Archive for the ‘Finance’ Category

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.


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.


Being for the Benefit of Mister Mogg

February 17, 2018

The younger Mogg is a hard-line British conservative politician, and a favorite butt of the UK satirical magazine Private Eye. This week, they honor him on the cover.

Jacob Rees-Mogg, retro-brit, as seen by Private Eye magazine.

Mogg senior, however, is currently the object of my attentions. The Guardian newspaper carried an article this week on New Zealand—normally that wouldn’t get my attention, and it was a very long-winded piece—but it focuses on the likes of Peter Thiel.

Thiel is a Silicon Valley billionaire—two orders of magnitude below Jeff Bezos, but still worth a respectable 2.5 billion dollars. There’s nothing unusual about tech entrepreneurs being wealthy, but Thiel is unusual because he supports Trump.

There’s a group of extremely wealthy folks who believe the apocalypse may be around the corner, and that the safest place to view it from is… New Zealand. Apart from the mystical vapors of Tolkien, the attraction appears to be its distance from… well, anywhere, and the fact that there’s plenty of clean air and water.

Some of these beliefs are fruit of a book called Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State, written by James Dale Davidson and William Rees-Mogg, and published in 1997. The late Mogg was editor of The Times of London, and is the better-known of the two names.

I don’t like basing articles on reviews, so I did my best to locate a copy of the book. You can get it from Amazon in analog, but I wanted instant digital gratification—it didn’t prove easy. I browsed the deep web, using esoteric tools like, but I couldn’t access the real deal.

Like the Guardian author, I don’t plan to enrich the Mogg estate, so I’ll have to wing it. Mogg Major was apparently one of the first to predict the arrival of bitcoin, and deduced that this would free capital from taxation, since it would make it impossible for governments to trace income.

If I had a bitcoin (sing to the tune of If I Were a Rich Man) I could buy the book. At today’s rate it would cost me ten bucks and change.

The authors also suggest that democratic governments currently force folks to pay for health and education—the shame of it!

In this dystopian vision, sovereign individuals and corporations replace ineffectual democracies, and an entire new world order is created. The digital paradigm is at the center of this acid trip, and for those who are buying up apocalypse-free land in faraway places, there’s yet another hallucination—seasteading.

Seasteading looks like upmarket island living to me—a trip on a concrete petal (image from the Huffington Post).

The word is a little weird, which matches the concept itself—man-made islands where humans… live differently.

The Seasteading Institute empowers people to build floating startup societies with innovative governance models

The concept merits a book—written by someone aptly named Joe Quirk. French Polynesia seems to be on board, if you excuse the pun, and these man-made islands will of course be resilient to climate change, because—duh—they float.

The institute’s head, who does sound like a bit of a nutter, preaches the seasteading gospel.

Our venture is poised to launch a seasteading industry that will provide environmental resiliency to the millions of people threatened by rising sea levels, provide economic opportunities to people in remote and economically deprived environments, and provide humanity with new opportunities for organizing societies and governments.

Ambitious? Moi? Steady on, chaps…

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



January 28, 2018

In the original Latin, the word was related to favor. Either to depend on favor, or to be given as a favor. It’s a term I’ve heard all my adult life—in Portugal, and assuredly elsewhere, it has a clear connotation with employment—there’s even an NGO by that name.

The end of precarious labor is one of the banners of the left—the fight for permanence, where a job has continuity, and a worker can plan a life based on a steady income stream.

In the developed world, this ‘jobs for life’ model ended with the baby boomers—the very early baby boomers, at that. Post-austerity in Southern Europe, it became obvious that the pension model was similarly dead.

There’s a certain irony here, because jobs for life are what we have now—a nuanced version where retirement age steadily increases, and you work until you’re physically unable to carry on. In both halves of the hourglass, but particularly in the McDonald’s half, you shift (excuse the pun) into each new ‘job’ until you keel over.

For John and Jane, the golden handshake (or watch), the golf links, the Martini-modulated retirement plan, are a bygone. Current baby boomers and millennials are under no illusion: precarious is the new normal.

A recent study in the U.K. entitled ‘thriving, striving, or just about surviving’, reports that seventy percent of the country’s population is practically broke. Forty percent of the two thousand people interviewed stated their finances were ‘permanently precarious’, and the lowest thirty percent claimed they were ‘not managing to get by’—a British euphemism for being broke.

The lie of the land. Jobs in the United Kingdom, analyzed by the Royal Society of Arts.

The Royal Society of Arts commissioned this research, and the report identifies a wholly new class structure. In this brave new world, there are seven classes, in ascending order.

The chronically precarious: the reliably broke, people in this group are typically on a steady contract albeit with low pay. 60% have less than £1,000 saved and they have low job satisfaction and little autonomy at work. Typical job: full-time sales assistant.

The acutely precarious: usually broke but with significant income “yoyo-ing”. Work is often low-paid but, unlike the chronically precarious, irregular. This is a young group and 45% have a degree. Typical job: zero-hours hospitality.

The flexi-workers: love their job, even if it doesn’t pay well: 83% are satisfied at work but 59% earn less than £21,000 a year. High levels of savings: many are redundant “second careerers”. They value autonomy above security. Typical job: freelance photographer.

The steady-staters: feel well treated (90%) and well paid (69%), even if work is a means to an end. But they have low savings, and rely on work for income so are vulnerable to a shock. Their routine jobs are at high risk of automation. Typical job: public sector administrator.

The idealists: mid-earning, passionate and often millennials (50% under 35), 70% think they make a positive contribution to society at work. They are most likely to rely on others, such as parents, for income. They are urbane and 25% have more than £10,000 saved. Typical job: charity employee.

The strivers: these have regular jobs with high income and high savings, but worry the link between hard work and fair pay has broken: 73% are stressed but only 20% think their pay reflects their efforts. Typical job: middle manager.

The high-flyers: the wealthiest group: 55% have more than £10,000 in savings. They are successful at adapting to automation, and the most likely group to value new technology. They report high job security, high autonomy and high fulfilment. Typical job: director of an IT services business.

This distribution is heart-rending. Forty-three percent of the total have no safety net—if they lose their job, have an accident, or fall prey to the many other tricks life plays on us, no one in their household is able to support them.

I’ve been in England all weekend, talking to people who voted enthusiastically for Brexit, listening to the same people moaning about the government, and eating and drinking in establishments where the staff have no idea of the meaning of good service.

I also had the opportunity to examine one National Health Service (NHS) facility at close quarters, and I was impressed—in a good way. The hospital I visited was full of dedicated staff, of which the vast majority were foreigners: Indians from Kerala, Greeks, Spaniards, East Europeans.

I was struck by the friendly and competent nurses, the cleanliness, the quality of the wards—everything impressed me. I saw empty corridors, not gurney-ridden walls of patients waiting for treatment. I guess that may happen in some places, but it didn’t happen here.

I saw that much of the work was executed by immigrants, who definitely fall into some of the more challenging classes above. I guess the Indians will stay on after the Europeans go, but I can tell you they will be missed.

Work like this is not a job, it’s a calling. I searched through the RSA report for data on immigrants. The word pops up only once. I wonder how many of those two thousand people are not UK nationals, and I think I know the answer—very few.

So here’s the thing. The UK is no different from a bunch of other countries. So take a selfie. Where do you fit in?

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


Happy Birthday

December 2, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Three Buses

September 30, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To find out, I asked a machine.

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

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

  • Trainers
  • Explainers
  • Sustainers

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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


No Pension

September 23, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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