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ARTIFACTS FROM THE FUTURE

2009-07-08T18:22:00.006+02:00

Our understanding of the future is greatly improved when we have clear images of what it might be like. Here are some images:

For years, Wired magazine has tapped a bevy of designers and artists in the tech field to craft detailed visions of futuristic objects for a monthly showcase at the close of each issue.

11.04 - Election Day (2012)
12.04 - Barf Bag (2047)
01.05 - House Call (near future)
02.05 - Taste Tester (2009)
03.05 - Insurance Form (2069)
04.05 - Horoscope (2056)
05.05 - Bumper Sticker (2012)
06.05 - Antivirus (2022)
07.05 - Nightstand (2017)
08.05 - Crossword (2019) [solution]
09.05 - Space Elevator (2032)
10.05 - Sharper Image (2012)
11.05 - Diaper (2024)
12.05 - Christmas Morning (2016)
01.06 - Mood Ring (2009)
02.06 - Love Tester (2015)
03.06 - MTA Route Map (2067)
04.06 - Tax Day (2021)
05.06 - Operation (2027)
06.06 - Bookstore (2021) [side view]
07.06 - Contact Lens (2020)
08.06 - Diet Cola (2019)
09.06 - Report Card (2018)
10.06 - Bluetooth (2019)
11.06 - Organ Farming (2015)
12.06 - Christmas Shopping (2017)
01.07 - Crayons (2013)
02.07 - Speeding Ticket (2054)
03.07 - Medicine Cabinet (2013)
04.07 - Bug Spray (ca. 2050)
05.07 - Reunion (2052)
06.07 - Fido Fusion (2016)
07.07 - Comic Book (2021)
08.07 - Fruit Stand (ca. 2020)
09.07 - Birthday (2079)
10.07 - Halloween (2015)
11.07 - Waste Management (ca. 2025)
12.07 - Responsibeer (2012)
01.08 - Windshield (2013)
02.08 - Tatoo (near future)
03.08 - Home Shopping (ca. 2016)
04.08 - Risk (2027)
05.08 - Smithsonian (2096)
06.08 - Wine Spectrometer (ca. 2020)
07.08 - "The Final Found" (2018)

SCENARIOS FOR ECONOMIC RECOVERY

2009-07-08T17:08:00.011+02:00

Source: Fast Future - FutureScape Issue 3 - July 8th 2009
http://twitter.com/fastfuture | http://www.linkedin.com/in/talwar
Fast Future is a research and consulting firm which focuses on helping clients anticipate and develop innovative responses to the forces, patterns of change and ideas shaping the future.

4 Fast Future Scenarios for Economic Recovery
In our current work with clients, we are focusing on four main scenarios for how this downturn could play out. These all are plausible - if not equally likely - scenarios for how the key engines of the global economy may develop over the coming five to six years. As none of us truly knows how the next few years will play out, we cannot rely on a single set of assumptions. Instead, as governments, businesses, nonprofits and individuals we have to prepare for a range of possible scenarios and have strategies in place to deal with each of them. In the interest of brevity we have focused here largely on the economic outlook. Elsewhere we have expanded the scenarios to look at the impact of and implications for other factors such as the environment, energy prices, science and technology, innovation, regional development perspectives, social values and governance structures.

Scenario 1 - Love is in the Air - The "V" shaped recession.
Under this scenario, the recovery starts towards the end of 2009 / early 2010. Tough banking reforms and "bad bank" models are adopted in most of the hardest hit economies. As many developing economies such as China and India manage to avoid recession, confidence returns to those markets more rapidly. A wave of new lending by developing economy banks from China to the Middle East helps improve the flow of credit in developed markets and simpler loan structures also help improve transparency and increase investor confidence in the borrowers.

In the more developed economies, despite concerns over the potential US$600 trillion of outstanding derivates contracts and a possible US$1 trillion of 'at risk' Eastern European debt, the system largely withstands the pressures, major new shocks, are prevented, only a few economies fail and confidence gradually returns to the real economy. While redundancies, wage cuts, short time working and other measures continue to be adopted for at least another year, most developed economies have turned the corner by the end Q1 2010. Public sector debt and the measures to address it act as a brake on the recovery but we see an eventual return to 2008 growth levels by 2013-14 at the latest. However concern is also growing in developed economies over how to deal with an ageing society, a growing pensions shortfall and the overhang of public sector debt.

Scenario 2 - Suspicious Minds - The "U" shaped recession.
The much heralded economic decoupling is more evident in this scenario as China and India recover faster than much of the more the developed world, bringing a number of developing economies along in their wake. A strong outflow of investment funds from developed economy firms and funds into developing markets helps accelerate the recovery process as the investors seek to offset negative conditions in their home markets. China and India in particular see rapid development trajectories and are back to their 2008 growth levels by 2011 - driven by high levels of infrastructure spending and rising domestic consumption.

Most of the larger economies in Europe, the US and Japan don"t pull out until later in 2010 or early 2011 and do not get back to 2008 growth levels until 2015 or later. During 2010 one or two major new shocks emanating from the banking system serve to erode confidence and slow the pace of developed economy recovery. Developing economy banks don"t start lending to the developed world at significant levels until the second or third quarter of 2010 as they wait to ensure that the bottom has definitely been reached. Nervous consumers continue to emphasise savings over spending through most of 2010. Redundancies and other cost cutting measures continue through 2010 and into 2011 - with the public sector in some countries seeing some of the biggest job losses.

Scenario 3 - Dancing in the Dark - The "W" shaped or "sine wave" recession.
Pent up demand, plentiful supplies of available talent and cheap asset prices lead to a short term recovery towards the end of 2009 / early 2010 as businesses and consumers start spending again. However a series of new shocks emerge from the banking system through 2010, bringing more bank failures, further nationalisations and rising bailout costs. The result is declining business and consumer confidence as credit dries up and increasingly negative sentiment dominates the media. By 2011 we fall back either into a much deeper and longer lasting recession or experience a series of oscillations in and out of recession over a four to five year period. The result is zero net growth over the period for Europe, the US and Japan. Corporate investment in particular shifts rapidly to selected developing economies until the end of 2010. Investment slows rapidly from 2011 onwards as firms around the world focus on conserving cash and batten down the hatches for a prolonged period of uncertainty.

While China and India don"t actually fall into recession, growth rates fall to 3-4% as the collapse in demand from Western markets takes its toll along with a rapid decline of confidence and negative economic outlook in many other developing economies. 2010 is the year of the Asian takeover as cash rich Chinese and Indian firms in particular acquire businesses cheaply across global markets. Country bankruptcies happen more frequently. Redundancies are commonplace through to 2012-13. Confidence only really starts to return once consumers have adapted to a lower income lifestyle and investors and businesses start to accept they are operating in new era of lower profit margins. Particularly painful restructuring of state and company pension funds and rolling back of pension commitments lead to high levels of public unrest and even bring down some governments. Eventually the 2009-10 stimulus package investments in infrastructure, education and green technologies start to generate new economic opportunities and yield new jobs.

Scenario 4 - Road to Nowhere - The "L" shaped recession.
In this scenario, we go into a long and deep downturn in Europe, the US and Japan with only feint signs of recovery by 2014. China and India could well dip into recession and many developing economies would fail. Small scale inter-country conflicts would be highly likely in the developing world and in parts of Eastern Europe. Company failure rates of 25-30% and unemployment of 25% are experienced in some economies. Huge levels of debt default by countries, corporates and individuals generates further economic uncertainty.
The recovery when it comes is not uniform. A combination of massive cuts in public services, higher tax rates, business support grants and cheap loans are all adopted as measures to help stabilize finances and encourage growth. Pension systems are reformed and payments are scaled back. Growth is driven by new technologies, processes and business models in areas such as green technologies, food production, infrastructure and education. A new breed of low cost, low price businesses emerge in every sector. A simplified and highly regulated banking system evolves with a clear legal differentiation between consumer banks and commercial banks. The complex investment banking products, securitised debt derivatives and hedge fund structures have all but disappeared as the new mantra is of one of control, simplicity and transparency.

Responding to the Scenarios
We know that in reality the recovery won't quite reflect any of these scenarios. However the aim is not to predict the exact trajectory of recovery but to paint a range of possible pictures of what it could look like. The challenge for leaders and individuals is to assess each scenario (or develop your own) and determine what your response would be before the event rather than while it is happening.
We'd be fascinated to hear your views on what the recovery scenarios could like and the kinds of strategies you see as appropriate in each case.

NEVER MISTAKE A CLEAR VIEW FOR A SHORT DISTANCE

2009-05-24T21:14:00.004+02:00

A.I.'s new respectability is turning the spotlight back on the question of where the technology might be heading and, more ominously, perhaps, whether computer intelligence will surpass our own, and how quickly.

The concept of ultrasmart computers - machines with "greater than human intelligence" - was dubbed "The Singularity" in a 1993 paper by the computer scientist and science fiction writer Vernor Vinge. He argued that the acceleration of technological progress had led to "the edge of change comparable to the rise of human life on Earth." This thesis has long struck a chord here in Silicon Valley.

Artificial intelligence is already used to automate and replace some human functions with computer-driven machines. These machines can see and hear, respond to questions, learn, draw inferences and solve problems. But for the Singulatarians, A.I. refers to machines that will be both self-aware and superhuman in their intelligence, and capable of designing better computers and robots faster than humans can today. Such a shift, they say, would lead to a vast acceleration in technological improvements of all kinds.

The idea is not just the province of science fiction authors; a generation of computer hackers, engineers and programmers have come to believe deeply in the idea of exponential technological change as explained by Gordon Moore, a co-founder of the chip maker Intel.

In 1965, Dr. Moore first described the repeated doubling of the number transistors on silicon chips with each new technology generation, which led to an acceleration in the power of computing. Since then "Moore's Law" - which is not a law of physics, but rather a description of the rate of industrial change - has come to personify an industry that lives on Internet time, where the Next Big Thing is always just around the corner.

Several years ago the artificial-intelligence pioneer Raymond Kurzweil took the idea one step further in his 2005 book, "The Singularity Is Near: When Humans Transcend Biology." He sought to expand Moore's Law to encompass more than just processing power and to simultaneously predict with great precision the arrival of post-human evolution, which he said would occur in 2045.

In Dr. Kurzweil's telling, rapidly increasing computing power in concert with cyborg humans would then reach a point when machine intelligence not only surpassed human intelligence but took over the process of technological invention, with unpredictable consequences.

Profiled in the documentary "Transcendent Man," which had its premier last month at the TriBeCa Film Festival, and with his own Singularity movie due later this year, Dr. Kurzweil has become a one-man marketing machine for the concept of post-humanism. He is the co-founder of Singularity University, a school supported by Google that will open in June with a grand goal - to "assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the development of exponentially advancing technologies and apply, focus and guide these tools to address humanity's grand challenges."

Not content with the development of superhuman machines, Dr. Kurzweil envisions "uploading," or the idea that the contents of our brain and thought processes can somehow be translated into a computing environment, making a form of immortality possible - within his lifetime.

The science fiction author Ken MacLeod described the idea of the singularity as "the Rapture of the nerds." Kevin Kelly, an editor at Wired magazine, notes, "People who predict a very utopian future always predict that it is going to happen before they die."

However, Mr. Kelly himself has not refrained from speculating on where communications and computing technology is heading. He is at work on his own book, "The Technium," forecasting the emergence of a global brain - the idea that the planet's interconnected computers might someday act in a coordinated fashion and perhaps exhibit intelligence. He just isn't certain about how soon an intelligent global brain will arrive.

Others who have observed the increasing power of computing technology are even less sanguine about the future outcome. The computer designer and venture capitalist William Joy, for example, wrote a pessimistic essay in Wired in 2000 that argued that humans are more likely to destroy themselves with their technology than create a utopia assisted by superintelligent machines.

Mr. Joy, a co-founder of Sun Microsystems, still believes that. "I wasn't saying we would be supplanted by something," he said. "I think a catastrophe is more likely."

Moreover, there is a hot debate here over whether such machines might be the "machines of loving grace," of the Richard Brautigan poem, or something far darker, of the "Terminator" ilk.

"I see the debate over whether we should build these artificial intellects as becoming the dominant political question of the century," said Hugo de Garis, an Australian artificial-intelligence researcher, who has written a book, "The Artilect War," that argues that the debate is likely to end in global war.

Concerned about the same potential outcome, the A.I. researcher Eliezer S. Yudkowsky, an employee of the Singularity Institute, has proposed the idea of "friendly artificial intelligence," an engineering discipline that would seek to ensure that future machines would remain our servants or equals rather than our masters.

Nevertheless, this generation of humans, at least, is perhaps unlikely to need to rush to the barricades. The artificial-intelligence industry has advanced in fits and starts over the past half-century, since the term "artificial intelligence" was coined by the Stanford University computer scientist John McCarthy in 1956. In 1964, when Mr. McCarthy established the Stanford Artificial Intelligence Laboratory, the researchers informed their Pentagon backers that the construction of an artificially intelligent machine would take about a decade. Two decades later, in 1984, that original optimism hit a rough patch, leading to the collapse of a crop of A.I. start-up companies in Silicon Valley, a time known as "the A.I. winter."

Such reversals have led the veteran Silicon Valley technology forecaster Paul Saffo to proclaim: "never mistake a clear view for a short distance."

Indeed, despite this high-technology heartland's deeply held consensus about exponential progress, the worst fate of all for the Valley's digerati would be to be the generation before the generation that lives to see the singularity.

"Kurzweil will probably die, along with the rest of us not too long before the 'great dawn,' " said Gary Bradski, a Silicon Valley roboticist. "Life's not fair."

Source
The Coming Superbrain by John Markoff, The New York Times, May 23, 2009

INTERPRETING DATA

2009-05-08T18:45:00.008+02:00

U.S. Economy:

The U.S. Labor Department said that employers cut 539,000 jobs in April. That was less than expected and the smallest reduction in six months.

However, the U.S. unemployment rate climbed to 8.9 percent, the highest since late 1983.

Oil Price:

Benchmark crude for June delivery rose $1.04 cents to $57.75 a barrel on the New York Mercantile Exchange. In London, Brent prices rose 83 cents to $57.31 a barrel on the ICE Futures exchange.

The Energy Information Administration said America's oil surplus grew less than expected, which is typically gives energy prices a boost.

But levels rose nonetheless, meaning storage houses were bloated with more crude than has been seen in nearly 19 years. Growing levels of unused crude in most cases would drive energy prices down.

ALPHATRENDS MARKET ANALYSIS (VIDEO)

2009-05-07T15:34:00.005+02:00

AlphaTrends

WOLFRAM ALPHA

2009-05-04T10:18:00.019+02:00

The biggest internet revolution for a generation will be unveiled this month with the launch of software that will understand questions and give specific, tailored answers in a way that the web has never managed before.

The new system, Wolfram Alpha, showcased at Harvard University in the US last week, takes the first step towards what many consider to be the internet's Holy Grail, a global store of information that understands and responds to ordinary language in the same way a person does.

Wolfram Alpha will not only give a straight answer to questions such as "how high is Mount Everest?", but it will also produce a neat page of related information, all properly sourced, such as geographical location and nearby towns, and other mountains, complete with graphs and charts.

The real innovation, however, is in its ability to work things out "on the fly", according to its British inventor, Dr Stephen Wolfram. If you ask it to compare the height of Mount Everest to the length of the Golden Gate Bridge, it will tell you. Or ask what the weather was like in London on the day John F Kennedy was assassinated, it will cross-check and provide the answer. Ask it about D sharp major, it will play the scale. Type in "10 flips for four heads" and it will guess that you need to know the probability of coin-tossing. If you want to know when the next solar eclipse over Chicago is, or the exact current location of the International Space Station, it can work it out.

What the experts say

"Generally, I did not use search terms that clearly had no computable answer (and therefore would have stumped Wolfram). But I also didn't throw any softballs in areas close to the heart of its makers: physics, chemistry, engineering, and genomics. On hard-core scientific questions, it gives you tons of symbols and graphics and other information that would be useful to a researcher but obscure to most people. But on many common questions for which there is no obvious data element, you will not get much help. In any event, if its plans hold, you should be able to test it out yourself in two or three weeks."
- David Talbot, Technology Review

"If it is not gobbled up by one of the industry superpowers, his company may well grow to become one of them in a small number of years, with most of us setting our default browser to be Wolfram Alpha."
- Doug Lenat, Semanticuniverse.com

Worldwide network: A brief history of the internet

1969 The internet is created by the US Department of Defense with the networking of computers at UCLA and the Stanford Research Institute.

1979 The British Post Office uses the technology to create the first international computer networks.

1980 Bill Gates's deal to put a Microsoft Operating System on IBM's computers paves the way for almost universal computer ownership.

1984 Apple launches the first successful 'modern' computer interface using graphics to represent files and folders, drop-down menus and, crucially, mouse control.

1989 Tim Berners-Lee creates the world wide web - using browsers, pages and links to make communication on the internet simple.

1996 Google begins as a research project at Stanford University. The company is formally founded two years later by Sergey Brin and Larry Page.

2009 Dr Stephen Wolfram launches Wolfram Alpha.
In a recent article on CNN, by John D. Sutter, entitled "New Search Engines Aspire To Supplement Google" the author examines some recent new search engines. The author discusses: Twine, Hakia, Searchme, Cuil, Kosmix, Wolfram Alpha, Topsy, TweetMeme and OneRiot. Each of these are different, making your web search more personal, more visual, or connecting your search to new social networks like FaceBook and Twitter.
The new search engine from Microsoft called Bing, which is very similar to Google in many ways. To Bing or not to Bing, that is the question? There's a very informative article on Bing by Farhad Manjoo on Slate entitled: "Beware Google: Microsoft's New Search Engine Isn't Half-bad." Just Bing or Google to find it!

Google Trends on May 4
Top Search Terms in the USA right now
1. prejean photos
2. miss usa runner up
3. carrie prejean pictures
4. cinco de mayo
5. miss california pictures
6. michael savage

Sources:
An invention that could change the internet, by Andrew Johnson, The Independent
Wolfram Alpha and Google Face Off, by David Talbot, Technology Review

WALL STREET LOOKS FORWARD, NOT BACK

2009-04-30T11:27:00.007+02:00

Wall Street sees signs of an economic recovery, so it is abandoning so-called safety stocks like Bristol-Myers for early-cycle plays like Fortune Brands. The focus is shifting from defense to growth because money managers expect a much better business environment six to nine months from now.

The only thing that matters is the performance going forward. That's why a consistent, stable firm like Bristol-Myers Squibb [BMY 19.15] can lose 4.3% in a single trading session, despite reporting solid numbers today. At the same time, Fortune Brands [FO 38.98] cut its dividend, but that stock finished the day higher by 3.9%.

Wheii.com Notes:

We still have to consider that consumer spending dipped in March as recession persists and jobless claims are stuck at elevated levels!
The number of people continuing to draw unemployment benefits jumped to more than 6.27 million, the highest on records dating back to 1967. Journalists shouldn't call the lower claims of 631000 last week (down from the prior week's 645000) a bullish signal!!! It is lower but we still have 631,000 NEW initial claims for unemployment!

Since early March, financials have risen 74 percent; cyclical consumer discretionary have jumped 46 percent; industrials gained 44 percent and materials are up 41 percent. The defensive sectors are underperforming. Almost half of the S&P are now up 50 percent from their 52-week lows.

INTEL: TOP TEN TECHNOLOGY PREDICTIONS FOR NEXT DECADE

2009-04-28T18:19:00.009+02:00

Intel predictions:
1.    New classes of portable devices with ten times more battery life
2.    Low-cost silicon photonics for faster data transmission
3.    New heights of realism in visual computing
4.    Realistic computer generated images
5.    Malware will become a thing of the past
6.    Personal internet devices will be truly personal
7.    Composable computing a reality
8.    Next-generation TV will not be about pixels
9.    Seamlessly connected 3-D worlds
10. A spectrum revolution is looming

Prediction One
:. new classes of portable devices with ten times more battery life

Sub-threshold integrated circuit technology requires only 300mV to operate.
Intel showed 4-way SIMD (single instruction multiple data) vector processing accelerator in 45nm in CMOS operated below its gate threshold voltage at the ISSCC technology conference. "This will lead to new classes of portable devices designed to take advantage of greater battery life, which in turn will drive popularity and uptake."

Prediction Two
:. low-cost silicon photonics for faster, more reliable data transmission
Silicon photonics optics channels will be used inside and outside PCs.

For example, remote optical memory can be used to create converged I/Os so a PC could have a single unified connector for a computer display, LAN, printer, wireless connection, scanner, USB and so on. Furthermore, because an optical channel does not require design engineering to ensure speed - its inherent in its nature - speed is implicit which has all sorts of positive implications such as true HD down loads, storage capability and terabit networking.

Prediction Three
:. new heights of realism in visual computing

There will be a shift from dedicated hardware graphics engines to general hardware running dedicated software as this has greater flexibility so features such as shadow map algorithms - an aspect of rendering that creates tiny ragged outline edges - can be replaced by 'soft shadows'. 'Order independent transparency' - the ability to create overlaid images which are clearly transparent, will be vastly improved. Overall, these benefits will deliver new heights of realism to computer generated imagery. Immediate applications areas are gaming sphere, but it will also have implications for business applications and the film industry.

Prediction Four
:. realistic computer generated images

Some types of complex graphic rendering requires the use of data sharing between the CPU and the graphic processing unit (GPU). However, the hardware-based model for graphics does not easily facilitate this at present. The sharing of virtualised memory between the CPU and the GPU will deliver the highest performance yet, for what are typically very complicated interactions. For example, complex data structures can be shared between the two with applications easily split between the CPU and GPU.

Prediction Five
:. malware will become a thing of the past

Malware, whatever form it takes whether viruses, trojans or worms, will be beaten by hardware-based techniques that protect at the deepest level. Today Intel has 'trusted execution technology' which is a set of processor hardware extensions and chipsets that have security characteristics such as measured launch and protected execution. It achieves this by creating an environment in which applications can run within their own space, protected from all other software on the system. To a degree, the success of hardware-based security is also dependent on how much effort vendors are prepared to put into securing their products. But once it is known that there is a solution that successfully addresses the problem of malware market forces will drive vendors in this direction.

Prediction Six
:. personal internet devices will be truly personal

Mobile internet devices (Mids) are already powerful enough to be useful and the introduction of sub-threshold devices (prediction one) mean these will run all day.
Add this to a continuous Internet connection and users will, for example, be able translate words into other languages and hear then pronounced, or with GPS get a constant geographically-based pollen prediction for that day. Ten years from now Mids will be ubiquitous and application developers will flood the market with all sorts of ingenious ideas.

Prediction Seven
:. interactive computing devices make 'composable computing' a reality

'Composable computing' is the impromptu assembly of a logical computer from wireless components that are nearby - enabled by wireless links, automatically assembling networks, and simple graphical user interfaces that allow available components selected and connected as the user desires. For example, images taken on a mobile device could be directed onto a nearby TV, or the music playing on an MP3 player could be sent to a HiFi in the room.

Prediction Eight
:. next-generation TV will not be about pixels

There is a limit to how big a TV screen can be without needing larger rooms, and a limit to the amount of resolution this size of screen needs. Beyond this, TVs will have to differentiate themselves by delivering further information. For example, click on a athlete in a running race to bring up biographical details in a window.
Viewing will be from any location, delivered through various means such as 'over-the-air' and multi-cast IP, and available on a wide range of devices from notebook PCs to mobile internet devices and smart phones.

Prediction Nine
:. seamlessly connected 3-D worlds

3D worlds, perhaps the World of Warcraft and Second Life, will overlap and be used for more practical activities. Companies already get feedback from virtual users about new products before they are brought to the real market, and virtual spaces can be created as meeting places where employees can exchange information regardless of geographical location. With the impending advances in computer graphics and growth in devices, how long will it be before a company like Amazon.com, for example, establishes a 3D presence with shopping aisles and book shelves that can be entered via virtual worlds such as Second Life?

Prediction Ten
:. and finally a spectrum revolution is looming

Already many devices contain two or three wireless connectivity options and as television becomes more interactive this need will become more pressing. As things stand today, the spectrum is fragmented and fairly chaotic, parts are saturated, and parts almost empty. It's unlikely that this will happen in a smooth manner, as many organisations will wish to maintain dominance of their spectrum segment.
However, for example, as broadcast TV eventually concedes its position to interactive TV which is tailored to each user's preferences, spectrum will eventually be freed up.

Source:
Intel top ten technology predictions, by Steve Bush, ElectronicsWeekly.com

THE WORLD DIGITAL LIBRARY

2009-04-21T20:02:00.012+02:00

Map of the New World, drawn by Diego Gutiérrez in 1562.
1562 Map of the New World

A digital repository of some of the most important documents in world history was launched by UNESCO this week.

The World Digital Library makes cultural and historical documents (maps, pictures, texts and other cultural artefacts) freely available on the Internet.
The World Digital Library

DO "QUANTS" ADD UP ON WALL STREET?

2009-03-11T10:05:00.009+01:00

What follows is an excerpt from the article written by Dennis Overbye and published on page 12 of the Global Edition of the New York Times on Wednesday, March 11, 2009.

They are known as "quants" because they do quantitative finance. Seduced by a vision of mathematical elegance underlying some of the messiest of human activities, they apply skills they once hoped to use to untangle string theory or the nervous system to making money. Quants occupy a revealing niche in modern capitalism. They make a lot of money but not as much as the traders who tease them and treat them like geeks. Until recently they rarely made partner at places like Goldman Sachs. In some quarters they get blamed for the current breakdown - "All I can say is, beware of geeks bearing formulas," Warren Buffett said on "The Charlie Rose Show" last fall. Even the quants tend to agree that what they do is not quite science.

As Dr. Derman put it in his book "My Life as a Quant: Reflections on Physics and Finance", "In physics there may one day be a Theory of Everything; in finance and the social sciences, you're lucky if there is a useable theory of anything." In the 1970s the late Fischer Black of Goldman Sachs, Myron S. Scholes of Stanford and Robert C. Merton of Harvard had figured out how to price and hedge these options in a way that seemed to guarantee profits. The so-called Black-Scholes model has been the quants' gold standard ever since. In the old days, Dr. Derman explained, if you thought a stock was going to go up, an option was a good deal. But with Black-Scholes, it doesn't matter where the stock is going. Assuming that the price of the stock fluctuates randomly from day to day, the model provides a prescription for you to still win by buying and selling the underlying stock and its bonds. The Black-Scholes equation resembles the kinds of differential equations physicists use to represent heat diffusion and other random processes in nature. Except, instead of molecules or atoms bouncing around randomly, it is the price of the underlying stock. The price of a stock option, Dr. Derman explained, can be interpreted as a prediction by the market about how much bounce, or volatility, stock prices will have in the future. But it gets more complicated than that. For example, markets are not perfectly efficient - prices do not always adjust to right level and people are not perfectly rational. Indeed, Dr. Derman told The Times, the idea of a "right level" is "a bit of a fiction." As a result, prices do not fluctuate according to Brownian motion. Rather, he said: "Markets tend to drift upward or cascade down. You get slow rises and dramatic falls."

One consequence of this is something called the "volatility smile," in which options that benefit from market drops cost more than options that benefit from market rises.
Another consequence is that when you need financial models the most - on days like Black Monday in 1987 when the Dow dropped 20 percent - they might break down.

One of the most outspoken critics is Nassim Nicholas Taleb, a former trader and now a professor at New York University. He got a rock-star reception at the World Economic Forum in Davos this winter. In his best-selling book "The Black Swan" (Random House, 2007), Dr. Taleb, who made a fortune trading currency on Black Monday, argues that finance and history are dominated by rare and unpredictable events.

"Every trader will tell you that every risk manager is a fraud," he told The Times, and options traders used to get along fine before Black-Scholes. "We never had any respect for nerds."

Dr. Taleb has waged war against one element of modern economics in particular: the assumption that price fluctuations follow the familiar bell curve that describes, say, IQ scores or heights in a population, with a mean change and increasingly rare chances of larger or smaller ones, according to so-called Gaussian statistics named for the German mathematician Friedrich Gauss.

But many systems in nature, and finance, appear to be better described by the fractal statistics popularized by Benoit Mandelbrot of I.B.M., which look the same at every scale. An example is the 80-20 rule that 20 percent of the people do 80 percent of the work, or have 80 percent of the money. Within the blessed 20 percent the same rule applies, and so on. As a result the odds of game-changing outliers like Bill Gates's fortune or a Black Monday are actually much greater than the quant models predict, rendering quants useless or even dangerous, Dr. Taleb said.

Links:
They Tried to Outsmart Wall Street
The Black-Scholes model

DID YOU KNOW 3.0

2009-01-28T11:16:00.003+01:00

Globalization & The Information Age
Newly Revised Edition Created by Karl Fisch, and modified by Scott McLeod
Did You Know Sources

RUNNING BACKWARDS

2009-01-08T23:29:00.003+01:00

"Despite lower equities and massive government intervention, the equilibrium between equity, credit, commodities and currencies remains elusive"
Todd Harrison, CEO of Minyanville.com

Today, the Bank of England slashed rates to their lowest level since the central bank's formation in 1694.

The U.S Deficit pegged at $1.2 Trillion and this figure excludes the $800 Billion spending proposed by Obama.

We are running backwards, encouraging people to take on more debt, and lowering rates to nothing... this is not a stable foundation on legitimate economic growth!!!

29-12-2008 QUOTES

2008-12-29T12:00:00.006+01:00

"There is no way that we should worry about what we should eat for dinner when we have not had breakfast yet. The good thing to do is to prepare and eat breakfast first."
Japanese Finance Minister Shoichi Nakagawa as he dismissed suggestions Japan will need to draw up another fiscal stimulus package and said extra spending plans must be implemented first

"Given the difficulty in the world economy and South Korea's high dependence on outside markets, we are at a critical moment which may see negative growth in the first and second quarters although the annual number may be positive."
South Korean President Lee Myung-bak

"Production is falling like Niagara Falls. What's going on now is beyond what Toyota and Sony had ever imagined."
Mitsuru Saito, chief economist at Tokai Tokyo Securities

SAVE THE PEOPLE AND LET THE FIRMS DIE YOU CANNOT REPAIR AN ILLUSION

2008-12-13T15:33:00.009+01:00

Excerpts from a discussion with Thierry Gaudin, Prospective 2100 President:

"Because of the growing influence of the medias, particularly TV, the modern economy, at least in the so called "developed" countries, but also elsewhere, has been built on mental manipulation of the public, and turned to bear a complete illusion, including growth, development and so forth. Thus, you cannot repair an illusion. The only thing you can do is to go back to reality: ecological footprint, depletion of resources, decline of biodiversity..."

"As far as the pre-crisis employment was devoted to respond and amplify the illusion, the unavoidable reaction of the ruling class, which is to try to "save" the firms, is definitely counterproductive. The correct response would be to save the people, implement reasonable great programs aimed at ecological equilibrium, and let the firms die. After all, organizations are only legal commodities. If they are not serving the common good why should they be maintained?"

Links:
Thierry Gaudin
World Futures Studies Federation

U.S. VIDEOGAME SALES FOR THE MONTH OF NOVEMBER: $3 BILLION

2008-12-12T17:18:00.005+01:00

Americans may be cutting back on holiday shopping, but they are still buying video games.

November 2008 U.S. Video Games Sales (Hardware + Software + accessories) totaled $2.91 billion, according to data from market researcher NPD Group.

Nintendo Wii sold 2 million units for the month (+108% compared to same month last year), allowing five games to be among the top ten titles.

The U.S. video game industry is set to top $22 billion in 2008.

TOP TEN BEST-SELLING VIDEO GAMES FOR THE MONTH OF NOVEMBER:
Gears of War 2 (Xbox 360 - Microsoft): 1.56M
Call of Duty: World at War (Xbox 360 - Activision): 1.41M
Wii Play (Wii - Nintendo): 796k
Wii Fit (Wii - Nintendo): 697k
Mario Kart (Wii - Nintendo): 637k
Call of Duty: World at War (PS3 - Activision): 597k
Guitar Hero: World Tour (Wii - Activision): 475k
Left 4 Dead (X360 - EA): 410k
Resistance 2 (PS3 - Sony): 385k
Wii Music (Wii - Nintendo): 297k

Links:
Video Game Sales Chart
NPD Market Research

STILL HAVEN'T REACHED LOWEST VALUATION LEVELS

2008-12-08T16:07:00.006+01:00

John Mauldin, author of the popular Thoughts from the Frontline e-letter, isn't buying the "stocks are cheap" mantra.

June 2008, John Mauldin's historical comment:
"We have seen the heads of virtually all financial institutions stand up over the last few months and claim the worst is behind us. Why would anyone listen to these people? They didn't see the disaster coming, and yet somehow they are qualified to tell us it is all alright! Perhaps I am just unduly skeptical, but this reeks of a conspiracy of optimism. The recession has barely started, let alone reached its nadir. The market moves of late have all the hallmarks of a classic sucker's rally. This isn't discounting the recovery, this is denial! Far from being behind us, the worst may well still be ahead!"

December 2008:
"This is going to be a longer recession we've had in a long time and earnings are going to be impacted a lot more than people are currently thinking. If earnings do disappoint, today's "cheap" P/E ratios will prove to be a sucker's bet."
Mauldin predicts valuations will eventually fall to record low levels, meaning low single-digits price-to-earnings ratios, before ultimately finding a floor.

December 2008 Volatility:
Regarding volatility, Diane Garnick, investment strategist at Invesco, notes that if the S&P is at 900 and the VIX at 50 (current levels are 899 and 54, respectively), the market is pricing in a two-thirds chance the index will trade between 770-1029 over the next 30 days creating one of the most difficult environments to make a commitment to stocks.

PETER SCHIFF WAS RIGHT

2008-11-24T20:31:00.017+01:00

Here is a popular YouTube clip called "Peter Schiff Was Right" that shows the president of Euro Pacific Capital engaged in on-air debates with financial luminaries such as Art Laffer and Ben Stein back in 2006-07.

This clip shows the wisdom of Schiff's dire forecasts and, judging from the dismissive reactions, just how far he was outside the mainstream.

2008: Peter Schiff Sees More Pain Ahead
A longtime gold bull, Schiff believes the dollar's "phony" rally will soon end. To his credit, Schiff admits being caught off guard by the greenback's recent bounce, but believes efforts by global central bankers to fight the credit crunch will lead to devalued currencies, and higher commodity prices.
The U.S. Dollar is in the midst of a prolonged collapse against other world currencies.
Government debt is out of control. Instead of solving the problem sensibly (by raising taxes and/or reducing spending), the government just prints more money, which leads to inflation, and which may lead to hyperinflation.
The government is severely underreporting inflation, which Schiff says is running at 8-10% annually.
The low interest rates promoted by the Federal Reserve have fueled needless consumption and the overuse of credit.
Like the housing market before it, consumer debt is another meltdown waiting to happen.

In his new book, The Little Book of Bull Moves in Bear Markets, Schiff explains the reasons for his dire predictions, and suggests ways for readers to protect their financial well-being.
Yahoo Tech|Ticker Video with Peter Schiff

2008: Why Isn't Anyone in Jail?
"There is no poster child for the housing scandal because you need to investigate, and you need to bring cases and we haven't done either against the major players," says William Black, Associate Professor of Economics and Law at the University of Missouri - Kansas City, former federal regulator and author of "The Best Way to Rob a Bank Is to Own One". Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis and blew the whistle on the "Keating Five" in 1989, says investigations have shown fraud incidence of 50% at once major subprime lenders like IndyMac and Countrywide.
But even though the FBI warned of an "epidemic" of mortgage fraud in 2004, they subsequently made a "strategic alliance" with the Mortgage Bankers Association, which serves the major industry players.
Yahoo Tech|Ticker Video with William Black

BUBBLE HISTORY SAYS: MORE PAIN AHEAD FOR FINANCIALS

2008-11-20T23:48:00.003+01:00

John Roque, Managing Director, Natixis Bleichroeder:
"Historically, we noticed that most bubbles aren't popped until they are down 90 percent from their peak. Even with the S&P Financial SPDR down more than 70% from its peak, the entire sector still has more pain ahead."

Historical peak-to-trough declines of past Market Manias:
Dutch Tulip Mania (1637): 90% peak-to trough decline
South Sea Co. (1720): 90% peak-to trough decline
Missisipi Co. (1720): 95% peak-to trough decline
Tokyo Real Estate (1989): 84% peak-to trough decline
Nasdaq (2000): 77% peak-to trough decline
U.S. dotcoms (2000): 92% peak-to trough decline
U.S. Financials (2007): 71% so far

FINANCIAL CRISIS SNAPSHOT

2008-11-13T15:20:00.007+01:00

U.S. jobless claims hit 516,000, highest in 7 years

Germany in recession first time in five years

U.S. trade gap narrows as imports, exports shrink

Euro zone economy already in recession,
says ECB Governing Council member Ewald Nowotny

OECD slashes economic output forecasts

China's annual industrial output growth falls to 8.2 pct in October
Lowest in seven years

Gold steady, 717

Oil prices hit 22-month low of $55 a barrel, OPEC mulls output cuts

Copper falls to 3-year low

DIMENSIONALISATION GeForce Stereoscopic 3D with active shutter glasses

2008-11-10T19:09:00.011+01:00

Dimensionalisation: the coming age of 3D technology as the next step in our visual interaction with our computing devices.

NVIDIA GeForce 3D stereoscopic technology is an NVIDIA software and hardware solution which takes standard Microsoft DirectX games and converts them to stereoscopic 3D. The NVIDIA GeForce Stereoscopic 3D driver works at the lowest level by taking 3D game data and rendering each scene twice, once for the left eye and once for the right eye. Each eye image is offset from each other for the correct viewing. The GPU then sends this data to a 3D Ready display. These displays show the left eye view for even frames (0, 2, 4, etc) and the right eye view for odd frames (1, 3, 5, etc).
NVIDIA 3D glasses then synchronize back to the 3D Ready display and present slightly different images to each eye resulting in the illusion of depth and an incredibly immersive experience for games.

To date there are two 3D Ready displays:
ViewSonic pure 120 Hz LCD and a Mitsubishi 70 inches DLP HDTV.
Viewsonic's monitor comes with a 1,680 x 1,050 resolution, a 3ms grey-to-grey response time, 1,000:1 contrast ratio and a 120Hz refresh rate. This refresh rate combined with 3D glasses from nVidia allows an effective 60Hz refresh rate for each eye.

NVIDIA's technology uses active shutter glasses that have LCD panels inside them to block the left and right eyes alternately. When voltage is applied to these glasses, the liquid crystal darkens but is still transparent, creating what's called an alternate-frame sequence; in synchronizing with the monitor at a high refresh rate, each eye receives a different image, in which the 3D effect is achieved. Thus, it corrects the tilt problem and provides a convincing 3D image.

CREATIVE MAN

2008-10-29T10:31:00.003+01:00

The book "Creative Man" is about future creative people and their impact on our society. Originally printed in Danish, the Copenhagen Institute for Futures Studies has recently published the English version.

Link:
Creative Man, The Future Consumer, Employee, Citizen

MONEY AS DEBT

2008-10-02T10:30:00.020+02:00

Money as Debt is a powerful animated documentary by videographer Paul Grignon. It tries to explain the evolution and functioning of banking, and the international monetary system:
Money As Debt, 47 Minutes Video, by Paul Grignon
Money as Debt Critique, by Verne Warwick

BOSTON DYNAMICS

2008-09-09T20:32:00.006+02:00

Boston Dynamics is an engineering company that is setting the standard for human simulation technology worldwide and their robots are unparalleled in agility and rough-terrain capability.

Boston Dynamics BigDog Robot:

Boston Dynamics RHex Robot:

Link:
Boston Dynamics Dedicated to the Science and Art of How Things Move

THE BIG PICTURE

2008-06-05T10:24:00.027+02:00

This week I participated to the ESA Emerging Market and Future Application Study, Macroeconomic Workshop, in Zurich, Switzerland. The goal was to jointly create scenarios of future development of ICT using the year 2020 as a time horizon.

I. ORGANIC SOLAR CELLS, ELECTRICITY FROM A THIN FILM
Teams of researchers all over the world are working on the development of organic solar cells. Organic solar cells have good prospects for the future: They can be laid onto thin films, which makes them cheap to produce. At nano tech in Tokyo, The Fraunhofer Institute for Solar Energy Systems ISE has presented a flexible solar module that is as small as the page of a book. It was produced by a method that can easily be transferred to roll-to-roll technology, a vital step en route to mass production.
Article: ScienceDaily.com

Developing organic solar cells from polymers is a cheap and potentially simple alternative energy. New Jersey Institute of Technology's Dr. Somenath Mitra has developed solar cells that use a carbon nanotube complex. Nanotubes are 50,000 times smaller than a human hair, but one nanotube can conduct a current better than any electrical wire.
Video: EngineeringTV.com

II. CLEAN ENERGY TRENDS 2008

1. Biofuels (global production and wholesale pricing of ethanol and biodiesel) reached $25.4 billion in 2007 and are projected to grow to $81.1 billion by 2017. In 2007 the global biofuels market consisted of more than 13 billion gallons of ethanol and 2 billion gallons of biodiesel production worldwide.

2. Wind power (new installation capital costs) is projected to expand from $30.1 billion in 2007 to $83.4 billion in 2017. Last year's global wind power installations reached a record 20,000 MW, equivalent to 20 large-size 1 GW conventional power plants.

3. Solar photovoltaics (including modules, system components, and installation) will grow from a $20.3 billion industry in 2007 to $74 billion by 2017. Annual installations were just shy of 3 GW worldwide, up nearly 500 percent from just four years earlier.

4. The fuel cell and distributed hydrogen market will grow from a $1.5 billion industry (primarily for research contracts and demonstration and test units) to $16 billion over the next decade.

Together, these four benchmark technologies, which equaled $55.4 billion in 2006 and expanded 40 percent to $77.3 billion in 2007, are projected to grow to $254.5 billion within a decade.

Sources:
Clean Energy Trends 2008 Report
Clean Energy Trends 2008 Charts

III. THE VISION
"Design, Ecology, Ethics and the Making of Things"
William McDonough, architect William McDonough,
a prophet of the sustainability and clean-technology movements.

What if the concept of waste didn't exist?
The following is an excerpt from "Industrial Revolution, Take Two"
by Matt Tyrnauer, Vanity Fair Magazine.
Source: VanityFair.com/culture/

"If we understand that design leads to the manifestation of human intention, and if what we make with our hands is to be sacred and honor the earth that gives us life, McDonough said that day, "then the things we make must not only rise from the ground but return to it, soil to soil, water to water, so everything that is received from the earth can be freely given back without causing harm to any living system. This is ecology. This is good design. It is of this we must now speak." William McDonough

One of the things that is holding back the environmental movement and its proponents, says McDonough, is the collective burden of guilt about the ills of our society. "They say they want durable products that last a long time. Like a 25-year car. I'll tell you why that's not good. That car will still be made with toxins in the adhesives, compound epoxies. O.K., it amortizes its damage over a longer period of time, but it's still a car that is damaging. You also lose jobs, because people don't buy enough cars. You are using outdated technology on the roads for a longer time. The solution that he and Braungart suggest is a five-year car that allows for industry to "transform the technology at high speed toward the Cradle to Cradle concept. The five-year car is a car whose materials are all coherent and tagged. In fact, all materials in the car have passports. So we know where they come from, and we know where they're going "back to the auto-makers" after five years of utility, so the car could be recycled and updated with the latest in safety and efficiency. All done with the same materials that you in effect lease from the auto company. They keep making the cars out of the same stuff."

IV. THE FUTURE
A Revolution Coming Sooner than Expected
The following is an excerpt from "The Future Is Now? Pretty Soon, at Least"
by John Tierney, The New York Times.
Source: NYTimes.com

Dr. Kurzweil sees biology, medicine, energy and other fields being revolutionized by information technology. His graphs already show the beginning of exponential progress in nanotechnology, in the ease of gene sequencing, in the resolution of brain scans. With these new tools, he says, by the 2020s we'll be adding computers to our brains and building machines as smart as ourselves.

This serene confidence is not shared by neuroscientists like Vilayanur S. Ramachandran, who discussed future brains with Dr. Kurzweil at the festival. It might be possible to create a thinking, empathetic machine, Dr. Ramachandran said, but it might prove too difficult to reverse-engineer the brain's circuitry because it evolved so haphazardly.

"My colleague Francis Crick used to say that God is a hacker, not an engineer," Dr. Ramachandran said. "You can do reverse engineering, but you can't do reverse hacking."

Dr. Kurzweil is accustomed to this sort of pessimism and readily acknowledges how complicated the brain is. But if experts in neurology and artificial intelligence (or solar energy or medicine) don't buy his optimistic predictions, he says, that's because exponential upward curves are so deceptively gradual at first.

"Scientists imagine they'll keep working at the present pace," he told me after his speech. "They make linear extrapolations from the past. When it took years to sequence the first 1 percent of the human genome, they worried they'd never finish, but they were right on schedule for an exponential curve. If you reach 1 percent and keep doubling your growth every year, you'll hit 100 percent in just seven years."

DIGITALLY AUGMENTED OBJECTS AND ENVIRONMENTS

2008-04-11T10:34:00.010+02:00

Computers are becoming invisible and integrated into our lives. Our clothes can monitor our heart rate, breathing and motion. Sensors like accelerometers, for measuring acceleration or detecting and measuring vibrations, light detectors, are worn as soft computers "in a noninvasive, non-weight-bearing way".

Tom Igoe, who leads physical computing for the N.Y.U. program said:
"The end goal is not the communication but the quality of life that the communication affords." He offered an example: the Toyota Prius, an electric hybrid, and many other new cars report fuel consumption instantaneously to the driver. Whenever you can help people "measure how they do something, they change how they do it". It becomes a live-in video game, but a live-in video game with a purpose.

Other examples of sensors being integrated into unexpected areas include the PhyTalk system from Phytech. It uses sensors placed on fruit trees or other crops to provide information to farmers. One sensor monitors tiny changes in stem diameter, while another tracks size and growth of fruit. Avi Lulu, the company's chief executive, said: "We are not irrigating what we think the plants need; we're irrigating what the plants really need"

Some plant lovers might be interested in Botanicalls, a simpler project developed by the New York University program in interactive telecommunications. It will measure soil moisture and send a message to the owner when the soil is too dry. When the plant gets the water, it also sends a thank-you note.

At the Intel Corporation's Digital Health Group, Eric Dishman, director of product research and innovation, said he saw many opportunities for making embedded computers that could help people. His group is focusing on preventing falls, social health and cognitive assistance. Sunny Consolvo, at Intel, has been working to create a system using similar sensors that gives feedback to users about their degree of physical activity with subtle and often coded metaphors. What she calls a "glanceable" display converts distances of walking and climbing stairs into a picture of a garden. "As you work through the week, the garden blooms. And if you meet your goal, a butterfly flies" she said.

Article's Source:
The New York Times, My Life in a Video Game (Batteries Not Included)

Links:
Sparkfun, online store catering to developers and prototypers
Phytech, Monitoring Growing Plants
Botanicalls, The Plants Have Your Number
MIT, Things That Think Consortium