Share-alike notion understood at 8 years old

Study shows that share-alike, without notion of reciprocity, is ingrained in 8 years old. Reciprocity is a self-centered notion, that maximizes individual gain. Here an experiment was conducted where kids had to share candy with an anonymous person, not present in the room and it was a one time thing.

From Nature:

A notable result was a change to other-regarding behaviour with age: younger children (3–4 years old) were mostly self-centred, whereas the older children (7–8 years old) were concerned with equality — within their group, that is. Interestingly, this developmental pattern is different from that of another form of altruism, namely 'instrumental helping'. Human infants as young as 14–18 months readily help others do such things as fetch or stack objects, or open cabinets7. For this kind of helping there is direct evidence that infants are not influenced by external rewards, and indeed our nearest primate relatives sometimes help others achieve their goals as well7, 8. So, in the case of instrumental helping, the developmental trajectory is of early altruism and other-regarding preferences, and then, presumably, growing concern with reciprocity and reputation as children learn to be selective altruists so as to avoid being exploited by others.

Can we draw parallels to software licenses? Proprietary is 3 years old. BSD is 8 years old: you share alike and do not expect reciprocity. Cynicism kicks in at puberty, pure altruism is but a distant memory of candy and enter the GPL?

Flame away...

Selection against low serotonin

Depressed mice do not care for their off-spring and they die. Thus is the negative selection for lack of serotonin in mice. Happy mice...

From Nature.

The neurotransmitter serotonin is known to be important in mood and behaviour; now researchers have shown that its function is also essential to the survival of baby mice.

Evan Deneris at Case Western Reserve University in Cleveland, Ohio, and his colleagues compared the reproductive success of normal mice with that of animals lacking many of the neurons that produce serotonin. Litters in the care of mothers with low serotonin levels died within a few days of birth despite adequate nursing.

The mothers' behaviour explained this: they built poor-quality nests and did not keep their offspring huddled together, leaving the litter exposed to the cold. When these mothers' young were fostered by normal mothers immediately after birth, their odds of living rose to normal.

SSRIs, the common drugs that inhibit the re-uptake of Serotonin (which makes it more present) are not available for rats. Jokes aside, I am stunned that the presence or absence of one molecule can so dramatically alter behavior and mood and therefore directly be a factor in selection. Mental illness is a terrible thing, but maybe mostly a chemical thing?

I strongly believe in better living through chemistry.

Anti-Matter goes Boing!

For those of you that read angels and demons, the book by Dan Brown, there is this great depiction of the matter and antimatter interaction, it is the most destructive interaction in the universe! bwahahahaha!

Actually not all the time, some times they just bounces around playfully playing cat and mouse (until they destruct in the most violent way known in the universe, bwahahahaha)

From Phys.Rev.A via Nature

Experimental evidence of antiproton reflection by a solid surface

A. Bianconi, et. al.
(Received 21 March 2008; revised 18 June 2008; published 11 August 2008)

We report here experimental evidence of the reflection of a large fraction of a beam of low energy antiprotons by an aluminum wall. This derives from the analysis of a set of annihilations of antiprotons that come to rest in rarefied helium gas after hitting the end wall of the apparatus. A Monte Carlo simulation of the antiproton path in aluminum indicates that the observed reflection occurs primarily via a multiple Rutherford-style scattering on Al nuclei, at least in the energy range 1–10 keV where the phenomenon is most visible in the analyzed data. These results contradict the common belief according to which the interactions between matter and antimatter are dominated by the reciprocally destructive phenomenon of annihilation.

Nice! But really it doesn't give as dramatic a phenomena for a good Dan Brown book. "He cut the eyeball out from the dead professor. With it he could get past the retina-scan security system and get to famed anti-matter, free-floating in a miniature magnetic coil. There it was the one and only store of anti-matter that had the potential to amuse the whole world by going boing! boing! boing!"... nah... doesn't work as well, not as dramatic.

Postcards from Spain: Culture in Context

The first thing that strikes me when I think about writing about my experiences here, as an American living in Spain, is all the things I don't want to write.

This is because of all the times I have been on the other side of the fence. When foreigners implore the "Natives" to read their cute little blog musings on the natives' little corner of the world, they don't imagine that how offensive the Natives will find some of those musings," for ex. "Have I become dumber since moving to America?"

Genre and the American Travel writer

The Self-loathing American/Geography snob
This is the type of person who usually grew up somewhere in bum-fuck and could not wait to move to New York, San Francisco, or Abroad, to manifest their innate sense of superiority to all the rubes they grew up with. This kind of person inevitably becomes "more" New York, San Francisco or name your Euro capital than anybody who actually grew up there. I think there is something innately fishy about being ashamed of where you come from, especially when that person came from the same place (in a manner of speaking) as me, and, therefore, looks down on me! I am not always proud of my country and don't agree with its current government, but there are still a lot of things I like about America, that I am grateful for. I realize that where I come from has played a significant role in my identity today.

The American Bigot
I was well into a reverie of the reverse type: "When Americans go abroad, waxing poetic about their fresh baguettes and Tuscan views and how they just love the relaxed pace of living in the 'Old World' they don't realize that this is because they are 'On vacation' and they are not having to get anything practical done."

This was in a moment of frustration, dealing with the headache of getting papers here, like the NIE--foreign tax ID number, whose only benefit is a big "come and get me" to the tax authorities--it's harder than you think to get, and without it you can't even get a mobile phone in Spain. Or, dealing with Customs and blocked containers and more administrative papers. In short, huffing and puffing because my immigrant status here forces me to deal with that most international, illogical and pernicious of characters: the low level civil servant.

Just at the moment, I feel myself slipping into the American bigot rant, which frankly, being married to somebody from somewhere else and having dealt with the INS on his behalf and seeing what kind of treatment you can expect from them, even if you do have a higher education and speak perfect English, and God forbid you move to another region of the US and they can't locate your file..., I was still tempted to feel all American-bigoty about how much more efficient we are at getting things done, when what do I get in my in-box? A note from my surgeon's "appeals professional," apparently he has a full-time person with this title on staff. The letter informs me that Cigna (which has now been bumped ahead of Blue Cross Blue Shield in my personal circle of Hell ranking of health insurance companies) has decided to only pay half their portion of my surgery, from back in June.

Nastygram to Cigna

So I spent the morning writing an appeal to Cigna, pointing out that the first reason they denied partial payment on my claim--that I had co-insurance, was patently false, I do not now, nor have I ever had co-insurance. So that does not exactly inspires me with confidence at how closely they reviewed my dossier, as a whole. Or, do they automatically deny payment as a policy, assuming that not everybody is going to be pissed off and energetic enough to appeal? I had a PPO, what ever happened to my choice in health care? Why should some paper pusher at Cigna determine that I should go to some hack who just happens to be in their network to have my belly sliced open from hip to hip when I could have a laparoscopic procedure done by The Male Surgeon and His Colleague, who have more published successes in this surgery than anybody else in the World, let alone the Atlanta metropolitan area? I have a poor history of wound healing and four children to run after...and so on.

Martin Feldstein on the Housing spiral

Martin Feldstein pens a comment on the dangers of overshooting on the way down in housing in this morning's FT. Martin is a professor of economics at Harvard and also apparently an avid reader of this blog since I wrote about a 20% overshoot as a game-over scenario. He has taken notice :)

House prices that could overshoot by 60 per cent on the way up could also overshoot substantially on the way down. During the past 12 months, house prices across the nation fell by an average of 16 per cent.

...

A policy is needed that will permit the appropriate 15 per cent additional decline in house prices but end the risk of a further downward spiral. No such policy is now in place or on the legislative drawing board.

...

Because of the uncertain values of mortgage-backed securities, financial institutions lack confidence in the liquidity and solvency of counter­parties and even in the value of their own capital. Without that confidence, there cannot be adequate credit flows and without credit there cannot be economic activity and growth.

...

Because of the decline in house prices that has already occurred, more than 10m home owners now have mortgages that exceed the values of their house. This is 20 per cent of all homeowners with mortgages. For half of that negative equity group, the debt exceeds the house value by more than 20 per cent. If house prices fall another 15 per cent, negative equity mortgages will rise to 20m.

The large and growing number of homeowners with negative equity will increase the rate of defaults and foreclosures and therefore drive the downward spiral of prices. Defaults are likely to accelerate as the ratio of the debt to the home value rises. While a homeowner who owes 10 per cent more than the value of a house may continue to service the mortgage, when the excess debt reaches 30 per cent he is much more likely to default. Each such default puts downward pressure on existing prices, increasing the like­lihood of further defaults. It is this spiral that threatens the American economy and the global financial system.

...

The federal government would offer every homeowner with a mortgage the opportunity to replace 20 per cent of that mortgage with a low interest government loan – up to a loan limit of $80,000 (€55,000, £44,000) – that reflects the government’s lower borrowing rate. Creditors would be required to accept this partial mortgage pay-down and to reduce the monthly interest and principal by the same 20 per cent. That mortgage replacement loan would not be collateralised by the house but would be a loan that the government could enforce by lodging a claim on an individual who does not pay.

With the mortgage replacement loan, people who now have a mortgage equal to 90 per cent of their house value would see that mortgage fall to just 72 per cent of the house value, implying that it would take a very unlikely price fall of more than 28 per cent to push those individuals into negative equity.

By stopping the downward overshooting of house prices, the mortgage replacement programme would help all homeowners, including those who now have negative equity. Limiting the destruction of homeowners’ wealth would help to maintain consumer spending, boosting production and employment. Renters as well as homeowners would benefit. And stabilising the values of mortgage-backed securities would strengthen financial institutions, increasing credit flows that would further stimulate the economy.

...

The US economy is sliding into recession. Employment, industrial production and real incomes are declining. Monetary policy has little traction because of the dysfunctional credit markets and the collapse of housing. The fiscal policy of tax rebates failed to achieve a significant impact on consumer spending. The economy will continue to decline and the financial markets to deteriorate unless a policy is adopted to stop the downward spiral of house prices.

This looks like is a refinancing program by the govt. I do not exactly understand how this reduces and individual's equity participation. You owe the same monies but now your creditors are a private company and the govt and the govt one happens to have a lower payment rate. You will still go in negative equity territory but you have swapped a no-recourse loan into one where the govt can go and pick your pockets. Also in case there is nothing to pick the tax payer is left with the bill. This helps the lenders, by liquifying 20% of the value, they get the cash now, which they badly need. This helps Wall Street but not Joe Schmoe.

Postcards from Spain: Afernoon in Ikea

Ikea must truly be the world's most democratic place. While equipping our apartment in Madrid, we made the requisite stop there. After spending an hour and a half configuring something called the "blobbi" or the "schlaghklumf" or some other lump of unpronounceable Scandinavian syllables for our living room couch and various other pieces of furniture, we were in for a nasty surprise. Things have changed since our last stop in Ikea outside Paris in the mid-nineties. You no longer drop off your ticket at the warehouse and wait for them to bring you your boxes. Each piece of furniture comes with it's own aisle and item number; you grab your cart and off you go to the warehouse to find each individual item and lift it onto your cart, before proceeding to checkout. This might work just fine for one or two items, but gets tiresome when you are equipping a whole apartment.

Talk about a company that knows how to squeeze a margin. I look at the smiling employees (they all mostly seem happy to work there) re-stocking items and ask my husband if we couldn't just hand one of them 20 or 30 euros to get our stuff for us? He said this just isn't done and they would be offended that I am trying to subvert their egalitarian Scandinavian ethos with my filthy American money and expectations. I wonder about the supposed high level of youth unemployment in Spain and other European countries. Surely it wouldn't cost Ikea anything to let these people earn tips by getting people's boxes for them at the warehouse? Where's the evil in paying for extra service? Why isn't Ikea online, or is it?

Marc tells this story to Sacha (Labourey)--our friend and former colleague at JBoss and RHT, who sympathizes. "I know what you're saying. The other day, I needed to buy some furniture for a family house in the mountains. I called up Ikea and told them that I had rented a truck and was going to drive 200 km just to get some furniture there and could they please reserve the pieces I wanted. They responded: No, we can't do that. All we can tell you is that there are eight of those items left and they are going fast, so we recommend you hurry."

We find ourselves reflecting. When we were young and didn't have money, we went to places like Ikea. Now that we're older and more settled, we are still still doing many of the exact same things. Some things don't change.

Credit (M4) vs GDP

Click on the picture to enlarge. This is the chart that keeps me awake at night. That peak on the left is the 1929 crash. The interesting part is that the deleverage didn't start until 1934. The market crash in fact drove M4 relative to GDP UP. The real depression happened when M4 started going down.

In other words: it hasn't even started. When M4 starts really going down, then the shit will really hit the fan. Banks lose money, can't recapitalize, legislation will limit credit availability and levels, M4 goes down. Housing can't float due to credit tightening, we go below mean, banks lose a lot more money.

M4 deleveraging is a self feeding macro beast. It could be 2 years out. Pray.

Housing, we are not there yet

Amid horrible foreclosure data in the press this morning (and warning that the states legislation is fudging numbers by delaying foreclosure procedures), easy macro-analysis sheds some light on what is to come. Consider the "reverting to mean" that is going on above. Consider that the bell curve started in 2001, so is a very recent event, a bubble really, nothing but a bubble.

If the bubble stabilizes at +1 standard deviation, this is good news. We got 5% downside on the housing market on top of 15% so far so about $160B further damage on the banking system. Well below the FED shock absorbers. All good, we are close to bottom.

If the bubble reverts to mean, we got another 15% to go, to get back to 2001 levels. That is $1T of banking damage. At the FED shock absorbers. Bad but we might make it.

If the bubble overshoots on the way down, at -1 SD, then all bets are off. We are talking about $2T and there is nothing the FED can do. It is game over. In my opinion this scenario is a function of credit, if credit evaporates (M4) then we may be looking at an overshoot.

When a bubble can kill the system, the system deserves to die? In any case, we are not there yet, I am ignoring calls of housing bottom, it is the least plausible scenario.

$500B and counting

When the sub-prime crisis hit last year, I did a quick back of the envelope calculation. I came up with $350B of real losses by banks. At the time some of the analysis was saying 60B and that it would be contained. Finger in the dam. Above is the breakdown of losses and the money raised. It amount to $510B so far and about 350 raised.

Oil vs GDP

Reading through a report on oil. Fascinating. The graph above gives some basis for the supply/demand crunch and some support to peak-oil claims. Efficiency is increasing so offsets a bit the increasing gap, but there it is...