Maps

A lot of kids these days don't care much for geography. Okay now that's a personal choice, if you'd rather do AI or data science or machine learning (--> Ed: these three are basically the same thing), that's totally up to you. But studying maps is often the best way to understand nuances, especially about places that we may not be familiar with.  I'll give several examples below:

1. The Korean conflict

I've actually written about North Korea at some length. But the most salient point is easily shown on the map: the Seoul-Incheon megapolis of 12+ million is within 40 miles of the North Korean border. This means: South Koreans don't really give a rats about Kim Jong Un's nuclear program -- well, they do, I guess, a little bit -- but ICBMs and strategic warheads  are mostly Japan's and America's concerns.

In the event of a war, North Korea can just mobilize its artillery guns to the DMZ, and wreak havoc to its southern nemesis.

We're talking perhaps tens of thousands of casualties within the first three hours.

North and South Korea

2. The Cuban Missile Crisis

This is a similar theme, which I've also covered previously, about missile ranges.  Maps clearly show Cuba is located within 25 miles off the coast of Florida.  When Brezhnev installed missiles in Cuba, Reagan knew that even a short-range one could easily hit central Miami.  A Soviet nuke, on the other hand, can pulverize many other vulnerable East coast cities, including Washington D.C.

Cuba

3. Iran

Even if you don't know any history before the 1990s.  Even if you don't know your Shia vs Sunnis. Even if you think Shah Reza Pahlevi is a Bollywood actor. Even if you don't understand the big deal about economic sanctions.

Just look at where Iran is on the map. On the west, it borders Iraq. On the east, it borders Afghanistan. So Iran is surrounded by two countries that were invaded by George W. Bush under the misguided premise of the War on Terror, creating instability that lasts until this day.

Does that explain why "death to America" chants are so popular in Tehran?

Iran

4. Haiti

Haiti and the Dominican Republic (DR) share the Hispaniola island in the Caribbean, but they might as well be on separate planets. Historically, the earlier was a French colony, and the latter Spanish, which partly explains their vastly different fates.  The DR also had "better" dictators, post-independence, than Haiti -- if that's even a thing. How different, you ask? Just look at the satellite image.

The Haitian (left) side looks like desolate hills where nothing grows, while the DR side looks lush green and fertile. Agriculture is and has always been a large part of the island's economy, but one side took a more sustainable approach. You can even see the contrast as you trek the border. No wonder there's so much disparity: in terms of GDP per capita, Haiti's is $1,800 while the DR is $17,000 -- almost ten times higher.

Adding insult to injury, Haiti is also prone to natural disasters; the 2010 earthquake destroyed large parts of the capital Port-au-Prince, and 2016 Hurricane Matthew also took numerous lives.

Two worlds, separated at birth

Is it solely the blame of European colonizers? Of course not, but when you're down and out, incapable of working towards a fix, could you blame poverty-stricken Haitians for pointing fingers at their past colonial masters?

The border between Haitian - Dominican Republic

Further reading, from Vox.com:

• Maps TOC
• 40 maps that explain the Middle East
• 40 maps that explain World War I
• Maps that explain the global refugee crisis
• 33 maps that explain terrorism

What is an Inverted Yield Curve?

The yield curve inverted in 1989, in 2000 and in 2006.

Recessions occurred in 1990, 2001 and 2008 https://t.co/KeuvkAXFU8 pic.twitter.com/WrZ33XUcG5

— Bloomberg Opinion (@bopinion) January 4, 2019

In the past 60 years An inverted yield curve was a perfect indicator of US recessionshttps://t.co/ZPT8qwA1re

— François Bégin (@fpbegin) January 10, 2019

If you ever read Bloomberg, WSJ, or put on Bloomberg TV or CNN Finance (big fan of Julia Chatterley here), you've probably heard about the dreaded Inverted Yield Curve.  It's supposed to be this super-scary finance thing that shows the world is coming to an end.

So what is it, and why does it really show?

What is a Yield Curve?

The yield curve compares the returns ("yields") on bonds by the same issuer over different maturity periods.  99% of the time, people talk about the yield curve of the United States Treasury (UST) notes, because banks and governments use UST as the safe haven and universal store of value.

UST yields typically move depending on investors' confidence.  When the economy is doing well, investors take money out of USTs and into riskier, more profitable assets.  Prices of USTs go down, or their yields go up.  Conversely, when the economy is shaky, investors are cautious and would rather keep money in risk-free USTs, driving prices up and yields down.

(Normal) Yield Curve, per May 2018

The normal shape of the yield curve is positive, an increasing (hyperbolic) curve.  This implies that  for the same issuer (e.g. US government), investors still demand a premium to put money in long-term (e.g. 10-year vs 2-year) bonds.

Curse of the Inverted Yield Curve

That's in normal economic times. A few times in the past 50-years, the yield curve gets inverted, i.e. the spread between US10Y vs US2Y goes to zero or even negative.  This means, investors want to put money in long-term risk-free notes, because they're pessimistic on near-term investment opportunities and would rather not lose principal.  Conventional wisdom says this is a robust sign of a recession -- typically a severe one.  For instance, spreads went negative during the 1979 energy crisis, 1990s Iraq war, 2000 dotcom bubble crash, and 2007 global financial crisis.

Negative spreads in the past 50 years

On the flip side, there are some contrarians, like John Mauldin, who argue that inverted yield curve suggest investor overreactions, and that it either (i) is an indicator that's way too early, or (ii) presents opportunities for substantial gain.

What are other signs of recession?

Some other leading indicators are the VIX index (the "fear" index: it's actually just a futures contract for global market volatility).  Some countries also publish PMI (producers manufacturing index) and CCI (consumer confidence index), which are widely accepted leading indicators for the strength of their economies.  There are some unconventional measures as well, such as the skyscraper index (e.g. if a region builds way too many skyscrapers e.g. Dubai, then it's bound to hit a recession).

Hence, Yield Curve Inverted in December #VolQ pic.twitter.com/aGaOGH3WRF

— Volatility Quant (@VolatilityQ) January 9, 2019

So does that mean the world will end in 2019?

Yes, duh! Did you read anything I've wrote this far?

As you can see in the chart above, spreads hit negative in December. But even looking at the 50-year trend, cyclical recessions tend to happen every 8-10 years, and the last one hit in December 2007.  Since then, the Dow Jones Industrial Average has soared from 6,600 up to 25,000+ in 2018.  So recession is probably way past due.  

Perhaps it has something to do with, I don't know, US$14tn of quantitative easing (QE) by the Fed, ECB, and BoJ, and Zero Interest Rate Policy (ZIRP), flooding the world with liquidity?  Not to mention the 2018 Trump tax cuts, basically adding a US$2.3tn sugar high to an already overheated economy -- leaving behind some US$22tn of US public debt and a central bank with no good tool respond to slowdowns.  So the question is whether irrational exuberance can continue to overcome gravity, or if what goes up must eventually come down.

Dow Jones Industrial Average, 2008-19

In any case, as wise-ass John Maynard Keynes once said, the market can stay irrational longer than you can stay solvent.  If I could accurately predict the markets, I would make so much $$$ so I could be chillin' on a beach in Tora Bora with Gal Gadot, instead of sitting here blogging for my two followers (six if you include Russian bots).

Quantitative Easing, 2008-18

Further reading

Enjoy! (No, I haven't read the below)

3) An inverted Yield curve has historically preceded recessions by 0-18 months and is considered a more short term indicator. The current yield curve is on it's way to being inverted within the next 3-6 months if trends continue. pic.twitter.com/44wyDmnx5I

— Vince Jansen (@Vince_R_Jansen) January 9, 2019

POTUS spreads Russian propo

US President Trump starts off the new year with a (potentially years-long??) shut down government, and by spouting Russian (and even Soviet-era) propaganda.

So he doesn't know the Balkans from the Baltics, he doesn't know his own anti-ISIS special envoy, but he is strangely fluent with minute details on the implication of Montenegro's accession into NATO?  That Poland wants to invade Belarus?

Could he be an FSB asset?

Could he be the most wildly incompetent graduate (also least sexy) of the Sparrow school?

Let you be the judge.

Do walls work? Wheels?

The Great Wall is not just where Matt Damon fights an army of lizards.  It's what POTUS wants to build on the Southern border.

There's a fascinating new article by Pamela Crossley in FP on the history of border walls and their effectiveness, I highly recommend a read in its entirety.

"The security aspects of walls have always been problematic. Today they’re even weaker than in the Middle Ages, suggesting that the immaterial benefits of the wall are what really attract the president. Like that first emperor of China, Trump has used the prospect of the wall as a tool to demonstrate his coercive power and tighten his grip on income and expenditure, to the point that the government has been throttled into unconsciousness. Perhaps the president imagines himself on video, gesticulating benevolently while superimposed on a panorama of a glinting razor wire trammel studded with surveillance scaffolds, each proudly flying the Stars and Stripes, as an ecstatic chorus belts out the national anthem. 

The president might think of history for a moment. That first emperor of China, the one who conceived of the so-called Great Wall, had a very brief rule; the people rose up angrily against his fiscal and labor demands. The Yongle Emperor, the Ming leader most associated with aggrandizing the wall, had his outsized ambitions repudiated after his death. Public scorn of his budget-busting vanity projects was so thorough that he was denounced as a tool, and possibly an active agent, of the most imposing Ming hostiles—the Mongols. 

And the American public in their turn would do well to remember the one thing that walls have actually proven effective at: keeping people in. Medieval tyrants used them to keep the yeomen from deserting, every serious prison or internment facility has one of some kind, the Berlin Wall worked on most people, and Israel uses one to keep Palestinians in their place. Modern wall-building does not have to be physical: It can be economic, cultural, and psychological."

So that sounds better than POTUS' walls vs wheels monologue; although it could be his fancy-schmancy Wharton education talking.

The Year of the Troika

National Security Advisor John Bolton

2018 is the year that US National Security Advisor/Iran hawk/facial hair aficionado John Bolton coined the term "Troika of Tyranny", or a Triangle of Terror (I guess this is a subtitle, like "Die Hard: With a Vengeance"), to refer to socialist governments in Cuba, Nicaragua, and Venezuela in a speech in Miami.  Condemning socialism (and left-leaning politicians), he said "the problems we see in Latin America today have not emerged because socialism has been implemented poorly. On the contrary, the Cuban, Venezuelan, and Nicaraguan people suffer in misery because socialism has been implemented effectively" and that the troika was "the cause of immense human suffering, the impetus of enormous regional instability, and the genesis of a sordid cradle of communism in the western hemisphere". Bolton concluded his speech stating "Look to the North; look to our flag; look to your own. The Troika will crumble. The people will triumph. And, the righteous flame of freedom will burn brightly again in this Hemisphere".

Bolton clearly builds upon Bush 43-era Secretary of State Condoleeza Rice's 2005 speech on the "Outposts of Tyranny", in which she identified Belarus, Burma, Cuba, North Korea, Zimbabwe and the broader Middle East as regions of tyranny, despair, and anger -- but Bolton, I suppose, is highlighting Vladimir Putin's role in propping up the South American socialist regimes, all the while trying to shore up the Cuban-American voting block for Trump.

Anyways, there's quite a bit to digest here.

Maybe we should rename Bolton the "mustache of mediocrity"

— Wayne Wilson (@slider2004) November 1, 2018

Troika of Tyranny is Axis of Evil with a bushy moustache.

— Jacob Weisberg (@jacobwe) November 2, 2018

1. Venezuela

Venezuela has been all over the news for its severe economic mismanagement and humanitarian disaster over the past 5 years, leading to thousands fleeing the country's borders every week.  Ishan Tanoor from the Washington Post calls it the biggest crisis in the western hemisphere:

According to U.N. figures, some 2.3 million Venezuelans — about 7% of the population — have left their homeland over the past couple of years. Other estimates place the number at closer to 4 million.  The exodus is the consequence of severe economic deprivation and mounting desperation among Venezuelans. The country’s economy has shrunk by half in just five years, and inflation is nearing a staggering 1 million percent. Shortages of food and medicine have led to a crisis in public health, with once-vanquished diseases such as diphtheria and measles returning and the rate of infant mortality rising sharply. U.N. officials claim that some 1.3 million Venezuelans who left the country were “suffering from malnourishment.”
The vast scope of the crisis has drawn bleak parallels. “Comparisons with Syria’s refugee crisis — the worst man-made disaster since the second world war, with almost 6 million refugees out of a prewar population of 20 million — may be inexact,” noted an editorial in the Financial Times. “In terms of scale and raw numbers, however, they no longer seem entirely far-fetched.”

Constrained by US sanctions, Venezuela has received lifeline from the other "superpowers": China and Russia.  Moscow, in particular, has doubled down on its investment in Venezuela, giving it larger influence in the western hemisphere.  Anthony Faiola (Washington Post) reports from Caracas: 

[China] has made massive investments and established deep trade ties in Latin America. But their efforts are largely economic. A major Venezuelan creditor, China has shown little interest in accumulating Venezuelan assets or strengthening political ties with [President Nicolas] Maduro’s failing regime. For the most part, it has concentrated on trying to get its loans repaid. 

Russia, in contrast, has repeatedly restructured, refinanced or taken in-kind payments from Venezuela. Just days after the [G-20] summit, Maduro traveled to Moscow to meet with Putin. The Venezuelan leader said Russia agreed to invest an additional $5 billion to improve Venezuelan oil production — much of which goes to Russia’s export customers — and $1 billion in gold mining. Separate contracts were signed to supply Venezuela with 600,000 tons of Russian wheat and to modernize and maintain its Russian-made weaponry. [...]

Russia also now owns significant parts of five oil fields in Venezuela, which holds the world’s largest reserves, along with 30 years’ worth of future output from two Caribbean natural-gas fields. Venezuela also has signed over 49.9% of Citgo, its wholly owned company in the United States — including three Gulf Coast refineries and a countrywide web of pipelines — as collateral to Russia’s state-owned Rosneft oil behemoth for a reported $1.5 billion in desperately needed cash. [...]

Maduro described Russia and Venezuela, both under heavy U.S. sanctions, as comrades in a fight against American hegemony and leading the charge toward a new, “multipolar world.”

So does it make much sense, or is it disingenuous, to blame Russia, when US sanctions give Maduro no choice but to offer the country to Putin and Xi?

2. Nicaragua

Given the CIA financial and military support for the Contras rebels (which committed atrocities including burning farms and schools, murdering women and children, and hundreds of terrorist attacks) against the Sandinista junta in the 1980s, which fueled a bloody civil war that lasted a decade, it's a bit jarring to hear a Trump official talk about Nicaragua with no sense of irony whatsoever. 

President Daniel Ortega has been de facto ruler for many decades, consolidating his power through corruption and nepotism, and maintained popular support by administering generous welfare programs for the country's poor population.  For most of the 21st century, the country was a bright spot for tourism, with a economy (although still very poor by world's standards) growing at a brisk 5% annually.   Things turned in 2017, when trading partner Venezuela stopped financial support due to its own economic collapse, and northern neighbor Honduras plagued by gang violence. 

Ortega responded to the cash strap by cutting social security benefits, leading to an outraged public to take to the streets.  Following the old dictators' playbook, he unleashed his security forces to crack down on the protesters, killing hundreds, leading the Washington to impose sanctions under human rights violation.  The Ortega regime is widely expected to collapse under the weight of severe economic crisis and popular disenchantment.

3. Cuba

Pointing at Cuba as part of the troika is... probably the strangest, in a speech full of very odd statements [Note: Perhaps since Bolton's is mostly a political stump speech right before crucial midterm elections, we shouldn't try to distill foreign policy out of it].  The island nation south of the Florida has been stable under former president Raúl Castro, who assumed power in 2011 from his ailing brother/socialist revolutionary icon Fidel Castro (who passed away in 2016), and its current president Miguel Díaz-Canel, who took office in April 2018 in a peaceful political transition.  Furthermore, in 2014, Castro and US President Barack Obama announced that efforts to normalize relations between the two nations would begin with the re-establishment of embassies in Havana and Washington.  The embassies had previously been dissolved in 1961 after Cuba became a close ally of the Soviet Union.

The normalization efforts were heavily criticized by conservative politicians, most notably Senator Marco Rubio (R-FL).  In a 2016 election stump speech he said:

“The Obama administration is making more concessions to the Castro regime, and the United States is getting nothing in return. Cash makes the Castro regime’s grip on power stronger, its repression harsher and its exportation of misery throughout the hemisphere, especially Venezuela, easier‎ [...] By encouraging U.S. companies to do business with Cuban military-owned entities, Obama is giving them an open invitation to violate existing U.S. law. [...] After two years of President Obama’s Cuba policy, the Castro regime has made out like bandits without lifting a finger to return the fugitives it is harboring from American justice, pay Americans for their stolen property, or allow the Cuban people to exercise their God-given freedoms. [...] President Obama’s Cuba policy puts the Castro regime’s interests first, profits ahead of America’s national security, and the Cuban people’s rights and dignity dead last.”

The Cuban economy is fragile (thanks to lingering sanctions and Venezuela's collapse), but President Díaz-Canel recently announced constitutional reform to revive its socialism-based economy.  Noteworthy changes include modest steps towards decentralization, and recognizing a role for non-state actors, including small private businesses, worker-owned cooperatives, private property and foreign direct investment. However, the extent of this opening is yet to be determined.

Build the STEEL SLAT!

A design of our Steel Slat Barrier which is totally effective while at the same time beautiful! pic.twitter.com/sGltXh0cu9

— Donald J. Trump (@realDonaldTrump) December 21, 2018

If the above Presidential directive gives you a splitting headache, Dara Lind at Vox (of course) has the lowdown:

What Trump wants: $5 billion for 215 miles of border wall 

Ultimately, the Trump administration wants to build hundreds of miles of border barriers — a lot more than $5 billion can provide. But it has identified particular stretches of the border as top priorities, and a $5 billion appropriation would allow it to blast through several of them. 

The Department of Homeland Security (DHS) estimates that if it got the whole $5 billion, it would be able to build 215 miles’ worth of barriers along the US-Mexico border. Most of this — about 150 miles — would be built where no physical barriers currently exist; the rest would be intended to replace some older and less imposing barriers.  [...]  All of this would be a bollard barrier made of steel poles, erected close enough together to prevent entry but far enough apart that Border Patrol agents can see what’s happening on the other side. ([hence] the“see-through wall” that Trump got excited about back in 2017.)  Previous administrations referred to bollards as fencing; the Trump administration calls it a wall; and Trump himself has started calling them “steel slats” because he thinks it sounds tougher. 

What the Senate has floated: $1.6 billion for 65 miles of “fencing” 

When the Senate’s subcommittee for Homeland Security appropriations in June passed a DHS budget for fiscal year 2019, it included $1.6 billion for the Trump administration to build 65 miles of barriers in the Rio Grande Valley. The subcommittee called it “pedestrian fencing,” but in practice it would be identical to the barrier the Trump administration is now calling a wall. 

This was Senate Minority Leader Chuck Schumer’s offer to Trump earlier this month, to the consternation of progressives who wanted no money whatsoever for “Trump’s wall.”  Democrats in the House have said they wouldn’t vote for even $1.6 billion in “wall money.” They may thread the needle the same way the Senate has, and decide that they are going to call it “fencing” or just “border security,” even as they give the administration money for something Trump will call a wall. Or they could decide that as long as Republicans insist on talking about $1.6 billion for a wall, they won’t vote for it[...] 

The Trump administration has gone from insisting on concrete barriers that Mexico would pay for, to trumpeting the existence of a “wall” made out of materials that were already in use before Trump [declared his candidacy].  If it wants to, it can take whatever barriers it ends up building, and declare victory. The question of how much wall is enough is much less a question of policy than of what Trump himself will be satisfied with [...]

And don't forget that Trump isn't really serious about wanting the wall, else he'd be willing to put something on the line, a compromise of some sorts -- he's just in it for the fight (which must be televised a la 90's reality shows), and Republicans know this all along.

So somewhere in Florida, Jeb! is ROTFLHAO:

Jeb Bush just talked about my border proposal to build a "fence." It's not a fence, Jeb, it's a WALL, and there's a BIG difference!

— Donald J. Trump (@realDonaldTrump) August 25, 2015

Who's going to pay for the wall?

2015-2018: Mexico
2018-2018: Mexico (indirectly)
2018: the wall itself https://t.co/shRmitwrZf

— Dave Itzkoff (@ditzkoff) December 21, 2018

Fast forward to 2020:

A design of our Steel Slat Barrier which is totally effective while at the same time beautiful! pic.twitter.com/QSa43Buwq9

— Chuck Wendig (@ChuckWendig) December 21, 2018

“Mr. President, your welfare proposal is nothing but a lot of technical jargon and partisan rhetoric and..." pic.twitter.com/1b7HRnihA3

— SimpsonsQOTD (@SimpsonsQOTD) December 17, 2018

Do what you Love? [Updated]

Thanks, ass hole...

[Updated from original post 6/6/18]
Recently I heard a tech startup founder during a speech, who said: "I've been taught, that if you just do what you love, the money will come."  It was mentioned in passing, very casually, probably didn't even think twice about it.  But my immediate response was: "well that's easy to say if your last name is [insert wealthy family], but most people have mouths to feed."

I'd love to see research on how enterpreneurship, especially in tech, drives wider inequality.  The 99% don't have the luxury of quitting their day jobs in pursuit of their lifelong dreams of fishing, climbing Mt Kilimanjaro, or doing Brazilian jiujitsu for a living.  Risk-taking is only remotely an option to the privileged.  Even in a rich country, almost half of all Americans can't fund a $400 emergency without taking on credit card debt or borrowing money in some other way - - so people are basically living paycheck-to-paycheck, with no savings, and no ability to take risks of any sort.

With billions of dollars sloshing around in the venture capital space, naturally the moneys flow into the hands of the elite few.  This is how 82% (US$762 billion) of all wealth creation in 2017 went to the top 1%, while the bottom 50% saw no increase at all.  Or how the 42 richest people control the same wealth as the bottom 3.7 billion.  Sure 90% of all startups fail in less than five years.  Perhaps they die in a fiery inferno like Webvan or Pets-dot-Com, but most likely they just can't get funding to continue, the principals lose interest, everybody understands and moves on.

Source: Bloomberg

Moreover, "Do What You Love" is just a terrible mantra.  Popularized by the late world-renowned weed afficionado/asshole-who-parks-in-handicapped-spots Steve Jobs, DWYL is basically a propaganda tool for capitalism.  From Miya Tokumitsu:

"By portraying Apple as a labor of his individual love, Jobs elided the labor of untold thousands in Apple’s factories, conveniently hidden from sight on the other side of the planet — the very labor that allowed Jobs to actualize his love.  [...] 

Think of the great variety of work that allowed Jobs to spend even one day as CEO: his food harvested from fields, then transported across great distances. His company’s goods assembled, packaged, shipped. Apple advertisements scripted, cast, filmed. Lawsuits processed. Office wastebaskets emptied and ink cartridges filled. Job creation goes both ways. Yet with the vast majority of workers effectively invisible to elites busy in their lovable occupations, how can it be surprising that the heavy strains faced by today’s workers (abysmal wages, massive child care costs, et cetera) barely register as political issues even among the liberal faction of the ruling class?"

Let's not limit ourselves to just Apple, check out the retail/commerce space.  Could Wal-Mart succeed without the prison laborers of Yingshan?  Or could you really separate Amazon's behemoth from the Somali immigrant warehouse workers in Minnesota?  In both cases, the companies say the workers are well-compensated, but these people are under pressure to clock inhumane hours or risk punishment or termination.

Now nobody is arguing that the work environment shouldn't be enjoyable.  But DWYL degrades our effort, making it less serious, valuable and worthwhile.  By masking our labor as "love", do employers expect us not to demand fair compensation & benefits, or ask for reasonable leisure and family time?

When we (employers) succeed, we earn all the credit to ourselves -- forget about all of the support workers who are "doing it for the money", not for love.  When we fail -- and as mentioned above, most likely we *will* fail -- sure everybody loses their livelihoods, but at least we're doing something we love. 

I stand corrected