http://calnewport.com/blog/2010/01/06/the-grandmaster-in-the-corner-office-what-the-study-of-chess-experts-teaches-us-about-building-a-remarkable-life/ The Grandmaster in the Corner Office: What the Study of Chess Experts Teaches Us about Building a Remarkable LifeJanuary 6th, 2010 · 200 comments Becoming a Grandmaster How do great chess players become great? If you read Malcom Gladwell’s Outliers , you probably have an answer: the 10,000 hour rule. This concept, which was first introduced in academic circles in the early 1970s, was popularized by Gladwell in his 2008 book. Here’s how he summarized it in a recent interview: When we look at any kind of cognitively complex field — for example, playing chess, writing fiction or being a neurosurgeon — we find that you are unlikely to master it unless you have practiced for 10,000 hours . That’s 20 hours a week for 10 years. There seems to be no escape from this work. As Flordia State University Psychology Professor Anders Ericsson reminds us: “even the chess prodigy Bobby Fisher needed a preparation period of nine years.” The full story, however, is more complex. Gladwell is right when he notes that the 10,000 hour rule keeps appearing as a necessary condition for exceptional performance in many fields. But it’s not sufficient . As Ericsson, along with his colleague Andreas Lehmann, noted in an exceptional overview of this topic, “the mere number of years of experience with relevant activities in a domain is typically only weakly related to performance.” Put another way, you need to put in a lot of hours to become exceptional, but raw hours alone doesn’t cut it. To understand what else is necessary, I’ll turn your attention to a fascinating 2005 study on chess players , published in the journal Applied Cognitive Psychology . After interviewing two large samples of chess players of varied skill, the paper’s authors found that “ serious study ” — the arduous task of reviewing past games of better players, trying to predict each move in advance — was the strongest predictor of chess skill. In more detail: …chess players at the highest skill level (i.e. grandmasters) expended about 5000 hours on serious study alone during their first decade of serious chess play —nearly five times the average amount reported by intermediate-level players. Similar findings have been replicated in a variety of fields. To become exceptional you have to put in a lot of hours, but of equal importance, these hours have to be dedicated to the right type of work. A decade of serious chess playing will earn you an intermediate tournament ranking. But a decade of serious study of chess games can make you a grandmaster. I’m summarizing this research here because I want to make a provocative claim: understanding this “right type of work” is perhaps the most important (and most under-appreciated) step toward building a remarkable life … Deliberate Practice Anders Ericsson, the psychology professor quoted above, coined the term deliberate practice (DP) to describe this special type of work. In a nice overview he posted on his web site, he summarizes DP as: ctivities designed, typically by a teacher, for the sole purpose of effectively improving specific aspects of an individual’s performance. Geoff Colvin, an editor at Fortune Magazine who wrote an entire book about this idea, surveyed the research literature, and expanded the DP definition to include the following six traits (which I’ve condensed slightly from his original eight): It’s designed to improve performance. “The essence of deliberate practice is continually stretching an individual just beyond his or her current abilities. That may sound obvious, but most of us don’t do it in the activities we think of as practice.” It’s repeated a lot. “High repetition is the most important difference between deliberate practice of a task and performing the task for real, when it counts.” Feedback on results is continuously available. “You may think that your rehearsal of a job interview was flawless, but your opinion isn’t what counts.” It’s highly demanding mentally. “Deliberate practice is above all an effort of focus and concentration. That is what makes it ‘deliberate,’ as distinct from the mindless playing of scales or hitting of tennis balls that most people engage in.” It’s hard. “Doing things we know how to do well is enjoyable, and that’s exactly the opposite of what deliberate practice demands.” It requires (good) goals. “The best performers set goals that are not about the outcome but rather about the process of reaching the outcome.” If you’re in a field that has clear rules and objective measures of success — like playing chess, golf, or the violin — you can’t escape thousands of hours of DP if you want to be a star. But what if you’re in a field without these clear structures, such as knowledge work, writing, or growing a student club? It’s here that things start to get interesting… Deliberate Practice for the Rest of Us Colvin, being a business reporter, points out that this sophisticated understanding of performance is lacking in the workplace. “At most companies,” he argues, “the fundamentals of fostering great performance are mainly unrecognized or ignored.” He then adds the obvious corollary: “ Of course that means the opportunities for achieving advantage by adopting the principles of great performance are huge. ” It’s this advantage that intrigues me. To become a grandmaster requires 5000 hours of DP. But to become a highly sought-after CRM database whiz, or to run a money-making blog, or to grow a campus organization into national recognition, would probably require much, much less. Why? Because when it comes to DP in these latter field, your competition is sorely lacking. Unless you’re a professional athlete or musician, your peers are likely spending zero hours on DP. Instead, they’re putting in their time, trying to accomplish the tasks handed to them in a competent and efficient fashion. Perhaps if they’re ambitious, they’ll try to come in earlier and leave later in a bid to outwork their peers. But as with the intermediate-level chess players, this elbow-grease method can only get you so far. As Ericsson describes it , most active professionals will get better with experience until they reach an “acceptable level,” but beyond this point continued “experience in is a poor predictor of attained performance.” It seems, then, that if you integrate any amount of DP into your regular schedule, you’ll be able to punch through the acceptable-level plateau holding back your peers . And breaking through this plateau is exactly what is required to train an ability that’s both rare and valuable (which, as I’ve argued, is the key to building a remarkable life ). This motivates a crucial question: What does DP look like for fields that don’t have a tradition of performance-optimization, such as knowledge work, freelance writing, entrepreneurship, or, of course, college? Let me use myself, in my role as a theoretical computer scientist , as an example. There are certain mathematical techniques that are increasingly seen as useful for the types of proofs I typically work on. What if I put aside one hour a day to systematically stretch my ability with these techniques? Taking a page out of the chess world, I might identify a series of relevant papers of increasing complexity, and try to replicate the steps of their key theorem proofs without reading them in advance. When stuck, I might peek ahead for just enough hints to keep making progress (e.g., reading an induction hypothesis , but not the details of their inductive step ). The DP research tells me that this approach would likely generate large gains in my expertise. After a year of such deliberate study, I might even evolve into one of the experts on the topic in my community — a position that could yield tremendous benefits. Why am I not doing this? What would such strategies look like in other aspects of my life, like non-fiction writing or blogging? What about for other similar fields? These are the type of questions I want to explore this winter here on Study Hacks. The answers aren’t obvious. But that’s what makes this endeavor exciting. By piecing together a systematic approach to building a DP strategy for unconventional fields, I hope to identify an efficient path to the type of excellence that can be cashed in for remarkable rewards. Or, perhaps I’ll discover that such a quest is quixotic. Either way, it should be fun… (Photo by World Economic Forum ) 200 thoughts on “The Grandmaste
你明白了吗？ 1. Are you with me? 都明白了吧？ 2. Do you know what I mean? 你懂我意思吧？ 3. You've got the picture? 你明白了吗？ 4. Do you understand? 懂了吗？ 5. Got it? 明白了吗？ 6. Are you following me? 你跟上我说的了吗？ 7. You know what I am talking about? 你知道我在说什么吗？ 8. Am I understood? 我说明白了吗？ 9. Are you clear? 你都清楚了吗？ 10. Did I make myself clear enough? 我都说明白了吗？
2015年3月2日 The History of Astronomy Your teacher is abroad on a conference today, so there is no class on 2 March. However, the two student assistants (Yunfeng Chen and Zhen Guo) will be in the lecture room to answer many of your questions. They will also provide you with hand-outs ( download PDF) that contain information about the lecture course. No homework today. 2015年3月9日 The Night Sky No homework today. 2015年3月16日 The Physics of Astrophysics; Light and other forms of radiation 2015年3月23日 Telescopes and Astronomical Observing Homework 1 handed out. Please write the answers of your homework on a separate piece of paper and hand it in next week. 2015年3月30日 Gravity, Planetary Orbits, and the Sun Deadline for handing in Homework 1. 2015年4月6日 No lecture today (Qingming). 2015年4月13日 The Rocky inner planets: Mercury, Venus, and the Earth-Moon system 2015年4月20日 The Earth; the Moon, Mars, and Space Exploration 2015年4月27日 Asteroids; the Gas Giant Planets, and the Outer Solar system 2015年5月4日 No lecture today (University Day). 2015年5月11日 Interstellar Gas; The Formation and Evolution of Stars 2015年5月18日 Stellar Evolution; Planet Formation 2015年5月25日 Star clusters; Astrophysical Computer Simulations, the Milky Way 2015年6月1日 Galaxies and Cosmology 2015年6月8日 Einstein's Relativity and the Big Bang Theory 2014年5月15日 Life in the Universe Deadline for handing in your essay or research project report: (date to be decided . You can hand in the essay during the class, or you can bring it later to the Kavli Institute for Astronomy and Astrophysics (KIAA). You can give it to Yunfeng Chen, or to Zhen Guo, or to Thijs Kouwenhoven (room 201). If we are both away, you can also give your essay to the KIAA guard, and tell him to give the essay to Thijs Kouwenhoven (柯文采). To be absolute sure that your essay is received on time, you are recommended to ALSO send an email with the essay to the teacher. Make sure that you write your name and student number on the first page of the essay. Of course, you can also hand in your essay or research project report before the deadline. Good luck!
(CNN) -- "UglyGorilla," "KandyGoo," and "WinXYHappy" are some of the aliases used by the Chinese accused of hacking U.S. companies on Monday. The men behind these handles are officers of the People's Liberation Army (PLA) under a unit known simply by the code 61398. Little is confirmed about the mysterious unit 61398, a section that the Chinese authorities have not officially acknowledged. The Chinese defense ministry said the country's military "has never supported any hacker activities." But the U.S. indictment notice pinpoints a non-descript building on Datong Road in Shanghai's Pudong District as one of the locations for unit 61398's alleged cyber espionage activities. The Shanghai building allegedly home to a part of the PLA's unit 61398. When CNN tried to visit the building last year, our correspondents were chased away by security guards, as seen in the video above. What is unit 61398 and what do they do? U.S.-based Internet security firm Mandiant released a 60-page report last year detailing allegations against the shadowy unit over a six-year period. U.S. vulnerable to Chinese cyberspies? Chinese accused of hacking US secrets Snowden: U.S. hacked targets in China According to Mandiant's document and the U.S. indictment, here's what we know about the secret division. Capable Mandiant says unit 61398 is also known as the "comment crew," and has systematically stolen hundreds of terabytes of data from at least 141 organizations across 20 industries worldwide since as early as 2006. Large Mandiant estimates that more than 1,000 servers are being used by unit 61398. The security firm believes the unit employs anywhere from hundreds to thousands of staff. A look at the physical size of the building in Shanghai -- 12 floors high, with more than 130,000 square feet of space -- suggests the unit could house around 2,000 people. Focused Mandiant observed 141 companies targeted by unit 61398, out of which 115 were in the United States. These were blue-chip companies in important industries such as aerospace, satellite and telecommunications, and information technology -- strategic industries that were identified in China's five year plan for 2011 to 2015. "It's really a who's who of American companies," says Grady Summers, Mandiant's vice president. Some of the alleged victims included in the latest indictment are U.S. Steel Corp., Westinghouse, Alcoa, Allegheny Technologies, the United Steel Workers Union and SolarWorld. Well-supported Unit 61398 was given a special fiber optic communication infrastructure by state-owned enterprise China Telecom in the name of national defense, Mandiant reported. Tricky The accused Chinese hackers reportedly use spear-phishing to hack into companies. The simple trick makes scam emails appear like they are from someone the receiver actually knows. For example, the emails would be personally addressed and signed by another employee in the same company. Spear-phishers may scan social media to find out personal details about a victim to make the scam emails seem legitimate. Tip of the iceberg Unit 61398 is just one of more than 20 cyber attack groups with origins in China, says Mandiant.
The provost hosts an annual conference on diversity and gender equity, for which I was invited as the co-speaker with the vice provost and financial director. The main question for me was what kinds of research on gender equity has been translated into policy and what are the challenges and success. The following s a simple outline. I guess they have videoed my talk anyway. Gender equity in workplace I would like to open with one phrase: the personal is political. This is indeed the article title wrote by feminist Carol Hanisch in 1969 and has been a slogan among at least feminist groups. It is not to say that all personal choices women make are political, but to say that personal problems are political problems. For instance, childbearing is one of many women things. Studies have shown that childbearing often holds women back in their career development. While it is an individual choice, but collectively, it becomes a political problem entailing actions and efforts in the public domain. One more interesting finding is that in more egalitarian countries, women are doing less household errands than women in less egalitarian countries. It is not just couple’s choice, it more or less reflect social and cultural factors. Much has been undertaken over the past few decades in the workplace regarding gender equity and more broadly regarding diversity. 1: there is consensus that institutional factors are responsible for gender inequity. Women are unhappy or not faring well in their careers, not because they are genetically problematic, hysterical or stupid. People come to recognize that institutional factors are to be blamed, not women as a group. For instance, Studies show that sex has impact on who gets the job. Experiments show that with the same credentials (same gradation GPAs, same professional certificates etc) but with different names, the chances of landing a job is significantly different. Women are more likely to be hired in women dominant positions and men are more likely to have offers from male-dominant positions. Unfortunately, those high-paid jobs are often perceived as male-dominant positions, therefore women often have tremendously hard time to step their feet into certain positions Nature published a article titles as nepotism and sexism in peer review. Again with the same CVs, but different names, say one is Julie and the other is Matthew, the results are shocking that women scientists receive consistently lower scores than male scientists, even though both are hypothetical figures. 2. More specifically, what kinds of practices and policies that institutions have been engaged: A. structural commitment: one of most effective policy instruments to promote gender equity is to develop structural commitment, which often refers to women offices, affirmative action offices, chief diversity offers, and offices dealing with inequity grievance, sexual harassment etc. Most of these agencies have been developed within the past two or three decades. You may take them for granted or even feel indifferent, but they represent progress toward gender equity. B. family friendly policies are adopted and wide spread across organizations. For instance, Family and medical leave act in 1993 provides job protected and unpaid leave for qualifying medical and family reasons. United states is possibly the only one among all industrialized countries that do not offer entitlement leave for new parents. But things are changeing. The California became the first state to pass a paid family and medical leave law, providing six weeks of paid leave for new parents. institutions often provide care assistance, leave bank, spousal hiring and even child care facilities to create a level playing field for women. These are often packed in employee benefit plans. Studies do show that family friendly policies increase organizational attractiveness to professional employees C. Diversity management. institutions are now offering a great deal of diversity and equity training, mentoring programs, professional development programs, which target to reduce the isolation and marginal status of women professionals. 3. More needs to be done Unfortunately, while institutional efforts are important and make substantial progress, the commitment needs to be further strengthened as you can see now we still have a wide gender gap. This year’s data show that women earn 77 cents of a dollar earned by men. Women are not in par with men in career opportunities, particularly senior, high paid positions. The shift, however, is seen from addressing overt form of discrimination to nuanced behavior and environmental factors A. subtle discrimination, while often occurred by individuals toward individuals, proves no less detrimental to women, further demoting women’s chances to be truly equal. For instance, some people hold dear the belief that women are vulnerable and needs more protection. Scholars often call it benevolent sexism, which proves equally harmful to women’s career B. some taken-for-granted process or culture may hurt women than people even might think of. Interaction among people often automatically sex-categorize others, and use gender stereotypes to make decisions. For instance, male with children are often perceived as a symbol of high responsibility, while women with kids are often perceived as irresponsible as women have to take care of them. c. Also consistent pattern has been found that positions occupied by women leaders are often undervalued. You may not be surprised to know that some female leaders are so bossy, so pushy and so this and so that.
1994 Redux? But Not In Bonds Submitted by Tyler Durden on 06/15/2013 19:17 -0400 Bond Borrowing Costs Capital Formation Central Banks China Copper CPI ETC Exchange Traded Fund fixed Germany Gross Domestic Product High Yield Housing Market Hyman Minsky India Mexico Monetary Policy Recession recovery Switzerland Trade Balance United Kingdom Yield Curve In UBS' view, 1994 is critical for guiding investing today. The key point about 1994 was not that US bond yields rose during a global recovery. But that the leverage and positioning built up in previous years, on the assumption that yields would remain low, then got stressed. The central issue, they note, is that a long period of lacklustre growth, low rates and easy money induces individual investors, funds, non-financial corporates and banks to reach for yield. In many cases, they gear up to do it. And as Hyman Minsky warned; in this way, stability breeds leverage, and leverage breeds instability . Via UBS: 1994 Redux? ... Sebastian Mallaby has written an excellent account of the 1994 bond market blowout in ‘Hurricane Greenspan’, chapter eight of his book ‘More money than God’ (Bloomsbury press, 2010). In his depiction of the legendary hedge fund trader Michael Steinhardt – he describes how hedge funds, and a range of other financial institutions, chased convergence trades from 1990-1993 . They played term carry (borrowing short term to buy long dated bonds within the US) . They ran cross regional carry trades (borrowing in Germany or the US to buy Italian Spanish bonds as these countries prepared for EU membership) . And they rushed to buy assets that were priced off convergence trades ; emerging market property, peripheral banks. They even bought defensive growth stocks (with the idea that the PE on a defensive growth stock should converge to the inverse of the 10 year yield). We argue below that the set-up today is very similar to that in early 1994 . The danger in these trades is that a cyclical recovery, especially a global cyclical recovery, will cause yields to rise and compel policy makers to withraw accommodation. And that this can induce an outsized reaction in all the convergence trades ultimately priced off treasuries, as leverage is removed. This is why the central lesson from 1994 is that , after a long period of easy money, when a cyclical recovery kicks in and policymakers are setting to remove accommodation, at all costs avoid convergence trades and avoid assets that are priced off convergence trades . And the popular convergence trades of the past months have been; Emerging market credit Emerging market property Southern European sovereign debt Peripheral European sovereign debt US mortgage backed securities US and global high yield debt Global defensive growth stocks. So what brings us to think that we can use 1994 as a guide to investing for the rest of 2013? In the section below we highlight several key developments from 1990-1995 and the comparison with the current situation ; 1990-Feb 1994 The Fed ran a very easy monetary policy from 1990-early ’94 in an attempt to reflate the US economy in aftermath of the SL crisis. We have seen lower rates even easier monetary policy since 2009. US growth remained lacklustre throughout 1990-1993, going through a series of moderate ‘mini-cycles’. We have seen even more lacklustre growth over the past four years. US 10-year treasury yields fell from 9% to 5% from 1990-early 1994, as a recession and then disinflationary pressure pushed down inflation expectations. Treasury yields fell from 4.3% in 2007 to 1.4% in the summer of 2012. US banks hoarded treasuries. Lending remained lacklustre. Corporates hoarded cash paid back debt. From 1990-1994 Capital flowed into emerging markets . Asia boomed. The former USSR saw large inflows also. Capital flowed heavily into emerging markets from 2009-11, although it then slowed in 2H11 2012 as the Fed ended QE2. Credit spreads tightened from 90-94, and from 09-13. Commodities remained in the doldrums from 1990-1994. This was unusual, given the strong capital flows into emerging markets. But the implosion of the military/industrial complex in Russia from 1989 saw domestic demand for commodities collapse. Russia then exported nickel, aluminium, palladium, platinum, copper and oil to get hold of hard currency. Commodity prices came under intense pressure. This contrast is with the 2009-13 period – where capital flows restocking drove commodity prices higher from 2009-11, but where capital outflows, destocking and new supply drove prices lower in 2011/12. Headline CPI trended down , persuading many that there was no cause for rate hikes. We have seen a similar trend from mid-2001. The dollar trade weighted index range traded between 80 95 from 1990-1995 . An interesting development was that the dollar weakened while the US economy recovered through 1994, and while the Fed raised rates 225bps. The DXY has been range trading in a similar manner, broadly between 75 and 90 since 2009. The extended period of low rates and strong capital flows into emerging markets induced a huge build-up of leverage across financial non-financial institutions on a global basis . The strong flows of capital into emerging markets set off the procyclical growth dynamic we have described regularly. Capital inflows induce central banks to print their own currency to buy the dollars coming in. Bank deposits rise, and banks lend to construction and engineering companies. Growth inflation pick up. And with nominal rates sticky, real rates fall. That in turn incentivises procyclical gearing up to buy build houses, inventory and general fixed capital formation. The Asian tigers grew aggressively , and their stock markets boomed going into 1993. Emerging markets recovered in 2009/10, struggled into 2011/12 and then saw a patchy recovery until recently. The problem with the reflationary process in emerging markets is that it sows the seeds for its own destruction. Because the low real rates in EM induce excessive gearing fixed capital formation – compared to a more balanced allocation of capital, had real rates stayed steady above zero. This leaves misallocated capital, and the latent potential for bad loans to emerge when credit becomes scarce. It also causes a deterioration in the trade balance . Both make emerging markets increasingly dependent on capital flows to stay afloat. In many cases, emerging market governments will react to rising inflation by attempting to restrict credit growth (rather than raising rates). The problem with this is that it incentivises US dollar borrowing. Emerging market business finds it attractive to borrow in dollars when domestic inflation is rising , the domestic currency is appreciating, and domestic borrowing costs are higher than dollar funding. And it is even more attractive when the activity the loans are funding – from inventory building to FCF – sees price/cost rises. But when the trends reverse – the domestic currency depreciates, the dollar funding becomes more dear, the inventory values fall – then emerging market corporates can find themselves squeezed. Very rapidly. But it is not just EM . In the long history of financial crises, the ‘reach for yield’ during a slow growth and low yield environment has on multiple occasions set up the conditions for financial stress when yields eventually rose. The book ‘More money than God’ by Sebastian Mallaby (Bloomsbury, 2010), gives an excellent description of the leverage and yield enhancing structures that built up in the 1990-1993 period , and the carnage inflicted upon that leverage in 1994. Some examples include: Bank hedge fund carry trades – borrowing at the short end to purchase long dated bonds. Borrowing in USD and German marks to buy Italian and Greek long term debt Borrowing to buy high yield corporate debt. he use of interest rate swaps to generate yield enhancement. Leverage purchases of buy-to-let properties We have also seen a significant build up in leverage over the past four years . Buy-to-let investment has risen strongly in the US/UK/Switzerland/Scandinavia. Retail investors have become heavily exposed to credit through mutual funds and credit ETFs. Investors became very overweight long duration defensive growth and dividend yielding equities , at the expense of cyclical exposure. Investors have left themselves highly exposed to any kind of cyclical rally outside the US, as well as within it . Valuations (as we noted here ) are extremely varied. 1994 As macro activity in the US accelerated, corporates stopped hoarding cash and started to seek to borrow to expand their businesses. US banks, which had been hoarding treasuries, sold them to make way for increased corporate loans. Treasuries started to sell off . The Fed then responded to the steepening curve and the improving macro conditions by raising rates by 25bps in February 1994. This came as a surprise to the market, which was not aware of the Fed’s internal deliberations. The transcript of the February meeting indicates that Fed members were wary of a 1988/89 style spike in inflation if they did not start the process of tightening. Greenspan believed that the curve would flatten, as markets anticipated tighter policy moderated inflation expectations in the future. But that’s not what happened. The rise in rates instead dented the derivative trades predicated on no rise in yields, and it squeezed carry traders . That induced a more aggressive unwinding of treasury holdings, as leveraged carry trades unwound. And the Banks accelerated the sell off as they sold treasuries to make space for increased corporate lending. So the yield curve steepened over the year, with 10-year yields rising 306bps vs the 225bp rise in Fed funds. An array of casualties ensued , from Orange county, California, that went bankrupt due to its exposure to a series of exotic interest rate swaps. To a number of prominent hedge funds – which saw extreme losses in February 1994. Then there was the international fallout. The sharp increase in domestic demand for credit, combined with the increase in real rates induced powerful capital flows back to the US. This sucked liquidity out of several emerging markets, whose central banks had to retire domestic currency to repay the dollars exiting their countries. Soon, countries that had seen the most aggressive investment booms, which had done the most aggressive US dollar borrowing, and which suffered the largest current account deficits, came under intense duress. The Mexican peso crisis erupted, and the seeds were sown for a sustained deterioration in Asia, before the full collapse of the Asian crisis in 1997. One of the conundrums of 1994 was the US dollar. It would be logical to think that, with a sharp rise in US growth, in rates yields that the US dollar would have rallied. But it didn’t. It fell. An important reason was that the US recovery, while stronger than expected, was not a big surprise. But what was a surprise was the European recovery – after the sustained post-unification funk in Germany, and the Scandinavian banking crisis in 1992. In our view in commodity strategy – it was the relative surprises – which made Europe’s recovery much more unexpected, that triggered the currency move. This is particularly interesting today – with the broad consensus that the US dollar is going to rally, due to the more robust recovery in the US and the potential for tapering. But it is always worth keeping an eye on relative macro surprises. We see the potential for a counter trend fall in the US dollar . Now there are clearly some stark differences between today and 1994 . Back then interest rates were much higher. So 300bps on treasuries increased rates by three fifths. The same rise from the July low would treble rates. And certainly, the authorities are first talking about an extended period of QE tapering. We are still a distance away from actual rate hikes. The Fed is also much more transparent than it was under Greenspan in the early 1990s. Where conditions are similar is that a very large structure of leverage has built up on the back of low rates , from leveraged property credit buying, large retail exposure to yield enhancement products (high yield ETFs etc), earlier dollar leverage driven investment booms in emerging markets. So where are we now. It looks to us very similar to February 1994. The Fed’s continued insistence on talking tapering despite the recent rollover in US macro surprises has started to unsettle leveraged yield enhanced positioning . The US high yield ETF has come under severe pressure. The US mortgage spread has blown out relative to the US 30-year treasury yield. South African and Indian currencies are under pressure. India has responded by raising taxes on gold imports. In 1994, Mexico was the first to feel the brunt. Followed by South Korea in 1997. In 2013, South Africa is feeling the pressure. Although other emerging markets, notably China, continue to benefit. The next big question is; can the US withstand a higher cost of capital, like it did from 1994-98. In short, no! In the mid-late ‘90s, the US coped with a higher cost of capital in several ways. It enhanced productivity through a rapid adoption of tech. Corporates geared up, which ensured strong liquidity growth and ‘efficient’ balance sheets. Corporates went through a second round of ‘just in time’ inventory management and outsourcing. Consumers benefited from the strong dollar and falling commodity prices – seeing their disposable incomes improve. And the disinflation in EM translated to a downtrend in yields from 1994, which allowed for an acceleration in the housing market and an expansion of household debt. But we have a number of concerns that hint at vulnerability. The first is that the potential for sustained disinflation over multiple years is less, because yields are already low . Consequently, there is less scope for a sustained recovery in housing – beyond the initial flurry of demand from rising household formation. The sharp rise in mortgage spreads is one hint that this transition may be more difficult. The spread on mortgages may be particularly important for the leveraged buy-to-let investors , who have been heavily involved in the recent surge in housing sales. Because we understand that a large part of the buying is from investors then seeking to rent out the properties, we suspect that the follow-through consumer demand may not be as aggressive as previously imagined . If a household buys a house, taking on debt, it opens the floodgates to increasing debt fuelled buying of cars, household furnishings and white goods. A very different psychology comes from paying a month up-front on a rental. You are much more likely to cut back, to be more frugal. Government debt levels are clearly extended , and the deficit needs to be cut to prevent further deterioration A more subtle point is that the extended expansion of government spending as a share of GDP in response to the financial crisis is crowding out the private sector, and reducing the productive potential of the US economy. This stands in stark contrast with the tight control of government debt in the early 1990s under the Clinton administration . These suggest that it is much less likely that we see the US enter a ‘high plateau’ of growth as we saw from 1995-98 , where the US saw a powerful productivity credit fuelled boom while the emerging markets deflated. And it makes it more likely that the US stays on a lower trajectory, interspersed with periodic recessionary slowdowns in the years ahead. The point at which the market realises this would likely herald a significant risk-off event. 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The Widening Chasm Submitted by Tyler Durden on 05/08/2013 12:58 -0400 Corruption ETC Gross Domestic Product Guest Post recovery Unemployment Submitted by Charles Hugh-Smith of OfTwoMinds blog , An independent, critical account of the American economy would soon raise questions about the structural causes of inequality. That some sectors of the economy will be doing better than others is natural. If you're a landlord or mobile-apps coding genius in San Francisco, the economy is excellent. Those working in the vast North American oil-patch are experiencing a boom economy. Realtors in resurgent markets such as Miami are having their best year since the top of the bubble in 2007. This can be viewed through any number of lens, one of which is the inherent inequality of capitalism: capital and labor flow to what is most profitable at this point in time, and capital and labor left stranded in low-yield, declining sectors suffer poor returns and lower wages. This inequality can be seen as the systemic cost of a dynamic economy in which capital and labor are free to move to better opportunities. It can even be argued that the more dynamic and fast-changing the system, the greater the inequality, as those who move fast enough to take advantage of new opportunities reap most of the gain (The Pareto Distribution of 80/20 is often visible in these sorts of distributions). Economic systems that can be gamed by bribery or purchased political influence are also inherently unequal, as those with power are more equal than those without power. This is the classic feudal society or crony-capitalist kleptocracy. Those benefitting within the crony-capitalist kleptocracy will of course claim that the society is a meritocracy and their advantages are the result of their own hard work and brilliance (and perhaps luck if they are honest enough to admit to being lucky). As a result, it is difficult to tease apart the capitalist functions of the U.S. economy from the cartel-state, crony-capitalist kleptocracy that I call neofeudalism. What we do know is that the top 1/10th of 1% is reaping most of the income gains. We also know that household debt has far outstripped the growth rate of the economy as measured by GDP, evidence that much of the prosperity is based not on wealth creation or savings but on expanding credit: And we know that real income (adjusted for inflation) has declined. Since this is the median household income, we can project that the bottom 90% are actually doing much less well than shown here, as income gains mostly flow to the top 10%. Individuals are not powerless to change their circumstance. This is the basis of the American Dream (and also the Chinese Dream, Mexican Dream, Iraqi Dream, etc.) The question then becomes: how is the system "wired," i.e. what are the obstacles, incentives and disincentives presented to individuals who are trying to better their circumstance? It's important to ask this question, and to be honest in our assessment of victimhood, oppression and individual responsibility. The widening chasm refers to both the income chasm between the financier class (1/10th of 1%) and the 99.9%, and the chasm between the real economy and the official narrative of the economy. The essence of propaganda is to substitute an officially conjured narrative for independent critical thinking. In the American propaganda narrative, the central state and bank are admirably supporting a "recovery" that though uneven in places is soundly on the path to widespread prosperity. The primary support of this narrative is ginned-up statistics (bogus unemployment rate, etc.) and asset bubbles inflated by easy credit to the masses and unprecedented low-cost credit to the financier class. These are the basic tools of propaganda: choose a metric that you can control or game, and make that the measure of success. In the Vietnam War, the body-count of enemy combatants was the metric chosen by the propaganda machine to measure success. Unsurprisingly, stacks of dead civilians were duly counted to boost morale and to mask the failure of the war's managers. Nowadays the unemployment rate is the new body-count: a metric that can be gamed to reflect an illusory success. Just erase tens of millions of people from the workforce, count every 4-hour a week job and dead-reckon a few million jobs were created outside the statistical universe (the Birth-Death Model of small business creation) and voila, the unemployment rate magically declines even as the economy and the job market stagnate. The other metric of choice is the stock market, which has been inflated by central bank policies and identified as the gauge of recovery by a political class anxious to deflect inquiries into its systemic corruption and monumental policy failures. The official narrative carefully leaves the kleptocracy, crony-capitalism and cartel rentier arrangements firmly in place. As noted above, those benefitting from the cartel-state neofeudalism defend their perquisites as "natural," i.e. the result of meritocracy. This adds another layer of propaganda persuasion to the official narrative. An independent, critical account of the American economy would soon raise questions about the structural causes of inequality by asking cui bono , to whose benefit is the system arranged? If we can honestly say that the system's primary source of inequality is a dynamic economy that rewards the top 10% who are best able to deploy skills and capital, then that suggests one set of potential remediations. If however we find the system is unequal largely as a result of its cartel-state structure, then that suggests a political and financial reset is needed to clear the deadwood of corruption, malinvestment and state/central bank manipulation of statistics, finance and credit. We had to destroy the economy to save it. Indeed. New video with CHS and Gordon Long: Peak Consumption Average: 2.9 Your rating: None Average: 2.9 ( 10 votes) Tweet - advertisements - Republicans: be careful what you wish for. A brewing White House scandal could ruin Obama AND the Republican Party. 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Who Is Ben Bernanke's Worst Nightmare?" Submitted by Tyler Durden on 04/30/2013 10:55 -0400 Ben Bernanke Ben Bernanke All we can say is that we are very delighted that an imaginary character from a fictitious narrative is not Ben Bernanke's worst nightmare. The truth is that he has much more real things to worry about. Source: Yahoo Finance Average:
So You Want To Short The Student Loan Bubble? Now You Can Submitted by Tyler Durden on 03/03/2013 14:44 -0500 Ben Bernanke Ben Bernanke Goldman Sachs goldman sachs Lloyd Blankfein McDonalds Monetization New Century New Normal Primary Market Securities and Exchange Commission Student Loans Even as the gargantuan $1+ trillion student debt load has been the bubbly elephant in the room that few are still willing to talk about (as the ease of obtaining very fungible loans, with ultra-low interest rates, have become the primary source of lifestyle funding for a wide swath of Americans who are rotating out of high yielding credit cards into this latest Uncle Sam subsidy, and is thus just one more aspect of the status quo perpetuation), there have been until now zero opportunities for a the proverbial highly convex "ABX" short in the student debt space. This of course is the trade that was put on by those who sensed the subprime bubble is about to pop in early/mid 2007 and made billions as the yield chasers were summarily punished one by one as first New Century blew up, and then everyone else. Yet while one was able to buy synthetic "hedge" exposure with limited downside and unlimited upside (by shorting synthetic index spreads) in subprime, so far the only way to be bearish on student debt has been to short the equity of various private sector lenders - a trade with very limited upside and unlimited downside, and which in the current idiotic New Normal is more likely to leave one insolvent and crushed in a smoldering heap of margin calls following yet another epic short squeeze as GETCO's stop hunting algo run amok. This may be about to change. As WSJ reports , SecondMarket Holdings, the private-market securities trading firm best known for allowing numerous overzealous fans to buy FaceBook at moronic valuations, on Monday "will roll out a platform allowing lenders to issue securities backed by student loans directly to investors." Why is SecondMarket doing this? The same reason Lloyd Blankfein was selling Abacus (and all those other synthetic MBS CDOs) to clueless yield chasers all across Europe and Asia: yield chasing and career risk. The justification is also the same: making a market. The move is driven mainly by investors' growing appetite for student loans, said Barry Silbert, founder and chief executive of SecondMarket. "The catalyst for this new suite of services is investor demand," said Mr. Silbert. " At the end of the day, investors are yield searching." And just as Paulson was able to coordinate with other sellers of synthetic exposure and have a bearish bet already set in the primary market following collusion with Goldman even before breaking for trading, so we are confident that enterprising packagers of securities will be just as capable in tranching various student loan packets into securitized layers with the assistance of SecondMarket, and offload those with highest risk to those with the most aggressive career risk-for-yield chasing fulcrum points. Investors registered through SecondMarket already can trade student-loan securities they hold in their portfolios, said Mr. Silbert. Since 2008, about $6 billion worth has traded on the exchange, he said. The new platform will allow lenders to issue securities directly to SecondMarket's base of more than 100,000 investors, including institutions and affluent individuals who qualify as so-called accredited investors by the U.S. Securities and Exchange Commission. Issuers will be able to sell securities backed by private student loans, which aren't guaranteed by the federal government, as well as older federally backed student loans known as Federal Family Education Loan Program (FFELP) loans. They also will be able to distribute servicing reports through the new platform, said Mr. Silbert. Educational Funding of the South Inc., or EdSouth, and another lender have signed up to use the platform, according to SecondMarket. Edsouth, which typically buys student loans from other lenders, has used SecondMarket to trade student-loan backed securities in the past, said President and Chief Executive John Arnold. The ability to issue securities piqued his interest, he said: "Any opportunity for capital, you'd have to be looking at." And while some will be furious at what SecondMarket is doing, we applaud it as for the first time there will be a real chance for price discovery and crossing bids and asks in this latest debt bubble. After all, they are merely doing what Goldman Sachs called "making markets" which in retrospect merely allowed the subprime bubble to pop faster than it would have otherwise. Which in this day and age of one-way bets in everything is to be applauded. Of course, all that betting against the student debt bubble - which is merely one more way of "fighting the Fed" - will do is crash it promptly, only to see it reincaranted in the form of the latest Ben Bernanke monetization program (QEternity+2.718) which will be launched after this one fails to take the DJIA to 32,000. The key, as always, will be about timing. Those who get in just right, will be able to retire promptly. Everyone else will be sweeping their local McDonalds. Average: 5 Your rating: None Average: 5 ( 23 votes) Tweet Login or register to post comments 15083 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Taibbi: "Goldman Raped The Taxpayer, And Raped Their Clients" AIG: Collusion Of Epic Proportions Between Goldman's US Treasury Branch And Goldman Sachs Proper Janet Tavakoli Retracts Her Apology To Goldman Sachs, Calls For More Regulation Of The Government Backstopped Hedge Fund Additional Perspectives On The AIG Fiasco 2012 Year In Review - Free Markets, Rule of Law, And Other Urban Legends
1. Kiwis are small, round and hairy, and tend to be nocturnal. They are also a bird or a fruit by the same name. All three are good-natured. 2. Sheep farming is in decline but the roast lamb and wool are still exceptional. Stansborough sells the woolen cloaks it produces for the movies. 3. Driving is on the wrong, er, left-hand side of the road. 4. Banknotes are made of plastic. 5. Internet is generally very slow and expensive, but Wellington provides free Wi-Fi along the waterfront. 6. New Zealand bus drivers are incredibly friendly and helpful. 7. New Zealand DVDs play in Australia, Oceania and most countries directly south of the United States. 8. New Zealand uses three-pronged electric plugs just like Australia, Argentina and Papua New Guinea. 9. New Zealand makes fantastic wine, beer (“Sobering Thought” and “Golden Perch” for hobbits), Manuka honey (a veritable natural cure-all) dairy products (try Mammoth Supply Co. yogurt for men) and RJ’s licorice. 10. Citizens of more than 50 countries, including the United States, can visit New Zealand without a visa.
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