The adjustment process requires more than just stimulating the economy and involves a worldwide rebalancing
By JOERGEN OERSTROEM MOELLER
THE current financial and economic crisis seems to be moving into a phase where the deceleration is losing steam. But we are still in unknown territory, wondering how long it will take before a flat economy caught by stagnation will gain sufficient momentum to accelerate.
The global economy has encountered more serious problems than originally envisaged because deep and strong imbalances - especially in the US - have been allowed to persist. Therefore an adjustment process is not just about stimulating the economy, but the need to tackle the more agonising issue of rebalancing the global economy.
There are four basic challenges requiring the policymaker's attention.
The first one is the frightening similarity between this crisis and the start of the Great Depression in 1929. In both cases, the calamities began with a collapse of the financial system in the US spreading to the financial systems in other countries, triggering a decline in the real economy through rising unemployment and economic contraction.
All other recessions seen between these two events have started with a fall in demand, steering the economy into recession with the result that the financial sector ran into problems later because the lower growth or outright contraction pushed enterprises into lower profits or losses, turning normal bank loans into bad debt.
There is a frightening similarity between this crisis and the start of the Great Depression in 1929. In both cases, the calamities began with a collapse of the financial system in the US spreading to the financial systems in other countries, triggering a decline in the real economy through rising unemployment and economic contraction.
In 1929 and 2007, the financial sector dragged the economy into crisis, contrary to the normal pattern characterising recessions.
Is the worst over?
When people judge the performance of the financial sector in the current crisis and the policy measures applied by central banks and finance ministers, they - quite rightly - find it reassuring that the worst seems to be over.
That disregards the unhappy phenomenon waiting in the wings that over the next six to 12 months, financial institutions will report heavy losses as many enterprises cannot service their debts. Or in other words: what we have seen so far in the financial sector is the consequences of the original financial crisis emanating from sub-prime and related exuberance, but not yet the consequences from the economic downturn coming in with a time lag.
Unless we realise this, observers may be disappointed. They may be more than that when 2009 does not bring along improving but deteriorating profits for the financial institutions.
The second challenge is that the financial cycles have gone global. Work by the International Monetary Fund (IMF) shows unequivocally that the world is steered by a congruous financial cycle among industrialised countries and emerging economies. The curves reveal that as soon as one of these groups get into difficulties, another one is dragged into the quagmire immediately. There is no possibility of finding a refuge or opting out.
This also explains why global policymakers are so focused upon global or international steering instruments for the financial systems. If the cycles were national or regional, they might be dealt with in a national or regional context. But the plain fact is that as they are global, measures on a global scale are required. The other plain fact is that even if all political goodwill is taken into account, the world is far away from such measures.
The third point is that there is no global business cycle. There are two business cycles - one dominating the economies of the industrialised countries and another one for the economies of the emerging economies and developing countries. As the figures published by the IMF show, emerging Asia stopped fluctuating with the US business cycle around 1980 and emerging Latin America did the same around 1990 to follow the business cycle in emerging Asia instead of the US.
That makes global economic policy more difficult than if there was a global business cycle. When the major countries do not follow the same or congruous business cycle, measures required to turn the economy around differ and countries tend to diverge in their policy options instead of converging them.
The fourth point is that the US follows a course of strong stimulatory policies disregarding the deficits and imbalances. China is adopting a similar policy, but can better afford to do so, as the Chinese deficits and debts are manageable. The figures for the US are frightening, disclosing a deficit for the federal budget running close to 15 per cent of gross domestic product (GDP) plus a high debt, and deficits on the balance of payments despite a reduction of the growth differential between the US and several other industrialised nations including Europe. The main worry is that there are no signs that these deficits and imbalances gripping US economy are going away.
Japan is mired in a severe recession with a contraction of about 6 per cent this year. Britain falls more or less in the same category as the US, while continental Europe is reluctant to run up heavy deficits to stimulate their economies.
The discrepancy is illustrated by a closer look at the figures for G-20 countries. From 2008 to 2010, the budget deficit among industrialised G-20 countries is expected to grow from 4 per cent of GDP to about 7 per cent. For emerging G-20 countries, the corresponding figures are nil for 2008 and only 2 per cent expected for 2010. Government debt among industrialised G-20 countries is expected to rise from 80 per cent to 100 per cent, but at an almost stable fluctuation of around 35 per cent of GDP for emerging G-20 countries.
Politically, it reverberates around the globe that unsound and irresponsible policies are pursued by the industrialised world with the US in the forefront, while prudent policies have become the pride of emerging G-20 countries.
The inevitable repercussion of this is an unbalanced effect on the global economy of national stimulatory measures. Some of the US stimulatory measures will benefit Europe or Japan or China, which will give rise to questions in the US on why such countries do not adopt similar stimulatory policies instead of getting a free ride on the US measures.
So far, these voices have been kept under control, but unless the US economy starts to reflate in early autumn, there is considerable risk that the US discontent about the lack of coordination will spill over into strong words and maybe even policy actions to preserve the positive effects of stimulatory measures for the US economy.
Time is running out for the global economy to mastermind a better coordinated global response addressing the underlying imbalances. We know that the crisis is deeper than we thought. Unless we introduce global measures to address the imbalances, it will also be longer.
The writer is a visiting senior research fellow at the Institute of Southeast Asian Studies, Singapore and an adjunct professor at Copenhagen Business School and Singapore Management University
Friday, May 29, 2009
Monday, May 18, 2009
Green shoots and dud forecasts
By Samuel Brittan
Published: May 14 2009 22:13 Last updated: May 14 2009 22:13
We have been told by that usual bringer of bad tidings, George Soros, that the “economic freefall” has stopped. The normally cautious president of the European Central Bank, Jean-Claude Trichet, has identified a slowing down of the rate of decrease in gross domestic product and, in some cases, “already a picking up”. The Organisation for Economic Co-operation and Development composite leading indicator shows at least a slight uptick. The admittedly highly erratic Easter UK retail sales figures show an actual increase and surveyors report more property inquiries. Financial commentators talk of “green shoots” and one of them has even suggested that the recession came to an end in April. So – Bank of England dissenting – everything is all right and we can get back to normal life.
Except that it isn’t. It is perhaps unfair to cite the continuing horrifying rise in unemployment in so many countries. For that is admittedly a lagging indicator. A better reason for being suspicious is that so much of the new optimism is associated with a very recent recovery in equities. These lost up to half their value in the key US and UK markets, but have come less than a third of the way back since early March. Paul Samuelson once said that the stock market had predicted eight of the last five recessions. The same might be said of recoveries.
There is also a little matter of arithmetic. UK GDP is estimated to have fallen at an annualised rate of 7.4 per cent in the first quarter of 2009. So it is as well that the rate of decline is itself declining. A more specific factor is that a drop in stocks much amplifies any recession. As the Bank of England inflation bulletin explains: “De-stocking only reduces GDP growth if the fall in stock levels is larger than the fall in the previous period.” When this no longer happens the recession looks less draconian; but it does not mean that it is over.
In fact, I have never shared the gloom-and-doom, end-of-capitalism attitude to the credit crunch. Injecting public funds into failing banks was not the best way to bolster demand and credit, especially as governments have relied upon these very same bankers to advise them. Critics on the left and right agree on this matter and are largely right. Nevertheless, governments and central banks have probably injected enough cash into the world economy to prevent the worst from occurring. Sound money commentators fret about the difficulties of withdrawing the stimuli in time. They should equally worry about the danger of withdrawing them too soon. One reason why US unemployment remained so high in the New Deal period is that a premature monetary tightening and attempt to balance the budget aggravated a new recession in 1937.
There has been much discussion about whether the present recession will be V-shaped, which is what national authorities would like; W-shaped, in which a modest recovery would be followed by a further downturn; or L-shaped, in which output stops falling but we crawl along at the bottom without getting back to normal trend growth. Having exhausted suitable letters of the alphabet, commentators talk of bath-shaped and hook-shaped recessions as well.
The truth is that we do not know. To me the most dispiriting aspect of current discussion is the way in which both governments and their critics still cling to national income forecasts, known in the trade as “NIF”. The value of such forecasts is not to be judged by their average record over several years, but by whether they signal problems and opportunities in advance of turning points. Here their record is abysmal. At the beginning of 2007 both national and international mainstream forecasters looked ahead to a golden period of good growth with low inflation, oblivious to the credit crunch that was to hit us later the same year. This should have been the coup de grâce, but it was not. There is no solution in putting wide ranges of error on the predictions – what one economist called “giving them wings”. New Bank of England charts show a range of between minus 2 per cent and plus 6 per cent for output growth in 2011 and 2012, which is honest but useless.
I recently heard a well-known forecaster say that the only valid question is which forecasters to go by and what methods they should use. Not so. New mathematical theories of chaos and complexity provide insights into why forecasting is so problematic but do not provide alternatives. We just have to accept that the future cannot be foreseen in the way many governments and businessmen would like.
Let me end with a simple illustration. The weather in summer in north-west Europe is known to be highly variable. Somebody going away for a fortnight in that part of the world would find it helpful to have a day-by-day prognosis of temperature, rainfall, sunshine, wind conditions and so on. But apart from the first day or two it cannot really be done. Rather then rely on long-term weather bureau predictions, it is safer to take an umbrella or raincoat and a warm pullover as well as sunglasses and a sunshade, even at the cost of slightly heavier luggage. Now apply this homely little story to economic policy.
More columns at www.ft.com/brittanwww.samuelbrittan.co.uk
Wednesday, May 6, 2009
EU-CHINA RELATIONS: A chess game with 28 players
By Jonathan Eyal
EUROPEAN governments may disagree about how to tackle the current financial crisis, but they all agree on one issue: China is crucial to global economic recovery.
Yet, as a recent report from the European Council on Foreign Relations (ECFR) - a leading think-tank - points out, the Chinese have a very different perception about Europe's importance. They regard the European Union (EU) as a political dwarf - a rich but dysfunctional player which very often can simply be ignored.
China 'treats its relationship with the EU as a game of chess, with 27 opponents crowding the other side of the table and squabbling about which piece to move', the ECFR report claims. And unless the Europeans act in unison, matters are only likely to get worse.
Europe has long felt sidelined by China. Trade disputes between America and China preoccupy all international financial negotiations. Europe, which is actually China's biggest export market, hardly gets a hearing. And the whopping $332 billion surplus in China's trade with Europe last year alone elicits no expressions of concern from Beijing.
More importantly, the Europeans feel politically humiliated. If the Chinese cancelled a summit at the level of heads of state with the US, this would have been headline news. But when China cancelled a scheduled summit with the EU last December because it did not like Europe's policies over Tibet, nobody noticed.
One reason why China does not take the EU seriously is that, despite its name, Europe is hardly a proper 'union'. It is a confederation of nation-states, pursuing different agendas. It did not take the Chinese long to conclude that, while there was no point in offending the stream of EU bureaucrats who visit Beijing, the real business is still conducted in Berlin, Paris and London.
True, the Chinese are paying a price for this policy. China's relations with the European Parliament are poor: the EU legislature frequently passes resolutions criticising Beijing's human rights record.
But, on the whole, China still gets its way by 'running rings around the EU', as the ECFR report puts it.
Beijing's chief tactic is to forge a close relationship with one important European country at any given time. For years, Britain was Beijing's bogeyman. Now, it is the turn of France to be excluded, while Britain is lavished diplomatic attention.
In theory, there is an answer to this tactic: the Europeans can stick together. As the authors of the ECFR report argue, the EU could refuse to make trade concessions unless Beijing opens up its own markets. Also, it could refuse to lift the current arms embargo on China until Beijing promises to cooperate over European security concerns in Iran or Africa.
But this confrontational approach, although beguilingly simple, is also guaranteed to fail. Europe is the victim of wider historic trends that can neither be ignored nor wished away.
Paradoxically, the Chinese used to be the EU's most fervent supporters. During the long decades of the Cold War, China hoped that the EU could provide a counter-balance to the US and the then Soviet Union, a third force in international relations. That was the moment when Europe could have forged a special relationship with Beijing. Unfortunately, that was also the moment when Europe preferred to examine its own navel.
That historic opportunity is unlikely to return. The Chinese have now reached a stage in their development when they no longer need the EU to counter-balance America: Beijing can do this on its own. And the rise of other powers has further diminished Europe's importance. So the Europeans are proposing to get serious about China just when Beijing no longer needs them.
And despite all their pretences, the Europeans still do not understand what makes China tick. Although all EU member-states have embassies in Beijing, only a handful have any serious presence throughout Asia. Very few European foreign ministries employ Chinese speakers or experts. And only a tiny minority have either the capacity or interest to think in global terms.
The result is that Europeans often make decisions without even sparing a thought as to how they could affect China.
At the last G-20 summit in London, for example, the Europeans wanted to isolate offshore financial centres - the so-called 'tax havens' - oblivious to the fact that China, with its interests in Hong Kong and Macau, was never likely to accept this. It took US President Barack Obama to broker a deal, leaving the Europeans to fume on the sidelines.
The same applies to Europe's grandstanding on human rights. Not one EU official believes that the 'dialogue' with Beijing on such matters can produce any results. But talks continue, because nobody agrees what should replace them.
As the report from the ECFR correctly points out, 'Europe's approach to China is stuck in the past'.
Yet the future still does not lie in confronting Beijing. Rather, it has to start with the Europeans understanding that they never had the slightest hope of 'changing' China, and they no longer have the luxury to choose how or when to engage with Beijing.
This may not be a pleasant conclusion for the 'old continent'. But it remains a necessary one.
ST May 7, 2009Friday, April 24, 2009
CEOs, it is time to decouple from financial markets
By Vijay Govindarajan and Anant Sundaram
Published: April 21 2009 03:00 Last updated: April 21 2009 03:00
Managers are frustrated. While many are intent on creating long-run value for investors, the recent performance of equity markets makes them question how the fundamentals of their business are reflected in the stock price.
Basic finance theory tells us that a company's value reflects long-run cash flows discounted to the present at the rate of return that investors expect ("cost of capital"). Cash flows are a function of revenues, costs and investments - and the life of a manager revolves around getting the most out of these. But cost of capital is primarily determined by the stock market.
As a result, individual stock prices are tied to movements of the market. If the market swoons, the chances are high an individual stock will plunge too. As we have seen recently, this can happen irrespective of what managers do to influence future cash flow prospects.
What to do? We believe it is time to re-examine the relationship between companies and capital markets. Chief executives should decouple their long-run strategies from the short-run vagaries of financial markets by taking any or all of the following six actions:
* Jettison quarterly guidance. Chief executives have had a simple bargain with the market: provide regular updates and the market will process the information and reveal "fair" prices. But, in many companies, earnings guidance has become a treadmill of managing for the next 90 days. Recent market falls made little distinction between companies that provided quarterly information and ones that did not.
* Reduce dependence on external capital. Having to justify to the markets why a company needs capital is viewed as a source of discipline. But that assumes the market will believe the company's business case, that the liquidity and the investment bank will be there when needed. We have seen that these could be somewhat naive assumptions.
Companies might do better by focusing on internal cash to fund growth. They should concentrate on cash flows - that is, the cash that comes in versus the cash that goes out - rather than accounting earnings. They should also rethink their dividend policies. If they can create more value by reinvesting the cash, they should do so, even if the action risks a fall in the share pricein the short term.
* Focus on individual and not institutional investors. Most shares in the US are owned by institutions. But it is perhaps time to develop, manage and communicate the company's strategy as though its primary investor is an individual. Why? Individuals have longer horizons. Second, if a company is managed for institutional investors, which institution should it care about and for what horizon? After all, they include everything from pension funds (longer horizons) to hedge funds (short horizons) to arbitrageurs (horizons measured in minutes).
This focus, however, must be accompanied by three changes in shareholder relations. Companies should appoint to the board a retail shareholder representative. They should treat the annual general meeting as an opportunity to have a meaningful conversation with investors. Companies should make financial statements more retail investor-friendly.
* Rethink compensation.
Earnings-per-share-related metrics bias managers' attention towards the short term. Companies should instead focus on long-run, cash-flow-based metrics in a manner that rewards managers for the value-creating investments they make.
If using stocks or options, payoffs should be benchmarked against market or peer performance. On the upside, executives are rewarded only for value they (and not the market or industry) create; on the downside, they are not penalised for market-driven declines.
* Innovate via adjacencies rather than breakthroughs. Tough economic conditions call for a brutal focus on costs. But companies must also grow and growth requires innovation: we recommend innovation into spaces adjacent to the core rather than via breakthroughs. The latter, such as Detroit's quest for an electric car, involves bet-the-company moves that can exacerbate share price volatility because the up-front cash outlays required and the chances of failure are both higher.
Adjacency innovations extend existing competencies and offer new products and services to already-familiar customers. To the extent that they involve a smaller up-front cash outlay, they are consistent with reliance on internal cash flows, and obviate the need for large external financing.
* Invest and acquire countercyclically. Companies tend to go shopping for big-ticket items when they feel rich. But the risk is that they can "buy high" in a boom and go into a defensive mode in a downturn. By being counter-cyclical in investing and acquiring, not only are assets likely to be cheaper but screening mechanisms are also more disciplined and the requirements for a business case more uncompromising.
Vijay Govindarajan and Anant Sundaram are professors at the Tuck school of business at Dartmouth
Source: FT.com
Published: April 21 2009 03:00 Last updated: April 21 2009 03:00
Managers are frustrated. While many are intent on creating long-run value for investors, the recent performance of equity markets makes them question how the fundamentals of their business are reflected in the stock price.
Basic finance theory tells us that a company's value reflects long-run cash flows discounted to the present at the rate of return that investors expect ("cost of capital"). Cash flows are a function of revenues, costs and investments - and the life of a manager revolves around getting the most out of these. But cost of capital is primarily determined by the stock market.
As a result, individual stock prices are tied to movements of the market. If the market swoons, the chances are high an individual stock will plunge too. As we have seen recently, this can happen irrespective of what managers do to influence future cash flow prospects.
What to do? We believe it is time to re-examine the relationship between companies and capital markets. Chief executives should decouple their long-run strategies from the short-run vagaries of financial markets by taking any or all of the following six actions:
* Jettison quarterly guidance. Chief executives have had a simple bargain with the market: provide regular updates and the market will process the information and reveal "fair" prices. But, in many companies, earnings guidance has become a treadmill of managing for the next 90 days. Recent market falls made little distinction between companies that provided quarterly information and ones that did not.
* Reduce dependence on external capital. Having to justify to the markets why a company needs capital is viewed as a source of discipline. But that assumes the market will believe the company's business case, that the liquidity and the investment bank will be there when needed. We have seen that these could be somewhat naive assumptions.
Companies might do better by focusing on internal cash to fund growth. They should concentrate on cash flows - that is, the cash that comes in versus the cash that goes out - rather than accounting earnings. They should also rethink their dividend policies. If they can create more value by reinvesting the cash, they should do so, even if the action risks a fall in the share pricein the short term.
* Focus on individual and not institutional investors. Most shares in the US are owned by institutions. But it is perhaps time to develop, manage and communicate the company's strategy as though its primary investor is an individual. Why? Individuals have longer horizons. Second, if a company is managed for institutional investors, which institution should it care about and for what horizon? After all, they include everything from pension funds (longer horizons) to hedge funds (short horizons) to arbitrageurs (horizons measured in minutes).
This focus, however, must be accompanied by three changes in shareholder relations. Companies should appoint to the board a retail shareholder representative. They should treat the annual general meeting as an opportunity to have a meaningful conversation with investors. Companies should make financial statements more retail investor-friendly.
* Rethink compensation.
Earnings-per-share-related metrics bias managers' attention towards the short term. Companies should instead focus on long-run, cash-flow-based metrics in a manner that rewards managers for the value-creating investments they make.
If using stocks or options, payoffs should be benchmarked against market or peer performance. On the upside, executives are rewarded only for value they (and not the market or industry) create; on the downside, they are not penalised for market-driven declines.
* Innovate via adjacencies rather than breakthroughs. Tough economic conditions call for a brutal focus on costs. But companies must also grow and growth requires innovation: we recommend innovation into spaces adjacent to the core rather than via breakthroughs. The latter, such as Detroit's quest for an electric car, involves bet-the-company moves that can exacerbate share price volatility because the up-front cash outlays required and the chances of failure are both higher.
Adjacency innovations extend existing competencies and offer new products and services to already-familiar customers. To the extent that they involve a smaller up-front cash outlay, they are consistent with reliance on internal cash flows, and obviate the need for large external financing.
* Invest and acquire countercyclically. Companies tend to go shopping for big-ticket items when they feel rich. But the risk is that they can "buy high" in a boom and go into a defensive mode in a downturn. By being counter-cyclical in investing and acquiring, not only are assets likely to be cheaper but screening mechanisms are also more disciplined and the requirements for a business case more uncompromising.
Vijay Govindarajan and Anant Sundaram are professors at the Tuck school of business at Dartmouth
Source: FT.com
Wednesday, April 8, 2009
Basic Truths About Jack Bauer
Killing Jack Bauer doesn't make him dead. It just makes him angry.
If Jack Bauer was in a room with Hitler, Stalin, and Nina Meyers, and he had a gun with 2 bullets, he'd shoot Nina twice.
If you wake up in the morning, it's because Jack Bauer spared your life.
Superman wears Jack Bauer pajamas.
If it tastes like chicken, looks like chicken, and feels like chicken, but Jack Bauer says its beef. Then you better believe it's beef.
Jack Bauer once forgot where he put his keys. He then spent the next half-hour torturing himself until he gave up the location of the keys.
1.6 billion Chinese are angry with Jack Bauer. Sounds like a fair fight.
Let's get one thing straight: the only reason you are conscious right now is because Jack Bauer does not feel like carrying you.
Jack Bauer was never addicted to heroin. Heroin was addicted to Jack Bauer.
Jack Bauer played Russian Roulette with a fully loaded gun and won.
When life gave Jack Bauer lemons, he used them to kill terrorists. Jack Bauer hates lemonade.
Jack Bauer once won a game of Connect 4 in 3 moves.
Osama bin Laden's recent proposal for truce is a direct result of him finding out that Jack Bauer is, in fact, still alive.
Jack Bauer is the leading cause of death in Middle Eastern men.
Jack Bauer doesn't miss. If he didn't hit you it's because he was shooting at another terrorist twelve miles away.
When Jack Bauer was a child, he made his mother finish his vegetables.
Jack Bauer killed 93 people in just 4 days time. Wait, that is a real fact.
Simon Says should be renamed to Jack Bauer Says because if Jack Bauer says something then you better do it.
Jack Bauer won the Tour de France on a unicycle to prove to Lance Armstrong it wasn't a big deal. He thinks yellow wristbands are gay.
When Jack Bauer pissses into the wind, the wind changes direction.
Jack Bauer's favorite color is severe terror alert red. His second favorite color is violet, but just because it sounds like violent.
When you open a can of whoop-ass, Jack Bauer jumps out.
When Google can't find something, it asks Jack Bauer for help.
You can lead a horse to water. Jack Bauer can make him drink.
Jack Bauer can get McDonald's breakfast after 10:30.
When the boogie man goes to sleep, he checks his closet for Jack Bauer.
Every mathematical inequality officially ends with "< Jack Bauer".
In 96 hours, Jack Bauer has killed 93 people and saved the world 4 times. What the hell have you done with your life?
Jesus died and rose from the dead in 3 days. It took Jack Bauer less than an hour. And he's done it twice.
Jack Bauer killed so many terrorists that at one point, the #5 CIA Most Wanted fugitive was an 18-year-old teenager in Malaysia who downloaded the movie Dodgeball.
In kindergarten, Jack Bauer killed a terrorist for Show and Tell.
What color is Jack Bauer's blood? Trick question. Jack Bauer does not bleed.
Guns dont kill people, Jack Bauer kills people.
If Jack and MacGyver were locked in a room together, Jack would make a bomb out of MacGyver and get out.
People with amnesia still remember Jack Bauer.
Sun Tzu once wrote, "If your enemy is weaker, conquer him. If he is stronger, join him. If he is Jack Bauer, you're f***ing dead."
Jack Bauer literally died for his country, and lived to tell about it.
Jack Bauer has been to Mars. That's why there's no life on Mars.
Superman's only weakness is Kryptonite. Jack Bauer laughs at Superman for having a weakness.
When Batman is in trouble, he turns on the Jack Bauer signal.
It took Jack Bauer two minutes to beat a confession out of OJ.
If Jack Bauer was gay, his name would be Chuck Norris.
The bumper sticker on Jesus's car reads, "WWJBD?"
Jack Bauer was conceived by torturing the other sperm until they gave up the location of the egg.
After 7 minutes of interrogation at the hands of Jack Bauer, Tom Cruise admitted that he was gay.
Jack Bauer's family threw him a surprise birthday party when he was a child. Once.
If Jack Bauer was in a room with Hitler, Stalin, and Nina Meyers, and he had a gun with 2 bullets, he'd shoot Nina twice.
If you wake up in the morning, it's because Jack Bauer spared your life.
Superman wears Jack Bauer pajamas.
If it tastes like chicken, looks like chicken, and feels like chicken, but Jack Bauer says its beef. Then you better believe it's beef.
Jack Bauer once forgot where he put his keys. He then spent the next half-hour torturing himself until he gave up the location of the keys.
1.6 billion Chinese are angry with Jack Bauer. Sounds like a fair fight.
Let's get one thing straight: the only reason you are conscious right now is because Jack Bauer does not feel like carrying you.
Jack Bauer was never addicted to heroin. Heroin was addicted to Jack Bauer.
Jack Bauer played Russian Roulette with a fully loaded gun and won.
When life gave Jack Bauer lemons, he used them to kill terrorists. Jack Bauer hates lemonade.
Jack Bauer once won a game of Connect 4 in 3 moves.
Osama bin Laden's recent proposal for truce is a direct result of him finding out that Jack Bauer is, in fact, still alive.
Jack Bauer is the leading cause of death in Middle Eastern men.
Jack Bauer doesn't miss. If he didn't hit you it's because he was shooting at another terrorist twelve miles away.
When Jack Bauer was a child, he made his mother finish his vegetables.
Jack Bauer killed 93 people in just 4 days time. Wait, that is a real fact.
Simon Says should be renamed to Jack Bauer Says because if Jack Bauer says something then you better do it.
Jack Bauer won the Tour de France on a unicycle to prove to Lance Armstrong it wasn't a big deal. He thinks yellow wristbands are gay.
When Jack Bauer pissses into the wind, the wind changes direction.
Jack Bauer's favorite color is severe terror alert red. His second favorite color is violet, but just because it sounds like violent.
When you open a can of whoop-ass, Jack Bauer jumps out.
When Google can't find something, it asks Jack Bauer for help.
You can lead a horse to water. Jack Bauer can make him drink.
Jack Bauer can get McDonald's breakfast after 10:30.
When the boogie man goes to sleep, he checks his closet for Jack Bauer.
Every mathematical inequality officially ends with "< Jack Bauer".
In 96 hours, Jack Bauer has killed 93 people and saved the world 4 times. What the hell have you done with your life?
Jesus died and rose from the dead in 3 days. It took Jack Bauer less than an hour. And he's done it twice.
Jack Bauer killed so many terrorists that at one point, the #5 CIA Most Wanted fugitive was an 18-year-old teenager in Malaysia who downloaded the movie Dodgeball.
In kindergarten, Jack Bauer killed a terrorist for Show and Tell.
What color is Jack Bauer's blood? Trick question. Jack Bauer does not bleed.
Guns dont kill people, Jack Bauer kills people.
If Jack and MacGyver were locked in a room together, Jack would make a bomb out of MacGyver and get out.
People with amnesia still remember Jack Bauer.
Sun Tzu once wrote, "If your enemy is weaker, conquer him. If he is stronger, join him. If he is Jack Bauer, you're f***ing dead."
Jack Bauer literally died for his country, and lived to tell about it.
Jack Bauer has been to Mars. That's why there's no life on Mars.
Superman's only weakness is Kryptonite. Jack Bauer laughs at Superman for having a weakness.
When Batman is in trouble, he turns on the Jack Bauer signal.
It took Jack Bauer two minutes to beat a confession out of OJ.
If Jack Bauer was gay, his name would be Chuck Norris.
The bumper sticker on Jesus's car reads, "WWJBD?"
Jack Bauer was conceived by torturing the other sperm until they gave up the location of the egg.
After 7 minutes of interrogation at the hands of Jack Bauer, Tom Cruise admitted that he was gay.
Jack Bauer's family threw him a surprise birthday party when he was a child. Once.
Tuesday, April 7, 2009
The kind of smart that IQ tests miss
ST 8 Apr 2009
By Keith Stanovich
IN 2002, cognitive scientist Daniel Kahneman of Princeton University won the Nobel Prize in Economics for work done with his longtime collaborator Amos Tversky (who died in 1996). Their research had to do with judgment and decision-making - what makes our thoughts and actions rational or irrational. They explored how people make choices and assess probabilities, and uncovered basic errors that are typical in decision-making.
The thinking errors they uncovered are not trivial mistakes in a parlour game. To be rational means to adopt appropriate goals, take the appropriate action given one's goals and beliefs, and hold beliefs that are commensurate with available evidence. It means achieving one's life goals using the best means possible. To violate the thinking rules examined by Kahneman and Tversky thus has the practical consequence that we are less satisfied with our lives than we might be. Research conducted in my own laboratory has indicated that there are systematic individual differences in the judgment and decision-making skills that Kahneman and Tversky studied.
Intelligence tests measure important things, but they do not assess the extent of rational thought. This might not be such a grave omission if intelligence were a strong predictor of rational thinking. But my research group found just the opposite:It is a mild predictor at best, and some rational thinking skills are totally dissociated from intelligence.
Ironically, the Nobel Prize was awarded for studies of cognitive characteristics that are entirely missing from the most well-known mental assessment device in the behavioural sciences: intelligence tests. Scientists and laypeople alike tend to agree that 'good thinking' encompasses sound judgment and decision-making - the type of thinking that helps us achieve our goals. Yet assessments of such good (rational) thinking are nowhere to be found on IQ tests.
Intelligence tests measure important things, but they do not assess the extent of rational thought. This might not be such a grave omission if intelligence were a strong predictor of rational thinking. But my research group found just the opposite: It is a mild predictor at best, and some rational thinking skills are totally dissociated from intelligence.
To an important degree, intelligence tests determine the careers of millions of people. Children are given intelligence tests to determine eligibility for admission to school programmes for the gifted. Corporations and the military depend on assessments that are little more than disguised intelligence tests.
Perhaps some of this attention to intelligence is necessary, but what is not warranted is the tendency to ignore cognitive capacities that are at least equally important: the capacities that sustain rational thought and action.
Critics of intelligence tests have long pointed out that the tests ignore important parts of mental life, mainly non-cognitive domains such as socio-emotional abilities and interpersonal skills. But intelligence tests are also radically incomplete as measures of cognitive functioning, which is evident from the simple fact that many people display a systematic inability to think or behave rationally despite having a more than adequate IQ. For a variety of reasons, we have come to overvalue the kinds of thinking skills that intelligence tests measure and undervalue other important cognitive skills, such as the ability to think rationally.
Psychologists have studied the major classes of thinking errors that make people less than rational. They have studied people's tendencies to show incoherent probability assessments; to be overconfident in knowledge judgments; to ignore the alternative hypothesis; to evaluate evidence with a 'my side' bias; to show inconsistent preferences because of framing effects; to over-weigh short-term rewards at the expense of long-term well-being; to allow decisions to be affected by irrelevant context; and so on.
All of these categories of failure of rational judgment are very imperfectly correlated with intelligence - meaning IQ tests tend not to capture individual differences in rational thought. IQ tests measure mental skills that have been studied for a long time, whereas psychologists have only recently had the tools to measure the tendencies towards rational and irrational thinking. Nevertheless, recent progress in the cognitive science of rational thought suggests that nothing could stop us from constructing an 'RQ' test.
Such a test might prove highly useful. Sub-optimal investment decisions have, for example, been linked to overconfidence in knowledge judgments, the tendency to over-explain chance events, and the tendency to substitute affective valence for thought. Errors in medical and legal decision-making have also been linked to specific irrational thinking tendencies that psychologists have studied.
There are strategies and environmental fixes for the thinking errors that occur in all of these domains. But it is important to realise that these thinking errors are more related to rationality than intelligence. They would be reduced if schools, businesses and government focused on the parts of cognition that intelligence tests miss.
Instead, these institutions still devote far more attention and resources to intelligence than to teaching people how to think in order to reach their goals. It is as if intelligence has become totemic in our culture. But what we should really be pursuing is development of the reasoning strategies that could substantially increase human well-being.
The writer is professor of human development and applied psychology at the University of Toronto.
PROJECT SYNDICATE
By Keith Stanovich
IN 2002, cognitive scientist Daniel Kahneman of Princeton University won the Nobel Prize in Economics for work done with his longtime collaborator Amos Tversky (who died in 1996). Their research had to do with judgment and decision-making - what makes our thoughts and actions rational or irrational. They explored how people make choices and assess probabilities, and uncovered basic errors that are typical in decision-making.
The thinking errors they uncovered are not trivial mistakes in a parlour game. To be rational means to adopt appropriate goals, take the appropriate action given one's goals and beliefs, and hold beliefs that are commensurate with available evidence. It means achieving one's life goals using the best means possible. To violate the thinking rules examined by Kahneman and Tversky thus has the practical consequence that we are less satisfied with our lives than we might be. Research conducted in my own laboratory has indicated that there are systematic individual differences in the judgment and decision-making skills that Kahneman and Tversky studied.
Intelligence tests measure important things, but they do not assess the extent of rational thought. This might not be such a grave omission if intelligence were a strong predictor of rational thinking. But my research group found just the opposite:It is a mild predictor at best, and some rational thinking skills are totally dissociated from intelligence.
Ironically, the Nobel Prize was awarded for studies of cognitive characteristics that are entirely missing from the most well-known mental assessment device in the behavioural sciences: intelligence tests. Scientists and laypeople alike tend to agree that 'good thinking' encompasses sound judgment and decision-making - the type of thinking that helps us achieve our goals. Yet assessments of such good (rational) thinking are nowhere to be found on IQ tests.
Intelligence tests measure important things, but they do not assess the extent of rational thought. This might not be such a grave omission if intelligence were a strong predictor of rational thinking. But my research group found just the opposite: It is a mild predictor at best, and some rational thinking skills are totally dissociated from intelligence.
To an important degree, intelligence tests determine the careers of millions of people. Children are given intelligence tests to determine eligibility for admission to school programmes for the gifted. Corporations and the military depend on assessments that are little more than disguised intelligence tests.
Perhaps some of this attention to intelligence is necessary, but what is not warranted is the tendency to ignore cognitive capacities that are at least equally important: the capacities that sustain rational thought and action.
Critics of intelligence tests have long pointed out that the tests ignore important parts of mental life, mainly non-cognitive domains such as socio-emotional abilities and interpersonal skills. But intelligence tests are also radically incomplete as measures of cognitive functioning, which is evident from the simple fact that many people display a systematic inability to think or behave rationally despite having a more than adequate IQ. For a variety of reasons, we have come to overvalue the kinds of thinking skills that intelligence tests measure and undervalue other important cognitive skills, such as the ability to think rationally.
Psychologists have studied the major classes of thinking errors that make people less than rational. They have studied people's tendencies to show incoherent probability assessments; to be overconfident in knowledge judgments; to ignore the alternative hypothesis; to evaluate evidence with a 'my side' bias; to show inconsistent preferences because of framing effects; to over-weigh short-term rewards at the expense of long-term well-being; to allow decisions to be affected by irrelevant context; and so on.
All of these categories of failure of rational judgment are very imperfectly correlated with intelligence - meaning IQ tests tend not to capture individual differences in rational thought. IQ tests measure mental skills that have been studied for a long time, whereas psychologists have only recently had the tools to measure the tendencies towards rational and irrational thinking. Nevertheless, recent progress in the cognitive science of rational thought suggests that nothing could stop us from constructing an 'RQ' test.
Such a test might prove highly useful. Sub-optimal investment decisions have, for example, been linked to overconfidence in knowledge judgments, the tendency to over-explain chance events, and the tendency to substitute affective valence for thought. Errors in medical and legal decision-making have also been linked to specific irrational thinking tendencies that psychologists have studied.
There are strategies and environmental fixes for the thinking errors that occur in all of these domains. But it is important to realise that these thinking errors are more related to rationality than intelligence. They would be reduced if schools, businesses and government focused on the parts of cognition that intelligence tests miss.
Instead, these institutions still devote far more attention and resources to intelligence than to teaching people how to think in order to reach their goals. It is as if intelligence has become totemic in our culture. But what we should really be pursuing is development of the reasoning strategies that could substantially increase human well-being.
The writer is professor of human development and applied psychology at the University of Toronto.
PROJECT SYNDICATE
Tuesday, March 24, 2009
Can Singapore fail?
By Kishore Mahbubani (Straits Times)
I have just finished writing an article for the Wilson Quarterly, an American journal, on the topic, Can America Fail? The opening paragraph reads as follows: 'In 1981, Singapore's long-ruling People's Action Party was shocked when it suffered its first defeat at the polls in many years, even though the contest was in a single constituency. I asked Dr Goh Keng Swee, one of Singapore's three great founding fathers and the architect of Singapore's economic miracle, why the PAP lost. He replied, 'Kishore, we failed because we did not even conceive of the possibility of failure'.'
The simple truth is that any society can fail. America is vulnerable. So too is Singapore. And as Dr Goh perceived, the only way to prevent failure is to conceive of failure.
The aim of this article is to stimulate Singaporeans into thinking how Singapore might fail. Let me emphasise that I do not believe Singapore is going to fail. But to ensure it does not fail, we must think of how it might fail. Such thinking is absolutely essential as we sail through the biggest economic storm the world has experienced since the Great Depression. I have come to the paradoxical conclusion that Singapore's greatest strengths may also be the source of its greatest vulnerabilities.
One of Singapore's greatest strengths is that it is the world's most globalised nation. The Foreign Policy magazine has a globalisation index. Singapore ranks No.1. There is no doubt that Singapore has succeeded in a spectacular fashion because it has been the best surfer on the tidal wave of globalisation.
But what happens to the Singapore economy if we move from an era of globalisation to an era of de-globalisation? De-globalisation has not arrived. However, there are early warning signals of its possibility.
Earlier this month, The Washington Post painted a gloomy picture of the global recession, noting that many countries were now entering a period of de-globalisation with plummeting world trade. It noted that Singapore's predicament was that it faced an 'ebbing of a golden age of trade, innovation, wealth accumulation and poverty reduction through globalisation'.
Against this backdrop, we should heed Dr Goh's advice and conceive of the possibility of globalisation failing. And if it fails, how does Singapore avoid failure?
Another of Singapore's big strengths is good governance. In May this year, Singapore will celebrate its 50th anniversary of good governance, since self-government in 1959. As an amateur student of politics who has travelled around the world, I cannot think of any other developing nation that has enjoyed 50 years of good governance.
Singapore is unique; good governance is not the historical norm. Every society in the world, without exception, has experienced bad governance. Inevitably, Singapore will experience it some day. Can Singaporean society cope with bad governance? Can we ever conceive of the possibility of Singapore experiencing bad governance?
The best way of preparing for bad governance is for the population to rely less on the government to provide solutions and to rely more on individual citizens to find solutions. But the unfortunate corollary of good governance is that Singaporeans have come to rely on the Government to solve their problems.
Let me provide one small but significant example: Singapore is one of the cleanest cities in the world. But this happens because we employ an army of cleaners. Few Singaporeans take personal responsibility to remove litter. I see this most vividly when I go running in the East Coast Park after a weekend. Mountains of rubbish are left thoughtlessly everywhere. One way to create a greater sense of responsibility is for each citizen to take individual responsibility for litter. Each citizen should pick up at least one piece of litter each day. If we cannot even pick up our own litter, can we prepare ourselves for the day when more individual responsibility would be needed?
A third strategic strength of Singapore is our ethnic harmony. Indeed, it is remarkable what Singapore has achieved in this area. One of my favourite comparisons is the following: The British Empire left behind several small multiracial colonies in all corners of the world, including Guyana, Cyprus, Sri Lanka, Singapore and Fiji. Only one has experienced continuous ethnic harmony since independence: Singapore. Can we fail in this area?
The older generation of Singaporeans has fully absorbed the virtues of ethnic harmony. I experienced that when I accompanied then Prime Minister Goh Chok Tong on an official visit to Malaysia. We stayed in the official residence, Carcosa. One day, the Malaysian butler asked Mr Goh what he would like for breakfast. He expected Mr Goh to choose either a Chinese or English breakfast. To his amazement, Mr Goh said: 'Get me thosai from Brickfields.'
Mr Goh's generation of English-educated Singaporeans has a near total blindness to ethnic differences. I am not sure that the younger generation of Singaporeans can match this. Some of the anecdotal evidence I have heard suggests that the younger generation of Singaporeans are more aware of their ethnic differences, partly because of the segregation caused by our second-language policies. Modern sociological methods of research can tell us whether ethnic harmony is growing or diminishing over time in Singapore. This is one area we need to monitor carefully, if we want to look for possible causes of Singapore failing.
I have suggested only three possible ways how Singapore might fail. The likelihood is that if Singapore fails, the failure will be due to a completely unanticipated cause. Ironically, Singapore is a legend in military history because it provides a textbook example of how things can go badly wrong when you don't think of alternative ways of failing. The British expected a Japanese naval attack on Singapore from the south. Instead, the Japanese came on bicycles from the north. The British discovered too late that their big guns were pointed in the wrong direction. Winston Churchill and other British leaders were shocked when the supposedly invincible fortress of Singapore fell to the Japanese in February 1942. Having fallen once as a result of a complete surprise, can we fail again?
Pray let us not give any future historian occasion to say of Singapore: 'They failed because they did not even conceive of the possibility of failure.'
The writer is Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. Think-Tank is a weekly column rotated among eight leading figures in Singapore's tertiary and research institutions.
I have just finished writing an article for the Wilson Quarterly, an American journal, on the topic, Can America Fail? The opening paragraph reads as follows: 'In 1981, Singapore's long-ruling People's Action Party was shocked when it suffered its first defeat at the polls in many years, even though the contest was in a single constituency. I asked Dr Goh Keng Swee, one of Singapore's three great founding fathers and the architect of Singapore's economic miracle, why the PAP lost. He replied, 'Kishore, we failed because we did not even conceive of the possibility of failure'.'
The simple truth is that any society can fail. America is vulnerable. So too is Singapore. And as Dr Goh perceived, the only way to prevent failure is to conceive of failure.
The aim of this article is to stimulate Singaporeans into thinking how Singapore might fail. Let me emphasise that I do not believe Singapore is going to fail. But to ensure it does not fail, we must think of how it might fail. Such thinking is absolutely essential as we sail through the biggest economic storm the world has experienced since the Great Depression. I have come to the paradoxical conclusion that Singapore's greatest strengths may also be the source of its greatest vulnerabilities.
One of Singapore's greatest strengths is that it is the world's most globalised nation. The Foreign Policy magazine has a globalisation index. Singapore ranks No.1. There is no doubt that Singapore has succeeded in a spectacular fashion because it has been the best surfer on the tidal wave of globalisation.
But what happens to the Singapore economy if we move from an era of globalisation to an era of de-globalisation? De-globalisation has not arrived. However, there are early warning signals of its possibility.
Earlier this month, The Washington Post painted a gloomy picture of the global recession, noting that many countries were now entering a period of de-globalisation with plummeting world trade. It noted that Singapore's predicament was that it faced an 'ebbing of a golden age of trade, innovation, wealth accumulation and poverty reduction through globalisation'.
Against this backdrop, we should heed Dr Goh's advice and conceive of the possibility of globalisation failing. And if it fails, how does Singapore avoid failure?
Another of Singapore's big strengths is good governance. In May this year, Singapore will celebrate its 50th anniversary of good governance, since self-government in 1959. As an amateur student of politics who has travelled around the world, I cannot think of any other developing nation that has enjoyed 50 years of good governance.
Singapore is unique; good governance is not the historical norm. Every society in the world, without exception, has experienced bad governance. Inevitably, Singapore will experience it some day. Can Singaporean society cope with bad governance? Can we ever conceive of the possibility of Singapore experiencing bad governance?
The best way of preparing for bad governance is for the population to rely less on the government to provide solutions and to rely more on individual citizens to find solutions. But the unfortunate corollary of good governance is that Singaporeans have come to rely on the Government to solve their problems.
Let me provide one small but significant example: Singapore is one of the cleanest cities in the world. But this happens because we employ an army of cleaners. Few Singaporeans take personal responsibility to remove litter. I see this most vividly when I go running in the East Coast Park after a weekend. Mountains of rubbish are left thoughtlessly everywhere. One way to create a greater sense of responsibility is for each citizen to take individual responsibility for litter. Each citizen should pick up at least one piece of litter each day. If we cannot even pick up our own litter, can we prepare ourselves for the day when more individual responsibility would be needed?
A third strategic strength of Singapore is our ethnic harmony. Indeed, it is remarkable what Singapore has achieved in this area. One of my favourite comparisons is the following: The British Empire left behind several small multiracial colonies in all corners of the world, including Guyana, Cyprus, Sri Lanka, Singapore and Fiji. Only one has experienced continuous ethnic harmony since independence: Singapore. Can we fail in this area?
The older generation of Singaporeans has fully absorbed the virtues of ethnic harmony. I experienced that when I accompanied then Prime Minister Goh Chok Tong on an official visit to Malaysia. We stayed in the official residence, Carcosa. One day, the Malaysian butler asked Mr Goh what he would like for breakfast. He expected Mr Goh to choose either a Chinese or English breakfast. To his amazement, Mr Goh said: 'Get me thosai from Brickfields.'
Mr Goh's generation of English-educated Singaporeans has a near total blindness to ethnic differences. I am not sure that the younger generation of Singaporeans can match this. Some of the anecdotal evidence I have heard suggests that the younger generation of Singaporeans are more aware of their ethnic differences, partly because of the segregation caused by our second-language policies. Modern sociological methods of research can tell us whether ethnic harmony is growing or diminishing over time in Singapore. This is one area we need to monitor carefully, if we want to look for possible causes of Singapore failing.
I have suggested only three possible ways how Singapore might fail. The likelihood is that if Singapore fails, the failure will be due to a completely unanticipated cause. Ironically, Singapore is a legend in military history because it provides a textbook example of how things can go badly wrong when you don't think of alternative ways of failing. The British expected a Japanese naval attack on Singapore from the south. Instead, the Japanese came on bicycles from the north. The British discovered too late that their big guns were pointed in the wrong direction. Winston Churchill and other British leaders were shocked when the supposedly invincible fortress of Singapore fell to the Japanese in February 1942. Having fallen once as a result of a complete surprise, can we fail again?
Pray let us not give any future historian occasion to say of Singapore: 'They failed because they did not even conceive of the possibility of failure.'
The writer is Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. Think-Tank is a weekly column rotated among eight leading figures in Singapore's tertiary and research institutions.
Sunday, March 22, 2009
Phone scams are big business in Taiwan
March 23, 2009 (Straits Times)
Victims lost $551m last year; survey shows almost one in 10 conned WHEN Taichung city mayor Jason Hu recently called up a lucky draw winner to deliver the good news, the voice on the other end of the line was filled with doubt, not excitement.
Never trust the caller, as conventional wisdom goes in Taiwan, where almost everyone has a story to share about scam calls.
In my first six months in Taiwan, I received at least three such calls.
In some cases, the fraudster would even pose as the fraud-buster.
Just some weeks ago, I picked up a call from someone who identified herself as a representative of the police's anti-scam hotline. I was told I had to file a report because my phone line had been tapped for use by a fraud syndicate.
She gave me the case number and even offered to transfer my call to the police department. But I declined because it sounded fishy.
It was only later that I discovered it was a common tactic used by tricksters exploiting the public's lack of familiarity with government procedures.
If I had followed the woman's advice, I could have been coaxed into volunteering my personal data, including my bank account details.
According to police data, phone scam cases have gone up by about 6 per cent to 42,910 last year, from 40,348 in 2007. Victims lost some NT$12.3 billion (S$551 million) last year.
But some believe the official figures may be just the tip of the iceberg, as many cases go unreported. Almost one in 10 in Taiwan has fallen prey to phone scams, according to a survey of about 2,000 people by the National Chung Cheng University.
'Some people don't report to the police as they feel that it's a loss of face. Or they don't think that the culprits would be caught anyway,' said Professor Cheng Jui-lung, a criminologist from the university.
Two weeks ago, a man in his 60s from the southern Kaohsiung county was crowned the most easily conned man in Taiwan by the media, after he was cheated of some NT$3.5 million over 11 times in two years. He repeatedly fell for it when callers claiming to be from the Hong Kong lottery or turf club told him he had won a pot of money. The catch was that he must first transfer over 'guarantee fees' of NT$200 to NT$476,000 - money which he never saw again.
Last year, he received another call claiming that the criminals had been nabbed but he was asked to pay NT$220,000 in 'security fees' first. And he was duped yet again.
The elderly are not the only vulnerable targets. Those in their 20s and 30s also make up a large percentage of scam victims, police statistics showed. This group tends to shop online, and their personal data could be easily stolen or bought illegally by fraud syndicates, said Associate Professor Tsai Tyan-muh, who teaches crime studies at the Central Police University.
Experts say these scams usually exploit one's sense of fear or greed. Typically, callers hired by such syndicates would pretend to be from the bank or the district prosecutors' office, warning potential victims about unpaid bills or the risk of losing money in their bank accounts.
They would then instruct the unsuspecting to transfer their money to a 'safer' account.
Another common ruse is to tell would-be victims that they have won a lottery but have to pay a fee first before they can claim their winnings.
But the phone scam syndicates follow a largely similar modus operandi: Call centres are started in Taiwan or China, calls are made randomly. The unsuspecting are asked to transfer money and the loot is picked up by runners.
Prof Tsai traced the rise in such crimes to 2000, when mobile phones and automated teller machines became increasingly common. Traditionally, such fraud cases occurred face to face, he noted. 'Now, a mobile phone is all it takes. It's a revolution of criminal methods,' he said.
Indeed, some Taiwanese syndicates are even targeting victims beyond its shores. Last November, five Taiwanese were caught for allegedly cheating eight Singaporeans of nearly S$85,000 with a set-up in China. Chinese callers hired by the Taiwanese group had snared the victims with a lottery scam.
Analysts said the lack of cross-strait cooperation against crime has made it hard for the police to crack down on scam syndicates, many of which have Taiwanese masterminds but are based in China. 'Because cross-strait interactions are muddy and unclear, we can't work closely together to fight crime. There's space for criminals to exploit,' said Prof Tsai. The worry is that such scams could exact a larger social cost. 'If such scams become more common, it will lower the degree of trust between people,' said Ms Chen Man-li, president of the National Alliance of Taiwan's Women's Associations. 'If I don't know you, or even if I know you, I may be less willing to help when you call.'
Victims lost $551m last year; survey shows almost one in 10 conned WHEN Taichung city mayor Jason Hu recently called up a lucky draw winner to deliver the good news, the voice on the other end of the line was filled with doubt, not excitement.
Never trust the caller, as conventional wisdom goes in Taiwan, where almost everyone has a story to share about scam calls.
In my first six months in Taiwan, I received at least three such calls.
In some cases, the fraudster would even pose as the fraud-buster.
Just some weeks ago, I picked up a call from someone who identified herself as a representative of the police's anti-scam hotline. I was told I had to file a report because my phone line had been tapped for use by a fraud syndicate.
She gave me the case number and even offered to transfer my call to the police department. But I declined because it sounded fishy.
It was only later that I discovered it was a common tactic used by tricksters exploiting the public's lack of familiarity with government procedures.
If I had followed the woman's advice, I could have been coaxed into volunteering my personal data, including my bank account details.
According to police data, phone scam cases have gone up by about 6 per cent to 42,910 last year, from 40,348 in 2007. Victims lost some NT$12.3 billion (S$551 million) last year.
But some believe the official figures may be just the tip of the iceberg, as many cases go unreported. Almost one in 10 in Taiwan has fallen prey to phone scams, according to a survey of about 2,000 people by the National Chung Cheng University.
'Some people don't report to the police as they feel that it's a loss of face. Or they don't think that the culprits would be caught anyway,' said Professor Cheng Jui-lung, a criminologist from the university.
Two weeks ago, a man in his 60s from the southern Kaohsiung county was crowned the most easily conned man in Taiwan by the media, after he was cheated of some NT$3.5 million over 11 times in two years. He repeatedly fell for it when callers claiming to be from the Hong Kong lottery or turf club told him he had won a pot of money. The catch was that he must first transfer over 'guarantee fees' of NT$200 to NT$476,000 - money which he never saw again.
Last year, he received another call claiming that the criminals had been nabbed but he was asked to pay NT$220,000 in 'security fees' first. And he was duped yet again.
The elderly are not the only vulnerable targets. Those in their 20s and 30s also make up a large percentage of scam victims, police statistics showed. This group tends to shop online, and their personal data could be easily stolen or bought illegally by fraud syndicates, said Associate Professor Tsai Tyan-muh, who teaches crime studies at the Central Police University.
Experts say these scams usually exploit one's sense of fear or greed. Typically, callers hired by such syndicates would pretend to be from the bank or the district prosecutors' office, warning potential victims about unpaid bills or the risk of losing money in their bank accounts.
They would then instruct the unsuspecting to transfer their money to a 'safer' account.
Another common ruse is to tell would-be victims that they have won a lottery but have to pay a fee first before they can claim their winnings.
But the phone scam syndicates follow a largely similar modus operandi: Call centres are started in Taiwan or China, calls are made randomly. The unsuspecting are asked to transfer money and the loot is picked up by runners.
Prof Tsai traced the rise in such crimes to 2000, when mobile phones and automated teller machines became increasingly common. Traditionally, such fraud cases occurred face to face, he noted. 'Now, a mobile phone is all it takes. It's a revolution of criminal methods,' he said.
Indeed, some Taiwanese syndicates are even targeting victims beyond its shores. Last November, five Taiwanese were caught for allegedly cheating eight Singaporeans of nearly S$85,000 with a set-up in China. Chinese callers hired by the Taiwanese group had snared the victims with a lottery scam.
Analysts said the lack of cross-strait cooperation against crime has made it hard for the police to crack down on scam syndicates, many of which have Taiwanese masterminds but are based in China. 'Because cross-strait interactions are muddy and unclear, we can't work closely together to fight crime. There's space for criminals to exploit,' said Prof Tsai. The worry is that such scams could exact a larger social cost. 'If such scams become more common, it will lower the degree of trust between people,' said Ms Chen Man-li, president of the National Alliance of Taiwan's Women's Associations. 'If I don't know you, or even if I know you, I may be less willing to help when you call.'
Wednesday, March 18, 2009
Jay Leno's economic jokes
1. The US has made a new weapon that destroys people but
keeps the building standing,. Its called the stock market.
2. Do you have any idea how cheap stocks are? Wall Street
is now being called Wal Mart Street.
3. The difference between a pigeon and a London investmentbanker. The pigeon can still make a deposit on a BMW
4. What's the difference between a guy who lost everything inLas Vegas and an investment banker? A tie!
5. The problem with investment bank balance sheet is thaton the left side nothing's right and on the right side nothing's left.
6. I want to warn people from Nigeria who might be watchingour show, if you get any emails from Washington asking for money, it's a scam. Don't fall for it.
7. Bush was asked about the credit crunch. He said it was his favourite candy bar.
8. The rescue bill was about 450 pages. President Bush's copy is even thicker. They had to include pictures.
9. President Bush's response was to meet some small businessowners in San Antonio last week. The small business ownersare General Motors, General Electric and Century 21.
10. What worries me most about the credit crunch is that ifone of my cheques is returned stamped 'insufficient funds'. Iwon't know whether that refers to mine or the bank's.
keeps the building standing,. Its called the stock market.
2. Do you have any idea how cheap stocks are? Wall Street
is now being called Wal Mart Street.
3. The difference between a pigeon and a London investmentbanker. The pigeon can still make a deposit on a BMW
4. What's the difference between a guy who lost everything inLas Vegas and an investment banker? A tie!
5. The problem with investment bank balance sheet is thaton the left side nothing's right and on the right side nothing's left.
6. I want to warn people from Nigeria who might be watchingour show, if you get any emails from Washington asking for money, it's a scam. Don't fall for it.
7. Bush was asked about the credit crunch. He said it was his favourite candy bar.
8. The rescue bill was about 450 pages. President Bush's copy is even thicker. They had to include pictures.
9. President Bush's response was to meet some small businessowners in San Antonio last week. The small business ownersare General Motors, General Electric and Century 21.
10. What worries me most about the credit crunch is that ifone of my cheques is returned stamped 'insufficient funds'. Iwon't know whether that refers to mine or the bank's.
Monday, March 16, 2009
Solar Stocks, Energy Stocks - You Can Make Money from Al Gore's Big Lie
You Can Make Money from Al Gore's Big Lie
By Porter Stansberry
January 17, 2009
This past week, I encouraged my Put Strategy Report subscribers to establish a short position in solar stocks.
Solar stocks are popular right now... so they have wildly inflated share prices. And I know the entire solar industry is a big con – it is impossible to efficiently use solar power and it always will be, thanks to the Second Law of Thermodynamics. Governments have tried to break the laws of physics because solar energy is popular, but all the subsidies in the world will never make solar energy viable as a reliable and efficient source of energy. That means solar stocks are ultimately doomed.
Meanwhile, even in the short term, so much money has been spent building solar-panel manufacturing facilities that the price of solar panels is falling below their cost of production – which will mean a terrible year for the makers of solar panels, especially the largest companies.
I'm facing a lot of skeptics who believe what Al Gore has told them about solar energy. But once you know the only real buyers of solar panels are governments (through subsidies and large direct purchases), you should immediately suspect the promise of solar power isn't what it's cracked up to be.
If everyone could power their homes by putting solar panels on the roof, everyone would want to do it. We wouldn't need tax incentives. Of course, that's not how it works. Instead, the cost to install and maintain a solar system far exceeds the economic value of what it provides. And the reason is basic physics, specifically the Second Law of Thermodynamics.
This is nature's version of "there's no such thing as a free lunch." The Second Law says energy moves from more useful forms to less useful forms, from more concentrated and powerful forms to more disparate and less powerful forms. In short, machines that promise to bring us the power of the sun by harnessing its rays won't work because by the time the sun's rays reach the Earth, not much useful energy is left. That energy won't return to a more concentrated form without the input of just as much additional power. You can't simply "reconcentrate" sunlight in any useful way. The concept breaks the fundamental laws of nature.
I'm not the only person who has doubted the functional utility of solar power. Another skeptic is Warren Meyer, who frequently blogs about free market economics, climate nonsense, and solar power, among other topics. Meyer is a Princeton and Harvard Business School graduate, but even those institutions didn't ruin his brain, which tells me he's a very smart guy indeed.
Al Gore has claimed, repeatedly, that if we were to build a 90-mile by 90-mile solar-panel facility in the Southwest desert, we would have enough electricity to power the entire United States. The claim is fantastic. If only we cared enough about the environment to build enough solar panels, then the world would be saved and power would be free! Al Gore is a masterful politician, which is to say he is a complete liar.
Meyer, who worked as an engineer for Exxon and an analyst with McKinsey, decided to run the actual numbers.
I assumed a third of the 8,100 square miles would be dead space between the panels, roads, transformers, access paths, etc. I assumed you put the installation in the best solar sites in the southwest, which yield on average about 6 peak-sun-hour-equivalents a day. I assumed a 20% loss in conversions and transformers. So 8,100 sq miles x 2/3 x 200 watt/12sq ft x 6 hours x 365 days x 80% (with necessary unit conversions thrown in) yields 4.08 billion Megawatt-Hours of electricity, which is about exactly our current US generating capacity. (Way to go! Al got a number right!).
But there's a significant catch. (Remember the Second Law of Thermodynamics...)
This does not cover elimination of fossil fuels in the transportation sector. And it does not address the problem of how you store this power at night, which of course is a catastrophic problem for the idea... Using the assumptions above and assuming that installation costs (with land acquisition, transformers, inverters, roads, mounting, installation, etc) is as much again as the panel costs themselves, the total installation would cost just under $21 trillion dollars. This is orders of magnitude [more than 10 times] more than a nuclear program of the same size would cost. And presupposes the environmentalists would let you cover 5 million acres of desert with metal and silicon.
Solar power isn't the answer to our country's energy needs – and it never will be.
While I don't know (and can't know) how long the current solar mania will last, I am convinced with oil selling for less than $50 a barrel again and with the economics of solar energy more and more apparent, we're near at least a short-term peak in the popularity of solar stocks. Most will fall 50%-75% in the next year or two.
How do you choose which solar stocks to bet against? Just like you would any other sector. Look for the most popular, high-profile players. Look for high price-to-book or price-to-sales ratios. But do it soon... A bet here is a bet on one of the surest trends in 2009.
Good investing,
Porter Stansberry
Source: http://www.dailywealth.com/archive/2009/jan/2009_jan_17.asp
Thursday, March 12, 2009
Quotes
"I have no expectation of making a hit every time I come to bat. What I seek is the highest possible batting average."
-- Franklin D. Roosevelt
"When you are green, you're growing. When you're ripe, you rot."
-- Ray Kroc
"Think you can, think you can't; either way you'll be right."
-- Henry Ford
"When the going gets tough, the tough gets growing."
"He is no fool who gives what he cannot keep to gain what he cannot lose."
-- Jim Elliot
"It's impossible, that's for sure. So let's start working."
-- Philippe Petit
“If you don’t have the best people, you can’t be the best firm. But if you do have the best people and you train them rigorously, organize them effectively, and motivate them to do their best work consistently, you will inevitably become the best firm.”
-- John Whitehead, co-head of Goldman Sachs from 1976 to 1984
"...we failed because we did not even conceive of the possibility of failure."
Dr. Goh Keng Swee
-- Franklin D. Roosevelt
"When you are green, you're growing. When you're ripe, you rot."
-- Ray Kroc
"Think you can, think you can't; either way you'll be right."
-- Henry Ford
"When the going gets tough, the tough gets growing."
"He is no fool who gives what he cannot keep to gain what he cannot lose."
-- Jim Elliot
"It's impossible, that's for sure. So let's start working."
-- Philippe Petit
“If you don’t have the best people, you can’t be the best firm. But if you do have the best people and you train them rigorously, organize them effectively, and motivate them to do their best work consistently, you will inevitably become the best firm.”
-- John Whitehead, co-head of Goldman Sachs from 1976 to 1984
"...we failed because we did not even conceive of the possibility of failure."
Dr. Goh Keng Swee
Desiderata - Max Ehrmann
Go placidly amid the noise and the haste,
and remember what peace there may be in silence.
As far as possible, without surrender,
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even to the dull and the ignorant;
they too have their story.
Avoid loud and aggressive persons;
they are vexatious to the spirit.
If you compare yourself with others,
you may become vain or bitter,
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs,
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals,
and everywhere life is full of heroism.
Be yourself. Especially do not feign affection.
Neither be cynical about love,
for in the face of all aridity and disenchantment,
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be.
And whatever your labors and aspirations,
in the noisy confusion of life,
keep peace in your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful. Strive to be happy.
and remember what peace there may be in silence.
As far as possible, without surrender,
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even to the dull and the ignorant;
they too have their story.
Avoid loud and aggressive persons;
they are vexatious to the spirit.
If you compare yourself with others,
you may become vain or bitter,
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs,
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals,
and everywhere life is full of heroism.
Be yourself. Especially do not feign affection.
Neither be cynical about love,
for in the face of all aridity and disenchantment,
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be.
And whatever your labors and aspirations,
in the noisy confusion of life,
keep peace in your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful. Strive to be happy.
If - Rudyard Kipling
IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'
If you can talk with crowds and keep your virtue,
' Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'
If you can talk with crowds and keep your virtue,
' Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!
Love's Philosophy - Percy Bysshe Shelley
The fountains mingle with the river
And the rivers with the ocean,
The winds of Heaven mix for ever
With a sweet emotion;
Nothing in the world is single,
All things by a law divine
In one spirit meet and mingle -
Why not I with thine?
See the mountains kiss high Heaven
And the waves clasp one another;
No sister-flower would be forgiven
If it disdained its brother;
And the sunlight clasps the earth,
And the moonbeams kiss the sea -
What are all these kissings worth
If thou kiss not me?
And the rivers with the ocean,
The winds of Heaven mix for ever
With a sweet emotion;
Nothing in the world is single,
All things by a law divine
In one spirit meet and mingle -
Why not I with thine?
See the mountains kiss high Heaven
And the waves clasp one another;
No sister-flower would be forgiven
If it disdained its brother;
And the sunlight clasps the earth,
And the moonbeams kiss the sea -
What are all these kissings worth
If thou kiss not me?
The Road Not Taken - Robert Frost
The Road Not Taken
TWO roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
Then took the other, as just as fair,
And having perhaps the better claim
Because it was grassy and wanted wear;
Though as for that, the passing there
Had worn them really about the same,
And both that morning equally lay
In leaves no step had trodden black.
Oh, I marked the first for another day!
Yet knowing how way leads on to way
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I,
I took the one less traveled by,
And that has made all the difference.
TWO roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
Then took the other, as just as fair,
And having perhaps the better claim
Because it was grassy and wanted wear;
Though as for that, the passing there
Had worn them really about the same,
And both that morning equally lay
In leaves no step had trodden black.
Oh, I marked the first for another day!
Yet knowing how way leads on to way
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I,
I took the one less traveled by,
And that has made all the difference.
How To Do What You Love - Paul Graham
How To Do What You Love - Paul Graham
January 2006
To do something well you have to like it. That idea is not exactly novel. We've got it down to four words: "Do what you love." But it's not enough just to tell people that. Doing what you love is complicated.
The very idea is foreign to what most of us learn as kids. When I was a kid, it seemed as if work and fun were opposites by definition. Life had two states: some of the time adults were making you do things, and that was called work; the rest of the time you could do what you wanted, and that was called playing. Occasionally the things adults made you do were fun, just as, occasionally, playing wasn't—for example, if you fell and hurt yourself. But except for these few anomalous cases, work was pretty much defined as not-fun.
And it did not seem to be an accident. School, it was implied, was tedious because it was preparation for grownup work.
The world then was divided into two groups, grownups and kids. Grownups, like some kind of cursed race, had to work. Kids didn't, but they did have to go to school, which was a dilute version of work meant to prepare us for the real thing. Much as we disliked school, the grownups all agreed that grownup work was worse, and that we had it easy.
Teachers in particular all seemed to believe implicitly that work was not fun. Which is not surprising: work wasn't fun for most of them. Why did we have to memorize state capitals instead of playing dodgeball? For the same reason they had to watch over a bunch of kids instead of lying on a beach. You couldn't just do what you wanted.
I'm not saying we should let little kids do whatever they want. They may have to be made to work on certain things. But if we make kids work on dull stuff, it might be wise to tell them that tediousness is not the defining quality of work, and indeed that the reason they have to work on dull stuff now is so they can work on more interesting stuff later. [1]
Once, when I was about 9 or 10, my father told me I could be whatever I wanted when I grew up, so long as I enjoyed it. I remember that precisely because it seemed so anomalous. It was like being told to use dry water. Whatever I thought he meant, I didn't think he meant work could literally be fun—fun like playing. It took me years to grasp that.
Jobs
By high school, the prospect of an actual job was on the horizon. Adults would sometimes come to speak to us about their work, or we would go to see them at work. It was always understood that they enjoyed what they did. In retrospect I think one may have: the private jet pilot. But I don't think the bank manager really did.
The main reason they all acted as if they enjoyed their work was presumably the upper-middle class convention that you're supposed to. It would not merely be bad for your career to say that you despised your job, but a social faux-pas.
Why is it conventional to pretend to like what you do? The first sentence of this essay explains that. If you have to like something to do it well, then the most successful people will all like what they do. That's where the upper-middle class tradition comes from. Just as houses all over America are full of chairs that are, without the owners even knowing it, nth-degree imitations of chairs designed 250 years ago for French kings, conventional attitudes about work are, without the owners even knowing it, nth-degree imitations of the attitudes of people who've done great things.
What a recipe for alienation. By the time they reach an age to think about what they'd like to do, most kids have been thoroughly misled about the idea of loving one's work. School has trained them to regard work as an unpleasant duty. Having a job is said to be even more onerous than schoolwork. And yet all the adults claim to like what they do. You can't blame kids for thinking "I am not like these people; I am not suited to this world."
Actually they've been told three lies: the stuff they've been taught to regard as work in school is not real work; grownup work is not (necessarily) worse than schoolwork; and many of the adults around them are lying when they say they like what they do.
The most dangerous liars can be the kids' own parents. If you take a boring job to give your family a high standard of living, as so many people do, you risk infecting your kids with the idea that work is boring. [2] Maybe it would be better for kids in this one case if parents were not so unselfish. A parent who set an example of loving their work might help their kids more than an expensive house. [3]
It was not till I was in college that the idea of work finally broke free from the idea of making a living. Then the important question became not how to make money, but what to work on. Ideally these coincided, but some spectacular boundary cases (like Einstein in the patent office) proved they weren't identical.
The definition of work was now to make some original contribution to the world, and in the process not to starve. But after the habit of so many years my idea of work still included a large component of pain. Work still seemed to require discipline, because only hard problems yielded grand results, and hard problems couldn't literally be fun. Surely one had to force oneself to work on them.
If you think something's supposed to hurt, you're less likely to notice if you're doing it wrong. That about sums up my experience of graduate school.
Bounds
How much are you supposed to like what you do? Unless you know that, you don't know when to stop searching. And if, like most people, you underestimate it, you'll tend to stop searching too early. You'll end up doing something chosen for you by your parents, or the desire to make money, or prestige—or sheer inertia.
Here's an upper bound: Do what you love doesn't mean, do what you would like to do most this second. Even Einstein probably had moments when he wanted to have a cup of coffee, but told himself he ought to finish what he was working on first.
It used to perplex me when I read about people who liked what they did so much that there was nothing they'd rather do. There didn't seem to be any sort of work I liked that much. If I had a choice of (a) spending the next hour working on something or (b) be teleported to Rome and spend the next hour wandering about, was there any sort of work I'd prefer? Honestly, no.
But the fact is, almost anyone would rather, at any given moment, float about in the Carribbean, or have sex, or eat some delicious food, than work on hard problems. The rule about doing what you love assumes a certain length of time. It doesn't mean, do what will make you happiest this second, but what will make you happiest over some longer period, like a week or a month.
Unproductive pleasures pall eventually. After a while you get tired of lying on the beach. If you want to stay happy, you have to do something.
As a lower bound, you have to like your work more than any unproductive pleasure. You have to like what you do enough that the concept of "spare time" seems mistaken. Which is not to say you have to spend all your time working. You can only work so much before you get tired and start to screw up. Then you want to do something else—even something mindless. But you don't regard this time as the prize and the time you spend working as the pain you endure to earn it.
I put the lower bound there for practical reasons. If your work is not your favorite thing to do, you'll have terrible problems with procrastination. You'll have to force yourself to work, and when you resort to that the results are distinctly inferior.
To be happy I think you have to be doing something you not only enjoy, but admire. You have to be able to say, at the end, wow, that's pretty cool. This doesn't mean you have to make something. If you learn how to hang glide, or to speak a foreign language fluently, that will be enough to make you say, for a while at least, wow, that's pretty cool. What there has to be is a test.
So one thing that falls just short of the standard, I think, is reading books. Except for some books in math and the hard sciences, there's no test of how well you've read a book, and that's why merely reading books doesn't quite feel like work. You have to do something with what you've read to feel productive.
I think the best test is one Gino Lee taught me: to try to do things that would make your friends say wow. But it probably wouldn't start to work properly till about age 22, because most people haven't had a big enough sample to pick friends from before then.
Sirens
What you should not do, I think, is worry about the opinion of anyone beyond your friends. You shouldn't worry about prestige. Prestige is the opinion of the rest of the world. When you can ask the opinions of people whose judgement you respect, what does it add to consider the opinions of people you don't even know? [4]
This is easy advice to give. It's hard to follow, especially when you're young. [5] Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. It causes you to work not on what you like, but what you'd like to like.
That's what leads people to try to write novels, for example. They like reading novels. They notice that people who write them win Nobel prizes. What could be more wonderful, they think, than to be a novelist? But liking the idea of being a novelist is not enough; you have to like the actual work of novel-writing if you're going to be good at it; you have to like making up elaborate lies.
Prestige is just fossilized inspiration. If you do anything well enough, you'll make it prestigious. Plenty of things we now consider prestigious were anything but at first. Jazz comes to mind—though almost any established art form would do. So just do what you like, and let prestige take care of itself.
Prestige is especially dangerous to the ambitious. If you want to make ambitious people waste their time on errands, the way to do it is to bait the hook with prestige. That's the recipe for getting people to give talks, write forewords, serve on committees, be department heads, and so on. It might be a good rule simply to avoid any prestigious task. If it didn't suck, they wouldn't have had to make it prestigious.
Similarly, if you admire two kinds of work equally, but one is more prestigious, you should probably choose the other. Your opinions about what's admirable are always going to be slightly influenced by prestige, so if the two seem equal to you, you probably have more genuine admiration for the less prestigious one.
The other big force leading people astray is money. Money by itself is not that dangerous. When something pays well but is regarded with contempt, like telemarketing, or prostitution, or personal injury litigation, ambitious people aren't tempted by it. That kind of work ends up being done by people who are "just trying to make a living." (Tip: avoid any field whose practitioners say this.) The danger is when money is combined with prestige, as in, say, corporate law, or medicine. A comparatively safe and prosperous career with some automatic baseline prestige is dangerously tempting to someone young, who hasn't thought much about what they really like.
The test of whether people love what they do is whether they'd do it even if they weren't paid for it—even if they had to work at another job to make a living. How many corporate lawyers would do their current work if they had to do it for free, in their spare time, and take day jobs as waiters to support themselves?
This test is especially helpful in deciding between different kinds of academic work, because fields vary greatly in this respect. Most good mathematicians would work on math even if there were no jobs as math professors, whereas in the departments at the other end of the spectrum, the availability of teaching jobs is the driver: people would rather be English professors than work in ad agencies, and publishing papers is the way you compete for such jobs. Math would happen without math departments, but it is the existence of English majors, and therefore jobs teaching them, that calls into being all those thousands of dreary papers about gender and identity in the novels of Conrad. No one does that kind of thing for fun.
The advice of parents will tend to err on the side of money. It seems safe to say there are more undergrads who want to be novelists and whose parents want them to be doctors than who want to be doctors and whose parents want them to be novelists. The kids think their parents are "materialistic." Not necessarily. All parents tend to be more conservative for their kids than they would for themselves, simply because, as parents, they share risks more than rewards. If your eight year old son decides to climb a tall tree, or your teenage daughter decides to date the local bad boy, you won't get a share in the excitement, but if your son falls, or your daughter gets pregnant, you'll have to deal with the consequences.
Discipline
With such powerful forces leading us astray, it's not surprising we find it so hard to discover what we like to work on. Most people are doomed in childhood by accepting the axiom that work = pain. Those who escape this are nearly all lured onto the rocks by prestige or money. How many even discover something they love to work on? A few hundred thousand, perhaps, out of billions.
It's hard to find work you love; it must be, if so few do. So don't underestimate this task. And don't feel bad if you haven't succeeded yet. In fact, if you admit to yourself that you're discontented, you're a step ahead of most people, who are still in denial. If you're surrounded by colleagues who claim to enjoy work that you find contemptible, odds are they're lying to themselves. Not necessarily, but probably.
Although doing great work takes less discipline than people think—because the way to do great work is to find something you like so much that you don't have to force yourself to do it—finding work you love does usually require discipline. Some people are lucky enough to know what they want to do when they're 12, and just glide along as if they were on railroad tracks. But this seems the exception. More often people who do great things have careers with the trajectory of a ping-pong ball. They go to school to study A, drop out and get a job doing B, and then become famous for C after taking it up on the side.
Sometimes jumping from one sort of work to another is a sign of energy, and sometimes it's a sign of laziness. Are you dropping out, or boldly carving a new path? You often can't tell yourself. Plenty of people who will later do great things seem to be disappointments early on, when they're trying to find their niche.
Is there some test you can use to keep yourself honest? One is to try to do a good job at whatever you're doing, even if you don't like it. Then at least you'll know you're not using dissatisfaction as an excuse for being lazy. Perhaps more importantly, you'll get into the habit of doing things well.
Another test you can use is: always produce. For example, if you have a day job you don't take seriously because you plan to be a novelist, are you producing? Are you writing pages of fiction, however bad? As long as you're producing, you'll know you're not merely using the hazy vision of the grand novel you plan to write one day as an opiate. The view of it will be obstructed by the all too palpably flawed one you're actually writing.
"Always produce" is also a heuristic for finding the work you love. If you subject yourself to that constraint, it will automatically push you away from things you think you're supposed to work on, toward things you actually like. "Always produce" will discover your life's work the way water, with the aid of gravity, finds the hole in your roof.
Of course, figuring out what you like to work on doesn't mean you get to work on it. That's a separate question. And if you're ambitious you have to keep them separate: you have to make a conscious effort to keep your ideas about what you want from being contaminated by what seems possible. [6]
It's painful to keep them apart, because it's painful to observe the gap between them. So most people pre-emptively lower their expectations. For example, if you asked random people on the street if they'd like to be able to draw like Leonardo, you'd find most would say something like "Oh, I can't draw." This is more a statement of intention than fact; it means, I'm not going to try. Because the fact is, if you took a random person off the street and somehow got them to work as hard as they possibly could at drawing for the next twenty years, they'd get surprisingly far. But it would require a great moral effort; it would mean staring failure in the eye every day for years. And so to protect themselves people say "I can't."
Another related line you often hear is that not everyone can do work they love—that someone has to do the unpleasant jobs. Really? How do you make them? In the US the only mechanism for forcing people to do unpleasant jobs is the draft, and that hasn't been invoked for over 30 years. All we can do is encourage people to do unpleasant work, with money and prestige.
If there's something people still won't do, it seems as if society just has to make do without. That's what happened with domestic servants. For millennia that was the canonical example of a job "someone had to do." And yet in the mid twentieth century servants practically disappeared in rich countries, and the rich have just had to do without.
So while there may be some things someone has to do, there's a good chance anyone saying that about any particular job is mistaken. Most unpleasant jobs would either get automated or go undone if no one were willing to do them.
Two Routes
There's another sense of "not everyone can do work they love" that's all too true, however. One has to make a living, and it's hard to get paid for doing work you love. There are two routes to that destination:
The organic route: as you become more eminent, gradually to increase the parts of your job that you like at the expense of those you don't.The organic route is more common. It happens naturally to anyone who does good work. A young architect has to take whatever work he can get, but if he does well he'll gradually be in a position to pick and choose among projects. The disadvantage of this route is that it's slow and uncertain. Even tenure is not real freedom.
The two-job route: to work at things you don't like to get money to work on things you do.
The two-job route has several variants depending on how long you work for money at a time. At one extreme is the "day job," where you work regular hours at one job to make money, and work on what you love in your spare time. At the other extreme you work at something till you make enough not to have to work for money again.
The two-job route is less common than the organic route, because it requires a deliberate choice. It's also more dangerous. Life tends to get more expensive as you get older, so it's easy to get sucked into working longer than you expected at the money job. Worse still, anything you work on changes you. If you work too long on tedious stuff, it will rot your brain. And the best paying jobs are most dangerous, because they require your full attention.
The advantage of the two-job route is that it lets you jump over obstacles. The landscape of possible jobs isn't flat; there are walls of varying heights between different kinds of work. [7] The trick of maximizing the parts of your job that you like can get you from architecture to product design, but not, probably, to music. If you make money doing one thing and then work on another, you have more freedom of choice.
Which route should you take? That depends on how sure you are of what you want to do, how good you are at taking orders, how much risk you can stand, and the odds that anyone will pay (in your lifetime) for what you want to do. If you're sure of the general area you want to work in and it's something people are likely to pay you for, then you should probably take the organic route. But if you don't know what you want to work on, or don't like to take orders, you may want to take the two-job route, if you can stand the risk.
Don't decide too soon. Kids who know early what they want to do seem impressive, as if they got the answer to some math question before the other kids. They have an answer, certainly, but odds are it's wrong.
A friend of mine who is a quite successful doctor complains constantly about her job. When people applying to medical school ask her for advice, she wants to shake them and yell "Don't do it!" (But she never does.) How did she get into this fix? In high school she already wanted to be a doctor. And she is so ambitious and determined that she overcame every obstacle along the way—including, unfortunately, not liking it.
Now she has a life chosen for her by a high-school kid.
When you're young, you're given the impression that you'll get enough information to make each choice before you need to make it. But this is certainly not so with work. When you're deciding what to do, you have to operate on ridiculously incomplete information. Even in college you get little idea what various types of work are like. At best you may have a couple internships, but not all jobs offer internships, and those that do don't teach you much more about the work than being a batboy teaches you about playing baseball.
In the design of lives, as in the design of most other things, you get better results if you use flexible media. So unless you're fairly sure what you want to do, your best bet may be to choose a type of work that could turn into either an organic or two-job career. That was probably part of the reason I chose computers. You can be a professor, or make a lot of money, or morph it into any number of other kinds of work.
It's also wise, early on, to seek jobs that let you do many different things, so you can learn faster what various kinds of work are like. Conversely, the extreme version of the two-job route is dangerous because it teaches you so little about what you like. If you work hard at being a bond trader for ten years, thinking that you'll quit and write novels when you have enough money, what happens when you quit and then discover that you don't actually like writing novels?
Most people would say, I'd take that problem. Give me a million dollars and I'll figure out what to do. But it's harder than it looks. Constraints give your life shape. Remove them and most people have no idea what to do: look at what happens to those who win lotteries or inherit money. Much as everyone thinks they want financial security, the happiest people are not those who have it, but those who like what they do. So a plan that promises freedom at the expense of knowing what to do with it may not be as good as it seems.
Whichever route you take, expect a struggle. Finding work you love is very difficult. Most people fail. Even if you succeed, it's rare to be free to work on what you want till your thirties or forties. But if you have the destination in sight you'll be more likely to arrive at it. If you know you can love work, you're in the home stretch, and if you know what work you love, you're practically there.
Source: http://www.paulgraham.com/love.html
Stanford Commencement Address (June 2005) by Steve Jobs
Stanford Report, June 14, 2005
'You've got to find what you love,' Jobs says
This is the text of the Commencement address by Steve Jobs, CEO of Apple Computer and of Pixar Animation Studios, delivered on June 12, 2005.
I am honored to be with you today at your commencement from one of the finest universities in the world. I never graduated from college. Truth be told, this is the closest I've ever gotten to a college graduation. Today I want to tell you three stories from my life. That's it. No big deal. Just three stories.
The first story is about connecting the dots.
I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit. So why did I drop out?
It started before I was born. My biological mother was a young, unwed college graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife. Except that when I popped out they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking: "We have an unexpected baby boy; do you want him?" They said: "Of course." My biological mother later found out that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would someday go to college.
And 17 years later I did go to college. But I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back it was one of the best decisions I ever made. The minute I dropped out I could stop taking the required classes that didn't interest me, and begin dropping in on the ones that looked interesting.
It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:
Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.
None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, its likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.
Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.
My second story is about love and loss.
I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew we hired someone who I thought was very talented to run the company with me, and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him. So at 30 I was out. And very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.
I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me — I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.
I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.
During the next five years, I started a company named NeXT, another company named Pixar, and fell in love with an amazing woman who would become my wife. Pixar went on to create the worlds first computer animated feature film, Toy Story, and is now the most successful animation studio in the world. In a remarkable turn of events, Apple bought NeXT, I returned to Apple, and the technology we developed at NeXT is at the heart of Apple's current renaissance. And Laurene and I have a wonderful family together.
I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.
My third story is about death.
When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.
Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.
About a year ago I was diagnosed with cancer. I had a scan at 7:30 in the morning, and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die. It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.
I lived with that diagnosis all day. Later that evening I had a biopsy, where they stuck an endoscope down my throat, through my stomach and into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated, but my wife, who was there, told me that when they viewed the cells under a microscope the doctors started crying because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and I'm fine now.
This was the closest I've been to facing death, and I hope its the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept:
No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.
Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.
When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.
Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.
Stay Hungry. Stay Foolish.
Thank you all very much.
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