Scottish Independence

When Thatcher and Reagan decided to smash the Unions, deindustrialize Britain, and change the West into a financial center, it was because they knew that the exporting nations, meaning Asia and the Middle East, were now on the leash of the US Dollar, driven by greed, desperate to save face, unwilling to lose their gains of the day in US paper.

It is surprising how few people know the history. Up until around about 1970, dollars were convertible to gold, at rates agreed after WW2 at a meeting called “Bretton Woods”. Plus minus 1970 the US had spent all of its gold on wars, like Vietnam. Internally, their military and industry had acquired such a stranglehold over government spending, that by 1970 the US had gone from having 50% of global GDP to defaulting on its gold promises.

This was the critical moment that defines today’s world.

In 2014 the year 1970 might seem a while ago, especially to younger people today, but it’s not. The exact date was the date of The Nixon Shock, when the US just said, “OK from this day forward, everything you ever worked for, everything you sold us, everything your people toiled for…all your investments, all your profits with us, mean nothing in gold anymore….you can accept our paper or not”. For the first time, we got things like floating exchange rates. Until that time, exchange rates were linked to gold, and after Bretton Woods, the exchange rates were fixed to the dollar, which was backed by gold, making the dollar a proxy for gold.

The world might have been thrown into chaos…but the layman was blissfully ignorant of what had actually happened. Behind the scenes, the Anglo-American world recognized their opportunity. The corporations that had so successfully hijacked the industries to their purposes, and bled US financial resources dry, were now happily recognizing that both Asia and the Middle East had no choice but to reinvest those paper dollars back into the USA. After exporting a nation’s worth of crude oil, or exporting a nation’s worth of produce, what you have is a Middle East with massive current account surpluses of meaningless paper dollars. And you have an Asia whose communist leaders cannot afford the unemployment that would arise if those paper dollars devalued. What you have is today’s world. You have an America making sure that the Middle East still wants to sell oil in dollars, and a manufacturing Asia that still insists on payment in dollars.

What’s backing those dollars? Nothing. Except the promise, or expectation, that the world order of today will continue, that the US will make sure that as long as the likes of China and Saudi Arabia keep reinvesting those dollars, then the US will keep printing more. It’s a vicious circle. Ever wondered why talking heads on mainstream corporate media keep reiterating the mantra of ‘growth’? If you have ever wondered why ‘growth’ should be important at all, that is your answer.

In the 1980s Reagan and Thatcher embraced that vision. They did not try to reverse the problem of corporate dominance, they embraced financialisation, they embraced the power that the limitless printing press offered, unfettered from gold, the promise of endless rivers of paper, and the unending Asian and Arab appetite for this green matter, Thatcher and Reagan thought that they had a window of opportunity to become the nerve center of this new globalized world doctrine.

Instead all that happened is that in the name of Globalisation and the Dollar, everyone lost the opportunity to shape industrial manufacturing, lost their jobs in those industries, handed power to the Banks, and started illegal wars in the Middle East to prop up the status quo.

They did nothing but push the inevitable disaster out 20 or 30 years.

They instigated their own revolution, fundamentally removing our core values, taking away everything from honesty and communal pride and supplanting it with neoliberal economic notions of free-market greed, individualism and corruption.

It was an arrogant and destructive revolution. They took away domestic control and handed it to Western corporate elites, to banks and huge firms, who have not acted responsibly. The financial crisis came, the disaster came, the taxpayer had to bail everything out, and still has to bail everything out, and there is no end, recovery or progress in sight. The government does its utmost to mothball the status quo with endless taxpayer funded bailouts, and still defends bank and CEO megabonuses?

The Scottish Independence vote is much more than a choice about devolved power. It is a timely, powerful opportunity for a people who share a culture and history to reject the alienation imposed on them by these ambassadors of Corporate dominance, and base their society on values that they choose, of integrity, of bravery,  of strength, values that they, their descendants and the world will be proud of.

These values are not without meaning. Scientific discovery and innovation? Challenge, reject and attack the status quo. Healthcare and energy advances? State projects that empower the people. Even Henry Ford at the start of it all made sure that the cars he made could be paid for by his workers. He created his own market, both for himself and to lift them from them poverty. It was the Union that gave birth to the Middle Class. I hope that Scotland makes its own market too.


Pale Blue Dot perspectives…

“From this distant vantage point, the Earth might not seem of any particular interest. But for us, it’s different. Consider again that dot. That’s here. That’s home. That’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilization, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar,” every “supreme leader,” every saint and sinner in the history of our species lived there – on a mote of dust suspended in a sunbeam.

The Earth is a very small stage in a vast cosmic arena. Think of the rivers of blood spilled by all those generals and emperors so that in glory and triumph they could become the momentary masters of a fraction of a dot. Think of the endless cruelties visited by the inhabitants of one corner of this pixel on the scarcely distinguishable inhabitants of some other corner. How frequent their misunderstandings, how eager they are to kill one another, how fervent their hatreds. Our posturings, our imagined self-importance, the delusion that we have some privileged position in the universe, are challenged by this point of pale light. Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity – in all this vastness – there is no hint that help will come from elsewhere to save us from ourselves.

The Earth is the only world known, so far, to harbor life. There is nowhere else, at least in the near future, to which our species could migrate. Visit, yes. Settle, not yet. Like it or not, for the moment, the Earth is where we make our stand. It has been said that astronomy is a humbling and character-building experience. There is perhaps no better demonstration of the folly of human conceits than this distant image of our tiny world. To me, it underscores our responsibility to deal more kindly with one another and to preserve and cherish the pale blue dot, the only home we’ve ever known.”

Carl Sagan

“The New Industrial State” – a perspective on media and corporate planning

“But there remain more general sources of conflict between the educational and scientific estate and the technostructure. One is the management of individual behaviour.

In the absence of a clear view of the nature of this conflict, much of the dispute centres not on its ultimate causes but on the techniques of management. Management requires extensive access to means of communication – newspapers, billboards, radio and especially television. To ensure attention these media must be raucous and dissonant. It is also of the utmost importance that this effort convey an impression, however meretricious, of the importance of the goods being sold. The market for soap can only be managed if the attention of consumers is captured for what, otherwise, is a rather incidental artifact. Accordingly, the smell of soap, the texture of its suds, the whiteness of textiles treated thereby and the resulting esteem and prestige in the neighbourhood are held to be of highest moment. Housewives are imagined to discuss such matters with an intensity otherwise reserved for unwanted pregnancy and nuclear war. Similarly with cigarettes, laxatives, pain-killers, beer, automobiles, dentifrices, packaged foods and all other significant consumer products.

The educational and scientific estate and the larger intellectual community tend to view this effort with disdain. The technostructure, sensing this but aware also of the vital importance of the management of demand, reacts defensively and with earnest protestations of its importance for the health and survival of the economic system. Its case is closer to the truth than is commonly imagined.

Thus the paradox. The economy for its success requires organized public bamboozlement. At the same time it nurtures a growing class which feels itself superior to such bamboozlement and deplores it as intellectually corrupt. The subculture which requires such obfuscation for its existence can only be regarded with disdain. That culture responds with a sense of hurt and guilt and the indignation which comes from the knowledge that its needs sustain and nourish its academic critics.

This conflict, in one form or another, is inevitable with planning. That requires that the needs of the producing mechanism take precedence over the freely expressed will of the individual. This will always invite the disaffection of the individual. In the Soviet-type economies the resentment is expressed against the state and the heavy and visible apparatus by which it exercises control over the individual. Under non-Soviet planning it is expressed against the techniques and instruments – advertising and the mass communication which carry it – by which the individual is managed. Curiously, in neither society does the attack centre on the planning which is the deeper cause.”

– John Kenneth Galbraith, from “The New Industrial State,” 1967.

Music Sales

In the background on BBC at the moment is some article about how music sales are declining. They say it’s a paradox, how these days more people listen to more music of more styles in more ways, that there is a music renaissance, and yet no-one can figure out how to make money on it.

At the same time I am thinking that the same argument is being regurgitated month after month and year after year, and no-one has figured out that the internet service providers and the telecommunication companies, whom we pay to access this music, are laughing all the way to the bank.

The fact that one small group of elite companies (owning the world’s recordings) cannot make an agreement with another group of elite companies (who run the internet infrastructure and charge us to use it), should not be my problem. It just shows how backward these dinosaurs are, despite the tech they sell or use. There is no need for clever business models here. The content providers just need to make the right arrangements with those who are distributing it to us and charging us for it.

The EU and Russia

Living in Central and Eastern Europe, you often get to hear people claiming that locals look upon Russia with historical resentment.  In contrast, countries like the Czech Republic owe at least 50% of their direct manufacturing capacity to German firms. Poland is engaged in mutually funded megaprojects with Germany.

Russian banks and Russian communities are prevalent everywhere. While people are angry about what happened in the past, they are just as angry about what has happened recently. Financialisation and greedy exploitation of post-reform anarchy has left people feeling just as trapped today (in debt) as they did before (under Muscovite central authority).

In short, while some politicians point to Russia as a threat, or identify anti-financial state-led endeavours with former Soviet policies, they are being hypocritical and disingenuous. They speak standing from a flimsy, feeble ledge held up entirely by the Germans, who if you accept their rationale, should be held as accountable for their past as the Russians.

I propose we forget all this nonsense, and ignore the voices that raise racial, nationalist fears of the past. Times have changed. We have survived the mechanisation of the military, the industrialisation of the world, even the computerisation of the world, and our European borders have been dissolved. Germans are not Nazis. Russians are not Stalinists. We are a European Union.

What I see ahead of us is a pretty bright future, new technologies, new approaches. Everything from domestic manufacturing involving personalised gadgets, 3d printed objects, to electric cars. But only if we can get past the status quo, which is a financialised mess.

The EU and Russia need to work very closely together, if not quite fully assemble themselves, in order to make the most of this. Russia has the resources, Mittelevropa and its dependents have the organisational and manufacturing ability.  Together the combination could be wonderful : a huge domestic economy with rapid real growth based on real wealth, real optimisations and real technical benefits, a sound military policy, peace on its periphery….and finally an end to US funded chaos in the Mid East.


Bitcoin Centralisation

Bitcoin is a fascinating thing.

Bitcoins are in my opinion commodities. Essentially they are special codes that must be generated by expensive and time-consuming calculations, and using peer-to-peer electronic distribution they can move from one digital ownership to another. These properties allow them to be used as a currency or means of exchange. Today there is a bitcoin economy of about USD270m and growing (

Sometimes bitcoin is presented in the context of a polemic against central banking, the finance sector, or fiat currency in general, and presented as the antithesis to central control of the means of exchange. For example, see this document proposing  bitcoin. Also, see this . At the time of writing their header caption read “Bitcoin is an experimental new digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. Bitcoin is also the name of the open source software which enables the use of this currency.”  I would say this is slightly inaccurate, or promotional perhaps, but it does emphasise ‘peer-to-peer’, avoiding central authority, and collective, network operated behaviour.

From time to time something new comes along and upsets the old system. Whichever red-coats, aristocrats or bourgeoisie happen to be around get replaced by some new red-coats, aristocrats or bourgeoisie.  Today we happen to be graced by the presence of a complex, global system of financial institutions, which for an increasingly aware public is being considered the ‘central authority.’ For the general public, today, post-crisis and post real-estate debt-boom, the retail bank is the equivalent of a Stalinist totalitarianism. If you need an education, you better have a good credit rating. If you want a car, you better be on good terms with your bank manager. If you want a home, you need to spend your life in debt-slavery to The Man, who just happens to wear a suit and work behind a desk down town.

It would not be surprising if in this ongoing context of an over-indebted private sector that Bitcoin continues to gain popularity. If credit cannot enter circulation, then Bitcoin presents a method achieving money that increasingly makes more sense. There is even the possibility that eventually, despite the best efforts of governments and other interested parties, that Bitcoin achieves such market depth and liquidity, that it becomes an alternative mainstream currency.

No doubt, Bitcoin proponents would love to see this.

However, my view is that all new systems tend to centralise and contract. It is only the emergence of some new, alternative system that decentralises and redistributes things (the revolution), and many revolutions have happened in the system of humanity we call ‘Society.’ The very process of centralisation is a sociological change that gives birth to an exclusive elite group, and as a consequence an excluded minority group, which with sufficient volume, allows the new paradigm to germinate and evolve.

Whenever a system has incentives in communication, its elements exhibit the behaviour of gravity. They try to grow closer together. It is this that causes centralisation, as a society or system will acquire multiple centers and areas of sparsity between them, instead of collapsing upon themselves like black holes.

The Bitcoin paradigm already shows where some of the new centers would form if it were to become mainstream. To generate Bitcoins, it is easier to join a ‘mining’ pool. ‘Mining’ Bitcoins involves using dedicated computing power such as graphics cards or programmable gate arrays to run difficult calculations until something is solved. However, blocks of solutions in a sequence are necessary for the award of Bitcoins. The chances of this happening as a sole miner is quite low. For this reason, it is recommended to join a mining pool, which allows miners to combine their computing resources, and Bitcoins are awarded continuously, though in smaller units, given the distribution of probable mined blocks.

It is easy to imagine that if Bitcoin was a mainstream commodity, a prime source of credit would ultimately be some super-datacenter, in which a credit-issuing elite minority would be main stakeholders. The end result is not much different than what we have to today, except that a different group would be the stakeholders, and a different datacenter would be running the Fed.

Bitcoin exchanges (shops) would further escalate the importance of telecommunication providers. Bitcoin use in the mainstream would create greater demand for trusted backup providers (Bitcoin users have all their assets in bitcoin data files), and other IT infrastructure and security. Again, this is not much different than what we have today with digital money, and I wonder if a rise in popularity of Bitcoin would not merely have the effect of converting IT infrastructure providers into the social equivalent of financial institutions, instead of the current situation, where financial institutions find themselves turning in to IT service providers.

Because Bitcoin is a commodity, it could eventually result in a financial system akin to the gold backed system we had in place before around 1970, before the introduction of floating exchange rates and pure fiat money. There would still be demand for credit, bank credit would still exist, only that those trusted Bitcoin backup providers, datacenters, and mining conglomerates would be running the banks, and reserve fractions would be perhaps in the 90% area, instead of today’s 0% in some cases. In my opinion this setup would still be preferable than today’s and would put an end to global trade imbalances.

All systems tend to centralise because the basic nature of the individuals to interact and mutually gain through exchange result in a cost if they don’t do so. I wonder if one day quantum physicists will find that there is some equivalent explanation in terms of information exchange for the phenomenon of gravity. Bitcoin can’t defy the laws of gravity forever, and it is interesting to guess where the new centers will form, but it can help to pull down what’s in place today.

Population and Housing in CEE

Let’s take the Czech Republic as an example.

This is the population at 1945. Images are from the Czech Statistical Office.

Note the missing chunk of population at age group 27 to 32. This is probably the result of both deaths/emigrations during WW1 (one generation earlier) and disruption of WW2. Also note that the population older than 45 taper off quite rapidly. Not only is this a result of turmoil and war, but also because of early healthcare standards. In these conditions the natural response is to have more babies. The group with average age 29 reproduce at a very high rate.

Now the parents and children bracketed in red by ‘a’ are a little older. By about 1948 the parents managed to multiply themselves 1.5 times. Also notice how the early dip in population repeats itself generation after generation (blue).

If we advance a generation to show what happened to the ‘a’ children, we see this:

In 1974 the children of the previous population explosion (followed by a repeat in the dip in population from WW1) are now old enough to replace themselves. They do so at just over 1:1. In contrast with the preceding WW1/WW2 aftershock population dip, the sudden increase in numbers of children are perceived as a babyboom.

These children in turn grow older, but now the Soviet Union is crumbling, and old traditions die as couples sacrifice family life for freedom (and then later debt). Couples have children at a later age:

Couples are now well into their thirties before they have children, and with their new lifestyle of mortgage repayment, increased divorce rate, and both parents working, the fertility rate has dropped.

Not only has the old babyboom – babydip cycle ended, but it has done so dramatically with the parent group almost halving themselves.

This demographic shows that there can be no foreseeable longer term increase in demand for residential or commercial property (from the native population). Most likely there will be some turn around of property though, as the current parent generation pay off debt, gain inheritance and enter the bracket of 50-70 year olds looking for other properties so that their children may carry on elsewhere. A possible consequence of this though is that the turnaround and deleveraging results in a drop in prices with increased volume of trade (as vacated larger properties find fewer young families willing to buy, and because current advertised prices are upheld by underlying debt).

There are two main wildcards. Remaining to be seen is when CEE post-soviet concrete residential tower blocks be deemed unfit for use and torn down. Currently in the CZ these ‘panalak’ tower blocks are being upgraded rather than demolished, and for the next twenty years should remain fit for use. Another scenario is that for some reason immigration increases, offsetting the local depopulation. Government and banking officials seem to have close links with the construction industry, and it would not be surprising if interests affected by housing devaluation prompted some kind of pro-immigration moves.