Writeup and Thoughts on ISIS' Resurgence

Iraqi regime forces in ISIS-controlled Ramadi, December 2015 (Reuters)

The Islamic State of Iraq and Syria (ISIS) has shaken the world in 2015; it seemed to have come out of nowhere and took over larger and larger areas in the conflict-ridden Middle East.  In late 2015 they also claimed several attacks in foreign soils, including in Lebanon, Russia, and France.

It's important to understand what they seek to gain and what the world is doing to fight them.

1.  Origins

What's ISIS? What's the difference between ISIS, ISIL, or Daish?

ISIS = Islamic State of Iraq and Syria;
ISIL = Islamic State of Iraq and the Levant (the Levant is an historical region that encompasses Syria).
Daish = "Dawlatul Islamiyah fi Iraq wa Sham", which translates to (duh) Islamic State of Iraq and Syria.

They're all synonymous.  Some people think calling them "Islamic State" awards them legitimacy (as if they are the only Islamic state in the entire world), and that they take offense to the name Daesh.  Frankly a bunch of bloodthirsty extremists probably don't care what you call them.


Did they come out of nowhere? How did they grow so big so fast?

ISIS came into being as an Iraqi insurgency group -- it was founded as Al Qaeda in Iraq (AQI), an local Al-Qaeda branch led by Jordanian petty criminal Abu Mus'ab al-Zarqawi; it was promptly defeated and neutralized (Zarqawi was killed in a US airstrike in 2006).  However, the feeble government in Iraq allowed the group to reanimate and prosper, under the leadership of Abu Bakr el-Baghdadi -- a prominent Iraqi scholar with a doctorate in Quranic studies.    Baghdadi's strategy, where he distances himself from Al-Qaeda Central, is to quickly seize a sovereign territory ("caliphate") and elevate the fight from a military, tactical and localized conflict to that of a religious and global jihad for all Muslims.

ISIS rapidly grew due to the chaotic conditions in Iraq and Syria, and it exploited the fear within the large Sunni communities of both countries' Shi'a-led governments.   In 2003 after the US invaded Iraq and toppled longtime dictator Saddam Hussein, it installed Shi'a PM Nouri al-Maliki to create an inclusive coalition government … who then promptly fired his Sunni vice president, fired the many Saddam loyalists from his armed forces, cracked down on protesters with violence, alienated the nation's other minority groups, and made Iraqis terrified of their own government.  AQI (since renamed Islamic State in Iraq) recruited Saddam's former troops en masse, and started to make major gains early 2014, when it swept through areas including Fallujah and Mosul with little resistance.  Syria, engulfed in a bloody civil war raging since 2011, provided even greener pastures.  Baghdadi sent his troops marching across the porous borders and quickly took over Raqqa and Palmyra, declaring his caliphate and himself as the legitimate khalifa of the Muslim world.

ISIS distribution of aid, February 2015

In addition to fighting wars, ISIS also worked on nation building. They collect taxes, promote immigration into the state, and distribute aid to poor citizens -- giving them even greater appeal for the people when compared to the repressive, corrupt governments.

The group has an estimated annual revenue of anywhere between US$1.2-2bn from oil sales, smuggling of antiquities, agriculture, and extortion/taxes -- not a whole lot of money for an actual state, but quite a bit for an insurgency group. The money allows them to buy favours and recruit new jihadists using modern weapons of internet and social media.

ISIS' recruiting drive is motored by their prolific propaganda efforts. They publish a regular newsletter Dabiq (named after a small Iraqi town, currently under ISIS control, which in ancient tradition is supposed to be the site of the final battle between Islam and the infidels), 700-pages of propaganda published in multiple languages. These efforts have been hugely successful, with ~1,500 foreign recruits per month coming to join them in the battlefield.

It's quite complicated

They also have foreign affiliate groups outside Iraq and Syria, spread across 15+ countries (according to ISIS' propaganda).  Needless to say, these affiliates are likely just independent groups, each with its own secular goals, hoping to gain legitimacy (i.e. funding) by aligning with ISIS.


Is ISIS really that powerful/unique?

Despite their rapid rise to power, the media has been exaggerating how powerful they are.

Surely ISIS has been a master of propaganda, broadcasting gruesome videos of beheadings and mass executions, and touting international terror attacks as evidence of divine intervention for their success.  But fact is, ISIS isn't even the most violent active terror group right now -- that award goes to Nigeria's Boko Haram, which claims allegiance to ISIS despite only loose affiliation.  Furthermore, beyond Iraqis and Syrians, their new recruits probably aren't military-trained.  One soldier in the front line even reports that ISIS is really a bunch of ragtag, disorganized poseurs who "run away at the first sight of resistance".

In the Western world, people mostly looked the other way in the face of ISIS' resurgence, until:

1. The attacks in Paris and in San Bernardino (both of which are widely suspected to be perpetrated by ISIS loyalists, despite only circumstantial evidence)
2. The election season in the US, with presidential hopefuls capitalizing on fear and anxiety.

Is it true that US started/funded/is still bankrolling ISIS?

There's a lot of conspiracy theories out there conflating the CIA with ISIS. What we know quite well, is that the US invasion of Iraq created an entire generation with deep antipathy towards the West. Furthermore, Baghdadi and many other ISIS fighters were prisoners at the US military detention facility Camp Bucca ca. 2004, making it the single most successful radicalization camp, funded by American taxpayers.  Finally, the predictable shortcomings of US-backed Iraqi PM Maliki created fertile grounds for extremism.

Until now, many Iraqis still believe the US is in cahoots with ISIS.



What does it all have to do with the Sykes-Picot agreement? (or "is this a conflict that's been going on for millenia?")

This is going back into history by a bit. The 1916 Sykes-Picot Agreement is the infamous Post-WWI secret deal between war victors Britain and France on how to divide the Arab world.  Not only has the name become synonymous with betrayal (as Sharif Hussain of Arabia was promised independence by the British if he revolted against the ruling Ottoman Empire, which he did), but it also divided the Middle East and North Africa into ungovernable territories (e.g. many tribal communities suddenly chopped up by national borders, and warring factions forced to live under one rule). The aftermath of Sykes-Picot led to a Middle East rife with sectarian violence and ruled by militaristic strongmen such as Saddam Hussain of Iraq, Muamar Gaddafi of North Africa, and Hafez al Assad of Syria.  The recent collapse of Iraq and Libya, along with the impending collapse of Syria, led to a vacuum that was quickly capitalized by extremists, including ISIS.

2.  The War 

Who is ISIS fighting against?

Similar to Bush Jr., ISIS goes by the doctrine of "if you're not with us, you're a military target".  So they're fighting everybody.  They're fighting Iraqi regime forces, which is still unproven but is backed by both the US and Iran.  They're fighting the Kurdish militia, who wants to retake territories seized by ISIS in the past two years.  They're killing Shi'ites and demolishing their mosques in conquered areas.  They execute captured rebels from other groups, including those from the Jabhat al-Nusra, local affiliate of Al-Qaida Central.  They murder Sunni soldiers and civilians, both locals and foreigners from the Gulf states, calling them apostates.  They execute journalists and aid workers originating from all over the world.  They enslave and rape Yazidi women.  They're even angering drug lords in Mexico.

It's actually easier to identify who ISIS is not fighting against.  In Syria, they are not directly fighting President Bashar al Assad's regime forces, who is backed by Russia and Iran.  They're also not fighting Turkey, for reasons I will explore.

Where does ISIS get its recruits? How do normal people become radicalized? 

Insiders tell stories of many Tunisian, Egyptian, Saudi, Dagestani and Chechen recruits -- countries with a lot of anger and antipathy towards tyranny and oppressors.

There is no single identifiable pattern for radicalization, as the path to jihad can go through many different routes.  Many jihadists are not even religious.  Some may be motivated by pain and suffering, others by a fascination of the afterlife, others by money (jihadist salaries dwarf minimum wages in many Muslim countries).  Once radicalized, drugs help jihadists feel superhuman. 

Is Turkey sponsoring ISIS? 

The short answer is: most likely yes. Turkey is letting ISIS prosper through loose border control (i.e. allowing jihadi recruits to enter Syria through Turkey), oil trades, and sale of weapons and equipment. The reason they are doing this, is primarily to hammer the Kurds.

The Kurds are native to the region but ethnically distinct from Arabs; very proud people with a rich history  – the famed Salahuddin el Ayyubi, who in the 1100s led the Muslim opposition in many battles against European Crusaders, had Kurdish origins.  Nowadays they are 32 million strong spread across Iraq, Iran, Syria and Turkey  – they are perhaps the largest "nation without a state" in the world (note: Iraqi Kurdistan is an autonomous region within the country's borders).  In Turkey, the government has spent decades trying to cleanse the Kurdish identity and culture, including by funding extremists to kill off the Kurdish "threat" to Turkish sovereignty.  This puts them at odds with Western interests, which is a huge problem as Turkey is an active member of NATO.  There has been renewed international calls to throw Turkey out of the defense treaty.

In November 2015 a Russian fighter jet was downed by Turkish forces; Putin's government cried foul and went to press with damning evidence of President Recep Tayyip Erdogan's collusion with ISIS.  Erdogan disputed the account, saying he would resign if the allegations are proven, but nobody is buying it.  Even the citizens of Istanbul believe their government is propping extremists across the border.

Where does Saudi Arabia stand in the war against ISIS?

It's complicated, to say the least, as ISIS and the Saudi kingdom share similar ideologies with fundamental and existential importance to each.  

Right now, the Saudis are more preoccupied with preventing Iranian rise to prominence by fighting a bizarre war against the Houthis in Yemen, weaponizing the Free Syrian Army rebel group against Syria's Assad, propping military dictator Abdel Fatah el-Sisi in Egypt, and repressing Arab Spring movements elsewhere.  The fact that Western nations have "warmed" to embracing Iran, as evidenced by Obama's nuclear treaty and the war against a common enemy in ISIS, must be terrifying to the Saudis.

3. Extremism and the Muslim world

How do Muslims see war?  Is Islam a peaceful/violent religion?

Islamic scripture consists of not just the Quran (which is believed as the divine words of God), but also Prophet Muhammad's teachings and traditions as told by his wives and closest mates and spread by word of mouth through many generations.  It's a vast array of lessons that -- naturally and unfortunately -- may seem to contain many contradictions.  Muhammad in his lifetime was a religious leader, civilian administrator, and military leader during wartime.  Scholars spend their lifetime studying and interpreting scripture, for which -- just like many other religious texts -- context is just as important as the substance.  

Moreover, unlike the Catholic Church, there is no central authority in Islam -- so each group can appoint a just leader among them.  Naturally some people will use and abuse these traditions to forward their own interests; Baghdadi, with his expert knowledge of scripture, can readily cite parts of Quran that justifies the group's brutality even towards fellow Muslims. 

During his lifetime, Muhammad advocated mercy in many cases.  He protected Christians living under his rule and vowed that his followers would continue protecting them until the end of time.  He also fought in many wars.  However, he made many prohibitions against attacking civilians in wartime.  Muhammad’s successor, caliph Abu Bakr Siddiq, even established a code of conduct that would preclude anything like the terrorism of today; of enemies, he said, “Do not kill their children, old people and women. Do not even go close to their date palms.”

So calling Islam either peaceful or violent, that's just overly simplistic.  Islam is an ideological code and way of life for its adherents, in both peacetime and wartime.

Does Islam need a reform?

You've been reading Ayaan Hirsi Ali. Which is fine, because everybody needs to read different viewpoints.  But she is widely criticized as demanding Islam (which itself is an abstract, as the Islamic world is not monolithic but vast and diverse) to change in a way that's unrealistic and impossible, and she seems to ignore that her reformist ideals historically caused unprecedented bloodshed -- something the Muslim world doesn't need any more of.

4. Western strategy and the future of ISIS

Why has it been so hard to defeat ISIS?

Although ISIS is fighting wars in many fronts, but for many of their opponents, defeating ISIS is not their primary goal.  For instance, Syria wants to re-establish its government -- or just suck the country dry before Assad flees to Moscow; other rebel groups in Syria is busy fighting regime forces and leaving ISIS alone.  Iran wants to expand its influence with the fledgling Iraqi government. Saudi wants to undermine Iran's influence in the region.  Israel is taking a wait-and-see approach, perhaps hoping the chaos would benefit them somehow.  Elsewhere, nations are taking the stance of "as long as they're not killing [insert your own country] people, I don't care".  

So all of these nations in the "global alliance against ISIS", they would only lift a finger as long as it aligns with their "other" more important goals, and therein lies the problem.


How is the West fighting ISIS? What lies in the future for ISIS?

There was a time when direct intervention with ground troops would have made a difference in Syria, but that time has long passed.  There was also a time when the US toyed with training and equipping locals to fight ISIS, but that experiment failed laughably.  So Obama of today is very calculated in his moves, despite calls for more decisive actions against terrorism.  For ISIS, he believes in containment: supporting legitimate Iraqi/Kurdish forces in the front lines, assisting them by bombing key military assets and oil facilities controlled by ISIS, and basically letting ISIS self-destruct due to its multitude of shortcomings.  He sees no need to launch ground troops (which is a tall order given American voters' sentiment of the disastrous wars in Iraq and Afghanistan), increasing the frequency of bombings (which would surely cause civilian casualties and exacerbate the humanitarian crisis) -- both of which would risk validating ISIS' cause and struggle.

In terms of ISIS' future, it doesn't look bright.  They've lost some 14% of their annexed territories to the Kurdish militia and Iraqi regime forces.  They're losing revenue due to airstrikes on ISIS-controlled oil fields, and they're losing inhabitants who flee as the group's nation-building efforts crumble.  Plus you can only smuggle so much antiquities until it runs out.  The attacks against Paris, Russia, Lebanon, and others – assuming these were really perpetrated by ISIS – seem quite irrational and are actually signs of weakness; effectively Baghdadi is giving up on his Caliphate and reverting to guerrilla warfare, insurgency, and terror attacks.  Recently ISIS has also shifted their focus outwards, building presence in Libya and in Somalia – two other countries with inept and dysfunctional governments – but only time would tell how these ventures would fare.

Deadly suicide attacks in Beirut, Lebanon, November 2015 (AP)

Coalition forces should be able to defeat ISIS rather quickly, likely with some diplomacy led by current Iraqi PM Haider al-Abadi; I personally believe they wouldn't make it past 2016 [Ed note: ok, past 2017].   Unfortunately, however, the fall of ISIS won't mean the death of extremism -- the idea has lasted generations and will remain as long as there are grievances, marginalization and discontent against tyranny and intervening forces in the Middle East.  

How to defeat ISIS, according to the GOP

Magic carpet bombs

How to defeat ISIS, according to the GOP:

Trump: bomb the shit out of them, including their internet
Cruz: carpet bombs, but very carefully
Carson: drill for oil and bomb Putin
Republican constituents: bomb Aladdin

Scariest things about the Hunger Games: Mockingjay

The scariest thing about the "Mockingjay" movies from the Hunger Games series, is how they are eerily realistic portrayals of war.  In Part 1, an entire movie is spent dealing with wartime post-traumatic stress disorder (PTSD), which has affected and messed up the lives of so many veterans.  In Part 2, the plot revolves around three overarching themes, namely how in wartime:

1) there are no heroes, just confusion -- nobody knows who did what, or why, in the fog of war.
2) there is no good vs evil  -- just each side fighting for its own self-interests.  Any narratives would be determined post-war, by the victors.
3) there are no winners in war, just losers, with innocent civilians losing the most.

Another creepy parallel is the rebels' heavy use of propaganda in Mockingjay, just like ISIL in Iraq and Syria.

The point is that it doesn't matter what Katniss does, or what the rest of the characters do, or the fact that they exist at all.  The outcome of the war is determined by things happening outside of anybody's control, by bombs exploding in the right/wrong place/time, and knows who triggered which explosions.....

What I'm thankful for in 2015

In the spirit of Thanksgiving, I'd like to be thankful for my favorite product of the year.... Pepsodent/Signal/Mentadent Vertical Expert by Unilever Consumer Products.  It's an Italian re-design on a 4000-year old tech -- the toothbrush -- with one particular goal: to encourage vertical brushing (as opposed to side-to-side) as dentists recommend.   Best of all, it's not even electric, so you're not dealing with batteries, proprietary brush heads, or etc.

Highly recommended.  If you don't like it, you're only down $2.50.

Happy Halloween!

Halloween is the one day that never made sense to me:  I always thought you weren't supposed to take candy from strangers?

One year into the current administration

The IDR has been pummeled

So I attended a talk given by a prominent Indonesian economist and stock market strategist, who shall remain unnamed -- I'm mindful of the government's war on research analysts.  Perhaps our leaders believe the key to growth is to have all analysts gather and sing songs instead of doing their jobs: making constructive independent analyses.

Anyways, needless to say, the speaker was utterly disappointed in how the new administration have fared in the past year.  The indicative metrics are the underperformance of the IDR and the bond markets.  The president claims that the downtrend is caused by external factors and that people need not worry, but fact is that investors are losing patience and confidence.  See, in most (developed) markets, bond prices are inversely correlated with equities -- if equities go up, investors switch away from bonds.  Not in emerging markets like Indonesia: both securities are inversely correlated with the IDR.  In other words, both Indo bonds and equities fall when the IDR is under selling pressure.

Let's take a closer look on how the government is responding to the economic conditions of late.

Point 1 - Imposing Rupiah use in economic activities. 
This is a (relatively mild) form of capital controls, in order to boost the market for the domestic currency;  harsher measures are usually implemented by countries in severe crises such as Venezuela or Greece, or by countries that are not fully integrated with world markets, like China.  The impact would likely only weaken the currency -- the exact opposite of what it's intended to do.  Why? Because Indonesian corporates owe money in USD.  This isn't going to change, as long as Indonesia still needs a lot of FDI, and domestic funders and bank sector remain too small and limited.  Some of these corporates have been receiving some of its revenue in USD denomination (such as rental income, export-related revenue, etc).  With this new regulation,  revenue which was previously received in USD, will now be received in IDR.  When interest or principal payments fall due, these corporates will need to convert their IDR into USD to service these debts.  In the end, corporate treasuries unwillingly become currency speculators, spending resources figuring out FX movements instead of benefiting from natural hedges.   According to the current administration, this is progress.

Point 2 - Increase in taxes. 
They said they want to promote more activities in the property sector.  Well, in the context of economic slowdown, an increase in taxes will make land titles more costly. This is a truism and not an argument.  One may argue they are only increasing taxes in the high-end, keeping space for the affordable segment; however, without fiscal spending or subsidies it's not going to make a dent.   People are still losing buying power due to inflation and cost pressures.

Keynesian bulls may believe that the government need to increase taxes to fund expansionary fiscal policy.  They argue that China has made a killing with massive fiscal stimulus, and and we should follow the path.  Indeed our debt-to-GDP levels remain low -- but we also need to learn the lessons of (recent) Chinese history.  With a bigger government comes bigger corruption.  And massively misdirected incentives. Massive buildup of excess unused capacity.  And bigger chance of revolutionary social upheavals when the tide turns against it.

Point 3 - Social contract trumps everything else.
Indonesia has seen its president promoting social contracts -- popular sound bites that undermine long-in-place legal commitments.  I'm talking about lowering tollroad fares during the heaviest Idul Fitri travel season; lowering cement prices; lowering natural gas prices, and so on.  Never mind that tollroad operator Jasa Marga, cement producer Semen Indonesia, gas utility Perusahaan Gas Negara, and numerous other affected companies are publicly-listed big caps that spent 10 over years to build their reputation among international investors.

So what the president is saying is "we don't need your stinking FDI."

This is who we voted for, a far-left leader undoing the hard work of the past several decades.  

You might have missed: Pats, Jeter, Ashley, and Apple

The Buttfumble: nothing to do with what happened this week

... So Jorge Posada and Derek Jeter had homosexual relationships with each other, inside the Yankees facilities.  Or they may not have.  Must be written by a closet Red Sox fan.  Still hilarious.

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The New England Patriots are serial cheaters, have been for years, and the rest of the league knows it. Why doesn't any of the other teams cry foul? Probably a case of "don't bite the hand that feeds you."

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Hacked adultery website Ashley Madison has been bending over backwards to hide the real truth of its scam business model, from its millions of customers and potential customers, even from the California attorney general.   Perhaps the company doesn't expect its users to report to authorities because of the site's premise as a cheater's paradise --  it would be like a drug addict calling the cops after his dealer stole his coke stash.

On a related note, researchers cracked 11 million of passwords from the Ashley Madison data dump despite the company's strong bcrypt encryption, because the programmers kept a cache of weakly-encrypted (SHA) hash of the same password list.  And the most commonly used passwords are "123456" and "password".   Again, technology is pretty damn secure, but human stupidity is not.

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Apple launched some new shit, which is the same as the old shit, but better, faster and costs more (there's even a new program designed to rip you off for all of eternity).  Bombshell: technology moves forward and inflation happens. They're gonna sell 500 million of these next quarter.

Mad Respect to New Horizons

Pluto's surface -- seen from New Horizons

NASA's New Horizons probe successfully completed a flyby above dwarf planet Pluto in July, after a meandering 9-year, 3-billion-mile journey across our Solar System - - a first for humankind.   Before 2015 we only know Pluto from a blurry picture of the dwarf planet taken by the Hubble Space Telescope, but now we have a full topographical map in high resolution.  This is a huge step forward for science.

Pluto -- as seen by the Hubble Space Telescope (2010)

Pluto -- as seen from New Horizons (2015)

Why so difficult to see Pluto even with the huge, $2bn scope? Well first, it's really tiny.  To understand how small Pluto is, check out the illustration below of the Solar System objects drawn to scale (but not to distance).   The Sun is the big glowing yellow ball in the background, obviously.  Earth is the third ball at the bottom left, followed by the moon, Venus, and gas giants Jupiter, Saturn, Neptune, and Uranus.  Pluto is one the last 4 tiny dots on the right, along with some other Kuiper Belt Objects.

And Pluto is also far: its orbit is 30 times the distance from the Earth to the Sun.

Makes you think about how huge (and empty) the outer space is.   You see, New Horizons is speeding at ~40,000 mph away from the Sun, one of the fastest man-made objects in space.  Proxima Centauri, the closest star in our Milky Way galaxy, is 4 light years away.  If we send a spaceship going at the same (constant) speed as New Horizons, it would take 60,000 years to reach Proxima Centauri  (don't forget, thanks to the Sun's gravitational pull, the ship would continuously slow down unless it expends a lot of energy).  And that's just the closest star in our own galaxy.

So If you ever have doubts whether we'll ever find life beyond Earth, keep in mind that we've only scratched a tiny surface.

Proxima Centauri

Lessons from the Ashley Madison Hack

Ashley Madison (AM), a worldwide dating site for nearly 40 million married people looking for things on the side, was hit by a massive hack where gigabytes of user data are leaked to the public.  36 million email addresses and activity history are in the wild, and Avid Life Media (ALM), the owner of the site, insisted that the data may not be genuine.  So naturally, the hacker dumped another (larger) set of data -- 13GB worth -- containing even more sensitive information (internal emails, source code for the website and mobile apps, etc), taunting ALM's CEO to admit that the hack is real.

Here are some of the things we've learned:

1.  Most "hacks" are not really so 

I hate to bring up CSI:Cyber all the time,  but the kinds of "brute force attack"-type hacks (like you see on TV) are terribly slow and heavy on computing resources, and they are rarely successful.  Moreover, the typical hacking methods of SQL injection and buffer overflow attacks are well-documented, and good IT specialists know how to prevent them.  "Hacked" companies are more likely to be victims of one of the following:

• social engineering: along the lines of me calling Microsoft's support hotline, telling them I'm Bill Gates and I've lost my password,  
• a rogue employee (or ex-employee, contractor, vendor) stealing and dumping data they have/had privilege to (this even has a technical term 'doxing').  

Sadly, victimized companies probably won't admit they screwed up their customer service or internal HR policies, they'd rather say some criminals spent tons of money to break into their system.  So the general public will continue to think they are more vulnerable than they really are.

2. People are super-lazy with their passwords

I can explain this: perhaps these people think they just want to try the website once, so they just use stupid passwords like "123456" or "password".  I do the same on sites that I wouldn't give real personal information, like news sites or software companies' download pages.

3.  Dating sites like AM are sleazy, probably stuff their database with fake (female) profiles 

They do it in order to attract new members, even going to lengths to hire an army of "angels" to manually write fake profiles in multiple languages and post image sets stolen from Facebook.  These fake profiles are then "reanimated" by software, programmed to talk dirty to men and induce them to pay up.

Is it ethical? Nope (although accusing an extramarital hookup site of acting unethically is a bit redundant).  But illegal? Unlikely (i.e. somewhere in the legalese it will say the site is purely for "entertainment purposes").  Is it acceptable because all other sites do it? Maybe.  The fact that these kinds of sites are full of fake women and real scammers seeking to steal from unsuspecting men? Not surprising at all.

John C Dvorak of PC Magazine:

"What our researcher discovered in 2003 [from various dating sites] was that you sign up for these operations and then get inundated with messages from women who are just itching to meet you. But you must pay for more information. And surprise: once you join, you never hear from anyone ever again."

4.  It seems fair to say most men are probably not cheaters

We men are probably just curious, want to see what's out there.  If something happens, well great.  But (more likely) if not, well, it's only a few bucks, we can just move on and call women bitches.   If anything, us men, we are just retarded.

5.  People are less concerned about "financial information" than they are about "personal data"

Who cares about my credit card info? Needless to say, people who actually have secrets, are panicking.

6.  The vultures have come out and they stand to benefit the most from the debacle

I'm talking about divorce lawyers, ambulance chasers, litigation lawyers, and extortion artists.

7.  Hell hath no fury like a woman scorned

John McAfee -- billionaire cybersecurity expert, real-life Tony Stark and world-renowned connoisseur of cocaine, guns and prostitutes -- combed through the massive data dump and concluded the AM leak was done by one single female insider -- probably a disgruntled former employee, and that the so-called "Impact Team" hacker group does not exist.  You may agree or disagree, but read McAfee's article and tell me it doesn't seem plausible.  If you want to have fun, read it out loud as Oscar Winner™ Patricia Arquette explaining to Ally McBeal's befuddled boss.  As if things are not crazy enough, the key to identifying the real perpetrator may be legendary hard rock band AC/DC.

Head of FBI Cybercrime Division: "Ooh, is that the new angry birds?"

8.  This leak will be a game-changer

We only get real-life data dumps of this magnitude once every few years.  The silver lining is that this "hack" would provide a massive corpus for analysis by data scientists (in addition to showing the naked truth about these kinds of sites, of course).  It would, hopefully, change how companies view security and the importance of safeguarding customer information.  Just hope the impact would be as definitive as the 2009 "Rockyou" hack and how it changed cyber security forever.

Blast from the Past Movie Review: "Lagaan" (2001)

Highly recommended watch, if you can withstand 4 hours of hilarious acting and equally laughable dancing.  Starring Aamir Khan and a bunch of folks I've never heard of, 2001 hit Lagaan is described as an Indian epic sports-drama comedy, which basically sums it up.

Set in a small Indian village during the time of the British Raj, the first two hours shows the plight and daily lives of local villagers as the colonial officers impose high taxes ("lagaan" means tax, I think), even charging punitive rates when the villagers try to organize.  The head honcho challenges local leader Aamir Khan to a game of cricket, where if the villagers win there will be no taxes for a year, but if they lose they would have to pay more tax (double and triple lagaan!!)

--Intermission--

The second half shows the villagers learning a game they've never seen before while singing and dancing.  They learn by peeking at the other team's practice -- kinda like the New England Patriots.  Funniest moment when the pitcher (bowler? quarterback? no idea what they're called) discovers top spin, everybody thinks it's the greatest thing in the world.  I'll not spoil the ending, but you're free to guess (or just watch the clip below).

In sum, 2 hours of fiscal policy discourse + 2 hours of singing, dancing, and cricket = box office smash hit!  (it literally earned two megazillion crores)

On parenting

David Roberts on Vox.com:

"Life is just a series of moments, and it's amazing how many of them we miss, rush past, or disrupt because our minds are elsewhere... Be aware of those moments, and never turn one down. If you face a choice — a moment or a chore, a moment or bedtime, a moment or work obligations, a moment or your damn iPhone — always choose the moment. They seem abundant, sometimes too abundant, in those early years. But childhood isn't linear; it seems to accelerate faster and faster as it progresses, and when it's over that set of memories will be all too finite."

Random thoughts on China's stock market collapse

In China, red means a stock price is up

1.  The stock market was red hot ... (then it turned green) 

So hot, in fact the Chinese stock markets created US$6.5 trillions of value in just 12 months – the Shenzen Composite was up 158% year-on-year as of early June 2015.    Then it went down crashing to everybody’s hysteria and confusion – except everybody outside of China saw a massive bubble from far away.  Between June and July, Shenzen lost 40% of its market value before some multi-pronged government intervention stopped the bleeding (basically by stopping trading for half the stocks).

2.  In the beginning there was easy money

The bubble was fueled by the People’s Bank of China (PBOC) multiple rate cuts.  Four reductions in the reference rate since November 2014, as well as the RMB peg to the USD (which was just recently lifted this past week), form the pillars of the “Chinese QE” policy to boost growth.  Low interest rates were intended to drive consumption as well as investment.

Unfortunately the Chinese economy is not driven by consumption; its people are avid savers, unlike Americans who regularly max out their credit cards to buy everybody Christmas gifts, or the latest Iphones.  China’s savings rate (51% of GDP) is triple that of the US.

The Chinese used to put their life savings into bank deposits.  But after the rate cuts, bank account yields became unattractive, so they all moved on to buying property.  This worked for some time (i.e. many years), but after terrible cases of oversupply in many markets, property prices came down and the government promptly told the public that property was no longer safe haven.  So people went into the stock market in droves.

3.  China has more trading accounts than Indonesia has population(!)  

Credit Suisse estimates there are 258m trading accounts in SH and SZ stock market.

Some analysts point out that the Chinese stock markets are actually quite small (as % of GDP) compared to the markets in US/Japan, or even compared to the Chinese bond markets.  I think this is probably more telling about the sheer size of the economy, than a commentary of the stock market, which is indeed still fledgling.

Green means down

4.  About 2/3 of Chinese investors don't have a high school education

...some are even illiterate.  Inexperienced investors don’t have a clue about portfolio risk.  Even Chinese farmers were giving up tending their fields in order to tend their stocks.  Many investors are young -- about 1/3 are age 30 or below.  Uninformed investors tend to be on the hook for losses, as more experienced players readily cash out of the market.

These people entered into the stock market because the Communist Party was pushing them to buy buy buy.  As the market crashed and burned, they will likely blame the government -- which is why the government is very fearful of widespread anger and anarchy.

5.  These unsophisticated investors bought shares using borrowed funds

Margin lending skyrocketed; the official amount is RMB2.2 trillion, up five-fold in 2 years.  On top of that, there’s possibly double that amount in unofficial/unrecorded margin lending vehicles, as low interest rates and loose banking policies encouraged such loans to shady lending companies.

Margin lenders even allowed – probably encouraged – using property collateral for stock purchases.  This means is that fickle market movements could (and probably would) result in people losing their homes.

6.  Not just retail investors; even corporations drank the kool-aid

Chinese companies borrowed funds in huge amounts, with stock as collateral – exacerbating volatility.  Even junk companies that should have gone bankrupt, successfully raised capital in the market to stay afloat.

7.  Government is making an all-out effort to bail out the stock market

Because of the sheer number of retail investors, the government is risking social unrest if the stock market collapses without intervention.  Meanwhile, critics say the government’s efforts are fruitless and lacking in coordination and transparency.

8.  China doesn't have an official spokesperson, like Greenspan or Draghi, to calm the markets

Senior officials in the government, usually appointed by the Communist Party, are afraid to say something that may upset their bosses.  So investors dwell in befuddlement as prices continue to collapse.

9.  The Chinese middle class aspires to be wealthy in retirement

...even if the odds are against them.  I call it the mahjongg syndrome™, perhaps driven by the fact that it's a huge country and everybody knows “a friend of a friend” who had made it big time.  That’s why people gamble all their money, invest in junk stocks, and buy Bitcoins.

10.  Critics say the problem is more fundamental

... that the Chinese economy is hugely misdirected.  Over-reliance on investment and exports as part of GDP, wrongly-incentivized local governments, general misallocation of assets and stubbornly low consumer spending could mean the economy is stuck in a “middle income trap”.

However, this is not news; experts have argued for years whether China was about to have a hard or soft landing.

Max Fisher of Vox: "...to be a reliable growth engine, China must recalibrate its entire economy. This will require politically-sensitive reforms to empower small-and-medium-size companies, get off the country's addiction to exports and rein in a massive shadow-banking industry prone to creating debt bubbles."

Ah don't forget about the debt issue. Local governments have been accumulating debt at record pace, with recent estimates putting 2015's debt service burden at 1 trillion yuan (US$156bn) while revenue dwindles due to slumping property sales.  Similarly the private sector is massively indebted -- a large portion in foreign currency (i.e. USD-denominated) loans, making it highly vulnerable to painful deleveraging when the RMB devalues.  According to a 2014 report by the Conference Board:

"Private sector debt, now at almost 200 percent of GDP and up from 117 percent at the end of 2009, is still accruing at 15 percentage points per year [...] This pace of credit creation is unprecedented for China, and the result has been debt levels that are now well in excess of the thresholds that have historically triggered financial crises in other countries.”

11.  What we know for sure is that the Chinese economy is slowing down

... and it will likely start a global recession.  Ray Dalio, a prominent hedge fund manager, writes in his report that the market mayhem will hugely affect consumer spending.

“The impact comes from the direct shifts in wealth and the psychological effects of the stock market bubble popping […] Though stock prices are [still] significantly higher than they were two years ago, the average investor in the stock market has lost money because more stocks were bought at higher prices than were bought at lower prices. We now estimate stock market losses in the household sector to be significant—i.e., about 2.2% of household sector income and 1.3% of GDP. However, these losses appear to be concentrated as only 8.8% of the population owns stocks. These are [only] rough estimates.[...]  [But even] those who haven’t lost money in stocks will be affected psychologically by the events, and those effects will have a depressive impact on economic activity.”

As the second-largest economy in the world, a hard landing in China will have negative reverberance globally.  Demand for commodities will be adversely affected, which will impact all emerging economies who are dependent on commodity exports like Indonesia, Brazil or Argentina.  Australia, also another resource-rich country, is already bracing for a dramatic slowdown.

12.  There's still a lot of unknowns

Most experts don't believe official numbers coming out of China, so it’s hard to judge the impact in the short-term; we can only assess the complete picture after the fact, perhaps years later.  What we know is that the country is so large, that we can make any argument, no matter how non-sensical, providing China as evidence.

7 thoughts on the crude oil price crash

1. Blame it on the Yankees.  

The crash is mostly caused by the rapid rise in petroleum production in the US and Canada over the past 5 years.  US output is up from 5.3 mmbopd in 2010 to 9.3 mmbopd today, whereas Canada from 2.5 mmbopd to 3.9 mmbopd.  The rapid rise – nearly double the barrels in five years – has thrown a wrench on global supply-demand dynamics, since the US has always been the largest crude oil consumer worldwide by far.

2.  It has caught everybody off guard.  

Back in 2011-12 nobody expected US production to continue rising the way it did. Remember "peak oil"? Or even "energy crisis"? Nobody is talking about these now....

From Ben Casselman: It isn’t just that experts didn’t see the shale boom coming, but they underestimated its impact at virtually every turn. First, they didn’t think natural gas could be produced from shale (it could). Then they thought production would fall quickly if natural gas prices dropped (they did, and it didn’t). They thought the techniques that worked for gas couldn’t be applied to oil (they could). They thought shale couldn’t reverse the overall decline in U.S. oil production (it did). And they thought rising U.S. oil production wouldn’t be enough to affect global oil prices (it was).

3.  Entire (centuries-old) industry dynamics have been completely upended.  

From Business Insider: "... in the past, large integrated oil companies — BP and Exxon Mobil — and state-owned companies have owned the more efficient, low-cost production while smaller oil companies faced higher barriers to entry. In the past, drilling oil necessarily required huge investments in platforms and equipment; massive balance sheets or state backing were virtually required to get into the market.
But with lower-cost fracking technology, this has changed. [...]  as a result, oil supply continues to run into the market as fracking companies are able to produce oil cheaply and shut down wells quickly when they become unusable or unprofitable.  [...] Meanwhile, large oil companies or countries that depend on oil revenue to meet spending commitments have continued pumping oil because they still need to bring in that revenue, regardless of price."

Meanwhile the Saudis also continue to pump despite the glut, partly because their national budget is 90% dependent on petroleum revenue, and also perhaps in attempt to drive out high-cost shale producers.  It hasn't worked.  OPEC is mostly defunct.

4. Africa and Latin America have been hit hard.  

Oil-rich emerging countries such as Angola and Ghana got their economies whupped through budget imbalances and asset misallocation.  Venezuela, well, it has much bigger problems than oil.

5. Russia also fell victim.  

The premise of the 2013 movie Jack Ryan: Shadow Recruit is about how Russia would launch a terror attack on the US if crude falls below US$79/barrel. Well, oil is at $50 in real life now, and surely Russia is in huge economic trouble – with oil is just a small part of the cause.  The country’s economy shrank the most since 2009, with Q2 2015 GDP contracting 4.6% yoy.  The rout on commodities markets has overshadowed the signs of stabilization by hammering the ruble and shaking a country whose budget relies on oil & gas for about 50% of its revenue. Inflation eroded consumer buying power, as sanctions over Ukraine choked access to capital markets.  The country is a bit unique, however, in the way the nation has united in its unwavering adoration for Putin despite the country's freefall towards poverty.

6.  Widespread hit on global commodities -- and countries dependent on them.  

It's not just crude oil, but it's a perfect storm of slower Chinese growth affecting all metals and mining commodities, discovery of substitutes for rare earth minerals, Greek debt crisis, and tapering of QE policies worldwide -- all at once.  Even agri commodities, which continue to see solid demand and no technological disruptions of any significance, have been impacted.

Pretty much all countries dependent on commodity exports, from Australia to Brazil and Argentina, are seeing slowdowns and contractions.  Even worse, net oil importer countries, like my hometown Indonesia, fail to benefit from the drop in oil prices, usually through a lethal cocktail of resource misallocation, sticky prices, inflation, and strong dollar.

7.  So volatility is here to stay... or is it?  

The past 10 years have seen some of the most volatile crude prices in history.

But history is history.  Going forward, there isn't seem to be much volatility going around.  Supply shocks don't have much effect on prices, because traders know that US and Canada can ramp up production quickly whenever prices go up.  If anything, we may not have seen the bottom.  Maybe the market will move again in the long-term.

My thoughts on the Greek crisis

Greece is about to receive its third multibillion euro bailout in just 5 years.  With this lifeline, the Greek people faces a fresh wave of austerity policies – increase in taxes, public sector wage cuts, more cuts in pension benefits – basically the same approach has been tried repeatedly with no results to show for.

The fairy tale (tragedy) started when Greece joined the Eurozone in 2001.  Becoming part of a developed region, the Greek economy boomed with confidence and prosperity.  Everything went to shits in 2008 during the global financial crisis.  The entire Europe entered a recession, but Greece was hit particularly hard as it is one of the poorest, least industrialized, and most heavily-indebted countries.  Unemployment rate reached 28% in 2013, worse than the US during the Great Depression.

I. How much do the Greeks owe?

Technically debt is 177% of GDP -- twice the level of the US.  However, deep depression – real GDP contraction of 26% over the past 6 years – means it has no way of raising capital, so the debt situation will only get worse and worse.  Any tax hikes or budget cuts to help pay debt would just worsen the depression. 

Looking at it this way, the debt level is just an academic exercise: it's sort of like saying "I'm super broke" instead of "I'm deadbeat broke".

II. How badly has it affected the Greek people ?

The economic contraction continues thru this year, with GDP growth estimated to be -4%.  The Greeks have surely suffered, but to many outsiders (i.e. northern Europeans), the country is where it should have been without the confidence boost when they entered the Eurozone.  Adopting the Euro, and being able to borrow massive amounts on the cheap, created a boom for Greek personal wealth.  A lot of it was surely misdirected through reckless spending and corruption, but a boom nonetheless. 

But it was in no way sustainable.  A sharp reversal followed. 

III. Whose fault is it really? 

There’s plenty of blame going around.  If you give me more fingers and I’ll point them at more culprits.

1) It's the Greeks' own fault
Since Greece reinstated democracy in 1974, the country's bureaucracy has been grown fatter and fatter, with each new administration adding its supporters to the public sector payroll — and wages rising steeply in the past decade. Economist Yannis Stournaras: “The government kept adding bonuses and benefits and pensions.  At election time there was a boom cycle as they handed out jobs.”

There were rampant cases of waste and abuse of power among bureaucrats, including officials who hire their wives, or $750k/year office space just for 11 people.  It was a bureaucracy which employs one out of five workers in the country, with nearly 800,000 public sector employees.  The government is basically an army of patronage appointments, campaign workers, built up over decades; they also have lifetime tenure and indifferent to productivity.

The national budget has more holes than Swiss cheese.  Shipping, which contributes 7% to the country’s GDP, is nearly exempt from taxes or duties, and income from international business aren't taxed at all.   At the same time, tax evasion by Greek citizens and businesses remains a huge problem. The average taxpayer only report half of their real income.   Tax evasion accounted for half of the country’s 2008 deficit and a third of its 2009 deficit.  And there has been no signs of reforms on this front, despite the obvious need.

2) European leaders completely mishandled the situation
Some critics blame Europe for providing the first two bailouts. Europe, they argue, has been unwilling to accept fault for lending so much bad loans to the poor nation.

This is akin to blaming thieves after you left your front door wide open.

The argument for the first and second bailout was clear: the world is in the midst of a debt-fueled financial crisis, and any sovereign failure can be systemic – just like Lehman was.  The Greek rescue package was necessary to keep the financial system running, while proper monitoring and safeguards are installed into place.  Since 2010, the EU has set up a permanent bailout fund, stiffened deficit- and debt-limitation rules, tightened surveillance of national economies to prevent asset bubbles, centralized bank regulation and — perhaps most important — allowed the ECB to act as a safety net for unhinged economies.

However, the creditor group’s mismanagement of the Greek problem meant that the second, third, and likely more bailout rounds would be needed. The “Troika” of creditors – the ECB, the EU commission and the IMF – told Greece  to adopt severe austerity, which felt to Greeks like the shredding of labor rights and benefits. This program not only failed to make the debt sustainable; it has carried the country backwards to the pits of poverty.

Meanwhile, the bulk of the €240bn rescue funds Greece received in 2010-2012 went straight back to the banks that lent it money before the crash.

3) The bankers are the devil
For years, Goldman Sachs and JPMorgan helped Greece, Italy and other sovereign governments, to hide mountains of bad loans within structured products -- similar to what eventually triggered the subprime mortgage crisis.  The schemes are not illegal, but they completely distort the government balance sheet and hide the real picture from Eurozone statisticians and policy makers. 

The discrepancy turned out to be massive. In November 2009, newly-elected PM George Papandreou admitted that the year's budget deficit would be 12.7% of GDP, almost quadruple the 3.7% the previous government projected. The country's finances were in much rougher shape than anyone — especially anyone buying Greek bonds — had realized.

4) The Syriza government is at fault
The Greek political landscape has traditionally been dominated by two parties, PASOK and New Democracy; the duopoly – and the race to buy votes in every election – was partly the cause of the problem as previously mentioned.  Desperate for a change, in January 2015 the citizens elected the far-left party Syriza led by PM Alexis Tsipas on a platform of ending austerity.

So it wasn’t the party’s fault that the economy is in shambles; it simply inherited a mess already brewing for decades (by making promises it probably can't keep).

However, Tsipras’ behavior during the bailout negotiations ticked off many.  The rhetoric coming from Athens is as heated; there is even talk of European “blackmail” against the free will of Greek voters, as if Germany and France don’t have voters of their own.

Tsipras was unable to come up with proposals that secure support from any substantial number of other European governments, leading to a deadlock.  Then on June 30, he stopped talks to hold a referendum, asking the population to reject the creditors’ terms, just to later accept an even tougher terms of austerity.   He framed the referendum question as: “do you want to keep using the euro?”, which is like asking, “do you want to lose your life savings now for the sake of uncertain (maybe better but still uncertain) future, or don’t lose your savings now but with an uncertain future as well?”  And the people have decided: they don’t want to lose their savings.  Can you blame them?

In essence, months of brinkmanship has caused untold damage to the Greek economy for no purpose whatsoever.

IV. The rest of the world really hates Greece

It’s not just Germans who are tired of Greece. Leaders in Spain, Ireland, and Portugal – Eurozone’s poorest countries– have been Greeks’ toughest critics; they argue that their countries swallowed the harsh austerity medicine after the debt fallout and that Greece must, too. 

Italy also took the pill and probably needs 20 years to rebuild and regain its job market.  Even Bulgaria, which only joined the EU in 2007 and is still trying to get into shape to adopt the common currency, is fed up. “We are much poorer than the Greeks, but we have performed reforms,” President Rosen Plevneliev pleas.   The Ukrainian people, ailing from an armed conflict with neighboring Russia, sees Greek pensioners’ high living standards with disdain.

Even the reviled IMF can explain its hard line: given the bitter programs it has imposed on other countries (Indonesia, South Korea, and Thailand in 1997-98, just to name a few), it can hardly now be lenient towards a more developed and relatively better off European country.  Actually the Asian Financial Crisis sets a pretty good precedent as there are many similarities to the Greek situation, as well as lessons to be learned.

V. There are many advocates of Grexit

Economically speaking, there is a wealth of arguments for Grexit.  For one, reviving growth was never the primary sticking point during the powwow with the Troika – it always revolved around austerity measures and debt repayment.

If Greece were allowed to run a budget deficit and create fiscal stimulus to offer jobs and relief to the most desperate citizens, then its social crisis would lift.  But the terms of the bailout package won't allow any of this – Tsipras already agreed to target an aggressive 3.5% budget surplus (excluding debt service) in pre-bailout talks, meaning more belt-tightening as if there are any notches left.

In that sense, many argue that leaving the euro may just be the best option left.  In the short term, this would be a rough path.  Greece would suddenly become a poor, isolated failed state stuck between richer northern Europe and conflict-stricken Africa and Middle East.   Access to external funding sources would disappear overnight.  Very stringent capital controls would be needed to keep banks solvent.   A lot of personal wealth would be wiped out as the value of drachma-denominated assets plummet.  Dangerous inflation may arise.  It would probably look a lot like the Soviet Union circa 1991.

But Grexit at least provides the country with a path back toward growth sometime in the next decade. The Greek people would finally have control over their monetary policy, letting them devalue their currency, boost exports and tourism, and get back on track.

Politically, it’s a totally different ball game.  Nobody really knows what the political cost of Grexit will be.  Angela Merkel subscribes to Helmut Kohl’s ideology, that the EU needs to show the world that it can remain united in the face of difficult internal issues – especially with looming threats from Putin's militaristic ambitions and sectarian violence in the Middle East and Africa along with the migrant influx and humanitarian situations.  Merkel, Hollande and others, they are children and grandchildren of the WWII, and nobody wants to relive those painful childhood memories. 

VI.  This round of bailout and any future rounds –and there will be– will not be sufficient  

The Greek economy is too damaged, and the debt burden is too heavy.  Debt forgiveness, not just rollovers, will be needed.  In essence,  Europe needs to admit that they had royally fucked up in the way they handled the issue.

In fact, this bailout, just like previous ones, only buys time for Greek people and other lenders to exit before things get worse.  Much of the previous rescue funds have gone to pay off Greek bonds held by private investors and other eurozone governments, rather than on programs to stoke growth.  The money was supposed to help replenish banks’ capital, to get them lending to revive the moribund economy. Instead, it sat in banks’ coffers as bad debts piled up, and it bought time for Greeks and foreign investors to get their money out.  Only $27b out of the $230b of bailouts have gone to government spending, the rest mostly went to debt repayments and interest payments and commercial banks.

Wanna buy a Greek island?

Furthermore, one of the bailout provisions prescribes selling off Greek state assets (companies, utilities, airports and whole islands) and generating about $55 billion in revenue, half of which would go toward debt service.  The idea of a public garage sale was part of the previous rescue programs — and failed miserably. Only a fraction of the projected amount was raised, and hardly anyone expects much more this time around.  Furthermore, years of economic hardship has damaged the value of domestic assets, that's assuming there are still buyers left.

VII.  Many stakeholders –even the creditors– don't believe Greece can get back on its feet  

The IMF estimates that even if Greece achieves all the reforms (note: that’s a huge if), debt-to-GDP will only come down to a still-unsustainable 118% by 2030.

Even Wolfgang Schaeuble, the German finance minister, is on record saying that a temporary "timeout" for Greece from the euro would in many ways be preferable to a new rescue package. 

VIII. The real homework for Greece is to fix its fundamentals and business environment

Greece has an entrenched system and regulations molded over decades to protect incumbents and stifle innovation, entrepreneurship and new business models.  As a result, inefficiencies abound and the country suffers from poor productivity and a dearth of talent.  To restore the economy, the country must focus on the basics: stability, investment and simpler laws.  This is Econ 101 stuff.  There are still prospective sectors that may lead future growth for the nation: tourism, shipping,  agriculture, and pharmaceutical industries just to name a few.

Professor Michael G. Jacobides of the London Business School: "...on balance the structural changes that the deal calls for represent a once-in-a-lifetime opportunity. They are reforms that no government in Greece, including Syriza, has attempted, for fear of upsetting powerful vested interests.   By forcing the government to remove institutional barriers to competition and innovation the deal will create a sound basis for economic growth and development.  If (and that’s a huge if) the politics work out, confidence returns, and people invest again, things could get back on track; the alternative may be a failed state.  So, let’s keep a cool head, and not throw the baby out with the bathwater.  There’s just too much at stake—for Greece, for the Eurozone, and for the European project more broadly."