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time words

How we think of time

• minute
  
• hour
  
• day
  
• week
  
• month
  
• year
  
• (5-year)?
  
• decade
  
• generation/active life/career (20~ years ?)
  
• lifespan (technically eon, or age)
  
• century (now also an eon)
  
• period (i.e. 200 years, as in "the enlightenment" or "the renaisance")
  
• age [agrarian empires, 3500-800 BC, axial age 800 BC-600 AD, middle ages 600 AD-1450, capitalist empires 1450--] (missaplied term, but who is picky)
  
• millenium
  

America the Principled by Rosabeth Kanter

She works in organizational change, or teaches it at Harvard Bus Sch, or both.

Main thesis: The successful way to manage change, or to thrive in a dynamic environment, is by sticking to core principles. The moral compas is your guide.

She would like to see America stick to these three principles, which by implication says she thinks we are slipping away from them. I only remember two: open minds and common ground.

Kanter's Law (named after her, perhaps by her) states that "everything looks like a failure in the middle"-- and your principles guide you to success in the end. Her earlier book "Confidence -- how winning streaks and loosing streaks begin and end" argues this point.

Best quote:
"Reality isn't fixed, only our view of it."

She discusses kaleidoscope vision. Twist the kaleidoscope.

She quotes some middle eastern buisness leaders as saying (in a case study) "If we know his religeon, we will know how he thinks". This upset her, she does not like that level of fundamentalism.

The change element rule of thirds. 1/3 is for it, 1/3 is against it, 1/3 doesn't care. Target those people without alienating the opponents.

Paul Saffo -- Embracing Uncertainty

Mr. Saffo is a forecaster. How to spot the future coming.

"The difference between a forecast and reality is that a forecast must be believable and internally consistent"

wildcards make for better forecasting. For example, predicting that a movie star will become the next governor. He also says it helps to be a smart alec. His "movie star" prediction was a smart alec-y response which proved to be a true prediction. If you are pessimistic, appy the Lilly Tomlin rule.

Mr. Saffo is a big believer in the S-curve. 20 years of slow growth before you hit the inflection point. Implications: when people say things are just around the corner, they are 10-20 years out (we are still at the flat part of the S). When people say it will never happen, it is imminent (they haven't seen it take off in 20 years of effort, so have given up hope. 20 years is the time to inflection).

"Never mistake a clear view for a short distance!"

Next insight-- The future has arrived, but is unevenly distributed. Look for the small anomolies. These are the prodromal signs of change. Look back twice as far as you plan on looking ahead.

We fail our way into the future. Silicon valley is not build on the spires of achievement, but on the rubble of failure.

And he makes a prediction. The robots are coming.

Anomolies:

1. DARPA grand challenge. First one, only 4/20 make it out of the starting gate. Next one, 18 mo later, all but 4 finish.
   
2. Roomba. Not only do people buy them, they name them and take them to visit friends houses.
   
3. Another DARPA grand challenge, city driving. The robots all drove well, on the same day as California had a 100+ car pileup on the freeway.
   

The trend: changes in computation. The mircoprocessor put a computer on the desktop, and the device was a processor. Optical lasers/fiber optics allowed fast/big bandwith internet and the device became a connection. Now we have cheap sensors (tennis shoes reporting your pace !?!) which give the computer senses. Add wheels and we will have robots.


He called to someone in the audience to illustrate one of his points. They gave the wrong answer. He said "Next time I am going to use a planted response."

My whiteboard

starscriber

Neat company. Their pitch:
all emerging markets have prepaid wireless subscribers. They all run out of money at some point. Most of the world is on a 2G network with a $15 Nokia phone. These people have do something called "flashing" - where they call their friends or their boss and hang up on the first ring. That's a "flash" - the recipient now knows to call that person back. The phone company gets no revenue from this. On a daily basis this happens - are you ready - 8 billion times around the word (almost half of all cellphone calls are flashes each day!). It is a well-known form of communication. Starscriber goes to these countries and tells the consumers there is an easier more effective way to do this kind of "flash-messaging" with their service, they are up and running in Nigeria, Indonesia and Latin America.

http://www.starscriber.com/en/index.html
"Connecting the unconnected"

pixar story rules

Cut and paste from http://www.pixartouchbook.com/blog/2011/5/15/pixar-story-rules-one-version.html

Pixar story artist Emma Coats has tweeted a series of “story basics” over the past month and a half — guidelines that she learned from her more senior colleagues on how to create appealing stories:

#1: You admire a character for trying more than for their successes.

#2: You gotta keep in mind what’s interesting to you as an audience, not what’s fun to do as a writer. They can be v. different.

#3: Trying for theme is important, but you won’t see what the story is actually about til you’re at the end of it. Now rewrite.

#4: Once upon a time there was ___. Every day, ___. One day ___. Because of that, ___. Because of that, ___. Until finally ___.

#5: Simplify. Focus. Combine characters. Hop over detours. You’ll feel like you’re losing valuable stuff but it sets you free.

#6: What is your character good at, comfortable with? Throw the polar opposite at them. Challenge them. How do they deal?

#7: Come up with your ending before you figure out your middle. Seriously. Endings are hard, get yours working up front.

#8: Finish your story, let go even if it’s not perfect. In an ideal world you have both, but move on. Do better next time.

#9: When you’re stuck, make a list of what WOULDN’T happen next. Lots of times the material to get you unstuck will show up.

#10: Pull apart the stories you like. What you like in them is a part of you; you’ve got to recognize it before you can use it.

#11: Putting it on paper lets you start fixing it. If it stays in your head, a perfect idea, you’ll never share it with anyone.

#12: Discount the 1st thing that comes to mind. And the 2nd, 3rd, 4th, 5th – get the obvious out of the way. Surprise yourself.

#13: Give your characters opinions. Passive/malleable might seem likable to you as you write, but it’s poison to the audience.

#14: Why must you tell THIS story? What’s the belief burning within you that your story feeds off of? That’s the heart of it.

#15: If you were your character, in this situation, how would you feel? Honesty lends credibility to unbelievable situations.

#16: What are the stakes? Give us reason to root for the character. What happens if they don’t succeed? Stack the odds against.

#17: No work is ever wasted. If it’s not working, let go and move on - it’ll come back around to be useful later.

#18: You have to know yourself: the difference between doing your best & fussing. Story is testing, not refining.

#19: Coincidences to get characters into trouble are great; coincidences to get them out of it are cheating.

#20: Exercise: take the building blocks of a movie you dislike. How d’you rearrange them into what you DO like?

#21: You gotta identify with your situation/characters, can’t just write ‘cool’. What would make YOU act that way?

#22: What’s the essence of your story? Most economical telling of it? If you know that, you can build out from there.

Presumably she’ll have more to come. Also, watch for her personal side project, a science-fiction short called Horizon, to come to a festival near you.

Kevin Kelly-- the next 100 years of science

Kevin Kelly, active in the Long Now, self-proclaimed science groupie.

Transcript of the talk is here

Science is a structure of sustainable changes.

Recursion/self-reference is the fundamental principle of the universe (he does not say it as strongly, but this comes across). Self reference creates a new level; this explains the growing complexity of XX (science, civilization, life ITSELF!)

If science is how we know things (the god of truth/knowledge). Next wave of science a tripod:

1. immense depth of observation
   
2. full exploration of the parameter space (deterministic search)
   
3. simulations (random search)
   

Earliest use of the word "science" in English is "For God of science is Lord" from 1340. I think he gets this from the Oxford English Dictionary [vol.ix, 1961, p. 221], but this is from an unconfirmed Google search. Other quotables:

What you imagine is as important as what you measure

Science is how we surprize God

black queen hypothesis

image from http://io9.com/5897134/researchers-describe-a-new-evolutionary-theory-the-black-queen-hypothesis

The theory is proposed in The Black Queen Hypothesis: Evolution of Dependencies through Adaptive Gene Loss J. Jeffrey Morrisa, Richard E. Lenskia, and Erik R. Zinserc

In the context of evolution, the BQH posits that certain genes, or more broadly, biological functions, are analogous to the queen of spades. Such functions are costly and therefore undesirable, leading to a selective advantage for organisms that stop performing them. At the same time, the function must provide an indispensable public good, necessitating its retention by at least a subset of the individuals in the community — after all, one cannot play Hearts without a queen of spades.

Gene loss can provide a selective advantage by conserving an organism’s limiting resources, provided the gene’s function is dispensable. Many vital genetic functions are leaky, thereby unavoidably producing public goods that are available to the entire community. Such leaky functions are thus dispensable for individuals, provided they are not lost entirely from the community. The BQH predicts that the loss of a costly, leaky function is selectively favored at the individual level and will proceed until the production of public goods is just sufficient to support the equilibrium community;

HIV treatment as prevention

Nice opening session discussing two contrasting strategies for HIV transmission prevention-- Pre-exposure prophylaxis, and immediate HAART.

PrEP provides substantial but incomplete protection against transmission. Rates are estimated from 39-62%. An alternate calculation looks at risk reduction. In these studies, PrEP reduces the three-year transmission risk from 0.04 to 0.01. Oral dosing (tenofovir) is effective, but not nearly as effective as a topical gel. The gel delivers much higher drug concentrations to the area concerned, with fewer chances for side effects. There is no evidence that PrEP selects for drug resistant strains. The gel also stops transmission of herpes. In all cases, adherence is the key factor in the real world. An interesting factor is that PrEP is associated with an increase in pregnancy and also with other STDs. The suggestion is that people feel protected, so do not take other measures.

HAART provides an alternative route. A functional therapy suppresses the virus to non-detectable levels. This means the person no longer transmits (real world check-- as long as the therapy is still working, and the patient is adhering ...). A problem is the common belief that the epidemic is driven by people in the primary phase of infection, many of whom (80%!!) are not aware that they are infected. At particular risk in EU are young homosexuals.

A suggested solution was mandatory (or at least strongly encouraged) universal HIV testing for all 15 year olds, with yearly followup. Anyone with positive results is immmediately put on HAART. Some epidemic models suggest that this would effectively stop the epidemic from spreading, and lead to almost no new infections by 2050. While this would initially cost more, after 10 years it would be substantially cheaper since we would have much fewer cases.

In one Kenya study, 84% of patients with primary infection did not know they were infected.

Finally, Brooks Nichols from Erasmus presented a mean field approximation of the epidemic in a rural African community of approx 150K. She used the model to compare the effectiveness of targeting PrEP to a small number of highly active individuals vs a large number of randomly selected individuals. Not surprisingly, targeting the hubs proved better control for significantly less cost. We are talking about simulating this using my zombie code.

economics

in terms of national income, a country with a long running current account deficit has been borrowing goods and services from the rest of the world. In order to support this one, or both, of the non-external sectors of the economy will have expanding debt positions and due to this the economy tends to restructure around consumption over investment and production. Because the external sector is a net drain on capital from the country, the government and/or private sector must continually expand their debt in order to maintain economic growth.

clipped from http://www.nakedcapitalism.com/2012/03/spain-follows-greece.html

spain is headed for a hard time

Cultivating genius

Another perspective on where good ideas come from, this one courtesy of Jonah Lehrer, writing in March 2012 Wired.

he starts from David Bank's paper on the problem of excess genius. Bank notices that genius comes in clumps. He postulates that this is due to a confluence of factors

My sense is that high points in cultural history require the confluence of many factors; some of these are more important than others. When all or most of the factors coincide, then one has a Periclean Athens, Laurencian Florence or Elizabethan London. When only several factors combine, the cultural eruption is more humble -- one gets Goethe's Weimar, or the Lake Poets. Things trail off gradually; if virtually none of the factors obtains, then we call it a Dark Age.

He tests many, and finds none.

Jonah Lehrer thinks the answer is in Paul Romer's concept of meta ideas, from his essay on economic growth

meta-ideas are ideas about how to support the production and transmission of other ideas.

Romer gives the 17th century idea of patents and copyrights. Lehrer lets this slide. These meta-ideas at SEVENTEENTH CENTURY ideas, and NO LONGER SUPPORT THE PRODUCTION AND TRANSMISSION OF IDEAS, they block it.

Romer concludes

We do not know what the next major idea about how to support ideas will be. Nor do we know where it will emerge. There are, however, two safe predictions. First, the country that takes the lead in the twenty-first century will be the one that implements an innovation that supports the production of commercially relevant ideas in the private sector. Second, new meta-ideas of this kind will be found.

Only a failure of imagination, the same one that leads the man on the street to suppose that everything has already been invented, leads us to believe that all of the relevant institutions have been designed and that all of the policy levers have been found.

Oscar Omoro (a FX trader) has this to say about meta-ideas and currency values

Meta-ideas come from a previously unknown source, and possesses the power to propel a large and growing audience into thinking in some new way.

Meta-ideas contain a kind of formula to perpetuate themselves. This formula can include a degree of fear (or greed), such as the fear (or desire) that gold prices will rise and a nation’s currency will decline. The formula has power because it associates some well-recognized truth with the particular emotion it intends to sway.

Lehrer concludes that we shoud support genius in science/arts the same way it is supported in sports. The US has a tremendous system to cultivate athletic talent at every stage of its development.

modern fairy tales

http://www.amazon.com/dp/014311784X?tag=braipick-20&camp=213381&creative=390973&linkCode=as4&creativeASIN=014311784X&adid=0KTW4441J1ZQMFDV52DZ


My Mother She Killed Me, My Father He Ate Me: Forty New Fairy Tales

crash acoming?

Further to your highlighting Helene Meisler’s comments and graph on NYSE margin debt, for several years I too have tracked this number and have found that when combined with VIX as a measure of investor complacency, it is a useful tool for raising orange and red flags around market tops.

The fundamental ‘thesis’ of combining margin debt and investor complacency in one index (margin debt divided by VIX) is that a combination of high investor leverage and high investor complacency is a toxic mix indeed. As you know, margin debt figures are reported with a one month lag, so to try the make the indicator more timely, I estimate margin debt one month in advance.

Thus, for March 2012, I estimate NYSE margin debt could be in the range of $300-$305b. Dividing 300-305 by 13.66 (the VIX low in March so far, on Mar 16th) yields an indicator value of 21.96 to 22.33. On the basis of historical experience, I treat any indicator value above 20 as an orange flag and any indicator above 22 as a red flag. Thus the estimated March figure of approx. 22 is enough to prompt me to “head to the hills” i.e. seek refuge in high cash reserves.

Stated another way one might say that NYSE margin debt above $300b is a worry in and of itself but when combined with high levels of investor complacency as measured by a low VIX, the danger signal is magnified and intensified.

Gold standard

In reply to BB:

In today’s baseless monetary system labor cannot save its wages because banks may issue infinite credit that raises the general price level (GPL) above where it would naturally gravitate. If left to its own devices, prices would naturally fall, not rise, due to population growth, innovation, economies-of-scale, and productivity improvements. This would benefit all wage earners because a lower GPL would make wages more competitive vis-à-vis the goods, services and assets available for purchase. Affordability would rise for all economic participants, and would be especially beneficial to those at the lower end of the wage scale.

Obviously this is not the monetary system we have, which is premised on continually rising prices and policies that seek to ensure that. The current monetary regime issues credit and creates systemic debt. In this system asset price growth can outpace wage growth for long stretches of time. Asset prices, however, may be driven higher by the availability of credit, not rising demand or productivity. The debt build up that goes hand-in-hand with the credit build up creates a drag on demand and productivity. Unemployment rises. Debt cannot be serviced or repaid easily through wages.

Central banks must ultimately dilute the purchasing power of their currencies by manufacturing more currency with which debtors can repay their debts or with which creditors can extend new credit to debtors so they can roll over their debts. Any saved wages lose their purchasing power if held in that currency. This gives incentive to laborers not to save in the currency in which they are paid. Rather, they are forced to speculate in financial asset markets (directly or indirectly).

Lee Quaintance & Paul Brodsky
pbrodsky@qbamco.com

End of the Yen -- coming soon??

Clipped from "The Yen’s Looming Day of Reckoning" By Andy Xie, Caxen, 03.23.2012 and seen on TBP.

Japan is on an unsustainable path of a strong yen and deflation. The unprofitability of Japan’s major exporters and emerging trade deficits suggest that the end of this path is in sight. The transition from a strong to weak yen will likely be abrupt, involving a sudden and big devaluation of 30 to 40 percent. It will be a big shock to Japan’s neighbors and its distant competitors like Germany. The yen’s devaluation in 1996 was a main factor in triggering the Asian Financial Crisis. Japan’s neighbors must have a strong banking system to withstand a bigger devaluation of the yen.

Japan’s nominal GDP contracted 8 percent in the four years to the third quarter of 2011, and six percentage points of that was due to deflation. Without increased government expenditure, the contraction will be one percentage point more. Japan has not seen this kind of sustained deflation since the 1930s.

A strong yen, deflation and rising government debt form a short-term equilibrium that lasts as long as the market believes it is sustainable. The yen has seen a relentless upward trend since it depegged from the dollar in 1971, up to 83.4 from 360 again to the dollar. Japan’s nominal GDP peaked in 1997 and its nominal wages did too.

As Japanese institutions and households hold almost all of the government’s debts, their faith in the government’s creditworthiness is the mojo for Japan’s seemingly harmless deflationary spiral.

Japanese culture is group-oriented. This psyche was the reason that Japan’s property bubble became so big in the 1980s, five to six times the size of the bubble in the United States. After the property bubble, the group psyche shifted its power to a strong yen, pushing Japan’s economy onto the path of a rising yen, deflation and rising government debt.

A yen collapse will impact China and South Korea most, just like in 1998.

Dave Birch "The Future of Money" 24 Nov 2011

I blogged this once before.

Re-listened today, which brought some fresh perspective.

Money has different functions (store of value, medium of exchange, unit of account). Technology affects each of these differently.

Checks, for example, transform a store of value (bank account) into a medium of exchange.

The Tally Stick government debt market discounted debts across both time and space.

Cash money is a stealth tax, since what is really exchanged is government debt.

The Euro is a doomed currency. So what about the "galactic credit" of science fiction fame?

Tech again puts money creation into everyone's hands.

Should a currency be resource-based (gold standard) or reputation-based (debt standard).

Payments and banking are two seperate functions which our current monetary model conflates.

In a world without cash, what happens to prices?

outsourcing resources

http://www.clay-collins.com/blog/49-decent-virtual-assistant-personal-outsourcing-resources/

links to a number of other sites:
http://www.instigatorblog.com/10-tips-for-picking-a-great-freelance-vendor/2007/11/19/

LEYF, social entreprenurship -- June O'Sullivan

June O'Sullivan talks about LEYF at the RSA.

The lady knows her buzzwords, and uses them well. Fast speaker. The buzzwords capture key concepts-- they are not just buzz when coming from her lips.

She heads LEYF, the london early years foundation:

Established in 1903, we are the UK's leading childcare charity and social enterprise; our ambition is to build a better future for London's children, families and local communities through a commitment to excellence in Early Years education, training and research.

LEYF nurseries mix across social levels/income brackets. Variable pricing means more well-off families subsidize childcare for their less well off neighbors. Note that London has the best mixing of rich and poor of any city in the world. The London buroughs are (historically) built around a central estate belonging to the wealthy, with concentric rings of decreasing poverty around it, in the back mews, etc. If a London nursery draws from a 5-block radius, the lowest/highest income ratio for people living in that circle is the highest in the world.

They work to bridge communities. It isn't just leaving your kids from 8-5.They open their locals for wider hours, offereing courses and activities into the evening.

June spoke about social ROI. Wanting to get LEYF completely off of government funding, yet with profit as a secondary objective. Glossed over that England does not yet have a legal form of incorporation which allows this; technically LEYF is still a non-profit. Discussed in more detail that because non-profits people generally have a hard time talking about making money, they almost universally have poor business skills. She feels this needs to change.

She also has problems scaling up her vision. She wishes to franchize the LEYF model, which presents a number of difficulties. But franchizes better allow for local control, which is a key component of the LEYF vision-- each LEYF center MUST be a vital part of its local commmunity. Further, she is keenly aware that local control provides a better test-bed for innovation-- good ideas often come from the fringes, and can be tested there with much lower risk.

She wants the children who pass through LEYF to develop social capital. Trust networks, etc, the things which count for as much success in life as money capital.

And I reflect on the franchise model as a species type form for social evolution.

Weeks when decades happen -- shameless cut and paste

A cut/paste of a cut/paste. How's that for internet freedom?

My source is http://www.ritholtz.com/blog/2012/03/weeks-when-decades-happen/

Key point: the three trends which will shape markets for the next decade? are
Internationalization of the RMB
Rise of robotics
Cheap energy in the US

Weeks When Decades Happen

By Louis Gave
March 14, 2012

Talking about the Russian Revolution, Lenin once said that “there are decades when nothing happens and there are weeks when decades happen.” The last quarter of 2001 looks in retrospect like one of those exciting periods: three events occurred which set in motion the main economic trends of the ensuing decade. Successful investors latched on to at least one of these trends. The problem is, all three trends are now over. The investment strategies that worked over the past decade will not continue to work in the next. What comes next?

The three big events of 2001 were:

• The terrorist attacks of 9/11. This unleashed a decade of bi-partisan “guns and butter” policies in the US and produced a structurally weaker dollar.

• China joined the WTO in December 2001. China’s full entry into the global trading system signaled a re-organization of global production lines and China’s emergence as a major exporter. Export earnings were recycled into the mother of all investment booms, which drove a surge in commodity demand and a wider boom in emerging markets.

• The introduction of euro banknotes. The introduction of the common currency unleashed a decade of excess consumption in southern Europe, financed unwittingly by northern Europe through large bank and insurance purchases of government debt.

But today, all three trends have stalled—and this perhaps accounts for the discomfort and uncertainty we find in most meetings with clients. Indeed:

• US guns and butter spending is over. For the first time since 1970, real growth in US government spending is in negative territory:

• Chinese capital spending is slowing. China still needs to invest a lot more, but future growth rates will be in the single digits.

• Excess consumption in southern Europe is done. Money is clearly flowing out to seek refuge in northern Europe.

Thus, like British guns in Singapore, investors whose portfolios still reflect the above three trends are facing the wrong way. Instead of lamenting over the past, investors should be coming to grips with the trends of the future: the internationalization of the RMB, the rise of cheaper and more flexible automation, and dramatically cheaper energy in the US.


1- The internationalization of the RMB

China is now the centre of a growing percentage of both Asian, and emerging market trade (a decade ago China accounted for 2% of Brazil’s exports; today it is 18% and rising). As a result, China is increasingly asking its EM trade partners why their mutual trade should be settled in US dollars? After all, by trading in dollars, China and its EM trade partners are making themselves dependent on the willingness/ability of Western banks to finance their trade. And the realization has set in that this menage à trois does not make much sense. Indeed, for China, the fact that Western banks are not reliable partners was the major lesson of 2008 and again of 2011.

As a result, China is now turning to countries like Korea, Brazil, South Africa and others and saying: “Let’s move more of our trade into RMB from dollars” to which the typical answer is increasingly “Why not? This would diversify my earnings and make our business less reliant on Western banks. But if we are going to trade in RMB, we will need to keep some of our reserves in RMB. And for that to happen, you need to give us RMB assets that we can buy”. Hence the creation of the offshore RMB bond market in Hong Kong, a development which may go down as the most important financial event of 2011.

Of course, for China to even marginally dent the dollar’s predominance as a trading currency, the RMB will have to be seen as a credible currency—or at least as more credible than the alternatives. And here, the timing may be opportune for, today, outshining the euro, dollar, pound or even yen is increasingly a matter of being the tallest dwarf.

Still, China’s attempt to internationalize the RMB also means that Beijing cannot embark on fiscal and monetary stimulus at the first sign of a slowdown in the Chinese economy. Instead, the PBoC and Politburo have to be seen as keeping their nerve in the face of slowing Chinese growth. In short, for the RMB to internationalize successfully, the PBoC has to be seen as being more like the Bundesbank than like the Fed.

Following this Buba comparison, China has a genuine opportunity to establish the RMB as the dominant trade currency for its region, just as the deutsche mark did in the 1970s and 1980s. But interestingly, China seems to consider that its “region” is not just limited to Asia (where China now accounts for most of the marginal increase in growth—see chart) but encompasses the wider emerging markets. How else can we explain China’s new enthusiasm in granting PBoC swap lines to the likes of the Brazilian, Argentine, Turkish and Belorussian central banks?

China’s attempt to move more of its trade into RMB is interesting given the current shifts in China’s trade. Indeed, although the US and Europe are still China’s largest single trade partners, most of the growth in trade in recent years has occurred with emerging markets. And China’s trade with emerging markets is increasingly not in cheap consumer goods (toys, underwear, socks or shoes) but rather in capital goods (earth- moving equipment, telecom switches, road construction services, etc; see China Bulldozes a New Export Market). In short, yesterday China’s trade mostly took place with developed markets, was comprised of low-valued-added goods, and was priced in dollars. Tomorrow, China’s trade will be oriented towards emerging markets, focused on higher value-added goods, and priced in RMB.

This would mark a profound change from China’s old development model: keeping its currency undervalued, inviting foreign factories to relocate to the mainland, transforming 10-20mn farmers into factory workers each year, and triggering massive labor productivity gains—gains which the government captures through financial repression and redeploys into large-scale infrastructure projects. But China’s change in development model may be less a matter of choice than of necessity.
2– Virtue from necessity: the rise of robotics

The first harsh reality confronting China is that the country is now the world’s single largest exporter. Combine that impressive status with the reality that the world is unlikely to grow at much more than 3% to 4% over the coming years and it becomes obvious that the past two decades’ 30% average annual growth in exports just cannot be repeated.

Beyond the limits to export growth, the other challenge to China’s business model is the second step, namely the transforming of farmers into factory workers. Not that China is set to run out of farmers (see The Countdown for China’s Farmers). But the coming years may prove more challenging for unskilled workers as robotics and automation continue to gather pace. Over the coming decade, cheap labor may not be the comparative advantage it was in the previous decade, simply because the cost of automation is now falling fast (see The Robots Are Coming).

Of course, factory and process automation is hardly a new concept. What is new is the dramatic recent shift from fixed automation to flexible automation. For decades we have had machines that could perform simple repetitive tasks; now we have machines that can be reprogrammed easily to perform a wide range of more complicated functions. With improved software and hardware, robots can do more, in more industries; and the purpose of automation has shifted from improving crude productivity (making more of the same things at lower cost) to more sophisticated targets like adaptability across product cycles, and improved quality and consistency.

One consequence of cheaper and more flexible automation is that some manufacturing that fled the developed world for cheap-labor destinations like China may return to the US, Japan and Europe, as firms decide that the benefits of low-cost labor no longer outweigh the advantage of better logistics and proximity to customers. Even if this does not occur, factories in places like China may become ever more automated (e.g.: electronics assembler Foxconn, Apple’s main supplier and one of the world’s biggest employers with some 1mn workers, has started to talk about building factories manned with robots). This then raises the question of what China’s hordes of manufacturing workers will do should Chinese factories automate and/or re-localize to the developed world. One obvious conclusion is that China’s leaders will thus have to deal with slowing growth through further deregulation, rather than stimulus and currency manipulation. The remedies of 2008 (large fiscal and monetary stimulus) will not work again.

This dilemma implies that the robotics trend dovetails with the RMB internationalization trend. To understand just why, it is important to recognize one aspect of policymaking which makes China unique: the country’s leaders wake up every morning pondering how to return China to being the world’s number one economy and a geopolitical superpower in its own right (few other world leaders harbor such thoughts). And ever since Deng Xiaoping, the answer to that question has typically been to sacrifice some element of control over the economy in exchange for faster growth.

Today, China faces the imperative of making just such a trade-off between control and growth: the old model of cheap labor and vast capital spending is near exhaustion, so the only way to sustain growth is to go for more efficiency, especially through financial sector reform. For China’s leaders, reform will be painful but the cost of missing out on the global power that comes with further growth would be even more painful. Hence we are convinced Beijing will eventually bite the financial reform bullet, and RMB internationalization is the leading edge of that reform. In that light, the creation of the RMB offshore bond market is an event of much greater significance than is currently acknowledged by the general consensus.
3– Cheap US energy

Along with the possibility of manufacturing returning to the developed world from China and other low labor-cost countries, another key trend of the coming decade should be the gradual achievement of energy independence by the US. Given the discoveries of the past few years in the exploitation of shale gas and oil, and assuming the existence of political will to invest in reshaping US energy infrastructure, such a development is now within reach.

These large natural gas discoveries have two potential global impacts. First, the combination of low-cost automation and low-cost energy could encourage manufacturers to locate their plants not in countries with the lowest labor cost, but in those with the lowest energy cost. For example, on a recent visit to Germany we kept hearing how chemical plants would have a tough time competing with American plants if the price of US natural gas stayed below US$2.50. In fact, with Germany having decided to pull away from nuclear and bet its future on high-cost wind power, energy- intensive industries in the country could be in for a challenging decade.

Second, the return to manufacturing and energy independence should lead to sustained improvement in the US trade deficit. Energy imports account for around half of the US trade deficit (while the other half is broadly manufactured goods from China). Today the US, through its trade deficit, sends roughly US$500bn worth of cash to the rest of the world every year. This money helps grease the wheels of global trade since more than two-thirds of global trade is still denominated in dollars. But what will happen if, in the next ten years, the US stops exporting dollars, thanks to its new strengths in manufacturing and cheap energy? In such a scenario, the dollars would run scarce.

In fact, this may already be happening. This would explain why the growth of central bank reserves held at the Fed for foreign central banks has been in negative territory for the past year—and why, over the past two quarters, the Fed has been exceptionally generous in granting swap lines to foreign central banks (notably the ECB).

This does not make for a stable situation. And given that the RMB is unlikely to replace the dollar as the principal global trading currency for many years to come (see History Lessons and the Offshore RMB), the likely combination of expanding global trade and a shrinking US trade deficit should mean that either the dollar will have to rise, or US assets will outperform non-US assets to the point where valuation differnces make it attractive for US investors to deploy dollars abroad (since US consumers won’t).
4– Conclusion

Obviously, we do not claim to have identified all the big trends of the coming decade. The next several years will doubtless deliver many more important changes and investment opportunities (monetization of Japan’s debt and a collapse in the yen? Demographic challenges in numerous countries? Reform and modernization in the Islamic world? Political upheaval and regime change in Iran? Water shortages in China, India and other Asian countries? Possible energy independence for India through thorium-based nuclear energy plants?). But we are nonetheless confident on these main points:

• The three key macro trends of the past decade have come to a screeching halt. This explains why financial markets seem to lack conviction and direction.

• The internationalization of the RMB and the birth of the RMB bond market is likely to be one of the most important developments of the decade. The closest analogy is the creation of the junk bond market by Michael Milken in the 1980s. Interestingly, just as in the early 1980s, few people are taking the time to work through the ramifications of this momentous event. Understanding this new market will prove essential to understanding the world of tomorrow.

• The likely evolution of the US from record high twin deficits to much smaller budget and trade deficits should help push the dollar higher over the coming years. And this in turn will have broad ramifications for a number of asset prices.

Vernor Vinge -- What if the singularity does NOT happen?

Remember, he came up with the idea.

Long term policy to make the war on terror short -- John Rendon

From the Long Now.

John Rendon's webpage Interesting blog, I should follow it.

Wikipedia is not favorable:

The Rendon Group is a public relations and propaganda firm headed by John Rendon which specializes in providing communications services both nationally and internationally. James Bamford of Rolling Stone describes him as "The man who sold the [Iraq] war.[3]

and continues to paint a dubious portrait of the man.

And since I listened to this talk a week ago, I have forgotten it. Damn you, short term memory!!

steven johnson-- the long zoom

Other background reading: LN bio, NYT article, which says "spore" is the answer -- see earlier talk with Eno and Wright

Paul Hawken -- The new great transformation

"I now believe there are over one million organizations working toward ecological sustainability and social justice. This is the largest social movement in all of history, no one knows its scope, and how it functions is more mysterious than what meets the eye. What binds it together is ideas, not ideologies. The promise of this unnamed movement is to offer solutions to what appear to be insoluble dilemmas: poverty, global climate change, terrorism, ecological degradation, polarization of income, loss of culture.

Talk is here

The Brain is Wider than the Sky -- Bryan Appleyard

Presents his new book at the RSA, with discussion from Rod Liddle. Audio

Bryan Appleyard is a bit of an anti-tech guy, though he denies it. The talk had some good quotes, and I agree with some of his concern, but he takes it too far.


Rod Liddle is a journalist

The blurb for the book reads

Drawing on his experience as an acclaimed writer on science, new technology and the arts, he charts the tantalising choices we now face and the questions we should be asking ourselves. The book is a widely informed meditation on the fast-moving technological forces of the present and how they will shape our future and define the priorities of the new machine ag

My notes/summary. I here record Mr Appleyard's rant, these are NOT MY OPINIONS

The basic insight can be put thus: A computer might soon pass the Turing test, but not because the computer is smart, but rather that the human has become dumb.

Another way: Are you a computer compliant citizen?

Another way: the key insight for the book came while working his way down a telephone answer tree, and hating how dehumanizing it was. The system was dehumanizing him, quantizing him, (accompanied by a little recorded voice saying how valuable he was).

A complex system will not respond well to the merely complicated.

Complex would be human. Hard to predict, many connections, A merely complicated system is one that exceeds working memory-- a telephone tree, for example.

All explanitory arrows point downwards. It is a one-way theory.

Then Mr. Appleyard begins talking about neuroscience. He claims neuro is the new buzzword, now that genetics turns out not to explain everything.

Science seeks the beautifully simple explanation, but this MUST be insufficient for a complex system. He is reacting to things like the neuroscience of art, as if activation in the temporal lobe is even remotely sufficient as an explanation of what the artist (or viewer) was feeling. He also attacks Steve Plinkter

The cultural shift which concerns him is the nature of our gadgets. They now know us and categorize us. Private companies which can datamine their knowledge of our web history to "know" us better than we know ourselves. The massive surveillance. Your gps constantly reporting back to Apple about your location, which is then used to sell you stuff.

The devices constantly pushing us towards short-term attention. Hard to read a long text, you just want to get to the point. But sometimes the mood is the reason you are reading, not the author's point.

And the singularity is NOT an endpoint!!! If it is, it must be hell. Because you get swallowed by a device which does not capture what it is to be human, but sucks your entire sould

TB vaccine trials near completion in South Africa

JOHANNESBURG (AP) — Scientists say the first advanced clinical trials in South Africa for tuberculosis vaccine are scheduled for completion by early next year.

South African researcher Dr. Hassan Mohomed says the trials will make medical history, even if the vaccine doesn't work. He said the results will help scientists understand the world epidemic and form a key building block to hasten the eventual eradication of TB.

The government's health department said at the launch Tuesday of a new global drive to find a vaccine that South Africa has the second highest rate of TB infection in the world after the tiny southern African nation of Swaziland. TB is the biggest killer of HIV-positive South Africans, whose resistance to disease is lowered.

network vision

This is an idea which has been growing in my head, and which I will nourish so it continues to grow.

Networks of networks. I see the small networks "crawling" around on the larger network, needing to match nodes or links, or creating links, or potential links.

All nodes in a snet are they similar? How specialized? How varied within a specialty (think: ants, or adventurous bees).

Nework spawns new networks. This is the definition of success; or rather the success of the progeny is the measure of success. How recursive is that?

Alex Wright -- Organizing information

AW talks about historical and present systems for organizing information

Summary here

Hard to talk about knowledge (knowledge structures) evolving. Recall the most successful organisms in terms of evolution are the bacteria.

Networks turn into hierarchies which spawn networks which coalesce into hierarchies which ...

Theory by Berlin: ALL cultures have folk taxonomies for the living/natural world, and they are all 5 levels deep. Strong analogy between folk taxonomy and family trees.

Note: a folk taxonomy is not the same as a folksomony, a new term (2004) referring to social tagging "the practice and method of collaboratively creating and managing tags to annotate and categorize content;"


Mythology is a form of taxonomy


Ice age forced small hunter/gatherer bands into larger groups, which required hierarchical systems and symbolic objects to conveigh status/ability.

Oral vs written culture. Oral is more collaborative, written provides one authoritive voice.
and what about visual culture? Oral is participatory, re-created each telling, fluid, with less authority. The written word is powerful and fixed. I wonder what would have happened if God had written the world into existence instead of speaking it??

Written language for accounting, temple library.

Scrolls as linear progresson, codex/books as random access. The midievial monestary, monks learned the memory palace method.


The Long Zoom-- a history of information architecture.

Berlin's observation that all societies have folk taxonomies for the natural world, and they are universally 5 levels deep (I need to check this reference, I cannot believe there is no variation in this depth). These taxonomies resemble family trees, and echo them in other ways (brother bear?). The 5-level limit may reflect that human working memory is 7pm 2 items. Also, studies show that people can comfortably navagate 5 levels down a web-page, but if the tree is longer than that they rapidly get lost.

Mythology provides another information system/structure.

Something about what happens when social groups get bigger than family size-- you no longer know everyone, and we see the begining of symbolic objects to conveigh status (is this verified by antrhopologists?? True, but not complete).

Jimmy Wales on wikipedia

"I'm not that smart, just really friendly"

WP is community based, not rules based.

Compare to dynamic systems-- a set of fixed rules generate complex behavior.

WP software allows most anything. But it tracks everything. This allows the community to restore/reset.

Models of growing systems-- Conway's life does not get a bigger board, nor would this affect things (unless you have programmed in wraparound). The rules allow for a few limited types of life. An open system would then assume those types existed, and use them as inputs for the next level.

Brian Fragan-- Not the first society to face climate change

Brian Fagan,British acheologist and author, talks about other societies which have faced climate change.

The big danger is drought.

Humans are remarkably adoptable, and what keeps us together are the social ties of family and friends. Urbanism, unfortunately, destroys these.

Decisive local leadership can save people in a crisis, but we here talk about LOCAL leaders with kinship ties to the community and who understand the community dynamics.

Invention of agriculture: people living on the edge of vast oak forests, who could make an easy living off of the forest fruits (nuts, game, etc). Forest start to dry up, they switch to grass. They already have the habit of stable homes/fixed dwellings.

Great speaker, many stories

Foxes more accurate than hedgehogs, philip tetlock

Social psychologist, worked on prediction accuracy for 20+ years, with a focus on public policy.

Foxes, good at many things
Hedgehog, good at one thing.

60% of people are in the middle of the spectrum, with 20% in each of the extremes.

Hedgehogs see the world from a strong idealogical point of view, and attempt to explain the world from this framework (i.e. free markets are THE answer).
Foxes see much more nuance, and take the bits that work from contrasting ideas (free markets work, but so do govnt- services).

Foxes as individuals have more accurate predictions, but with more hedging and nuance.
Hedgehogs have more absolute predictions, which are generally wrong.

Thus a fox as an individual is already the wisdom of the crowd, while the predictive accuracy of a crowd of hedgehogs is markedly better than that of a single hhog.

None of them predict much better than simple stochastic processes (i.e. mean reviersion, or 2-4 step ARMA, or continum)

But as people, the game is not played to be accurate. Hedgehogs, with their stronger sense of certainty, get more attention. People don't care if you are accurate, they want a simple statement and a compelling story. Mix that, and you win, even if events don't bear you out.

And if they don't, you can always use the counterfactual defense (yes, but imagine how much worse/better if would have been if they hadn't/had taken my advice)

Because the real world doesn't give you a control group.

kurzweilon the Singularity part I

Dear Colleagues,

I listened to Kurzweil's talk on the Singularity this morning. It presented some great follow-ups to ideas from my last seminar. The talk is available here:

http://download.fora.tv/rss_media/Long_Now_Podcasts/podcast-2005-09-23-kurzweil.mp3

Kurzweil's big insight is the power of exponential growth, or rather that we are living in the elbow of the hockey stick. Plot the history of life on a log-log scale, with key dates being: origin of life, Cambrian explosion, mammals, humans, stone tools, agriculture/cities, machines (industrial rev), computers,... and you get a straight line. Plot it on a linear chart, and everything that has happened is happening right now.

The current rate of change supports my claim that we are at the beginning of a whole new age.

The driving force is that life (and technology) are autocatalitic systems. The current stage powers the development of the next stage.

Shifting stages also requires/implies shifing paradigms. The most powerful example he gave is the shift from drug discovery to drug design. In drug discovery, you find a compound which seems to have the desired effect. This explains almost all current medicines. It also explains why they are so crude and have so many undesired side effects.

The drug design paradigm works by finding a known biological mechanism and working with it. We discussed life extension in the seminar. Olga reminded us that calorie restriction was a proven, if unpleasant, way to increase lifespan by 20%. Kurzweil mentioned a drug which works by RNA interference to block a key insulin related pathway. Since it is based on RNA interference, it does not need to get into the cell nucleous, only into the cell. In mice, the drug reproduces the bilogical benefits of calorie restriction even though the mice eat normally (or actually more than normally).

Now that is only one example, and one that might fail. It is near imposible to predict the path of any one specific particle/idea/approach, the overal system is too complex. But, as in thermodynamics, even though the path of any one molecule is random, the path of the whole system is easy to see. Things are heating up.

A final key point which we all should consider closely when planning our projects. A successful project will be aimed at what is possible/expected when it is complete, not the world as it is today. Old example: sequencing the human genome. Venture knew that exponential growth in technology would make it possible in 15 years. Ten years into the project the doubters were still laughing at him, as only 2% had been sequenced. But it is the last few doublings which gets you the remaining 98%, and as we all know, the genome was sequenced in time.

Cheers,

+glenn

Conservative press on the war on drugs

Two headlines this week:
Forbes: The War On Drugs Hurts Businesses and Investors

A criminal cancer is spreading through the global economy, taking its nutrition from the world-wide illegal drug business. ... This enormous market is evidence that our efforts to stop the drug supply create the incentives that have grown a global criminal infrastructure of countless drug prohibition enterprises.

The political dynamic of being tough on crime and drugs led to a dramatic expansion of the population with a criminal record. Yet few analysts have calculated the full impact of expanded criminal punishment that has reduced opportunities for education, job training, employment, credit, marriage, and ultimately, American productivity and consumer buying power.

Article credited to Eric E. Sterling, who helped write much of the war on drugs legislation in the 1980s. He has also published a book, "A Businessperson’s Guide to the Drug Problem."

Second headline: Wall Street Journal, Number of the Week: Legalize Pot to Make Roads Safer

8.7%: The drop in traffic fatalities in states with medical marijuana laws.

Not a rigourous study, and only a correlation, but interesting in any case.

nat gas

clipped from the reformed broker:
http://www.thereformedbroker.com/2012/02/29/trade-of-the-year/
see also
http://allstarcharts.com/

Take a look at the recent consolidation in the United States Natural Gas Fund (UNG). The breakdown here below the triangle is typical. This type of brief pause usually resolves itself in the direction of the underlying trend. In this case it is clearly down. As scary as it may sound, the 4 point base in the triangle gives us a target somewhere in the 17.50 area. We may not get that low, and we can just as easily go even lower. But I have a feeling that a vicious tradable rally will develop from this breakdown.

Look at the extreme lows recently put in RSI in the chart above. As $UNG makes new lows in price, I would want to see a higher low made in the Relative Strength Index. This potential bullish divergence could spark the rally. But we’re not there yet. We’re looking at a 17.50 target where we can start looking for entry points, but it could come sooner. A key reversal day would not surprise me. Perhaps a day where Nat Gas sells off early and rallies back hard in the afternoon? Or maybe a big gap lower after a weekend with a solid all-day rally throughout Monday.

The idea here is to find a risk/reward where we can risk less than 4-5% with the potential to get back to the mean. In this case, a 200 day moving average that could be twice the value of the entry point.

Six-Legged Giant Finds Secret Hideaway, Hides For 80 Years

By Robert Krulwich, first published via NPR

No, this isn't a make-believe place. It's real.

They call it "Ball's Pyramid." It's what's left of an old volcano that emerged from the sea about 7 million years ago. A British naval officer named Ball was the first European to see it in 1788. It sits off Australia, in the South Pacific. It is extremely narrow, 1,844 feet high, and it sits alone.

What's more, for years this place had a secret. About halfway up, at 225 feet above sea level, hanging on the rock surface, there is a small, spindly little bush, and under that bush, a few years ago, two climbers, working in the dark, found something totally improbable hiding in the soil below. How it got there, we still don't know.

Here's the story: About 13 miles from this spindle of rock, there's a bigger island, called Lord Howe Island.

On Howe, there used to be an insect, famous for being big. It's a stick insect, a critter that masquerades as a piece of wood, and the Lord Howe Island version was so large — as big as a human hand — that the Europeans labeled it a "tree lobster" because of its size and hard, lobsterlike exoskeleton. It was 12 centimeters long and the heaviest flightless stick insect in the world. Local fishermen used to put them on fishing hooks and use them as bait.

Then one day in 1918, a supply ship, the S.S. Makambo from Britain, ran aground at Lord Howe Island and had to be evacuated. One passenger drowned. The rest were put ashore. It took nine days to repair the Makambo, and during that time, some black rats managed to get from the ship to the island, where they instantly discovered a delicious new rat food: giant stick insects. Two years later, the rats were everywhere and the tree lobsters were gone.

Totally gone. After 1920, there wasn't a single sighting. By 1960, the Lord Howe stick insect, Dryococelus australis, was presumed extinct.

There was a rumor, though.

Some climbers scaling Ball's Pyramid in the 1960s said they'd seen a few stick insect corpses lying on the rocks that looked "recently dead." But the species is nocturnal, and nobody wanted to scale the spire hunting for bugs in the dark.

Climbing The Pyramid

Fast forward to 2001, when two Australian scientists, David Priddel and Nicholas Carlile, with two assistants, decided to take a closer look. From the water, they'd seen a few patches of vegetation that just might support walking sticks. So, they boated over ("Swimming would have been much easier," Carlile said, "but there are too many sharks."), they crawled up the vertical rock face to about 500 feet, where they found a few crickets, nothing special. But on their way down, on a precarious, unstable rock surface, they saw a single melaleuca bush peeping out of a crack and, underneath, what looked like fresh droppings of some large insect.

Where, they wondered, did that poop come from?

The only thing to do was to go back up after dark, with flashlights and cameras, to see if the pooper would be out taking a nighttime walk. Nick Carlile and a local ranger, Dean Hiscox, agreed to make the climb. And with flashlights, they scaled the wall till they reached the plant, and there, spread out on the bushy surface, were two enormous, shiny, black-looking bodies. And below those two, slithering into the muck, were more, and more ... 24 in all. All gathered near this one plant.

They were alive and, to Nick Carlile's eye, enormous. Looking at them, he said, "It felt like stepping back into the Jurassic age, when insects ruled the world."

They were Dryococelus australis. A search the next morning, and two years later, concluded these are the only ones on Ball's Pyramid, the last ones. They live there, and, as best we know, nowhere else.

How they got there is a mystery. Maybe they hitchhiked on birds, or traveled with fishermen, and how they survived for so long on just a single patch of plants, nobody knows either. The important thing, the scientists thought, was to get a few of these insects protected and into a breeding program.

That wasn't so easy. The Australian government didn't know if the animals on Ball's Pyramid could or should be moved. There were meetings, studies, two years passed, and finally officials agreed to allow four animals to be retrieved. Just four.

When the team went back to collect them, it turned out there had been a rock slide on the mountain, and at first they feared that the whole population had been wiped out. But when they got back up to the site, on Valentine's Day 2003, the animals were still there, sitting on and around their bush.

The plan was to take one pair and give it a man who was very familiar with mainland walking stick insects, a private breeder living in Sydney. He got his pair, but within two weeks, they died.

Adam And Eve And Patrick

That left the other two. They were named "Adam" and "Eve," taken to the Melbourne Zoo and placed with Patrick Honan, of the zoo's invertebrate conservation breeding group. At first, everything went well. Eve began laying little pea-shaped eggs, exactly as hoped. But then she got sick. According to biologist Jane Goodall, writing for Discover Magazine:

"Eve became very, very sick. Patrick ... worked every night for a month desperately trying to cure her. ... Eventually, based on gut instinct, Patrick concocted a mixture that included calcium and nectar and fed it to his patient, drop by drop, as she lay curled up in his hand."

Her recovery was almost instant. Patrick told the Australian Broadcasting Company, "She went from being on her back curled up in my hand, almost as good as dead, to being up and walking around within a couple of hours."

Eve's eggs were harvested, incubated (though it turns out only the first 30 were fertile) and became the foundation of the zoo's new population of walking sticks.

When Jane Goodall visited in 2008, Patrick showed her rows and rows of incubating eggs: 11,376 at that time, with about 700 adults in the captive population. Howe Island walking sticks seem to pair off — an unusual insect behavior — and Goodall says Patrick "showed me photos of how they sleep at night, in pairs, the male with three of his legs protectively over the female beside him."

Now comes the question that bedevils all such conservation rescue stories. Once a rare animal is safe at the zoo, when can we release it back to the wild?

On Howe Island, their former habitat, the great-great-great-grandkids of those original black rats are still out and about, presumably hungry and still a problem. Step one, therefore, would be to mount an intensive (and expensive) rat annihilation program. Residents would, no doubt, be happy to go rat-free, but not every Howe Islander wants to make the neighborhood safe for gigantic, hard-shell crawling insects. So the Melbourne Museum is mulling over a public relations campaign to make these insects more ... well, adorable, or noble, or whatever it takes.

They recently made a video, with strumming guitars, featuring a brand new baby emerging from its egg. The newborn is emerald green, squirmy and so long, it just keeps coming and coming from an impossibly small container. Will this soften the hearts of Howe Islanders? I dunno. It's so ... so ... big.

But, hey, why don't you look for yourself?

What happens next? The story is simple: A bunch of black rats almost wiped out a bunch of gigantic bugs on a little island far, far away from most of us. A few dedicated scientists, passionate about biological diversity, risked their lives to keep the bugs going. For the bugs to get their homes and their future back doesn't depend on scientists anymore. They've done their job. Now it's up to the folks on Howe Island.

Will ordinary Janes and Joes, going about their days, agree to spend a little extra effort and money to preserve an animal that isn't what most of us would call beautiful? Its main attraction is that it has lived on the planet for a long time, and we have the power to keep it around. I don't know if it will work, but in the end, that's the walking stick's best argument:

I'm still here. Don't let me go. [Copyright 2012 National Public Radio]

Looking for a fight (guest post)

The following was sent to me by my uncle Stan Virden.

Regrettably, the attached NYT account is pretty accurate. When the U.S. Navy won the battle of Manila Bay (1 May 1898), imagining that this had ended Spanish control of the Philippines, our leaders did not realize that the local hero, General Emilio Aguinaldo, had already achieved that end. He proclaimed Philippine independence from the window of his home in Cavite, across the bay from Manila, on 12 June. This Declaration of Independence was ratified by the Malolos Congress on 21 September 1898. Meanwhile, the U.S. had established a military government in August, which initiated a bit of a row that lasted for some years.



Members of my family have worked and lived in the Philippines off and on since 1905. As a boy I followed the Asiatic Fleet back and forth between the Philippines and China (1937-40), as a naval officer I was stationed there (1962-64) and subsequently visited a few times on board ships. The country and its circumstances have always held my interest. Currently, through PLAN USA, I still contribute to support of a rural Filipina school girl. The country is rich in history, scenery, and natural resources, occupied by cheerful and interesting folk speaking some 30 languages and governed by haphazard political administration that has made sensible development a very slow and awkward process. The domination of Chinese, then Spanish, then American, then Japanese occupiers has had a great deal to do with this cultural failing. With WWII freshly underway, my father and his naval friends of recent Asian experience felt certain that Filipinos would rally to the Rising Sun. They were astonished that the reverse was largely true, and that throughout the war these people were our fervent, brave, and able allies.



European colonization of non-European territory was well underway by the 16th Century. In the 18th Century the U.S. rose as a by-product of this activity. Initially we ourselves had no incentive to cross oceans for colonization. We had a broad continent, thinly inhabited by those who arrived here some 14 millennia past, and we assumed a natural right to take it over, whatever the objections of others. In reading the following it struck me that the rise of U.S. overseas land-grab initiatives in the early 20th Century must have been a postscript to the completion of this “Manifest Destiny.” Our momentum simply kept us going, spurred on by the high spirits of our brief war with Spain. That war, as we now know, was fought under a false vengeance over the explosion in Cuba of the U.S. battleship MAINE, thought to have been sabotaged by Spanish forces. Later forensics showed the explosion to have been caused by careless attention to safety in handling coal dust. But history turns on small pivots.



Whatever you think of Rep. Ron Paul (whom I am not necessarily endorsing), he may, in echoing George Washington, have it right about our continuing tendency to get involved overseas in other peoples’ squabbles. Perhaps we had little choice about WWI, WWII, and Korea. But I ponder the possibilities had we not gone to war with Spain and also become involved in China at that time. Perhaps there would have been less incentive for Japan, our ally in WWI, to come after us later on. We were indeed reluctant to get into WWI, but strategically adrift in accepting an indecisive armistice in place of a full-fledged victory, followed by stringent German reparations. Had we used the Marshall Plan philosophy in Germany post-WWI, would we have averted the conditions that gave rise to National Socialism and Hitler’s mad attempt to become the new Napoleon Plus? Might a healthy and friendly post-WWI Germany have lessened the incentive to form the WWII Axis? If so, how might the history of 1939-45, and 45-91 been different? And suppose, post WWII, we had not supported European attempts to regain and control their former colonies, often nations created by gluing together disparate tribes? Was it really our business to do this, and was our fearful “Domino Theory” really justified?



I have no wish to sound either like an isolationist or an inchoate 60s anti-war protester, and I have no personal regrets over my own career as a naval officer. I’m proud of the contributions my family has made over several centuries to the development and defense of our country. But is it not time for us to take lessons from the past 500 years, to relax a bit under a refurbished umbrella of a strong economy and an unbeatable national security structure (neither of which is currently in very good shape), and to mind our own business? After all, the legendarily neutral Swiss, who strictly train and arm all their citizens and who carry on trade with anyone, manage very well to do just that.



The inescapable conclusion apparent to me is that a strict focus on adherence to our own Declaration of Independence and Constitution (the why and the how of our republic), a firm adherence to non-interference by our government in the affairs of other countries (unless we are attacked), the energetic practice of open trade, and the consistent maintenance of a rock-hard national defense structure would give us leave to create lasting prosperity with few citizens so poor as to require public assistance. Perhaps this is dreaming, but are not dreams the wellspring of better things to come?

Why I love Johnny Cash

You asked if I had any favourite songs, and my answer was "all of them". I know it wasn't so helpful. For me, it isn't about any one song, it is about the singer.

Johnny Cash has always stood with the outcast and abused. What other singer would perform in a maximum security prison, and insist on no barrier between him and the audience? That takes balls. And compassion.

He had one wife. Until you have done this yourself for 10 years, you don't understand how hard it is, and the depths of frustration which a partner can bring. Keep in mind he was a star. Beautiful women threw themselves at him continuously. Temptation, opportunity, desire, longing. Cash knew what it means to live total commitment to an ideal and a person. His love was so deep that he could not live without her, and died of a broken heart soon after her death.

He was a strong Christian, though not the preachy or judgemental kind. Who else ends a concert with things like "Goodnight! See you all tomorrow in church!" I don't mean to praise the value of religion (which is doubtful) but to stress that he was a strong voice for moral behaviour, as exemplified by the two life-choices given above.

So you have to realize that all of this goes into the songs he sings.

With that, the first song I would point out is "The beast in me". This song was written explicitly for him one of his son in laws, Nick Lowe. (Cash had one daughter. She went through a lot of husbands. Did I say that Cash knew what committed marriage and love were about??).

Next up, the first song on American Recordings (1994), "Delia's Gone." This details a man murdering his wife in cold blood. Now I did some prison ministry in my youth. I spent some time with a man who though to make some money as a hit-man. He shot and killed his target. This put him into a fugue state (http://en.wikipedia.org/wiki/Fugue_state), during which he went home and shot his wife (probably in an attempt to explain to her what he had just done to the other person). She also died. He then went to his local bar, ordered a beer, and told the bartender what he had done. The police picked him up a few minutes later.

So from talking to that man for hours, I can tell you that Johnny Cash knows intimately the mental state of a man who has just killed for poor reasons, and Delia's Gone is one of many songs which conveighs it.

Are you starting to see some of the depths and contrasts in the man?

I've also known some Vietnam vets. SO I would say "Drive On", also on American recordings, captures some of them as well. War takes killing to a whole new level.

As you get older, your sense of your own mortality gets stronger. "Like the 309" is a brilliant example of a man facing death with a smile. "On the evening train" is a heartbreaking story of a child losing his mother. Both of these are on "American V- A Hundred Highways (2006). American VI -Ain't no Grave has even more songs about the end of life.

I also very much enjoy his "cover songs". It is in quotes for a reason. To say you are doing a cover version of someone else's song implies that the song rightfully belongs to the other artist. This is a fiction, and one which Cash recognises as such. A song belongs to itself. Different people can interpret it differently, but it is the song which is the living thing.

So also look at the songs he chooses to cover. Of all the Beatle's tunes, why "In my life"? (American IV- The Man Comes Around, 2002). What do the lyrics mean to a man who has lived a full life? John Lennon was a pussy punk (living in a Manhattan penthouse, one of the riches men on earth, singing "imagine there's no money" and considered a visionary hero for it??? Did Lenon give up his money to back his vision? Rather not, the coward!). Lennon's visions of peace and harmony came from LSD. Not that is wrong, hey, at least he got the visions, but Cash got them by living them. Cash was proved by fire.

Or "One" (Unearthed, 2003). U2's song where a man tries to stop fighting with his lover. Or "If you could read my mind" (American V- 100 highways), the 1971 Gordon Lightfoot classic (inspired by Gordon's divorce, back in the day when divorce was just becoming acceptable).

Here is a man who has lived an incredible and trying love. What is he telling us about love, and about what it means to be a man via these songs?

Johnny Cash is an undeniable American. The songs and stories he tells are (mostly) about my country, good and bad. Like the Ballad of Ira Hayes (1964), the Pima Indian immortalised in the photo of US marines raising the flag over Iwo Jima, who later became a noted alcoholic. The song is on the album Bitter Tears (1964)which was dedicated to injustices done to American Indians. Keep in mind 1964 was early in the Civil Rights movement. And here comes Johnny Cash, singing to a white, southern, conservative audience about equal rights for a minority even more despised than the blacks. Did I mention he had balls?

He also has many songs praising the true heros and good done in my country. But as I am approaching my word limit, I will move to conclude. Listen to his later works for deep, deep views into what it means to live, to kill, to love, to die. Listen to his earlier works to see where it started from.

Fear

I'd been out drinking. Now I had to pee. I stepped into an alley to do my business. Mistake.

Maybe I hadn't been paying enough attention. 'Cause when I looked up, three guys were blocking the alley mouth. They stepped towards me. The middle one was holding a knife.

I didn't really understand the words they were speaking, but the knife spoke a language I understood clearly enough. He was holding it out with extended arm. It was a threat, not an action.

As he stepped closer, so did I. My right hand grabs the outside of his wrist and, stepping beside and behind him, my left comes up to complete the arm bar. I step into him and he falls. The knife skitters away down the alley. A sick cracking sound comes from his shoulder.

I stand there, still holding his wrist. He lays on his stomach, with his arm sticking up at a 90 degree angle. One of the other men is closing fast. The other is reaching down for the dropped knife.

I am swept with the revelation that something needed to happen, and happen now. The revelation comes not from my conscious mind, but from the eternal, immortal seed which I carry in my loins. Understanding floods my body, my heart, my consciousness.

I am a 14 year old man, helping his pa clear land for the farm. A sapling is standing in front of me. It needs to go.

The man-child squatts down and grabs the sapling with both hands. Straining with all his might, he pulls. The tendons in his thighs tighten, his buttocks clenched. Had anyone been looking, they would see the boy's face turn a deep, beet red as his blood pressure soars. The sapling makes a loud cracking and ripping sound, and suddenly come loose from the ground.

I hear a roaring sound. It fills my lungs. My whole torso echos with it. It is accompanied by a wailing scream coming from the ground at my feet.

The man who had run up to me is now staring. His eyes are huge white orbs. His mouth is a second orb, this one a black empty pit.

I am holding a club. I don't know where it came from, but I know where it is going. The club connects with orb-man's head.

It is a funny club. It bends in the middle, more of a flail than a bat. The man staggers but does not go down. He turns to run, while the club comes back on its counter swing. It connects with the left rear corner of the skull. I know it connected with the skull because I could see the scalp torn away and skull bone exposed. He stumbles forward two steps and crashes down.

The wailing still hasn't stopped, but it is getting fainter. Number three is holding the knife, but certainly not holding himself. His body is shaking and his face has a pale greenish twinge. It looks like he is trying not to vomit. I wonder why he isn't running.

The club pulls me towards him. He falls to his knees, whimpering and gibbering. The rich smell of offal fills the air.

The club raises itself. I'm trying to pray to God. I might actually be praying as the club comes down, again and again. Five swings, five hits, and the body is not whimpering any more. A dark pool is spreading from the back of its head.

I don't really remember very much. I am standing in the street. I am in the staircase to my apartment. I am in the shower. My head hurts. I am waking up in my bed. My head hurts.

I don't drink any more. My doctors says that's good for me, though sometimes I wonder. I don't go out, either. I'm afraid. Not of man, but of beast. The beast that I am.

Some days I miss the music.

[TED Air] I like this TED talk. Paddy Ashdown: The global power shift http://www.ted.com/talks/paddy_ashdown_the_global_power_shift.html TED Air (http://goo.gl/2Aftm)

[TED Air] I like this TED talk. Jack Horner: Shape-shifting dinosaurs http://www.ted.com/talks/jack_horner_shape_shifting_dinosaurs.html TED Air (http://goo.gl/2Aftm)

isohyet -- rainfall and survival and good news

Isohyet- line on a map indicating rainfall patterns.

Below the 100-400mm isohyet land becomes uninhabitable.

11 african countries sign the great green wall initiative, a 15km wide 7000 km long green belt to stop the desert.

Arab Defense spending

German "tiger" attack helicopters to have combat debut in afghanistan this year

Saudis ordered $30bn of F-15s in december.

Oman ordered 12 F-16c/d block 50 falcon fighters on 14 december.

UAE ordered THAAD ballistic missile shield, first order outside the US.

Arabian 2012 defense procurement saudi 11.3, iran 6, israel 3.7, UAE 3 (bn euros)


Almost half of Saudia Arabia's 26 million are under age 20.

importance of cities, and pedestrians

From the Monocle article

21st century economy is city-driven, but political power is based on the 19-20th century model of the nation-state.

Cities, not nations, are the community of the 21st century.

% of world pop living in cities 1800--3%, 1950--30%, 2012--50% or more.

18% of global population generate 66% of global economic activity and 85% of scientific/technical innovation-- city dwellers

More people are killed by cars than by HIV, tb, or malaria.

97k pedestrians use main street NYC each day, and have 30% of the street space. 56k cars take the other 70%. Flushing main street

45% of trips in Chennai, India, are on foot or bike, yet attract only 3% of infrastructure spending

vnote to text converter

I sometimes want the vnotes from my Androd Galaxy on my laptop. The file transfer is trivial, but the notes are sent in vnote 1.1 format.

I only want the note text, so I need to strip away the meta-info. Also, the text contains the unicode control characters =0A and =0D. I prefer to have line feeds.

The following BASH pipeline does the job:

grep 'BODY' $1 | awk -F: '{$1="";print $0}' | sed -e 's/=0D//g' -e 's/=0A/\n/g'

where the $1 in the grep command refers to the vnote I want to extract.

I save the script in a file (vnoteextracter.sh) and make it executable.

Results are written to the command line.

Principles of magic

Teller tells some secrets to smithsonian

1. Pattern recognition (establish a pattern)
   
2. Make the secret more trouble than the trick is worth
   
3. Laughter stops critical thinking
   
4. Keep the trick outside the frame
   
5. Combine two tricks (or a second trick which "proves" the first)
   
6. Nothing fools you better than a lie you tell yourself
   
7. A choice implies that you have acted freely (think forced choice)
   

Combined into one trick:

THE EFFECT I cut a deck of cards a couple of times, and you glimpse flashes of several different cards. I turn the cards facedown and invite you to choose one, memorize it and return it. Now I ask you to name your card. You say (for example), “The queen of hearts.” I take the deck in my mouth, bite down and groan and wiggle to suggest that your card is going down my throat, through my intestines, into my bloodstream and finally into my right foot. I lift that foot and invite you to pull off my shoe and look inside. You find the queen of hearts. You’re amazed. If you happen to pick up the deck later, you’ll find it’s missing the queen of hearts.

THE SECRET(S) First, the preparation: I slip a queen of hearts in my right shoe, an ace of spades in my left and a three of clubs in my wallet. Then I manufacture an entire deck out of duplicates of those three cards. That takes 18 decks, which is costly and tedious (No. 2—More trouble than it’s worth). When I cut the cards, I let you glimpse a few different faces. You conclude the deck contains 52 different cards (No. 1—Pattern recognition). You think you’ve made a choice, just as when you choose between two candidates preselected by entrenched political parties (No. 7—Choice is not freedom). Now I wiggle the card to my shoe (No. 3—If you’re laughing...). When I lift whichever foot has your card, or invite you to take my wallet from my back pocket, I turn away (No. 4—Outside the frame) and swap the deck for a normal one from which I’d removed all three possible selections (No. 5—Combine two tricks). Then I set the deck down to tempt you to examine it later and notice your card missing (No. 6—The lie you tell yourself).

More investment rules

1. Believe in history
“All bubbles break; all investment frenzies pass. The market is gloriously inefficient and wanders far from fair price, but eventually, after breaking your heart and your patience … it will go back to fair value. Your task is to survive until that happens.”

2. ‘Neither a lender nor a borrower be’
“Leverage reduces the investor’s critical asset: patience. It encourages financial aggressiveness, recklessness and greed.”

3. Don’t put all of your treasure in one boat
“The more investments you have and the more different they are, the more likely you are to survive those critical periods when your big bets move against you.”

4. Be patient and focus on the long term
“Wait for the good cards this will be your margin of safety.”

5. Recognize your advantages over the professionals
“The individual is far better positioned to wait patiently for the right pitch while paying no regard to what others are doing.”

6. Try to contain natural optimism
“Optimism is a lousy investment strategy”

7. On rare occasions, try hard to be brave
“If the numbers tell you it’s a real outlier of a mispriced market, grit your teeth and go for it.”

8. Resist the crowd; cherish numbers only
“Ignore especially the short-term news. The ebb and flow of economic and political news is irrelevant. Do your own simple measurements of value or find a reliable source.”

9. In the end it’s quite simple. really
“[GMO] estimates are not about nuances or Ph.D.s. They are about ignoring the crowd, working out simple ratios and being patient.”

10. ‘This above all: To thine own self be true’
“It is utterly imperative that you know your limitations as well as your strengths and weaknesses. You must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely must not manage your own money.”

The Caging of America

By Adam Gopnik, in the Jan 30 2012 edition of the New Yorker.

Describes one of the United States' current great crimes-- that we have so many of our citizens in jail.

He opens with a reminder of the enveloping fog of "attenuated panic, of watchful paranoia—anxiety and boredom and fear mixed" which characterizes jail life. Time becomes something which is done to you.

Mass incarceration today is as pervasive as slavery was in 1850, with more blacks currently in the grips of the criminal "justice" system than there were enslaved (I wonder if the figure is in absolute numbers or relative?), and more than were held in Stalin's Gulag Achipelago. "Lockdown City" is the second largest in the States.

The rate of incarceration is accelerating. In 1980, it was 220/100,000 (0.2%). In 2010, it was 731/100,000 (0.7%). The money spent on prisons has increased at 6x the rate spent on higher education.

Prison rape has become expected and accepted, reminiscent of 18th century japery of men struggling on the gallows.

Why? How did we get this way? The Norther arguement claims it is BECAUSE of the bill of rights, which encodes proceedures but not principles.

accused criminals get laboriously articulated protection against procedural errors and no protection at all against outrageous and obvious violations of simple justice. You can get off if the cops looked in the wrong car with the wrong warrant when they found your joint, but you have no recourse if owning the joint gets you locked up for life.

it would be better if

The criminal law should once again be more like the common law, with judges and juries not merely finding fact but making law on the basis of universal principles of fairness, circumstance, and seriousness, and crafting penalties to the exigencies of the crime.

Northern argument espoused by William J. Stuntz, a professor at Harvard Law School, author of Collapse of American Criminal Justice" 2011.

the Southern argument claims it is racism.

Society has seen a massive drop (40%) in violent crime rates over the last 30 years, with no clear explination. Franklin E. Zimring’s new book, “The City That Became Safe,” reports. But the additional drop in NYC seems to have come from the N.Y.P.D. not by fighting minor crimes in safe places but by putting lots of cops in places where lots of crimes happened—“hot-spot policing.”

criminal activity seems like most other human choices—a question of contingent occasions and opportunity. Crime is not the consequence of a set number of criminals; criminals are the consequence of a set number of opportunities to commit crimes.

Thus the key to stopping crime is

Conservatives don’t like this view because it shows that being tough doesn’t help; liberals don’t like it because apparently being nice doesn’t help, either. Curbing crime does not depend on reversing social pathologies or alleviating social grievances; it depends on erecting small, annoying barriers to entry.

Conclusion

one piece of radical common sense: since prison plays at best a small role in stopping even violent crime, very few people, rich or poor, should be in prison for a nonviolent crime.

Changing habits

A habit is a learned response to a que which leads to a rewards. Que, action, reward.

Once the action is learned it becomes automatic. The reward is addictive. So the que triggers the action and it is near impossible to stop.

Awareness of this allows you to re-learn bad habits. You cannot (easily) change the que-reward, but you can change the action. You must identify the que and reward, then plot a new action. Ques are usually:
location, time, emotional state, other people, or preceeding action.

To identify the real que, keep a log of these five factors each time you feel the urge.

You also need to identify the real reward.

So one day, when I felt a cookie impulse, I went outside and took a walk instead. The next day, I went to the cafeteria and bought a coffee. The next, I bought an apple and ate it while chatting with friends. You get the idea. I wanted to test different theories regarding what reward I was really craving. Was it hunger? (In which case the apple should have worked.) Was it the desire for a quick burst of energy? (If so, the coffee should suffice.) Or, as turned out to be the answer, was it that after several hours spent focused on work, I wanted to socialize, to make sure I was up to speed on office gossip, and the cookie was just a convenient excuse? When I walked to a colleague’s desk and chatted for a few minutes, it turned out, my cookie urge was gone.

Likewise, to create a new habit, come up with a que - reward process

Golden age of investing

Tech is making it easier. Source Abnormal Returns

Examples:

http://signup.estimize.com/ to estimate earnings etc
http://alphaclone.com/ follow the hedgies
http://sumzero.com/ investment ideas from the community

i.e. http://sumzero.com/postings/4534/guest_view explains why Community Bankers Trust (BTC) should triple in price over the next 2 years, and it has a large margin of safety at its current price of 1.10

Swarming networks

There is an interesting analogy between swarm models and adoptive networks. Need to develop a zombie model of it.

American grand bargins since WWII

This probably applies to more than just the US, but the US is what I know best.

The bargin is between the masses and the wealthy elite, and heavily inspired by D. Graeber's book Debt.

Pre WWII, it was the social safety net, a chicken in every pot.

Post WWII, the workers got small houses, cars, and pensions

Post 1970, it was big houses which gained in value and a piece of the capitalist pie (401k)

For the last two, if you knew what the bargin was and bought in early, you made out big.

I wonder what bargin comes next? What are the terms?

Tinkerbell

The political dimension is that in which things become true if enough people believe in them, but one can never acknowledge that it is the Tinkerbell principle which supports the whole thing. It is, in this sense, fraud.

To take it to the next step, one can thus create something out of nothing. Fractional reserve banking, for example.

Credit conquers the community order

The peasant's morality and life were rooted in a daily life with maintenance of common fields and forests, and every day cooperation. Trade was based on credit, with a general reckoning held once or twice a year. At this, any tallies which could not be fully settled could be paid in cash. Markets were thus based on trust and social pressure, and were a form of mutual aid.

Cash was reserved for transactions with strangers, and (ominously) between landed gentry, and in the government for war expenses. Thus government saw cash as normal and credit as criminal, while the villagers has the reverse perspective.

Hobbes creates scandal by arguing that the villager's world would not work, since people pursue their own self interest. Note the word. Interest is the demand that money never cease to grow. Like self-love (as opposed to love of God), Hobbe's assumption is the Christian one that we are all incorrigible sinners at heart.

The origin of capitalism is the story of the gradual destruction of traditional communities by the impersonal, government enforced, debt and cash based economy. The state legalized intrest-bearing loans, but enforcement was harsh (death sentence, prison, ...). So community life became hazardous, since accepting a favor gave the other party power to utterly destroy you.

Capitalist Empires

The Age of Exploration, 1450, a return to gold and silver as currency, and along with it professional armies, massive predatory warefare, usury and debt peonage, and materialism, science, and arts.

Also the time of the black death.

Most of the gold went to temples in India, and the silver to China. The Chinese demand for European silver made it all possible. In the early 17th century, China was importing 116 tons of silver per year. They paid for it in silk and porcelin.

Yet in this Tudor England, coin was in very short supply. Yet taxes HAD to be paid in metal.

The mines in the Americas were pits of hell, with dead bodies for miles around. The savage, insatiable hunger of the conquistidors for treasure -- was it because no matter how much they got, they could not pay off their debts? Cortez conquered a continent, yet could not pay his bills.

This was reminiscent of the 4th crusade, during which indebted knights would strip whole cities of their wealth, only to find themselves one small step ahead of their creditors. And the creditors were the same, the bankers of Northern Italy.

Debt leading to a psychology of cold, calculating greed, complicated by shame and righteous indignation, frantic urgency of debts which only grow, and outrage that they should be held to owe anything at all.

But this age saw the logic of money gain autonomy from the state, until political and military power were reorganized around it. Now the state became involved in debt enforcement.