September 25, 2015

Janus - Saved by Zero < 5min

So the Fed has chosen to hold off on their goal of normalizing interest rates and the ECB has countered with the threat of extending their scheduled QE with more checks and more negative interest rates and the investment community wonders how long can this keep goin’ on. For a long time I suppose, as evidenced by history at least. ... zero bound interest rates destroy the savings function of capitalism, which is a necessary and in fact synchronous component of investment. Why that is true is not immediately apparent. If companies can borrow close to zero, why wouldn’t they invest the proceeds in the real economy? The evidence of recent years is that they have not. Instead they have plowed trillions into the financial economy as they buy back their own stock with a seemingly safe tax advantaged arbitrage. But more importantly, zero destroys existing business models such as life insurance company balance sheets and pension funds, which in turn are expected to use the proceeds to pay benefits for an aging boomer society. These assumed liabilities were based on the assumption that a balanced portfolio of stocks and bonds would return 7-8% over the long term. Now with corporate bonds at 2-3%, it is obvious that to pay for future health, retirement and insurance related benefits, stocks must appreciate by 10% a year to meet the targeted assumption. That, of course, is a stretch of some accountant’s or actuary’s imagination.

The Atlantic - The Mothers of All Disasters 5-15min

Massive hurricanes striking Miami or Houston. Earthquakes leveling Los Angeles or Seattle. Deadly epidemics. Meet the “maximums of maximums” that keep emergency planners up at night. ... The people who try to keep the nation ready for these doomsday scenarios call them the Maximums of Maximums, or the MOMs. You might call them the mothers of all disasters. The term comes from the Federal Emergency Management Agency, and for the feds, it generally includes a small universe of possibilities: a major hurricane, a major earthquake, or an improvised nuclear device. ... In a rebuke to a techno-utopian age, natural disasters remain a greater threat than almost anything humans can produce. ... natural disasters are often abetted by humans. Construction in floodplains, lax building codes, lack of preparation, the malign effects of climate change, and even underinsurance exacerbate the impact of the disasters. The number of weather-related disasters that cost more than $1 billion has been gradually increasing over the last few decades ... The challenge of preparedness is convincing people who are not movie directors or emergency managers to do the same.

Bloomberg - Was Tom Hayes Running the Biggest Financial Conspiracy in History? (Or just taking the fall for one?) 5-15min

Fixations are a symptom of Asperger’s, along with social problems, elevated stress, and a propensity for numbers over words. The kids in Winchester bullied him for it. Hayes remained a peripheral figure in college, at the University of Nottingham. While his fellow students took their summer holidays, he paid for school by cleaning pots and lugging kitchen supplies for £2.70 an hour. ... Seeking better money, Hayes won an internship at UBS in London. After graduating, in 2001, he joined Royal Bank of Scotland as a trainee on the interest rate derivatives desk. For 20 minutes a day, as a reward for making the tea and collecting dry cleaning, he was allowed to ask the traders anything he wanted. It was an epiphany. ... On the rare occasions he joined other bankers on their nights out, he stuck to hot chocolate. They called him “Tommy Chocolate” and blurted out Rain Man quotes like “Qantas never crashed” as Hayes walked the trading floor. He was bad at banter, given to taking quips and digs at face value. The superhero duvet was a particular point of derision. The bedding was perfectly adequate, Hayes thought; he didn’t see the point in buying another one. ... Not everyone in finance was a jerk. Hayes made a few friends, and he found that his machine-gun approach to messaging and trading made him a favorite among brokers, who didn’t care where a trader had gone to school as long as he brought them deals. ... His M.O. was to trade constantly, picking up snippets of information, racking up commissions as a market maker, and building a persona as a high-volume, high-stakes risk-taker. ... Libor was a component in securities ranging from U.S. student loans and credit cards to Kazakh gas futures, but it was determined each day by just a handful of distracted, guesstimating individuals.

Aeon - Perfect genetic knowledge 5-15min

Human genomics is just the beginning: the Earth has 50 billion tons of DNA. What happens when we have the entire biocode? ... By 2020, many hospitals will have genomic medicine departments, designing medical therapies based on your personal genetic constitution. Gene sequencers – machines that can take a blood sample and reel off your entire genetic blueprint – will shrink below the size of USB drives. Supermarkets will have shelves of home DNA tests, perhaps nestled between the cosmetics and medicines, for everything from whether your baby will be good at sports to the breed of cat you just adopted, to whether your kitchen counter harbours enough ‘good bacteria’. We will all know someone who has had their genome probed for medical reasons, perhaps even ourselves. Personal DNA stories – including the quality of the bugs in your gut– will be the stuff of cocktail party chitchat. ... Due to satellite imaging, we can see the entire surface of our planet. There can be no undiscovered land masses. The map of the world is complete. And we should expect the same thing for genetics. DNA testing will become so pervasive it will transform the medical, legal and social foundations of society. If blanket genome sequencing takes off, it will be impossible to obscure human relationships or ignore the content of our DNA. ... One of the greatest achievements of the coming century will be the characterisation of the Biocode, not just as a list of genomes of different species, but as patterns of interacting communities. ... By 2050 we should aim to finally have a handle not only on human genetic diversity but on the biodiversity of the planet.

The New York Times - High School Football Inc. < 5min

Their assuredness is as bold as the company behind the school: IMG, the global sports management conglomerate that has helped propel the competitive leap that high school football has made beyond traditional community teams. ... convention is being challenged by a more professional model at the highest levels as top players urgently pursue college scholarships, training becomes more specialized, big business opens its wallet, school choice expands, and schools seek to market themselves through sports, some for financial survival. ... IMG is at the forefront. It is trying to enhance its academy brand with football, perhaps the most visible sport. And it is applying a business model to the gridiron that has long been profitable for tennis and has expanded to golf, soccer, baseball, basketball, lacrosse, and track and field. The academy has nearly 1,000 students from more than 80 countries enrolled in prekindergarten through 12th grade and postgraduation. About half the students are international. ... The full cost of tuition and boarding for a year of football at IMG Academy is $70,800, although need-based financial assistance is available.