their time bumping into each other, so panel-beating will become an art form, not a day job.

The mental process I used in the last paragraph is a generic description of an algorithm—I did it in my head, since I pre-date calculators, but you can check it on Excel, or write a two line computer program to do it.

Musk  uses the game of Go as an example of how fast this will all change. If you want to see how much fun lawmakers will have legislating algorithms, read this summary from the scientific journal Nature—it’s a bit long, but humor me.

The game of Go has long been viewed as the most challenging of classic games for artificial intelligence owing to its enormous search space and the difficulty of evaluating board positions and moves. Here we introduce a new approach to computer Go that uses ‘value networks’ to evaluate board positions and ‘policy networks’ to select moves. These deep neural networks are trained by a novel combination of supervised learning from human expert games, and reinforcement learning from games of self-play. Without any lookahead search, the neural networks play Go at the level of state-of-the-art Monte Carlo tree search programs that simulate thousands of random games of self-play. We also introduce a new search algorithm that combines Monte Carlo simulation with value and policy networks. Using this search algorithm, our program AlphaGo achieved a 99.8% winning rate against other Go programs, and defeated the human European Go champion by 5 games to 0. This is the first time that a computer program has defeated a human professional player in the full-sized game of Go, a feat previously thought to be at least a decade away.

A recent study commissioned by the UK Royal Society of Arts suggests four million jobs in the British private sector could shift to AI in the next decade. That’s 15% of the workforce. The current unemployment number is almost identical to the US: 4.5%, and would bump up to 19.5% as machines take over.

A survey of employers shows that three sectors would be hardest hit: finance and accounting, transportation and distribution, and manufacturing. Over twenty percent of employers see more than thirty percent of jobs in those sectors disappearing.

These trends toward automation are much more prevalent in developed countries than in other parts of the world, and are pushing a major change in the way society works.

Job satisfaction, unemployment, trade unions, overtime, workers rights, coffee breaks, vacation, sick leave… all these words fall on a robot’s deaf ears. These days, when you call US airline customer services, you have to say the word agent three times before you get to speak to a human.

Society is globally unconcerned, or else humans blame other humans for their woes. Think Trump trampoline for expelling immigrants, Brexit, and the US job export to humans in third-world countries.

Citizens rally to the call against their fellow man, but no one blames the machines, or those who conceive or build them. I love technology, but I also believe in human employment—just as boundaries are imposed on people, so they must be imposed on machines. After all, we want our kids to grow up to be useful citizens, whose values include a work ethic and an education—if you grow up destined to do nothing, it’s hard to see why you should work hard at school, or even why you should go at all.

Crazy things happen when a paradigm shifts. If in fifty years there’s a scarcity of protein, there will be no more pets, since they compete with humans for food—salmon and trout patê, yum!

And in a world where robots do our jobs, there will be no pension plan.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.


August 5, 2017

History is most interesting when paradigms shift. And paradigms shift in two ways.

The first is when something totally unexpected occurs. The discovery of penicillin, which changed the relationship between humans and disease, is a good example. The second comes about through non-linearity, my favorite process. Water slowly builds up behind the wall, the level gradually rising, unseen and unheard, and then one day the wall cracks.

This build-up translates an accumulation of potential energy into a release of kinetic energy—the myth of Sisyphus, perennially rolling a rock up a hill until exhaustion releases it to roll down again. The king of Corinth provides the kinetic energy, the rock acquires potential energy, and then releases it as it rolls downhill.

A similar shift occurs when anger, stress, or frustration builds up inside you until there is a release, and there is a societal parallel as a trend or wish develops in enough minds to cause a shift. Arguably, the US presidential election is an example of the latter.

Unquestionably, so is the recent decision in parts of Europe (not Germany) to do away with the internal combustion engine. France and Britain plan to do so by 2040, by banning the sale of new diesel and petrol cars.

Germany, where diesel is king, timidly wants a million electric cars on the road by 2020—in 2016, there were forty-five million registered.

Which bring us to Uncle Rudolf.

Rudolf Diesel: an amazing man, of whom hardly an English biography exists.

The inventor of the most successful engine in the world is a little-known man. The Franco-German engineer became very wealthy from his invention, but he was a prodigy in engineering, with a string of innovations to his name.

You may not like engines, so forgive me torturing you with the information that the man invented the compression-ignition engine, a very different beast from the internal combustion engine that drives petrol-fueled cars. These engines fire on their own, using basic principles of thermodynamics to inject fuel into a compressed air mixture—above a certain temperature the mixture self-ignites, so the engine doesn’t need the complex low voltage-high voltage rig that fires spark plugs.

Diesel is the only guy with an engine named after him. Well… there is Wankel, but I don’t want to lower the tone on a weekend—we already have trump tweets for that.

The remarkable thing about diesel engines is they run on just about anything, as long as it burns. Which means used cooking oil, even from McDonald’s, and everything from cane sugar alcohol to beet to peanut oil—the oils fall under the category of biodiesel, and you can run the most recent diesel engines on it. You can even use homemade oil, as long as you wash it.

Rudy was born in 1858, and disappeared mysteriously from a postal steamer called the Dresden in 1913. Somewhere between dinner and breakfast he vanished from the ship, in the middle of the English Channel, while en route to London. What is known is that the fifty-five year old millionaire had dinner on his own and retired to his cabin at ten o’clock, leaving word that he was to be woken at 06:15 the next morning.

His bed was found perfectly made, with his unused nightshirt laid out, and his hat and overcoat were neatly folded on the afterdeck. A terribly disfigured corpse was found in the North Sea ten days later, and his identity confirmed by his son Eugen, based on personal effects.

The corpse was found near Norway, but the ship had sailed from Antwerp to London, not exactly close—there was a report on October 11th 2013 that Diesel’s body had first been found by a small Dutch fishing boat at the mouth of the Scheldt estuary in Zeeland, but cast overboard due to rough seas.

In the early XXth century, the world was still the province of colonial powers, and at the Paris World’s Fair in 1900, the Otto company exhibited a diesel engine running on peanut oil.

The French wanted it for their African colonies, where petroleum fuels were not abundant. Diesel himself had a noble vision for his engine—he saw it powering the agri-industry in remote parts of the world, and imagined a world where farming became self-sufficient—farmers would go their own fuel, refine it using simple methods, and use it to power the engines that operated tractors and harvesters.

Rudolph Diesel became a strong advocate for biodiesel, which is understandable for three reasons. First, his engine was fuel-agnostic, and he saw no particular advantage in advocating petroleum products. Second, it was a huge untapped market, which could greatly increase his company revenue.

Finally, it made perfect sense to locally produce the fuels that would be used in farm areas—although no one spoke of carbon footprint back then, or terrorism in the Mid-East, hindsight can be revealing on the consequences for both.

Enter John D. Rockefeller and Big Oil. A biodiesel success would scupper Standard Oil of New Jersey, and the huge US business bet on petroleum hydrocarbons.

Or… enter the German secret service, worried that Diesel would help Churchill with his plans for the development of a British submarine.


The suicide theory is very unlikely, and in those days a problem could be created or resolved by one man with a briefcase.

And although they found the hat and coat, the briefcase is missing to this day.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.





Old Europe

July 1, 2017

Old Europe is heating up again.

The disparaging term was coined by Donald Rumsfeld to vilify traditional European views that clashed with the Bush 43 administration’s vision of a new world order.

History is a wonderful leveler—this so-called order, fifteen years later, is a world in utter chaos. With one exception: Old Europe.

In mid-2016, the prophets of doom began predicting the end of Europe—Anglo-Saxon pundits repeated ad nauseam that the UK was the first nation to leave the European Union.

In the fall, a confused and fractured America elected Donald Trump, and the voices of isolation grew—a kind of nationalist autism (natautism) frenzy, where crazies with no historical grounding advocated a return to bastions of prejudice and hatred.

After Holland gave Europe its first sign of hope this spring, those same pundits said “with all due respect” that The Netherlands was small potatoes, France would be the game-changer.

And it was. The country whose motto is ‘liberty, equality, fraternity’ scored a home-run for Europe. Twice, in the presidential and parliamentary elections—and shut the pundits up for good.

In the meantime, Trump steadily confirmed what better-educated Americans knew all too well: his boorish incompetence, singular lack of judgement, and moral turpitude—the latter manifested through multiple cheap accusations and childish threats, offending anyone and everyone who disagreed with him or dared question his ‘wisdom’.

And then came the Maybot debacle. It’s difficult to exaggerate the degree of confusion that currently plagues the British Isles, but it’s left an isolated England even more alone, and turned Old Europe into a haven of common sense when compared to the Anglo-Saxon alternative.

Finally, young Britons saw the light, and came out en masse to change the status quo. I’ve been railing in these pages for some time that apathy and amnesia are democracy’s greatest enemies—British youth suddenly awoke and put the fear of god into the Tory government.

The same seems to have happened in France, where Macron mobilized young people in ways that completely shifted the political spectrum.

In both countries, the change was for the good of all, and underscored a simple fact—what unites us is far more important than any divisions.

The U.K. is more isolated than ever, and has absolutely no idea on how to extricate itself from its present mess. Europe is left wondering who it is negotiating with, and what will actually be discussed—on both sides of the Channel, cool heads believe that the most straightforward solution would be to confess that the whole Brexit affair was simply a huge mistake—many affairs are.

Europe is running hot. The financial channels, which delighted in dissecting the break-up of the euro, are now busy discussing the vagaries of the pound and UK inflation.

The dollar, which was moving toward parity with the euro even as Trump was elected, and afterward flirted with values below 1.05, is presently nudging 1.15.

The greenback vacillates as Old Europe thrives.

The next test for Old Europe is the German election on the 24th of September. It seems unlikely that the Germans will undo the good things this year has brought.

Frau Merkel, whether you like her or not, is a steady hand at the helm, and has learned several important lessons about Europe—some of which, like austerity, made Southern European nations pay a spectacular price, but there is a far clearer vision now about what works and what doesn’t.

We have scary people like Le Pen, Trump, and Farage to thank for showing us all how not to do it, and above all for frightening the politicians and the young people of Europe alike into a return to common sense.

Beyond the borders of Europe lies chaos: the Mid-East inheritance of the Bush and Blair years, and the radical testosteronocracy of Russia.

We’re not out of the woods yet, but this good feeling that permeates the continent is a superb opportunity for Europe to consolidate further.

After all, many of the citizens of the Union will be happy to tell you they live in the best place on earth. And England can so easily remain a part of that, if it exercises one of its most prized virtues—common sense.

Good Old Europe.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.



Fractured, Not Broken

February 4, 2017

In medicine, the two words are identical. A fractured bone is broken, period.

But in the minds of ordinary people, these are two different concepts. And in America today, I see the distinction in simple terms.

America is broken is an untruth, aka an alternative fact, put forward by the new US administration. There are obvious asymmetries in American society between the Haves and the Have Nots, but there is no novelty here. Overall things are far from where they should be, but far better that they were. Rust belt? Read the Grapes of Wrath, and listen to Woody Guthrie sing Do-Re-Mi. Then after that, listen to Ry Cooder cover the same tune. Turn it up, it brings tears to your eyes!

By the way, the incredible accordion player happens to be a Mexican, Flaco Jiménez—or rather, what used to be disparagingly called a wetback, an immigrant to the San Antonio area of Texas.

America is fractured, on the other hand, is no factoid. By my definition, the country is split down the middle. FACT. Not because it’s broken, but because the ideology gap is huge, and widening.

A fascinating article by Fareed Zakaria in yesterday’s Washington Post helps put that in perspective. I admit I got sidetracked on the first paragraphs, trying to apply Spoonerisms to some cabinet names.

Sean Hannity could become Hean Sannity, and Steve K. Bannon might turn into BS Kannon. Even DJ himself could become TJ Dump, at a stretch.

But as I’ve said before, what these guys say is only relevant insofar as it gives them the power base to do things. And what they do is extremely worrying. Democracy gave them the soapbox, and populism gave them the popgun. Except this popgun not only fires the traditional cork to silence the media, but is capable of far greater harm.

The Post article uses data compiled by The Economist on the role of individual US states as net donors or recipients of federal funds. I feel a table coming on…

How the fed gets and spends its money (table from The Economist).

How the fed gets and spends its money (table from The Economist).

It turns out that, based on Zakaria’s analysis (the data are from 2009)

…blue states, which voted against Trump in 2016, that fund the red states that voted for him. From 1990 to 2009, Clinton states collectively paid $2.4 trillion more in federal taxes than they received in federal spending, while Trump states altogether received $1.3 trillion more than they paid.

A report from the Brookings Institution, also mentioned in the article, tells us that the areas of the US that voted against Trump produce the vast majority of economic output—true for employment, innovation, start-up companies, and pretty much any other indicator you fancy.

Even more worrying, the less than 500 US counties that voted Clinton generate 64% of GDP, whereas the Trump block (over 2,600 counties) generates the other 36%. These are not alternative facts, but between you, me, and the truck on blocks, who cares?

The fracture is clear: the areas where there is less knowledge, less employment, less education, and greater income inequality are the support base for a range of policies being enacted by the current administration. On the other hand, the areas that thrive better economically are being penalized for their success.

Overall, the kinds of measures now considered, which include changes to immigration, increased protectionism, and ignorance of all the benefits of a sustainable circular economy that emphasizes re-use, waste reduction, and a better environment, will be disastrous.

The one thing they will not do is improve the welfare of the 36% group.

Europeans, my own folk, would do well to dwell on these numbers—I look forward to a similar analysis of the Brexit referendum vote.

To those in Europe who believe that one generation is long enough to analyze the potential of a European Union, as opposed to the previous eighty generations of European war (a well-tested model), the facts above should be food for thought.

The US gained independence in 1776. If in 2011, a federal union can still support a diversity of winners and losers among the states, and work toward a greater balance, what part of a European Union do you not understand?


The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

Break Out the Wodka

November 12, 2016

It feels like a remake of Sweet Little Sixteen. Just change the lyrics a little.

He’s got ’em rockin’ in Moscow
In Beijing, Hebei
Deep in the heart of China
In North KO-RE-E-A

Way down in Crimea
Across Manila Bay
All the cats wanna dance with
Sweet little DJ

Yes indeed, they’ll be cracking out the Russian Standard these days in Red Square. And the square of heavenly peace. Glory days like these come once a century.

Everything’s gone a little nuts since Wednesday morning—dollar shot up, so did copper. Pound shot up, as speculation on a UK rate rise became rampant, and the brexit + trexit = succexit camp reveled.

Leonard Cohen preempted the Trump victory in the most appropriate way, and all I did this Monday was dump dollars.

Last night I went through the few Cohen songs I still know how to play: Suzanne; Chelsea Hotel, which he wrote after a one-night stand with Janis Joplin; and The Partisan, a classic about the French resistance in the Second World War. Not forgetting Marianne, and the song Joe Cocker immortalized: Bird On A Wire—both written for his longtime muse, Marianne Ihlen, who died earlier this year.

It helped me to sing those old songs, and to share a few tears with an old friend—he was always there for me on those dark nights in my English boarding school.

Cohen’s final album is called ‘You Want It Darker.’ What could be more appropriate.

Well, good old Donald’s ahead of me on the dollars, but with his plans for US debt, it won’t last. Personally, I think the markets are in headless chicken mode, and as January approaches both the nights and the knives will get longer.

After I went to Las Vegas in the spring, I was convinced this election might well end up giving the US this ‘accidental president’, and after Brexit I was sure. I owe you all an apology for boring you with these scribblings for weeks—but if ever there was a relevant historical topic, this is it.

Meantime, I worked on an early draft of my new book, The Hourglass—and I’m still only a third of the way in, with characters and concepts jockeying for position. Sometime around June, President David Klomp elbowed his way into my pages, right there in chapter 2.

I usually only share text when my book is already in good shape, but as Cohen says in Chelsea Hotel, for you I will make an exception.

President Klomp was late. Don Pletz paced the huge entrance hall, aware that a roomful of extremely busy men and women waited impatiently at the back of the mansion—among them, the British prime minister, the top adviser of the European Commission, and key world leaders in banking, insurance, and oil.

Pletz knew the discussion was super-sensitive, which is why the group was meeting in Maine, not Manhattan. He’d been thinking about this for years, a problem that hamstrung GDP growth, and made politicians act even more stupid than usual—calling referendums they couldn’t win, and making wild promises they had no way of keeping.

At the core, it boiled down to one, simple, four letter word.

The secret service men morphed into animated Action Man puppets, striding, taking positions, and murmuring into microphones. Pletz heard the blades of the Sikorsky VH-3D overhead and followed the presidential detail toward the helipad.

Marine One was given ground clearance by the senior security officer, and a large, ruddy man, running to flab, descended. The new tenant of the White House—POTUS as he was known to the acronym-rich US military—walked toward Pletz, the chopper downwash tangling his perennially messy hair into a stylist’s nightmare.

Klomp was a no-nonsense businessman, the sort of guy who disdained career politicians and had no patience or knowledge of detailed analysis—his approach to government appealed widely to his core voters—he trusted his gut.

Pletz greeted the president, a corporate magnate who he’d known for years. Personally, like many business people, he thought Klomp was a fool—a thin-skinned, self-obsessed, conceited buffoon. The chairman of Goldstein was a New Yorker like Klomp, and he knew a con when he saw one—the president was an empty set, and the campaign rhetoric about fixing Wall Street and main street was just a bag of nothing.

Goldstein Pletz had put a package together for this client, a marvel of easy solutions to complex problems. After all, that’s what an investment bank did best, from sub-prime mortgages to sovereign debt. Now, Pletz thought, as he showed the president into the meeting room, all I have to do is sell the package.

Signor Presidente.” The senior European Commissioner, a stubby Italian career politician with a face like a mole, shook the great man’s hand. There was no need for false smiles and photo-ops here—any reporter found within the perimeter would be dropped into the lake with a lead weight round his neck.

Next came the ‘special relationship’, a woman who guided the destiny of the United Kingdom. Pletz watched the dowdy, non-descript British PM pay homage to POTUS—it was well known that career politicians loathed him, just as he in turn despised them. Well, Brit politicians often referred to their nation as a corporation, UK plc: now she’d find out what it really meant—and agree to it.

“Welcome to the United States of America, ladies and gentlemen.” The president formally opened the meeting. “We were asked to meet here, in beautiful Maine, by our good friends at Goldstein Pletz. As you know, Goldstein is good for business, and business is good for America.” POTUS seemed well pleased with this quip. His hand absently ran his mussed hair forward.

“This great country was made great by deal-makers, and secrecy is the heart of the deal. It’s a pleasure to bring together the key players of the Western world, our friends from Europe, from Britain. I’ll tell ya—“the man in the red tie and the rumpled blue suit used the familiar tones that had won him the election—“Lemme tell ya, what we’re doing here today, I mean, this is the best deal you’ll ever make.”

He’s going off the reservation, Pletz thought. Cut with the bullshit already.

“Now, when I heard about this deal, understood the story here, I knew. I knew, people, that it would work.” People? Pletz could see the faint distaste on the British premier’s face, as if confronted with a particularly pungent plate of haddock.

One thing Tuesday did for me, it gave me a lot more motivation to work on The Hourglass. I’m going to leave you today with a little bit of homework, to help put the new leader of the free world in perspective.

The first gem is an article published in August by Anne Applebaum, a woman who was repeatedly insulted during the campaign by the anti-Jewish lobby of the Trump campaign. News today of how the president-elect plans to involve his family in the running of USA, Inc., very much supports her thesis.

The second piece was published yesterday in the Guardian. Among other things it suggests Sarah Palin might become interior secretary, in charge of emblematic parks like Yosemite and Yellowstone.

Yogi Bear will be turning in his grave.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.


November 5, 2016

History will be made on Tuesday. Either the United States gets its first female president, or Americans make the worst choice since the republic was created.

I subscribe to the view that there are no good choices—what we have here is poor and lamentable.

Nevertheless, if Tuesday, November 8th, delivers Donald Trump to the White House, I will never forgive myself if I don’t write a little prehistory today. Maybe I can change one US voter’s mind, tally one less vote for Trump.

There are a number of good, smart, and trustworthy US citizens who could have been on the stump on Tuesday. They include John McCain, Michael Bloomberg, Carly Fiorina, and Martin O’Malley. And yes, Bernie Sanders.

But none of them got there—some didn’t even try.

The America I know so well, the nation that has always welcomed me with open arms, deserves much better than these two—but given the stark choice between flu and cancer, you catch the flu.

These last weeks have been the climax of a toxic campaign—as soon as Trump got on the stump, that was inevitable. Why? Because he doesn’t discuss ideas, he attacks people.

From Little Marco to Lyin’ Ted, the stage was set from the start. And if you don’t seriously discuss policy, then your opponent can’t rebut your argument, and the whole thing becomes a cat fight.

That polarizes your supporters, who follow your example—it makes rivals enemies, and neighbors foes. Parents contaminate kids, schools become battlegrounds rather than communities, it’s as toxic as gets.

Blame Hillary Clinton for emails, for cozying up to Wall Street, and for decades of insider politics. Skip the email bit, and you could replace Clinton’s name with Bush, Reagan, Obama, Kennedy…

Is the email issue a deal-breaker? Only if was done to avoid scrutiny. That hasn’t been established, and doesn’t hold water. First, Clinton is not stupid, and she certainly remembers the Lewinsky email trap. Second, she knows some things can be written, some only spoken, and some not even thought. Third, the secure communications at her disposal are plentiful, including encrypted cell phones and other platforms.

Goldlock, which I researched for Atmos Fear, is the best commercial example of multiple cross-platform encryption. Clinton, like any other person in a sensitive position, has multiple communication options if she wishes to avoid scrutiny—therefore avoiding FOIA, or the Freedom of Information Act, seems a bit of a stretch.

Was she stupid to do this? Of course. Should that deliver America to Trump? Of course not. Practically all US politicians have supplementary personal email accounts such as Gmail, and huge federal agencies are already run by Google.

Let’s talk about Trump. Not those grope stories, the Howard Stern stuff, but the consequences. My big concern is that Trump is a political groper, not a man who thinks actions through and delivers.

The risk for Tuesday, and right now I see it as a huge risk, is that for the next four years America will grope immigration, grope foreign policy, grope healthcare, grope  economics, and grope terrorism.

The issue is not whether the man is endearing, it’s whether he has the nouse. He doesn’t. He’s a man consumed by his ego, ‘the man who stands before you without a guitar or a piano’—or brains.

A very dangerous proposition, and one that China and Russia would welcome, because with Trump in charge, the USA will make serious mistakes. And when the consequences of these become obvious, the president will come up with some version of ‘it’s not my fault.’

Reasoning and common sense don’t come into the arguments.

Immigration: build a wall
Terrorism: bomb the shit out of ISIS
The economy: lower taxes and watch it soar
Healthcare: revoke Obamacare

Take any of these and ask for detail, and that’s the end of the story. There’s no narrative, but all these issues are connected.

The low-paying jobs (which Trump has always used, both at home and abroad) are done by immigrants or in China. Immigrants come because gaps are there to be filled, and the people who own the gap are not ‘bad hombres’, they’re bad men—they’re US citizens, most likely not even Latinos, and they’re hiring.

Lack of jobs in the US, promotion of decent employment in the country of origin, and no war in the homeland, that’s the wall you need. There’s a reason why the US is full of Somalis, Afghans, and Sudanese—war. That’s what brings Syrians to Europe.

Syrians are like Americans, Somalis, or Portuguese: no one wants to leave their home.

Repatriate US jobs by imposing tariffs on China. Take a moment to reflect on the products you possess. Your phone. If it’s a Huawei, you’re excused. If it’s an iPhone, you’re not. Made in China, stealing jobs from US workers—from your friends and neighbors.

A five-star hotel near an American airport costs two hundred bucks a night. In China, it’ll cost you thirty-five bucks. Ballpark, your seven hundred dollar iPhone 7, which you can only ‘afford’ on credit anyhow, would cost four thousand bucks.

What do you think that’ll do for jobs in Ohio? And for iPhone sales, not to mention Apple engineers in Cupertino?

For every difficult problem, there’s a simple solution. And it’s usually wrong.

Don’t let this man grope the country, leave him to his pathetic little pastime of groping women. And one of these days one of them will turn round and knee him in the nuts.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.





The Household

October 22, 2016

The two words that govern our lives, ecology and economics, have very similar roots.

Many of our new words come from the dominant influence of America—which is so prevalent that in many countries, the prefix ‘United States’ is often dropped.

Verbs like tweet have found their way into various languages, as have nouns like pack or spread, and adjectives like prime.

But back in the day, if you wanted to come up with a new word, and give it that pizazz, there was only one thing for it—you went Greek.

If you wonder why ecology and economics rule you, it’s a no-brainer: ecology determines what you eat, and economy how you pay for food. Then there are a couple of other reasons why the two are important.

But back to the Greek. Oikos can mean three things: family, family property, or house. That’s similar to Chinese, where wo de jia means both my house, and my family.

So both these words are about the house, which you can interpret as the planet, your neighborhood park, or the country you live in.

So now for the terminations: logos means reason, and nomos means custom or law.

In general terms, one word means household function, and the other household management.

In ecology there’s a concept known as adaptive radiation, where a common structure adapts to changing environments through evolution—or if you happen to be a creationist, a fairy wand has been waved over the pentadactyl limb, magically transforming it into a bat’s wing, a human hand, a porpoise fin…

So ecology and economics packed their bags and headed off in different directions. But ecology stayed the course, and after hundreds of years there is not a single lie in it.

As a result, ecology has become increasingly valuable as our understanding grows, and we’re able to describe our life-support systems, and to manipulate them for food production. We can model these systems inside a computer and predict what may happen to them.

And whenever we (or nature) tip the system far enough from balance, the results are obvious, and often dramatic.

Economics has done its best to follow this course, in the complicated matter of household management. But because we don’t deal in the supply and demand of mass and energy, but instead slip in an intermediary that we can adjust and falsify, the whole system is flawed.

Schoolchildren learn in chemistry class that matter can neither be created nor destroyed. Nevertheless, when they learn about money, and how to use it, that concept breaks down.

This is relatively recent—when I was at grade school, we had a ‘shop’ where the kids could buy things, spend ‘money’, and learn about making change. Among other things, in those pre-digital times, it helped with simple math.

If you played monopoly, it demonstrated the basic concepts of ownership, profit and loss, and financial management—it included a debt model, and if a combination of bad, i.e. luck and judgement, put you in trouble with the bank, it was curtains.

Maybe there’s a version now where you can take out sub-prime loans, leverage your position with credit default swaps, perhaps the central bank can print money.

By the time I was at college, in the heady days of Reagan and Thatcher, wise men explained debt was a good thing, and that all countries did it. Fast-forward to 2016, where the world economy is now valued by the IMF at $75 trillion.

That would be the world GDP, so if you divide by the world population (7.4 billion, but I’ll add a decimal because no one really knows) you get a per capita GDP of 10,000 dollars.

That’s an equivalent monthly salary of 840 bucks, and since most of the world is way below that, it means that wealth distribution is obscenely uneven.

About twenty percent of the world population lives well, the rest is drowning in poverty.

About twenty percent of the world population lives well, the rest is drowning in poverty.

In a recent article in the Washington Post, Robert Samuelson points out that the world debt now stands at $152 trillion—that’s double the size of the world economy.

And yet we’re looking for economic growth, much of which is predicated on debt.

Any ecological system where the energy consumption rate is substantially greater than the existing energy is condemned.

Samuelson points out that an overall growth rate of one percent means a spend of $750 billion. Not only is that unlikely in today’s economy, but it would be based on borrowing.

If we roll back to 2002, world debt was $67 trillion, roughly on a par with the world economy, so what we see is debt growing much faster than population—in 2002, there were 6.3 billion people on this planet, and now we’re at 7.4 billion.

It’s beyond question that the economic system will melt down, and also that we are unable to deal with the concept as a society. Many years ago, the Canadian environmentalist David Suzuki said that humans suffer from an ‘old mind’ syndrome—he meant that we’re predisposed by evolution to deal with local crises, but utterly unable to deal with planetary ones.

So the two interesting questions are: when will the system collapse, and what will the collapse look like?

If you’re an optimist, you might consider that, as masters of the universe, we will prevail. The human brain, so fertile in inventing the weaponry with which to wage war, will overcome this challenge also.

But if like me, you’re an optimist with experience, then you can be certain of two things. The first is that ecology will dictate the timing—you can print money, but you can’t print protein. The second is that any collapse is by definition non-linear.

Whenever this happens, and it will be triggered by the shortage of food or water, possibly both, humans will have no idea how to react. Goods and services we now prize will become worthless—I’m talking about automobiles, cellphones, vacations, and fancy houses—the very essence of our lives in developed countries, as we now perceive it.

Property in London or Los Angeles, which is built on mountains of debt, will collapse—not physically, but in value. And people will die, on a scale we find impossible to imagine. In the end, it boils down to the issue of carrying capacity.

To paraphrase another Clinton, in an election far far away: it’s the ecology, stoopid.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

The Fall

September 10, 2016

As the summer ebbs away, history returns with a vengeance—the balmy days of August quickly replaced by the barmy days of fall.

History, in this case, is prefixed by the adjectives ‘political’ and ‘economic’. I resampled London this week, which gave me a chance to probe the post-brexit mood. The thing is, as Private Eye pointed out, the UK is not in post-brexit, but in post-vote.

There is a certain naive hilarity to all this, because there’s a buoyant mood in the Great British press that ‘we got away with it.’ Problem is, the invocation of Article 50 is as distant as winter sunshine.

Let’s get down and dirty. You’ve heard Article 50 mentioned umpteen times, but most likely never read it.

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

There’s a whole website dedicated to the Lisbon Treaty, should you be affected by insomnia, but I give you only the offending article. Thankfully, it isn’t written in legalese, like so many EU directives—it may appear that the salient points are (a) the notification in 50(2), which the UK shows no signs of providing; and (b) the two-year period following it, as per 50(3).

However, 50(4) tells a more interesting tale—since the European Council concludes the negotiation, and the withdrawing Member-State does not participate, it means that in the end the UK doesn’t have a say in the final decision.

And there’s the rub. It’s for this reason that Theresa May and her twin bêtes noires (Davis and Johnson) want to strike a backdoor deal before notification, whereas the EU repeats that negotiation begins after notification.

I did a little homework on Articles 218 and 238 to help me understand the process and the majority definitions. Turns out that a qualified majority, normally equivalent to two-thirds of the vote, is a little different here. For the purpose of closing this deal the EU needs 55% of the nations, holding 65% of the population of the Union.

My interpretation is that the UK is excluded on both counts. As Stalin famously observed, it doesn’t matter who votes, but who counts the votes. So let’s engage for a minute in what the Portuguese call contar espingardas—let’s count our guns.

Rather than make a spreadsheet to work all this out, why not use the European Council’s voting calculator? The qualified majority voting system clearly favors big countries, so you can get your 65% with a five to six nation agreement.

Our calculator is flawed for this purpose, because it includes the UK, but we can make a quick correction in Excel. The UK has 12.73% of the EU population, so deduct and recalculate the percentage.

Turns out that if Germany, France, Italy, Spain, and Poland negotiate an agreement, we’re at 66% of the population. You’d then need a further ten countries, just to gild the lily—I’d say you’re spoiled for choice (you could start with the ones that hate Farage).

Currently, the annual EU income from Member-States stands at about 133 billion euro. If you remove the net contribution from the UK, that value goes down to 126 billion euro. To top that up, each country needs an increased contribution of about five percent, but since eighteen countries are net beneficiaries, the shortfall can be partly compensated by a cut in structural funds. This penalizes convergence, but so would an increased contribution.

The point is that from the budgetary aspect, brexit is of little consequence to the remainder of the EU. From the trade perspective, it may be different. Nevertheless, people in the UK don’t choose German cars on the basis of price—they buy on quality, brand, and prestige.

Everywhere in the UK, the mantra is repeated that the EU is broken. I maintain we’re seeing the beginning of a great experiment, exactly as we saw in the creation of the United States, and it saddens me greatly that Britain won’t be along for the ride.

In between all this and the potential ‘Trexit‘ in November, perhaps things won’t be cooling down in the fall.

As the Chinese curse goes, may you live in interesting times.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

The India Road, Atmos Fear, and Clear Eyes. QR links for smartphones and tablets.

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