Lifeboat Foundation

The biggest challenge to the ‘ecosystem’ of world economics that keeps society ticking over is how to overcome our inability to regulate a sustainable economic model. In Europe at present we are undergoing the difficult measures in setting about rules of austerity to ensure that government borrowing never gets as out of hand as it has done on our watch. I post on this topic now as it is topical to me — back home here in my native Ireland we are voting on a referendum this week to ensure we no longer borrow from our children to fuel indulgences today — a referendum on rationality and responsibility.

The topical of austerity reminds me of an opinion I blogged on a crisis in the Obama administration last August on national debt in the light of striking comments from foreign figureheads amid the storm from the ‘Tea Party Taliban’. I share with you for to see if anyone cares to comment on an operandi of living like parasites off the global economy:

Living Like Parasites Off The Global Economy, originally written 3 Aug 2011:

With the US in turmoil over its national debt, and held to ransom by a ‘Tea Party Taliban’, last week China publicly mocked American democracy. Yesterday, the world witnessed the humbling of America after a trillion-dollar deal marked the end of an era for the US. The US now faces a shift in its relations with creditor nations, and it was not all too surprising to hear Vladimir Putin, the Russian Prime Minister, yesterday accusing Americans of living “like parasites off the global economy”. If America had defaulted on its international debt obligations, that is exactly what it would be. While America continues to service it’s debt, it is quite the opposite — for now at least- as is perpetually paying interest to its creditors.

Continue reading “Spiralling Debt & The Road to Breaking Point” »

On the cusp of graduation, I’ve had two major realizations in college.

One: most of America’s worst economic crises have been a result of financial obscurity. The first major crash in my lifetime was in the tech bubble of the early 2000s, where Wall Street traders were overrating the quality of Internet stocks. Once the broader market realized this, the values of many tech companies were obliterated. Millions of investors exposed to this sector lost their entire investments because they were unaware of these misrepresentations. In the most last recession, where lenders were underrating the riskiness of homeowners and financial institutions were securitizing riskier-than-advertised mortgages, millions of investors lost their entire investments yet again because they were unaware of further misrepresentations.

Two: economic history repeats itself, even if as a society, we might be aware of this pattern. Taking these two market crises as an example of this bleak fact about our species, it seems that we’ll always have the shortest of memories. In this case, history repeated rather quickly – twice in the span of a decade. Is it possible that people are cognizant of a recurring mistake before it happens, even if it’s happened before in their lifetimes? Most likely not, if the last recession is any example. A significant number of real estate professionals, banking gurus, and regulators were responsible for inflating a price bubble in the housing market, even though some fraction should have been economically conscious enough to understand the problems that would eventually arise.

The question then remains: is there a way to solve both of these problems, assuming the best of all possible worlds? Yes. Imagine a place where peoples’ understandings of basic economics and financial practices was commonplace, where a homeowner and a lender had an equal comprehension of a mortgage, where a hard-working breadwinner knew the dangers of payday loans, and where a child could sit side-by-side with his or her parents while overseeing family finances. All of these possibilities – and more – can come into fruition if we as individuals place a greater emphasis on financial awareness. Note: I don’t say “financial learning” because all of these concepts are innate to us, though hidden by verbiage and stigma. Whether we like it or not, if our career is in finance or not, we must come to terms with the economic world that surrounds us.

Continue reading “One Key to The Future is Financial Clarity” »

What’s to worry? RMS Titanic departs Southampton.

This year marks the 100th anniversary of the Titanic disaster in 1912. What better time to think about lifeboats?

One way to start a discussion is with some vintage entertainment. On the centenary weekend of the wreck of the mega-liner, our local movie palace near the Hudson River waterfront ran a triple bill of classic films about maritime disasters: A Night to Remember, Lifeboat, and The Poseidon Adventure. Each one highlights an aspect of the lifeboat problem. They’re useful analogies for thinking about the existential risks of booking a passage on spaceship Earth.

Can’t happen…

Continue reading “Earth's Titanic Challenges” »

Steamships, locomotives, electricity; these marvels of the industrial age sparked the imagination of futurists such as Jules Verne. Perhaps no other writer or work inspired so many to reach the stars as did this Frenchman’s famous tale of space travel. Later developments in microbiology, chemistry, and astronomy would inspire H.G. Wells and the notable science fiction authors of the early 20th century.

The submarine, aircraft, the spaceship, time travel, nuclear weapons, and even stealth technology were all predicted in some form by science fiction writers many decades before they were realized. The writers were not simply making up such wonders from fanciful thought or childrens ryhmes. As science advanced in the mid 19th and early 20th century, the probable future developments this new knowledge would bring about were in some cases quite obvious. Though powered flight seems a recent miracle, it was long expected as hydrogen balloons and parachutes had been around for over a century and steam propulsion went through a long gestation before ships and trains were driven by the new engines. Solid rockets were ancient and even multiple stages to increase altitude had been in use by fireworks makers for a very long time before the space age.

Some predictions were seen to come about in ways far removed yet still connected to their fictional counterparts. The U.S. Navy flagged steam driven Nautilus swam the ocean blue under nuclear power not long before rockets took men to the moon. While Verne predicted an electric submarine, his notional Florida space gun never did take three men into space. However there was a Canadian weapons designer named Gerald Bull who met his end while trying to build such a gun for Saddam Hussien. The insane Invisible Man of Wells took the form of invisible aircraft playing a less than human role in the insane game of mutually assured destruction. And a true time machine was found easily enough in the mathematics of Einstein. Simply going fast enough through space will take a human being millions of years into the future. However, traveling back in time is still as much an impossibillity as the anti-gravity Cavorite from the First Men in the Moon. Wells missed on occasion but was not far off with his story of alien invaders defeated by germs- except we are the aliens invading the natural world’s ecosystem with our genetically modified creations and could very well soon meet our end as a result.

While Verne’s Captain Nemo made war on the death merchants of his world with a submarine ram, our own more modern anti-war device was found in the hydrogen bomb. So destructive an agent that no new world war has been possible since nuclear weapons were stockpiled in the second half of the last century. Neither Verne or Wells imagined the destructive power of a single missile submarine able to incinerate all the major cities of earth. The dozens of such superdreadnoughts even now cruising in the icy darkness of the deep ocean proves that truth is more often stranger than fiction. It may seem the golden age of predictive fiction has passed as exceptions to the laws of physics prove impossible despite advertisments to the contrary. Science fiction has given way to science fantasy and the suspension of disbelief possible in the last century has turned to disappointment and the distractions of whimsical technological fairy tales. “Beam me up” was simply a way to cut production costs for special effects and warp drive the only trick that would make a one hour episode work. Unobtainium and wishalloy, handwavium and technobabble- it has watered down what our future could be into childish wish fulfillment and escapism.

Continue reading “Verne, Wells, and the Obvious Future Part 1” »

Greetings fellow travelers, please allow me to introduce myself; I’m Mike ‘Cyber Shaman’ Kawitzky, independent film maker and writer from Cape Town, South Africa, one of your media/art contributors/co-conspirators.

It’s a bit daunting posting to such an illustrious board, so let me try to imagine, with you; how to regard the present with nostalgia while looking look forward to the past, knowing that a millisecond away in the future exists thoughts to think; it’s the mode of neural text, reverse causality, non-locality and quantum entanglement, where the traveller is the journey into a world in transition; after 9/11, after the economic meltdown, after the oil spill, after the tsunami, after Fukushima, after 21st Century melancholia upholstered by anti-psychotic drugs help us forget ‘the good old days’; because it’s business as usual for the 1%; the rest continue downhill with no brakes. Can’t wait to see how it all works out.

Please excuse me, my time machine is waiting…

The California Dream Act.

The banking industry is likely California Dreaming about the day when more states get their act together. …For those of us who think that the US will see a bubble in the education industry caused by its efforts to distribute human kind’s knowledge communities outside of the affluent elite, they shouldn’t hold their breath.

The Cali Dream Act could seem like an altruistic attempt to empower our desperate relatives converging on US cities, but there are some fiscally desperate economics behind this proverbial triumph over “social evil”, as if such a thing ever existed…LOL

Continue reading “Avoiding Bubbles — The California Dream Act” »

I got this tweet today, as a part of a larger conversation that technological breakthroughs could help predict disruptive economic times. During the past 10 days or so, the US and global financial markets have taken a deep plung, as a result of, well, according to the CIOs (chief investment officers) and politicians, we don’t know. The new industry pins the almost unanimous economic decisions of sell sell sell, to the latest new is geo-political interactions and/or financial specific news.

We see headlines like “Downgrade Ignites a Global Selloff” at the Wall Street Journal, referring to the Standard & Poor’s downgraded credit rating of US treasuries, which by the way soared during the selloff of equities, because of their relative strength.

Continue reading “The Technological Catalyst behind the Frequent Financial Market Capitulation” »

Dear Lifeboat Foundation Family & Friends,

A few months back, my Aunt Charlotte wrote, wondering why I — a relentless searcher focused upon human evolution and long-term human survival strategy, had chosen to pursue a PhD in economics (Banking & Finance). I recently replied that, as it turns out, sound economic theory and global financial stability both play central roles in the quest for long-term human survival. In the fifth and final chapter of my recent Masters thesis, On the Problem of Sustainable Economic Development: A Game-Theoretical Solution, I argued (with considerable passion) that much of the blame for the economic crisis of 2008 (which is, essentially still upon us) may be attributed the adoption of Keynesian economics and the dismissal of the powerful counter-arguments tabled by his great rival, F.A. von Hayek. Despite the fact that they remained friends all the way until the very end, their theories are diametrically opposed at nearly every point. There was, however, at least one central point they agreed upon — indeed, Hayek was fond of quoting one of Keynes’ most famous maxims: “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else” [1].

And, with this nontrivial problem and and the great Hayek vs. Keynes debate in mind, I’ll offer a preview-by-way-of-prelude with this invitation to turn a few pages of On the Problem of Modern Portfolio Theory: In Search of a Timeless & Universal Investment Perspective:

It is perhaps significant that Keynes hated to be addressed as “professor” (he never had that title). He was not primarily a scholar. He was a great amateur in many fields of knowledge and the arts; he had all the gifts of a great politician and a political pamphleteer; and he knew that “the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is generally understood. Indeed the world is ruled by little else” [1]. And as he had a mind capable of recasting, in the intervals of his other occupations, the body of current economic theory, he more than any of his compeers had come to affect current thought. Whether it was he who was right or wrong, only the future will show. There are some who fear that if Lenin’s statement is correct that the best way to destroy the capitalist system is to debauch the currency, of which Keynes himself has reminded us [1], it will be largely due to Keynes’s influence if this prescription is followed.…

Continue reading “On the Problem of Modern Portfolio Theory: In Search of a Timeless & Universal Investment Perspective” »

Perhaps the most important lesson, which I have learned from Mises, was a lesson located outside economics itself. What Mises taught us in his writings, in his lectures, in his seminars, and in perhaps everything he said, was that economics—yes, and I mean sound economics, Austrian economics—is primordially, crucially important. Economics is not an intellectual game. Economics is deadly serious. The very future of mankind —of civilization—depends, in Mises’ view, upon widespread understanding of, and respect for, the principles of economics.

This is a lesson, which is located almost entirely outside economics proper. But all Mises’ work depended ultimately upon this tenet. Almost invariably, a scientist is motivated by values not strictly part of the science itself. The lust for fame, for material rewards—even the pure love of truth—these goals may possibly be fulfilled by scientific success, but are themselves not identified by science as worthwhile goals. What drove Mises, what accounted for his passionate dedication, his ability to calmly ignore the sneers of, and the isolation imposed by academic contemporaries, was his conviction that the survival of mankind depends on the development and dissemination of Austrian economics…

Austrian economics is not simply a matter of intellectual problem solving, like a challenging crossword puzzle, but literally a matter of the life or death of the human race.

–Israel M. Kirzner, Society for the Development of Austrian Economics Lifetime Achievement Award Acceptance Speech, 2006

Continue reading “On the Problem of Sustainable Economic Development: A Game-Theoretical Solution” »