Tag: Gross domestic product

Happiness = Ten minus five or thereabouts!

Brilliant mathematics without the need for a calculator!

Thanks to the bottomless resources of the Internet, I could quickly find a relevant quote or two to open up today’s Post.  Rene Descartes (1596-1650) was reputed to have said, “Perfect numbers like perfect men are very rare.

Sorry, couldn’t resist that!  It wasn’t the quote relevant to this essay but it was too good to miss.  (Descartes was also the person who coined the phrase: I think therefore I am!)

 The quote that I thought was relevant was this one from Descartes, “With me everything turns into mathematics.”  Well until I read something recently on the Big Think website I would have been certain that the emotions, such as happiness, were well beyond reach of the logical power of mathematics.  I was wrong!

Big Think recently reported on a new book from Mr. Chip Conley called Emotional Equations where he …….,

….. argues (against Einstein, as it happens), that everything that counts can and ought to be counted. A hotelier by trade, he says that GDP and the bottom line are blunt instruments for measuring the health of a society or a business. After the dot.com crash of 2001, and a visit to the Buddhist nation of Bhutan, which has a “Gross National Happiness” index, Conley and his team decided to create indices for measuring the well-being of their employees and customers.

And a paragraph later continues,

In Emotional Equations, Conley takes the mathematics of human happiness a step further, creating simple formulas like anxiety = uncertainty x powerlessness, which, when used systematically, he says, can give individuals and organizations a concrete method for addressing the human needs that drive them.

The description of the book on the Amazon website is thus,

Mr Chip Conley

Using brilliantly simple math that illuminates universal emotional truths, Emotional Equations crystallizes some of life’s toughest challenges into manageable facets that readers can see clearly—and bits they can control. Popular motivational speaker and bestselling author Chip Conley has created an exciting, new, immediately accessible visual lexicon for mastering the age of uncertainty. Making mathematics out of emotions may seem a counterintuitive idea, but it’s an inspiring and incredibly effective one in Chip Conley’s hands. When Conley, dynamic author of the bestselling Peak, suffered a series of tragedies, he began using what he came to call “Emotional Equations” (like Joy = Love – Fear) to help him focus on the variables in life that he could deal with, rather than ruminating on the unchangeable constants he couldn’t, like the bad economy, death, and taxes. Now this award-winning entrepreneur shares his amazing new self-help paradigm with the rest of us. Emotional Equations offers an immediately understandable means of identifying the elements in our lives that we can change, those we can’t, and how they interact to create the emotions that define us and can help or hurt our progress through life. Equations like “Despair = Suffering – Meaning” and “Happiness = Wanting What You Have/Having What You Want” (Which Chip presented at the prestigious TED conference) have been reviewed for mathematical and psychological accuracy by experts. Conley shows how to solve them through life examples and stories of inspiring people and role models who have worked them through in their own lives. In these turbulent times, when so many are trying to become “superhuman” to deal with our own and the world’s problems, Emotional Equations arms readers with effective formulas for becoming super human beings.

So it all seems not quite so daft as one might initially guess.  Indeed, settle down for twenty minutes and watch Chip eloquently explain his ideas captured at that TED Conference referred to above.

There’s also an audio conversation with Mr. Conley that you can download free from here.

Finally, let me close with yet another quote from Rene Descartes, “It is not enough to have a good mind. The main thing is to use it well.” Amen to that!

The end of an era, part one.

A review of David Kauder’s recently published book, The Greatest Crash.

Details of the availability of the book are included at the end of both parts of my review, part two is published tomorrow.

Extracts from the book included are with grateful thanks to Sparkling Books.

Personal introduction.

Back in the late 90s, when I was living in England, I attempted to bolster my self-employed income by investing and trading in equities. It was a frustrating game, game being the right word! One day I was lamenting this to a close friend and he gave me the name of David Kauders at Kauders Portfolio Management and suggested I might like to contact him.

I followed my friend’s recommendation and met with David. What he outlined at that meeting all those years ago was mind-blowing, no other way of putting it. Essentially, David predicted a financial and economic crisis of huge proportions. He convinced me of the likelihood of that crisis and in November 2001 I became a fee-paying client. As the world now knows that prediction came to fruition. My anticipated residency in the USA meant continuing to be a client was not possible, and I ceased being a client of Kauders Portfolio Management in June 2010.

Thus not only am I deeply indebted to my friend for referring me to David but also unable to write this review from an unprejudiced point of view.

The Greatest Crash

The book, released in paperback in England in October 2011, published by Sparkling Books, is subtitled ‘How contradictory policies are sinking the global economy‘. Frankly, that subtitle doesn’t do much for me. A clearer message that comes from the book is this: the economic world has reached a ‘systems limit’. Indeed, the term systems limit is used widely throughout the book.

In his introduction to the book, Professor D. R. Myddelton, Chairman of the Institute of Economic Affairs, writes,

Adam Smith said ‘There’s a deal of ruin in a nation’, and it would be a mistake to despair. But one of the things we need now is new thinking on the fundamentals. That is what David Kauders provides in his book ‘The Greatest Crash’.

Without doubt, David achieves that.

Starting with the first sentence, David sets out the core problem;

This book argues that it is impossible to expand the financial system much further.

expanding this a few paragraphs later,

This is the financial system limit: lack of new borrowing plus excessive weight of debt obligations from past borrowing combine to slow economies down. This is the barrier whichever way policy makers turn. It is like the lid on a boiling kettle. Enough steam can lift it for a while but it always snaps back into place. The financial system limit is a roadblock preventing growth.

A few pages later in this opening chapter ‘The roadblock preventing growth‘ this limit is explained thus,

Policy contradictions also show us that the financial system has reached a roadblock. The glaring conflict between bailout and austerity is at the core. Each bailout or stimulus requires creation of more credit, leading to false financial speculation, and for a short while markets recover their poise. The threat of inflation returns. Later, bad debts rise, the markets tumble again and a new crisis emerges. Austerity, the alternative policy, cuts spending thereby cutting the immediate level of economic activity and bringing economic decline more quickly than the stimulus alternative. Whichever way they turn, the authorities are damned.

In the next chapter, ‘Evolution by trial and error‘, David writes about economic cycles and reminds his readers that the long economic cycle is often “beyond the practical experiences of our working lifetimes“.  Then later suggesting that because we have seen the greatest period of inflation ever since the end of World War Two, ergo “the unwelcome lesson from history is that the greatest deflation should follow.

In Chapter 4, ‘An Era of Wishful Thinking‘, the spotlight is put on the horrific policy errors that have been made for decades, try these three examples (there is a longer list in the book),

  • Policy makers believed that debt could expand indefinitely, at no cost.
  • Nobody realised that interest rate rises would make existing borrowing unaffordable and cause a wave of defaults.
  • The world was swamped with so many detailed requirements and standards that nobody could understand how they all fitted together. It was assumed that ‘transparency’, i.e. extensive detail, would solve the inability to comprehend how the parts made the whole.

Part Two of the review, continuing with Chapter 5 is tomorrow.

Want to buy The Greatest Crash?  The ebook was published in October worldwide, the  paperback published in the UK on the 1st November UK, the hardcover being released any day now in the UK.  For North America both the paperback and hardcover versions are being published on 1st February, 2012.

Full details from the Sparkling Books webpage here.

Copyright © 2011 Paul Handover

Think you understand money?

This documentary may, probably WILL,  enlighten you.

On the 30th March I wrote about the film Inside Job.  Then a few days ago James Kwak of Baseline Scenario, a blog that I have been reading for some time now, also wrote a piece about the film, opening his Post thus,

I finally saw Inside Job at a friend’s house tonight. I don’t have anything original to say about it. I thought it was a very, very good movie. There were lots of little things that weren’t quite right (many of which were probably conscious decisions to simplify details for the sake of comprehension), but I don’t think any of them were substantively misleading.

As always with Baseline Scenario, the comments are as interesting and educational as the article, and that was just as valid in this case.  One of the comments was from Carla who wrote,

I think Inside Job is no longer available to view for free now that the DVD is for sale at Amazon (well worth the purchase, BTW).

But at the same site I found “The Money Fix,” which you can watch for free: http://topdocumentaryfilms.com/money-fix/

Also, there’s another site with some good free docs:http://www.freedocumentaries.org.

Anyway, we watched the film on Tuesday evening and, boy oh boy, was it an eye-opener.

I promise you, the full film is so well worth watching.   (And do read to the end of this Post!)

The film also makes reference to the website The Money Fix which has a great number of resources for those that wish to explore further this fascinating subject.  Thanks Carla.


Statistical impressions!

Or as I would prefer to call it: Lies, Damn Lies and Statistics!

From time to time, I have mentioned David Kauders of Kauders Portfolio Services

I was a client for many years but had to terminate that client relationship when residence in the USA became highly likely!  Very happy with the service and advice provided – extremely so!  (I have no relationship at any level with that firm now!).

Anyway, David publishes what he calls Contrary View from time to time.  His latest is reproduced with his permission.

No. 074 9th August 2010 A statistical impression

Over the last few weeks a number of graphs have appeared showing how the economy has apparently picked up to where it was before the credit crunch started. Such graphs invariably show a ‘U’ shaped curve demonstrating perfect recovery. This is the impression easily formed by a glance at such a graph, but it is the wrong assumption to make.

National Statistics reports Gross Domestic Product (GDP) as two different measures, both estimates showing a decline in GDP.  Here are the latest figures (estimated), taken from their website last week:

3rd Qtr 2008 Index 102.6

2nd Qtr 2010 Index  99.0

This GDP index shows a permanent loss of output.

Detailed figures are also available (Table 1.02 of the UK economic accounts) and on the same estimating basis, seasonally adjusted, report:

3rd Qtr 2008 GDP £340,780 million

2nd Qtr 2010 GDP £328,766 million

No matter how you look at these figures, there has been a permanent loss of output of just over 3.5% in this period.

This loss of output means less work, so debts are more difficult to service.  Why do the press produce graphs showing an apparently perfect recovery? The answer is that the graphs are taken from the National Statistics press release, for example on 23rd July 2010. The graph that is offered is a rate of change, not the level of output, and may simply have been copied without consideration of the impression formed.

The graph mentioned in the text. Ed.

http://www.contraryview.co.uk, published by Kauders Portfolio Management

WARNING: The firm can only be responsible for action taken on our advice given personally and specifically to be suitable for each individual. Statements on this site do not, on their own, constitute advice. Please note that UK regulatory requirements prevent us commenting on your existing investments or giving specific advice, unless you first sign one of our portfolio service agreements.

As I mentioned in a comment to a regular reader of Learning from Dogs:

To me, sufficiently old to have watched Governments for some decades now, the most striking thing about the present circumstances is the terrible decline in political integrity.

By Paul Handover