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A BATTLE TO REDEFINE HUMANITY

2009-12-16T16:39:00.009+01:00

Tell people something they know already and they will thank you for it.
Tell them something new and they will hate you for it.
George Monbiot

George Monbiot (www.monbiot.com) is the author of the best selling books "The Age of Consent: a manifesto for a new world order" and "Captive State: the corporate takeover of Britain". He writes a weekly column for the Guardian newspaper.

It's hard for a species used to ever-expanding frontiers,
but survival depends on accepting we live within limits.
by George Monbiot

This is the moment at which we turn and face ourselves. Here, in the plastic corridors and crowded stalls, among impenetrable texts and withering procedures, humankind decides what it is and what it will become. It chooses whether to continue living as it has done, until it must make a wasteland of its home, or to stop and redefine itself. This is about much more than climate change. This is about us.

The meeting at Copenhagen confronts us with our primal tragedy. We are the universal ape, equipped with the ingenuity and aggression to bring down prey much larger than itself, break into new lands, roar its defiance of natural constraints. Now we find ourselves hedged in by the consequences of our nature, living meekly on this crowded planet for fear of provoking or damaging others. We have the hearts of lions and live the lives of clerks.

The summit's premise is that the age of heroism is over. We have entered the age of accommodation. No longer may we live without restraint. No longer may we swing our fists regardless of whose nose might be in the way. In everything we do we must now be mindful of the lives of others, cautious, constrained, meticulous. We may no longer live in the moment, as if there were no tomorrow.

This is a meeting about chemicals: the greenhouse gases insulating the atmosphere. But it is also a battle between two world views. The angry men who seek to derail this agreement, and all such limits on their self-fulfilment, have understood this better than we have. A new movement, most visible in North America and Australia, but now apparent everywhere, demands to trample on the lives of others as if this were a human right. It will not be constrained by taxes, gun laws, regulations, health and safety, especially by environmental restraints. It knows that fossil fuels have granted the universal ape amplification beyond its Palaeolithic dreams. For a moment, a marvellous, frontier moment, they allowed us to live in blissful mindlessness.

The angry men know that this golden age has gone; but they cannot find the words for the constraints they hate. Clutching their copies of Atlas Shrugged, they flail around, accusing those who would impede them of communism, fascism, religiosity, misanthropy, but knowing at heart that these restrictions are driven by something far more repulsive to the unrestrained man: the decencies we owe to other human beings.

I fear this chorus of bullies, but I also sympathise. I lead a mostly peaceful life, but my dreams are haunted by giant aurochs. All those of us whose blood still races are forced to sublimate, to fantasise. In daydreams and video games we find the lives that ecological limits and other people's interests forbid us to live.

Humanity is no longer split between conservatives and liberals, reactionaries and progressives, though both sides are informed by the older politics. Today the battle lines are drawn between expanders and restrainers; those who believe that there should be no impediments and those who believe that we must live within limits. The vicious battles we have seen so far between greens and climate change deniers, road safety campaigners and speed freaks, real grassroots groups and corporate-sponsored astroturfers are just the beginning. This war will become much uglier as people kick against the limits that decency demands.

So here we are, in the land of Beowulf's heroics, lost in a fog of acronyms and euphemisms, parentheses and exemptions, the deathly diplomacy required to accommodate everyone's demands. There is no space for heroism here; all passion and power breaks against the needs of others. This is how it should be, though every neurone revolts against it.

Although the delegates are waking up to the scale of their responsibility, I still believe they will sell us out. Everyone wants his last adventure. Hardly anyone among the official parties can accept the implications of living within our means, of living with tomorrow in mind. There will, they tell themselves, always be another frontier, another means to escape our constraints, to dump our dissatisfactions on other places and other people. Hanging over everything discussed here is the theme that dare not speak its name, always present but never mentioned. Economic growth is the magic formula which allows our conflicts to remain unresolved.

While economies grow, social justice is unnecessary, as lives can be improved without redistribution. While economies grow, people need not confront their elites. While economies grow, we can keep buying our way out of trouble. But, like the bankers, we stave off trouble today only by multiplying it tomorrow. Through economic growth we are borrowing time at punitive rates of interest. It ensures that any cuts agreed at Copenhagen will eventually be outstripped. Even if we manage to prevent climate breakdown, growth means that it's only a matter of time before we hit a new constraint, which demands a new global response: oil, water, phosphate, soil. We will lurch from crisis to existential crisis unless we address the underlying cause: perpetual growth cannot be accommodated on a finite planet.

For all their earnest self-restraint, the negotiators in the plastic city are still not serious, even about climate change. There's another great unmentionable here: supply. Most of the nation states tussling at Copenhagen have two fossil fuel policies. One is to minimise demand, by encouraging us to reduce our consumption. The other is to maximise supply, by encouraging companies to extract as much from the ground as they can.

We know, from the papers published in Nature in April, that we can use a maximum of 60% of current reserves of coal, oil and gas if the average global temperature is not to rise by more than two degrees. We can burn much less if, as many poorer countries now insist, we seek to prevent the temperature from rising by more than 1.5C. We know that capture and storage will dispose of just a small fraction of the carbon in these fuels. There are two obvious conclusions: governments must decide which existing reserves of fossil fuel are to be left in the ground, and they must introduce a global moratorium on prospecting for new reserves. Neither of these proposals has even been mooted for discussion.

But somehow this first great global battle between expanders and restrainers must be won and then the battles that lie beyond it ? rising consumption, corporate power, economic growth ? must begin. If governments don't show some resolve on climate change, the expanders will seize on the restrainers' weakness. They will attack ? using the same tactics of denial, obfuscation and appeals to self-interest ? the other measures that protect people from each other, or which prevent the world's ecosystems from being destroyed. There is no end to this fight, no line these people will not cross. They too are aware that this a battle to redefine humanity, and they wish to redefine it as a species even more rapacious than it is today.

TEN BUBBLES IN THE MAKING

2009-09-14T17:21:00.010+02:00

The Business Insider, Sept. 14, 2009:
One year after America's brush with economic catastrophe, there's plenty of looking back at the bubbles that caused financial chaos.

But what's next?
There are surely dangerous economic bubbles forming as we speak. As Alan Greenspan warned this week, "They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."

The trick, of course, is spotting them. By definition, most people don't spot a bubble before they form and burst.

Here's 10 for which you should be on alert:

1. China bubble: Despite the weak global economy, the Chinese stock market has soared like crazy this year. But many believe the rally has been driven purely by government-supplied liquidity, rather than fundamentals. The fear is that companies are flush with cash, but have little "real" to do with the cash, so they're parking it in the stock market casino. The Chinese real estate market appears to be on a similar trajectory.

2. Green bubble: Green has been everywhere. With observers saying the "Age of Cleantech and Biotech" will be the next major economic revolution, and Washington pouring billions of dollars into alternative energy projects, you'd think a bubble would have already formed. But, as we noted this spring, it did not, at least from an investment perspective.

Still, as the economic recovery takes shape, alternative energy could see excess investment on hopes of big future returns. There's plenty of hype left, and if investors regain the cash to get in the game, could green become the next internet or housing bubble?

3. Gold bubble: Gold prices just keep going up. They've risen for seven straight years, recently breaking $1,000 per ounce.

Is it a bubble? Right now, it doesn't look too bad. Gold is good in both inflationary and deflationary periods, as it holds wealth tangibly. And, as the Telegraph notes, there's real demand, especially from China.

But with some predicting a doubling of prices to $2,000 an ounce, too many people could jump in and spike the real value of the precious metal. The "rise forever" mentality usually means trouble.

4. Federal Reserve bubble: Is the Fed saving the financial system or creating another dangerous credit bubble by snapping up mortgage-backed securities?

At first glance, the Fed's effort to clean up mortgage-backed securities is a winner. But, as Heidi Moore wrote for Slate's The Big Money, the Fed is actually creating a bubble similar to the one it's trying to do damage control on. By eagerly trying to save banks and stabilize the housing market, Washington is taking on too much: $1.25 trillion of mortgaged-backed securities, including both the original toxic assets and products of foreclosures to come. So who would bail the Fed out? You.

5. Trash stock bubble: There's a rush to trash going on. Stocks like Fannie Mae (FNM), Freddie Mac (FRE), AIG (AIG) and even GM made big runs in August -- trading in trash financials made up nearly one-third of NYSE's August volume.

So why are people buying junk? Charlie Gasparino says shares of junk financials -- companies like Fannie, Freddie, AIG, Citi and Bank of America -- are being pushed up by a short squeeze. The Wall Street Journal suspects its high frequency traders. And others say its retail speculation and day traders getting their way while Wall Street went on vacation.

6. Education bubble: More people are going back to college and taking on huge debt to do it, despite questions about what the degree is really worth.

Last year, the amount borrowed by students and received by schools grew some 25% over the previous year, to $75.1 billion. That's a huge amount, especially with weak, low-paying job prospects for graduates in this economy.

As we've noted, all this student loan debt is crazy. Despite the desire to see more subsidization of college, we suspect there will be a collapse in student loan debt availability and desire to take on new debt.

Short of telling kids not to go to college, something's going to give.

The pop may be starting already. As Bloomberg reports, as many as one-third of all private colleges surveyed said they expected enrollment to drop in the next academic year. And almost 40 percent of those colleges said some of their students dropped out due to personal economic reasons and a quarter said full-time attendees switched to part time. Half said families had to cut back their expected contributions as the value of college savings plans dropped 21 percent last year.

7. Subprime bubble, 2.0: What are banks doing with all those subprime mortgages? They're repackaging with a higher rating -- "re-securitization of real estate mortgage investment conduits" -- and selling them.

As we've noted, it's a plan nearly identical to the complicated investment packages of the financial crisis a year ago. That being said, the problem was not strictly securitization, but the underlying housing bubble. So the return of complicated products isn't necessarily the end of the world.

8. Life insurance securitization bubble: In its search for new profits, Wall Street is planning on securitizing "life settlements" -- policies that the sick and elderly can sell for cash while they're alive -- much like it did subprime mortgages. The New York Times warns that we could be looking at subprime all over again.

Maybe. As we've noted, it wasn't securitization that caused the financial meltdown. It was the bursting of the housing bubble. Yes, there was a feedback loop, whereby securitization allowed more money to flow towards housing, but it seems unlikely that "life settlements" would get big enough to infect all portions of the financial world.

9. Commercial real estate bubble: This bubble is already hissing, if not popping outright.

While the economy is improving and some home sales are slowly coming back, the commercial real estate market could get far worse.

As The New York Times reports, "Even though industry lobbyists were able to persuade Congress to extend a loan program aimed at prodding the stalled securitization market back to life, several analysts said it was unlikely to head off a spate of defaults, foreclosures and bankruptcies that could surpass the devastating real estate crash of the early 1990s."

As UPI notes, commercial mortgage defaults could reach 4.1 percent by the end of the year, up from 2.25 percent in the first quarter, and Real Capital Analytics estimates commercial property loans worth $83 billion have been involved in default, foreclosure or bankruptcy in 2009.

Badly hit will likely be malls. "The next financial tsunami to hit will be the widespread failure of shopping center mortgages," says Peter Monroe, co-chair of REOMAC, a not for profit trade association to CNBC. "Half a trillion dollars of commercial loans financed on historically low rates, are due for refinancing in the next three years," says Monroe. "The negative impact of these shopping center mortgages is enormous."

10. Emerging market bubble: It's not just China. Risk-tolerant investors are bidding up emerging market shares to valuations not seen in 9 years. With an average PE of 20x, they're not in bubble territory just yet, but watch for things to get out of hand.

Despite the weak global economy, the Chinese stock market has soared like crazy this year. But many believe the rally has been driven purely by government-supplied liquidity, rather than fundamentals. The fear is that companies are flush with cash, but have little "real" to do with the cash, so they're parking it in the stock market casino. The Chinese real estate market appears to be on a similar trajectory.

"The myth of the rationality-assuming economist"
Human beings chase bubbles. They favor short-term pleasures over long-term ones. Our ancient nervous system clouds our rational decision making. We make decisions based on random recent events, like floods! Or terrorist attacks! Do we assume regulators to be rational? Remember, regulators pre-bubble were interested in expanding homeownership and the general policy of the United States was to keep price-appreciation going. That's been built into our law for awhile. Sure, now we might (for some period) adopt a different stance. But over the long run, on what basis are we to believe that the biases and irrationality of government regulation/policy will prove to be the proper antidote to our own actions? The answer's never given. It's just assumed.

Sources:
The Business Insider
Look, We Get It, People Aren't Always 100% Rational

BUBBLE DIAGNOSIS AND PREDICTION

2009-09-10T15:13:00.006+02:00

Econophysicist Predicts Date of Chinese Stock Market Collapse:

Back in July, econophysicist Didier Sornette at the Swiss Federal Institute of Technology in Zurich and a few pals predicted the impending collapse of the Shanghai Composite stock market index.

Their evidence was that the index had been growing at a faster than exponential rate, which was clearly measurable and obviously unsustainable.

At the beginning of August, the Shanghai Composite dropped by about 20 per cent!

Yesterday, Sornette and co publish the method they use to make their prediction.
Their method is a synthesis of ideas from the economic theory of rational expectation bubbles, from the imitation and herding behaviour of investors and traders and from the mathematical and statistical physics of bifurcations and phase transitions.

From this, they say they have discovered an unambiguous signature of a bubble market about to collapse in the form of super-exponential growth decorated with logarithmic oscillations as in the diagram above.

Sornette says he has used this method to predict the collapse of several bubbles in the last few years, including the collapse of the oil bubble last year and the US housing market in 2006.

That's important work which could have a profound impact on economic models. If Sornette and his colleagues have put their money where there mouths are, they ought to be super rich by now.

One interesting aspect of Sornette's predictions is that the team claim that they will not affect the market in a way that changes the forecast.

"Even in the presence of investors fully informed of the presence of the bubble and with the knowledge of its end date, it remains rational to stay invested in the market to garner very large returns since the risk of a crash remains finite."

Of course, the end of a bubble doesn't always imply a crash, just a change from super exponential growth to some other kind of market dynamics.

But if Sornette's forecasts prove reliable, the herding behaviour of traders and investors makes it seem inevitable that they will trigger crashes. If that happens, they will become self-fulfilling prophecies that will generate some interesting dilemmas for traders and regulators alike.

Sources:
Econophysicist Predicts Date of Chinese Stock Market Collapse
Bubble Diagnosis and Prediction of the Chinese stock market bubbles

THE PONZI ECONOMY

2009-08-25T14:33:00.011+02:00

PREPARING FOR THE WORST, BY ROBERT KIYOSAKI

"Is the crisis over?" is a question I am often asked. "Is the economy coming back?"
My reply is, "I don't think so. I would prepare for the worst."

Like most people, I wish for a better future for all of us. Life is better when people are working, happy, and spending money.

The stock market has been going up since March 9, 2009. Talk of "green shoots" fill the air. Yet, in spite of the more positive news, I continue to recommend that people prepare for the worst. The following are some of my reasons:

1. I believe the stock market is being manipulated. I suspect the government, banks, and Wall Street are doing everything they can to keep the market from crashing. Our leaders know that nothing makes the world feel better than a raging bull market.

Do I have any proof that the market is being manipulated? No. I just smell a rat, or a pack of rats. I believe greed, self-interest, arrogance, and fear control the financial markets. I suspect those in charge will do anything to keep us all from panicking... and I don't blame them. A global panic would be ugly and dangerous.

2. In my view, this global crisis has been caused by the Federal Reserve Bank, the U.S. Treasury, Wall Street, and the central banks of the world. They caused the problem, profited excessively in doing so, and now profit by being asked to fix the problem.

Every time I hear a politician mention the word stimulus, my mind flashes back to high school biology class, when I touched battery wires to a dead frog to make it twitch. Today, you and I are the dead frogs. Pretty soon the dead frog will be fried frog.

In the 1980s, our government's hot money stimulus was measured only in the millions of dollars. By the 1990s, the government had to ramp the stimulus voltage into the billions in order to get the frog to twitch. Today the frog has jumper cables with trillions in high-voltage hot money pouring through the lines.

While most us feel better when we have more high-voltage money in our hands, none of us feel good about higher taxes, increasing national debt, and rising inflation for the long term. Another old saying goes, "Sometimes the cure is worse than the disease." I say the government stimulus cure is killing us frogs.

3. Old frogs don't hop. Another reason I am cautious about the future is that the Western world has a growing number of old frogs. Between 1970 and 2000, the economy responded to bailouts and stimulus packages because the baby boomers of the world were entering their greatest earning years -- their purchasing power increased, and demand for homes, cars, refrigerators, computers, and TVs boosted the economy.

The stimulus plans seemed to work. But when a person turns 60, their spending habits change dramatically. They stop consuming and start conserving like a bear preparing for winter. The economy of the Western world is heading into winter. Hot wires and hot money will not get old frogs to hop. Old frogs will simply join the bears and stick that money in the bank as they prepare for the long, hard winter known as old age. The businesses that will do well in a winter economy are drug companies, hospitals, wheelchair manufacturers, and mortuaries.

4. The dying frog economy will lead us to the biggest Ponzi schemes of all: Social Security and Medicare. If we think this subprime financial crisis is big, it's my opinion that this crisis will be dwarfed by the crisis brewing in Social Security and Medicare...Medicare being the biggest crisis of all. As old frogs head for the big lily pad in the sky, they will demand young frogs spend even more in tax dollars just to keep old frogs from croaking.

5. The 401(k)Ponzi scheme. A Ponzi scheme, like the scheme Madoff ran, depends upon young money to pay off old money. In other words, a Ponzi scheme needs tadpoles to finance old frogs. The same is true for the 401(k) and other retirement plans to work. If young money does not come into the stock market, the old money cannot retire. One reason so many people my age are worried, not only about Social Security and Medicare, is because they're concerned about getting their money out of the stock market before the other old frogs decide to drain the swamp.

The facts are that the 401(k) plan has a trigger that requires old frogs to begin withdrawing their money at a certain age. In other words, as baby boomers grow older, more and more will be required, by law, to begin withdrawing their money from the market. You do not have to be a rocket scientist to know that it is hard for a market to keep going up when more and more people are getting out.

The reason the 401(k) has this law related to mandatory withdrawals is because the Federal government wants to collect the taxes that they deferred when the worker's money went into the plan. In other words, the taxman wants their pound of flesh. Since they allowed the worker to invest without paying taxes, the government wants their tax dollars when the employee retires. That is why the laws require older workers to sell their shares and pay their pound of flesh.

Demographics show that we are entering a battle between young and old. I call it the "Age War." The young want to hang onto their money to grow their families, businesses, and wealth. The old want the tax and investment dollars of the young to sustain their old age.

This war is not coming...it is upon us now. This is one of many reasons why I remain cautious and say, "The worst is yet to come."

Sources:
Preparing for the Worst, by Robert Kiyosaki
Robert Kiyosaki on Wikipedia
Rich Dad

Links:
Money Pirates
Stock Shock: The Movie

WIKITUDE WORLD BROWSER

2009-08-17T15:41:00.013+02:00

WIKITUDE World Browser presents the user with data about their surroundings, nearby landmarks, and other points of interest by overlaying information on the real-time camera view of a smartphone.

Geo-Tag the World:
Wikitude.me, is the Augmented Reality (AR) platform which allows you to browse the world and helps you discover information about places and points of interest around you.

WIKITUDE World Browser

This is what we had to wear in order to have augmented reality back in 2001 (in the picture my friend Tom Brooks):

And this is how SixthSense, enhances the real world with digital information at MIT today:

A simple, wearable device enhances the real world with digital information
SixthSense Video

STOCK MARKETS RALLY, TOO FAR, TOO FAST?

2009-08-03T18:07:00.010+02:00

U.S. MARKETS

PREMISE:
March 18, 2009: The Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.

STATUS:
If the market would trade on fundamentals, maybe the march lows would have been lower, and maybe we would end-up retesting those lows, but in a money printing world (Asset prices tend to rise when the government prints money), we kind of throw some of the historical evaluation tools out of the window and we witness everyone being bullish in the U.S. after a 40 percent rise in the S&P.

CHINA

PREMISE:
July 8, 2009: In China the focus of the stimulus was to stimulate lending. China's new lending more than doubled in June from a month earlier, increasing concerns for bad loans and asset bubbles. New lending was 1.53 trillion yuan ($224 billion), the central bank said on its Web site today, bringing total lending this year to 7.4 trillion yuan ($1080 billion).

STATUS:
The Shanghai Composite is up 87 percent this year!
The government is countering an export collapse by flooding the economy with money to fuel domestic demand. Rapid credit growth poses a risk to the nation's lenders and a concentration of credit in some industries and businesses may damage the stability of the financial system, the banking regulator said yesterday.

"Excess liquidity is fueling speculation and that means asset bubbles and wasteful investment," said Isaac Meng, a senior economist at BNP Paribas SA in Beijing.

Fear the Dark Side of China's Lending Surge
RMB 1.5 trillion in new Chinese lending, can we turn this thing off?

DANGER:
If China starts falling, the U.S. market can follow...

GLOBAL INNOVATION IS OUR ONLY HOPE

2009-08-03T16:19:00.003+02:00

July 2009 | NASA Ames Research Center
Interviews at the Singularity University

Larry Smarr, director of the California Institute for Telecommunications and Information Technology, interviewed by David Orban at the Singularity University.

ARTIFACTS FROM THE FUTURE

2009-07-08T18:22:00.007+02:00

Our understanding of the future is greatly improved when we have clear images of what it might be like. Here are some images:

For years, Wired magazine has tapped a bevy of designers and artists in the tech field to craft detailed visions of futuristic objects for a monthly showcase at the close of each issue.

11.04 - Election Day (2012)
12.04 - Barf Bag (2047)
01.05 - House Call (near future)
02.05 - Taste Tester (2009)
03.05 - Insurance Form (2069)
04.05 - Horoscope (2056)
05.05 - Bumper Sticker (2012)
06.05 - Antivirus (2022)
07.05 - Nightstand (2017)
08.05 - Crossword (2019) [solution]
09.05 - Space Elevator (2032)
10.05 - Sharper Image (2012)
11.05 - Diaper (2024)
12.05 - Christmas Morning (2016)
01.06 - Mood Ring (2009)
02.06 - Love Tester (2015)
03.06 - MTA Route Map (2067)
04.06 - Tax Day (2021)
05.06 - Operation (2027)
06.06 - Bookstore (2021) [side view]
07.06 - Contact Lens (2020)
08.06 - Diet Cola (2019)
09.06 - Report Card (2018)
10.06 - Bluetooth (2019)
11.06 - Organ Farming (2015)
12.06 - Christmas Shopping (2017)
01.07 - Crayons (2013)
02.07 - Speeding Ticket (2054)
03.07 - Medicine Cabinet (2013)
04.07 - Bug Spray (ca. 2050)
05.07 - Reunion (2052)
06.07 - Fido Fusion (2016)
07.07 - Comic Book (2021)
08.07 - Fruit Stand (ca. 2020)
09.07 - Birthday (2079)
10.07 - Halloween (2015)
11.07 - Waste Management (ca. 2025)
12.07 - Responsibeer (2012)
01.08 - Windshield (2013)
02.08 - Tatoo (near future)
03.08 - Home Shopping (ca. 2016)
04.08 - Risk (2027)
05.08 - Smithsonian (2096)
06.08 - Wine Spectrometer (ca. 2020)
07.08 - "The Final Found" (2018)

SCENARIOS FOR ECONOMIC RECOVERY

2009-07-08T17:08:00.011+02:00

Source: Fast Future - FutureScape Issue 3 - July 8th 2009
http://twitter.com/fastfuture | http://www.linkedin.com/in/talwar
Fast Future is a research and consulting firm which focuses on helping clients anticipate and develop innovative responses to the forces, patterns of change and ideas shaping the future.

4 Fast Future Scenarios for Economic Recovery
In our current work with clients, we are focusing on four main scenarios for how this downturn could play out. These all are plausible - if not equally likely - scenarios for how the key engines of the global economy may develop over the coming five to six years. As none of us truly knows how the next few years will play out, we cannot rely on a single set of assumptions. Instead, as governments, businesses, nonprofits and individuals we have to prepare for a range of possible scenarios and have strategies in place to deal with each of them. In the interest of brevity we have focused here largely on the economic outlook. Elsewhere we have expanded the scenarios to look at the impact of and implications for other factors such as the environment, energy prices, science and technology, innovation, regional development perspectives, social values and governance structures.

Scenario 1 - Love is in the Air - The "V" shaped recession.
Under this scenario, the recovery starts towards the end of 2009 / early 2010. Tough banking reforms and "bad bank" models are adopted in most of the hardest hit economies. As many developing economies such as China and India manage to avoid recession, confidence returns to those markets more rapidly. A wave of new lending by developing economy banks from China to the Middle East helps improve the flow of credit in developed markets and simpler loan structures also help improve transparency and increase investor confidence in the borrowers.

In the more developed economies, despite concerns over the potential US$600 trillion of outstanding derivates contracts and a possible US$1 trillion of 'at risk' Eastern European debt, the system largely withstands the pressures, major new shocks, are prevented, only a few economies fail and confidence gradually returns to the real economy. While redundancies, wage cuts, short time working and other measures continue to be adopted for at least another year, most developed economies have turned the corner by the end Q1 2010. Public sector debt and the measures to address it act as a brake on the recovery but we see an eventual return to 2008 growth levels by 2013-14 at the latest. However concern is also growing in developed economies over how to deal with an ageing society, a growing pensions shortfall and the overhang of public sector debt.

Scenario 2 - Suspicious Minds - The "U" shaped recession.
The much heralded economic decoupling is more evident in this scenario as China and India recover faster than much of the more the developed world, bringing a number of developing economies along in their wake. A strong outflow of investment funds from developed economy firms and funds into developing markets helps accelerate the recovery process as the investors seek to offset negative conditions in their home markets. China and India in particular see rapid development trajectories and are back to their 2008 growth levels by 2011 - driven by high levels of infrastructure spending and rising domestic consumption.

Most of the larger economies in Europe, the US and Japan don"t pull out until later in 2010 or early 2011 and do not get back to 2008 growth levels until 2015 or later. During 2010 one or two major new shocks emanating from the banking system serve to erode confidence and slow the pace of developed economy recovery. Developing economy banks don"t start lending to the developed world at significant levels until the second or third quarter of 2010 as they wait to ensure that the bottom has definitely been reached. Nervous consumers continue to emphasise savings over spending through most of 2010. Redundancies and other cost cutting measures continue through 2010 and into 2011 - with the public sector in some countries seeing some of the biggest job losses.

Scenario 3 - Dancing in the Dark - The "W" shaped or "sine wave" recession.
Pent up demand, plentiful supplies of available talent and cheap asset prices lead to a short term recovery towards the end of 2009 / early 2010 as businesses and consumers start spending again. However a series of new shocks emerge from the banking system through 2010, bringing more bank failures, further nationalisations and rising bailout costs. The result is declining business and consumer confidence as credit dries up and increasingly negative sentiment dominates the media. By 2011 we fall back either into a much deeper and longer lasting recession or experience a series of oscillations in and out of recession over a four to five year period. The result is zero net growth over the period for Europe, the US and Japan. Corporate investment in particular shifts rapidly to selected developing economies until the end of 2010. Investment slows rapidly from 2011 onwards as firms around the world focus on conserving cash and batten down the hatches for a prolonged period of uncertainty.

While China and India don"t actually fall into recession, growth rates fall to 3-4% as the collapse in demand from Western markets takes its toll along with a rapid decline of confidence and negative economic outlook in many other developing economies. 2010 is the year of the Asian takeover as cash rich Chinese and Indian firms in particular acquire businesses cheaply across global markets. Country bankruptcies happen more frequently. Redundancies are commonplace through to 2012-13. Confidence only really starts to return once consumers have adapted to a lower income lifestyle and investors and businesses start to accept they are operating in new era of lower profit margins. Particularly painful restructuring of state and company pension funds and rolling back of pension commitments lead to high levels of public unrest and even bring down some governments. Eventually the 2009-10 stimulus package investments in infrastructure, education and green technologies start to generate new economic opportunities and yield new jobs.

Scenario 4 - Road to Nowhere - The "L" shaped recession.
In this scenario, we go into a long and deep downturn in Europe, the US and Japan with only feint signs of recovery by 2014. China and India could well dip into recession and many developing economies would fail. Small scale inter-country conflicts would be highly likely in the developing world and in parts of Eastern Europe. Company failure rates of 25-30% and unemployment of 25% are experienced in some economies. Huge levels of debt default by countries, corporates and individuals generates further economic uncertainty.
The recovery when it comes is not uniform. A combination of massive cuts in public services, higher tax rates, business support grants and cheap loans are all adopted as measures to help stabilize finances and encourage growth. Pension systems are reformed and payments are scaled back. Growth is driven by new technologies, processes and business models in areas such as green technologies, food production, infrastructure and education. A new breed of low cost, low price businesses emerge in every sector. A simplified and highly regulated banking system evolves with a clear legal differentiation between consumer banks and commercial banks. The complex investment banking products, securitised debt derivatives and hedge fund structures have all but disappeared as the new mantra is of one of control, simplicity and transparency.

Responding to the Scenarios
We know that in reality the recovery won't quite reflect any of these scenarios. However the aim is not to predict the exact trajectory of recovery but to paint a range of possible pictures of what it could look like. The challenge for leaders and individuals is to assess each scenario (or develop your own) and determine what your response would be before the event rather than while it is happening.
We'd be fascinated to hear your views on what the recovery scenarios could like and the kinds of strategies you see as appropriate in each case.

NEVER MISTAKE A CLEAR VIEW FOR A SHORT DISTANCE

2009-05-24T21:14:00.004+02:00

A.I.'s new respectability is turning the spotlight back on the question of where the technology might be heading and, more ominously, perhaps, whether computer intelligence will surpass our own, and how quickly.

The concept of ultrasmart computers - machines with "greater than human intelligence" - was dubbed "The Singularity" in a 1993 paper by the computer scientist and science fiction writer Vernor Vinge. He argued that the acceleration of technological progress had led to "the edge of change comparable to the rise of human life on Earth." This thesis has long struck a chord here in Silicon Valley.

Artificial intelligence is already used to automate and replace some human functions with computer-driven machines. These machines can see and hear, respond to questions, learn, draw inferences and solve problems. But for the Singulatarians, A.I. refers to machines that will be both self-aware and superhuman in their intelligence, and capable of designing better computers and robots faster than humans can today. Such a shift, they say, would lead to a vast acceleration in technological improvements of all kinds.

The idea is not just the province of science fiction authors; a generation of computer hackers, engineers and programmers have come to believe deeply in the idea of exponential technological change as explained by Gordon Moore, a co-founder of the chip maker Intel.

In 1965, Dr. Moore first described the repeated doubling of the number transistors on silicon chips with each new technology generation, which led to an acceleration in the power of computing. Since then "Moore's Law" - which is not a law of physics, but rather a description of the rate of industrial change - has come to personify an industry that lives on Internet time, where the Next Big Thing is always just around the corner.

Several years ago the artificial-intelligence pioneer Raymond Kurzweil took the idea one step further in his 2005 book, "The Singularity Is Near: When Humans Transcend Biology." He sought to expand Moore's Law to encompass more than just processing power and to simultaneously predict with great precision the arrival of post-human evolution, which he said would occur in 2045.

In Dr. Kurzweil's telling, rapidly increasing computing power in concert with cyborg humans would then reach a point when machine intelligence not only surpassed human intelligence but took over the process of technological invention, with unpredictable consequences.

Profiled in the documentary "Transcendent Man," which had its premier last month at the TriBeCa Film Festival, and with his own Singularity movie due later this year, Dr. Kurzweil has become a one-man marketing machine for the concept of post-humanism. He is the co-founder of Singularity University, a school supported by Google that will open in June with a grand goal - to "assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the development of exponentially advancing technologies and apply, focus and guide these tools to address humanity's grand challenges."

Not content with the development of superhuman machines, Dr. Kurzweil envisions "uploading," or the idea that the contents of our brain and thought processes can somehow be translated into a computing environment, making a form of immortality possible - within his lifetime.

The science fiction author Ken MacLeod described the idea of the singularity as "the Rapture of the nerds." Kevin Kelly, an editor at Wired magazine, notes, "People who predict a very utopian future always predict that it is going to happen before they die."

However, Mr. Kelly himself has not refrained from speculating on where communications and computing technology is heading. He is at work on his own book, "The Technium," forecasting the emergence of a global brain - the idea that the planet's interconnected computers might someday act in a coordinated fashion and perhaps exhibit intelligence. He just isn't certain about how soon an intelligent global brain will arrive.

Others who have observed the increasing power of computing technology are even less sanguine about the future outcome. The computer designer and venture capitalist William Joy, for example, wrote a pessimistic essay in Wired in 2000 that argued that humans are more likely to destroy themselves with their technology than create a utopia assisted by superintelligent machines.

Mr. Joy, a co-founder of Sun Microsystems, still believes that. "I wasn't saying we would be supplanted by something," he said. "I think a catastrophe is more likely."

Moreover, there is a hot debate here over whether such machines might be the "machines of loving grace," of the Richard Brautigan poem, or something far darker, of the "Terminator" ilk.

"I see the debate over whether we should build these artificial intellects as becoming the dominant political question of the century," said Hugo de Garis, an Australian artificial-intelligence researcher, who has written a book, "The Artilect War," that argues that the debate is likely to end in global war.

Concerned about the same potential outcome, the A.I. researcher Eliezer S. Yudkowsky, an employee of the Singularity Institute, has proposed the idea of "friendly artificial intelligence," an engineering discipline that would seek to ensure that future machines would remain our servants or equals rather than our masters.

Nevertheless, this generation of humans, at least, is perhaps unlikely to need to rush to the barricades. The artificial-intelligence industry has advanced in fits and starts over the past half-century, since the term "artificial intelligence" was coined by the Stanford University computer scientist John McCarthy in 1956. In 1964, when Mr. McCarthy established the Stanford Artificial Intelligence Laboratory, the researchers informed their Pentagon backers that the construction of an artificially intelligent machine would take about a decade. Two decades later, in 1984, that original optimism hit a rough patch, leading to the collapse of a crop of A.I. start-up companies in Silicon Valley, a time known as "the A.I. winter."

Such reversals have led the veteran Silicon Valley technology forecaster Paul Saffo to proclaim: "never mistake a clear view for a short distance."

Indeed, despite this high-technology heartland's deeply held consensus about exponential progress, the worst fate of all for the Valley's digerati would be to be the generation before the generation that lives to see the singularity.

"Kurzweil will probably die, along with the rest of us not too long before the 'great dawn,' " said Gary Bradski, a Silicon Valley roboticist. "Life's not fair."

Source
The Coming Superbrain by John Markoff, The New York Times, May 23, 2009

INTERPRETING DATA

2009-05-08T18:45:00.008+02:00

U.S. Economy:

The U.S. Labor Department said that employers cut 539,000 jobs in April. That was less than expected and the smallest reduction in six months.

However, the U.S. unemployment rate climbed to 8.9 percent, the highest since late 1983.

Oil Price:

Benchmark crude for June delivery rose $1.04 cents to $57.75 a barrel on the New York Mercantile Exchange. In London, Brent prices rose 83 cents to $57.31 a barrel on the ICE Futures exchange.

The Energy Information Administration said America's oil surplus grew less than expected, which is typically gives energy prices a boost.

But levels rose nonetheless, meaning storage houses were bloated with more crude than has been seen in nearly 19 years. Growing levels of unused crude in most cases would drive energy prices down.

ALPHATRENDS MARKET ANALYSIS (VIDEO)

2009-05-07T15:34:00.005+02:00

AlphaTrends

WOLFRAM ALPHA

2009-05-04T10:18:00.019+02:00

The biggest internet revolution for a generation will be unveiled this month with the launch of software that will understand questions and give specific, tailored answers in a way that the web has never managed before.

The new system, Wolfram Alpha, showcased at Harvard University in the US last week, takes the first step towards what many consider to be the internet's Holy Grail, a global store of information that understands and responds to ordinary language in the same way a person does.

Wolfram Alpha will not only give a straight answer to questions such as "how high is Mount Everest?", but it will also produce a neat page of related information, all properly sourced, such as geographical location and nearby towns, and other mountains, complete with graphs and charts.

The real innovation, however, is in its ability to work things out "on the fly", according to its British inventor, Dr Stephen Wolfram. If you ask it to compare the height of Mount Everest to the length of the Golden Gate Bridge, it will tell you. Or ask what the weather was like in London on the day John F Kennedy was assassinated, it will cross-check and provide the answer. Ask it about D sharp major, it will play the scale. Type in "10 flips for four heads" and it will guess that you need to know the probability of coin-tossing. If you want to know when the next solar eclipse over Chicago is, or the exact current location of the International Space Station, it can work it out.

What the experts say

"Generally, I did not use search terms that clearly had no computable answer (and therefore would have stumped Wolfram). But I also didn't throw any softballs in areas close to the heart of its makers: physics, chemistry, engineering, and genomics. On hard-core scientific questions, it gives you tons of symbols and graphics and other information that would be useful to a researcher but obscure to most people. But on many common questions for which there is no obvious data element, you will not get much help. In any event, if its plans hold, you should be able to test it out yourself in two or three weeks."
- David Talbot, Technology Review

"If it is not gobbled up by one of the industry superpowers, his company may well grow to become one of them in a small number of years, with most of us setting our default browser to be Wolfram Alpha."
- Doug Lenat, Semanticuniverse.com

Worldwide network: A brief history of the internet

1969 The internet is created by the US Department of Defense with the networking of computers at UCLA and the Stanford Research Institute.

1979 The British Post Office uses the technology to create the first international computer networks.

1980 Bill Gates's deal to put a Microsoft Operating System on IBM's computers paves the way for almost universal computer ownership.

1984 Apple launches the first successful 'modern' computer interface using graphics to represent files and folders, drop-down menus and, crucially, mouse control.

1989 Tim Berners-Lee creates the world wide web - using browsers, pages and links to make communication on the internet simple.

1996 Google begins as a research project at Stanford University. The company is formally founded two years later by Sergey Brin and Larry Page.

2009 Dr Stephen Wolfram launches Wolfram Alpha.
In a recent article on CNN, by John D. Sutter, entitled "New Search Engines Aspire To Supplement Google" the author examines some recent new search engines. The author discusses: Twine, Hakia, Searchme, Cuil, Kosmix, Wolfram Alpha, Topsy, TweetMeme and OneRiot. Each of these are different, making your web search more personal, more visual, or connecting your search to new social networks like FaceBook and Twitter.
The new search engine from Microsoft called Bing, which is very similar to Google in many ways. To Bing or not to Bing, that is the question? There's a very informative article on Bing by Farhad Manjoo on Slate entitled: "Beware Google: Microsoft's New Search Engine Isn't Half-bad." Just Bing or Google to find it!

Google Trends on May 4
Top Search Terms in the USA right now
1. prejean photos
2. miss usa runner up
3. carrie prejean pictures
4. cinco de mayo
5. miss california pictures
6. michael savage

Sources:
An invention that could change the internet, by Andrew Johnson, The Independent
Wolfram Alpha and Google Face Off, by David Talbot, Technology Review

WALL STREET LOOKS FORWARD, NOT BACK

2009-04-30T11:27:00.007+02:00

Wall Street sees signs of an economic recovery, so it is abandoning so-called safety stocks like Bristol-Myers for early-cycle plays like Fortune Brands. The focus is shifting from defense to growth because money managers expect a much better business environment six to nine months from now.

The only thing that matters is the performance going forward. That's why a consistent, stable firm like Bristol-Myers Squibb [BMY 19.15] can lose 4.3% in a single trading session, despite reporting solid numbers today. At the same time, Fortune Brands [FO 38.98] cut its dividend, but that stock finished the day higher by 3.9%.

Wheii.com Notes:

We still have to consider that consumer spending dipped in March as recession persists and jobless claims are stuck at elevated levels!
The number of people continuing to draw unemployment benefits jumped to more than 6.27 million, the highest on records dating back to 1967. Journalists shouldn't call the lower claims of 631000 last week (down from the prior week's 645000) a bullish signal!!! It is lower but we still have 631,000 NEW initial claims for unemployment!

Since early March, financials have risen 74 percent; cyclical consumer discretionary have jumped 46 percent; industrials gained 44 percent and materials are up 41 percent. The defensive sectors are underperforming. Almost half of the S&P are now up 50 percent from their 52-week lows.

INTEL: TOP TEN TECHNOLOGY PREDICTIONS FOR NEXT DECADE

2009-04-28T18:19:00.009+02:00

Intel predictions:
1.    New classes of portable devices with ten times more battery life
2.    Low-cost silicon photonics for faster data transmission
3.    New heights of realism in visual computing
4.    Realistic computer generated images
5.    Malware will become a thing of the past
6.    Personal internet devices will be truly personal
7.    Composable computing a reality
8.    Next-generation TV will not be about pixels
9.    Seamlessly connected 3-D worlds
10. A spectrum revolution is looming

Prediction One
:. new classes of portable devices with ten times more battery life

Sub-threshold integrated circuit technology requires only 300mV to operate.
Intel showed 4-way SIMD (single instruction multiple data) vector processing accelerator in 45nm in CMOS operated below its gate threshold voltage at the ISSCC technology conference. "This will lead to new classes of portable devices designed to take advantage of greater battery life, which in turn will drive popularity and uptake."

Prediction Two
:. low-cost silicon photonics for faster, more reliable data transmission
Silicon photonics optics channels will be used inside and outside PCs.

For example, remote optical memory can be used to create converged I/Os so a PC could have a single unified connector for a computer display, LAN, printer, wireless connection, scanner, USB and so on. Furthermore, because an optical channel does not require design engineering to ensure speed - its inherent in its nature - speed is implicit which has all sorts of positive implications such as true HD down loads, storage capability and terabit networking.

Prediction Three
:. new heights of realism in visual computing

There will be a shift from dedicated hardware graphics engines to general hardware running dedicated software as this has greater flexibility so features such as shadow map algorithms - an aspect of rendering that creates tiny ragged outline edges - can be replaced by 'soft shadows'. 'Order independent transparency' - the ability to create overlaid images which are clearly transparent, will be vastly improved. Overall, these benefits will deliver new heights of realism to computer generated imagery. Immediate applications areas are gaming sphere, but it will also have implications for business applications and the film industry.

Prediction Four
:. realistic computer generated images

Some types of complex graphic rendering requires the use of data sharing between the CPU and the graphic processing unit (GPU). However, the hardware-based model for graphics does not easily facilitate this at present. The sharing of virtualised memory between the CPU and the GPU will deliver the highest performance yet, for what are typically very complicated interactions. For example, complex data structures can be shared between the two with applications easily split between the CPU and GPU.

Prediction Five
:. malware will become a thing of the past

Malware, whatever form it takes whether viruses, trojans or worms, will be beaten by hardware-based techniques that protect at the deepest level. Today Intel has 'trusted execution technology' which is a set of processor hardware extensions and chipsets that have security characteristics such as measured launch and protected execution. It achieves this by creating an environment in which applications can run within their own space, protected from all other software on the system. To a degree, the success of hardware-based security is also dependent on how much effort vendors are prepared to put into securing their products. But once it is known that there is a solution that successfully addresses the problem of malware market forces will drive vendors in this direction.

Prediction Six
:. personal internet devices will be truly personal

Mobile internet devices (Mids) are already powerful enough to be useful and the introduction of sub-threshold devices (prediction one) mean these will run all day.
Add this to a continuous Internet connection and users will, for example, be able translate words into other languages and hear then pronounced, or with GPS get a constant geographically-based pollen prediction for that day. Ten years from now Mids will be ubiquitous and application developers will flood the market with all sorts of ingenious ideas.

Prediction Seven
:. interactive computing devices make 'composable computing' a reality

'Composable computing' is the impromptu assembly of a logical computer from wireless components that are nearby - enabled by wireless links, automatically assembling networks, and simple graphical user interfaces that allow available components selected and connected as the user desires. For example, images taken on a mobile device could be directed onto a nearby TV, or the music playing on an MP3 player could be sent to a HiFi in the room.

Prediction Eight
:. next-generation TV will not be about pixels

There is a limit to how big a TV screen can be without needing larger rooms, and a limit to the amount of resolution this size of screen needs. Beyond this, TVs will have to differentiate themselves by delivering further information. For example, click on a athlete in a running race to bring up biographical details in a window.
Viewing will be from any location, delivered through various means such as 'over-the-air' and multi-cast IP, and available on a wide range of devices from notebook PCs to mobile internet devices and smart phones.

Prediction Nine
:. seamlessly connected 3-D worlds

3D worlds, perhaps the World of Warcraft and Second Life, will overlap and be used for more practical activities. Companies already get feedback from virtual users about new products before they are brought to the real market, and virtual spaces can be created as meeting places where employees can exchange information regardless of geographical location. With the impending advances in computer graphics and growth in devices, how long will it be before a company like Amazon.com, for example, establishes a 3D presence with shopping aisles and book shelves that can be entered via virtual worlds such as Second Life?

Prediction Ten
:. and finally a spectrum revolution is looming

Already many devices contain two or three wireless connectivity options and as television becomes more interactive this need will become more pressing. As things stand today, the spectrum is fragmented and fairly chaotic, parts are saturated, and parts almost empty. It's unlikely that this will happen in a smooth manner, as many organisations will wish to maintain dominance of their spectrum segment.
However, for example, as broadcast TV eventually concedes its position to interactive TV which is tailored to each user's preferences, spectrum will eventually be freed up.

Source:
Intel top ten technology predictions, by Steve Bush, ElectronicsWeekly.com

THE WORLD DIGITAL LIBRARY

2009-04-21T20:02:00.012+02:00

Map of the New World, drawn by Diego Guti�rrez in 1562.
1562 Map of the New World

A digital repository of some of the most important documents in world history was launched by UNESCO this week.

The World Digital Library makes cultural and historical documents (maps, pictures, texts and other cultural artefacts) freely available on the Internet.
The World Digital Library

DO "QUANTS" ADD UP ON WALL STREET?

2009-03-11T10:05:00.009+01:00

What follows is an excerpt from the article written by Dennis Overbye and published on page 12 of the Global Edition of the New York Times on Wednesday, March 11, 2009.

They are known as "quants" because they do quantitative finance. Seduced by a vision of mathematical elegance underlying some of the messiest of human activities, they apply skills they once hoped to use to untangle string theory or the nervous system to making money. Quants occupy a revealing niche in modern capitalism. They make a lot of money but not as much as the traders who tease them and treat them like geeks. Until recently they rarely made partner at places like Goldman Sachs. In some quarters they get blamed for the current breakdown - "All I can say is, beware of geeks bearing formulas," Warren Buffett said on "The Charlie Rose Show" last fall. Even the quants tend to agree that what they do is not quite science.

As Dr. Derman put it in his book "My Life as a Quant: Reflections on Physics and Finance", "In physics there may one day be a Theory of Everything; in finance and the social sciences, you're lucky if there is a useable theory of anything." In the 1970s the late Fischer Black of Goldman Sachs, Myron S. Scholes of Stanford and Robert C. Merton of Harvard had figured out how to price and hedge these options in a way that seemed to guarantee profits. The so-called Black-Scholes model has been the quants' gold standard ever since. In the old days, Dr. Derman explained, if you thought a stock was going to go up, an option was a good deal. But with Black-Scholes, it doesn't matter where the stock is going. Assuming that the price of the stock fluctuates randomly from day to day, the model provides a prescription for you to still win by buying and selling the underlying stock and its bonds. The Black-Scholes equation resembles the kinds of differential equations physicists use to represent heat diffusion and other random processes in nature. Except, instead of molecules or atoms bouncing around randomly, it is the price of the underlying stock. The price of a stock option, Dr. Derman explained, can be interpreted as a prediction by the market about how much bounce, or volatility, stock prices will have in the future. But it gets more complicated than that. For example, markets are not perfectly efficient - prices do not always adjust to right level and people are not perfectly rational. Indeed, Dr. Derman told The Times, the idea of a "right level" is "a bit of a fiction." As a result, prices do not fluctuate according to Brownian motion. Rather, he said: "Markets tend to drift upward or cascade down. You get slow rises and dramatic falls."

One consequence of this is something called the "volatility smile," in which options that benefit from market drops cost more than options that benefit from market rises.
Another consequence is that when you need financial models the most - on days like Black Monday in 1987 when the Dow dropped 20 percent - they might break down.

One of the most outspoken critics is Nassim Nicholas Taleb, a former trader and now a professor at New York University. He got a rock-star reception at the World Economic Forum in Davos this winter. In his best-selling book "The Black Swan" (Random House, 2007), Dr. Taleb, who made a fortune trading currency on Black Monday, argues that finance and history are dominated by rare and unpredictable events.

"Every trader will tell you that every risk manager is a fraud," he told The Times, and options traders used to get along fine before Black-Scholes. "We never had any respect for nerds."

Dr. Taleb has waged war against one element of modern economics in particular: the assumption that price fluctuations follow the familiar bell curve that describes, say, IQ scores or heights in a population, with a mean change and increasingly rare chances of larger or smaller ones, according to so-called Gaussian statistics named for the German mathematician Friedrich Gauss.

But many systems in nature, and finance, appear to be better described by the fractal statistics popularized by Benoit Mandelbrot of I.B.M., which look the same at every scale. An example is the 80-20 rule that 20 percent of the people do 80 percent of the work, or have 80 percent of the money. Within the blessed 20 percent the same rule applies, and so on. As a result the odds of game-changing outliers like Bill Gates's fortune or a Black Monday are actually much greater than the quant models predict, rendering quants useless or even dangerous, Dr. Taleb said.

Links:
They Tried to Outsmart Wall Street
The Black-Scholes model

DID YOU KNOW 3.0

2009-01-28T11:16:00.003+01:00

Globalization & The Information Age
Newly Revised Edition Created by Karl Fisch, and modified by Scott McLeod
Did You Know Sources

RUNNING BACKWARDS

2009-01-08T23:29:00.003+01:00

"Despite lower equities and massive government intervention, the equilibrium between equity, credit, commodities and currencies remains elusive"
Todd Harrison, CEO of Minyanville.com

Today, the Bank of England slashed rates to their lowest level since the central bank's formation in 1694.

The U.S Deficit pegged at $1.2 Trillion and this figure excludes the $800 Billion spending proposed by Obama.

We are running backwards, encouraging people to take on more debt, and lowering rates to nothing... this is not a stable foundation on legitimate economic growth!!!

29-12-2008 QUOTES

2008-12-29T12:00:00.006+01:00

"There is no way that we should worry about what we should eat for dinner when we have not had breakfast yet. The good thing to do is to prepare and eat breakfast first."
Japanese Finance Minister Shoichi Nakagawa as he dismissed suggestions Japan will need to draw up another fiscal stimulus package and said extra spending plans must be implemented first

"Given the difficulty in the world economy and South Korea's high dependence on outside markets, we are at a critical moment which may see negative growth in the first and second quarters although the annual number may be positive."
South Korean President Lee Myung-bak

"Production is falling like Niagara Falls. What's going on now is beyond what Toyota and Sony had ever imagined."
Mitsuru Saito, chief economist at Tokai Tokyo Securities

SAVE THE PEOPLE AND LET THE FIRMS DIE YOU CANNOT REPAIR AN ILLUSION

2008-12-13T15:33:00.009+01:00

Excerpts from a discussion with Thierry Gaudin, Prospective 2100 President:

"Because of the growing influence of the medias, particularly TV, the modern economy, at least in the so called "developed" countries, but also elsewhere, has been built on mental manipulation of the public, and turned to bear a complete illusion, including growth, development and so forth. Thus, you cannot repair an illusion. The only thing you can do is to go back to reality: ecological footprint, depletion of resources, decline of biodiversity..."

"As far as the pre-crisis employment was devoted to respond and amplify the illusion, the unavoidable reaction of the ruling class, which is to try to "save" the firms, is definitely counterproductive. The correct response would be to save the people, implement reasonable great programs aimed at ecological equilibrium, and let the firms die. After all, organizations are only legal commodities. If they are not serving the common good why should they be maintained?"

Links:
Thierry Gaudin
World Futures Studies Federation

U.S. VIDEOGAME SALES FOR THE MONTH OF NOVEMBER: $3 BILLION

2008-12-12T17:18:00.005+01:00

Americans may be cutting back on holiday shopping, but they are still buying video games.

November 2008 U.S. Video Games Sales (Hardware + Software + accessories) totaled $2.91 billion, according to data from market researcher NPD Group.

Nintendo Wii sold 2 million units for the month (+108% compared to same month last year), allowing five games to be among the top ten titles.

The U.S. video game industry is set to top $22 billion in 2008.

TOP TEN BEST-SELLING VIDEO GAMES FOR THE MONTH OF NOVEMBER:
Gears of War 2 (Xbox 360 - Microsoft): 1.56M
Call of Duty: World at War (Xbox 360 - Activision): 1.41M
Wii Play (Wii - Nintendo): 796k
Wii Fit (Wii - Nintendo): 697k
Mario Kart (Wii - Nintendo): 637k
Call of Duty: World at War (PS3 - Activision): 597k
Guitar Hero: World Tour (Wii - Activision): 475k
Left 4 Dead (X360 - EA): 410k
Resistance 2 (PS3 - Sony): 385k
Wii Music (Wii - Nintendo): 297k

Links:
Video Game Sales Chart
NPD Market Research

STILL HAVEN'T REACHED LOWEST VALUATION LEVELS

2008-12-08T16:07:00.006+01:00

John Mauldin, author of the popular Thoughts from the Frontline e-letter, isn't buying the "stocks are cheap" mantra.

June 2008, John Mauldin's historical comment:
"We have seen the heads of virtually all financial institutions stand up over the last few months and claim the worst is behind us. Why would anyone listen to these people? They didn't see the disaster coming, and yet somehow they are qualified to tell us it is all alright! Perhaps I am just unduly skeptical, but this reeks of a conspiracy of optimism. The recession has barely started, let alone reached its nadir. The market moves of late have all the hallmarks of a classic sucker's rally. This isn't discounting the recovery, this is denial! Far from being behind us, the worst may well still be ahead!"

December 2008:
"This is going to be a longer recession we've had in a long time and earnings are going to be impacted a lot more than people are currently thinking. If earnings do disappoint, today's "cheap" P/E ratios will prove to be a sucker's bet."
Mauldin predicts valuations will eventually fall to record low levels, meaning low single-digits price-to-earnings ratios, before ultimately finding a floor.

December 2008 Volatility:
Regarding volatility, Diane Garnick, investment strategist at Invesco, notes that if the S&P is at 900 and the VIX at 50 (current levels are 899 and 54, respectively), the market is pricing in a two-thirds chance the index will trade between 770-1029 over the next 30 days creating one of the most difficult environments to make a commitment to stocks.

PETER SCHIFF WAS RIGHT

2008-11-24T20:31:00.017+01:00

Here is a popular YouTube clip called "Peter Schiff Was Right" that shows the president of Euro Pacific Capital engaged in on-air debates with financial luminaries such as Art Laffer and Ben Stein back in 2006-07.

This clip shows the wisdom of Schiff's dire forecasts and, judging from the dismissive reactions, just how far he was outside the mainstream.

2008: Peter Schiff Sees More Pain Ahead
A longtime gold bull, Schiff believes the dollar's "phony" rally will soon end. To his credit, Schiff admits being caught off guard by the greenback's recent bounce, but believes efforts by global central bankers to fight the credit crunch will lead to devalued currencies, and higher commodity prices.
The U.S. Dollar is in the midst of a prolonged collapse against other world currencies.
Government debt is out of control. Instead of solving the problem sensibly (by raising taxes and/or reducing spending), the government just prints more money, which leads to inflation, and which may lead to hyperinflation.
The government is severely underreporting inflation, which Schiff says is running at 8-10% annually.
The low interest rates promoted by the Federal Reserve have fueled needless consumption and the overuse of credit.
Like the housing market before it, consumer debt is another meltdown waiting to happen.

In his new book, The Little Book of Bull Moves in Bear Markets, Schiff explains the reasons for his dire predictions, and suggests ways for readers to protect their financial well-being.
Yahoo Tech|Ticker Video with Peter Schiff

2008: Why Isn't Anyone in Jail?
"There is no poster child for the housing scandal because you need to investigate, and you need to bring cases and we haven't done either against the major players," says William Black, Associate Professor of Economics and Law at the University of Missouri - Kansas City, former federal regulator and author of "The Best Way to Rob a Bank Is to Own One". Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis and blew the whistle on the "Keating Five" in 1989, says investigations have shown fraud incidence of 50% at once major subprime lenders like IndyMac and Countrywide.
But even though the FBI warned of an "epidemic" of mortgage fraud in 2004, they subsequently made a "strategic alliance" with the Mortgage Bankers Association, which serves the major industry players.
Yahoo Tech|Ticker Video with William Black

BUBBLE HISTORY SAYS: MORE PAIN AHEAD FOR FINANCIALS

2008-11-20T23:48:00.003+01:00

John Roque, Managing Director, Natixis Bleichroeder:
"Historically, we noticed that most bubbles aren't popped until they are down 90 percent from their peak. Even with the S&P Financial SPDR down more than 70% from its peak, the entire sector still has more pain ahead."

Historical peak-to-trough declines of past Market Manias:
Dutch Tulip Mania (1637): 90% peak-to trough decline
South Sea Co. (1720): 90% peak-to trough decline
Missisipi Co. (1720): 95% peak-to trough decline
Tokyo Real Estate (1989): 84% peak-to trough decline
Nasdaq (2000): 77% peak-to trough decline
U.S. dotcoms (2000): 92% peak-to trough decline
U.S. Financials (2007): 71% so far