Tuesday, September 2, 2014

Non-Euclidian Economics

From Econospeak:

SCIOD 12: Euclidean Rhapsodies

"It is fairly obvious," John Maurice Clark, explained to Irving Fisher, Frank Knight and other participants in a 1920 American Economic Association seminar, "that there are systems of economics with axioms fully as far removed from each other as the geometries of Euclid and the non-Euclideans..."

Non-Euclidean geometry was topical in 1920. On May 29, 1919, a total eclipse of the sun could be viewed from Brazil and Africa and provided the opportunity to test a prediction of Einstein's theory of general relativity about the displacement of light from a star as it passes the sun. The conclusions from those observations were hailed as "the most important result obtained in connection with the theory of gravitation since Newton's day."
Clark's paper, "Soundings in non-Euclidean Economics," was not the first foray into this particular metaphor, nor would it be the last. In his inaugural lecture as Professor of Political Economy at Cambridge, "Economic science in relation to practice," Arthur Cecil Pigou quoted extensively from Bertrand Russell's Principles of Mathematics regarding the relationship between the Euclidean and non-Euclidean geometries, which "are equally true," and realistic science, which can only be decided, "so far as any decision is possible, by experiment and observation." 
In 1920, Pigou recycled his 1908 non-Euclidean ruminations -- and the Russell quote -- in The Economics of Welfare, arguing that Russell's distinction was "applicable to the field of economic investigation. It is open to us to construct an Economic Science either of the pure type represented by pure mathematics or of the realistic type represented by experimental physics."

In The General Theory of Employment, Interest and Money Keynes also employed the geometrical metaphor, comparing classical theorists (Professor Pigou among them!) to:
Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight as the only remedy for the unfortunate collisions which are occurring.
Of course it was not literally the axioms of Euclidean geometry that classical economic theorists clung to but rather the doctrine, taught by them "from the time of Say and Ricardo..." that "supply creates its own demand..."
-- meaning by this in some significant, but not clearly defined, sense that the whole of the costs of production must necessarily be spent in the aggregate, directly or indirectly, on purchasing the product.
As it informs a theory of employment --"practically without discussion" -- that doctrine suggests what Keynes described as "two fundamental postulates," that: "1. The wage is equal to the marginal product of labour" and "2. The utility of the wage when a given volume of labour is employed is equal to the marginal disutility of that amount of labour."...MUCH MORE
Here's the real Euclidean Rhapsody:
If you have three lines
And they're made equally
Put them together
Each angle is sixty degrees
Now it is time, to learn a new shape from me
It is a rhomboid, a quadrilat'ral, see
That it has four sides, on a plane, all their lengths, are the same
It is not a square since angles aren't ninety degrees

Tesla Up Another 5%, The Case For $400 Shares (TSLA)

The price targets will keep going up until the stock stops.
Up $13.18 (4.89%) at $282.88. New all-time high $284.89.
From Forbes:
The Case For Tesla's $400 Per-Share Future
As recently as May, shares of Tesla Motors were trading under the $200 mark — but according to one analyst at Stifel Nicolaus, the stock could easily hit $400 in the foreseeable future, thanks largely to what the firm sees as Tesla’s “defensible niche in the global market for luxury electric vehicles.”

In a research note out Tuesday, Stifel Nicolaus analyst James Albertine raised Tesla’s rating from a hold to a buy, giving the electric car company a $400 price target, a figure that’s more than $100 higher than its current $282 per-share price and double what the stock was trading for just this past May. Albertine also raised Tesla’s 2017 earnings per share estimate from $6.14 to $8.28, citing increased Model X pricing assumptions, “modestly” increased Model S/X output and a 33% non-GAAP gross margin.

As for the impetus for the bullish note, Albertine pointed to a recent visit to a Tesla production facility that seemed to indicate an 800-unit per-week production rate that will only increase in the coming months.

“We recently hosted a tour of Tesla’s production facility in Fremont, CA, where it appeared the company remains on track (if not ahead of plan) to achieving a 1,000 unit per week production rate by year-end 2014,” he wrote Tuesday. “Simply put, the rate of change versus our last tour (May 2013) was staggering.”...
...MORE

Gold: "There's something wrong with our bloody ships today, Chatfield"

The quote is from Admiral David Beatty to his flag captain while watching 2200 of his sailors disintegrate at the Battle of Jutland. In comparison gold is only down $21.90 at $1265.50, less than 2%.

Although the December gold futures appear headed for the 2013 double-bottom (Jun; Dec) ~$1179, our target from 15 months ago, $875, might not be achievable in the four weeks remaining in our forecast timeframe.

I am counting on the reader to remember that despite the devastation Admiral Beatty was promoted, appointed First Sea Lord and granted an Earldom.
I'm jus' sayin'

From FinViz:
The easier call has been silver:
Aug. 15
Lines on Charts: Silver Is Poised To Break Lower
$19.530 down 0.376
Aug. 19 
Sell Silver
$19.400 last, down 23.5cents

$19.19 last.
More downside to come.

Agora Replaces Silk Road as the Web's Top Darknet Site

From Wired via Reason's Hit & Run blog:
Looking for illicit drugs and other black market goods? For years the place to go was Silk Road. Now, it's Agora.

Late in August, the Digital Citizens Alliance (DCA), an Internet safety nonprofit, released a report detailing various darknet marketplaces.
Sesame Street
Wired, which picked up the report earlier today, notes that "the analysis counts 16,137 products for sale on [Agora]. … That's about 200 more listings than Silk Road 2.0." And it's growing quickly. "The latest numbers for Agora … represent a dramatic shift from just four months ago, when it had only 7,400 product listings."

What has pushed Agora to the top? "Just as on the rest of the internet, users on the dark net are very quick to move on to new things and move away from those products and websites that seem stale and old," Adam Benson, a representative from the DCA tells Wired....MORE
In case you want to try the darknet's equivalent to Google for easier product searches on Agora, check out Grams. 
Those Libertarians are so helpful.

"Writing Skills"

My new motto:
Embrace my slow-wittedness, employ aides-mémoire at every opportunity and stop trying to figure out xkcd when explain xkcd is so, so good.
Not really much of a motto but still better than Clan Moffatt and their "Spero meliora" ("I hope for better")

From Explain xkcd:

Writing Skills
I'd like to find a corpus of writing from children in a non-self-selected sample (e.g. handwritten letters to the president from everyone in the same teacher's 7th grade class every year)--and score the kids today versus the kids 20 years ago on various objective measures of writing quality. I've heard the idea that exposure to all this amateur peer practice is hurting us, but I'd bet on the generation that conducts the bulk of their social lives via the written word over the generation that occasionally wrote book reports and letters to grandma once a year, any day.
Title text: I'd like to find a corpus of writing from children in a non-self-selected sample (e.g. handwritten letters to the president from everyone in the same teacher's 7th grade class every year)--and score the kids today versus the kids 20 years ago on various objective measures of writing quality. I've heard the idea that exposure to all this amateur peer practice is hurting us, but I'd bet on the generation that conducts the bulk of their social lives via the written word over the generation that occasionally wrote book reports and letters to grandma once a year, any day.

[edit] Explanation

Cueball and White Hat are discussing the positive and negative effects of young people writing on mobile phones in the vernacular of the day, Short Message Service (SMS).
SMS messages are one of the primary means of text communication on mobile devices, and are typically limited to 160 characters. Due to the limited space available on this and other messaging platforms, and also to decrease the time taken to write a message, SMS language (aka textese) developed as a form of short-hand writing. This involves the abbreviation and deliberate misspelling of words, and the use of acronyms.
Naturally, the use of this style of language has expanded into other areas, including those where brevity is not an issue, and this expansion and evolution of language is a subject of intense debate. The main viewpoints on the subject are:
  • Language is being negatively degraded by the use of text speak
  • The use of text speak is a natural evolution of language
Cueball's point is that "practice makes perfect". The ability to form good grammar comes from practice through a lot of writing, even when that writing is informal; hence, the SMS generation gets a lot of practice compared to previous generations, who communicated mostly with speech, over the phone, and in person, and may have written only a few letters a year. To foster talent for a major literary work, we should encourage practice, even when that practice is through informal writing such as SMS.

This idea has some real scientific background. Such as the investigation in 2009 Exploring the relationship between children's knowledge of text message abbreviations and school literacy outcomes. In this study children 10-12 were asked to compose text messages. The number of textisms was recorded, and a positive correlation was found between use of sms abbreviations and success at literacy tests. This is then related to David Crystal's concept of "ludic" language: the playful use of language as a contribution to language development. That notion is developed here: By playing with textual language, one develops writing skills, just as by playing with balls one can develop sports skills. David Crystal explains: "Children could not be good at texting if they had not already developed great literary awareness [...] If you are aware that your texting behaviour is different, you must have intuited that there is a standard."[1]
 
James Joyce was an celebrated Irish novelist and poet, and his novel Ulysses is considered to be one of the most important works of modernist literature. It was criticized in some quarters for the frequent lack of punctuation and ungrammatical stream of consciousness narrative mode. In addition to his better-known works, he wrote a number of love letters with extremely explicit content.

In the title text, Randall wishes to prove Cueball's point by analyzing and comparing bulk volumes of texts (= a corpus) written by children today and 20 years ago. Randall favors the literary ability of today's children for their everyday use of written word over the situation of the past, when children wrote only if forced to do so....
...MORE

Lloyds Takes Top Spot As Hargreaves Lansdown Makes its First Appearance.

From Wealth Manager:

Lloyds, Pru and Sesame top FOS list
Lloyds Banking Group has topped the Financial Ombudsman Service list of most complained about businesses for the first half of 2014, as the total number of complaints the ombudsman received fell by 20%.
This is Lloyds Banking Group’s fourth consecutive time at the top of the list. The group, which includes the Halifax, Lloyds TSB and Bank of Scotland brands, received 62,132 complaints, down 27% from 85,379 complaints.

Barclays followed Lloyds to make second place with 27,487 complaints, followed by the Royal Bank of Scotland in third with 13,654 and HSBC in fourth with 13,240.

The figures published today showed that the ombudsman took on 191,129 new cases in total in the first half of 2014. This is a 20% fall from the 248,801 that it received in the last six months of 2013.

Prudential was the most complained about life company with 330 complaints, with 17% being upheld in favour of the consumer. This was followed by Phoenix Life and Aviva with 327 and 230 complaints respectively....MORE

EIA: Residential Electricity Prices Are Rising (All-time High in June and July)

From the Energy Information Administration's Today In Energy post, 2Sept14:

Graph of change in first-half 2014 average residential electricity prices from comparable 2013 period, as explained in the article text
Source: U.S. Energy Information Administration, August 2014 Electric Power Monthly
Note: Data are preliminary.
Note: Map of U.S. Census divisions.

U.S. retail residential electricity prices for the first half of 2014 averaged 12.3 cents per kilowatthour, an increase of 3.2% from the same period last year. This is the highest year-over-year growth in residential prices for the first half of the year since 2009. Average prices rose in all areas of the country except for the Pacific Census Division (excluding Alaska and Hawaii).

Electricity customers in New England experienced the largest price increases, averaging 11.8%. Beyond taxes, fees, and other charges, there are two main components of electricity bills: the generation component, which reflects the costs of generating the electricity, and the delivery portion, which reflects the costs of transmitting and distributing that electricity. All New England states, with the exception of Vermont, have restructured the industry so that residential customers have the option of choosing an alternative retail electricity supplier for the generation (energy) component of their electricity bill. More than one-quarter of all residential customers in New England pay a retail supplier other than the regulated utility for the generation of their electricity. Customers of both full-service utilities and restructured retail suppliers have experienced similar rate increases of just under 12% so far this year....MORE
Meanwhile, via the Bureau of Labor Statistics All-time record highs in June and July:
Average Price for a KWH of Electricity
 
Series Id:  APU000072610
Area:       U.S. city average
Item:       Electricity per KWH
YearJanFebMarAprMayJunJulAugSepOctNovDecAnnual
20040.0910.0910.0910.0910.0930.0990.0990.1000.0990.0940.0920.092 
20050.0940.0940.0940.0950.0970.1040.1050.1050.1060.1020.1020.102 
20060.1080.1080.1090.1090.1100.1180.1180.1180.1180.1120.1100.110 
20070.1130.1130.1130.1130.1150.1220.1220.1210.1210.1170.1150.115 
20080.1160.1160.1160.1180.1200.1280.1310.1320.1300.1260.1230.124 
20090.1260.1260.1260.1250.1260.1320.1310.1300.1300.1260.1240.124 
20100.1240.1230.1250.1260.1270.1320.1330.1330.1320.1270.1250.125 
20110.1250.1250.1270.1270.1290.1340.1350.1350.1350.1300.1280.127 
20120.1280.1280.1270.1270.1290.1350.1330.1330.1330.1280.1270.127 
20130.1290.1290.1280.1280.1310.1370.1370.1370.1370.1320.1300.131 
20140.1340.1340.1350.1310.1360.1430.143      

"Some Thoughts on Peter Thiel’s New Book, Zero to One: Notes on Startups, or How to Build the Future"

We noted it was coming back in 2013's "Elon Musk Frenemy Peter Thiel is writing another book!".
From PJ Media:

Is a Great Company a Conspiracy to Change the World?
I thought about this as I read Peter Thiel’s new book Zero to One: Notes on Startups, or How to Build the Future. The book description is as follows:
The great secret of our time is that there are still uncharted frontiers to explore and new inventions to create. In Zero to One, legendary entrepreneur and investor Peter Thiel shows how we can find singular ways to create those new things.

Thiel begins with the contrarian premise that we live in an age of technological stagnation, even if we’re too distracted by shiny mobile devices to notice. Information technology has improved rapidly, but there is no reason why progress should be limited to computers or Silicon Valley. Progress can be achieved in any industry or area of business. It comes from the most important skill that every leader must master: learning to think for yourself....MORE
Previous posts on Mr. Thiel:
Thiel Sold 20.06 Million Facebook Shares For $395.8 Million Last Week (FB)
"PayPal Founder Talks Technology"
Energy Storage: Screw Batteries, Bill Gates, Peter Thiel and Khosla Ventures Team Up on A Different Approach
"Five Hedge Fund Managers Who Lost Their Superstar Status"
Which Came First: The Artificial Plant-based Egg That Bill Gates and Peter Thiel Are Backing
"Five Hedge Fund Managers Who Lost Their Superstar Status"
"The Tech Industry’s Asperger Problem..."

See also Peter Thiel and:
Founders Fund
Mithril Capital
Valar Ventures
Clarium Capital

And at Founders Fund the mini-manifesto:
What Happened to the Future?:
We Wanted Flying Cars and Got 140 Characters

Institutional Investor: "Controversy In the Land of Disruptive Innovation"

Or is it innovative disruption?
Long time readers have seen most of this stuff, either here, by way of Izabella Kaminska at FT Alphaville* or Izabella's personal blog, Dizzynomics. It's good to see Institutional Investor taking the themes seriously.
And Irving.
Irving makes an appearance.
From Institutional Investor's The Futurist:
Who could be against innovation? Enterprises embrace it as an indispensable ingredient of adaptation and growth, a key to overcoming uncertainty and competition and to ensuring survivability. Advocates often take their cues from The Innovator’s Dilemma, by Harvard Business School professor Clayton Christensen.
In the June 23, 2014, issue of the New Yorker, Jill Lepore, an American history professor at Harvard, lambasted the 1997 book and set off a summer of discontent in innovation-land. Her article, “The Disruption Machine: What the Gospel of Innovation Gets Wrong,” picked apart the widely accepted theory of disruptive innovation — that successful, established companies can be blindsided by seemingly inferior products from inventive entrepreneurs — and the implication, as she presented it, that if an incumbent “doesn’t disrupt, it will fail, and if it fails it must be because it didn’t disrupt.”

Lepore contended that Christensen made “circular arguments,” disregarded case examples that didn’t fit his theory and failed to prove that it is predictive. “Disruptive innovation is a theory of why businesses fail. It is not more than that,” she concluded.

Christensen did not lack for defenders. His work is a rare example of rigorous research that “finds its way into mainstream business, guiding managers to make day-to-day decisions,” said Howard Yu, professor of strategic management at IMD in Lausanne, Switzerland.

Irving Wladawsky-Berger, retired vice president of strategy and innovation at IBM, agreed with Lepore that “the concept of disruption has been overused and misused in business” but was “taken aback” by her attack on “a useful organizing framework for discussing the creative-destruction aspects of innovation.”

Christensen criticized Lepore for “breaking rules of scholarship” by ignoring sequels to The Innovator’s Dilemma and subsequent research that addressed her complaints — and for being mean. The contretemps offered more drama and played out more publicly than the typical academic debate. But it wasn’t much more than that. The corporate innovation beat goes on, and Christensen’s is hardly the only textbook.

Innovation is so entrenched in business strategies because there is more to it than the cycles of disruptive entrepreneurism that Christensen documented in the 1990s. The popular conception of freewheeling visionaries launching start-ups in garages distorts the reality of how disciplined, systematic and scientific the practice and pursuit of innovation have become.

Of course, good intentions do not guarantee best execution. Innovation requires patience and tolerance of failure — qualities that can go against the grain of profit-driven cultures. Art and serendipity at times will trump hard science and deep pockets.

Firms face such realities in organizing for innovation, and it is anything but haphazard. In a July webinar sponsored by the Massachusetts Institute of Technology’s System Design and Management program, Mona Vernon, vice president of Thomson Reuters’s Data Innovation Lab, said suggestion boxes and other loosely coordinated attempts to rally creativity result in “too much noise, too little value.” She advocated applying structured and replicable system architecture principles to innovation management and recommended the open innovation methodology championed by University of California adjunct professor Henry Chesbrough and a book he co-edited, Open Innovation: Researching a New Paradigm....MORE
*This Is Just Plain Smart: Creative Destruction May Be Neither Creative nor Mere Destruction
** Innovation versus freedom | Dizzynomics
"Has ‘Disruptive Innovation’ Run Its Course? Not Yet…"
A Master Course on the "Thinking About Innovation Biz"
Irving sounds annoyed.


And many more, especially @Alphaville.

Rabobank Calling the Bottom In Corn and Soy (but not quite yet)

December corn 365'4 up 0'6, November soybeans 1027'6 up 3'4.
From Agrimoney:

Corn, soy prices near the bottom. Cotton, sugar to revive

Corn and soybean futures will "experience further downside" – but not too much - Rabobank said, while foreseeing revivals ahead in cotton and sugar futures.
The bank acknowledged the prospect of huge US harvests of both corn and soybeans, estimating the yield of the grain at 170-175 bushels per acre, above a US Department of Agriculture forecast of 167.4 bushels per acre.
For soybeans, if pegged the yield at 46.5 bushels per acre, and harvest at 3.985bn bushels, compared with USDA forecasts of 45.4 bushels per acre and 3.816bn bushels.
"As the record large US grains and oilseeds harvest progresses, conditions remain idea to realise the long-anticipated build in stocks," the bank said.
"Grain and oilseed prices are expected to experience further downside through 2014 as the new crops flow."
Above the curve
However, while cutting its forecast for average soybean futures prices in the October-to-December quarter by $0.20 a bushel to $10.00 a bushel, that remains above expectations among many observers for single-digit prices ahead.
Values retain some premium to account for the risk of an early frost, which remains a threat for the next couple of weeks, and are seen typically finding a seasonal bottom later in the autumn, under the weight of harvest supplies....MORE
The futures appear to be forming a high-fructose fat bottom:
 

Sunday, August 31, 2014

"Red-Light District Dims as Zurich Bankers Curb Spending"

The world's oldest profession.
From Bloomberg:
Zurich’s red-light district is dimming. Bankers who have been core patrons of the city’s sex industry and cabarets are curbing spending.

The venues of Langstrasse -- or long street -- are closing, replaced by hipster bars, techno clubs and even a backpackers’ hostel. Like the finance industry, the sex trade has opted for a lower profile.

“Times have changed,” said Kevin Joliat, the manager of the Petit Prince nightclub in central Zurich. “Bankers really have to show who the client was, why they spent the money and was it really necessary,” said Joliat, who once worked at Zuercher Kantonalbank, Switzerland’s largest state-owned bank.

The decline of erotic entertainment highlights a changing culture in Zurich as banking jobs ebb and public opinion turns against inflated bonuses. That and smaller budgets for entertaining customers have deprived the clubs and bars of a key customer base....MORE

“Immersive Journalism” Using Virtual Reality to Put the Viewer In the Story

We've noted that Pearson PLC, owner of the Financial Times was interested in VR for the classroom.
Here's another angle they may be looking at.
From the BBC:
News reports often feel remote and irrelevant to our lives. But will that change with “immersive journalism” that places viewers in the centre of the story?

News events across from distant countries can feel so far away, it is difficult to grasp their importance. But that may change as journalists create reports with virtual reality, so that viewers feel as if they are witnesses to the unfolding action.

Nonny de la Pena, senior research fellow at the University of Southern California’s Annenberg School of Journalism, does this by mixing traditional journalism with immersive gaming technology. Her team might record sound clips on the ground before combining them with visual reconstructions of the scene....MORE



I'm just spitballin' here:
"Facebook, Oculus, And Businesses' Thirst For Virtual Reality"
One of the least talked about aspects is the use of VR in education. Because the mind has trouble distinguishing between virtual reality and the outside world you should be able to get people to believe almost anything you want them to accept, given enough repetition and an engaging story line. Whether the learner has deep understanding is pretty much immaterial.

Pearson, the edu/testing co. with the Financial Times and Economist attached will be moving in this direction.
Think deeply immersive multiplayer gaming as an example, then put on some virtual reality goggles....
Pearson May Be Rethinking That "Sell the Financial Times" Strategy
"Financial Times CEO: 'We've now achieved critical mass in digital' "
 "The Inside Story of Oculus Rift and How Virtual Reality Became Reality"

Meanwhile, at Pearson Labs:
Beyond gaming: virtual reality hits the classroom

Burton Malkiel is Alive! (his latest advice for investors)

Economist Burton Malkiel's "A Random Walk Down Wall Street" influenced a generation of theoreticians.
He is 82 years old.
It is the strong version of the Efficient Market Hypothesis that is dead.
From Morningstar:

Burton Malkiel's Latest Advice for Investors 
Patience, emerging-markets stocks, and municipal bonds. 
Bait and Switch
In yesterday's Wall Street Journal, Burton Malkiel asked, "Are Stock Prices Headed for a Fall?" Surely a tease, I thought. This past December, in the same space no less, Malkiel wrote that "nobody can foretell what the market can do in 2014." Has he had a revelation? Has he realized that he is The One? Well...no, he doesn't. The article completely avoids the question.

It does, however, discuss three other items.

All Things Considered...
While Malkiel won't touch the stock market's immediate future, he does speculate about its long-term prospects. Like many, he is wary. The cyclically adjusted price/earnings ratio, or CAPE ratio, is 25, well above its average level of 15. Malkiel writes that while the "CAPE is not useful in predicting returns one or two years into the future"--what indicator is?--that it "does a reasonably good job of predicting 10-year equity returns."

Of that I am not certain. To my mind, London Business School professors Dimson, Marsh, and Staunton have convincingly demonstrated that the CAPE ratio has been predictive after the fact, but not beforehand. When the trio simulated what the ratio would signal using only information that was available at the time, they found that the forecast had little power....MORE
HT: Abnormal Returns

It's Time to Bomb Iceland

It is past time to deal with this. The stakes are just too high.
From Damon Tucker Hawaii News and Information (Dec. 2010):
The folks over at the Pacific Aviation Museum just posted this on Facebook and I thought it needed to be given a bit more attention.

I always thought that the lava flows were pretty much unstoppable but this seems to prove otherwise.

I would have no problem with the military dropping a few bombs above Hilo if it meant saving the entire town!
…Explosives were first suggested as a means to divert lava flows threatening Hilo, Hawaii during the eruption of 1881. They were first used in 1935, without significant success, when the Army Air Force bombed an active pahoehoe channel and tube system on Mauna Loa’s north flank. Channel walls of a Mauna Loa flow were also bombed in 1942, but again there were no significant effects. The locations of the 1935 and 1942 bomb impact areas were determined and are shown for the first time, and the bombing effects are documented. Three days after the 1942 bombing the spatter cone surrounding the principal vent partially collapsed by natural processes, and caused the main flow advancing on Hilo to cease movement. This suggested that spatter cones might be a suitable target for future lava diversion attemptsMORE
Also: "Engineering Volcanic Eruptions"
https://wattsupwiththat.files.wordpress.com/2014/08/b18smaunaloaeruptionapril1940.jpg

*See for example this morning's "Icelandic volcano could trigger Britain's coldest winter EVER this year".

Pope Francis: Elite Finance Manager

From Fortune:
This pope means business
Il Papa di global macro
The wildly popular Francis is more than a pontiff of the people. He’s an elite manager who’s reforming the Vatican’s troubled finances.

The new pope wanted to talk about money. That was the message that went out to a group of seven prominent financiers—major Catholics all—from around the world in the summer of 2013. Barely five months after the shocking resignation of Pope Benedict XVI, Pope Francis had summoned them to assemble at the seat of holy power, the Vatican. They knew their general assignment: to create a plan to restructure the Vatican’s scandal-plagued finances. And like Catholics everywhere, they knew that Francis had already signaled that he was a new kind of pontiff, a “people’s pope” who championed charity and tolerance over dogma. Still, they didn’t know what to expect when they arrived at the Vatican for a meeting with the pope on the first Saturday in August. How interested was he in finance, really? And how serious was he about changing business as usual inside the Vatican?

A major hint came from a change in tradition upon their arrival: The visitors didn’t report to the Apostolic Palace, the Renaissance showplace where for centuries past popes had received visitors in high style. Instead they entered Vatican City on the other side of the colonnade of St. Peter’s Square and took a 150-yard stroll through the hilly enclave to the new pope’s place of business—Casa Santa Marta, a five-story limestone guesthouse that could be mistaken for a newish hotel. There they were ushered into a nondescript meeting room on the first floor with no paintings or religious ornaments and took their seats around a conference table. The members—including Jean-Baptiste de Franssu, ex-chief of asset-management giant Invesco in Europe; Jochen Messemer, a top executive at ERGO, a large German insurer; and George Yeo, former foreign minister of Singapore—chatted nervously as they waited....MUCH MORE

"What's Replacing Coal In Europe? Imported Wood"

Great.
From Smithsonian Magazine:
In trying to meet renewable goals, Europe is relying on wood from forests in the Southern United States
Europe is trying really hard to reduce its dependence on oil and coal, by upping the use of solar, wind and trash as energy sources. But not all of the methods that the continent has tried are exactly environmental panaceas. 

One of the ways that European countries are trying to reduce their dependence on non-renewable fuels sources is by burning wood. Specifically, a whole lot of wood pellets created from trees harvested in the Southeastern United States. According to the EIA, wood pellet exports doubled between 2012 and 2013, mostly because of demand from European countries who are trying to meet their 20-20-20 goals. 

The 20-20-20 targets aim to increase energy efficiency, lower greenhouse gas emissions and increase the amount of renewable energy sources in use. One of the sources classed as renewable is biomass, which includes wood. The problem, as Grist reports, is that a recent report out of the U.K. (the largest importer of U.S. wood pellets) found that, in some scenarios, burning imported wood from North America can produce just as much greenhouse gas as burning fossil fuels. Other scenarios (depending on factors including transportation distance, the land and type of tree used) resulted in lower greenhouse gas emissions. But in all cases, the U.K. report asserts, the energy invested in producing North American wood pellets was greater than the energy invested almost any other fuel source (renewable or otherwise)....MORE
See also: 
Woodgas cars 1

Putin Calls for the “Statehood” of Southeast Ukraine

Hey, how's about a land bridge to Crimea!
From the Financial Times:

Putin calls for negotiations on statehood for southeast Ukraine
Vladimir Putin has called for negotiations on the “statehood” of southeast Ukraine, sharply raising the stakes in his stand-off with the west as Europe prepares to impose tougher sanctions against Moscow. 

Ukraine locator mapThe comments by the Russian president are the latest escalation in rhetoric from the Kremlin amid an intensification of fighting in eastern Ukraine that Kiev and western governments say is being fuelled by an inflow of Russian soldiers and equipment.

“We must immediately begin substantive, meaningful negotiations, not on technical questions but on questions of the political structure of society and of the statehood of southeast Ukraine in order to guarantee the legal interests of people who live there,” Mr Putin said in a TV interview....MUCH MORE

"The secret world of power generation, and the arrival of Earth-spanning super grids"

From ExtremeTech, 30July:
A long, long time ago, before the wind, before the snow — well, the middle of the 1800s to be exact — electricity was an intriguing but mostly useless thing. Some factories and residences toyed with early electric lights and motors powered by on-site generators, but most of the world used piped steam and natural gas to heat their homes and drive their machines for decades after electrification began. That would all change, however, with Nikola Tesla’s invention of three-phase high-voltage power distribution at the end of the 1800s and the creation of the world’s first synchronized national electricity grid in Great Britain in 1938.

Overnight, electricity became cheap and constantly available — it became a utility — and the number of users in the UK shot up dramatically, from around 750,000 in 1920 to 9 million in 1938. Synchronized electricity — 50Hz from every socket in the country — meant that devices (radios, TVs, motors) worked everywhere, and the production and sales of those early electric devices boomed accordingly. Other countries would soon follow, and eventually, thanks to intra- and international interconnections between networks, the world’s power grids are now mostly synchronized at either 50 or 60Hz.
Power line pylons, at sunset

A modern power grid is a wondrous thing. Basically, through the magic of high-voltage direct-current (HVDC) cables, electricity generation and consumption can be balanced across an entire country — or even an entire continent. If you need power down south, you can spin up a hydroelectric generator in the north; if you have excess power in the south, you can use it to pump water back up to the top of the dam in the north. If it’s particularly windy or sunny, you can turn off a few coal and combined cycle gas turbine (CCGT) power plants. If a neighboring country or state is being hit by a heatwave, you can pump power into their grid via an interconnector. If you have a lot of constant nuclear power generation (like France), you can export surplus power to other countries  – and then, during peak times, import power from those same countries if you ever need it.

Perhaps most impressively, though, it’s important to remember that the world’s electricity grids have almost no energy storage at all. With the exception of pumping water back to the top of a hydroelectric dam — an option that’s only available in limited quantities and only in some countries — all electricity generated must be consumed immediately. As you can imagine, spinning up exactly the right number of turbines to match the power needs of millions of people is rather difficult — and in the UK, it’s all done by a single person....MUCH MORE

Electric Avenue in Brixton, London: The first market street to be illuminated by electric street lights (1895)
Electric Avenue in Brixton, London: The first market street to be illuminated by electric street lights (1895)

And, of course, Eddy Grant's song about Brixton 1981:



"Icelandic volcano could trigger Britain's coldest winter EVER this year"

The caps are in the original.
From the Daily Express:
BRITAIN could freeze in YEARS of super-cold winters and miserable summers if the Bardarbunga volcano erupts, experts have warned.


Depending on the force of the explosion, minute particles thrust beyond the earth’s atmosphere can trigger DECADES of chaotic weather patterns.

Tiny pieces of debris act as billions of shields reflecting the sun’s light away from earth meaning winter temperatures could plunge LOWER THAN EVER before while summer will be devoid of sunshine.

The first effect could be a bitterly cold winter to arrive in weeks with thermometers plunging into minus figures and not rising long before next summer.

The Icelandic Met Office has this week warned  of “strong indications of ongoing magma movement” around the volcano prompting them to raise the aviation warning to orange, the second highest and sparking fears the crater could blow at any moment.

The region has also this week been hit by a magnitude-four earthquake - the strongest for almost 20 years, officials said.

The British Met Office said the effects of an explosion on Britain’s weather depends on the wind direction in the upper atmosphere.

Spokeswoman Laura Young said: “If the upper winds are north-westerly it will have an effect on our weather.

“If the upper winds are westerly then it won’t.”...MUCH MORE
After a warmer than average Spring and slightly elevated temps over the summer the COLDEST WINTER EVER would feel a bit nippy.

Saturday, August 30, 2014

Attention Prognosticators: Seven of Italy’s top Scientists were Convicted of Manslaughter Following a Catastrophic Quake

We've been following this case for a few years:
June 2011
Attention Prognosticators: "Italian scientists charged with manslaughter for failing to predict earthquake"
Sept. 2012
Attention Prognosticators: "Italian Prosecutors Target Scientists Who Failed To Predict the Future"
Oct. 2012
Convicted: Italian Scientists Who Failed to Warn of Earthquake

And here's the latest, from Matter:
Giulio Selvaggi was asleep when the shaking started. It was the night of April 5, 2009, and the head of Italy’s National Earthquake Center had worked late into the night in Rome before going home to crash.
From the motion of his bed, Selvaggi could tell the quake was big — but not close. When you’re near the epicenter of a major quake, it’s like being a kernel of corn inside a popcorn maker. When you’re farther away, the movement is slower and steadier, back and forth, as the shock waves hit you.

Selvaggi hopped from the bed and checked his phone, but there were no messages. He hurried into the living room, dialing the office on the way.

“Where is it?” he asked.

“L’Aquila, 5.8,” came the answer.
(It would later be classified as a 6.2.)

Selvaggi’s first thought: At least it’s not a 7. A magnitude 7 quake centered in L’Aquila, a medieval town high in the mountains, would have killed 10,000 people....

 HT: Page Turner

"Found: The Islamic State's Terror Laptop of Doom"

The plague is not nearly the scariest stuff that can be weaponized so maybe President Obama was correct when he referred* to ISIS as the JV (junior varsity).

From Foreign Policy:

Buried in a Dell computer captured in Syria are lessons for making bubonic plague bombs and missives on using weapons of mass destruction.
ANTAKYA, Turkey — Abu Ali, a commander of a moderate Syrian rebel group in northern Syria, proudly shows a black laptop partly covered in dust. "We took it this year from an ISIS hideout," he says.
Abu Ali says the fighters from the Islamic State of Iraq and al-Sham (ISIS), which have since rebranded themselves as the Islamic State, all fled before he and his men attacked the building. The attack occurred in January in a village in the Syrian province of Idlib, close to the border with Turkey, as part of a larger anti-ISIS offensive occurring at the time. "We found the laptop and the power cord in a room," he continued, "I took it with me. But I have no clue if it still works or if it contains anything interesting."

As we switched on the Dell laptop, it indeed still worked. Nor was it password-protected. But then came a huge disappointment: After we clicked on "My Computer," all the drives appeared empty.

Appearances, however, can be deceiving. Upon closer inspection, the ISIS laptop wasn't empty at all: Buried in the "hidden files" section of the computer were 146 gigabytes of material, containing a total of 35,347 files in 2,367 folders. Abu Ali allowed us to copy all these files -- which included documents in French, English, and Arabic -- onto an external hard drive.

The laptop's contents turn out to be a treasure trove of documents that provide ideological justifications for jihadi organizations -- and practical training on how to carry out the Islamic State's deadly campaigns. They include videos of Osama bin Laden, manuals on how to make bombs, instructions for stealing cars, and lessons on how to use disguises in order to avoid getting arrested while traveling from one jihadi hot spot to another.

But after hours upon hours of scrolling through the documents, it became clear that the ISIS laptop contains more than the typical propaganda and instruction manuals used by jihadists. The documents also suggest that the laptop's owner was teaching himself about the use of biological weaponry, in preparation for a potential attack that would have shocked the world.

The information on the laptop makes clear that its owner is a Tunisian national named Muhammed S. who joined ISIS in Syria and who studied chemistry and physics at two universities in Tunisia's northeast. Even more disturbing is how he planned to use that education.
The ISIS laptop contains a 19-page document in Arabic on how to develop biological weapons and how to weaponize the bubonic plague from infected animals.
"The advantage of biological weapons is that they do not cost a lot of money, while the human casualties can be huge," the document states....
...MORE

*“The analogy we use around here sometimes, and I think is accurate, is if a J.V. team puts on Lakers uniforms that doesn’t make them Kobe Bryant”
-The New Yorker interview was an astonishing 17,000 words.

Note to FP: I may in future appropriate the term "Laptop of Doom".

You Aren't Imagining It: People Are Getting Dumber

From the Daily Mail, 21Aug:

Are we becoming more STUPID? IQ scores are decreasing - and some experts argue it's because humans have reached their intellectual peak
Dumb and dumber? Evidence suggests that the IQs of people in the UK, Denmark and Australia have declined in the last decade. Opinion is divided as to whether human intelligence will decrease over time. A study by the University of Hartford claims that the larger the global population becomes, the less intelligent we will be, dropping by around eight IQ points by the year 2110 - and other estimates are even more pesimistic
Dumb and dumber? Evidence suggests the IQs of people in the UK, Denmark and Australia have declined in the last decade. A study by the University of Hartford claims the larger the global population becomes, the less intelligent we will be, dropping by around eight IQ points by the year 2110 - and other estimates are even more pessimistic
Technology may be getting smarter, but humans are getting dumber, scientists have warned.

Evidence suggests that the IQs of people in the UK, Denmark and Australia have declined in the last decade.

Opinion is divided as to whether the trend is long-term, but some researchers believe that humans have already reached intellectual peak.
An IQ test used to determine whether Danish men are fit to serve in the military has revealed scores have fallen by 1.5 points since 1998. 

And standard tests issued in the UK and Australia echo the results, according to journalist Bob Holmes, writing in New Scientist
The most pessimistic explanation as to why humans seem to be becoming less intelligent is that we have effectively reached our intellectual peak. 

Between the 1930s and 1980s, the average IQ score in the US rose by three points and in post-war Japan and Denmark, test scores also increased significantly - a trend known as the ‘Flynn effect’.

This increase in intelligence was due to improved nutrition and living conditions - as well as better education - says James Flynn of the University of Otago, after whom the effect is named....MORE
Previously on the stupid channel:
 
 
Thanks, I think, to a reader.
"I would be willing to wager that if an average citizen from Athens of 1000 BC were to appear suddenly among us, he or she would be among the brightest and most intellectually alive of our colleagues and companions. We would be surprised by our time-visitor’s memory, broad range of ideas and clear-sighted view of important issues. I would also guess that he or she would be among the most emotionally stable of our friends and colleagues."...
...MORE

"The Five Cities Most At Risk For The Next Big Earthquake"

From ZeroHedge:
Damages from the earthquake that hit the San Francisco area this weekend are estimated to be as high as $4 billion. For many cities around the world, particularly coastal cities situated on the geologically active Ring of Fire, an earthquake could be catastrophically destructive. Bloomberg looks at the five cities that are most vulnerable to earthquakes.

As Michael Snyder rather ominously warns, the quake last weekend is just the start of the shaking in California...
Don't get too excited about what happened on Sunday.  Scientists assure us that it is only a matter of time before "the Big One" hits California.
In fact, the 6.1 magnitude earthquake that hit northern California on Sunday was not even the largest earthquake along the Ring of Fire this weekend.  According to the U.S. Geological Survey, a 6.4 magnitude earthquake shook the area around Valparaiso, Chile on Saturday and a 6.9 magnitude earthquake struck Peru on Sunday.
As I mentioned above, we have moved into a time when seismic activity is steadily rising.  It has gotten to the point where even the mainstream media cannot ignore it anymore.  For example, just check out the following excerpt from a recent CBS News report…
The average rate of big earthquakes — those larger than magnitude 7 — has been 10 per year since 1979, the study reports. That rate rose to 12.5 per year starting in 1992, and then jumped to 16.7 per year starting in 2010 — a 65 percent increase compared to the rate since 1979. This increase accelerated in the first three months of 2014 to more than double the average since 1979, the researchers report.
Something is happening that scientists don't understand, and that is a little scary.
As I wrote about the other day, earthquake activity seems to particularly be increasing in the United States.  While the west has been relatively quiet, the number of earthquakes in the central and eastern portions of the nation has quintupled over the past 30 years….MORE

Hurricane Watch: The Tropics Go Quiet World-Wide

This is just about unheard of for Labor Day weekend.
From Wunderblog Aug. 29:
Hurricane Cristobal ceased to be at 11 am EDT on Friday, as the storm completed its transition to a powerful extratropical storm. Though Cristobal is no longer a hurricane, it still has hurricane-force winds, and will be a threat to marine interests off the Newfoundland coast today, and to Iceland on Sunday night. With Cristobal's transition to an extratropical storm and the demise of the Eastern Pacific's Tropical Storm Marie earlier today, there are now no named tropical cyclones anywhere in the world--an unusual situation for what is traditionally one of the busiest days of the Northern Hemisphere's tropical cyclone season. This quiet period appears likely to extend though the weekend, as I don't expect any new named storms to form anywhere in the world through Sunday....MORE
His Aug. 30 post:
Invest 99L in Western Caribbean a Threat to Develop on Monday

There have been 5 large storms in the Pacific this season but since our focus is on the insurance/re-insurance companies we watch the Atlantic. Here is the most widely accepted shorthand of activity, Accumulated Cyclone Energy, which measures intensity x duration, via Weather Bell:

2014 Accumulated Cyclone Energy [ACE]
  Basin   Current YTD   Normal YTD % of Normal YTD Yearly Climo*
  Northern Hemisphere   280.0795   244 114% 562
  Western N Pacific   127.942   129 99% 302
  Central N Pacific   0.64      
  Eastern N Pacific   126.215   76 166% 138
  North Atlantic   21.515   30 71% 104
  North Indian   4.4075   7 62% 18
  Southern Hemisphere +   197.643   209 94% 209
  Global   412.0375   416 99% 771

*Climatology from historical 1981-2010 Tropical cyclone best track datasets
...MORE

"Hidden Obstacles for Google’s Self-Driving Cars" (GOOG)

From MIT's Technology Review:

Impressive progress hides major limitations of Google’s quest for automated driving. 
Would you buy a self-driving car that couldn’t drive itself in 99 percent of the country? Or that knew nearly nothing about parking, couldn’t be taken out in snow or heavy rain, and would drive straight over a gaping pothole?

If your answer is yes, then check out the Google Self-Driving Car, model year 2014.

Of course, Google isn’t yet selling its now-famous robotic vehicle and has said that its technology will be thoroughly tested before it ever does. But the car clearly isn’t ready yet, as evidenced by the list of things it can’t currently do—volunteered by Chris Urmson, director of the Google car team.

Google’s cars have safely driven more than 700,000 miles. As a result, “the public seems to think that all of the technology issues are solved,” says Steven Shladover, a researcher at the University of California, Berkeley’s Institute of Transportation Studies. “But that is simply not the case.”

No one knows that better than Urmson. But he says he is optimistic about tackling outstanding challenges and that it’s “going to happen more quickly than many people think.”

Google often leaves the impression that, as a Google executive once wrote, the cars can “drive anywhere a car can legally drive.” However, that’s true only if intricate preparations have been made beforehand, with the car’s exact route, including driveways, extensively mapped. Data from multiple passes by a special sensor vehicle must later be pored over, meter by meter, by both computers and humans. It’s vastly more effort than what’s needed for Google Maps.

Google’s cars are better at handling some mapping omissions than others. If a new stop light appeared overnight, for example, the car wouldn’t know to obey it. However the car would slow down or stop if its on-board sensors detected any traffic or obstacles in its path.

Google’s cars can detect and respond to stop signs that aren’t on its map, a feature that was introduced to deal with temporary signs used at construction sites. But in a complex situation like at an unmapped four-way stop the car might fall back to slow, extra cautious driving to avoid making a mistake. Google says that its cars can identify almost all unmapped stop signs, and would remain safe if they miss a sign because the vehicles are always looking out for traffic, pedestrians and other obstacles.

Alberto Broggi, a professor studying autonomous driving at Italy’s Università di Parma, says he worries about how a map-dependent system like Google’s will respond if a route has seen changes.

Michael Wagner, a Carnegie Mellon robotics researcher studying the transition to autonomous driving, says it is important for Google to be open about what its cars can and cannot do. “This is a very early-stage technology, which makes asking these kinds of questions all the more justified.”...MORE
HT: Marginal Revolution 

"See an Exclusive ‘Self-Portrait’ From the Creator of XKCD"

From TIME:

The webcomic's science series, What If?, is now a book
XKCD Creator Randall Munroe
Munroe has fun with the formulas for angular momentum of a spinning object (top) and centripetal force (bottom). Randall Munroe for TIME
For the past two years, xkcd creator Randall Munroe has been answering fantastical science questions for his popular webcomic’s sister site, What If?. In the new issue of TIME, Munroe talks about turning the project into a book (What If?: Serious Scientific Answers to Absurd Hypothetical Questions, hitting shelves Sept. 2) and how he conducts his investigations into topics like jetpacks and dinosaur nutrition.
“I try to be entertaining in the way I share them, but my real motivation with each question is that I want to know the answer,” Munroe says. “Once a question gets into my head, it will keep bugging me until I figure out the answer, whether I’m writing an article about it or not.”...MORE

"Home-Flipping Collapses in San Francisco, Losses Spread"

This is the first I've seen of "losses". To date the focus has been on decreasing rates of appreciation.
From S.F. based Wolf Street:
Home flippers are hardy folks who dive head-first into housing markets to buy homes at a discount from estimated market value, rehab them if they have to, trim the trees and cut the weeds out front, and flip the unit in less than a year, hopefully at a premium over estimated market value. If all works out, they’re rewarded with fat returns on investment.

It involves leverage, so some of the risks get shuffled off to the lender. It involves skills, connections, knowledge, and a good dose of luck. Above all, it requires the ability to buy low and sell high. To take home some serious dough, flippers need to purchase at double-digit discounts below “estimated market value” (based on AVM) and add enough value to sell at a premium over estimated market value. In the intervening months, home prices must also jump. So double-digit home price increases over the last two years have made flipping a lot more profitable. And easier.

This is the magic mix. If the conditions are met, the equation works out. It not, it’s a leveraged bet that can go to heck in a hand basket.

But flipping has started to run out of air in much of the country. And in the multi-county metro area of San Francisco, flipping collapsed in the second quarter, and flippers for the first time in years, started wading into red ink.

Home sales in the US have been declining since last fall, with mortgage applications plummeting at double-digit rates year over year. All sorts of excuses were dragged out of the closet, from tight inventories to bad weather, until inventories started to balloon and the weather was gorgeous, and sales were still dropping. Now it’s perfectly clear even to the most recalcitrant economists why: soaring prices have moved homes out of reach for many potential buyers. At first, the swoon in unit sales didn’t seem to have any impact on prices. But now the inevitable is happening: over the last few months, price increases have shriveled before our very eyes, and in some markets, on a monthly basis, outright price declines have started to crop up.

On Friday, in a section ominously titled, “Price Drops: ‘There’s Blood in the Water,’” Redfin reported on the growing prevalence in July of sellers having to lower listing prices as homes, rather than stirring up bidding wars, sit around for weeks or months. Redfin expects this trend to continue, with prices “potentially” declining month over month in September and October. “If that happens, it will be the first three-month price decline since the fall 2012,” it explained....MORE
Previously:
San Francisco Real Estate As A Leading Indicator Of the World Economy:
.
 
Signposts: Momentum Stock Fiasco Pricks San Francisco Housing Bubble

Getting Into The System: Indians Open 15 Million Banking Accounts in One Day

From the Business Standard:

PM Modi launches Jan Dhan Yojana, 1.5 crore bank accounts opened
FM Arun Jaitley said by Jan 26, 2015, the number will swell to 7.5 crore

Prime Minister Narendra Modi releases publications at the launch of Pradhan Mantri Jan Dhan Yojana in New Delhi
 
Prime Minister today formally launched the government's financial inclusion programme - the Pradhan Mantri Jan Dhan Yojana.

The project. which will help provide a for every Indian household is widely seen as the first comprehensive financial inclusion scheme in the country.

Speaking at the ceremony, Finance Minister said 1.5 crore accounts will be opened on first day of the scheme.

He said the scheme will be carried out on a "mission mode". He said the scheme hopes to rope in 7.5 crore accounts by Jan 26th, 2015.


Speaking at the event, Prime Minister Narendra Modi said more than 1.5 crore people getting insured in one day is a big record in the banking history and that the scheme will provide confidence to people.

He said the scheme's objective was to eradicate poverty and eliminate the "financial untouchability" that exists in the country....MORE
HT: Alphaideas 

Update 7:44p IST 10:48a EDT
Banks open 2.14 crore accounts under Jan Dhan mission