Archive for the ‘Finance’ Category


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.


July 16, 2016



A localized physical condition in which part of the body becomes reddened, swollen, hot, and often painful…

I’ve been working hard over the past month on my new book, The Hourglass. An old and cantankerous British professor  used to greet his doctoral students with the words “Don’t tell me how hard you’ve worked, tell me what you’ve done.”

Truth is, Professor, I haven’t done very much.

I’m struggling with the characters—none of them jump out at me and clamor to be in the book—it’s been a real challenge, because the ‘big idea’ that underpins the book is terrific (and terrifying).

A good book needs a good plot line, but a great book needs a big idea and a great plot line, with the requisite sub-plots.

I read a lot of good books, mostly for entertainment, and Kindle has made it possible to go back in time and access stuff that would otherwise be undiscoverable. An an example, I was a fan of Elmore Leonard for years. But he’s dead and I’ve read all his books. If you go back in time, you get to Richard Stark, and the Parker novels—which are fantastic.

Stark, who was really Donald Westlake, wrote superbly terse and twisted page turners—but you won’t find a single big idea in those books.

Historical novels automatically contain the ‘big idea’. In Clear Eyes it’s the discovery of a western route to Asia. They also contain compulsory characters who jump out of the book—Columbus and the Huntress, Beatriz de Bobadilla, spring to mind. So in many ways, the book is half-written before you start.

Perhaps I’ll kill off the characters who’ve made it into the first three thousand words of The Hourglass and start again. Part of the problem may be that I organized them all beforehand, thinking I could write better with a structured approach.

Follett pre-plans everything, so I gave it a try. Westlake said he starts out with no idea where the book is going. He makes a good point: if the author doesn’t know what comes next, then neither will the reader. When it came to Clear Eyes I did no planning, and it all worked out.

The big idea in Atmos Fear was the paradigm shift brought about by the collapse of oil prices. In that light, it’s amazing how many Western players are now pushing for higher oil—when I wrote the book we were at one hundred bucks a barrel—since then we’ve touched twenty-five.

Consistently low oil prices mean the end of Mid-East sponsored terrorism, but the West didn’t cheer the low prices. Gas prices in Europe should have halved, but instead a lot more money is going into a few people’s pockets.

Which brings me to The Hourglass. The demise of the middle class, the widening gap between haves and have-nots, the enormous and insoluble drama of youth unemployment in Europe—these are unquestionably big ideas.

Associated with them are two huge topics: education and medical care—I’d like my new book to dig deep into both.

When it comes to medicine, one of the fascinating aspects is called medical inflation. Excuse me for thinking of inflation as a unified concept—blessed ignorance.

Apparently there’s the one we all deal with, which governs pay increases, negative interest rates, baskets of goods… then there’s the special one. I don’t suppose that medical inflation, a particular subset of inflammation, is the only one, but it’s the one that most affects us.

Thar she blows! The incredible disconnect between real world and med world.

Thar she blows! The incredible disconnect between real world and med world.

Suddenly, at the end of the 1970s, when Ronald Reagan and Margaret Thatcher came to power, the gap between the consumer price index and so-called medical inflation began to widen—the fun thing is it’s been widening ever since.

Last year, UK medical inflation was in the region of thirteen percent, at least for insurance purposes. That means your premium goes up by that amount even before factoring in other costs—after all, you are one year older.

Gap in medical inflation (MPI) and CPI world wide over the last two years (source: AON)

The numbers in the table are stunning, but the comparison will be more evident if we take the ratio of MPI/CPI and look at the various world areas. You see, a quick glance at these data shows a jump of 20% in Latin America, or 11.6% in the Middle East and Africa. Shocking, right? but their MPI/CPI ratios are both 1.8—that was the US in the late 1990s.

Whereas the European and US ratios are 3.7 and 3.9 respectively, and the UK takes the cake (or perhaps the bitter pill) with 4.9! That means the price of medical care in Britain rose five times faster than pizza and beer.

For reasons that are nebulous, to say the least, medical insurance in the UK is up almost seventeen percent this year, the lion’s share of which is due to MPI. I’m sure this trend is identical in the US and in continental Europe.

What it means for the poor, the Brexit left-behinds, can be stated in one word—nothing. The bottom of the hourglass has no hope beyond the National Health Service. In an emergency, if the lines are backed-up three months, they’re screwed.

What it means for the top of the hourglass is more expensive services. So MPI will be followed by an equivalent inflation disconnect in legal fees, investment banking fees, and any other high-value professional services.

What it means for that squeezy middle bit of the hourglass, where the sand can only fall through one grain at a time, is that workers will increasingly receive very minimal complementary health benefits.

Middle class families who aspire to an alternative treatment option for aggressive cancer or other life-threatening emergencies—the medical equivalent of the safari Big Five—are shit out of luck. That’s why I need to write this goddamn book.

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 Youth of Today

June 25, 2016

Today for the first time I ticked all the boxes: History, Finance, Science, Travel, World Affairs.

It’s impossible to write about Britain leaving the European Union—which to me equates with leaving Europe—and not consider that all these are significant.

So many words will be uttered by the chattering classes over the next weeks that I struggle to pen something worthy of your attention.

This decision compromises the future of our children—a Scottish friend of mine put it best: Turkeys vote for Christmas.

I’ll start with the winners, since the losers are the youth of Britain and Europe. And with the lessons.

As in any messy divorce, the winners are scuttlebutt and legal wrangling—the media will boom and lawyers will make a killing. One tabloid nailed its colors to the mast this morning, claiming responsibility for the British Exit.

The first key lesson is for young people: vote, because bystanders lose.

Democracy is like wealth accrual or weight loss—it doesn’t just happen. You have to run hard just to stay where you are, and then run some more to make things change.

The second key lesson is for nations: asking this kind of question in a referendum is tragic. Germany learned it at a huge cost—I invite you to refresh your historical memory.

Perhaps the greatest indictment of Brexit was the enthusiastic praise from Donald Trump, a man who knows demagoguery better than most. Mein Trumpf, as the fringe groups refer to him, was visiting Scotland at the time—north of Hadrian’s wall they prefer a more direct approach.

A landmark British protest image, with the inevitable imperturbable constable. Memories of the early days of the first Thatcher government cam flooding back.

A landmark British protest image, with the inevitable imperturbable constable. Memories of the first Thatcher government came flooding back.

Powerful imagery these days is often met with wry comments. One person requested that the US build a wall so Trump couldn’t get back, and got the reply: “No, we’re building a fan. He’ll die of embarrassment when we aim it at his head.”

But my award goes to someone who considered the sobriquet inappropriate because the subject ‘lacks warmth and depth.’

One of the most shocking examples of demagoguery is the British nationalist Farage, who has been encouraging Britain to leave the EU for the last twenty-five years.

Sometimes referred to in the UK as ‘the toad‘, Farage was partly responsible for all this debacle, a fact that fills him with immense pride. His UKIP party pushed the conservatives further to the right, and that helped Cameron make the worst decision in his now-defunct political career.

There are many ironies in all this process, and many still to come—in Farage’s case, were it not for the EU, the man would never have held elected office. He’s a member of the European Parliament, because European elections are based on proportional representation—the UK system would never award him a seat.

His victory on Friday cost him that job, and the Tory party hate him more than fries with mayonnaise—like Cameron, his political future ended on Independence Day.

So much was said about the cost that European Union membership represented to the UK, and sadly very little is true—the left-behinds will continue to be… left behind.

Science is a small part of GDP but a strong indicator of a country’s success. The Royal Society analyzed the UK’s financial performance in European science, and the advantages are obvious.

British capacity to attract European science investment in Framework Program 7, 2007-2013.

British capacity to attract European science investment in Framework Program 7, 2007-2013 (data normalized to GDP). The UK comes in second place, compared to the last three, Germany, France, and Italy, who benefit much less than they contribute.

These kinds of subjects are irrelevant in a referendum, where the questions are so simplistic as to defy imagination. Would you like to pay less tax?

The issues at stake in the process that just ended are complex and have multiple sub-optimal solutions. They also interact with each other, so that ‘fixing’ one problem triggers another.

The National Health Service is a case in point. ‘Fixing’ European immigration breaks the NHS, where one in five workers are EU citizens from outside the UK. Of course there’s always the Australian points system—another small irony given the historical labor relationship between the two nations.

Regional distribution of the UK referendum vote.

Regional distribution of the UK referendum vote. Stay: Scotland (62%), London (59.9%), and Northern Ireland (55.8%). Leave: rest of England (57%), Wales (52.5%).

The regional aspects of the vote show anything but a united kingdom. This is hardly ‘man bites dog’ news, but it does open up another can of worms which the next government must address.

Since the polling stations map into constituencies, I would be curious to see how this vote would split the nation if the first-past-the-post method used in general elections were applied.

Two models are normally used for trade-offs: a zero sum, such as the outcome of a football game with one winner and one loser, or a positive sum such as education, where sharing knowledge enriches both parts.

Thursday’s outcome is the worst deal of all—a negative sum that enriches neither party—both are significantly worse off today than they were last Wednesday.

The one group of winners I didn’t mention are the most despicable people in the world—those whose life is dedicated to destroying the things that make us good. You may not know who you are, but we do.

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.


March 19, 2016

When the groom carries the bride over the threshold, the lucky lady is transported to a new condition—there’s a suggestion that the reason she’s carried, rather than walking across, is she appears less willing to lose her virginity.

That may be historically sound (though I doubt it), but the argument is hardly germane these days—only 3% of men and women have not had sex before marriage, according to the aptly named site waitingtillmarriage, but religion pushes the abstinence dogma.

Yet despite religion’s best efforts, our species is not monogamous—in fact, very few are. Scientific American offers a slide show with species that are (mostly) monogamous, but that’s cheating, if you excuse the pun. Monogamy is a threshold, like communism—you can’t be mostly monogamous, and you can’t be a little bit communist.

The creatures in the slide show include humans—that’s downright optimistic. The other species are mostly birds and rodents. Ethologists think that parental investment in birds, and particularly nest-building, plays a big part in being faithful.

One of the lucky(?) few is a species of African antelope called Kirk’s dik-dik. You couldn’t make it up.

So I wondered whether atheists were more promiscuous than other humans. I didn’t find much to support the hypothesis, but Yahoo did rate the bizarre comment below as its best answer.

Years ago I worked for a moving company. We would go into people’s houses, pack up all of their belongings and move them to their new place. Typically, those who had the most religious (usually Christian in this country, the U.S.) items (Bibles, pictures, etc.) in the main part of the house, had some of the most perverted sex toys, equipment, magazines and movies in the bedroom. It became a running joke among us that if you count the Bibles on the bookshelf in the main part of the house and multiply by three, that is how many sex toys (dildos, gags, binders, hand cuffs, etc.) you’ll find in the bedroom. It’s funny how much of a show they will put on of being “wholesome” while being some of the most perverted people in the bedroom. Magazines and movies that depict homosexual sex acts were extremely common to find in those houses.

I’m not sure what to conclude from this, since the topic was Are Christians usually more promiscuous than Atheists?  I offer three possibilities: (i) Atheists hide their sex toys better; (ii) Removals men don’t know the meaning of the word promiscuous; (iii) This is a testament to the demise of Yahoo.

I’m getting seriously sidetracked, because the thresholds I had in mind were economic, not sexual. I suppose the only common ground is that the world economy is pretty fucked, and I’ll proceed on that assumption.

Climate change in Europe. While temperatures increase, economics become chillier.

Climate change in Europe. While temperatures increase, economics catches a chill as interest rates become negative—coming soon to an economy near you.

Economics interests me because everyone swears by it but it doesn’t really work. And the more complex it becomes the less well it does. I’ve often tried to draw parallels between economics and ecology, for instance when addressing the challenge of feeding the world in 2050, with another three billion souls on the planet.

In the successive recessions (or is that recessive successions) after the Lehman collapse in 2008, the major world powers began printing money—actually the Japanese first did it in 2001. The idea is simple, and substantively insane. The central banks inject digital money into the banking system, the magicash  gets lent to businesses, that generates economic growth, which in turn benefits employment and consumption, which in turn generates economic growth.

The insane bit is that, much like monogamy, this has no support base except faith. As long as you believe a green (or blue, or red) piece of paper is worth something, it works.

You can’t do that with food, and everyone gets it. The concept, not the food.

You hit thresholds. If there’s no more feed, you can’t grow more animals. Beef. Chicken. Fish. So the answers are only three.

1. Produce more food.

Ask Google how much. If you type ‘How much food can’, Google suggests: a desert locust eat; a stomach hold; a person eat; you eat. That’s where our concerns are centered, although the desert locust bit…

But Harvard University’s E.O. Wilson worked out the production issue fifteen years ago. The 3.5 billion acres (1.4 billion hectares) of arable land on the planet produce two billion tonnes of grain, and Wilson suggests that if we all become vegetarians, the world can support ten billion people.

I recalculated his number and come to a figure of between three and ten billion for the world carrying capacity—all vegans. If we all ate meat then we’d already be past carrying capacity.

The fishy bit is missing, but it’s irrelevant in a vegan world—one hundred-fifty million tonnes of fish are produced each year, which would only feed two hundred million people—if nothing was used to feed farm animals and pets. Bye-bye Fido.

The carrying capacity of the earth depends a lot on what number you choose for the  grain yield—it varies by a factor of five hundred percent across different countries. And ultimately the yield depends on the nutrients—how much nitrogen, phosphorus, and other elements are available to make food.

2. Eat less food.

Less food for each of us, or less people. How about these palatable buzzwords? Wars, epidemics, eugenics, culling.

3. Eat differently.

A vegetarian diet—a world without farm animals, because we can’t feed both them and ourselves. No more Mr. McBurger.

Meantime we amuse ourselves with the illusion that if the world economy recovers, all will be well. The European Central Bank, much like Vasco da Gama, has sailed into uncharted waters. The twin tools of economists, adjustments to interest rates and to the money supply, have gone nowhere. Interest rates have gone to zero, and now Draghi has taken them lower, so that it costs you to keep your money in the bank.

The zero threshold has been breached, in the hope that consumers will go out and spend money rather than watch it dwindle in the bank—this is the worst possible reason to be profligate, and in the end it reduces reserves and makes banks more unlikely to lend. No problem! Print more money and lend it to the retail banks at negative rates.

And every time the Europeans, the Asians, or the Americans adjust interest rates, the others respond. The whole system is globalized, propagation is too fast, and there’s no capacity for changes to have an effect.

Our main economic weapons, which worked fine in the mid-range, are unusable at the edges. And we’re living at zero edge economics.

But does this really matter? Here’s my two cents.

The world is besotted by the economic question, but we’re asking the wrong question. It doesn’t really matter what economists think or what the economy does, because you can’t print food.

The way things are going, you may be swimming in digital money, but you’ll be lucky if you can find a locust for dessert.

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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