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— John Morton, DSS

Wednesday, August 26, 2009

Go Revisited

In past posts I have spoken extensively about the Game of Go. Chess is about win/lose and is mostly tactics. Go is more about a longer range strategic approach, in which even the loser usually ends up with some territory. Chess is primarily played in the West. Go in the East.

This interesting article by Ambrose Evans-Pritchard highlights what I was attempting to convey:

Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons.

A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs.

China mines over 95pc of the world’s rare earth minerals, mostly in Inner Mongolia. The move to hoard reserves is the clearest sign to date that the global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price.

Alistair Stephens, from Australia’s rare metals group Arafura, said his contacts in China had been shown a copy of the draft -- `Rare Earths Industry Development Plan 2009-2015’. Any decision will be made by China’s State Council.

“This isn’t about the China holding the world to ransom. They are saying we need these resources to develop our own economy and achieve energy efficiency, so go find your own supplies”, he said.

Mr Stephens said China had put global competitors out of business in the early 1990s by flooding the market, leading to the closure of the biggest US rare earth mine at Mountain Pass in California - now being revived by Molycorp Minerals.

New technologies have since increased the value and strategic importance of these metals, but it will take years for fresh supply to come on stream from deposits in Australia, North America, and South Africa. The rare earth family are hard to find, and harder to extract.

Mr Stephens said Arafura’s project in Western Australia produces terbium, which sells for $800,000 a tonne. It is a key ingredient in low-energy light-bulbs. China needs all the terbium it produces as the country switches wholesale from tungsten bulbs to the latest low-wattage bulbs that cut power costs by 40pc.

No replacement has been found for neodymium that enhances the power of magnets at high heat and is crucial for hard- disk drives, wind turbines, and the electric motors of hybrid cars. Each Toyota Prius uses 25 pounds of rare earth elements. Cerium and lanthanum are used in catalytic converters for diesel engines. Europium is used in lasers.

Blackberries, iPods, mobile phones, plams TVs, navigation systems, and air defence missiles all use a sprinkling of rare earth metals. They are used to filter viruses and bacteria from water, and cleaning up Sarin gas and VX nerve agents.

Arafura, Mountain Pass, and Lynas Corp in Australia, will be able to produce some 50,000 tonnes of rare earth metals by the mid-decade but that is not enough to meet surging world demand.
New uses are emerging all the time, and some promise quantum leaps in efficiency. The Tokyo Institute of Technology has made a breakthrough in superconductivity using rare earth metals that lower the friction on power lines and could slash electricity leakage.

The Japanese government has drawn up a “Strategy for Ensuring Stable Supplies of Rare Metals”. It calls for `stockpiling’ and plans for “securing overseas resources’. The West has yet to stir.

Posted by Paul Kaye at 7:34 PM
Keywords: Getting Ready, The Economy, The World
Comments [2] | Leave Your Comment

Tuesday, June 16, 2009

Three Important Trends

Number One

Last year, for the first time ever, the developing world consumed more energy than the developed. And this year, the US, Canada and Europe will generate less than half of global economic output, according to the Centre for Economics and Business Research. The emerging markets have come of age. We now need some new tag to describe an admittedly vast region that in many respects has better fundamentals than the West: better growth prospects; larger foreign reserves; less sovereign indebtedness; better GDP per capita growth; a stabler banking system; superior household finances and savings rates. Resurging markets, perhaps ?

Tim Price PFP Wealth Management Newsletter

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Number Two

American children have it easier than most other children in the world, including the supposedly lazy Europeans. They have one of the shortest school years anywhere, a mere 180 days compared with an average of 195 for OECD countries and more than 200 for East Asian countries. German children spend 20 more days in school than American ones, and South Koreans over a month more. Over 12 years, a 15-day deficit means American children lose out on 180 days of school, equivalent to an entire year.

American children also have one of the shortest school days, six-and-a-half hours, adding up to 32 hours a week. By contrast, the school week is 37 hours in Luxembourg, 44 in Belgium, 53 in Denmark and 60 in Sweden. On top of that, American children do only about one hour’s-worth of homework a day, a figure that stuns the Japanese and Chinese.

Americans also divide up their school time oddly. They cram the school day into the morning and early afternoon, and close their schools for three months in the summer. The country that tut-tuts at Europe’s mega-holidays thinks nothing of giving its children such a lazy summer. But the long summer vacation acts like a mental eraser, with the average child reportedly forgetting about a month’s-worth of instruction in many subjects and almost three times that in mathematics.


The Economist

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Number Three

From Paul Kedrosky:

There is an important story in England’s Daily Telegraph about the increasing likelihood that some economically devastated U.S. cities may have to be partially bulldozed in order to survive. With cities like Flint, Michigan, having lost much of their rationale for existence, this should not come as a complete surprise. Nevertheless, this will be a difficult pill for "things will come back" America to swallow.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the "rust belt" of America's Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.

"The real question is not whether these cities shrink – we're all shrinking – but whether we let it happen in a destructive or sustainable way," said Mr Kildee. "Decline is a fact of life in Flint. Resisting it is like resisting gravity."

Karina Pallagst, director of the Shrinking Cities in a Global Perspective programme at the University of California, Berkeley, said there was "both a cultural and political taboo" about admitting decline in America.

"Places like Flint have hit rock bottom. They're at the point where it's better to start knocking a lot of buildings down," she said.

Flint, sixty miles north of Detroit, was the original home of General Motors. The car giant once employed 79,000 local people but that figure has shrunk to around 8,000.

Posted by Paul Kaye at 7:26 PM
Keywords: Getting Ready, The Economy, The World
Comments [2] | Leave Your Comment

Friday, June 12, 2009

Back from Europe

If ever an article represented the ethos of this blog and is reflective of my own personal values this piece in the New York Times by the superb writer Pico Iyer does it. Please read the whole article. Excerpt:

"I had been lucky enough at that point to stumble into the life I might have dreamed of as a boy: a great job writing on world affairs for Time magazine, an apartment (officially at least) on Park Avenue, enough time and money to take vacations in Burma, Morocco, El Salvador. But every time I went to one of those places, I noticed that the people I met there, mired in difficulty and often warfare, seemed to have more energy and even optimism than the friends I’d grown up with in privileged, peaceful Santa Barbara, Calif., many of whom were on their fourth marriages and seeing a therapist every day. Though I knew that poverty certainly didn’t buy happiness, I wasn’t convinced that money did either.

"So — as post-1960s cliché decreed — I left my comfortable job and life to live for a year in a temple on the backstreets of Kyoto. My high-minded year lasted all of a week, by which time I’d noticed that the depthless contemplation of the moon and composition of haiku I’d imagined from afar was really more a matter of cleaning, sweeping and then cleaning some more. But today, more than 21 years later, I still live in the vicinity of Kyoto, in a two-room apartment that makes my old monastic cell look almost luxurious by comparison. I have no bicycle, no car, no television I can understand, no media — and the days seem to stretch into eternities, and I can’t think of a single thing I lack."

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For Your Education Dept.

"Although we in the West tend to forget, 190 years ago one-third of the world's gross domestic product was in China. But then, rather suddenly, colonial exploitation and unfair trade agreements, combined with a technological revolution in Europe and America, left the developing countries far behind, to the point where, by 1950, China's economy constituted less than 5 percent of the world's G.D.P. In the mid-19th century the United Kingdom and France actually waged a war to open China to global trade. This was the Second Opium War, so named because the West had little of value to sell to China other than drugs, which it had been dumping into Chinese markets, with the collateral effect of causing widespread addiction. It was an early attempt by the West to correct a balance-of-payments problem."

--Joseph E Stiglitz writing in Vanity Fair

Posted by Paul Kaye at 4:01 PM
Keywords: Frugal Living, The World, Trust, Values
Comments [3] | Leave Your Comment

Friday, February 27, 2009

Reality Check


How, then, do we live in this world?
How can we gain? What can our goal be?

For God's sake, don't have a goal in this world.
It's going to beat you bloody.

Where is the goal? The goal is inside.

When you turn back inside, you have your goal, you have your completeness, you have your fullness and you walk through the world, having all else added unto you.



(From The Tao Of Spirit by John-Roger, DSS)

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Good stuff from author and historian Niall Ferguson today. Some excerpts below but the whole interview is definitely worth a read here.

“...this isn't a recession. This is something really quite different in character from anything we've experienced in the postwar era. That's why these projections give positive numbers for 2010. That's the default setting. And it just seems to me ostrich-like, to bury one's head in the sand and assume this has to end this year because, well, that's what recessions do.

“It's obvious, surely we know by now, that this is something quite different. It's a crisis of excessive debt, the deleveraging process has barely begun, the U.S. consumers are not going to suddenly bounce back and hit the shopping malls just because they get a tax cut. The savings rate is going to continue to rise. These processes have tremendous momentum that quite clearly differentiates them from anything that we've seen, including the early 80s, including 73, 74, 75. Those big crises, the ones that we have lived through, were bad. But this one seems certain to be deeper, and more protracted.

“The truth about the crisis is that it is in large measure psychological. We're not dealing here with mathematics. We're not dealing here with human beings as calculating machines. We're dealing with real people whose emotions influence their individual decisions, and the swing from greed to fear is a very spectacular thing when it happens on this scale.

“I've been talking a while about this being the Great Repression. It took ages, ages, for people to realize this thing had fallen apart.”

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And this from Blackstone’s Steve Schwarzman via Paul Kedrosky matches my perspective:

“Our view is the economy will continue to deteriorate sharply and then I think you will have a weak 2010 although I don’t think it will keep declining…I think 2011 will show some growth but still be well below the levels of 2006 and 2007. My own view is you may not get back to 2006 and 2007 for a long time because we have sort of an emotional and psychic shift going on in America which is back to basics, don’t live on leverage, live within your means, more humble life styles, less extravagant consumption, savings, and all of that sort of stuff.

“I believe that a lot of people in America are legitimately scared and have seen their life savings or what they perceived as their net worth largely either wiped out or cut in half. That’s going to forge fundamental behavioral differences and that will retard the growth.”

Posted by Paul Kaye at 11:14 PM
Keywords: Money, The Economy, The World
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Friday, February 20, 2009

In the Midst of the Meltdown 5

Shape clay into a vessel;
It is the space within that makes it useful.


--Lao-Tzu

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It is within the no-thing that the Spirit lives.

The Spirit will not come into a space that is already filled.

If you are filled with anxiety, fear, depression, and disturbance, there is no space for the Spirit.

And since the Spirit cannot violate your consciousness, it must stay outside.

When you give up the negative emotions and expressions, the space that is left can be filled by the Spirit.

But you must create the space.

You have to risk letting go of the things that do not work for you in order to gain the things that will.


(From the Tao of Spirit by John-Roger, DSS)

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We are certainly living in interesting times. Please be aware of what is going on around you. It will change the course of the planet for generations. For example, capitalism. The U.S.A. is the great bastion of capitalism. Make that "was." And all in the last month or two. We are seeing that if an inefficient auto maker fails it is bailed out by the government. If a large, corrupt financial institution over extends itself through greed and stupidity, it is bailed out by the government. If a person spends too much money on a house they could never afford and are behind on their payments, they too are now being bailed out by the government. And who is really bailing them out? The people who run their businesses efficiently, who make their house payments on time and who are honest and pay their taxes. This is the new face of capitalism, and what you are seeing, first hand, is an abysmal failure. It is a historic moment. Really. You have a front row seat on what is likely to be an ongoing great world social upheaval.

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If you still can't get your head around what has taken place and all the terms like Credit Default Swaps and CDO's and things like that then this 11 minute video is a must see. It is about the clearest explanation I have found. Please educate yourself.


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Posted by Paul Kaye at 9:50 PM
Keywords: Letting Go, The Economy, The World
Comments [1] | Leave Your Comment

Tuesday, February 17, 2009

In the Midst of the Meltdown 3

In the midst of winter
I discovered within me,
an invincible summer.


— Albert Camus

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I am no financial genius. Quite the contrary. I believe in working for a living and not having expenses exceed what is earned. If money is borrowed then the use of that money should earn more than the cost of borrowing it as well as generating the money to be able to repay the loan.

As you can see with this philosophy I have been entirely out of kilter with the economy for most of my adult life. I have never really got how a consumer society could be sustained and how increasing amounts of leverage can be applied ad infinitum. Each time I thought the economy was going to collapse, property values went higher and the stock market went to new highs. I thought I was going crazy as I experienced a mismatch between my personal values and what I knew to be sustainable, and what was actually going on. Friends and acquaintances achieved wealth that I couldn’t imagine with relative ease. I felt left out and a little stupid.

Give the above you can imagine that the current financial insanity is to me a return to saner times. Things now make sense again and I feel in tune with the times for the first time in over 30 years.

That’s why I know that this stimulus package is doomed to fail. It may have short term benefits but how can you possibly cure financial irresponsibility with even more ramped financial irresponsibility? How can you cure a drug addict with more drugs--unless of course you are trying to kill them?

And how is this debt going to get paid off? With whose money?

It's going to be a long and winding road involving economics, geopolitics, the environment, and social factors. But at least I feel sane for the first time in years. It really is a great time to be alive.

Posted by Paul Kaye at 5:56 PM
Keywords: Getting Ready, The World
Comments [3] | Leave Your Comment

Tuesday, January 20, 2009

Another Form of Abundance

If you will strive to have a pleasant disposition while you’re doing whatever you’re doing in the world, there is a greater tendency for your Soul, which is so perfect and so loving, to radiate out of your pleasant disposition.

A truly pleasant disposition is loving, compassionate, and empathic, with the ability to know what’s going on in the world, because it is not run by the ego.

If you take that same pleasantness back inside you, you live with an abundance of enthusiasm that overflows to others.

Now, that is truly helping the planet.


From What's It Like Being You by John-Roger, DSS with Paul Kaye

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I found this interesting it is from a Bloomberg review of George Friedman's new book The Next 100 Years. I respect Friedman a lot.

“The United States -- far from being on the verge of decline -- has actually just begun its ascent,” Friedman writes in this geopolitical thriller.

Already in 2009, Friedman says, the jihadists behind the shock of Sept. 11, 2001, are a receding threat, their goal of an Islamic empire straddling Europe and Asia shattered by divisions in the Muslim world.

China will be the next challenger to go, torn apart by the inevitable economic slowdown and rekindled tensions between the coastal provinces and the countryside, Friedman predicts. Russia will hang on longer, rebuilding a Soviet bloc-lite by 2015, only to lose the second Cold War in much the same way it lost the first, and more quickly.

Two facts will drive the century according to this forecast: America’s dominance of the world’s oceans and its comparatively low population density. Dismissing the Great Man school of history, Friedman pays little attention to the triumphs and blunders of political leaders. He instead argues that each country’s grand strategy is “deeply embedded” in its DNA.

There are some brilliant apercus to be found in these pages. The U.S. “tends to first underestimate and then overestimate enemies,” we read. Russia is rearming because “rich and weak is a bad position for nations to be in.”


Paul Kedrosky had this to say about it:

Some musings from George Friedman of Stratfor today got me thinking about demographics and the future of the U.S. What people forget is that while the U.S. is aging, it is still a relatively young country in demographic terms. It is younger than almost all of Europe, as well as Japan, of course, but not (currently) China. That is a tremendous advantage, and one that is likely to tilt further in the U.S.'s.

These are, of course, wild-ass guesses, and I'm cheerfully skeptical that it all works out so neatly in the U.S.'s favor. But there is no denying Friedman is an entertaining geopolitical analyst. And, from an entirely selfish perspective, he did manage to make me go check U.S./China UN demographic data on the two countries aging rates. It compares the proportions of the two countries' populations age 65 and older in 2010, and in 2050. The pace at which China will go from a young society to an elderly one is remarkable.


Posted by Paul Kaye at 7:01 PM
Keywords: Fullness, The World
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