Tuesday, 11 October 2016

Let it go...





"One death is a tragedy, one million deaths is a statistic" — Stalin

I spent this weekend on a "marathon" at the Durham Book Festival. I saw quite a few shows, presentations and presentations that were more like lectures. Some were very very interesting, challenging, others made me angry, being as a consequence also interesting and challenging... and still, as a consequence, I will have to write about it.

One of the events was about "Love and Loss" with Cathy Rentzenbrink and Decca Aitkenhead talking about their experiences and their books "The Last Act of Love" and "All at Sea".  

As soon as the discussion started I felt uncomfortable, not because  the talk was about death, but because there was no death. Not that I am morbid, at all, and was expecting gory details and external expressions of grief, live. I did not know the circumstances of both writers, but I slowly started seething with the display of luxury of this exercise and its presentation as a standard matter of fact. I am already old enough to have tragedy in my life (quite a few) and lived through many more Stalin statistics as mentioned above. The extravagance of grieving through the medium of a book seems to me far fetched and not a process that can be achieved as a social standard. I could compare this as attending a vintage champagne or caviar degustation forum. I would never go to these hypothetical events knowingly, as my relationship with these indulgences is personal. I would much prefer to buy a bottle or a tin and have it on my own, or with some close friends. I understood the personal need of the intervenients of sharing their stories, but they are exactly that, their stories. I struggle with the "self-help" concept and, in this niche of death, I found it borderline ostentatious. I will come back to this...

We now live on times of "eternity", people don't die anymore, they fight for their place and fame through social media and death does not stop it. One of my great friends Pedro / Pita (read Peter) died 6 years ago of a heart attack, after bravely fighting and post-poning a death by colon cancer ad aeternum, if optimism is permitted. His Facebook page was kept alive year on year, morbidly in my opinion, recently changed I think by Facebook, in a "remembering" page.  I am still his friend on this page and my discomfort is evident. How do I "unfriend" him now? How can I? One of the hardest things I had to do was to go to my list of contacts and delete his entry. I grieved and I always will if not for the fact that we also share the same birthday (and always will).

It is a matter how we see friendship and relations... For me friends, close friends, never go away as they made what we are and we made exactly the same for them. Our beings are intertwined, our shared experiences, adventures, discussions, tragedies. When they go is just like we lose a limb, and we need to carry on for the rest of our lives with only one hand or leg, limping or using "hooks" or wooden contraptions, sometimes even changing to the point that we might cuddle a parrot, permanently residing on our shoulder, shouting "Ships ahoy. Arrrh!"... and we keep saying "No it's nothing, it is just a scratch, come on you wimps!" like the Monthy Python Black Knight.


... or we write a book.

That is why I find these stories borderline ostentatious and disrespectful. In a way Cathy's brother will never die, Decca's partner the same. They were put on this limelight without consultation, their lives dissected with the premise that "that is what they would like us to do". We need to let it go, to let them go, so they finally have the chance to rest in peace.

Postscript

On a positive note all this helped me to recall my friend Pita (Pedro Beça Múrias). He was a radio journalist and, when he got told that he had cancer, he started writing chronicles under the title "The Waiting Room Chronicles" that were read on radio and made into a book later on. He loved fishing and had a special relationship with the sea. As a memento I shall translate one of his chronicles entitled (remembering his voice and words)

"Falling asleep hugging a whale"

Beforehand imagine you can hear the chant of a whale
She is my companion on nights of insomnia
Yes it's a whale, so what?
We dance endless waltzes all night through the blue Atlantic Ocean
You cannot fathom the affection she uses to caress my back with her flipper, defusing my anxiety.
Nevertheless my daytime is quite easy going.
But my nights are always longer than the hours.
If it wasn't for my friend Moby, maybe a grandchild of the mythical Moby Dick, who invites me for a waltz ever so often, everything would be so much more difficult.
Sometimes mermaids and sunfish appear dancing at the bottom of my bed... and some poets too.
Pablo Neruda who introduced me to Francisco Coloane, who he calls tenderly "Son of the White Whale" remembering Melville.
Even O'Neill (Alexandre) invited me to chase a grouper through the tall see weed. It is always an adventure with him.
Sofia (de Mello Breyner Andresen) with her Girl of the Sea on her hand.
But it is Moby that I get on with better.
"Do you know something Pedro? Your loneliness could become an invitation to freedom and life!" she said to me one night.
"What do I care!" I replied like a spoiled brat.
"Believe me I know what I am talking about. You have no idea what is swimming against a strong current and then jumping as high as you can, hitting the water with your tail, jumping again... You have no idea."
"Oh Moby it's you who have no idea of the life and solace you bring me. Your example, your strength cruising the oceans without ever feeling alone... With you no one ever feels alone. It is your courage that inspires me to fight this, dancing over the blue sea."

... and it is like this, after these dialogues, that I fall asleep... hugging a whale*.

*listening to Leonard Cohen's "Take this Waltz" is compulsory.



Monday, 10 October 2016

Compound


(A bit boring now... money, numbers but what I describe below troubles me... have a read) 

Preamble

A few years ago it transpired that the policy of cuts and austerity based on Armageddon calculations by two Harvard economists, Carmen Reinhart and Kenneth Rogoff, was fundamentally flawed and based on an Excel coding error. Is the PMT Excel interest formula and its daily application in the finance world an even bigger error?

No this is not about the favourite architectural home style of Osama Bin Laden and US Embassies in the Middle East... This is about a permanent "invisible" effect that is present in all arithmetic calculations that include two entities... Excel and Finance; I have to add these are two of my favourite pet hates.

You can see here on this Microsoft Excel training on Formulas

Have a look and see what is wrong...
.....

I shall carry on... this has to do with the most used function in Excel, PMT, no not that regular monthly tension that afflicts one third of women, but an ignored tension that afflicts the entire world of accounts. At minute 2:15 there is an example "use 6% divided by 4 for quarterly payments at 6% APR" and later 3.35% divided by 12 since we are going to make monthly payments". There is a small problem with this, actually is is quite big... it is the well known compound effect.

I may have lost half of my audience by now but hang on in there.

I start with a numerical example, with a deposit because it is easier to understand interest on savings: if you place a deposit of $100,000.00 for one year at 10%, after 12 months when it matures you will have $110,000.00. You have 3 main options after the deposit matures... you recall the lot, you recall the interest or you roll it (called Principal and Interest) for another period. If you choose option 3, after another 12 months you will have $110,000.00 plus 10%, $121,000.00, the interest has been compounded. This can be calculated for any number of years (if you never recall your deposit) with a mid-complicated mathematical formula:

F = P (1 + R) (power of N)

F — Final amount
P — Original amount
R — Rate
N — number of periods  (week, month, year)

I wrote power of N to signify that the expression (1 + R) is multiplied by itself N times i.e. squared for 2 years, cubed for 3 and so on.

If you left a deposit for 10 years and compounded it, the calculation would be:

F = P (1 + R)  (1 + R)  (1 + R)  (1 + R)  (1 + R)  (1 + R)  (1 + R)  (1 + R)  (1 + R)  (1 + R)

For $100,000.00 at 5% yearly interest, you would receive a total compounded final amount of $162,890. This works perfectly for deposits, for interest gain. However it does not work for loans, the compound effect is overlooked.

Now instead of making a deposit you apply for a loan, same $100,000.00 at the same 5% for 10 years. You make monthly fixed repayments and the PMT formula gives you an amount (calculated on 10% divided by 12!!!  as you saw on the Microsoft video and where all errors reside) of $1,060.65 with a total of payments of $127,279.

However if you save monthly $1,061 for 10 years (i.e. if you could save $1,061 monthly) at 5% rate you would end up with $164,599!!! It is an enormous difference against $127,279, $37,320 to be more accurate. I don't like this. It appears that for the same amount of money a bank will lose $37,320 after ten years or at least will start with a loss of $37,320 that they will have to recoup over that period. 

I made an Excel table of loans below. I know the amount is a bit stratospheric ($1 billion) but in the big scheme of world finance it is quite common.


You can see that if you make monthly repayments on loans there is always an overpayment "dribble" on the right column. There is always more money present in the system than the one that is really accounted for. In financial systems with low interest, that is almost negligible but it is there. $1 billion generates an extra unaccounted $45,960.89 each year, "ghost money" that will have to be somewhere and, if not taken into account (literally), will somehow cause worldwide unbalance (literally) on financial systems as it does not add up (literally again). On a 6% interest rate environment you can see that $1,677,811.86 of "ghost money" is generated, an already significant 0.116%. 

In my view this "ghost money" is what creates inflation and currency devaluation.

On societies or systems with high interest rates the "ghost money" creates utter chaos. At 130% interest will create a bulky 113% of "ghost money" in one single year, which is more than the original loan. That is the reason why most countries with high interest have by default abysmal inflation and an almost worthless currency.



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