Monthly Archives: March 2012
In the context of evolution, the BQH posits that certain genes, or more broadly, biological functions, are analogous to the queen of spades. Such functions are costly and therefore undesirable, leading to a selective advantage for organisms that stop performing them. At the same time, the function must provide an indispensable public good, necessitating its retention by at least a subset of the individuals in the community — after all, one cannot play Hearts without a queen of spades.
Gene loss can provide a selective advantage by conserving an organism’s limiting resources, provided the gene’s function is dispensable. Many vital genetic functions are leaky, thereby unavoidably producing public goods that are available to the entire community. Such leaky functions are thus dispensable for individuals, provided they are not lost entirely from the community. The BQH predicts that the loss of a costly, leaky function is selectively favored at the individual level and will proceed until the production of public goods is just sufficient to support the equilibrium community;
Nice opening session discussing two contrasting strategies for HIV transmission prevention– Pre-exposure prophylaxis, and immediate HAART.
PrEP provides substantial but incomplete protection against transmission. Rates are estimated from 39-62%. An alternate calculation looks at risk reduction. In these studies, PrEP reduces the three-year transmission risk from 0.04 to 0.01. Oral dosing (tenofovir) is effective, but not nearly as effective as a topical gel. The gel delivers much higher drug concentrations to the area concerned, with fewer chances for side effects. There is no evidence that PrEP selects for drug resistant strains. The gel also stops transmission of herpes. In all cases, adherence is the key factor in the real world. An interesting factor is that PrEP is associated with an increase in pregnancy and also with other STDs. The suggestion is that people feel protected, so do not take other measures.
HAART provides an alternative route. A functional therapy suppresses the virus to non-detectable levels. This means the person no longer transmits (real world check– as long as the therapy is still working, and the patient is adhering …). A problem is the common belief that the epidemic is driven by people in the primary phase of infection, many of whom (80%!!) are not aware that they are infected. At particular risk in EU are young homosexuals.
A suggested solution was mandatory (or at least strongly encouraged) universal HIV testing for all 15 year olds, with yearly followup. Anyone with positive results is immmediately put on HAART. Some epidemic models suggest that this would effectively stop the epidemic from spreading, and lead to almost no new infections by 2050. While this would initially cost more, after 10 years it would be substantially cheaper since we would have much fewer cases.
In one Kenya study, 84% of patients with primary infection did not know they were infected.
Finally, Brooks Nichols from Erasmus presented a mean field approximation of the epidemic in a rural African community of approx 150K. She used the model to compare the effectiveness of targeting PrEP to a small number of highly active individuals vs a large number of randomly selected individuals. Not surprisingly, targeting the hubs proved better control for significantly less cost. We are talking about simulating this using my zombie code.
in terms of national income, a country with a long running current account deficit has been borrowing goods and services from the rest of the world. In order to support this one, or both, of the non-external sectors of the economy will have expanding debt positions and due to this the economy tends to restructure around consumption over investment and production. Because the external sector is a net drain on capital from the country, the government and/or private sector must continually expand their debt in order to maintain economic growth.
spain is headed for a hard time
Another perspective on where good ideas come from, this one courtesy of Jonah Lehrer, writing in March 2012 Wired.
he starts from David Bank’s paper on the problem of excess genius. Bank notices that genius comes in clumps. He postulates that this is due to a confluence of factors
My sense is that high points in cultural history require the confluence of many factors; some of these are more important than others. When all or most of the factors coincide, then one has a Periclean Athens, Laurencian Florence or Elizabethan London. When only several factors combine, the cultural eruption is more humble — one gets Goethe’s Weimar, or the Lake Poets. Things trail off gradually; if virtually none of the factors obtains, then we call it a Dark Age.
He tests many, and finds none.
Jonah Lehrer thinks the answer is in Paul Romer’s concept of meta ideas, from his essay on economic growth
meta-ideas are ideas about how to support the production and transmission of other ideas.
Romer gives the 17th century idea of patents and copyrights. Lehrer lets this slide. These meta-ideas at SEVENTEENTH CENTURY ideas, and NO LONGER SUPPORT THE PRODUCTION AND TRANSMISSION OF IDEAS, they block it.
We do not know what the next major idea about how to support ideas will be. Nor do we know where it will emerge. There are, however, two safe predictions. First, the country that takes the lead in the twenty-first century will be the one that implements an innovation that supports the production of commercially relevant ideas in the private sector. Second, new meta-ideas of this kind will be found.
Only a failure of imagination, the same one that leads the man on the street to suppose that everything has already been invented, leads us to believe that all of the relevant institutions have been designed and that all of the policy levers have been found.
Oscar Omoro (a FX trader) has this to say about meta-ideas and currency values
Meta-ideas come from a previously unknown source, and possesses the power to propel a large and growing audience into thinking in some new way.
Meta-ideas contain a kind of formula to perpetuate themselves. This formula can include a degree of fear (or greed), such as the fear (or desire) that gold prices will rise and a nation’s currency will decline. The formula has power because it associates some well-recognized truth with the particular emotion it intends to sway.
Lehrer concludes that we shoud support genius in science/arts the same way it is supported in sports. The US has a tremendous system to cultivate athletic talent at every stage of its development.
My Mother She Killed Me, My Father He Ate Me: Forty New Fairy Tales
Further to your highlighting Helene Meisler’s comments and graph on NYSE margin debt, for several years I too have tracked this number and have found that when combined with VIX as a measure of investor complacency, it is a useful tool for raising orange and red flags around market tops.
The fundamental ‘thesis’ of combining margin debt and investor complacency in one index (margin debt divided by VIX) is that a combination of high investor leverage and high investor complacency is a toxic mix indeed. As you know, margin debt figures are reported with a one month lag, so to try the make the indicator more timely, I estimate margin debt one month in advance.
Thus, for March 2012, I estimate NYSE margin debt could be in the range of $300-$305b. Dividing 300-305 by 13.66 (the VIX low in March so far, on Mar 16th) yields an indicator value of 21.96 to 22.33. On the basis of historical experience, I treat any indicator value above 20 as an orange flag and any indicator above 22 as a red flag. Thus the estimated March figure of approx. 22 is enough to prompt me to “head to the hills” i.e. seek refuge in high cash reserves.
Stated another way one might say that NYSE margin debt above $300b is a worry in and of itself but when combined with high levels of investor complacency as measured by a low VIX, the danger signal is magnified and intensified.
In today’s baseless monetary system labor cannot save its wages because banks may issue infinite credit that raises the general price level (GPL) above where it would naturally gravitate. If left to its own devices, prices would naturally fall, not rise, due to population growth, innovation, economies-of-scale, and productivity improvements. This would benefit all wage earners because a lower GPL would make wages more competitive vis-à-vis the goods, services and assets available for purchase. Affordability would rise for all economic participants, and would be especially beneficial to those at the lower end of the wage scale.
Obviously this is not the monetary system we have, which is premised on continually rising prices and policies that seek to ensure that. The current monetary regime issues credit and creates systemic debt. In this system asset price growth can outpace wage growth for long stretches of time. Asset prices, however, may be driven higher by the availability of credit, not rising demand or productivity. The debt build up that goes hand-in-hand with the credit build up creates a drag on demand and productivity. Unemployment rises. Debt cannot be serviced or repaid easily through wages.
Central banks must ultimately dilute the purchasing power of their currencies by manufacturing more currency with which debtors can repay their debts or with which creditors can extend new credit to debtors so they can roll over their debts. Any saved wages lose their purchasing power if held in that currency. This gives incentive to laborers not to save in the currency in which they are paid. Rather, they are forced to speculate in financial asset markets (directly or indirectly).
Lee Quaintance & Paul Brodsky
Clipped from “The Yen’s Looming Day of Reckoning” By Andy Xie, Caxen, 03.23.2012 and seen on TBP.
Japan is on an unsustainable path of a strong yen and deflation. The unprofitability of Japan’s major exporters and emerging trade deficits suggest that the end of this path is in sight. The transition from a strong to weak yen will likely be abrupt, involving a sudden and big devaluation of 30 to 40 percent. It will be a big shock to Japan’s neighbors and its distant competitors like Germany. The yen’s devaluation in 1996 was a main factor in triggering the Asian Financial Crisis. Japan’s neighbors must have a strong banking system to withstand a bigger devaluation of the yen.
Japan’s nominal GDP contracted 8 percent in the four years to the third quarter of 2011, and six percentage points of that was due to deflation. Without increased government expenditure, the contraction will be one percentage point more. Japan has not seen this kind of sustained deflation since the 1930s.
A strong yen, deflation and rising government debt form a short-term equilibrium that lasts as long as the market believes it is sustainable. The yen has seen a relentless upward trend since it depegged from the dollar in 1971, up to 83.4 from 360 again to the dollar. Japan’s nominal GDP peaked in 1997 and its nominal wages did too.
As Japanese institutions and households hold almost all of the government’s debts, their faith in the government’s creditworthiness is the mojo for Japan’s seemingly harmless deflationary spiral.
Japanese culture is group-oriented. This psyche was the reason that Japan’s property bubble became so big in the 1980s, five to six times the size of the bubble in the United States. After the property bubble, the group psyche shifted its power to a strong yen, pushing Japan’s economy onto the path of a rising yen, deflation and rising government debt.
A yen collapse will impact China and South Korea most, just like in 1998.
I blogged this once before.
Re-listened today, which brought some fresh perspective.
Money has different functions (store of value, medium of exchange, unit of account). Technology affects each of these differently.
Checks, for example, transform a store of value (bank account) into a medium of exchange.
The Tally Stick government debt market discounted debts across both time and space.
Cash money is a stealth tax, since what is really exchanged is government debt.
The Euro is a doomed currency. So what about the “galactic credit” of science fiction fame?
Tech again puts money creation into everyone’s hands.
Should a currency be resource-based (gold standard) or reputation-based (debt standard).
Payments and banking are two seperate functions which our current monetary model conflates.
In a world without cash, what happens to prices?