Thursday, December 18, 2003

Another Hour of the Idiot

About a hundred years or so ago, when ostrich feathers were still prized (and worth more than gold) for their decorative powers, there existed a group of ostrich farmers in southern Africa who prided themselves with their ostrich farming skills. So, in order keep their 'special' knowledge within their small community (its a supply & demand thing), they married within the community.

Soon they found that their offsprings included many idiots that they were more than a bit embarassed to be seen in public. So, they built 'ostrich palaces' which had large basements where they kept their idiot children from the public eye. But they cannot keep the children there for too long without having to withstand their complaints & restlessness. So the
families let their idiots out of their ostrich palaces and take walks in the streets with their maids on Sunday afternoons just after the town folks had their afternoon prayers. The thinking is that at that hour most town folks will be resting at home, and less people will get to know of their idiot children.

But what they didn't know is that people do get to know and that hour was then known as the 'hour of the idiots'.

The moral of this real story is this: whatever they do or think, there is always a time when idiots will show their true selves. One just has to wait for 'their hour'.

The attached news article is one such example from my country:


Malaysia moots cross-cultural circumcision
By Jonathan Kent BBC, Kuala Lumpur

Malaysia is to consider using mass circumcision ceremonies to promote racial harmony.

Circumcision is a rite of passage for young Muslim boys, and in Malaysia it is common for the ceremony to become an event with dozens, or even hundreds of boys being circumcised together.

Now the prime minister's religious affairs adviser has suggested that circumcision can bring Malaysians of all races and religions together.
Dr Abdul Hamid Othman said that with the growing popularity of circumcision among the country's non-Muslim minorities - who see it as good hygienic practice - they too could be invited to join in the celebrations with their Muslim friends.

He believes the idea could promote better race relations and he wants to see a nationwide circumcision ceremony organised.

Just over half of Malaysia's population is Muslim, mainly members of the ethnic Malay community, while the country's Chinese, Tamil and tribal peoples follow a variety of other faiths.

The government has been exploring ways of stopping the different groups from drifting apart, including the introduction of a national service scheme which begins in February.

Let's Toll the Bell

It is always an honour to Toll the Bell for the Hour of the Finest, for the ones in flesh that deliver what many of us can only hope.

US court rules Guantanamo detainees should be allowed lawyers (19/12/2003)

WASHINGTON (AFP) A US federal appeals court, in a setback for the Bush administration, ruled that detainees at the US naval base in Guantanamo Bay, Cuba, should be allowed access to lawyers and US courts.

The 2-1 ruling delivered by the San Francisco-based US Court of Appeals for the Ninth Circuit was the second blow delivered Thursday to legal maneuvers by the administration of President George W. Bush in its "war on terror."

Earlier in the day, a federal appeals court in New York ruled that Bush did not have the right to detain Jose Padilla, an American citizen seized on US soil, as an "enemy combatant" and ordered his release within 30 days.

The San Francisco-based appeals court issued its ruling in a case filed by Belaid Gherebi on behalf of his brother, Faren, a Libyan who is being held without charge at Guantanamo along with hundreds of other men captured in the US "war on terror."

The court was harshly critical of the detention of the prisoners at Guantanamo without charge or the protections of the Geneva Convention.

"Even in times of national emergency -- indeed, particularly in such times -- it is the obligation of the Judicial Branch to ensure the preservation of our constitutional values and to prevent the Executive Branch from running roughshod over the rights of citizens and aliens alike," said Justice Steven Reinhardt, writing for the majority.

"We simply cannot accept the government's position that the Executive Branch possesses the unchecked authority to imprison indefinitely any persons, foreign citizens included, on territory under the sole jurisdiction and control of the United States, without permitting such prisoners recourse of any kind to any judicial forum, or even access to counsel," Reinhardt said.

"In our view, the government's position is inconsistent with fundamental tenets of American jurisprudence and raises most serious concerns under international law," the justice said.

"Under the government's theory, it is free to imprison Gherebi indefinitely along with hundreds of other citizens of foreign countries, friendly nations among them, and to do with Gherebi and these detainees as it will, when it pleases, without any compliance with any rule of law of any kind, without permitting him to consult counsel and without acknowledging any judicial forum in which its actions may be challenged," he added.

"To our knowledge, prior to the current detention of prisoners at Guantanamo, the US government has never before asserted such a grave and startling proposition," he said. "It is the first time that the government has announced such an extraordinary set of principles -- a position so extreme that it raises the gravest concerns under both American and international law."

Some 660 prisoners are being held at Guantanamo Bay. Most of them were captured in Afghanistan when the
United States toppled the Taliban regime and routed al-Qaeda's network, responsible for the September 11, 2001 attacks.

The ruling by the 9th Circuit Court was the first by any court affirming that Guantanamo detainees should be allowed access to lawyers and to the US judicial system, but is likely to be supplanted by a US Supreme Court ruling expected soon.

The Supreme Court agreed last month to hear a similar case.

Reed Brody, legal counsel for Human Rights Watch, welcomed the ruling by the 9th Circuit.

"The Bush Administration thought that by holding the detainees on Guantanamo, it could keep them out of the reach of the Constitution and the courts," he said. "Guantanamo has become America's shame.

"Today's decision is a great victory for the rule of law because it says that even these prisoners must have access to the courts," Brody said.

Thursday, December 11, 2003

The Day the World Calls the Biggest Bluff in History

As many pseudo-economists among us know, money is just a piece of paper we hold in our wallet or more likely a number in a computer hard disk. They are worth what we think they are worth because there are enough people around who believe the same. Of course, paper money has its advantages. The most obvious is efficiency in trade exchange. Which explains why it is 'so popular' and every government wants to issue its own currency. But it takes no brain for one to also appreciate that it takes little to issue a piece of paper or to buy a hard disk. In fact, it costs the US government a few cents to issue a Dollar. Of course, it would be lesser for all those who counterfeit it.

And so, for centuries men in high places of power had been building up and taking advantage of this phenomenon known as Seignorage. The logic is that as long as there are enough fools out there that believe that my dollar is really worth a dollar, I can continue printing and exchanging one piece of my paper for a real tangible product. (For example, if the shoemaker from China is stupid enough to sell me his shoe for a piece of my paper so be it. Who do you think is the happier?) But the more credible ones learnt over time that you can bluff everyone some of the time but not forever (for money to work you cannot bluff only some people, hor, must be able to bluff most or all of them.). So, to ‘backup’ their credibility they used to commit themselves to delivering a specified amount of something of real tangible value like gold every time a holder of their paper wishes to ‘call on them’. But it is part of human greed that all of them will try to stretch their luck a bit (hey, that’s easy ‘money’ man, no need to really work) and issue more than they can really backup with real gold, and hope only a few really calls on them. Of course, if you have a big stick and is in desperation you can always whack any small guy that tries to do so and avoid delivering your gold (so Saddam, now do you really want your oil paid in Euro?).

And it is with this knowledge that there are some smart men that will think of ways to make money out of these greedy issuers. And so we hear of stories where certain people will induce and help governments to print more and more money for a fee or a share of the money issued. But these fellas are smarter that we folks. Very soon after that, they actually call on the issuers for the gold they are committed to deliver (while we all stupidly held on to the papers or our bank statements) and they tuck away those gold bars in a safe somewhere and wait for the day when that currency crashes due to ‘over expansion of money supply’ (economic jargon, but it essentially means ‘when the bluff gets too big’). These people are generally known as ‘financiers’ or ‘bankers’ (everything has to sound nice to customers, otherwise how to sell them crap?).

Quiz 1: where is 80% of the world’s known gold reserves held? Wonder why and how it got there?

Clue 1: No, not Fort Knox you old parrot. Fort Knox is for issuer type people. If you haven’t figured out by now, issuer types tend to lose gold not gather them!

Clue 2: In WWII the Japanese Army has special units specially assigned to seek out the richest families in occupied territories to get at their gold, the colonialists demanded gold for the opium they sold to the Chinese and they give themselves long term mining contracts before they leave their colonies (Iraq, does this sound like Bush-it again?)

Quiz 2: who are the top issuers and financiers in history?

Quiz 3: when do you know people are beginning to call their bluffs?

Hey, I don’t have answers to these questions. I am just another conspiracy theorist selling another quack! Only fools will buy such stories....

p.s. but if you do think I may have a point and has an idea on what to do to protect my wealth, pls let me know. I am still scratching my head on this one. Thanks in advance.


Background to Seignorage

The economic phenomenon Seignorage is well known to many economists but not all. I first learnt about Seignorage from an economist friend only a few years ago during the Asian Financial Crisis (which started in 1997 just after HK’s return to China) when the US seems to be booming along happily. Those were the times when I saw on TV the supreme arrogance of the IMF chief standing hands folded and over the shoulders of Suharto as the latter signed away whatever he had to in a desperate attempt to stay in power, of a certain cowboy US vice president Al Gore insulting his Malaysian hosts in front of their international guests, and of the international media (international only because enough fools around the globe parrot after them) gleefully writing about the end of the Asian miracle and their widespread KKN (Korrupsi, Kolusi, Nepostisme in Indon) as the cause of the crisis.

At that time, the Dow Jones was trading at an average P/E ratio of 40 while the Asian markets were trading below 10! My simpleton logic told me that people should be buying into Asia instead of running away. Dumbfounded, I decided to ask an economist friend of mine (Liew holds a master degree on Economics from the US, was my classmate from primary one and worked for a stock broking house at that time but later joined the Monetary Authority of Singapore).

His reply was that the Americans were different and their management are disciplined enough to cut losses when an investment gets bad. That’s why people are willing to pay a ‘premium’ for their stocks.

I disagreed with him and said that I do not believe the Americans are any different from anyone else in the world (I had the advantage of having worked in JP Morgan and saw how they operated). I suspect it has something to do with the US Dollar which gave them an advantage but could not explain it.

Later when I read that the Arabs and other countries contributed US$90 billion to the US for the Iraq war of 1990 for weapons that the US had already paid for, and realized that the Asian Crisis happened a few months after HK’s return to China (property prices in HK dropped 60% then thanks to the British policies before that), I also wondered if they also figured in the picture.

At that point in time I sensed that Liew saw that I might have a point but he also could not explain it. But a few months later he sent me an e-mail on the topic of ‘seignorage’ and said that that may be what I was looking for. Obviously he was bothered enough by my views to do some research.

However, that incident bothered me. It seemed that even supposedly ‘experts’ on economics may not really understand how the world really works. The reasons that Liew gave me initially were based on the concept of ‘some people are better than others, that’s why their stock markets commands better value’. Although it was clearly a subjective and somewhat ‘racist’ view, even professional economists like Liew seem happy enough to use it to explain something they clearly do not understand. To be fair, they were just following after the international media which were then saying that the Asian Crisis was caused by KKN.

That to me was a real life example of the power of the media and the folly of the human race. Thinking outside the box and independent thoughts are indeed rare.

Tuesday, December 02, 2003

Why It's Time for Me to Go Ho, Ho, Ho, Ho

A long time ago, some ancestors of man discovered that it is more efficient to stay put at one place and grow their own food rather than to live a life of nomadic hunters/pickers/scavengers. They also realised that a few natural elements are important to the success of this change in life style and strategy - fertile soil, water and sunlight. (Hey, you may think that this is basic stuffs but there are kids and probably their parents who think their veggies come from the local supermarket).

One of the best places to find fertile soil and lots of water is obviously the banks of a river or lake (but no river no lake hor). The only ones that cannot see that were the blind ones or their mental equivalents. That explains why all great civilisations blossomed along the banks of great rivers. But great rivers overflow almost every year and change course from time to time, thus stories of great floods. And great floods destroy crops (those precious crops!) and people have to try save as much things as possible. So it is not difficult to understand why floods became such a great concern to our ancestors. However, different ancestors of man took different outlooks on this important issue:

1. Some decided to write stories about great floods and heroes to encourage selfless conduct in time of floods, and left everything else to fate/faith. As time goes by, the more 'creative' of this type made the themes grander. Like saying that such selfless conduct is in the service of god and will be rewarded with the promise of eternal life.

2. But there are more practical others who figured that this perennial problem can be managed through the building of canals, embankments, reservoirs etc. That way there is less need to ‘stretch’ things the way the previous approach did.

Now, it does not take much brain to see which approach took more brains but then you can take your time while we move on to where this part of this story is so relevant to this time of the year. And it has to do with the Sun.

As mentioned earlier, many of our ancestors realised that the Sun is a very important element to life. In fact, they realised very early in their agricultural life that without the Sun, nothing grows. Well, almost. Unless you are a bacteria but that's another story, or a Singaporean graduate I know who said that 'trees may then switch to eating meat'! (No prize for guessing which faith he belongs to.)

People in the northern hemisphere noticed that sometimes the sun 'goes away'. When that happens everything gets covered with snow, nothing grows and most animals went away with the Sun (in fact their forefathers used to do that too but they have forgotten about it since they chose to settle at a fixed location). So we can imagine ancestors of ours would be very interested in the movement of this great giver of life, the Sun. And it was probably an annual ritual for them to watch anxiously as the Sun moved south in case it would not return (probably because the they thought the earth was flat and the Sun might just fall off, like the popes did until the likes of Copernicus came up with a smarter alternative. But hey, we are talking about people before them. So, we can excuse the pope-like ones for the time being.)

But people also noticed that the sun always return after a while. And when that happens, everything seems to spring back to life - flowers bloom, crops grow, birds and animals return to feed on them. And food is plentiful. For those that have the concept of the calendar, it was noticed that the Sun always makes its ‘u-turn’ during a 2-3 days period of a particular time in the year. (For those of us that remember some science lessons from school, the u-turn period is known scientifically as the winter solstice.) So the ancients ‘tagged’ that few days as special days worthy of great joy (more like relief) and celebrations. Which explain why all great cultures in the northern hemisphere (no matter what their colour and belief are) celebrate the day when the sun makes its u-turn. The Chinese have their own name for this celebration and so do the Indians, Romans and so on. And so this appreciation for the value and importance of the Sun went on for many thousands of years until the present day. Which also explain why the Sun god is such an important entity in many cultures.

But as in all great stories there are always interesting twists and one happened to this story about 2,000 years ago. I shall relate this one with some ambiguity just for the heck of it, and to avoid offending some sensitive souls (their supreme blessings not withstanding).

When the Romans first gained fancy on a certain new concept then, it was decided by someone that they should celebrate the birth of their ‘idol’ which they claimed as the ‘son of god’ as a sign of regard. At first, it was decided that that day should take place sometime in the early months of each year. But the powers that be found that no matter what they did, they could not make that day beat the celebrations conducted for the day when the Sun makes its u-turn! (not surprising if all around you were mostly practical farmers but don’t give those powers that be too much credit, hor) So, in a classic example of the saying that if you cannot beat ‘em join them, those powers decided that they might as well move the day of celebrating the birth of their idol to the same time as the celebrations of the Sun. That way, they figured, they can ensure maximum revelry for the new event they wanted to celebrate. And so history records that they literally commandeered the 'day of the Sun' as the 'day of the Son' (cute pun, hor?).

Not interesting enough? Then did you hear the story of how a certain small place where I live ‘commandeered’ the same celebration for other reasons. They now celebrate this event for a full 2 months! And as opposed to remembering the importance of the Sun, they are only interested in shopping, presents, and the money it makes for them.

So, now you see why I always go ho, ho, ho, ho with amusement around this time of the year?