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Sunday, 18 February 2018

Everybody's Got to Learn Sometime


Everybody's Got to Learn Sometime (1980) by The Korgis

Change your heart, look around you
Change your heart, it will astound you
I need your lovin' like the sunshine

Everybody's got to learn sometime
Everybody's got to learn sometime
Everybody's got to learn sometime

Change your heart, look around you
Change your heart, will astound you
I need your lovin' like the sunshine

Everybody's got to learn sometime
Everybody's got to learn sometime
Everybody's got to learn sometime

I need your lovin' like the sunshine

Everybody's got to learn sometime
Everybody's got to learn sometime

Everybody's got to learn sometime
Everybody's got to learn sometime
Everybody's got to learn sometime

Everybody's got to learn sometime
Everybody's got to learn sometime
Everybody's got to learn sometime

Everybody's got to learn sometime
Everybody's got to learn sometime

Saturday, 17 February 2018

Why do opposites (not) attract?

Have you ever held two magnets opposite each other? From a distance, they attract each other. However, at a close range, magnets either cling to each other immediately or magnets just refuse to cling together. These two opposite forces work the same way in (new) relationships: from a distance there is attraction but at a close range this attraction might be gone.

Folk wisdom points at the first: opposites do attract. I think, feel and believe that this folk wisdom contains a lot of truth. However, attraction might be nothing more than lust in this context. In Love and/or relationships, opposites will always cause differences of opinion. These differences need to be bridged, preferably from both sides. Else, irreconcilable differences may occur.

The Conversation (2018): "Since the 1950s, social scientists have conducted over 240 studies to determine whether similarity in terms of attitudes, personality traits, outside interests, values and other characteristics leads to attraction."

The Conversation (2018): "In 2013, psychologists Matthew Montoya and Robert Horton examined the combined results of these studies in what’s called a meta-analysis. They found an irrefutable association between being similar to and being interested in the other person."

Being similar will translate in having similar opinions. On the one hand, this might be boring at times. On the other hand, there will be less arguments and fights on who is right and wrong. Hence, there is little need for reconciling opinions. This will help the "relationship ledger" in which we keep score of our pluses and minuses (eg, Karen Grierson, my 2016 blog).

I think, feel and believe that similarity in relationships creates comfort rather than attraction. However, both attraction and comfort support a relationship, although the duration of attraction is likely to be less than comfort.

In other words, attraction is the magnetism that brings people together. Similarity is the glue that keeps people together. To some extent, attraction and similarity are like apples and oranges

A William Blake quote on attraction: "Without contraries is no progression. Attraction and repulsion, reason and energy, love and hate, are necessary to human existence." (eg, Wiki)

A Giorgio Armani quote on similarity: "It's not a good idea to match your shoes with a bag too stringently. Go for subtle similarity."

A Theodor Adorno quote that bridges attraction and similarity: "Love is the power to see similarity in the dissimilar."

Opposites Attract (1989) by Paula Abdul - artist, lyrics, video, Wiki-1, Wiki-2

Baby, ain't it something how we lasted this long?
You and me proving everyone wrong
I don't think we'll ever get our differences patched
It don't really matter 'cause we perfectly matched


Friday, 16 February 2018

Why are there (no) boundaries in human thinking?

My recent blog on Admiration caused a discussion on why we love someone else. It's genuinely difficult to give an answer. It's not about reproduction as you don't actually need Love for that. Hence, it's not surprising that there is no clear definition for Love (eg, Wiki). The same issue applies to concepts like friendship (my 2016 blog) and the Universe.

The ancient Greeks used 4 types of Love: Agápe (divine/spiritual), éros (romantic), philía (brotherly/sisterly), and storgē (parental). Today, an article claims there are (at least) 11 kinds of Love.

In my diagram on the How, What, When, Where, Who and Why of Love, I noticed a common answer: no boundaries.

The reason why we struggle to understand the Universe is - probably - the same: its proportions appear to be infinite. Infinite is another word for no boundaries.

Our minds have a problem visualizing the concept of infinity. Our conscious senses (eg, ears, eyes, smell, taste) only experience finite dimensions on this planet.

We express these finite dimensions in length, width, height (Space) and minutes, hours, weeks, months, years and even light-years (Time). We struggle to understand - let alone accept - any other dimensions (eg, Multiverse) that are beyond our bodily senses.

The term thinking outside the box "is thought to derive from management consultants in the 1970s and 1980s challenging their clients to solve the "nine dots" puzzle, whose solution requires some lateral thinking" (Wiki). Outside the box are no boundaries.

There is one human area that thinks outside the box: our imagination (see my 2018 blog). Our non-conscious dreams and imagination are an example of unknown unknowns (my 2016 blog). Our conscious world is, however, defined by known knowns (eg, facts, history), unknown knowns (eg, intuition, my 2016 blog) and known unknowns (eg, beliefs, my 2015 blog).

Human inventions may seem an example of imagination. However, some of our (technological) inventions appear to be a copycat of things that we see in Nature: airplane (bird), armoured fighting vehicle (rhinoceros), ships (waterbirds), society (ants), solar power (flowers, trees), submarine (whale), and perhaps even the use of fire (black kites). 

“Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.” A quote by Albert Einstein.

No Boundaries (2009) by Kris Allen - artist, lyrics, video, Wiki-1, Wiki-2


No Boundaries (2009) by Adam Lambert - artist, lyrics, videoWiki-1Wiki-2


Note: all bold and italic markings and underlining by LO

Thursday, 15 February 2018

Deficits, Losses, and (Government) Debt

"The failure to address our long-term fiscal situation has increased the national debt to over $20tn. This situation is unsustainable and represents a dire threat to our economic and national security." These recent words were expressed by Dan Coats, U.S. Director of National Intelligence, to the Senate intelligence committee (FT).

My recent blogs on Every 10 year a new US recession and The drivers of an asset bubble and a recession did not address the potential impact of (government) debt.

In order to visualize its impact, I prepared a diagram comparing the main actors: (Central) Banks, Consumers, Companies, Courts, and Governments.

This diagram shows that the comparison is different in its final stages. From a narrow legal sense, a country cannot go bankrupt while defaulting on its debts.

A country or sovereign default might be considered rare but is certainly not unusual. The Wikipedia list on sovereign debt crises mentions 6 sovereign defaults for USA, including the 1971 Nixon Shock.

Daily Sabah: "Although not commonly known, the U.S. has declared bankruptcy five times, since its foundation. Once it could not pay its foreign debts, and four times could it not pay its internal debts. These bankruptcies had resulted from financial crises in the banking sector, the first of which was in 1790, and the last of which was in 1933." 

A sovereign debt crises includes: (i) a sovereign default, where a government suspends debt repayments, (ii) a debt restructuring plan, where the government agrees with other countries, or unilaterally reduces its debt repayments, and (iii) assistance from the International Monetary Fund or another international source (Wiki).

In the absence of (ii) government debt restructuring, and/or (iii) IMF assistance, a country will usually face hyperinflation (eg, Brazil, Venezuela, Zimbabwe). 

National laws on consumer and/or company bankruptcies will usually differ. Some countries may offer consumers a debt write-off and thus a second chance in life. Company bankruptcies usually end in a legal limbo because termination often requires settlement of all remaining debts.

Money, Money, Money (1976) by ABBA - artists, lyrics, videoWiki-1, Wiki-2


Wednesday, 14 February 2018

Admiration

Several days ago, I talked to my Brazilian friend. She told me she still admires me. The word admiration struck a nerve. I've never written about admiration in relationships. I do know how important it is: when I lose it, the flame dies. Valentine's Day is an appropriate day for this topic.

Research by Dr. John Gottman of the Gottman Institute showed that "fondness and admiration are two of the most crucial elements in a rewarding and long-lasting romance. Getting through stressful times and managing conflict is much easier if you and your partner regularly show how highly you value each other" (Gottman).

A 2012 Psychology Today article may explain why: admiration and affection or fondness build an emotional bank account of positive feelings prior to (marital) conflict. PT-2012: "As the account builds, we tend to override our tendency to see our partner negatively when stress causes irritability, allowing us to use our reservoir of positive feelings to be forgiving." Please also see my related 2016 blog The ledger of a relationship.

One of the most remarkable insights came from a 2010 Psychology Today article: "The woman should desire the man and the man should admire the woman's characteristics". Aaron Ben-Zeév, the writer, is surprised as he "felt sure that the opposite is true". The article continues by explaining the validity of this quote by Professor Yehshieo Leibovitz (Wiki?).

PT-2010: "we can conclude that women generally give less weight to the aspect of physical attractiveness and hence the issue of (sexual) desire is of less significance for them. If despite the lesser weight, a woman greatly desires her man it indicates that she is highly attracted to him and that is likely to be connected to her admiration of him as well."

PT-2010: "The same reasoning applies to men. If, despite the lesser weight men give to such characteristics, a man admires the characteristics of his woman, it indicates that he rates her characteristics highly and that is likely to be connected to his great desire for her."

The question whether you can love someone whom you don't admire is the topic of several articles: Elite DailyExploring Your Mind, HuffPostPsych Central. Love without admiration might explain today's high divorce rates. People may also confuse love with lust (eg, Elite DailyGuardian, sexMD, YourTango). Both may explain the success of dating apps (eg, Tinder).

In my 2016 blog, I mentioned the 7 criteria for a successful relationship, being: communication, forgiveness, intimacy, respect, togetherness, trust, and vulnerability. With the knowledge of hindsight, admiration would have been more appropriate as a criterion than respect. Admiration is always for the other person while respect no longer is (my 2015 blog).

Love is a combination of admiration, respect, and passion. If you have one of those going, that's par for the course. If you have two, you aren't quite world class but you're close. If you have all three, then you don't need to die; you're already in heaven.” A quote from William Wharton.

I Can't Make You Love Me (1991) by Bonnie Raitt

'Cuz I can't make you love me if you don't.
You can't make your heart feel something it won't.


Note: all bold and/or italic markings by LO

Tuesday, 13 February 2018

The drivers of an asset bubble and a recession

Following yesterday's blog on a new US recession, I created a diagram that visualizes the drivers of an asset bubble and a recession. Actually, these drivers are the same. This makes sense as an asset bubble and a recession are each other's opposite. One involves overspending (asset bubble) and the other one underspending (recession).

My diagram to the left shows the main actors: consumers, companies, government, and financial institutions (ie, banks, central banks).

The flows between the actors are either about spending (eg, products, machinery) or money transactions (eg, deposits, loans, savings, tax).

The level of spending can either be stimulated or tightened through monetary policy, like lowering interest rates through quantitative easing.

In simplified terms, the total spending by consumers, companies and government on products and services equals Gross Domestic Product - or GDP. The interest rate depends on the money supply by the government's central bank. The government can loosen or tighten money supply through monetary policy, and create a lower or higher interest rate - again in simplified terms.

In order to recover from the 2008 recession, central banks in USA (Fed) and then Europe (ECB) started with a stimulus program called quantitative easing (my 2017 blog). This caused a massive increase in money supply and artificially low interest rates. This "cheap money" created sharp price increases in several markets (eg, bonds, real estate, stocks) - a.k.a. asset price inflation.

From mid to late 2017, the ECB and Fed announced their intention to unwind their stimulus program of quantitative easing (eg, CNBCForbesFT, Guardian). This made sense given the overheating (read: overspending) on certain markets. Immediately, JP Morgan warned that the "unwinding [of] QE could trigger a financial crisis" (eg, Telegraph).

Since the ECB/Fed announcement, long-term interest rates are rising although still low in absolute terms but high in relative (ie, percentage) terms (eg, OECDUSA). Since the Fed chair succession of Janet Yellen by Jerome Powell on Monday 5 February 2018, volatility has hit the stock markets. Real estate prices are still climbing as long-term interest is still artificially low.

The start of the unwinding of quantitative easing (QE) may have been too late. It may even never happen to prevent a new recession. QE is like supplying drugs to an addict. Taking away the drugs will result in erratic behaviour (eg, cold turkey). That is what we are witnessing right now.

Cold Turkey (1969) by John Lennon - artist, lyrics, video, Wiki-1, Wiki-2

Temperature's rising
Fever is high
Can't see no future
Can't see no sky


Monday, 12 February 2018

Every 10 year a new US recession

Last week, libertarian US senator Rand Paul voted against a bipartisan agreement on lifting the US debt ceiling for 2 years. He may have remembered its original intention: to control the ever increasing US government debt following annual deficits. His position was, however, ridiculed as he had voted in favour of the recent $ 1,500 billion tax cuts. The combination of higher spending and tax cuts is a toxic cocktail for annual deficits and government debt.

The EU's Stability and Growth Pact puts "limits on government deficit (3% of GDP) and debt (60% of GDP)". The US deficits are projected to reach above 5% of GDP while US government debt is projected to increase from about 80% to 100% or more (eg, Economist, Trouw). The Economist calls this "America’s extraordinary economic gamble" given that "fiscal policy is adding to demand even as the economy is running hot".

The US might, however, do this to prevent a new recession. 

Historically, the average US recession takes place every 10 years, and the last one was in 2008. Hence, the 2017 predictions about a 2018 recession (eg, BICNBC, FTGPF, Wiki).

Recent market turmoil (eg, rising interest rates, volatile stock markets, impending Canadian real estate crisis) could - indeed - indicate a new recession.

In my 1 December 2017 blog, I mentioned the various economic cycles - or waves and their average historic timelines.

The accompanying 2008 graph by Charles Hugh Smith was also used in my 2016 blogs Crisis? What crisis? and Conflict, Chaos and Change.

The graph still feels like a fair representation of what happened and what is about to happen. 

Early March 2016, Jeremy Grantham of GMO predicted the burst of the 3rd asset bubble - within 1-3 years after 2016 - which would result in a "bloodbath" (eg, City AMFD, my 2016 blog, WSJ).

Lao Tzu once said: "Those who have knowledge, don't predict. Those who predict, don't have knowledge". The above doesn't feel like a prediction at all. It almost feels like a certainty. I'm genuinely worried about the next 5 years. Alan Greenspan's irrational exuberance (eg, bitcoin, paintings, real estate prices) has been back for a while, and fueled by quantitative easing.

Fool's Overture (1977) by Roger Hodgson (lead singer of Supertramp)

History recalls how great the fall can be
While everybody's sleeping
The boats put out to sea
Borne on the wings of time
It seemed the answers were so easy to find