Bloomberg's pessimists guide

Found this interesting and worrying , but not because it is pessimistic.

https://www.bloomberg.com/graphics/pessimists-guide-to-2018/

The thing I note about these scenarios is they are all political/economic concerns.  Those are not the ones that worry me.  Yes they are bad, yes they hurt, but they are survivable, recoverable at a collective level at least.  It is the stuff not even on the radar of Bloomberg here that are the most troubling. You know the stuff: food security, eco systems collapse.

So there you have it  - guidance on how to profit from induced human misery while ignoring  the real crises.  They are so far down the rabbit hole they have forgotten  there is a world of light and life beyond the confines of the financial warren.  All the time they are down there burrowing away they undermine those  real world structures .  Madness...

Remarkable but unnoticed

History will likely have a spot for the first year of Trump's presidency, the saga of Brexit and the astounding impact of crypto-currencies this year.   Two stories that have not had significant attention might yet prove to be far more important than any of that. 


First wheat. Stable crop  for much of the developed world.  All that bread, pastry, breakfast cereal  and cake depends on grain and primarily wheat.   The overwhelming majority of the crop is grown on huge farms in inner continental  climate regions  -the prairies of the USA, steppes of Russia, Ukraine and parts of Australia.  It is big business, big machinery highly mechanised and industrialised.  The pursuit of yield has driven  breeding of high yielding varieties, at least they are high yielding if conditions are right.



Breeding varieties  for a single trait means a few selected genes have been selected time and again, and a few other lost.  So when a pathogen pops up that seems to particularly attack the same genes, things start to look  ugly.  No problem - start breeding in resistant genes to the  pathogen.  And that is hat has been happening for many years with resistance to wheat rusts (a family of fungal diseases).   But then a new pathogen  strain overcomes the resistance you have bred into your high yielding wheat pops up?


It has happened. Since the 1990's UG99 has been slowly expanding its range, from East Africa  into Pakistan and Afghanistan.  It is estimated more than 85% of the world's wheat is susceptible because almost all high yield wheat varieties carry the  Sr35 gene which is where the vulnerability  lays.


Despite this vulnerability and the projected increasing  demands for wheat across the globe as population and per capita consumption rises , wheat prices are  almost at a decade low.  

A different perspective on similar data, but pricing in gold rather than dollars, and hence somewhat mitigating inflationary effects from fiat currency:

Of course there is no certainty about how wheat prices will play out in the future.  But over the next 5  to 10 years the odds look to be very much in favour of significant price rises, and that is going to be reflected in basic food costs.  And that will impact the poorest hardest.


Second on my very short list is something that happened just this month.  AlphaZero teaches itself champion playing The importance is not that it beat other game playing AI's.  It is that it taught itself  to do so very quickly .  This is arguably the first step to a generalised intelligence.  Games are no different from many other spheres of human activity.  As long as there are clear rules and an objective evaluation function  all sorts of situations ought to be  capable of being treated the same way.  It is a game changer in more ways that one.

House built on sand?

eGov: £10million spent and key part still to do

https://www.bailiwickexpress.com/jsy/news/egov-project-exceed-99million-budget/?t=i#.WjitGXnLjcs


Software projects are difficult and big government type projects harder still.  Just look at the history of UK NHS IT projects for lessons in failure.  However headlines that the one above make me really nervous.  If you know there is a high risk of failure ,or a crucial  element the sensible thing to do is  trial out the key bits and the the most difficult bits first.

If you cannot deliver the key bits best to know early so the project board can close down the project with minimal financial costs,  albeit with a few embarrased faces. You might have the option of taking a different approach or making some compromises on other parts of the project so the whole can be delivered, but again if that's understood early on  it can be accommodated.  If you spend all the time and budget on the relatively simple stuff and worrying about the colour scheme and  type face of the  UI (It happens), you spend a ton of money and then not have time or budget left to tackle the hard crucial key bit.  If that isn't delivered you have wasted everything. At best your project overruns and you will be under immense pressuse for delivery on a crucial bit - and that is where quality shouldn't be compromised, but inevitable will be.  


That healdine, if an accurate representation of the state of play, should be a big red flag  to those overseeing the project.  It would be if they had any experience.  My guess is they will glibly sail on under the assurance we are 90 or 95%  of the way there.  That might be true in terms of code written , or budget spent.  No one ever asks about progress but in terms of risk and quality.  Those matter.  In big IT projects those matter a lot.

Unbalanced futures

I inadvertently found myself listening to the States on Wednesday afternoon. It is a habit I thought I had overcome ! It was on the funding of the new hospital. I haven't followed the debate on the selection of the site, but I was interested to hear some of the points being made about the funding. 

 At one extreme was Deputy A Lewis who was arguing we should be borrowing more. The basis of his case was that with abnormally low interest rates it would cost less than the return on the funds we have invested. The amount of debt the States carry would be considered very low in business and more is affordable. At the other end of the spectrum was deputy Bree and Sen Ozouf arguing it is too much of a burden on future generations. The proposal was for a fixed interest 40 year bond. In all probability the value of the capital repayment will be significantly eroded by inflation, but its not guaranteed and we have had extended periods of deflation in the past. 

 Both cases are based on some degree of facts, though I'm bound to note there are companies, even quoted ones, that operate without debt. Taking on debt necessarily requires you to have a view that you will have inflation or income growth in the intervening period. Both are plausible over the next 40 years. And in many way that is the problem. 

I was waiting to hear someone raise the question over other commitments and problems we shall have to fund over the next 40 years. Problems that themselves stem from growth - the growth needed to afford repaying the loan. Not one mention of the issues of climate change, resource depletion etc etc. A whole assembly making 40 year future commitments as though somehow finances are isolated and independent of the realities of growth in the physical world over a comparable timescale is folly. 

Of course we are in a hole, there is no good solution from this position. Deputy Noel made a good observation here. The reason we had to borrow £250million (issue a bond) to sort out the housing problems was because we (The States) did not invest in the housing stock over the years. Similarly with the health buildings. I believe that is true. And there was a reason that was allowed to continue. We had for decades a mentality that the tax system was perfect, so the revenue available fairly static, regardless of the scale of the problems to be addressed. That was folly. It is one that we somewhat persist with . 

All these new capital projects have to be funded of course, but as ever when you launch a big building programme you are committed not just to the capital costs, but a significant amount of ongoing maintenance and management costs, at least you are if you are doing it properly. My problem is we seem not to have learnt, we are still not making adequate provision it seems for future commitments. And if we aren't doing that financially when the whole assembly is looking at the finances, what do you imagine is going on about ecology and sustainability where practically no member of the States takes a strong lead?

Now that is a parliamentary speech

A valedictory speech from the New Zealand governement.  It is so sad and somewhat shameful that we have heard nothing like this in  the States Assembly for quite some time.