Author: Paul Handover

In praise of Yves Smith

Helping thousands better understand this crisis

Yves’ Blog Naked Capitalism has been mentioned many times on Learning from Dogs.  Indeed, she was one of the Blog authors highlighted recently in this Post.

Yves Smith

I fail to understand how she finds the hours in the day to write in such detail – but those of us interested in getting under the skin of our present economic situation are all the better for it.  Here’s a great example that was published on the 23rd February.  I quote the opening paragraphs and then link to the rest of her post. From here on is her piece:

———————–

Martin Wolf, the Financial Times’ highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson’s Doomsday cycle post from yesterday.

Let us cut to the chase of Wolf’s argument:

Now, after the implosion, we witness the extraordinary rescue efforts. So what happens next? We can identify two alternatives: success and failure.

By “success”, I mean reignition of the credit engine in high-income deficit countries. So private sector spending surges anew, fiscal deficits shrink and the economy appears to being going back to normal, at last. By “failure” I mean that the deleveraging continues, private spending fails to pick up with any real vigour and fiscal deficits remain far bigger, for far longer, than almost anybody now dares to imagine. This would be post-bubble Japan on a far wider scale.

Yves here. Notice he associates success and failure with polar options. But how can you “reignite the credit engine” when the financial system is undercapitalized even before allowing for the need to take further writedowns? The IMF has found the converse in its study of 124 banking crises, that purging bad debt is a painful but necessary precursor to growth. So I fail to understand how Wolf envisages that “skip Go, collect $200″ of releveraging quickly comes about. And in fact, it turns out that Wolf’s “success” is a straw man:

[to read the rest click here, Ed]

By Paul Handover

The Greenwich Meridian

Don’t know what time it is?  Hardly surprising in Spring and Autumn.

Today is exactly one month before the United Kingdom ‘moves’ its clocks forward and enters British Summer Time; 1am (UTC) on Sunday 28th March 2010.  Is that date the same across the world?  One would think so because it makes life, especially international air transport, so much easier.

But no!  In fact the way that time zones are applied and changed for Daylight Saving is a complete hotch-potch.

In the United States of America, daylight saving starts at 2am on March 14th, 2010.  And just three years ago that start time would have been the first Sunday in April.  Changes were made in the US Energy Policy Act of 2005.

From this geographic site comes the following:

Other parts of the world observe Daylight Saving Time as well. While European nations have been taking advantage of the time change for decades, in 1996 the European Union (EU) standardized an EU-wide “summertime period.” The EU version of Daylight Saving Time runs from the last Sunday in March through the last Sunday in October. During the summer, Russia’s clocks are two hours ahead of standard time. During the winter, all 11 of the Russian time zones are an hour ahead of standard time. During the summer months, Russian clocks are advanced another hour ahead. With their high latitude, the two hours of Daylight Saving Time really helps to save daylight. In the southern hemisphere where summer comes in December, Daylight Saving Time is observed from October to March. Equatorial and tropical countries (lower latitudes) don’t observe Daylight Saving Time since the daylight hours are similar during every season, so there’s no advantage to moving clocks forward during the summer.

Of course, someone had to create a web-site to track all these various time zones and changes.  Here it is.

Last year, the BBC News website published an interesting article about the Greenwich Meridian aka The Prime Meridian.  The setting of the Prime Meridian was done just over 125 years ago, in October 1884.  When one thinks of the importance in having a standard meridian, both for time keeping and navigation, I would have guessed that it went back much further in time.

The other aspect that was news to me was that the conference had been convened at the request of the American President Chester Arthur.

From that BBC article:

Until the 19th Century, many countries and even individual towns kept their own local time based on the sun’s passage across the sky and there were no international rules governing when the day would start or finish.

Maps with multiple meridians were confusing

However, with the rapid expansion of the railways and communications networks during the 1850s and 1860s, setting a standard global time soon became essential.

“The world was in a very big mix-up,” explains Dr Avraham Ariel, author of Plotting the Globe. “People had lots of prime meridians. Earlier in Europe there were 20 prime meridians. The Russians had two or three, the Spanish had their own and so on.”

Thus that famous line in the grounds of the National Maritime Museum at Greenwich, London is not as old as many might have thought.

Prime Meridian, Greenwich

By Paul Handover

Predicting lost decades for Britain

…. and most likely other ‘Western’ nations

This Post is taken in its entirety from the website Contrary View. Contrary view number 73 has just been published, as follows.  Please see note after signature. [The Japanese Nikkei 225 index was 10352 at the time of writing this Post – 0800 MT, 23rd Feb.]

There is plenty of evidence from Japan about lost decades for investments. Japan has now lost two decades in equity and property investment, during which time only Government Bonds provided any sanctuary. All policy options failed, because none tackled the real problem, which is that there is already too much debt. What lessons can be drawn for Britain?

Lost decades

Shares here [in Britain] have certainly had a lost decade. On the Japanese evidence, they may well suffer another lost decade. Property has only hit minor bumps, so the Japanese experience suggests that property may suffer a long decline for two decades. In the UK, the Bank of England’s support for mortgages will be withdrawn over the next two years, which itself threatens prices. Why, though, the hysteria about Government debt?

It is questionable whether pundits appreciate the extent of the private sector debt problem, which explains why two groups of economists can offer totally contradictory remedies. In a world with no Gold standard and therefore no anchor to the monetary system, Government debt is relatively safe. The global economy is perched on a knife edge, with a permanent loss of output that must cause income loss and therefore restrict the capacity of households to service their debts. Seeing the commercial risks, banks are still restricting lending, which means there can be no sustained recovery.

There is a misconceived demographic argument being touted at present, which completely ignores the real driver of the post-1945 expansion, namely increased credit. That credit growth has simply gone too far and now brings its own problems. For those people who neither saw the credit crunch nor the long fall in interest rates and inflation coming, to now be credible in predicting a lost decade for bonds, is itself unbelievable.

By Paul Handover

Note: Until very recently, the author was a client of Kauders Portfolio Services, the publisher of the Contrary View website.  Please see the warning about these views posted on that site.

Now this IS smart!

A very good idea from the Canadians

Read this quote:

“Time and again we see behaviour by people – we are talking highly educated, high income people – who are making less than ideal financial decisions for themselves and their families,” said one source. “Other countries that have developed a strategy have focused on education in high schools. This task force has come to the early conclusion that, while enhanced financial education is vital over the long term, it is insufficient.”

The first sentence is so important, to my mind, that it is worth repeating, “Time and again we see behaviour by people – we are talking highly educated, high income people – who are making less than ideal financial decisions for themselves and their families,”

This comes from a piece published by the Canadian newspaper, The Globe and Mail, about a Canadian taskforce that is

Group will be headed by Sun Life's Don Stewart

looking into ways of making Canadians “more savvy” about their personal finances.

The financial industry is very adept at producing complex financial products that are almost beyond the limits of the understanding of good common people.  We, the people, need to be much smarter and that’s why this initiative from the Canadians seems, on the surface, to be such an excellent idea.

By Paul Handover

Not your average airport!

The world’s 18 strangest airports

The American magazine Popular Mechanics had an interesting piece on some of the more bizarre airports around the world.  As the article says,

Engineers tasked with building an airport are faced with countless challenges: The ideal location needs ample space, endless flat ground, favorable winds and great visibility. But spots in the real world are rarely ideal, and engineers are forced to work with what they have, making sure that the end product is the safest possible structure for pilots. A survey of airports around the world turns up a mixed bag, ranging from dangerous and rugged landing strips to mega-size facilities that operate like small cities.

Apart from the general interest in these airports, there is also a personal resonance as three of them are in my aviation log-book: Barra; Gibralter; Courchevel.  Indeed my experiences of flying into Barra were the subject of a Post on this Blog a few months ago.

Courchevel in the French Alps is, for all pilots, one of the most amazing, butt-clenching arrivals one could ever imagine.

As Wikipedia puts it:

Courchevel’s airport also has a certain degree of infamy in the aviation industry as home to one of the shortest runways in the world, with a length of 525 metres and a gradient of 18.5% in order to help slow landing aircraft. The airport has a dangerous approach through deep valleys which can only be performed by specially certified pilots. On landing there is no go-around procedure, as most of the worlds airports have – there is merely a very steep hill which has seen a few accidents since the airport first opened.

Quite so!

Here’s an interesting video from YouTube

and a few personal memories:

Start of the approach into Courchevel
'short final' Courchevel
Author & aircraft on the apron - Courchevel

By Paul Handover

Old age!

A piece of Internet fiction still carries an important message

One of the features of the Internet is that stories can circulate widely across the globe.  This poem is one such example.  The ‘story’ behind the poem would appear to be fiction but so what!  It serves as a good reminder of something that affects us all (except those tragically cut off before they grow old!).

But before getting the poem, the reason that it was decided to publish the Post is that old age, whatever that really means, is a much bigger issue for societies than many care to acknowledge.  Because, I guess, the ‘many’ tend not to be old, or let us say, the right side of 60.

And look how even the terminology is so biased towards youth.  Why should it be the ‘right’ side of 60?  What is ‘wrong’ with being older than 60, or 70 or whatever age?

Of course, in so many ways nature’s purpose is for us to breed the next generation to continue our gene pool and once we have achieved that then our ‘natural’ use is limited.  But that is to ignore the value of wisdom, the huge advantage the next generation has in being able to tap into the experience and knowledge of the ‘ancients’.

Here’s an interesting piece from Aging and the Elderly by Hampton Roy MD and Charles Russell PhD

Wisdom has been attributed to older people in nearly all world societies from ancient times, but modern research on the psychology of aging has paid little attention to this quality of the late years

………………..
A number of researchers, however, have assessed the psychology of aging quite differently. Instead of measuring decline, their aim has been to measure the unique and special characteristics of mind possessed by older people.

………………….

These researchers might typically define wisdom as Kenyon did when he described it as “the ability to exercise good judgement about important but uncertain matters of life” -where “uncertain matters” refers to problems that may not have come up before, or to which there are competing or conflicting solutions, and so forth. These researchers describe the old as having “self-creating” powers because they seem to be more independent in their decisions, and less subject to external influences like the fads and trends that sweep over the young.
They propose also that the old are better able to live with contradictions in life and that they quickly see the essentials of situations because of their greater experience. Wisdom, they observe, includes the intent to do good, which in turn depends on holding favorable attitudes toward other people.

Then again, popular culture defines the ancient American Indian warrior as many things but old and decrepit doesn’t figure in that list!

Sioux warrior

So here’s that poem – may you live to a great age!

Read the rest of this Post

Collecting bridges!

Maybe not the strangest thing to collect, but close!

I doubt if very many people have heard of an American by the name of Eric Sakowski and, to be honest, neither had I until I opened a copy of The Arizona Republic newspaper on a recent visit to Payson, Az.  There on the front page was an article about Eric and his passion for bridges!  Yes, bridges.  As the article starts:

Eric Sakowski’s fixation with bridges began as it has for many.

As a kid, he bought the “Guinness Book of World Records” every year and read it cover to cover. He began to ponder: What is the world’s second-highest bridge? Or the 100th.

In 2004, Sakowski took his interest to the next level. He embarked on a five-year quest that would take him halfway around the world three times and cost him thousands of dollars. He became an amateur sleuth, digging out what he says are the real heights of mammoth bridges and snapping pictures.

Sakowski’s endeavor culminated last month in a tidy room of his parents’ home in Sun City West, where at age 44, he completed his project by launching a Web site, highestbridges.com, that catalogs the 500-highest bridges in the world. His findings challenge some long-held claims.

In fact, the website is really quite interesting and some of the photos are stunning.  Here’s one of the Hegigio Gorge Pipeline Bridge in Papua New Guinea.

Hegigio Gorge Pipeline Bridge

It’s 1,289 feet high (393 m) and until 2009 was the world’s highest bridge.

Sakowski has also found some interesting errors in the statistics concerning some bridges.

Using a laser range-finder, he has measured about 100 bridges in the U.S. and about a dozen in China. He found some interesting discrepancies. For example, he determined that the highest bridge in the United States, the Royal Gorge Bridge in Colorado, is 98 feet lower than officially reported. In western China, he said, he first identified the latest bridge to become the world’s highest. He is trying to get “Guinness World Records” to publish the claim next year.

Eric is a professional film-maker but I sense that the day may not be too far off when someone is going to make a film about Eric the Bridge Man!

By Paul Handover

Free speech!

Hats off to some intrepid commentators

We are going through unprecedented troubled times and the way ahead looks very uncertain.  The whole world could be participating in the ‘lost decade’ that Japan experienced previously.

But this article is not about doom and gloom!  It is about recognising the commitment to open and honest reporting being undertaken by (at least) these three  individuals.  Three commentators that this author follows in admiration and awe.

Learning from Dogs has nothing like the following of James Kwak, Yves Smith and Karl Denninger but the LfD authors do have an inkling of the work involved in writing not one but often several articles each day.  It is a huge commitment.

James Kwak

First James Kwak of Baseline Scenario.  Simon Johnson is, perhaps, the more well-known of this duo that comprise Baseline Scenario but it is James that puts in the leg-work.  Here’s a taste of a recent article from James:

Radio Stories

I spend a lot of time in the car driving to and from school, so I end up listening to a lot of podcasts (mainly This American Life, Radio Lab, Fresh Air, and Planet Money). I was catching up recently and wanted to point out a few highlights.
Last week on Fresh Air, Terry Gross interviewed Scott Patterson, author of The Quants, and Ed Thorp, mathematician,  inventor of blackjack card counting (or, at least, the first person to publish his methods), and, according to the book, also the inventor of the market-neutral hedge fund.

Large chunk snipped ……

I finally got around to listening to Planet Money’s interview with Russ Roberts from December. Russ Roberts and I are pretty sure to disagree on almost any actual policy question. But what I liked about his interview was that he basically admitted that policy questions cannot be settled by looking at the empirical studies. On whether the minimum wage increases or decreases employment for example, he says that he can poke holes in the studies whose conclusions he doesn’t agree with, but other people can poke holes in the studies he agrees with. In Roberts’s view, people’s policy positions are determined by their prior normative commitments.

I don’t completely agree. I don’t think that these questions, like the one about the minimum wage, are inherently unanswerable in the sense that the answer does not exist. But I agree that empirical studies are unlikely to get to the truth, particularly on a politically charged question, because there are so many ways to fudge an empirical study. As one of my professors said, there are a million ways you can screw up a study, and only one way to do it right. But I agree with the general sentiment. We are living in an age of numbers, where people think that statistics can answer any question. Statistics can answer any question, but they can answer it in multiple ways depending on who is sitting at the keyboard.

By James Kwak

Read about Yves Smith & Karl Denninger

How Earth Made Us …

... and the way we treat it!

Once again the British Broadcasting Company, BBC, has put together a spectacular television production; the epic story of how geology, geography and climate have influenced mankind.  It is remarkable and fabulous viewing as you can sample in these opening minutes from the first episode on Deep Earth.

The four programmes, Deep Earth; Water; Wind; Fire, are testament to both the incredible symbiosis between mankind and the elements and how that relationship is critically balanced in a way that allows us to survive.  Some of the images are truly outstanding, for example, the section on Prof. Iain Stewart exploring the Naica Cave system in Mexico.

Naica Cave system, Mexico

This theme of the balance of geological circumstances that allows, just, mankind to survive comes across time and time again in these films.  For example, our relationship with fresh water which we all take completely for granted.

Have any of us really pondered how long we would survive if there was insufficient clean, safe drinking water to go around?

The programmes also reveal something of the technological prowess that mankind has achieved to allow the way these films have been produced.

So why, oh why, are we also such a stupid, stupid species – so stupid that we foul our own nest to an incredible degree.

Continue reading “How Earth Made Us …” →

Crazy flying

This is not your usual air-show display

Author & author's dog in Piper Super Cub, R151

Three of the authors on Learning from Dogs are or have been pilots although only one, Bob Derham, is a real pilot!  I.e. he does it for a living!

Most pilots and many wannabes love the atmosphere of a good air show but after a few visits they can become rather predictable and that applies as much to the flying displays.  After all there is only so much that one can do to an aeroplane.

Not so the good people who comprise the Franklin’s Flying Circus.

Here’s a YouTube video showing Kyle Franklin ‘stealing’ a Piper Cub.  As a past owner of a Piper Super Cub, I have to tell you that the skills being used in this display are supremely clever.

Enjoy!

By Paul Handover