Archive for the ‘Finance’ Category

Shopped!

April 13, 2019

After strenuous denials about one week ago, which of course meant the diametrical opposite, Equador opened its er… door on Thursday and pushed Julian Assange out.

The founder of Wikileaks didn’t go willingly, but the Brits arrested him nonetheless and presented him to Westminster Magistrates’ Court.

The whole affair took on a farcical dimension when it emerged that Assange had violated embassy orders ‘to pay for his own health care and to clean up after his cat.’

In addition, Assange had been repeatedly warned to stop Wikileaks intercepting the president’s private messages, and had apparently failed to comply.

Refuge from extradition requests from Sweden and the US was granted in 2012 by Equador’s left-wing president, Rafael Correa, who granted the whistle-blower asylum in the country’s London embassy—an immediate thorn in the side of Equador’s relationship with the UK and US.

The fall in oil prices led to Moreno’s replacement by a more right-wing president—ironically called Lénin Moreno, literally the dusky Lenin.

Assange’s star rose briefly during the orang-u-tan campaign, when Trump publicly asked Wikileaks to reveal a set of Clinton emails. I confess that until this moment I was a Wikileaks virgin, but having spent the last fifteen minutes trawling the site, I can’t understand what the email fuss was about—all in all, pretty sophomoric stuff.

That was when the bizarre Australian should have negotiated a presidential pardon—it’s way too late now.

Equador needed the IMF, and the US pulls the strings on that front, so it was only a matter of time before the ‘stone in the president’s shoe’ was cast away.

The feline angle brought in the comedic element, and prompted my theory that the arch-leaker was shopped by his cat.

Details about one of the Amazon cloud data centers, sourced through Wikileaks.

Despite Assange’s predicament—extradition to the US followed by a show trial and a substantial period in prison—Wikileaks is going strong. Recent leaks include a list of Amazon cloud data centers.

Why is that interesting? Because allegedly Amazon works closely with the CIA and the US Department of Defense, partly because it’s one of the few organizations with appropriate security clearance. Contracts to develop cloud infrastructure are very substantial, and few beyond the IT community and the secret world know anything about Amazon’s alleged role in such matters.

One leaked document claims Amazon not only refuses to reveal the physical locations of its data centers, but obfuscates these further by using different names, such as Vandalay Industries, an obscure Seinfeld reference.

The partners page on Assange’s creation lists some of the most prestigious news organizations in the world, including Der Spiegel, Le Monde, and the New York Times.

Wikileaks appears to be itself under attack—a number of links to supposed CIA computer viruses are broken, simply reporting a ‘content encoding error.’ One such link describes AngelFire, an attack designed to infiltrate the Microsoft Windows operating system, using a sophisticated five-part package.

Just as the Guardian publishes the long read, this the long view. If you enjoy a good hack…

The message from the world’s great powers is clear: cyberwar is the new battleground—it’s a big boys’ game, played by Americans, Russians, and Chinese, with some help from the UK, North Korea, and Israel.

For the planet’s rulers, the cloud is the ultimate repository, containing top secret materials, details on the earth’s citizens—I’m not a quickfire conspiracy theorist, but I firmly believe we’re all there.

In a nutshell, ‘We know where you live.’

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

Blockchain

April 6, 2019

While Bitcoin came and went—oh, and just came again—the foundation for the cryptocurrency has steadily gained ground.

I’m talking about DLT, or Distributed Ledger Technology. If you want to take this seriously, and I believe you should, your starting point is the abstract of the original bitcoin paper by Satoshi Nakamoto—who has never been established to be an actual person.

You could read the full paper, or just skim the abstract below. It all depends how deep you want to dive.

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.

I like concepts, and this one is neat. The wording is indigestible, and as far as I can ascertain, the paper was not peer-reviewed, and was not published in a reputable journal, but that doesn’t mean it isn’t a good idea.

The financial side of it proposes a mechanism for avoiding double-spending and trusted third parties. At present, all the world powers are printing money digitally, well beyond what the economy can support in terms of tangible underlying value, and the only reason they get away with it is belief—the belief system is predicated on the ‘trusted third parties’, aka central banks.

Since all the central banks overprint money, whether they call it quantitative easing, LTRO, or Nellie the Elephant, the water level rises for all. The water is however infested with ever-expanding bubbles, and when these burst, the level suddenly falls—that’s when the ship runs aground and the rats go scurrying off.

So much for the trusted third parties—the lunatics are in charge of the asylum.

If you channel your transactions through the banks, one incentive is that there is a trust-based system you can depend on. When you buy or sell on eBay, you know that you can get your money back if the product is defective, or even if you change your mind—every major internet seller uses that business model—they have to, since the internet is inherently untrustworthy.

My favorite cartoon has gone through many morphs, but it’s still the best. In this version, the hound looks like he just got busted…

The financial part of the transaction is dealt with by Visa, Paypal, and others—the trusted third parties.

A peer-to-peer financial trust system would essentially dispense with central banks, but more importantly, the underlying ledger technology means that every currency unit could be traced back to when and where it was first mined. In other words, no money could be printed on an unsupported commodity—no gold, no coin.

The orange man is now pushing the Federal Reserve to go back to quantitative easing, knowing this will push the water level up—very handy for 2020, but the orange tide rises on trapped methane bubbles.

The chances for bitcoin to emerge as a potentate are slim—every major central bank hates it, and China imposed a blanket ban on cryptos in 2017.

Blockchain, however, is a different story.

Blockchain is serious business.

Some very large financial institutions are taking the whole thing seriously, and huge players like Microsoft, Amazon, Google, and IBM are selling the picks and shovels. Although the focus of blockchain began with money. it’s now recognized that DLTs can play an important role in monitoring the supply chain.

If we use a coin-based example, that dollar bill, pound note, or euro coin in your pocket provides some information on provenance, but not much. Euros in coin form have country-specific markings—these markers can be used to understand mobility of Europeans.

But that bill in your purse has little traceability, apart from DNA markers. You may recall whether you got it from a friend, a store, or an ATM, but you can go no further—when it comes to digital, the same thing applies. The Starbucks barista who accepts a five dollar payment from your contactless card knows it came from you, but were those five bucks part of a paycheck or a split Uber fare? Who knows.

Blockchain changes that—your digital cash becomes granular, and you can search through any transaction to look at the origin of the money, right back to the time it was coined (or mined). As a consequence, you cannot ‘make’ money out of thin air.

What this really means is traceability. Let’s say you’re enjoying a dozen oysters in a seaside restaurant in the small French town of Arcachon. You naturally assume you’re eating local produce, but that oyster you are about to eat may well have started life in a hatchery in the Netherlands. From there, it might have been bagged for growout in Dungarvan, a small town in SE Ireland.

Why would that happen? Because oysters now suffer from the Herpes virus, and colder waters provide more resistance. At some point, a batch of mid-sized oysters may have been relayed to France, grown to market size, and served at your table.

Blockchain means that you have a trail telling you know exactly how the animal fared on its journey to you—where it grew up, and when. If you’re concerned about animal welfare (but not so concerned that you wouldn’t gobble the little guy up), you might also find out about how it lived. Were the waters clean, did it survive a red tide, was the oxygen suitable for an oyster to live comfortably…

Supermarkets, chocolate manufacturers, and many other businesses now see blockchain as a critical part of their strategy for managing the supply chain. Farmers who sell lettuce to Walmart now enter key data about each batch into a blockchain system. The distributor that warehouses the product logs environmental conditions of shipping: inside and outside truck temperature, transport time, stoppages, damaged packaging…

If the customer who takes the product off the shelf files a quality complaint, the seller can trace a particular lettuce back to the time it was first planted.

Of course when it comes to goods, you can’t cheat the mass balance. The quantity of steel is limited by that of its constituent ores, and the amount of lettuce is limited by the carbon, nitrogen, and other elements that are available to ‘manufacture’ it.

Money, on the other hand, violates the core principles of ecology—that’s partly why I loathe the use of the term ecosystem in a corporate or business context. ‘Corporate ecosystem’ is as great an oxymoron as ‘affordable legal costs’ or ‘plastic silverware’.

Blockchain provides the traceability to change that.

In a nutshell, it’s thermodynamics for economists.

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

The Shift

February 3, 2019

In the historical sense of the word, the United States is not an empire, if you exclude peccadilloes like Puerto Rico and Guam. There are only five of these ‘little sins’ that are permanently inhabited, and the US has designated them unincorporated territories—by and large, they probably fall into the Trumpian ‘shithole country’ definition, as evidenced by the current administration’s treatment of Puerto Rico after Hurricane Maria—even the name is Hispanic, for chrissakes!

But the definition of ’empire’ that held true for Rome, Baghdad, Spain, and Britain is no longer valid. In the good old days, the historical context was simple—a nation with possessions beyond its conterminous boundaries technically qualified as an empire, all the more so if  those possessions were seized forcefully from their current but not necessarily rightful owner.

This definition held true as long as the ruling power had administrative rights over the subjugated territory. By that definition, a small country located at the edge of western Europe holds the record for the longest-lived empire in the history of the world.

The Portuguese king John I, whose wife was Philippa of Lancaster, eldest daughter of John of Gaunt—Jean de Gand, so-named because of his birthplace, Ghent—conquered the city of Ceuta in 1415. King John’s son, Prince Henry the Navigator, was the great promoter of the golden age of maritime discoveries, and Henry’s nephew, the Perfect Prince, took that work and exploded it into an empire that reached from India to Brazil.

The fruits were gathered mainly by his two successors, Manuel I and John III, by which time the empire reached parts of Indonesia, Thailand, and Malaysia, and the Portuguese had colonized the small island of Macao in the South China Sea.

Macao was the last European colony to be returned to China, in 1999. Towards the end of this video of the ceremony, you will spot the current president of the United Nations, then prime minister of Portugal.

The Portuguese empire lasted five hundred eighty-four years. It is most unlikely that any empire on this earth will ever beat that record, not least because massive empires of subjugation will not reappear.

We could explore the possibility of empires in space—these are the domain of science fiction, popularized by movies such as Star Wars. In his brilliant exercise in clairvoyance, Profiles of the Future, Arthur C. Clarke sets forth his predictions. Unlike the video below, his book doesn’t stray into the concept of enslaving chimps—I would rate that as morally untenable for society—let’s just keep on slaughtering our companions from other species in the usual way.

In the book, which is an obligatory read, Clarke discusses intergalactic empires. There’s a chapter entitled Space, The Unconquerable, where the visionary who gave us the communications satellite and all of its consequences pours ice-cold water on Star Wars.

The first sentence reads ‘Man will never conquer Space.’ The obstacle is distance, and therefore time. A conversation with someone on Mars is possible, but your words will take three minutes to reach that planet, so when you say “Hi”, the reply will arrive six minutes later. The difference between solar space and stellar space is enormous. Clarke’s analogy?

Imagine a world in which the closest object to you is only five feet away – and then there is nothing else until you’ve traveled 1,000 miles.

In practice, the ruler of some intergalactic empire could rule nothing—his orders would take decades to arrive, and resistance would take an identical time to be reported. This model became obvious within the great empires on our planet—in the days of sail, news of battles won and lost in Asia could take years to reach Europe, and colonial rule mutated into colonial autonomy.

Empires today are about economic control, albeit with a latent threat of violence—as evidenced by nuclear weapons proliferation. And in that context, the shift is clear. More than one Briton has told me, sotto voce, that a key reason for voting Brexit was that they could not abide a Europe economically owned by Germany.

The US and China have clearly grasped that the battle for empire is an economic one, not a nuclear confrontation. Putin, who understands Russia plays in the economic little league, ranking number twelve in the world, right next to Spain, opts for arms. The Moscow Times, in an article published on July 13th 2018, claims Russia is the sixth world economy, leapfrogging half a dozen places from official numbers—I don’t link fake news, just like they didn’t link any true news.

Economic empires, just like their historical predecessors, cross borders. Britain may own Gibraltar (they hate hearing it said like that), but Spain owns Heathrow Airport. France may have lost Trafalgar and Waterloo, but the French energy giant EDF owns four British suppliers, including London Electricity. China’s Three Gorges Corporation is using Portugal’s EDP to develop renewable energy in Brazil—in a way, they want their own Macao, but this time as a gateway to the West.

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

The Law of Averages

January 20, 2019

I stopped off in London a couple of days ago and felt as if I’d landed on a lost planet. I only muttered the ‘B’ word briefly, but the echoes were clear—people are fed up, confused, and mostly numbed to the political mayhem.

As I traveled east, the picture changed from a Europe troubled by the rise of populism to nations where freedom of expression—and therefore of choice—varies from limited to radically curtailed. As the plane flew over the Mid-East, and then on to Southeast Asia, the dawn brought me a little clarity.

The rise of populism in the EU is inevitable, as it is (and was) in the US and UK. The reason became obvious as I wandered around London and observed ordinary working people—it crystallized when an English lady opened a restroom door for me in an airport lounge two days ago. She was one of two englishwomen who stood in the access corridor providing these services—the lady was charming and worthy of all my respect, and as I exited she once again pulled the door open for me, to my great embarrassment.

In the lounge itself the opulence of the extremely wealthy hid in plain sight, and therein lies the rub. Over the last fifty years, income inequality in the West has mushroomed—and that got me thinking about GDP.

If you want to make absolute comparisons, you use absolutes (duh). China is the most populous nation in the world. France is larger than the Netherlands. Brazil has more head of cattle than Belgium.

But to make relative comparisons, you need to normalize—express your data per unit area, or perhaps as a percentage, or an average—which is exactly what happens with GDP. If you want to rank nations by living standards, per capita GDP is the weapon of choice.

Norway? 71,800 US dollars per annum. Portugal, less than half of that.

That’s all well and good, but are these fair comparisons? The short answer is no. Averages are only appropriate if we’re looking at a bell-shaped curve, but the distribution of income in the West is now much better aligned with what you see in the East, or in South America—fifty years ago, as a rule of thumb income inequality increased as you traveled east and south.

The analysis of income inequality is not new. The work by M.O. Lorenz led to a paper, Methods of measuring the concentration of wealth, published in 1905, and the Lorenz curve is widely used to represent distribution of wealth. The Gini coefficient was published in 1912, and provides a numerical representation of income inequality.

The Gini index on a world map. East and south are still the unfairest places on earth.

Let me pick five numbers out of a hat. The first numbers are similar: one, four, two, three. But the last number is whoppingly different: nine hundred-ninety. By sheer coincidence, these numbers add up to one thousand.

Bell-shaped they most certainly aren’t—four low numbers jumping to a huge one. If we average them, the result is two hundred. Is that a fair representation of 1, 2, 3, 4, 990? Nope. What might be fair is the median, i.e. the middle number: three.

If this were a human population, eighty percent of the people fall into the one to four income bracket, and the remaining twenty percent are of the species Felis crassus—that’s Latin for fat cat.

The Triple Eye Income Inequality Index, as a simple ratio of median/average, for several European countries and the US. Values close to one hundred indicate a well-balanced nation.

My own Triple Eye calculation suggests the developed world falls far short of equality—low values mean that a few wealthy people hold much of the income, which skews the per capita GDP. Values higher than one hundred exist only in Utopia—a nation with a smattering of poverty and an abundance of wealthy folk.

Of course, the Triple Eye in many gated communities, airline lounges, and luxury resorts is at least one hundred—that is, if you exclude the help.

How does all this relate to populism? If a hundred percent of families can vote, and eighty percent of them are poor, it’s only a matter of time before they vote to disenfranchise the twenty percent that tower above them financially.

Which leaves only two paths.

The first is China, whose Triple Eye score is 14.2%, lower than any of the results graphed above. In an unequal system where votes don’t count, there’s little threat to the status quo.

If the China model is not your bag, then there’s only way democracy can beat populism—fair play.

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

Lost Nations

January 12, 2019

At the start of 2019, the world continues to be an absolute disgrace.

The refugee population from the six biggest crisis-countries totals over eighteen million people, more than the entire population of the Netherlands. The nations in question are the usual suspects: Syria, Congo, Afghanistan, South Sudan, Myanmar, and Somalia. An order of magnitude separates Syria (6.3 million) from Somalia, which has ‘only’ nine hundred and ninety thousand refugees.

‘Informal’ housing in the Congo, a nation where 4.5 million are internally displaced and seven hundred thousand are refugees in other countries.

Worldwide, UNHCR, the UN High Commission for Refugees, estimates the number to be almost sixty-eight million—the population of the United Kingdom. The worse thing about those refugee numbers is the way they’ve grown in the last ten years. What we are witnessing in 2019 is a doubling of the displaced human population.

If numbers are your thing, that’s an APR of 8.7%, so right now the refugee crisis is growing faster than the Chinese economy.

The Congo is an extraordinary example of the African curse. The country was massacred by King Leopold II’s occupation in the late XIXth century—the Belgians, a most unlikely nation of conquerors, stayed until 1960. Since then, independence has brought nothing but suffering to the folks of this fabulously rich nation, on which the world depends to keep its cellphones running. Oh, and then there’s the diamonds and gold—none of this wealth filters down to the poor souls who live in the Democratic People’s Republic of the Congo.

Right now, the country is in post-electoral trauma, with hotly disputed results. After Mobutu and a couple of Kabilas, elections were finally held—a major stakeholder is the Congolese ‘Église de Christ’, the protestant Church of Christ. If you want to practice your French a little more, or just enjoy the retro animated gifs, praise the lord!

Change in refugees worldwide between 2008 and 2016.

The Congo provinces of North-Kivu and Ituri are Ebola hotspots—a report released one month ago counted five hundred cases, of which 452 were confirmed and 48 probable. 289 of these have died—241 are confirmed Ebola cases.  The health issue made voting in the provinces a challenge, and the election results reflect this omission.

Hemorrhagic fever, or Ebola, in full swing in the Congo. How long will it take to care enough?

But perhaps the most famous crisis you never heard of is Venezuela. I’m kidding, in a terrible sort of way—of course you’ve heard of it, but we don’t hear much. Occasionally there are shots of Nicolas Maduro, a man who cares more for his mustache than for his people, and the odd Trump rant, but that’s it.

Meanwhile, the IMF predicts a ten million percent inflation rate in 2019. When an economy collapses at that scale, we’re into chaos theory. It’s an extraordinary example of non-linearity, showcasing just how quickly a wealthy nation—Venezuela has the largest oil reserves in the world—descends from riches to rags, plunging a whole generation into despair. It’s an indictment of the command economy, and a dire warning of the consequences of saloon-door politics, where wild swings from left to right only ever benefit the opportunists.

In perspective, Europe, and even the United States, seem only mildly insane.

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

The Hundred Years War

November 11, 2018

Today marks one hundred years since the armistice was signed at Versailles. Eleven o’clock of the eleventh day of the eleventh month—sounds like a blues tune.

The 1914-1918 war is possibly the greatest exercise in overreaction (the term overkill comes to mind) the planet has ever known. One guy got shot in an obscure Bosnian city and the world fell apart.

Many thought the war would be done by Christmas, but instead it lasted four interminable years. The First World War brought with it many innovations—the joys of chemical warfare were introduced, aerial warfare became a reality, and tanks entered the fray for the first time in the Battle of the Somme.

WWI was also a war where global finance gained prominence—the business of war was predicated on large loans to governments, and nowhere was that clearer than in Great Britain. Woodrow Wilson refused for years to bring the United States into the war—in fact he was re-elected in 1916 with a margin of four thousand votes running on precisely that ticket, with the slogan “He has kept us out of war.”

A century later, one over-arching message is that the US has a tradition of resisting involvement in European conflicts—ironically, Britain, France, and Spain historically illustrate the exact opposite.

But Wilson also actively promoted trade with Europe, particularly for armament. In this respect, US neutrality is questionable, since far more weaponry was sold to the Allies than to Germany. By 1915, the only way to sell arms to Britain was by loaning it money.

Enter the huge banking houses of New York and Philadelphia. Bankers with names like Warburg, Schiff, Brandeis, Rothschild, Baruch, Meyer, and of course J.P. Morgan, were at the ready—a war is a great business opportunity, but only if your side wins.

Bank of England posters for the purchase of war bonds during World War I.

If the Germans won, it was pretty clear that the Allied bonds would return pennies on the dollar, if that—they would be what became known in the 1970’s as junk bonds—potentially huge, but potentially ruinous.

After the US entered the war things rapidly changed, and the bankers were all smiles. They did, however, require Germany to lose, and in order for this to happen, an accommodation was undesirable. If an early cease-fire was negotiated whereby Germany would not have to make substantial reparations, the bonds were junk.

By 1917, the bankers had lent the Allies 2.25 billion dollars. In fairness, they also lent money to Germany—twenty-seven million, hardly a balanced book—it was pretty clear who the financiers wanted to win.

Early German overtures to end the war were refused and, by the time the armistice was signed, the so-called Central Powers (Germany, Austria-Hungary, Bulgaria, and the Ottoman Empire) were forced to surrender on ruinous terms.

Many, including the economist John Maynard Keynes, attribute the Second World War to those terms. Undoubtedly, they contributed to the rise of fascism in Germany and to Hitler’s popularity. Some of the popular hatred against Jews will also have stemmed from the financial support given to the Allies—several of those US banking magnates were Jewish.

All those WWI ‘achievements’ have only made the world more dangerous: chemical and biological weapons, followed by nuclear warheads; open cockpit prop planes, followed by jets, missiles, rockets, and drones. Tanks are now in the world of robotics and can shoot down a commercial airliner full of innocent souls.

However, there is one achievement we can all be proud of in the West. The absence of civilian men during World War I forced women to take over male jobs—shortly thereafter, this led to women’s emancipation and the right to vote. That’s led directly to the landslide female representation in the US congress of 2018—absolutely unthinkable back then.

But on the world stage, where are we now?

When it comes to world leaders, I’ll let you be the judge. Instead of Lenin, we have Putin. Instead of Wilson, we got Trump. Instead of Asquith and Lloyd George, we have May. Clemenceau? Makron. Instead of Enver Pasha, we have Erdoğan.

At least three of the above are enthusiastic warmongers. Four generations after the war to end all wars, I wonder how well positioned we are for the start of World War III.

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

Bows and Arrows

October 27, 2018

The Anglo-Saxon world is consumed by the upcoming US mid-terms. The rhetoric has escalated to psychobabble, America seems more divided than ever, and for many, two years of Trump seem like two centuries.

I’m betting that on November 6th, US common sense will resurface and trounce Trump. But I’ll tell that story on November 10th.

There is, however, a far more important election for America in the upcoming days—tomorrow, to be precise—and that is the second round of the Brazilian presidential election.

To the gringos, as people of South American descent lovingly refer to US anglos, this election merits a brief shrug of the shoulders. Brazil? Weird language, weird music, weird ball game.

To South and Central America, and to the European originators of those societies, this is a critical juncture. In my book Clear Eyes, I describe how Columbus first reached the Indies, and just as important, what happened when he got back. In The India Road, the great circle route taken by Vasco da Gama is the same one Pedro Álvares Cabral sailed to discover the true cross—Vera Cruz was the first name given to Brazil. There is ample evidence that Vicente Yañez Pinzon, who had sailed with Columbus, made landfall in Brazil three months before Cabral, and then headed north to Venezuela—his voyage took him through the Amazon estuary, which he aptly named Mar Dulce, or Freshwater Sea.

However, there is also evidence as far back as the mid-1490s that the Portuguese were well aware that Brazil existed, but a country with 1.2 million people, overcommitted in Africa and focused on exploring the East, simply could not spare the manpower to colonize the Americas. The strongest circumstantial evidence for this was the Treaty of Tordesillas—the Portuguese negotiators forced a shift in longitude to the west, which placed Brazil into the Portuguese half of the newly divided globe.

The relationship between Brazil and Portugal is much stronger than the ties between the US and UK, perhaps because a war of independence was never fought—the tide of migration has oscillated between the two nations: in the nineteenth century, many Portuguese went west in search of fortune, in the late XXth it was the Brazilians who fled east from a failing economy, then it was Portugal’s turn again during the 2007-2012 austerity period.

In 2018, the tables are again turned and Brazilians are fleeing the violence in their society, a reflection of the corruption and lawlessness of life in their home towns. They flock to one of the safest countries in the world—the fourth safest, to be precise. As an aside, the others are, in ascending order, Austria, New Zealand, and Iceland—out of the top five, eighty percent are European, and out of the top thirty, two-thirds are European.

Only two American nations make the top thirty-one: Canada and Chile. Those escaping from Brazil are doing so for the same reason that a caravan of Hondurans and Nicaraguans are headed for the US—they cannot deal with the (often state-sponsored) violence in their societies.

I asked a Brazilian waiter recently for his predictions—”estou torcendo por Bolsonaro,” he said, with a wry smile. Like many Brazilians abroad, he is backing the former army captain who publicly praised the imprisonment and torture of impeached former president Dilma Rousseff, and lamented in parliament that her torturers hadn’t finished the job.

Bolsonaro (best pronounced in English as ‘bows and arrows’) is running against a candidate from PT, the workers’ party. Lula, the historical leader of the PT is presently in jail on corruption charges, and his party is about to get hammered.

Bows and Arrows will be a president in the vein of the recent populist wave: Duterte, El-Sisi, Trump, you get the picture. For Brazil, which lives with the ghosts of military dictatorship, this is not good news—but it’s what you get when decades of lawless corruption translate into endemic violence and a fractured society.

The campaign for the second ballot has taken fake news to the ultimate level—Brazilians are big on chat, and they took to social media like a lush to bourbon. The internet holds many surprises, and one has been the astronomical growth of WhatsApp.

WhatsApp usage as a percentage of the population (graph courtesy of Statista).

China does its own thing, and (speculatively) Germany is on there because they have the tightest pockets on the planet, but over half of the 209 million Brazilians are on the app. Some of this is driven by cellphone charges, but a lot reflects the simplicity of combining video, audio recordings, text, and just plain chit-chat. Penetration in the US is only six percent—whereas Facebook penetration is sixty-two percent, which is why the Russians had so much fun with it in 2015.

The WhatsApp stats show how much developing countries use it: India, Indonesia, Mexico, Turkey… and Brazil—now that’s volume!

In Brazil, WhatsApp has been abused more often than a reporter at a Trump rally, and, rather like those rallies, much of the material that it circulates is fake. Each WhatsApp group can have a maximum of 256 members, but nothing stops those members also joining another group. If twenty members do that, the message will reach about five thousand people. And if those twenty were members of different groups, one hundred thousand people get the message.

Brazil has one hundred and twenty eight million registered WhatsApp users. A recent study by two Brazilian universities analyzed 347 public WhatsApp groups prior to the first round of the election. The groups were monitored over a one month period—overall they had eighteen thousand participants.

The study found that one hundred thousand images were circulated, along with seventy-one thousand videos, thirteen thousand audio clips, over half a million text messages, and ninety thousand links.

A Brazilian fact-checking agency called Lupa, which collaborated in the study, reviewed the fifty most popular images circulated among these groups.

Only four images were true.

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

I Saw You Coming

October 20, 2018

Much of our world revolves around data—a lot of data. I’m talking about petabytes, yottabytes and the like. Put simply, you could fit all the academic research libraries in the US into two petabytes.

What kind of data are we talking about? Everything, including consumer products, news, crime, and weather.

That begs two questions. Where does the data come from, and who pays for it?

The data origin—not its provision—varies: records stored by humans provide a good deal of it. You are for instance able to tap into two hundred million records of crime data for the US. The data you access costs you money, and is the result of millions of security-related filings, including arrests, sentences, and paroles.

A second major source of data are sensors. These can be weather station sensors for wind speed or air temperature, buoys at sea measuring wave height, or satellites sitting high above you as you read these words. You are yourself part of the sensor network—as you read, your cellphone informs the cloud about your latitude and longitude. From that sensed data, we know whether you are sitting (and we know exactly where), and what time it is—if you sit there long enough, we will know where you live, or where you work—in a matter of days we’ll know both.

It’s a simple matter to find out who you live with, based on your coincidence in time and space, and build a relationship tree. If you’re moving slowly as you read these words, we’ll know you’re walking or strolling. If you’re moving fast, we know you’re in a vehicle—discovering whether it’s a car, bus, or train is a trivial matter. We can cross your trajectory with a highway map—if your vehicle makes frequent stops, you’re on a bus—or maybe you’re a UPS driver (but do me a favor, don’t read while you drive). Sensors provide huge amounts of data because they’re measuring stuff all the time.

The final source of data are models—these models don’t sashay on the catwalk, they run on computers, often using those very same sensor outputs to make forecasts—here’s that weather thing again.

The second question is even easier to answer. Who pays for it?

You do. You really should have seen that coming.

As a taxpayer, you fund the justice system, the weather office, the health system, the education system… delete as applicable, depending on where you live—I dearly hope no deletion is required.

When I was in the US, I picked up the latest book by Michael Lewis, called The Fifth Risk. I picked it up in the usual fashion, by seeing it an an airport store and promptly buying it on Kindle.

Now, Michael Lewis has been a favorite for years, so (unusually) I’ll plug an(other) author in these pages. Lewis has had a go at US investment bankers, the sub-prime mortgage scandal, the whole austerity deal in Europe, and HFT—High Frequency Trading is another scandalously well-kept secret—and yes, Big Data is at the heart of it. Oh, and he’s had a few goes at the orang-u-bang.

In summary, it’s a good job Lewis is not a Saudi national, otherwise he’d be part of an erector set by now. As an aside, the only simple question I want answered: if Khashoggi died in a fist fight, as claimed today, where’s the body? I suppose I’m also curious about why he got into a fist fight with fifteen guys.

The Fifth Risk took me two days to read, and I was fascinated by a chapter called ‘All the President’s Data.’ I want you to read the book, particularly in the lead-up to the mid-terms, so I won’t be a spoiler.

I will, however, tell you that US federal agencies such as the department of agriculture, NOAA, USGS, and NASA, have to provide data to the public as part of their mission statement. They are obviously not in the business of making the most sophisticated viewing interfaces for the consumer market—these are often done by third parties, but the key point is that those parties would be unable to source data were it not for the fact that you have paid for it to be made public, and more importantly, accessible in a simple way.

As an example, if you’re a US taxpayer, you support Wind Guru. The business model for this wind and wave forecasting website is fascinating—not least because the site is based in the Czech Republic, a land-locked nation. Every surfer knows Wind Guru—what most don’t know is that it isn’t a guru at all, the gurus are the US National Weather Service (NWS), the US Geological Survey, and others. Wind Guru accesses models run by NWS (a part of NOAA) using a special toolset known as web services.

Many government agencies worldwide provide such services, and this has allowed the private sector to develop some really nice tools for public use. The problem is when the private sector lobbies the government to try and stop the agencies that run the models being able to do anything but supply data.

One of the current discussions revolves around AccuWeather, which charges for its services, and its alleged efforts to limit how NOAA presents its own data, acquired through sensor networks paid for by (you saw it coming) the US taxpayer.

At the forefront of all this excitement is an American lawyer called Barry Myers, who is at present the CEO of AccuWeather. The exciting bit is that in October 2017, Myers was picked by Trump to lead NOAA.

The confirmation hearing is holding this one up. If Myers is confirmed, it means that an operator in the private sector of the multi-million weather forecast business will be in charge of a government agency that collects twenty terabytes of data every day, much of it weather-related.

The line between public and private becomes thinner and grayer than an old man’s hair.

If the orangutan buffoonery get away with this one, the fox will be firmly placed in charge of the henhouse.

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

VaporWare

August 4, 2018

I thought the word looked more modern with that sexy millennial middle capital, but the truth is vaporware has been with us since the eighties.

Many software (and hardware) companies used it to push an inexistent product, with various objectives, ranging from supporting or boosting share prices to sidelining competitors.

A big company might, for instance, announce the imminent release of a product a smaller competitor is working on in order to shut them out of the market. Nowadays, in the age of software behemoths, the movie plays out a little differently—big brother simply buys you out—Money talks, very loudly.

In recent years, the best piece of vaporware was produced by a company called Theranos. What they promised was the holy grail, and for a decade or so, they managed to con much of America.

Their demise came at the hands of a reporter from the Wall Street Journal by the name of John Carreyrou, in a process steeped in legal threats, lawsuits, and skulduggery (what an excellent word).

The rise of Theranos possessed a cocktail of ingredients so intoxicating that it fooled the likes of Henry Kissinger, George Shultz, Rupert Murdoch, and James Mattis.

The last name on that list is particularly interesting—General Jim ‘Mad Dog’ Mattis is none other than Trump’s current secretary of defense, a man who earned his call sign CHAOS (Colonel Has Another Outstanding Solution) during his early days in Afghanistan, following nine-eleven. I can’t help thinking how perfectly call sign CHAOS represents the current US administration.

The CEO of Theranos, Stanford dropout Elizabeth Holmes, convinced Mattis that the company’s technology was of great value to the US military, busy in several Mid-East theaters.

The holy grail was a blood-testing machine, which went through various iterations—none of which worked—capable of processing very small samples, obtained through a finger-prick, and accurately producing a battery of test results.

The machine had to be sexy—Holmes was a great admirer of Steve Jobs—so the design criteria for compactness, speed, a glitzy software interface, and a general wow factor were always paramount—accuracy and precision for blood testing played a very soft second fiddle.

Blood testing, like any analytical procedure, is complex. I know this well from marine waters, where practically every known element is present in the matrix—from sodium to yttrium, they’re in the house.

Small samples or very low concentrations make for analytical inaccuracies. Theranos sacrificed sample size because one of Holmes’ key emotional selling points was people’s fear of needles—the company was often pitched as the end of phlebotomy, at least for typical blood work.

Sample dilution was seen as a way to increase finger-prick sample volume. The problems are twofold: first, if the starting volume is variable, the error in the final reading increases. Second, by diluting the sample you lower the overall concentration of the analyte and require a better detection limit on your equipment.

Another issue common to finger-stick approaches is cell lysis—our cells are delicate structures and can easily burst, even by pushing blood out of a fingertip. A couple of years ago, my blood sugar was running higher than it should. Since diabetes is a very dangerous game, and one in which your body loses control of itself, I took the reading seriously—I wanted to get back into the normal range without having to take medication, and the obvious steps are to lose weight and cut carbohydrate intake—I was delighted to find that wine and cheese have hardly any carbs, so getting back to normal was easy.

But I bought a finger-stick glucose analyzer. One morning, the middle finger in my left hand gave a higher reading than usual. I went on a finger-pricking orgy, like a glucose junkie searching for that last main vein. I tried other fingers in my left hand. Then a couple in my right. Then various toes. The test strip vendors would have been overjoyed. Results varied widely—yours will too.

One of the statistics I calculated was Theramed’s undoing—the coefficient of variation measures the spread of values around the average—high values mean that measurements are not precise. In my case, I got values of twenty percent and fourteen percent, and my toes had far less sugar than my hands—every time I’ve asked a doctor for an explanation, they are singularly uninterested.

Results from a 2007 study in Malawi on HIV diagnosis, comparing finger-prick to venopuncture as as sampling procedure for analysis.

This graph shows a comparison from a study on AIDS done in Malawi. The authors have shown this in a rather bizarre format, but the way to read it is to divide the difference (on the vertical axis) by the average (on the horizontal). For instance, a value of -50 at 250 mean CD4 cells tells us that that’s a (50/250) twenty percent difference—not so trivial.

All this reminds me of an old joke featuring three statisticians at an archery range. The first misses the target by ten feet to the left, the second shoots ten feet to the right, and the third happily puts down his bow and shouts “Bullseye!”

Theranos had huge ambitions—it claimed to deal with the four major classes of blood tests: immunoassays, where antibodies are used; general chemistry, where chemical reactions of some type are used; hematology, which involves e.g. cell counts; and gene amplification, a nuclear technique that can help cancer diagnosis.

Vaporware is a hoax, but when it involves people’s health, and potentially people’s lives, it plays in a whole new league. And Elizabeth Holmes, who charmed Safeway, Walgreen, the US military, and the Obama administration, was also in a league of her own.

The investigative work done by John Carreyrou was a classic piece of journalism—an anthem to why the fake news narrative is so pernicious. Theranos was a prime example of the emperor’s new clothes, and the fact that taking the company down required a couple of federal agencies, extended lawsuits, ten years, and hundreds of millions of dollars attests to the power of vested interest, litigation, and deep pockets.

It is also a testament to the fact that for every complex problem there’s an easy solution, and it’s usually wrong.

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

Big Data

March 26, 2018

I’ve written many a blog on airplanes, but this is the first time I’m doing one online.

The turbulence is causing a stir as we hit the south coast of Turkey. In a few minutes we’ll be flying over northern Syria, and I’m keeping a close eye on the map.

Wifi in the sky is just another example of global comms—it’s a satellite feed, of course, and large email attachments go the way of Malaysian Flight 370, but for a wee blog it works just fine.

Night has fallen over the eastern Med, and I spare a thought for the poor people below, caught up in a proxy world war, while Trump fends off claims by porn actresses and Playboy centerfolds.

But today’s article is on Big Data, capitals and all. First off, full disclosure—I’m a social media dinosaur. I speak out against Facebook many a time, and Peter Wibaux would never hold an account—in any case, the platform lost its mojo when it became a shadow site for parents to track their kids.

I find it all pathetic, as kids swiftly shifted to Instagram, and parents share lonely, pathetic photos of their latest dinner party banalities, and pretend they lead an interesting life. So I welcomed a few suggestions on alternatives to F-Book.

Apart from the trivia aspect, my fundamental gripe is lack of privacy—I suppose growing up under the iron fist of the Portuguese dictator Salazar left me with a fundamental and permanent dislike for data theft, particularly on a grand scale—I’m pretty sure people who suffered the Stasi or the Savak feel the same way.

Somewheres East of Suez once more. Afrin, where the Turks recently pounded the Kurds, is just south of here.

Of course, the fact that I’m not on FaceBook doesn’t mean I’m not on FaceBook—and the same stilted logic applies to GMail, which I also take a pass on. Truth is, as long as you correspond with anyone on these platforms, or have your picture taken in their company, you’re trapped.

Practically the entire US electorate found out about this last week, when Cambridge Analytica turned turtle after a whistle blower decided to tell the world what they did for the Trump campaign.

The key to it all was the colossal FaceBook database, and the way in was through a personality evaluation app aimed at the insecure FB neurotics, which assessed their OCEAN score.

What’s OCEAN? Openness, Conscientiousness, Extroversion, Agreeableness, and Neuroticism. Who makes this shit up? Maybe it should be: Only Cretins Ever Auto-evaluate Neurosis. Because Neuroticism isn’t even a word!

The story of Cambridge Analytica beats any conspiracy theory. Robert Mercer, a US right-wing hedge fund billionaire, provided the seed capital to spawn the UK company—Mercer is a major contributor to Breitbart News, and created the ‘Make America Nº1’ PAC to elect Trump.

His daughter Rebekah (gotta love that ‘h’) sat on the company’s board, and Analytica’s vice-president was none other that Saturday Night Live’s grim reaper, Steve Bannon.

The company has now re-invented itself as Emerdata, with Mercer money again doing the rounds, and all the usual suspects back on the bus—given Analytica’s track record, lots of UK citizens are reaching beyond the Trump election and wondering what went on with Brexit.

The thing about Big Data? You can drop FaceBook right now but you can never shake your shadow.

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

 


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