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Saturday, 17 March 2018

Finance chief of Visa attacks bitcoin ‘bubble’ (FT)

"A top Visa executive has launched one of the most outspoken attacks yet from the financial establishment on the bitcoin craze, saying cryptocurrency was used by “every crook and dirty politician” and speculators who have “no clue”.

In an interview with the Financial Times, Vasant Prabhu, chief financial officer of the world’s biggest payment network by market value, recalled encounters he had with ill-informed retail investors that had been “a real shock” to him.

“The people asking me are the ones who scare the hell out of me,” he said. “You know, guys like the limo driver to the airport . . . They have no idea what they are doing.”

Visa operates at the heart of the mainstream global payments system, connecting about 3bn cardholders, 46m payment locations and 17,000 financial institutions.

Recognising the strength of feeling among crypto aficionados who wish to circumvent financial institutions, Mr Prabhu said he lived not far from “true believers” in Silicon Valley who think “people like me are dinosaurs”.

A bank teller told Mr Prabhu about six months ago how he planned to sell bitcoin in March, because he knew that was when the price would peak. A young member of Mr Prabhu’s extended family enthused over a Thanksgiving dinner that an $8,000 crypto investment he made had doubled in value.
“This is the ultimate thing that you hear about when you have a bubble, when the guy shining your shoes tells you what stock to buy,” the Visa executive said.

Bitcoin has collapsed from a pre-Christmas high above $19,000 to trade at about $8,100 but it is still up eight-fold from the start of last year, according to Bloomberg data.

Some of Mr Prabhu’s peers on Wall Street have become wary of speaking out. Jamie Dimon, head of JPMorgan Chase, said last month he regretted describing bitcoin as a “fraud” — not because he had changed his mind, but because it had become all anyone wanted to talk to him about.

Visa, which has a market capitalisation of $279bn, has been peppered with questions from analysts and investors about whether its model will be disrupted by emerging payment systems.

So far, it appears to have shrugged off any potential threat. Shares are up more than 1,000 per cent since its initial public offering 10 years ago next week, helped by the digitisation of global payments. 

The San Francisco-based group is experimenting with the technology that underpins cryptocurrencies. It is trialing a blockchain-based platform for banks to facilitate cross-border corporate payments.

 However, the company does not process or settle transactions in cryptocurrency itself. “With a currency issued by the Federal Reserve, I know who stands behind it,” Mr Prabhu said. With cryptocurrency, he said: “Who’s good for the money? Who the hell knows?”

Visa does not block consumers from using its network to buy cryptocurrency, although several banks that issue its cards have implemented such a ban.

The company also went to great lengths to comply with know-your-customer and anti-money laundering rules, Mr Prabhu said. “We shut people down immediately where we have even the whiff” of wrongdoing, he added.

In contrast, he said, cryptocurrencies were a “favourite” for criminals. “It’s very hard to get dirty money through a banking system. Cryptocurrency is phenomenal for all that stuff . . . Every crook and every dirty politician in the world, I bet, is in cryptocurrency.”

Chris Skinner, a financial technology author, said it was “complete rubbish” to suggest the main use of cryptocurrencies was criminal. “There is some criminal activity associated with some cryptocurrencies but it is quite minimal,” he said. “It’s a myth that the financial community want to promote.”

Mr Prabhu said: “My personal view is that cryptocurrencies are more speculative investment commodities than payment options, operating in a very unsettled regulatory environment. The markets are testing cryptocurrencies today with the volatile fluctuations we’ve seen recently. It’s early days and we’ll watch it very closely.”


Astronaut's DNA no longer matches that of his identical twin (CNN)

"Spending a year in space not only changes your outlook, it transforms your genes.

Preliminary results from NASA's Twins Study reveal that 7% of astronaut Scott Kelly's genes did not return to normal after his return to Earth two years ago.

The study looks at what happened to Kelly before, during and after he spent one year aboard the International Space Station through an extensive comparison with his identical twin, Mark, who remained on Earth.

NASA has learned that the formerly identical twins are no longer genetically the same.

The transformation of 7% of Scott's DNA suggests longer-term changes in genes related to at least five biological pathways and functions.

The newest preliminary results from this unique study of Scott, now retired from NASA, were released at the 2018 Investigator's Workshop for NASA's Human Research Program in January. Last year, NASA published its first round of preliminary results at the 2017 Investigator's Workshop. Overall, the 2018 findings corroborated those from 2017, with some additions.

To track physical changes caused by time in space, scientists measured Scott's metabolites (necessary for maintaining life), cytokines (secreted by immune system cells) and proteins (workhorses within each cell) before, during and after his mission. The researchers learned that spaceflight is associated with oxygen-deprivation stress, increased inflammation and dramatic nutrient shifts that affect gene expression.

In particular, Chris Mason of Weill Cornell Medicine reported on the activation of Scott's "space genes" while confirming the results of his separate NASA study, published last year.

To better understand the genetic dynamics of each twin, Mason and his team focused on chemical changes in RNA and DNA. Whole-genome sequencing revealed that each twin has more than expected unique mutations in his genome -- in fact, hundreds.

Although 93% of Scott's genetic expression returned to normal once he returned to Earth, a subset of several hundred "space genes" remained disrupted. Some of these mutations, found only after spaceflight, are thought to be caused by the stresses of space travel.

As genes turn on and off, change in the function of cells may occur.

Mason's work shows that one of the most important changes to Scott's cells was hypoxia, or a deficient amount of tissue oxygenation, probably due to a lack of oxygen and high levels of carbon dioxide. Possible damage to mitochondria, the "power plants of cells," also occurred in Scott's cells, as indicated by mitochondrial stress and increased levels of mitochondria in the blood.

Mason's team also saw changes in the length of Scott's telomeres, caps at the end of chromosomes that are considered a marker of biological aging. First, there was a significant increase in average length while he was in space, and then there was a decrease in length within about 48 hours of his landing on Earth that stabilized to nearly preflight levels. Scientists believe that these telomere changes, along with the DNA damage and DNA repair measured in Scott's cells, were caused by both radiation and calorie restrictions.

Additionally, the team found changes in Scott's collagen, blood clotting and bone formation due, most likely, to fluid shifts and zero gravity. The researchers discovered hyperactive immune activity as well, thought to be the result of his radically different environment: space.

The Twins Study helps NASA gain insight into what happens to the human body in space beyond the usual six-month International Space Station missions previously studied in other astronauts. Ten groups of researchers, including Mason's team, are looking at a wide variety of information about the Kelly twins' health, including how gut bacteria, bones and the immune system might be affected by living off planet.

Kelly's one-year mission is a scientific stepping stone to a planned three-year mission to Mars, NASA said. Research into how the human body adjusts to weightlessness, isolation, radiation and the stress of long-duration spaceflight is needed before astronauts are sent on journeys that would triple the time humans have spent in space so far."

Friday, 16 March 2018

Unilever: decoupling of business and UK politics

On March 15, Unilever announced that The Netherlands will be its new single legal corporate base. Before, Unilever had 2 parent companies (UK plc Dutch NV) and 2 HQs (London and Rotterdam). FT: this "decision marks [a] blow to British PM Theresa May". Without Brexit, London is a logical choice, if only given Dutch board remuneration issues (my 14 March blog).

FT: "Mrs May is adamant that the Unilever move has nothing to do with Brexit and felt vindicated by comments from Paul Polman, [Dutch] chief executive [of Unilever], that it was not a factor in the decision. “He could not have been clearer,” said one ally of the prime minister." The FT article suggests a firm coupling between UK businesses and UK politics. 

Another FT article states: "Britain’s third-biggest company by market value has just confirmed Europe’s worst kept corporate secret. As anticipated by the Financial Times some weeks ago, Unilever — the £105bn, 130-year-old consumer goods group — has today chosen Rotterdam over London as the location of its new unified headquarters, and new single legal entity. There will now commence the most predictable row over why it has done so, and what this says about Brexit."

In my concept of the 7 Belief systems, Money sides with Politics, its natural ally. The Unilever move shows (i) a decoupling between business (ie, Money) and unpredictable and unstable UK politics, and (ii) a coupling of business with predictable and stable Dutch politics. Money prefers arrogant Globalism / Internationalism over ignorant Nationalism (my 2017 blog).

Unilever's move will trigger similar considerations by other UK companies. The Brexit timeline is already short and ambitious. Furthermore, the "UK does not have the skills to negotiate a good Brexit deal" (Independent), whereas the EU is (very) skilled in (trade) negotiations. Moreover, the preliminary Brexit negotiation results are not hopeful for international businesses with UK domicile. At some point, UK businesses must decide on decoupling with UK politics. 

To a continental European, the UK negotiation strategy is one of "only benefits, no burdens" and/or "all gain, no pain". Essentially, this is a zero-sum game of winners and losers. This suggests an upcoming confrontation in which both sides will end as frenemies. The longer you pursue extreme negotiation positions, the more difficult it becomes to return to "mutual gain & pain". 

Extreme Negotiations, HBR-2010: "As well as pressuring people to act fast, a threatening situation makes them want to look strong and more in control than they probably are. In this state of mind, negotiators tend to stake out extreme positions and make aggressive demands. Unfortunately, that almost always triggers or exacerbates resistance from the other side. Discussions become contentious and inefficient, and both parties run the risk of a stalemate."

This stalemate may trigger the "extremely exceptional circumstances" clause, which the UK government added as an amendment to its EU withdrawal bill (Guardian). Also see my Mrs May's Machiavellian Moves blogs.

Money makes the world go round (1966) from the musical Cabaret feat. Liza Minnelli

A mark, a yen, a buck, or a pound
A buck or a pound
A buck or a pound
Is all that makes the world go around,
That clinking clanking sound
Can make the world go 'round

Note: all bold and italic markings by LO unless stated otherwise

Thursday, 15 March 2018

From dating to swiping to nowhere?

In the 1970s and 1980s, I was merely focussed on studying and graduating. I didn't have much of a social life. My parents may have gotten worried that I would never leave home. They urged me to find a girlfriend. However, access to personal computers, internet, and mobile phones only became (slowly) available as of the mid 80s. Hence, dating opportunities were limited.

In those days, it was unclear who was single and interested in dating and/or a relationship. This information was only available within your own immediate neighbourhood. Newspaper ads were the most common way of finding a romantic interest. The Saturday newspaper usually had some 100+ advertisements which read like short stories.

Responding to such an ad required sending a letter to the relevant newspaper department, while highlighting the unique code of the advertisement in the top left corner of the enveloppe. It could take a few weeks before the newspaper sent the response to your response. That was the first time that you would have any contact details, or a rejection letter without, or nothing at all.

Even with newspaper ads, the availability of dating opportunities was (very) small. Today, we swipe from one person to another in the numerous dating apps that are available. The investment in time and emotion is minimal. A recent Big Think video by Christian Rudder, president and co-founder of OkCupid, talks about "What Online Dating Tells Us About Human Relationships".

I think, feel, and believe that human relationships are changing because of the sheer volume of available (global) dating opportunities. Mr. or Mrs. Right may appear on your screen by just another swipe in a dating app. However, the dimensions of quality, quantity, time and space (ie, location) usually have a complex relation.

The large number of available dating candidates automatically reduces the available time per individual candidate. This is just mathematics. Why bother investing in a relationship if/when a candidate has a flaw? The grass is always greener at the other side of the fence. That other side of the fence is the huge remaining pool of dating candidates.

I think, feel and believe there is a huge growth in Living Apart Together (LAT) relationships as a result of the above. Why invest in living together if living apart covers your downside risk (future break-up) and also allows for an immediate upside potential (remaining dating pool)?

Technology offers near-perfect risk management strategies at the expense of the classic "fulltime" relationship.

"We're all just looking for Mr. Swipe Right." (image source)

Swipe (2014) by Miracles of Modern Science

I’m a part looking for a whole 
And my heart’s a hungry animal 
So if I whet your ample appetite 
Go ahead and swipe me to the right

Note: all bold and italic markings by LO unless stated otherwise

Wednesday, 14 March 2018

Systematic remuneration issues at systemic banks

Recently, the ING Bank Supervisory Board proposed a 50% raise in the CEO remuneration. Yesterday, the Supervisory Board withdrew their proposal given the uproar in Dutch politics. Initially, ING Bank claimed that their client base had not been affected by the uproar. Yesterday, they had to retract that earlier assertion.

There is a typical Dutch saying that translates like "Just act normal that's already crazy enough". ING Bank may regard itself as an international bank but their roots are very, very Dutch. The Dutch uproar cannot be understood without knowing this typical Dutch phrase. In its essence, the Netherlands is a rather egalitarian society in which you don't show off your wealth too much.

ING Bank is a merger product of several smaller, non-systemic, banks. During the 2007-2008 global financial and banking crisis, ING was forced to accept government support as the bank was labelled a Systemically Important Financial Institution. ING Bank reluctantly agreed. The downside of a systemic bank label is political (public) interference in a private bank.

One could well argue that the CEO remuneration has nothing to do with the systemic bank label. This argument ignores the ongoing sentiment that international banks were responsible for the 2007-2008 global financial crisis and have not been penalized enough for their misconduct. Unfortunately, this argument seems to have an indefinite application despite its sympathetic feel.

The broad Dutch political uproar is partly related to the 21 March 2018 municipal elections and the small (1 vote) national majority in the House of Representatives. The Green Left political party aims to propose a draft law requiring a minimum-maximum remuneration bandwidth of "some 1:10" for systemic banks (NRCTwitter). The Dutch Finance Minister announced that the Dutch Cabinet may interfere in the ING Board remuneration (FDNRC).

I tried to find the recommendations from shareholder advisory service agencies, like ISS. I would not be surprised if such recommendations would be positive. On average, Dutch board remuneration is probably lower than of international peers. Partly, this is a Dutch cultural issue. Partly, such comparisons are creating a self-inflicted international remuneration inflation.

My only surprise in this uproar is the joint miscalculation by the Dutch Chairman of the ING Supervisory Board and the Dutch CEO. This miscalculation is clearly stated in the ING press release: "We realise we have underestimated the public response in the Netherlands on this clearly sensitive matter." Such a miscalculation should not happen at this senior level as the "ongoing public discussion [is] damaging ING and its employees", and its Supervisory Board.

The remuneration debate at ING is far from new. On 8 November 2007, a former ING CEO threatened to relocate ING HQ to the UK as he was annoyed by the Dutch remuneration debate. In 2014, another anonymous relocation threat was aired. In 2015, the current ING CEO aired milder criticism in the Financial Times. The ING criticism feels systematic and may explain the Dutch desire for curtailing systemic banks. Sources: Correspondent, FDFTTrouwWiki.

Tuesday, 13 March 2018

How and when do you know it's over?

"So, then, how do you know if the relationship is truly over, and it’s time to move on? This is one of the most difficult life questions to answer. It really is. I’ve struggled with it so many times." (a Psychology Today-2018 quote). The 1st time, it took me some 10 years to figure out this question. The 2nd time, it took me a few months. Since then I got experienced at this - alas.

I still remember asking this same question to friends. They didn't have an answer and told me that I "would just know it" at the appropriate time. They were right. There is no other answer to this question. Each situation has its own merits. There is no generic or template answer to address an individual and often complicated situation. 

Actually, my tolerance levels only became higher during my period of contemplation. Perhaps, this is a default mechanism for saving your relationship. Initially, this period felt like a compromise with myself. Subsequently, I became angry with myself for "compromising". Unfortunately, I projected my anger onto others to release the increasing pressure inside me.

Compromising with myself and increasing tolerance levels wasn't the answer. I became an angry man. Provoking me became more and more easy for the people around me. I was mostly able to restrain myself given the intentions behind these provocations. My triangle of Body Mind & Soul suffered from this period. My 2013 burn-out was probably necessary to realign this triangle.

The last drop in the bucket came unexpected, for me and others. Suddenly, I realised that my future situation would never ever improve, unless I regained control over my own life. Finally, the consequences of my decision became secondary to my own wellbeing. For 10 years, these consequences had paralyzed me in taking a decision, and at the expense of my wellbeing.

It felt like a relief for putting my own wellbeing first rather than the wellbeing of others. However, doing this was unusual for me. Probably, this was also the reason why I had ended up in my situation. Apart from the duration, the 2nd time looked like a copy of the 1st: compromising with myself and increasing my tolerance levels. Still, forewarned is forearmed.

As a result, I have become reluctant to let my happiness and satisfaction - or contentment - suffer by others. I am looking for a healthy balance in making compromises now. The main differences are that I openly talk about it, and that I use a mutual rather than an individual perspective. Compromising should not imply or include a desire to want to change someone. 

“How do you know when it's over?"
"Maybe when you feel more in love with your memories than with the person standing in front of you.” 
An intriguing quote by Gunnar Ardelius (born 1981), Swedish author.

I Don't Want To Change You (2014) by Damien Rice

Note: all bold and italic markings and underlinings by LO unless stated otherwise

Monday, 12 March 2018

Beliefs and (im)morality

A recent Big Think article caught my attention: How we know right from wrong without God or religion. I prefer a slightly different angle: would we know right from wrong without philosophy or religion? Hence, the title of this blog: beliefs and (im)morality.

In my view, Religion is a derivative belief from Philosophy, its origin. I assume that the people whom we now regard as prophets, were originally viewed as teachers or philosophers (positive) - or rebels (negative). Morality is ingrained in both Belief systems.

The 7 virtues and the 7 deadly sins (a.k.a. capital vices) are relevant to (im)morality.

My diagram compares my concept of the 7 Belief systems with these 7 vices and virtues.

The diagram has good matches, apart from my yellow markings.

Remarkably, honesty is not a virtue and neither is dishonesty a vice. Hence, the yellow marking on the Truth highlights my doubt regarding my alleged match. The Belief system Religion feels like a similar mismatch given the relevant virtue and vice.

It's tempting to see animals as examples of morality and humans as examples of immorality because humans kill for fun. Unfortunately, various animal species also appear killing for fun (a.k.a. surplus killing): bottlenose dolphins, housecat, fox, leopards, hyenas, gorillas, lions, chimpanzees, stoats, honey badgers, elephants, wolves, and caracal (eg, Ranker, Wiki).

Britannica: "Parasitic plant, plant that obtains all or part of its nutrition from another plant (the host) without contributing to the benefit of the host and, in some cases, causing extreme damage to the host." Wiki: "About 4,500 species of parasitic plant in approximately 20 families of flowering plants are known."

Neither immorality nor morality appear to be the default option in Life or Nature. There seems to be a correlation between the complexity of the brain - or consciousness - and (im)morality. In her 2016 book  Thinking evil, the  German philosopher Bettina Stangneth attributes evil - or extreme immorality - to human thinking (my 2017 blog).

Human (im)morality would then be the consequence of a more complex brain than other species. This may also explain the extreme opposites within the 7 Belief system, like Money (charity vs greed), Philosophy (equality vs supremacism), or Politics (utopia vs authoritarianism).

Money, not morality, is the principle commerce of civilized nations. A quote by Thomas Jefferson (1743-1826), 3rd American President.

Note: all bold and/or italic markings by LO unless stated otherwise