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Banbury Cross

a pillow for lost thoughts...

Archives for: 2012

The White Sands

The best part of living on Earth is that every once in a while you stumble upon a place that is positively out of this Earth. Simply breathtaking. That kind of place that makes you proud to be an Earthling. Not to rub it in for all of you extraterrestrials, but you have to wonder if Mars has any place that would be out of this Mars. Methinks not.

One such magnificent place is the White Sands National Park in New Mexico. The world's largest field of gypsum dunes located just a short drive from Las Cruces, NM. It isn't exactly on the beaten path though. It took me some 15 years to finally make it there despite the fact that I spent 2 year of my life living in Los Alamos, NM - merely 300 miles to the north. If you ever happen to be in the Albuquerque area, however, you may give it a serious thought - doubly so if you are heading south or if you have ever wondered what the world would look like if it was made out of sugar.

That landscape is noble like a duchess on her wedding day. Her veil undulating in the wind. Grains of the finest rice strewn all over the ground. The delicate laces tying up the horizon in muted elegance. This is the fantasy planet you always wanted to wake up on. Especially if you are an hour glass. But whether you are into sand or not, you will enjoy the gently rolling curves and powdery heaps quietly conspiring to a future blizzard symphony. A choir of never-ending snow drifts rendered in the most festive tones of white.

You can even take a hike deep into the dunes and if you squint your eyes a bit, you may get an impression that you are dreaming of a white Christmas. And perhaps you are. I did not see any signs that would place any kind of restriction on dreaming. Indeed, dreaming is what a place like this is for.


Silence of the Angels

There are 17,000 alcohol related car accident deaths in the United States each year. There are 9,000 murders with firearms. On top of all that 3,000 people die every year in a fire. And that's just the beginning. Dismal statistics surround us from dawn to dusk and throughout the evening news. So much so that we have grown somewhat immune to their ominous presence. But every now and then a tragic event protrudes from the daily noise of data streams with contours so brazenly shocking and so factually inconceivable that it shakes us out of our stupor and makes us question the very basic premises and principles on which our society is built. The shooting in an elementary school in Newtown, CT which took 27 lives, including 20 children, was a wake up call of that sort. The sharp and penetrating spear of its pain drilled deep into the numb layers of our subconsciousness and brought billows of half forgotten sediments uncomfortably close to the surface.

No doubt, guns will be featured prominently in the ensuing blame game. In fact, several scouting parties are hacking their way through the jungle of gun control laws as we speak. If the headlines of the past few days are any indication, we should get a pretty spirited discussion on just about any aspect of the Second Amendment. What strikes me as equally important, albeit commanding much less media attention, is a question of our mental health. We pride ourselves in keeping our bodies in tip top shape, but in the barrage of healthy living ads we seem to be neglecting our mental fitness altogether. Shouldn't we pay equal attention to grooming our psyche? Specifically, what we should very seriously ponder - at least until the next heinous news story diverts our attention elsewhere - is how did we allow for an environment in which a young mind can grow so barbaric that it would embark on a premeditated murderous rampage and execute whole classes of school children in chillingly cold blood.

Our soul is just as complex and fragile as our body. We simply do not understand all the ramifications of an intricate chain of dependencies which its functionality represents. We do not know what makes one mind grow perfectly healthy while another slips into intolerable extremes under the very same conditions. One factor which I think should make an appearance in the hypothetical debate is the emotionally barren milieu of mass media in which many of our children grow and develop. Back in the days of my larval stage, long before the advent of Facebook or MTV, I spent most of my summer holidays at my grandfather's farm in Northern Bohemia. There we flew kites, chased trouts in the local creek, roasted potatoes in a bonfire, watched the rye fields undulate during the harvest, climbed sandstone rocks and sometimes fell from them and scratched a knee or two. While playing in this slow rural setting, we had enough time to intuitively understand how important observing certain rules was, how important hard work was and by extension how important each and every life was. And the reason we absorbed all of this relatively well was that it had been presented to us in a natural unbleached form which our minds tend to process rather easily. I am afraid today's world dominated by the TV networks and the Internet robs our kids of something very precious. The organic experience of the countryside which can form a sense of perspective with the same kind of ease with which our bodies digest natural vitamins.

And it gets worse. Our inner world isn't the only victim of potentially harmful pollution - we should also carefully re-examine the role of drugs, especially those designed to remedy mental disorders and prescribed to children and young adults. Sure these magic pills are being nominally tested. But monitoring two groups of people for a few weeks while tracking some trivial response mechanisms is not good enough. Drugs affecting our cerebral functions are a bit more complicated than aspirin or alka-seltzer. There may be subtle long term damages which lay hidden deep underneath the veneer of social protocols until suddenly activated by a chance signal. Kind of like when you randomly swap two wires in your computer and for a while it functions in a perfectly normal way, until one day you do something slightly out of the ordinary and the whole contraption goes bonkers.

Pouring crude human made chemicals into the sophisticated circuitry of our brain is a recipe for disaster. You never know under what synaptic connection they will flap their dark wings. It's like allowing a second rate house painter with a broad brush to tinker with Rembrandt's finest paintings. It may all sound like a well meant act of healing, but unless all side effects are well understood, such efforts may very well turn out to be an embellished gate to the maze of unintended consequences.

And the only thing we can possibly get in return for passing through such gate is an occasional silence of the angels, echoing wildly in the moral hollowness which created it.

Arizona Nocturne

In the rapids of life, the good and the bad are so thoroughly intermingled that it is virtually impossible to have one without the other. No matter how hard you try to navigate through the staccato of consequences, no matter how hard you deploy the paddle of your will, your canoe will be mostly left to the mercy of fiercely turbulent elements. As we are tacking left and right through our destiny, sometimes the wisest thing is to relax and just enjoy the ride. Because no matter how well you design your trip, there will always be mischievous elves planting dynamite sticks in the folds of your plan. And sometimes those dynamite sticks are exactly what brings you the good stuff.

This Thanksgiving I was hiking in South Arizona with a friend of mine and for the first day we planned the conquering of the Wasson peak, one of those sharp saguaro infested heaps of dirt overlooking the Tucson area. Due to a slight delay at Tombstone, we arrived at the site late in the afternoon. We had barely enough time to climb to the peak so we quickly hopped onto the trail and started crunching the miles as we did not want to risk coming back in the darkness and stepping on a tail of some disgruntled rattlesnake.

However, after about an hour of walking we strayed from our path a bit and got lost in an arroyo which seemed to lead in the right direction, but ended up at a stern rock face which was clearly not passable, unless you were a lizard or had suction cups for fingers. To make matters worse, on our way back to where we lost the trail we tried to utilize a seeming short cut which turned out to be an access road to some abandoned mine so all this backtracking and wandering cost us a good hour of our limited time. Wondering whether we should call it off or not, we recalculated how much time we have left before sunset and decided we'd resume going up the trail until the point that would still allow for safe return (which was about 4.45pm). We wanted to get as high as possible, so we put the pedal to the metal and darted off like a pair of hungry wolves that just intercepted a scent of marinated lamb chops. When we reached our point of safe return, steaming profusely, we were only about 20 minutes from the summit which was well within sight and tantalizingly beckoning in our general direction. We couldn't quit and start our descent now, so after a short pow-wow we kept pushing forth for a bit longer - damned be the consequences.

When we reached the top, some 15 minutes later, we were spent and panting, but the helter-skelter climb was worth it. The views of the surrounding ranges were dazzling and the sense of accomplishment nearly intoxicating. The time shift caused by the unfortunate digression may have jumbled our time table but it also enabled us to see the mountains in the precious light of the setting sun which bathed their every fold and cranny in a surreal reddish glare.

And that was not all. Since we had no chance of reaching the parking lot during the daylight, we were about to experience an adventure hike in night conditions - an endeavor we would not have attempted if we actually had a choice. And that was also the last basket of perks which the forced departure from our schedule laid at our weary senses: the silhouettes of cactuses barely visible against the fading sky, the low keyed humming of the attentive desert and last but not least the faint lick of light leaking across the western horizon.

All of that because we lost our way.


Max Bruch: Violin Concerto

I haven't heard Max Bruch's Violin Concerto for more than 20 years. It is a remarkably inspired piece of a rather obscure romantic German composer whose concert presence does not usually extend too far beyond this gem of violin repertoire. But its fresh melodies will forever secure his place on the musical Olympus. If you let them in, they will percolate through your mind like a creek of buttercup petals cascading down an alpine meadow and carry you forward in an unstoppable fete of youthful energy. I used to listen to them quite often when I was in my 20s but I do not think I heard it - live or recorded - ever since I left my old country.

I haven't been to Albuquerque for quite some time as well. I left New Mexico some 15 years ago and so it must be at least that many years since I last coasted on I-40, the interstate connecting Albuquerque with Arizona and eventually California. This November I was coming back from Arizona with a friend of mine and the last leg of our trip lead us back into I-40, the long forgotten highway passing through many towns whose name had that vaguely familiar sound of distant memories floating restively through the hallways of our recollection. As soon as we merged into a light flow of traffic, I started scanning the local radio waves to enliven the monotony of the New Mexican semi-desert and I thought it was quite appropriate when I hit the Bruch's concerto being performed on some classical station.

If you asked me about it a moment ago, I would not recollect a single note of that piece. But as the music climbed out from its dusty cocoon, unexpected magic started unfolding. Familiar phrases and motives emerged from the deep recesses of my memory, like beloved people I did not see for a while but instantly recognized: "Oh my God, uncle Joe, you haven't changed in 20 years". The sudden appearance of this violin concerto was like a flying carpet which turned a potentially boring drive into a resplendent cruise in the memory lane.

It amazes me what quantity of information our mind stores. Much of what we think is lost forever just hibernates in the cool cellars of our memory. There it lies dormant in a way which is unobtrusive, but when poked in the ribs it bursts to the surface with an amazing level of detail. To remind us who we are.

November Blues


drummer is drunk and sky may drizzle
call in your pranks before they fizzle
steady your hand - don't spill the bones
don't push the cart on rugged stones

barely alive
desolate trees
and grazing skeletons
dance their comatose waltz
two soldiers lean against a rock
an old frozen cat the only grub in their bag
and as the armies of winter wheeze behind the hills
one soldier tilts his torso and mutters under his breath

> the only thing worse than a battle
> is the long wait before it starts

there is no response - only a heavy detail of silence
and a hand pulling a blanket over a battered head

jump over moon and skip the streams
here comes the hero of all my dreams
a haggard pony plodding down the alley
with overthrown eyes and an empty belly


Tooth Fairy Pension Funds

The growing wealth inequality has many causes, some natural and obvious, some less so. One of the more esoteric ones occurred to me the other day when I was reading an article about the precarious position some of our pension funds got themselves into. I will start with a small scale model which better demonstrates the idea.

Imagine a small town somewhere on the surface of this Earth. Most people in this town work in a shoe factory which is owned by a respectable capitalist whom I will call Mr Smith. These folks are a prudent kind who live within their means and save enough for their well deserved retirement. The business is going reasonably well but one day Mr Smith figures out that people would be buying many more shoes if they were not putting so much money into their pension funds. Being a well connected entrepreneur, he decides to do something about it and creates the Magical Tooth Fairy Retirement Fund which offers great returns for basically a third of the traditional costs. People blithely embrace the new opportunity and pour all their savings into the new fund. With extra cash suddenly available for spending, they then buy those fashionable shoes they always wanted and live happily ever after. Or more precisely - until the moment the retirement fund has to make good on its prospectus.

Before that happens, however, let's pause for a little bit and see what effect Mr Smith's operation has on the fortunes of the denizens of our town. Its good people won't see much change at first since their retirement needs seem to be taken care of and so they will just go about their lives as usual, perhaps with an extra pair of shoes in their closets. The factory workers won't see much change either as they are paid the same hourly wage regardless of the extra shoes being sold. Only Mr Smith will see a real improvement, as his sales and profits - and by extension his bank account balance - register a healthy increase. At this point you may wonder though: where do these new revenues really come from? Well, most of their value comes from the poorly funded retirement assets. It's kind of like when you buy a cheap insurance - it seems fine until you have your first accident - and then you discover that the value is not there. Likewise, at some point in the future the townsfolk will have realized that their pension assets have not been as valuable as they once believed. Yet this extra value which they counted on has not simply disappeared, it has merely moved into Mr Smith's private accounts.

Now that is an oversimplified view of reality, of course. But I think its main point stands. Much of the record profits that flowed into a decreasing number of global corporations, and thus into a decreasing number of pockets, was made possible (at least in part) by a false sense of security on the part of consuming public. The promises of future income streams - well funded or not - allowed people to spend head over heals, wrongly assuming that their golden years had been secure. We have a large variety of pension funds, ranging from private to public, and satisfying just about every imaginable life style; yet the soundness of their balance sheets is something we have not been paying much attention to. Many have based their spectacular projections on Dow Jones hitting some ridiculously overvalued levels, others on the assumption that interest rates will stay high for indefinite periods of time. Last but not least - as people in Greece and Spain are realizing these days - some have put too much trust in the value of government bonds.

I would not be surprised if some of the wealth we think is awaiting us over the retirement rainbow turned out to be a phantom accounting entry whose intrinsic value had been quietly siphoned off into private coffers by the aforementioned mechanism. As the baby boomers are entering the 65+ demographics in hordes, we'll soon see how good all those pledges are. I am afraid not all of them will be golden. Perhaps people in the future will rely less on expectations of the well compensated fund managers, and more on the good old fashioned savings. It may curtail our consumptive vigor, but it will make us stronger in the long run.

New Age Etude

The other day I was watching a group of trees swaying high above my head when a strange idea occurred to me.

Maybe what we see is not always what we get.

Reality can play tricks on our cognition, and had our senses not been chaperoned by experience, they would have made a number of embarrassing calls on our journey through life. Consider what I just saw for instance. To an impartial observer without any prior knowledge of how the world operates it might seem that the trees above me are just flailing their limbs on their own volition, perhaps even gesticulating at each other as if having an argument over who bears juicier fruit. Sure, we all know it is just a wind moving the branches, but if you tried to convince the aforementioned observer who just happened to arrive from Outer Space you would solicit an incredulous look: "What wind? I do not see any wind?" And truth be told, wind itself is kind of hard to see really. The tree commotion, on the other hand, is rather obvious.

This silly idea made me pursue its tracks deeper into the world of meanings and perceptions and embark on a little New Age fantasy. What if our own consciousness is but a manifestation of something external that we merely react to? Kind of like the apparent motions of the tree boughs or spinning of the wind mill are only manifestations of the wind, but they are not the wind itself.

In other words, our lives and awareness may be just a secondary process, an illusion caused by actions of some other and probably much larger medium - the ever flowing universal consciousness of sorts. Or a "life force" if you prefer more mystical moniker. Perhaps what is important about our existence is the "wind" itself. Not how it manifests itself in thousands of little windmills it encounters along the way. What some may call soul would then be just a sensory artifact created by the spinning arms of our individual windmill as it interacts with this perennial and all permeating spiritual "wind". Naturally, we should ask then what happens to our soul as we depart this world. When the windmill breaks and its arms stop spinning, does that stop the "wind"? That is the million dollar question.

All this just goes to show that the more you try to figure out what reality is, the more entangled in its semantic webs you become. Attempting to espy the signs of objective truth through our subjective binoculars can be so frustrating that sometimes it looks like we might be better off just pouring ourselves some margaritas and spending the rest of the afternoon in the secular comfort of our hammocks. There we can watch palms swaying gently high above our heads and whispering to each other in a language of their own.


The Unsung 47%

Reams of paper have been sacrificed at the altar of partisanship since Mitt Romney's infamous 47% comments burst onto the tense pre-election scene. So many in fact that I suspect that 47 is the most famous percentage today, easily bumping yesteryear's 1% of the Occupy Wall Street fame.

Romney labeled almost half of the population as government free loaders who exercise very little personal responsibility over their lives. Rather predictably, implications that much of Obama's constituency belongs in this category and lives off government largesse created a brisk firestorm in the political blogosphere. Some have shredded the allegations to pieces, some extolled them as self evident, and some defended them with elaborate statistics, whose bottom line correlated remarkably well with their position on the political spectrum. Opulent partisan cliches were flying left and right. No pun intended.

What puzzles me a bit though is that in the cacophony of reactions I never really found a piece of analysis which would state the obvious. There is another slice of the population that would be left stranded on an island of their own greed without the government support. These unsung moochers somehow fell through the cracks of Romney's presentation, although their dependence on public funds is just as notorious. Except they do not use it for subsistence, like those who found themselves on the wrong side of automation and globalization, but rather for protection and multiplication of their ill-gotten gains.

This group of non traditional cadgers is the Wall Street. It may sound mildly surprising until you start asking yourself some fairly simple questions: Where is their wealth coming from? Would they thrive or even survive on their own? Do they use public finances for their own benefit? And I am not just talking about the unprecedented bailout we gave them in their hour of need. Nor am I alluding to tons of toxic debt they managed to offload onto public balance sheets via the central bank or the government sponsored enterprises such as Freddie Mac and Fannie Mae. This group is continuously being subsidized by our zero interest rate policy, whereby they get free money from the Fed and then use it to buy the Treasuries, pocketing the spread (basically risk free money at the expense of taxpayers). And fractional reserve banking, which they implemented to magnify their profits, is not without sin either. They essentially conjure up money that should belong to all of us, and then use it for their own benefit.

I would really love to see a parallel Universe where the Wall Street would be left on their own to swim through the rapids of the free market economy without a dime of our support. I think they would emerge from this thought experiment soaking and limp.

Perhaps Mitt Romney could organize a follow up lunch and slightly expand his definition of government moochers so that it also covered institutions that are regularly receiving taxpayer funded corporate welfare.

Church in Borgund

There are certain entities that act like beacons in our life. You can think of them as hypothetical sources of light that are clearly visible and do not move around too much. After all they provide us with a sense of orientation so they better be stable, otherwise we'd act like a bevy of spineless flip-flopping pushovers. They are to us what stars used to be to ancient sailors - except that they triangulate our inner space rather than the nightly sky above us.

For me one such entity is the Church in Borgund, an ancient stave church located in a small Norwegian town not very far from one of the arms of Sognefjord. I saw it first in a photography book when I was about 16 and still trying to make some sense of life in communist Czechoslovakia. In those days I spent number of hours listening to the music of the Norwegian composer Edvard Grieg, with the book opened in my lap, my eyes trained on the image of the church and my mind pondering the strange Orwellian reality into which I was born. The simple layout of the church, as well as its placement in the middle of nature sharply contrasted with the twisted and deeply corrupted world around me. In a way this church helped me survive those dark days and its image kept my spirits up while the Soviet Emperors (I mean Party Secretaries) ruled over my country. Part of its appeal also derived from the fact that it was built in Viking times - in an era sufficiently isolated from the craziness and confusion of the modern civilization.

Ever since those days the Church in Borgund was the closest I had to formal religion. The image of that church floated alonside me wherever I went. There is even a piece of Grieg's Piano Concerto that became so closely associated with it that whenever I want to see its shingled roof and four carved dragon heads all I have to do is hum or whistle that short melody.

No wonder when I eventually made it to Norway, I made a point of stopping by and paying my respect to that old structure built by rugged Nordmen many centuries ago. But that was not the last appearance of this church in my life. Recently, I visited South Dakota with two of my friends and during the preparations for this trip a little miracle happened. As I was googling around Rapid City for potential sightseeing locations, my eyes suddenly caught a glimpse of a familiar structure. At first I could not believe what I saw and thought it must have been a mistake. But when I realized that South Dakota had a large Norwegian population, I looked more closely and indeed, there was an exact replica of that church in Rapid City (google "Chapel in the Hills" for directions and more info).

On our way to Rapid City we nearly missed our connecting flight in Denver - after running across half the terminal we caught it literally by a few seconds. So as soon as we picked up our rental car and dropped our bags in the hotel, I dragged my friends to that familiar sight and bowed there to the memory of old Viking warriors whose protective hand has been hovering over me my whole life.

Needless to say that this episode only cemented the unique role of this Church in my spiritual space. It is the Pole Star on the night sky of my soul.


Ode to Routine

Having to move is a major galactic nuisance.

Sure, there are some perks associated with moving, mostly along the lines of unearthing tons of cool stuff from the long undisturbed layers of our personal biosphere - precious old photographs, misplaced official documents, arcane articles of clothing, lost cooking recipes etc - but these treasures are not worth the overall harrowing experience whose pain generating potential is second only to sumo wrestling with a saguaro cactus in the middle of a nasty hail storm.

My apartment complex is being spiffed up into a bloc of income sucking luxury abodes, so this deliberately avoided affliction finally caught up with me as well. It took me two whole days to haul my stuff five miles down the road and that was not all. The third day I still had to go back to my old place for the final clean up. Since I was wise enough to leave a towel there, and since cleaning turned out to be a surprisingly dirty business, I decided to take one last shower in the bathroom which served me well for over 9 years.

The rays of warm water were just what the doctor ordered. They felt like fingers of a gentle Thai masseuse. However, when I stepped out of the shower, a problem emerged: Where are my glasses? Under normal circumstances, I would have put my glasses either on the dresser or on top of my digital piano - but neither piece of furniture was present so there was no point looking there. To make matters worse, my back up glasses which I could possibly use to locate the primary glasses were in my new place as well. So here I was, a steaming (both literally and figuratively) lump of flesh with effective recognition radius of about 3 feet, trying to spot a tiny metal frame resting quietly somewhere in a psychedelic landscape of colorful but blurred blobs.

I started pacing impatiently to and fro, squinting around like a befuddled bat and carefully feeling every even remotely level surface with my fingers. Nothing. After this myopic search dragged on for about 5 minutes, I remembered that just before the shower I was looking out of the window. Indeed, there they were, shining innocently on the window sill.

This little ordeal taught me an important lesson though. Habits are kind of like personal assistants. They keep track of where things are so that we don't have to. Stereotypical routines are nature's ways of shielding us from boring and mundane details so we can focus on important stuff. It is at moments like these, when the old little drills break apart, that we are thrown into the boisterous ocean of possibilities and try to swim in it. If you saw the movie "Perfect Storm" you know that it is not always as much fun as cavorting on a beach in Hawaii.

It is said that when people age they become set in their ways. But those "set ways" can save you plenty of time when you are looking for something you cannot function without.


What do you get when you cross prairie, mountains and desert?

You get Badlands.

The spellbinding national park about 100 miles east of Rapid City in South Dakota. The giant clay workshop where Mother Earth discovered her artistic self. As you drive along the bizarrely shaped mounds planted randomly between tufts of dried grassland, you cannot help imagining the hand of an invisible sculptor at work here. And a painter as well. Just stop at the Yellow Mounds Overlook and you will be dazzled by layers of gold dust with reddish metallic overtones scattered all over the neighboring hills. This is the land where geography puts on the Halloween mask.

And there is no shortage of costumes to choose from. You can try a cloak of slowly undulating hills, rows of soft sedimentary rocks eroded to aesthetic perfection, long stretches of parched mountainous desert not unlike the one you can find in Oman or surreal bluffs sticking their tongues deep into the prairie. All concatenated into a seamless natural epic punctuated by dashes of sharp ravines.

Badlands are the place where Mother Earth broke out with goose bumps of excitement. And if you catch them under the setting Sun, your visual cortex may get some too.


Legally Bland

Rejoice! The United States of America are united again.

We may have had our differences about the nature of wealth redistribution in the past. We may have quarreled about the implementation of health care. We may have exchanged a few barbs here and there. But the first presidential debate blew the walls that separated us to smithereens and we all see eye to eye again. A conservative standing next to a liberal - America is one in its assessment: Barack Obama's performance was disastrous. Legally bland at best. A declawed tiger dozing off after having one too many water buffalos.

And it's not like Romney beat him to a pulp. In fact Obama could have easily derail many of his opponent's poorly worded diatribes, but for some reason he didn't. I don't know what his advisers were thinking, but I sure hope that his prep team will point out to him some obvious fault lines in Romney's offence. I could spot at least three.

1. (on economy) After several decades of unsustainable credit expansion, our economy has reached the turning point and the subsequent de-leveraging will take more than just a few years, so Romney's comments about the slow pace of recovery were uninformed at best. This was not your usual recession. Just look at the central bank's balance sheet (which massively increased since 2008, while during previous recessions it barely registered a blip). Obama should actually show that chart to the American public during the debates. That is what it took to avert systemic collapse. Even when viewed from afar, it is an eye opener.

2. (on national debt) Our path to unsustainable debt started with Romney's ideological predecessor, one George W Bush, who went to two wars while simultaneously cutting taxes (mostly for the wealthy). Surely Republicans must understand that if you want certain services (such as a bloated military adventure), you have to pay for them. And Obama should also mention that we are still bailing out our banks through the zero interest rate policy. That component of our deficit stems directly from the misguided attempts to create an "ownership society" - whatever that was supposed to mean.

3. (on employment) New jobs are produced when there is increased demand for goods, which can come only from a strong middle class. If there is no organic demand, then no matter how much you cut taxes for the CEOs, there simply won't be any need to expand production and create new jobs.

The President should make these three points clearly, without drowning them in technicalities, and forcefully, preferably looking at something else than his shoes. If he can't convey their gist to the undecided part of the electorate, I am afraid he'll be toast come early November.

Devil's Tower

Ever since I saw "The Close Encounters of the Third Kind", my favorite sci-fi flick of all time, I wanted to visit its legendary landmark: the Devil's Tower in Wyoming.

Unfortunately, the prominent rock doesn't exactly advertise itself along a major touristy route. You won't run into it on the way from Vegas to Grand Canyon and don't expect much luck if you drive from Denver to Yellowstone either (although this time you won't be astronomically far from it). This natural obelisk rests in the middle of a garden variety prairie, in the northeast corner of Wyoming, far from anything even remotely photogenic. No wonder it took 20 years before I could finally unleash my eyes on its daunting slopes - a feat accomplished when I was hiking around Rapid City, SD, some 150 miles East.

But this deliberate detour was worth every gallon of gas. The tower looks great from every distance. First you spot its commanding presence from miles away and the closer you get the more dominating it becomes. Just before you make a turn from the state road 24 into the park, it reveals itself in its awe inspiring presence and you realize that it is all you ever dreamed it would be: massive, stark, majestic, slightly intimidating, triumphant, perennial, breathtaking, elegant and mysterious. A petrified chord from a Beethoven symphony. If I was an alien, I would totally land here.

I have to admit that as we walked around it I was secretly wishing we would hear the famous 5 tone sequence from the movie, and see some lanky extra-terrestrial life-form looking for a final approach. But I also wondered if our little planet would actually be worth their time, in other words if we'd pass their muster for intelligent beings. Sure, we gave ourselves a lofty tag "homo sapiens", but are we really as smart as we think we are. Just look at our actions with a bit of perspective: we kill each other over some gunk oozing from the ground or when we believe that our God is more worthy than the one our opponents worship. On a good day, our financial system resembles a shaky Ponzi scheme which benefits those who control it without much regard for the needs of the whole community. And our priorities are still royally messed up - instead of devoting most of our resources to improving our knowledge and technological abilities, we spend tons of money on shiny trinkets that we put on our bodies or complicated organic molecules that we inject inside them to get high.

It is entirely possible that one day some alien scouts from a distant world far away will indeed wander into our Solar system and after having successfully traversed those vast intergalactic distances, which are notorious for the complete lack of motels and gas stations, these weary ambassadors from the Outer Space will park their fusion propelled vehicle at the geostationary orbit and tune in to our TV and radio signals for a few weeks. What worries me about that scenario is that after watching a couple of evening editions of CNN News, they will look at each other and their gray eyes will say: "Meh...". And they will never come back.


Romney 14.1

In his famous novel "Fahrenheit 451", Ray Bradbury writes:

"We need not to be let alone. We need to be really bothered once in a while. How long is it since you were really bothered? About something important, about something real?"

Sometimes we view the wheelings and dealings of our world as a form of necessary evil which lies beyond our control, almost as if some kind of permanent natural process was at work there. But if we bothered to bother about it, we'd find that in many instances the apparent immutability of social laws is only made possible by our apathy. This week's release of Mitt Romney's tax return (showing a measly 14.1% effective rate) was a great opportunity to shake some of the accepted dogmas and shine a probing light on the way our tax system works. And that is indeed what many did.

In politics though - no action comes without a reaction of equal magnitude and opposite direction. For the conservative punditry, taxing is a sacred issue, and taxing the wealthy doubly so. What followed that little probe was a hurricane of smoke and mirrors. In a time honored tradition of taking your opponent's position to the extreme, creating a ridiculously looking straw-man out of it, and then beating it publicly to death against the backdrop of cheering masses, the right hand side of the political spectrum filled the airwaves with an impressive swarm of easily digestible slogans, ranging from warnings of impending confiscation, to accusations of class warfare and (gulp) general hatred of success. Yet in a less hysterical Universe, a tax is not a confiscation, it is a remuneration. When you come back from a dealership with a new car - for which you just shelled out $20,000 - you don't write angry letters to your local editor that the car dealership just confiscated your money. It was just a payment for goods and services and most people understand that.

The inconvenient truth is that the wealthy benefit tremendously from the goods and services offered at the federal level. It is government which keeps the seas safe for shipping and trading routes, the government maintains the highways on which they truck their goods, the government backstops the financial system, and even such abhorrent function as entitlements is in fact beneficial to the producers. Imagine how much less demand for various products there would be if it wasn't for various forms of government support which put money in people's pockets. You see - the poor don't invest that money in gold or emerging market stocks. They go and buy stuff, which eventually fattens the bottom line of our beloved corporations. How many CEOs would not get their performance bonus if it wasn't for the despised government stimulus. Now ask yourself - who profits more from the stable business environment which our taxes collectively create - an average worker or the upper management? I think the answer is pretty clear. But on this planet of ours everything costs money. So we are not really trying to confiscate anyone's wealth, we are merely asking the rich to pay their fair share. And honestly, 14.1% does not sound like a fair share to me. Most of my friends pay double that rate.

Now closer inspection of the mystery of Romney's low taxes reveals that it is mostly caused by the capital gains rate. See, at some point we determined that income from capital gains is somehow nobler and more important than income coming from one's labor and we taxed it accordingly. And I think that attitude needs to change. Why would we think that a farmer working hard from dawn to dusk should pay more taxes than some dude whose income comes from capital gains in the portfolio established by his industrious and enterprising grandpa? Why would a teacher who spends evenings pouring over the efforts of the next generation of entrepreneurs and engineers have to pay more than a hedge fund manager who merely chaperones other people's money in the casino of financial markets? No disrespect but both labor and capital are instrumental to properly functioning economy, so why do we constantly favor the capital?

Equalizing these two would not mean that we hate success. It would just mean that we want those who succeed to contribute to the environment which enabled it. Just like the rest of us do. Sure - some functions of the government could be greatly streamlined and they should. But the costs of whatever remains ought to be carried by all segments of the society. Repealing the capital gains tax rates won't violate any laws of physics and it won't be the end of the world. But it's not gonna happen by itself. We'll have to push it through several lines of entrenched defenses and expect to catch some flak along the way. Because - as we know - for every action there is always an equal and opposite reaction.

I hope President Obama is bothered about this.

Das Reich in der Luft

Flying is a source of many wonders. My favorite in-flight movie - the one played on that little round screen on the side - comes at that moment when a descending airplane is just about to delve into a thick layer of clouds. You can see them slowly approaching from below, like a seemingly infinite bank of fog. Then you start recognizing the bulging shapes of individual clouds and soon the silvery wings of the aircraft start cutting gently into the streaming wisps of water vapor. Like blades of a lawn mower making stacks of celestial hay right in front of your eyes. Puffs of moisture are rolling wildly by like condensed dreams of a rogue angel hanging ten on a cotton wool beach. This is what a battlefield would look like if Heaven and Earth had a fierce pillow fight. A sight out of this world.

When I was a teenager, I enjoyed reading Romain Rolland's excellent biography of Beethoven. It was a book whose deep and instinctual insight into music influenced me in many ways. But there was one expression in that book which I remember to this very day although it is in German - a language of which I have only a very limited knowledge. When the flow of narration comes to Beethoven's Piano Sonata op. 106, Rolland observes that in this Masterpiece Beethoven reemerges as the supreme ruler of his "Reich in der Luft" (Kingdom in the Air). After many years spent in a creative limbo, his 29th Piano Sonata became the definite sign that the new Spring is in the offing. The king has returned to the throne.

The phrase itself had roots in Beethoven's own words. In one of the letters to his nephew Carl, he observes: "Mein Reich ist in der Luft" (my kingdom is in the air). So there it was - straight from the horse's mouth. For while I took it only as an abstract figure of speech, without any deeper meaning, but when I started flying to America, I discovered that there is an image that goes with it.

It is what you see from your window when the airplane starts skimming the clouds.

When that happens I imagine Beethoven walking amidst the billowing cushions, frowning as usual, flailing his arms like giant batons and humming fragments of the Hammerklavier Sonata to himself in a loud and coarse voice. And when I look at the world consisting only of two colors - white and blue - and yet offering endless variations in its shapes, I feel that this is a fitting home for his legacy.

Here, high above the ground he will live forever - the supreme ruler in his Reich in der Luft - unencumbered by Earthly noises and giving benevolent advice to those who aspire to fly.


Myth of Job Creation

As the Marathon presidential campaign season enters its homestretch, some of the sound bites that were coyly droning under the radar so far are putting on the war colors and bursting high into the sky.

My favorite bite of wishful thinking is the notion that cutting taxes for the wealthy will somehow automatically create millions of jobs. To begin with - it is not clear why the rich would turn any additional wealth into job producing assets, when there are other - and less dicey - places where you can park your money. Commodities, currency exchanges and especially foreign markets supported by cheaper labor present lucrative opportunities every day. Why would you choose investment vehicle whose risk/reward ratio is only slightly better than planting turnips in the Yankee Stadium outfield?

But what bothers me even more is the mechanism itself. Are jobs really created when the wealthy owners of the means of production get to keep larger share of their profits? I always thought that what created jobs was organic demand. The willingness and ability of potential customers to buy your stuff. Pure and simple.

Imagine this. You have a struggling factory which makes only a modest profit because no one in the country has any money to buy your product. You, the owner, get your brand new Congress approved tax cut - and then what? - all of a sudden you start hiring more workers to produce more stuff which no one can still afford? Methinks not.

In my world, a smart businessman will ramp up the production only if there is an increased demand for his product - which usually happens when a significant segment of the society has more money to spend. Rich people - being a fairly limited group almost by definition - simply do not have the numbers to drive the consumption up by themselves. How many bars of soap, how many iPhones or loaves of French bread do the affluent really need? That is why a healthy economy starts with a strong middle class whose members - by the sheer volume of their purchases - can significantly stimulate the overall business activity. Henry Ford knew this 100 years ago. What is so difficult about it that the conservative commentators don't understand these days?

Cutting taxes will only create more income inequality, and less vibrant economic environment. It will lead to the bananization of our republic. But it will contribute very little to the job growth we need. The bottom line is very simple. If the majority of the population won't have means to buy goods and services, then this recovery will wither on the vine - no matter how deeply the upper bracket income taxes will be cut.

Czech Switzerland

My sister travels a lot, so she knows many hidden gems the tiny Czech Republic harbors in its interior. For this summer's family trip, she took us to a remote region in Northern Bohemia where the river Labe (Elbe) leaves the country and squeezes into Germany through a series of shallow river valleys meandering along a gently undulating landscape. When - more than a century ago - two Swiss travelers visited the sparsely populated hills crowned with sandstone formations and separated by colorful meadows, they were so reminded of their homeland that they chose to give the surrounding area the moniker Czech Switzerland.

As we were hiking through its flagrant gorges and across the brawny ridges, I suddenly remembered a snippet from an old history book which claimed that had it not been for the Soviet occupation, Czechoslovakia would have been an Eastern European Switzerland. Indeed, between the wars my old country sported many burgeoning industries that manufacturing cars, airplanes, chemicals, textile, construction materials, machinery and just about anything the modern world might need. It had large deposits of coal and uranium (the latter plundered by Russians in the 1950s), well maintained infrastructure and educated and hard working population to boot. But the dream was not meant to be.

In 1948, a Communist coup installed a puppet regime whose various incarnations managed to turn this Switzerland in waiting into a Balkan wasteland - all that over the course of merely 40 years. And not by an accident either. Collectivism - which was adopted as the state doctrine - may sound like a great idea on the surface, but humankind still has not figured out its proper working implementation. Unlike capitalism, socialism does not provide a natural driving force that would be compatible with the individual desire to succeed. Somehow its notion of everyone working selflessly for the common good does not rhyme well with the human nature. At least in Czechoslovakia it didn't. Small minds, pervasive envy, incompetence, petty grudges, lack of natural incentives and bloated personal ambitions eventually got the better of Lenin's lofty intellectual framework and buried it deep under the ashes of mediocrity.

We hear a lot about socialism these days. The excesses of the financial expansion showed that capitalism may have overstayed its welcome in the annals of economic history and people are desperately looking for alternatives. I hope that those who are trying to offer socialism a second chance will keep the bleak lessons of the Soviet experiment fresh in mind. However crude and cruel the current embodiment of crony capitalism is, it is still a few leagues above the self-proclaimed humanism and efficiency of the Stalin's paradise. I breathed its noxious fumes for almost 30 years, so I know what I am talking about.

There must be a third way somewhere between the Scylla of capitalist greed and the Charybdis of communist apathy. A successful amalgamation of social responsibility and free market principles. But finding it may prove trickier than discovering a Swiss restaurant in the heart of Czech Switzerland.


A Call for Sane Banking

We have a somewhat conflicted variety of capitalism. Capital is supposed to be a surplus wealth for which its creators have no immediate use and so they set it aside and invest it in a worthy enterprise that will generate an additional income later on. But the machinations of the modern banking system and its never ending quest for liquidity are increasingly blurring the lines between the real and imaginary wealth and in the process make the tracking of capital rather difficult.

The mechanics of investing/loaning is not the rocket science. Here is an easy example. Joe has an extra $10,000 lying around, Carl has a great business idea that could multiply this $10,000 into $12,000 over the next 12 months, so Joe lends Carl the money for 12 months say at 5% interest and at the end of the year Joe collects his $500 in interest, Carl makes a nice overall profit of $1500 and everyone is happy. The problem is that in real life Joes with extra money do not have time to wait for Carls with brilliant ideas to waltz around and there arises the need for a middleman - the banking system. A banker is effectively a matchmaker who matches people with capital to people with ideas and takes a cut for this service.

But modern day finance has strayed far from that ideal. The funny monopoly money which central banks print at will these days gave investment banks an opportunity to turn the world's markets into giant casinos with little oversight or accountability. Trillions of dollars are swirling in the abstract monetary space without any backing and if there is collateral involved, you can bet that no one has any idea how much it is really worth. And I mean it - you can literally bet on it. The system got so far out of whack that the saver - the original creator of the capital - gets only a bit more than 0% interest for his or her effort these days. Who exactly profits from the capital flows and how much is an issue that has been successfully obscured by the gargantuan amount of global "money printing" effort which makes any real accounting virtually impossible.

I think that the original sin that brought about this perversity happened when bankers in the Middle Ages realized that they could lend out the deposited money many times over and unless the depositors conspired and demanded all of their money back at the same time, no one would really find out. Say you have some extra money and deposit it at a local bank which then lends it out to some Carl and collects interest on it. Some of that interest goes to you - the capital creator - and some stays with the bank as a payment for this service. So far so good. However, at some point the bankers realized that they could make another loan against this deposit and just pocket the interest themselves this time. In other words, they learned they could "print money" for their own private purposes.

Printing money is not a bad idea per se. In some instances injecting liquidity/credit into the larger economy may be just what the doctor ordered. The crucial question is, however, who really has the right to extend our money supply and - even more importantly - who is supposed to benefit from this operation? In a democratic society I would assume that the right to create money out of nothing belongs to the people themselves, although in practice this right would probably be transferred to some governmental institution, say the Treasury department.

The fractional reserve banking - which is the contemporary term for the system in which you loan our more money than you take in - is really a legalized form of counterfeiting, because bankers make no effort to share the interest collected from the "newly printed money" (which is what those unbacked subsequent loans are) with the depositors (the original providers of the capital) or with the Treasury (representing the people with whom the money printing rights should reside). And since the full reserve lending (where each dollar loaned out would be backed with a dollar deposited) may be economically too restrictive, we should look for a mechanism which would permit some money printing (to keep the economy well lubricated) but would do so so in a way that allowed for profit sharing with the depositors and the Treasury. The principle should be simple. The more often the bank loans out a given sum of money, the more profits it will have to share. This negative feedback loop itself should discourage excessive leverage (the multiple of the deposit that is being lent out) which nearly destroyed our current financial system.

So let us revisit the loan process and see how this scheme would work.

First, the recap of the actors.

Joe - the person who has capital
Carl - the person who has a business idea
Bank - which manages the loan
Treasury - which represents the people

In the present case Joe gets some interest on his mediated loan to Carl while the bank pockets all of the profits from subsequent loans. Let's suppose the interest rate for a loan (such as Carl's is 5%), the savings rate is 3% and the leverage is 10 (the bank lends any deposited money 10 times over). The profit sharing looks more or less like this:

1st loan (Joe gets 3%, the Bank gets 2%)
2nd-10th (Joe gets nothing, the Bank pockets all 5%)

Such division of spoils is conducive to higher and higher leverage and with it to riskier and riskier behavior. So what if we tried to tame this hazardous - almost gambling like - behavior by a distribution like this.

1st loan (Joe gets 3%, Bank 2%, Treasury gets nothing - no money was created)
2nd-3rd loan (Joe gets 2%, Bank gets 2%, Treasury gets 1%)
4th-5th loan (Joe gets 1%, Bank gets 3%, Treasury gets 2%)
6th-7th loan (Joe gets 0%, Bank gets 2%, Treasury gets 3%
8th-10th loan (Joe gets 0%, Bank gets 1%, Treasury gets 4%)

The above numbers are just made up, of course. They are whole for convenience. The actual interest rates would have to be finer and subject to expert discussion and/or some market mechanisms. But in this simple example you can actually do the math to see who ends up with what portion of the overall lending pie.

My point is that such a scheme would be fairer to both the creators of the capital and the taxpayers who get nothing under the current system although the money expansion is (or should be) their prerogative. Not to mention the fact that they implicitly guarantee the functionality of the banking system as a whole, so one would think they should be rewarded for it. Also note that the bank will think twice before going into very risky businesses because the higher its leverage, the more of its profits will have to be shared with the Treasury. At some point the bankers will have to conclude that the rewards are just not worth the risks, and stay away from leveraging their deposits to the point of near self destruction. Sure - they may lose some of their stellar profits, but over the course of time their profession may regain some of its lost respect.

And that is how it should be, in my humble opinion.

Complexity of connections

Multitude is not enough. If you put 10 billion ping pong balls in a container and shake it vigorously, you will still have only 10 billion ping pong balls. Nothing to write home about. To make something interesting happen, you need to add interactions, relationships, feed back loops between individual members. They are the ingredient that adds complexity to the mix.

Draw 10 circles on a piece of paper. Simple, right? Now think about the number of ways in which you can connect them. Soon you will realize that such exercise leads to mind boggling number of possibilities. Interconnectedness is that magical wand that can touch a mere quantity and conjure up a new quality out of it. Almost as if the connections made whole system undergo a phase change.

Carbon is not alive. Neither are protein molecules, amino acids or carbohydrates. But put enough of them together, stir the mix with a spatula of time and strange things will happen. Individual components will start exchanging signals, they'll become codependent and before you know it - life jumps from the crucible into its precarious existence. As if the complexity of interactions tripped up some invisible trigger.

Now think of living cells in your body. Neither of those cells is really you. None of them is even aware of itself. Each taken as an individual cell is just a simple living unit without any identity, feeling, mind or other human attribute. Yet add them all together, make them communicate and voila! A person arises. An entangled conglomerate of subsystems with a mind of its own.

Let's take it one step further: take several humans, place them together on a relatively warm blue planet and make them interact. A new entity arises again. Humankind. The sum of all people which can be viewed as one giant organism. In fact, there are some schools of thought which claim that this aggregate entity is in fact God. And I have to say I am not entirely opposed to that idea. The collective humankind does have a divine signature. It has a higher perspective than any individual and can make better judgements than individuals. None of us humans is God, of course. But together with all our interactions we may just as well be.

And a natural question is - what if humankind itself is but one building block of some higher form. Perhaps, one day, if we meet other civilizations and start interacting with them, a higher purpose will emerge. A pattern that we cannot comprehend on our own.


The City of London Olympics

(Limping Duck Press Agency)

Ladies and gentlemen, sporting fans, channel surfers, Olympic fiends, esteemed couch potatoes - good afternoon to all of you from the Wembley Stadium in London where we'll soon be witnessing the world premiere of a new Olympic discipline - the free style money printing. As you might imagine, the inclusion of this extreme sport in the Olympic program was no easy battle. After all, the Olympic Committee is well known for its conservative stance in accepting new sports - just consider that among this year's rejects we can find such popular pastimes as arms wrestling, tax evasion, running with the bulls, cross country dishwasher smuggling and synchronized pancake flipping. However, the recent epic events in the financial world convinced the executive members that the world's top money printers deserve to have an opportunity to flex their muscles in the Olympic ring.

The preliminary rounds were fierce and highly competitive. And delivered a couple of surprises, too. Carlos Rodriguez, the deputy Treasury of the Mexican drug cartel Los Zetas, unexpectedly qualified from the second semifinal in which he outprinted the Head of the National Bank of Switzerland, although some tabloids later alleged that he used stacks of pre-printed bills concealed in the lining of his jacket. Mr Rodriguez is known in British sporting circles as an international ace in the closely related discipline of Money Laundering, but his occasional counterfeiting side jobs gave him enough expertise to oust his worthy Swiss opponent and secure the placement among the best of the contemporary money printing. This elite group is formed by Ben Bernanke, the chairman of the US Federal Reserve, Mervyn King representing the Bank of England, Mario Draghi, who will be printing for the European Union, and finally Masaaki Shirakawa, the weathered governor of the Bank of Japan.

Only few minutes are remaining to the start and the participants are already warming up on the pitch. Mr Bernanke is diligently working the crank of an old rotary drum borrowed from the New York Times museum, Mr Draghi churns up crisp duplicates of the Bikini Quarterly centerfold on his personal laser printer and Mr King walks around the field with palms covering his ears and mutters under his breath "CTRL-P, CTRL-P". On the other end of the training area, seemingly lost in his inner world, Mr Shirakawa creates colorful imprints of cranes and monkeys with a set of children's rubber stamps. Sitting on an empty H/P box to his right, Mr Rodriguez is quietly munching on a Snickers bar and maintains a focused if a bit gloomy expression on his face.

The honor of starting today's inaugural race falls to Zimbabwean president Robert Mugabe for his lifetime achievement in the field of runaway money printing. Mr Mugabe is already on the pitch and waiting for his starting pistol... Wait a minute, something is afoot. One of his bodyguards just literally pounced on the official who was approaching Mugabe with the ceremonial pistol and knocked him down on the ground. This must be be some kind of a misunderstanding. I see a minor confusion on the field. It appears that Mr Mugabe's security team just gave a new meaning to the phrase "jump the gun". OK, everything seems in order now, apologies are being offered... Mr Mugabe gingerly raises his doubly inspected pistol and - bang! - ladies and gentlemen - the race is on.

All five finalists have briskly approached their printers and copiers and got right down to business. There were a couple of elbow clashes at the start, a few seconds may have been lost here and there as several central bankers were a bit flustered about the location of the ON switch, but now the field of contestants has spread over the whole pitch and newly printed dollars started flying off the printing presses like it's 2009. As far as I can see, Japan seems to have the upper hand in this initial phase. The country's long tradition in money printing gives Mr Shirakawa an obvious edge and his Sony remote control makes absolutely no mistakes so far.

Carlos Rodriguez, who had been visibly falling behind, made several attempts to distract other players on the field. He was whistling cheap tunes from gold commercials, calling Mr Draghi very unpublishable names to his face and throwing spare change at Mr Bernanke's back. To add insult to injury, he used Canadian currency. No wonder he was reprimanded by the head umpire. Other than this the race has upheld high standards of fair play so far. Oh, so far indeed, I am sorry to report now that a deplorable and distinctly unolympic incident has just taken place. Carlos has really done it this time! Right in front of our cameras, he tried to ram a pair of hair curlers - probably stolen from the hotel - into Mr King's smoothly functioning printer and for that he is being sent off the field. Mr Rodriguez, in the Mexican underworld also known as the Goon from the Lagoon, is escorted out of the arena and the race will continue without him.

The mood in the stadium is gradually heating up. The prominent London bankers in the front rows are rooting for their own, chanting "in-fla-tion, in-fla-tion" in unison and looking forward to the flood of jolly liquidity which will soon buoy their institutional trading accounts. In the cheaper seats, however, the elation stumbles. The common Londoners who do not have their wealth stashed in inflation protected assets are looking considerably paler. Many are worried about the loss of purchasing power caused by the freshly printed money and some are quietly calculating how much they'll have to shell out for food and gas in the weeks to come.

Meanwhile elsewhere in the stadium, an interesting development is taking place. For a race of this duration and intensity one cannot expect the printer cartridges to last longer than several minutes. So here - in the middle of the race - one by one, the finalists have to push their equipment into the depot where it is immediately being surrounded by a team of highly trained mechanics. After a few seconds of a flitting commotion - a scene reminiscent of silent movies - the cartridges are replaced and the printers ready for more action. This well rehearsed and seamless operation would certainly impress even the most discerning Formula One aficionados.

We are rolling into the second half and the Japanese leader is slowly loosing his monetary steam. Ben and Mario, on the other hand, have found their rhythm and proceed now in a smooth robotic fashion. The moves of these remarkable financial athletes became well planned and highly efficient - perhaps even resembling interpretive dance from some distance. Their thumbs keep hitting the Print button with lethal frequency and surgical precision. It is clear that years of texting Timothy Geithner are finally paying off.

Oh, too bad now. Mr King, whose repaired printer was doing so well that he worked himself into the third position, is signaling to his support that he's got a bad case of a printer jam. Deeply frustrated Mervyn is walking around his machine and kicking it tentatively in several critical places. We see him opening the plastic cover and tinkering with the mechanisms inside. Our online microphones are picking up his call to the the service center as well as its prompt and courteous response: "If you are calling about opening a new account, please press or say 1; if you would like to report a problem with the current installation, please, press or say 2". But, rather surprisingly, Mr King is not pressing or saying 2. He appears to be tossing his mobile phone far into the stands and storming off the pitch almost simultaneously.

The race is now approaching its home stretch and the leading printers are literally drowning in their own money. Clearing it is obviously the key to success here. And we have to say that the Mediterranean crew of Mr Draghi is doing far superior job in removing the new bills from his printer's vicinity. Especially the Greek and Spanish sweepers have no problem disposing of any new funds that come within their reach. No problemo, senor. Mr Bernanke appears a bit overwhelmed at this point and clearly trails behind even though... - wait - oh my goodness - ladies and gentlemen, this is a game changer - crikey! - a formation of helicopters is now descending onto the field and loading up piles upon piles of Mr Bernanke's new money. Unbelievable! And Ben immediately uses this freed up space as an excuse to increase the volume on his beloved turbo-charged Canon from "post-lehman" setting to "pre-spain".

What a finish! This is getting more thrilling by the second. Bernanke takes off his double breasted suit, rolls up his sleeves and embarks on what I can only describe as a printing concert. Nay, this not money printing any more. This is money sprinting, ladies and gentlemen. The crowds are ecstatic, the pace is nearly suicidal. Bill after bill, Mario's lead is diminishing and the finish ribbon is within reach. The present financiers are squealing with excitement and American spectators are cheering their man on with deafening "Q-E! Q-E! Q-E!". Queen Elizabeth, unsure to whom the ovations belong, raises slightly from her seat in the Royal Loge and makes a non-committal bow in their general direction.

In the breathtaking photo finish Ben Bernanke snatches the gold, when his last one hundred dollar bill is shown to be just a tad more extended from the printing tray than Mario Draghi's. Yes, it is official now! The barbaric relic goes to Team USA, EU is left with the silver and Japan takes the bronz. Messrs. Blankfein and Dimon are patting each other on the shoulder of their pin striped suits and their shining faces are sending a big thank you onto the field. On a darker note, an unidentified man wearing an Occupy Wall Street t-shirt has just attempted to throw a bundle of home made tortillas into the VIP sector. He is now being handcuffed by the local police and loaded into a security van. No connection to Los Zetas has been established at this time.

And that's a wrap, ladies and gentlemen.

New Hradec

Pilgrimage is a very special kind of journey. We don't take it to photograph some stunning waterfalls, or study cocktail menus of Thai bartenders, we won't discover new Amazonian frogs while on it, and we certainly won't be able to collect seeds of rare alpine plants, we don't even make any business deals while traveling, there is simply no Earthly practical purpose to it. Pilgrimage is a ritual of sorts - a symbolic watering of our roots or an identity confirmation that will be chiseled deep into our character. It is a junket for higher purpose, whether that purpose is religious, cultural or personal. And upon completion, a silver fiber is ceremoniously drawn through our spine and stays there for ever.

Few years ago I stumbled upon a small town in Minnesota named New Prague. Naturally, such serendipity prompted a little Internet search trawling for other American towns whose name might betray a Czech origin. The crown jewel of that effort was discovery of New Hradec, a small community in North Dakota named after the capital of Eastern Bohemia, where most settlers in that region came from in the second half of the 19th century. Since that capital, Hradec Kralove, also happens to be my hometown, a trip to North Dakota became a looming pilgrimage of my life. It was several years in the making, but this Spring I finally mustered enough resolve to pull it off. I know that my ancestors watching me from their respective heavenly clouds would never forgive me if I didn't.

North Dakota is not usually on the top of the list of most desired vacation destinations. For the vast majority of people it probably ranks just slightly ahead of a weekend trip to an abandoned strip mine. But a true pilgrim is not dazed by such mundane considerations. There is that higher purpose, right? So one weekend this June, I packed up my small suitcase and landed at a quaint airport of Bismark, fully determined to reach New Hradec come hell, high water or prairie fire. I rented a small car there and the next day set out across the grasslands into the Dickinson area. The sky was brilliant, the Sun was shining, the surroundings were comfortingly green and the sense of adventure nearly intoxicating (fortunately for me the highway cops do not have a measuring device for that yet).

I think most people have a special soft spot for their hometown in their soul. Especially if they spent the first 18 years there. It's like the first love - nothing will ever take its place. For your regular average Joe the name Hradec means absolutely nothing (although for non-Czech speakers its rapid repetition might be a cool tongue twister). For me however it has a whole universe of meanings. It is a line in my birth certificate. It is the locale of my high school years. It is the chant we used to sing at the matches of my favorite soccer team. It is the sign on a railway station that I used to look for when returning from my studies in Prague. It is the egg from which I came. Those 6 letters are indelibly tattooed on my big toe.

That is why seeing them pop up in the middle of the North American prairie was an unusual and uplifting experience. The plane ticket from DC wasn't exactly cheap, but the jazzy dissonance of the familiar name and unfamiliar elements made this pilgrimage worth every penny. It was like flying across the whole Galaxy to some distant planet and finding Kentucky Fried Chicken there.

Imagine that.


Fahrenheit 104

Someone famous once said that "home is where you can find a doorknob in the darkness". This past weekend I had an unexpected opportunity to test drive this piece of wisdom in real life conditions.

Washington area has been suffocating under a severe heat wave for quite a few weeks now. Some time in the middle of June, the Sun whipped out its best pom-poms and started flogging our little planet like there's no tomorrow. Day in and day out our skins were parboiled in an afternoon sauna. The heat was not only oppressive, but also persistent. Nay, habit forming. And as heat waves are wont, they generated a number of storms of matching ferocity. One of them rumbled into town on Friday and knocked down all that stood in its path. Primarily the power lines.

When I came home that night everything was cloaked in darkness. Even the traffic lights were ominously unblinking. So I inched my way upstairs and started fumbling for the door knob. Indeed, it was exactly where I left it in the morning. Moving blindly inside my apartment felt like an exercise in instrument flying. When I finally found the flashlight, I lit a few candles and calmly awaited the arrival of electric current. However, as the minutes dragged on and no available electrons came in sight I decided to call it a day and go to bed. Since my bedroom had turned into a kiln, sleeping in it was a straining and drawn out nightmare. I would compare it to swimming in a lukewarm vat filled with vegetable oil in which restless dreams float around like half baked fish hopelessly nibbling at the cool corral reef of imagination. No fun whatsoever.

The next morning it transpired that electrons were not expected to show up any time soon (the storm apparently decimated most of the DC area), so I hopped in the car and entered the rush hour like traffic heading for the hills.

This unenviable experience taught me two things though.

First. We worry about the wrong problems. We fret about the Greek and European debt. We are apprehensive about Syria and the deteriorating security situation in the Middle East. Yet we are oblivious of the fact that in the meantime our whole planet goes off its rocker. Arctic methane seeps away and the polar caps are becoming the World's least known vanishing act. I think we should get our priorities straight: just because something may go wrong over the course of the next decade rather than next Tuesday does not mean we should put it on the back burner and just let it fester. Yes, this may be a false alarm. But what have we got to lose? If all of this is just an innocent local instability, we will merely end up with a more sustainable way of life and cleaner air. We can rebuild the European banking system from the scratch if it collapses. Not so sure we can do the same with the climate.

Second - as I was stuck on my way to Frederick (obviously I was not the only one who figured out that skipping town was the correct solution) I pondered how fragile our civilization really was. How much we take certain things for granted. And how poorly we would deal with their loss. Some people slept in their cars that weekend. Some ate their emergency stash of dry or non perishable food. Some had to drive to far away restaurants. And this was just a little storm. What if we lost electricity for a month? How long would the facade of civility last? How little would it take to turn us from respectable citizens to prowling predators, hunting for food.

There is a Spanish proverb which says "Lo que separa la civilizacion de la anarquia son solo siete comidas" (Civilization and anarchy are only seven meals apart). Without electricity, it might be just five.


Any time I come back from the West - I feel like my soul has just taken a good shower. All the dirt has been washed away and clean sheets await - courtesy of the combined magic of high mountains, picturesque valleys, blue skies, simpler people and relatively pristine nature. The feeling of organic cleanliness is unmistakable. This is the world where land is not framed by industry or agriculture, but rather by its wild horses, by its soaring eagles and the open spaces in between.

And nowhere is the allure of open spaces as palpable as in the seemingly infinite prairies of North Dakota.

They seem comfortingly close and intriguingly distant at the same time. Like a slowly undulating green ocean. In fact, they are an ocean. A vast and living sea of grass that fills you with the same sense of wonder as sitting at the Jersey shore. You just wish you could hop on the nearest schooner and set sail across the green plain, guided only by stars, ancient spirits hovering above the prairie and your sense of adventure.

Most people do not think of North Dakotans as a great sea faring nation. But that's what they really are. When I was driving on Interstate 94, I had to make a quick stop at a rest area not very far from Bismarck. As I was strolling around and stretching my arms, I could not help noticing a rugged strapping trucker with XXL sized beard who was checking some stuff around his semi. And I swear, he looked just like Sinbad the Sailor about to set out on his voyage across the Pacific Prairie.


The Immigration Issue

Politicians have an amazing ability to becloud an otherwise clear sky beyond all meteorological recognition. Give them a simple choice and a few "Lobbying Welcome" signs and in a few weeks they will turn a legislative no-brainer into a spaghetti bowl of conflicting regulations, obscure edicts, executive orders, prohibitory statutes and arcane ordinances all intertwined in such confounding manner that it would take five armies of clairvoyant constitutional scholars to figure out what's right and what's wrong.

Take the issue of immigration, for instance. On the surface it looks like a reasonably clear cut matter. Either we think it is legal for people to just saunter into this country at will or it is not. There is no middle ground. There is no point just trying to make it somewhat legal or somewhat illegal or in general discourage immigration by instructing enforcement officers to frown and glower at the entry booth. This is a simple yes or no question. Are unauthorized border crossings within the law or not.

I am not saying that either variant has a moral high ground, because I see pros and cons on either side, but we should choose one and stick with it. If entering the country without permission is legal, then we should stop harassing throngs of prospective immigrants and make moving into this country as easy as moving from Alabama to Arkansas. On the other hand, if it is not legal then we should simply make sure that violators of the law will face consequences. For the Number One superpower which has placed a man on the moon and which can wage drone based surgical strikes half way across the globe it should be no problem to seal up the southern border and make sure that any new immigration is done in a controlled fashion. If we need more labor of a certain type, I am sure we can increase the appropriate quotas.

But such dichotomy would be too simple. Politicians hate transparency. They love murky waters where they can set up the traps of palace intrigue and flaunt their wheel greasing and elbow rubbing expertise. Rather than saying which variant they'd prefer, they keep dancing in the gray area, creating targeted pardons and temporal exceptions and a climate in which grand horse trading thrives. Imagine we'd apply the same standards to say stealing: Hear Ye! Hear Ye! Henceforth it will be deemed beyond the law to pilfer private property from other citizens, except on New Year's Eve and maybe also on Tuesdays as long as the name of the pilferer begins with "P". Just imagine the legal havoc.

While the political system flails in a legislative limbo, a motley crew of potential new Americans is pouring into the country day in and day out, whether through the Port Authority or through the Sonoran desert. The colorful crowds contain a varied mosaic of people: foreign experts with critical skills, gangs of drug traffickers hoping to expand their nefarious networks, hard working laborers on a quest for a decent job, gimmigrants whose one and only goal is leeching off the welfare system, stranded family members looking to reunite with their kin. The bandwagon teems with motives and aspirations, with schemes and visions. But the saddest part is that without clear and enforceable laws we won't be able to separate the good from the bad.

Clouds of Glass


any time clouds percolated above the horizon
large crowds gathered on a high plateau
all decked up with trumpets and motley hats
and bringing wines and crackers to the party

when the clouds rolled high above their heads
some pointed short and shiny harpoons in the air
some turned up their palms as if moisture was imminent
some cupped their hands around ears and started listening

sounds became hushed and muffled
as the clouds were getting closer
and closer
and closer
and closer
and when they were almost too close to each other
a faint clinking sound nicked the silence
and all the clouds just shattered

down comes the queen of morrow
and fills my glass with brandy
the time is yours to borrow

and streams of dust are swirling
and bells of rain are ringing
and apple trees are growing

paw pads of restless tigers
may touch those few still waiting
night tucks in smiles and whispers

and dreams


Waiting for a Financial Einstein

Towards the end of the 19th century, the towering edifice of science, by then well grounded in Newtonian mechanics, seemed consummated, plausible and self-consistent. But as the ever restless gang of physicists started plowing the elusive electromagnetic field, hairline fractures started showing up in its polished walls. The mathematical development of the underlying theory spurred by the barrage of high precision experiments began exerting significant strain on the foundations of classical mechanics. Soon it became clear that in order to reconcile the old with the new, the fundamental notions of space and time will need a serious adjustment. However, tweaking the statements and definitions within the existing schema created more problems than it solved. Scientists educated in the classical ways could not divorce themselves from the shadows of status quo. Lots of duct tape was expended to hold the teetering structure together but none was good enough to provide permanent relief.

Fast forward to 1905. Enter 27 years old clerk from the Swiss Patent Office named Albert Einstein. Unencumbered by the previous dogma, his mind could freely set sail on the vast ocean of imagination, guided only by the positions of the stars rather than by man made navigational structures. In his Special Relativity he boldly demolished the increasingly confusing labyrinth of ad hoc fixes and empirical constants and based his overall vision on two simple principles.

The Principle of Relativity - the laws of physics should be the same when expressed in coordinate systems that move with respect to each other with constant velocity.

The Principle of Invariant Light Speed - light propagates in empty space with a fixed and definite velocity which is independent of the motion of the body which emits it.

There. Instead of hectic, chaotic and mutually contradicting scribbles, two masterful strokes of a brush. Armed with only these two simple propositions and some relatively straightforward geometry Einstein laid foundations to of all of the 20th century physics. The survival of his theory on the boisterous seas of modern science (hundred years and counting) is the best testimony to the effectiveness of his sleek logical design.


These days, the banking system is floundering in a quagmire similar to the one physics was stuck in 100 years ago. Bound by the regulatory straight jacket, constantly undermined by rampant greed, conflicted by competing interests and helplessly overwhelmed with complexity, the system is on the verge of crumbling under its own weight like a bridge made out of reinforced corn flakes. Things are not helped by the fact that the central pillar of the whole structure, the US Federal Reserve Bank, was designed just a few years after Einstein published his ground breaking paper and it is not clear whether it still reflects the needs of the highly interconnected world or whether it was hijacked to serve the needs of a few. Viewed from the ground, the global financial system looks like a giant plumbing fixture whose sole purpose is to transfer wealth from productive sectors to financial centers.

Over the past few centuries, economists managed to create a veritable Babel tower of capital ratios, credit derivatives, currency swaps, collateral obligations and other obscure mumbo jumbo. No one - and that clearly includes CEOs of major banks - can even begin to understand all of its implied feedback loops. A brand new paradigm is obviously needed. Not a patchwork of regulations and exceptions which are being piled on top of each other without regard for consequences, but rather a clearly formulated framework which would benefit most citizens of this planet.

Something like this.

The Core Business of Banks is Lending - the primary purpose of banks is to match people who have extra money (i.e. capital) with entrepreneurs who have solid business ideas (i.e. people who can put that money to the best use).

People control the money - every now and then it may happen that existing money stock needs to be expanded. In such situations the power to print money rests with the people and they are the primary beneficiaries of such action

The first postulate defines the purpose of the financial sector. At least of the part that is protected by the central banking system. Banks are merely matchmakers. That is the function that is socially useful and as such should be protected. And if a group of wizzards - whether from Goldman Sachs or JP Morgan - wants to have fun in the cassino and do some proprietary trading on the side - sure - they can create their own hedge fund and gamble away to their heart's content but without implicit or explicit backing by taxpayers.

The second one refers to the crucial issue of who exactly has the power to print money. If Joe Sixpack prints or copies a $100 bill in his garage, he goes to jail, because he has to earn that money. So why would give a small group of financiers and bureaucrats a license to counterfeit our currency for their own purposes? The power to create money out of thin air can lead to enormous wealth whether it is implemented directly though the actions of the central bank or indirectly through a sleight-oh-hand known as Fractional Reserve Lending. In a democratic system, one would expect that any unbacked expansion of the money stock would be done in a way that supports all participants of the economy, and by extension all people. Not just those who managed to elbow their way into positions closest to the monetary spigot.

Bankers are not humanitarians and they are not supposed to be. They have a legitimate business and are perfectly entitled to make money off of it. It is up to us - or more precisely up to our elected representatives - to set up a system which will not only prevent abuse but also ensure that the evaluation and assessment of risks can be done in an efficient way. But instead of searching for the grounding principles, we are drowning in a sea of random details and expedient measures which are only good for creating thousand page monstrosities such as the Dodd Frank Financial Reform.

Now I am obviously not an expert, so I am not saying that the two postulates above should be at the heart of the new financial charter. What I am saying is that someone knowledgeable should come forward and lay out a simple and clear blueprint for a system that would respect the principles of fairness and functionality. Perhaps we could even have several competing visions. But the important point is that those visions should be formulated through a small set of transparent principles, rather than amendments to the current financial jungle. Which - as anyone knows by now - is neither fair nor functional.

Aerial Bridge Across the Ages

The other day I saw a nature show on TV about whales. The one image that stuck in my mind was that of a baby whale trudging alongside a mama whale as it was learning to swim on its own. The fledgling little behemoth was trying to keep up but every now and then it had to be nudged in the right direction. The image of a formidable, multiple ton mammal displaying parental tenderness seemed like a visual oxymoron. But it was moving in a way.

"Moving" is not a word I would normally associate with an Air Show. Sentimentality has little place in an enterprise brimming with military might, high-tech swagger and pilots' bravado. However, last week's Air Show at Andrews Air Force Base proved me wrong on that count. A weekend extravaganza held just outside of the Washington's Beltway managed to inject a little heart into the high-octane parade of the aluminum and titanium machinery.

The show flaunted the well polished hardware of the mightiest Air Force in the world. Bulging cargo planes opened up their reinforced bellies to loitering crowds. Wide eyed kids had a chance to sit at cockpits filled with mysterious dials and levers. Circuitry aficionados could study the wiry details of exposed innards. Formidable helicopters and sleek fighter jets stood silently on the tarmac, displayed prominently like some giant toys in a window shop. History buffs could compare their recollections with reality, and - in a way - so could taxpayers. But besides all this paraphernalia, the program also featured several flying demonstrations, including the famous vertical takeoff Harrier. But the one I am alluding to in the opening paragraph was titled the Heritage Flight. It was a tandem flyover in which a historical P-51 Mustang cruised above the spectators accompanied by the futuristic looking F-22 Raptor. Against the backdrop of a carefully chosen music this technological pastiche created a powerful impression. The passing of a legacy from one generation to another.

It was symbolism of this scene that made it moving. As the old WW2 fighter sputtered across the blue and white skies, it brought the image of a baby whale followed by its mama back to my mind. Although in this case the roles were reversed. An elderly parent was gently supported by a grown up child on the way to the store. At this one moment the clouds seemed to form an invisible bridge connecting two parallel Universes. Two slices of the spacetime merged into one.

I wondered what the mechanics who worked on that plane during the second World War would have thought of this image. They'd probably try to squeeze a tear forming in the corner of their eye.


Facebook Defaced

Facebook, meet reality.

Reality, this is Facebook.

After months of feverish preparations, just as the waves of anticipation started cresting at the investment shore, the company that was being hyped as a hypothetical new Google finally launched its IPO (initial public offering). And as is often the case in instances of mass hysteria, it all climaxed rather unexpectedly - not with a bang, but with a whimper.

Despite the fact that the whole operation had been handled by top-notch investing professionals who under normal atmospheric conditions would be perfectly capable of selling flood insurance to Saharan nomads, the IPO fell far short of expectations already during the first hours of trading. And in the days to come it kept falling shorter and shorter. None of the hyper-connected enthusiasts brimming with virtual compassion could save it. None of the young guns friending the whole world from the hip could save it. None of the big boys with pockets filled with casino chips could save it. The valuations just didn't compute.

But before the vaunted analysts and headache specialists figure out what went wrong, I would like to offer Facebook a few well meant tips how to increase their cash flow.

1. Pet Facebook

Enough of critter discrimination. Facebook needs to open its business to other species. That is where the growth is. The market for homo sapiens is already too saturated. Bring your pets online (although I have a suspicion that many are already there). Let them scratch on the wall. Let them update their status to purring or howling. Let them friend the neighborhood coons. Let them develop their bovine networks. There are billions of spiders on the web already. Come on, Facebook, give them their own accounts.

2. Adopt a dictator

This should be a no-brainer. Dictators usually sit on a big heap of cash and - at the same time - are in desperate need of friends. I am sure they would be willing to sponsor their own networks. This is simply a match waiting to happen. Just a small cut from these transaction would make Facebook's Chief Financial Officer smile like a new moon. Wondering whether to accept Fidel or Hugo? Ali or Bashar? Your choice. And who knows, maybe the notorious autocrats would open up and share with us some of their likes and dislikes. We may learn that Kim Jung Un has an irrational fear of being stabbed in the back by a poisoned carrot. Everything is possible. And if you know how to write good apps, you can sell them used bomb shelters to boot.

3. The Chinese Wall

Forget those little panels where friends scribble about what floated in their cereal bowl today and how they felt about it. We need to think big. Really big. Facebook needs a large centralized awe inspiring wall for all to see. A wall that could absorb all the profound comments generated by the recent concert tour of Esoteric Hernia. A wall where everyone would have a voice. A wall that would be funded by the cash rich Chinese government.

4. Insurance to the Rescue

We live in a surveillance world. Apparently some employers are now screening Facebook for signs of inappropriate behavior in the profiles of their prospective hires. Since this trend is more likely to intensify in the near future, it is time to introduce Facebook to the lucrative business of private insurance. Wanna make sure your career is protected in case your boss finds out that you are secretly kissing frogs in the park or bowing profusely to the porcelain throne? Our coverage specialists would be happy to design a contract for you that will fit your personal needs.

5. Central Friends Bank

This could be Facebook's crowning achievement. At some point the world will run out of natural friends, and then the ability to generate synthetic ones could come in handy. Imagine you do something bad, and all your friends unfriended you. No problem. Facebook will generate scores of fake accounts - for a small fee obviously - and have them all friend you. Maybe even write some computer generated pleasantry on your wall. Voila - you no longer the pariah of the block. And the best thing about synthetic friends - a fact real central banks are well aware of - is that they can be produced in unlimited quantities. Welcome to the Brave New World!

But let's put jokes aside for a moment. That last point actually opens a small window into one possible form of a dystopian future, and it is instructive to take a peek through it.

There is an uncanny parallel between the idea of creating non existent friends and the way our banking system operates, specifically how central banks create "money" out of thin air whenever they think it suits their needs. The parallel may sound preposterous at first glance, but now that Facebook enjoys its tango with the likes of Goldman Sachs and other Wall Street darlings, perhaps it is worthy of closer inspection.

We all crave wealth and friendship. It has always been that way. But they should be organic. They should be the product of our hard work and our social engagements. The moment you create wealth or friendship synthetically, their true meaning and value becomes diluted. In other words, making hundreds of Facebook friends is as good barometer of your real social life as printing 2 trillion dollars is of our nation's financial health. Sure, on the surface it may seem like we have just invented an antidote to all bad consequences: if you mess up - financially or socially - a central authority will step in and create brand new dollars or friends to paper over the problem. But if you think about it, something precious would have been lost in such shenanigans. For a world to function properly, there have to be consequences.

Every day we shape our future with a myriad of individual decisions we make. Let's hope that values we create and believe in will be as real as possible. Creating an illusion of wealth or social life by increasing their nominal quantities would be a giant leap in the wrong direction.

Forward to School

Bubble is dead, long live the bubble.

We have barely clambered out from underneath the housing wreck, and a new bubble is already swelling on the financial horizon. After the homeowners' ability to carry debt maxed out, a fresh new demographic is emerging to pick up the slack. Our youth. Faced with sky rocketing college tuition, many students have no choice but to tie their ankles to interest bearing leg irons. After the graduation, when most people would normally start their families, they will be providing an extra cash flow for our starved financiers. Considering that these loans cannot be defaulted on and have the full backing of taxpayers, it is a diabolically clever scheme for generating income.

There has to be a more efficient way how to transfer knowledge to the next generations - one that won't entail mortgaging their future to the hilt. Perhaps, the brightest ones could compete for an array of public stipends and those who wouldn't get them but were willing to study hard could have some other affordable option. Companies, for instance, could offer targeted stipends for students who'd be willing to work for them a stated number of years. Such approach would not only help young people to gain relevant experience without going into unnecessary debt, but it would also steer them into degrees with actual organic demand rather those in Oriental Literature or Comparative Ceramics (those might be fun, but will probably not lead to a sustainable career).

And then there is the cost side of things. Educating young people should not carry the costs of a minor space program. Significant improvements could and should be made in the overall operation of the system. And I do not just mean trimming the bloated administrative structures whose multitudinous offspring are covering the educational vessels like a layer of polyps.

The model where every University and every class has one full time professor lecturing to a semi attentive group of teenagers belongs to the 19th century. Reading the same textbook over and over on 20,000 campuses is a poor use of faculty time. No wonder tuition can cost tens of thousand of dollars. In the 21 century, the introductory lectures, taught by the best experts in the field, should be made centrally and available through Internet and other mass media. Even students at community colleges should have access to those. At the end of the first two years, students would undergo anonymous testing for basic grasp of history, math, sciences, style etc, and after that they would start specializing. In small problem solving seminars the senior professors could mold young minds in much more effective ways.

A system combining widely distributed mass produced lectures from the best sources with subsequent personal attention of human instructors all neatly tucked into a slim administrative wrapper would significantly improve our standing on the global educational scale. It would make all the difference in the world. A whole new ballgame with a whole new student body formed in the process. A convocation of intrepid eagles surfing the gales of curiosity rather than a flock of puzzled geese peeking into the crystal ball.

In our complex and increasingly regulated society much effort (on the governmental level at least) is being spent on designing all kinds of expensive institutions that would help protect the populace from fraud, abuse and predatory behavior. Yet, while spending taxpayers' money left and right we are forgetting one very deep and yet simple truth - school is the best consumer protection agency. Smart and informed people cannot be easily fooled.

We don't need myriad of protective bureaucracies. We need a functional and widely affordable education.


Rossum's Universal Robots

In 1920, at the age of 30, the Czech writer Karel Capek wrote a play about a future populated with intelligent androids. The play was titled "R.U.R", an acronym for the company manufacturing such creatures/machines, and premiered in Prague a year later. When searching for a good descriptive expression, his brother Josef suggested the word "robot" - derived from an old Czech word "robota" meaning "serf labor" (the forced work of feudal vassals toiling on their Lord's property).

Nearly a century later, the word robot found its way into many languages and robots themselves, albeit a bit simpler than Capek's nearly-human androids, are invading the world of manufacturing at a break neck speed. And apparently not just manufacturing.

Whenever I listen to our beloved politicians, I start thinking that their ranks have been infiltrated by an army of nearly indistinguishable androids. I watched a couple of political debates recently, and I could not help noticing that its participants often fell into two broad categories.

The first kind reacted like normal people. They listened to the question and then tried to answer it the best way they could. Sure, you might have disagreed with them, but they made sense - at least from their point of view. Tom Coburn, Elizabeth Warren, Ted Kaufman or Marcy Kaptur are examples I can think of from the top of my head. These people usually think in terms of complete sentences or whole paragraphs, not just simplistic and easily digestible sound bites or clearly ideological bullet points. They might rant on occasion, they might ramble here and there, but they will tell it like it is.

On the other side, there is a different kind of animal. Politicians who in their effort not to alienate any segment of society will scrub their thinking of any potential controversy, and hence also of any potential meaning. These are politicians who - when you hear their answers - make you immediately wonder if they actually heard the question. Lindsey Graham, Nancy Pelosi, Michele Bachman, or Chris Dodd are the first examples to come to my mind. To a human ear their answers will always seem a bit incoherent, intellectually stiff, formulaic and even evasive.

A typical conversation goes like this:

Reporter: "Senator, our viewers would love to know what you had for breakfast today.

Politician: Breakfast is a very important segment of every healthy individual's daily regimen.

Reporter: That is definitely true, but I am sure you must have a favorite meal.

Politician: I think all meals have significant nutritional value and my office would be happy to provide some specific details.

Reporter: Are you trying to make a point that we should pay more attention to the quality of our nutrition?

Politician: Ummmm, again, I think all meals have significant nutritional value and I am sure my staff would be happy to give you specifics.

In this kind of dialogue, something doesn't quite add up, does it? You quickly get the sense that the two parties are talking past each other. Almost as if politicians were some kind of pre-programmed automatons. Sometimes, you can track this suspicion step by step: they digest the verbal input, turn it into a stream of salient keywords, then scan the bank of hundreds of thousands of possible responses, find the closest match, run it through a politically correct filter and finally send it to the output. In other words, they seem to be driven by a complex but purely mechanical meta-algorithm in lieu of a normal human brain - you know, that old fashioned and finicky medium that gave us such anachronisms as beliefs, visions, principles, leadership and integrity. That is something a Natural Language Processor - no matter how sophisticated - will never fully emulate (or at least not in the foreseeable future).

See, we are spending all this money on the research in Artificial Intelligence, and yet all that time the answers may be lying at our doorstep. Or more precisely, at the doorstep of the Capitol Hill. So why don't we just send a team of our top notch researchers to the DC area, let them catch one of those political androids, find their Central Processing Unit, open it and see how they are wired. I think this would further the development of robotics at least by 50 years.

And save the taxpayers untold millions, too.

Nature's Way

It's April again. That time when Mother Nature puts her chartreuse pantaloons on and starts dispensing the best colors from her room service cart. After the long winter recession life is booming again. The trees flaunt their brand new clothes and that lawn which seemed so hopelessly brownish just last week is suddenly an exemplar of green.

The thing that fascinates me most about this annual miracle is the equal opportunity with which it showers all participants. No piece of lawn, no standalone tree is forgotten. When you look at a meadow, there are no "rich neighborhoods" in it that would be greener than the others. It is as if the last growing season was forgotten and everybody got a fresh start. All the assets and liabilities of the past have been wiped away. The world has a clean slate.

This made me wonder if there was a little lesson there. Maybe humanity would have thrived better if we had forgotten the past every so often and given everyone a fresh start. Utopia? Sure, but let's think about it.

Some of us are born with a silver spoon in mouth and some with ankle weights of poverty. As a result we have many dull but wealthy scions festering in expensive private schools with nothing to their credit but crooked character and sallow imagination. On the other side of the tracks, we have lots of bright kids whose minds are sentenced to atrophy in the boredom of poorly run inner city schools. And the question we should be asking ourselves is - can we really afford to waste capable minds? If we codify this continental divide, we will never unlock the hidden treasures of our human resources. I have tremendous respect for those who earned their lifestyle through their toil and expertise. Not so much for those whose only source of income is derived from the trust fund set up by their industrious grandpa.

Recently I heard that all tuition at US universities (public or private) comes to about $70 billion. Compared to various wars we are waging that seems like a chump change. Surely there must be a way to help sharp and crisp minds reach their full potential without going deep into debt. We already have a burgeoning SAT industry - so identifying those minds should not be a problem.

To help fund this program, I'd include a heavier tax on inheritance, because that is the point where the wealth flows into possibly less effective branches of the global skill market and the accompanying power gets wasted. That does not mean that silverspooners should give away their whole family fortune. After all, some projects require an effort of multiple generations. We should just place certain constraints on how much wealth can be transferred onward automatically.

The revenues from such tax would be used exclusively for education - just to make sure that some "well meaning" politician would not find use for them in bureaucracy or military spending. Let's say half of it would go to salary increases in public schools and the other half would fund stipends for the most worthy students. We don't want to lose the next Einstein, Jobs or Carnegie because they drowned their talent on the street.

This is not to propose some vulgar form of egalitarianism, Marxist or otherwise. The economic fate of the Soviet Empire showed clearly the Achilles heel of redistributing the wealth too equally. People simply won't put up their best effort if they know they will not be adequately rewarded for it. And we do want our elite to be the best this generation has to offer, don't we? Leadership is a task of great responsibility. It should not fall to someone just because their daddy had the most powerful Rolodex. In other words, we want to make sure that everyone with a true talent has a fair shot at it.

Equal opportunity. That's the nature's way.


Who is the Fairest of Them All?

The Buffet Rule - a provision requiring millionaires to pay higher taxes - took the center stage in Washington politics this Monday. As you might imagine, the political fireworks were spectacular. Comandeering other people's money is like a catnip to politicians. Any time the revenue for public spending appears on the agenda, both sides of the aisle explode in a flurry of impassioned argumentative tomfoolery. So much so that sometimes I worry that they might be sued by the three stooges for copyright infringement. As they toss the rhetorical cabers left and right all over the floor, the very concept of "fairness" (which both parties love to worship) gets flipped more times than a burger at Larry, Curly and Moe's Grill Party.

The big battle of political wills ended in a draw this time - even though the bill technically passed in the Senate (51:45), it was immediately filibustered by Republicans, which means - for all practical purposes - it was dead on arrival. Unfortunately, much of the "fairness" inherently involved in killing it was severely misplaced.

No, I do not mean the fact that capital income is valued more than that coming from labor as exemplified by Mitt Romney's benign tax rate of 15%, where most of us pay way over 25%.

I am also not alluding to those opulent junkets in Las Vegas which some public servants consider to be the best way of spending taxpayers' dollars, second only to the secret service traveling all the way to Colombia for a refresher course in Kamasutra.

Nor do I mean the question of who exactly benefits from waging a war in some rugged desert north of Waziristan, especially now that the world's most wanted terrorist has been consorting with heavenly virgins for more than a year.

The central omission in the discussion of "fairness" is the mindbogglingly obscure nature of the funding for our federal budget. Without balancing our books and seeing who pays for what you cannot even begin to address "fairness". When the Fed engages in its quantitative machinations (i.e. buying the government debt with money that they literally make up), the accounting becomes so blurry that any notion of what is fair loses its meaning. To find it, we need clearly visible lines between assets and liabilities and transparent book keeping.

Another way of saying that is that we don't really pay for the services we receive. Indeed, had we paid them straight from our pocket, we might have realized that perhaps we didn't need some of the expenditures. But rather than having a hard adult discussion of what our priorities are, we shift part of the financing burden onto our children (through future taxation), and part onto the poor and middle class (through inflation). In this situation, accusing the lower income brackets that they do not pay "fair share" is a bit disingenuous. And disregarding the perspective of children, whose future is being systematically plundered, does not smell like "fairness" to me either.

But that's just how DC operates. Whatever is beyond the 4 year horizon is simply invisible. In the meantime, there is plenty of muck to hurl around. While one side of the aisle yells "class warfare", the other one screams "income inequality" with equal gusto. And in a sense they both have a piece of truth. But in order to make any reliable judgment on this issue, we have to see the true bottom line. So how do we get our representatives to balance our public books?

Well, I have an idea. Why don't we make their pay decrease proportionately to the budget deficit. After all, it is their job to compromise and negotiate for the common good, right? And deficit is an obvious failure to do so.

So let's see - with a mature economy we cannot expect to grow more than 3%, so deficits should stay under that threshold as well, otherwise it will become increasingly difficult to finance them. Now, if they manage to come up with a budget hole smaller than 3% - good - they get their usual pay. But for every 1% of the deficit, they lose 10% of their pay. Say you come up with a 10% deficit - that is 7% over the 3% target - so that would be 7*10% = 70% off your paycheck, Ladies and Gentlemen. And guess what? They will make a compromise before you could say "Popocatepetl".

But don't hold your breath for this measure to ever materialize. You will sooner see 435 lizards bowing on ice during the Stanley Cap finals than our representatives tie their pay to actual performance.

The Pothole Project

We love to love arts. Dabbling in any culture booster confers certain aura of sophistication. But we don't usually subject our minds to whimsical vagaries of Muses haphazardly. We tend to unleash our aesthetic feelers in officially designated areas, such as theaters, concert halls or art galleries. In the safety of a like minded crowd that is. I guess when it comes to discerning, we really appreciate cues - those little rubber stamps of peer confirmation that tell us we are part of the in crowd. It must be some eons old herding instinct in us.

Our planet is steeped in beauty. Literally. We bathe in it every day, although most of the time we let it slip away unnoticed. No one squats under a post-bloom cherry tree to scoop the fallen petals with their palm, very few have time to smell the roses on their way to the office, and you don't see people stopping on a sidewalk to admire the deep orange tones of the setting Sun. Most of the time we don't even consider it. But take the same scenery, put it on canvass, hang it on the wall and voila: suddenly everyone stops by and marvels at the rich colors, at the amazing textures, at the audacious perspectives.

That's the magic of the gallery - passing through its door is our cue that we are to become connoisseurs of high arts. We can throw away the shackles of banality and emit sighs of enchantment. Oh wow, look at those tulips, honey! Never mind that those are the same tulips that bloom in much livelier colors in the public park just in front of your apartment. Galleries are the places of authorized artistic inculcation; the places where our infirm individual judgment gratefully grasps the invisible hand of centuries old collective opinion.

The same principle is at work when it comes to say culinary arts. The food in a fancy restaurant often seems better than a similar dish served in a hole-in-the-wall joint. The elaborate decor and the impeccable service whisper to us: "Psst! Good food offered here". That is our subconscious guiding light coming on. Beauty may be in the eye of the beholder, but separating our own subjective perceptions from the objective reality is hard. The visual prompts of a formal and perhaps expensive setting serve as training wheels for our verdict of a local chef's creations.

Our desire to be culturally refined is almost as natural as our predisposition for good food. But not having the handrails of context available can make us feel insecure. If we marvel at an opulent explosion of magenta in a sunlit rug caught in a tree, people may question our weird taste. In the gallery we are safe. Oohhing and aahhing is acceptable. Everything is a certified beauty. The supportive environment is a psychological subsidy of sorts. The kind of extra social dimension which also explains other aspects of our behavior - for instance why most people prefer going to the gym rather than jogging around the block or doing push ups in their own backyard.

However, like in every market, this subtle interference produces distortion. The values in a rigged market are not in sync with the underlying fundamentals. Not all great tasting food makes it into fancy restaurants and not all fancy restaurants serve great food. And same goes for the visual input. Even though art is a tireless rescue mission, not all great sights have been saved from withering in inhospitable places. No matter how many Manets, Monets or Munchs we commission, you can bet that sooner or later some poor schmuck will stumble upon an undiscovered Snowhite sleeping soundly in a plastic coffin obscured by a really dark forest.

The other day I was walking downtown Washington with a friend of mine and somewhere near the Union Station we came across a pothole which immediately caught my attention. It had a beautifully smooth shape that seemed to have fallen out from a Salvador Dali painting. Or maybe Joan Miro's. Anyway, I loitered around for a while to see if anyone noticed it, but the crowd was just passing inertly by. No time to wonder. Not a glance. The irony is that if the very same shape hung on the wall in MoMA and was signed by a famous name - preferably by someone who jumped off the cliff - everyone would be going gaga over it.

But that pothole would never make it into a gallery, because potholes are presumed ugly until proven pulchritudinous in the court of some critic's opinion. Unfortunately, when critics do come into contact with potholes, they are too busy turning the steering wheel. But I liked the raw appeal of this unexpected and unsolicited beauty. It was genuine. So I decided to rectify this insidious injustice and took a picture of it. Actually more than that, I decided I will shoot a whole series of remarkable potholes.

Who knows - maybe some other soul will notice them and one day there will be a shining new annex standing right next to the Museum of Modern Arts: the National Pothole Gallery. And then the natural beauty seekers will have to turn their restless attention elsewhere.


A Letter from the Dark Side

Biting the hand that feeds you is never a good career move. But if the hand that feeds you also fumbles in our collective pocket, perhaps an exception can be made.

Last week New York Times printed a peculiar farewell letter of one of Goldman Sachs London executives. The heartfelt scorcher by Greg Smith titled "Why I am leaving Goldman Sachs" had all the usual verbal trappings of the financial industry insider: "toxic and destructive environment", "sidelining client interests", "decline in the firm's moral fiber", the works. Naturally, such barrage of scathing criticism could not come without frowning reverberations in the press. Indeed, a number of otherwise temperate commentators hopped more than happily on the bank bashing band wagon.

But we should be careful not to throw out the baby with bathwater here. It's not that banking is inherently evil. It's just that its practice over the past decade or so has come seriously astray. Let me give an example.

Fixing cars is an honest business that we all are familiar with. You drive your car to the garage, state the problem and mechanics will do their best to fix it. Of course, they don't do it out of the goodness of their heart. For this service they collects an appropriate fee. That is how capitalism works.

Now imagine a town, let's call it Crookedville where mechanics treat your car in ways that could politely be described as somewhat dubious. They change some of its functioning parts by older and less functioning ones, they use the car for their own personal errands while it is in the garage, they talk you into additional and unnecessary repairs over the phone, they may pour inferior oil into its innards. When you get your car back - you suspect nothing wrong. It runs fine, everything seems normal. Yet in nefarious ways your car, and by extension you, has just been taken advantage of. And that has nothing to do with capitalism.

Banks provide useful services, too. They channel our capital to worthy entrepreneurs and for this service they deserve a reasonable fee. But it is their job to check reputation and credit worthiness of such borrowers. It is also their job to give savers, who provide the capital to begin with, a decent interest rate. It is not their business however to distribute funny money hand over fist to everyone with a heartbeat and then stick the taxpayers with the associated risks. It is not their business to tamper with the value of our currency for their own benefit. And it is not their business to herd their customers into inferior and opaque financial products.

If the global burden of debt reached such insane levels that merely maintaining the current levels of growth forces banks to engage in fraudulent behavior, then it is time to draw a firm line in the sand. It is up to the remaining honest captains of this industry to recognize the sordid state of affairs and steer the ship away from Crookedville even if it means sailing through slower waters.

Yes, that would imply less glitzy life for Wall Street, but over a long run it could earn for it some of the respect that it has lost. The operative word being "earn". I am not talking about that fleeting obeisance which issues forth from a frothy flock of acolytes singing praises to their material trinkets. Such respect is as phoney as the trillions of dollars that the central banks are flooding the capital markets with in order to create an illusion of prosperity. The true organic respect has to be earned by providing valuable service to the community. It cannot be conjured into existence by pressing the GO button on Ben Bernanke's money printing press.

If enough high financiers realized this (and that is a big if) then their subordinates would be able to devote more of their intellectual capacity to helping the global economy and less to writing vitriolic farewell letters.

I know. Dream on.

Photographer's Choice

Opportunities do not last forever. That is one of the most important lessons we all eventually learn. Life presents us with a mind boggling series of choices, but more often than not those choices have fine printed expiration dates. Yes it would be great if we could take some time off any time we are presented with a dilemma and ponder all its ramifications in the quiet comfort of our homes. But it does not work that way. By the time we reach the optimal solution, the changed circumstances may no longer allow it.

Examining the facts with all their attendant consequences is great, but gut reaction is often the way to go. That line separating spontaneity and premeditation is the same line which runs through a photographer's mind when she sees a great but ephemeral shot and has to decide whether to think about it and choose the right angle, or just grab a camera and sideswipe whatever happens to be passing in front of her eyes on its way into oblivion. And that's not an easy choice. Some shots last for a while, and positioning your tripod carefully will pay off handsomely. But some have a half-life of a transuranium element, and if your fingers dawdle just for a second the image will poof on you without refund.

If you think about it that is exactly how it is with life. We can either capture whatever comes our way, or wait in eternity for the planets to align optimally again.

Success is determined not only by our ability to find the correct solution, but - perhaps more importantly - also by our instinct which tells us how much time we have to arrive at it. Deciding on the fly whether we can afford a little analysis, or whether we need to shoot from the hip - that is our own photographer's choice.


The Artist

Silent movie winning the Best Picture at the 2012 Oscars. Who would have thought?

What kind of deviously twisted mind could have come up with the idea of resurrecting an old fashioned black and white flick in the age of new fashioned digitized spectacles brimming with real time 3D computer simulations? Whoever it was must have been aware of the old Russian proverb "New is something that has long been forgotten". People dig for new fads all the time. The whole history of art is but a search for that new angle. Utilizing dialogue free narrative makes you peek where no one has peeked before, or rather where no one has peeked for quite some time.

They say that people who lose one of their senses become more sensitive and alert to the stimuli of the other ones. Every now and then, it pays to submit your creative outlets to the restrictive discipline of an old form. You never know what hidden treasures may be brought to light in such rendering. Shooting a movie without colors and without a dialogue certainly emphasizes aspects of film making that we customarily overlook.

The Artist is a motion picture in its deepest sense. It is a picture in motion - a flaunting cascade of studies in intensity. In the barrage of recent movies trying to outeffect each other, the Artist is an unexpected oasis suddenly materializing amid the never ending dunes of silicon graphics. A well orchestrated masterpiece of life harking back to days when cinematography was a craft rather than a visualization experiment.

Director Michel Hazanavicius pampers our artsy buds with finely assembled visual picnic - freshly baked bread of action, earthy wines of pantomime and assorted fruit baskets of sentimentality - all neatly spread out on the blanket of the silver screen. Tiptoeing along the fragile border between smile and laughter, he unearths troves of long forgotten jewels from the abandoned mine of facial expressions. So much so that one could easily talk about a major emotion picture. From the beginning to the end, the movie flows smoothly like a small submarine tracking the unfolding plot only indirectly through the periscope of title cards. Sometimes poetic in a sublime way, sometimes a little tongue in cheek, but always carrying a specific nuance to its final destination in the eye of the beholder. And actually a little bit beyond - through the sluice of the optical nerve onto the wide ocean of our imagination.

And there it rests its case.

When I left the theater, I had an uncanny feeling for a few minutes that I am now myself part of a motion picture. The whole world turned into one giant decoration. My journey to the parking lot seemed to be split into several long takes, people passing us on the way out seemed like extras, I almost felt the need to start touching things to make sure they are three dimensional. But it was just an echo of the Artist splashing in my mind like water in a bath tub carried across a long stretch of rugged desert.

Jungle Book

Rainforest is a crate of contraband shoplifted straight from God's private garden. An amazing green splash on the wall of this planet. Although - now that I think of it - enmazing would probably be a better word for this tangle of vibrant, unquenchable, responsive and constantly bubbling biomass. Its twisted and intertwined labyrinth is an eternal tribute to turbulence sculpted out from a heap of breathing and growing vegetation.

They say that capitalism is like a jungle, but I am not so sure about that. With stronger and stronger doses of fiscal and monetary intervention all over the world, it does not look that way. Our markets are increasingly dependent on artificial injections of liquidity by central banks in the same way that drug addicts become dependent on their pushers. And that does not sound like the kind of capitalism Adam Smith dreamed about. The crony corporatism that seems to flourish around the globe these days is farther from jungle than most think. You don't create the natural growth of the rainforest by an edict of government.

Earlier this month I hiked through Costa Rican native forest and I thought about that analogy. But no matter how hard I tried, I just couldn't buy it. Not even with a Groupon discount. Jungle has a completely different modus operandi than our global economy.

You never see any entity propping up dead trees and preventing the new saplings from assuming their place in the Sun. You don't see groups of bushes forming multinational cartels and attempting to suffocate other species. There is no governing authority here that would try to pick winners and losers in the competition of life. Plants do not use their living power to redistribute the natural flow of air and water. Trees do not speculate with their leaves. And no one is pouring insane amounts of nutrients into one place hoping to spur local biological expansion.

In plain English: jungle is not greedy. Jungle lives and lets live.


Financial Democracy

The other day I learned that almost half of the members of our Congress are millionaires. How is that for a representative democracy? Let's think about it - how would millionaires even know what the life of an average citizen feels like? How it hurts when you get laid off and have little chance of finding a new job. Or how hard it is to choose between heating gas and vegetables for dinner. Sometimes it seems that millionaires occupy some far away place in a Galaxy which is totally unlike ours. One where you don't have to explain to your kids that they can't quite have the gadgets that would make them peer compatible at school. One where you don't have to work two jobs to just make ends meet.

Nothing against the members of the upper class, I am sure they would turn many noble heads in the court of Louis XIV, but how is it that they think they can represent us in the highest legislative body of this democratic country?

Now this is not to say that our overpaid public servants are lazy or generally incompetent. On the contrary. They can be quite a lodge of eager beavers. You see - having to decide what to do with other people's money is a grueling chore which involves lots of baby kissing, ribbon cutting, pork packaging and, most of all, socializing with almighty lobbyists whose concern for a common man is legendary. And if you think all this is trivial, try bloviating for fifteen minutes non stop in front of the mirror in bathroom - it is not as easy as you might think. And that's not all. After an exhausting day in the office, many of them have to change into an evening suit and show their teeth at various corporate functions, clinking expensive wine glasses and delivering that powerful executive stare usually associated with an undercover Vice President of the Northern Hemisphere. Really, let's give them some credit - I mean how many of you can prevaricate while processing a mouthful of Maine lobster salad? But despite their impressive qualifications, something still bugs me about this whole idea of representation.

As is widely known, we have two congressional chambers and both are based on geography. That makes sense because different states and different regions have different needs and we want them all included in the national debate. That is the principle of democracy. But how about different wealth layers of the society? They surely have divergent needs as well. Shouldn't we make sure that no income level feels left out of our collective decision making?

So here is an idea. Why don't we keep one chamber - say the House - as is i.e. based on geographical districts. But when we choose senators let's not look at their domiciles, but rather at their personal balance sheets. Then we'll end up with a completely different political composition. We may have one or two senators representing billionaires, we'll have a couple of them representing millionaires, there will undoubtedly be a bunch of them representing people with solid six digit salaries and there will be a few representing folks with less solid six digit salaries. But, and that's the most beautiful part, a significant part of them will speak for the interests of the middle class and poor people, preferably with the first hand knowledge of the problems involved. That is what I would call a truly representative democracy.

Then our system of checks and balances would cover everybody - even those whose checks and balances are on the slightly bouncier side.

Manuel Antonio

There is a definite magic to the beach. The soothing sound of breaking waves, the soft surface of the dunes, the steady rhythm of the tap dancing Sun, the tropical lilt of the breeze humming "the Girl of Ipanema" through the palm leaves, the marines of salty droplets facing the army of rootless grains of sand. The beach is the ultimate frontier of the fundamental tug of war between The Great Empire of Land and the Everlasting Kingdom of Sea.

But underneath all that lies something even more primordial. Our fascination with the unknown. Two thirds of our planet are covered with water and we still have only a limited idea of what lies beneath. The beach is where that fascination becomes a contact sport. As we tiptoe the water line, we are circling that unseen world like ancient armies sizing up their foes; or like a kid walking around a new car and peeking into its windows trying to figure out how it works. When we send our gaze across the waves, we really dispatch our humble emissaries to the Sultan of the Deep.

Manuel Antonio is one of the most popular destinations in Costa Rica. A pair of secluded beaches with a sizable patch of original Central American rainforest that creates a mesmerizing tropical backdrop: the green lanterns of overhanging trees swaying gently in the wind and offering their branches to migrating troupes of howler monkeys. Playa Manuel Antonio is the place where the jungle of the ocean meets the sea of the rainforest for a late afternoon tango. Two mystic elements staring in each other's eyes. The blue waters on the one side and the green foliage on the other.


Results and Results

Recently I noticed a disturbing parallel between our economy and our education. Both appear to be more and more focused on superficial short term results while neglecting less measurable long term objectives.

At schools a definite emphasis is placed on successful test passing which is slowly turning our educational institutions into conveyor belt prep farms. Students pass through a series of mindless drills that may prepare them well for the all important multiple choice questions but they do little to help them synthesize facts into a coherent body of knowledge. There is little time to learn how to put things into proper perspective and context or how to acquire analytical skills useful in real life - which does not usually come at us in the form of a multiple choice questionnaire. Sure, the kids can mechanically memorize reams of facts and test acing strategies, but they fail hopelessly where imagination and problem solving practice are needed.

In the world of economy, the situation is similar. The quarterly ritual of the Earning Season has put too much pressure on management to produce better than expected nominal results. Focusing on the bottom line leads to the same short sighted optics as viewing students performance through the prism of test passing. It may impose certain organizational discipline, but fails to accommodate less tangible effects, such as preserving environment, supporting future innovation, helping local communities and producing goods and services that have long term benefits. Not to mention the fact that our obsession with immediate profits is conducive to creating accounting and outright fraudulent behavior.

I think than our drive for purely quantitative performance criteria has been pushed a little bit too far. We need to find a system which will reward thinking rather than mechanical test wrestling. And one which will reward overall social utility rather than balance sheet gymnastics.

Red Herring Issues

Ever since denizens of the Neanderthal valley acquired enough vocabulary to trash their fellow cavemen for wearing out of style loincloths, gossip has been an integral part of our evolution into higher forms of life. Considering the lack of electronic gadgets available to humanity up until recently, man's fixation on the fortunes of other men is understandable. In the absence of a boob tube, peeping into dimly lit windows of your neighbors must have been the best value in medieval entertainment. Who could blame the poor unwashed peasants for sitting under a linden tree and passing judgment on their peers. In the era of Facebook, our passion for sticking noses gently into other people's affairs has been coddled on a global scale. And there is nothing wrong with that - nobody is perfect, right? But a line should be drawn when this ancient human proclivity gets hijacked for political purposes.

The magical rise of Rick Santorum in the Republican primaries and his holy obsession with what happens in private bedrooms of private citizens is an indicator that the party of Abraham Lincoln knows quite well how to play the ball in the political arena. Economic issues? Nah, too complicated. State of education - we don't need that. Wobbly financial system? Oh, still plenty of blind eyes to turn in that general direction. Immigration, health care, runaway income inequality? Oh, quit bothering me. Why don't we just play into centuries old peeping reflexes and start commandeering personal lives of the electorate.

Not so long ago, Michele Bachmann (a serious presidential contender at that time) opined with an absolutely straight and well made up face: "Gay marriage is probably the biggest issue that will impact our state and our nation in the last, at least, thirty years. I am not understating that." Really, Michele? We are running record levels of federal deficit, millions of families are struggling with the aftermath of the economic crisis, our military is stretched thin and tired, and yet somehow you think that the average citizen should worry about some gay couple getting married on the other side of the town?

Social issues make for a great political chewing gum - they set your jaws in motion, but provide no nutrition to the body. They certainly won't help laid off Americans achieve their dreams. Neither will they stop the wealth flow into the upper strata of the society. But maybe that is exactly their purpose. It's all just a clever distraction for the population at large. There is a well connected group of people who profit from the status quo tremendously and they have absolutely no real interests in bringing the jobs back or lifting the working classes out of their poverty. From the point of view of this class, the ability to convince masses to vote against their own economic interest is priceless. That's why the social issues appear to be such a godsend. They are a masterfully placed red herring. A powerful wedge hammered into the popular opinion alongside an artificially created cleft. Divide and conquer at its best.

When it comes to massaging the minds of general public, social issues are second to only one other agent: fear. Nothing will hold restive mood of the populace at bay like a little dose of trepidation. I know this first hand. Communists in the old Soviet bloc used this tactic day in and day out. They figured out pretty quickly that people who are afraid are much easier to control than free and confident individuals. And contemporary right wing media took this doctrine to new heights. From Good Morning to the Evening News, we are bombarded with new evidence that some tent dwellers growing poppy plants in a desert on the other side of the globe pose existential threat to our way of living. Or that the latest labor friendly bill passing through Congress is a thinly veiled attempt to establish a socialistic dictatorship of the USSR. In the 21th century there is no shortage of things to be afraid of.

Under normal circumstances people like Bachmann or Santorum would be great fodder for Jay Leno. Unfortunately, we gave up normal circumstances around the time George Bush rolled into the office. In the era when American Idol contestants have better public recognition scores than recent presidents and news cycle is driven by Lindsey Lohan's court appearances normality is a rare flower. The sad truth is that people have always found it easier to be passionate about something they understand. It is hard to be furious about the credit default swaps or central bank's inflationary policy when you have only a vague idea of how it affects your life. And politicians just love that kind of setup. After all, waltzing with a Styrofoam mannequin in front of the TV cameras is so much more pleasant than having your toes stepped on by fickle reality when you try to tango with thornier issues.

Watching the seemingly never-ending marathon of Republican debates has been a surreal experience. Hours of prime time programming wasted on debating what form of entertainment corrupts our population most or which Middle East country we should be invading next. Nary a peep about the real problems. That Ben Bernanke's printing press is killing middle class America. That Congress, well supported by generous donations from the financial sector, spares no effort in shifting private debts onto the backs of US taxpayers. That good manufacturing jobs are being exported to cheap Asian countries with poor environmental controls and virtually no labor protection rights. But why worry about our country's future, when we can worry about details of our neighbor's sex life?

In the old days GOP stood for the Grand Old Party. It appears that these days that very same acronym merely reflects on the pragmatic menu of choices their loyal followers are being offered:

Gossip or Phobia?

And would you like Freedom Fries with that?


Rational points on the unit circle

Unit circle is a very simple object. It is just a set of all points in the plane which happen to be exactly one unit away from the center which you can think of as the usual origin in the coordinate plane. Like everything living in the coordinate plane, every single point of it corresponds to a pair of numbers, expressing its location with respect to the x and y axes. If you are of curious nature, as some mathematicians are, you may start wondering if there are any rational points on this circle? That means points whose both coordinates are common fractions.

Knowing how ubiquitous common fractions are, your gut instinct would advise that there must be tons of them. But if you start looking for examples you realize the answer is not as obvious as it seemed. Let us pick a common fraction for one coordinate - say x=1/2. Since any point on the circle satisfies the equation x^2+y^2=1 you can calculate the other one easily: y=Sqrt(3)/2. And there is the rub - square root of three is not a common fraction. So let's take another well known fractions for the first coordinate: x=1/3 or and x=2/3 and see if we get luckier. We won't. The corresponding y-coordinate turns out to contain those pesky square roots again. At this point you may think that situation is becoming hopeless and if there are any rational points on the circle at all, they are extremely rare. Indeed, unless you have a perfect square to begin with - and perfect squares are few and far between - taking a square root of a whole number happens to be profoundly irrational and thus not eligible to pose as a common fraction.

But overly pessimistic viewpoint is misleading as well. Despite the slim odds of hitting a perfect square, there are in fact infinitely many rational points on the unit circle. If you want to see that without breaking too much algebraic sweat, you can connect the point (-1,0) with any rational point on the y-axis (and of those there are plenty because there you do NOT have to worry about that other coordinate) and then see where the resulting line intersects the circle. It is a fun calculation and it leads to points like (3/5,4/5) or (5/13,12/13) or (20/29,21/29) which are clearly rational and (slightly less clearly) lying on the unit circle. In fact, if you paid attention in high school algebra classes, you may recognize them as sides of Pythagorean triangles. They are among the most amazing objects of all mathematics.

For lay people this is one the most puzzling paradoxes in elementary mathematics. On the one hand these points are rare and difficult to calculate, but on the other there are infinitely many of them and they fill the circle densely to boot. That means no matter how tiny arc of the circle you consider, there will always be infinitely many points on it whose coordinates are common fractions. In other words, no part of the circle is fraction free. I sometimes imagine myself as a tiny ant standing in the center of that circle and watching all those rational points on it as if they were stars on a night sky.

Now if you moved that little ant to one such point on the circle, it would see the coordinate cross from a point which is algebraically simple (a pair of fractions) and unlike any other. In a certain sense these points are like people. They see the Cartesian geometry of the circle from their very unique and rational view point. Just like every person sees the circumstances of their lives from a very special, and hopefully rational, vantage point.

2012 will be a tough year and many important decisions will have to be made. Let's hope they will stay rational - like those Pythagorean points on the circle. They may be hard to find, but hey - there are infinitely many to choose from.

Pearls of Wisdom

George Santayana, a Spanish philosopher and novelist once said: "Those who do not learn from history are bound to repeat it". And that is the deep truth about the plight of the human race on this planet, although Mark Twain would probably temper our expectations with his famous disctum "History does not repeat itself, but it does rhyme".

This Christmas I finally found some time to put together a collection of quotes that had caught my attention over the past year. They show nicely how mankind continues to struggle with a fairly limited but recurring set of problems. We just don't seem to be able to learn from our past mistakes.


A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.

This piece of wisdom is usually attributed to Alexander Frasier Tytler. He may not be the original author, but the quote captures the primary weakness of democracy quite fittingly.


The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.

This is an old one - usually attributed to Marcus Tullius Cicero (most likely an embellished version of one of his actual speeches). But this piece again neatly summarizes the timeless problem of human governance. Living beyond one's means seems to be the end game of all complex societies. Too bad there was no Twitterus in those days, otherwise this Roman philosopher and statesman could have started "Occupy Circus Maximus" - a new and revolutionary movement that might have saved the already crumbling empire and put the whole civilization on a fast track into modern times.


In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [...]
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.

This is Alan Greenspan in one of his early objectivist essays. It shows how far way he strayed away from his youthful ideals but it also shows the true dilemma of monetary policy. However imperfect the gold standard may be, the moment our money acquires arbitrary value it becomes an object of manipulation.


Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some [...] As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

This is an actual quotation from John Maynard Keynes ("The Economic Consequences of the Peace"). This quote points in the same direction as young Greenspan. The manipulation of currency (which almost always means its debasement) is not a sound and fair economic policy. Although it may be politically the most convenient one.


And that's it for now. Close the textbook. However familiar our problems may seem, they will always need to be rehashed in terms of a new context. While we can learn a lot from the past, we should keep our eyes on the ultimate prize: the future. Or as one Johann Wolfgang von Goethe once put it - All theory, dear friend, is gray, but the golden tree of life springs ever green.


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