Wednesday, June 29, 2016

[tt] A note


I realize this place is informal in nature, so any kind of reporting
is not really expected but on the other hand, why not. Thus,

In a foreseeable future, thanks to growing number of activities, all
of which demand more and more of my attention, I will be unable to
contribute much if anything at all to the lists hosted here.

Tomasz Rola

** A C programmer asked whether computer had Buddha's nature. **
** As the answer, master did "rm -rif" on the programmer's home **
** directory. And then the C programmer became enlightened... **
** **
** Tomasz Rola **
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Tuesday, June 28, 2016

[tt] NYTDBR: In 'Ordinarily Well, ' Peter D. Kramer Goes to the Antidepressant Ramparts

Review: In 'Ordinarily Well,' Peter D. Kramer Goes to the Antidepressant

Books of The Times

Ordinarily Well
The Case for Antidepressants
By Peter D. Kramer
310 pages. Farrar, Straus and Giroux. $27.

A bit of advice before reading Peter D. Kramer's timely book,
"Ordinarily Well: The Case for Antidepressants": Skip the preface.
There's too much Peter Kramer in it, and it's off-putting. He casts
himself as a reluctant and oversensitive hero, one who only waded
back into the arena when he had no choice, forced to defend both
himself and his most cherished principles.

How eager Dr. Kramer had been to shake off the chains of his
celebrity as the author of "Listening to Prozac," published way back
in 1993! He'd written a novel, hosted radio programs, scribbled a
TED talk. But this book was inevitable, he suggests: Prozac needed
defending. He describes taking solace in the words of Norman Mailer,
who wrote in "The Armies of the Night" that he "learned to live in
the sarcophagus of his image."

Oy. A good friend should have read these opening pages, laid a
gentle hand on the good doctor's shoulder, and given him a
three-word command: Select all. Delete.

I carp because I care. In "Ordinarily Well," Dr. Kramer, who has
written so well about the curse of melancholia--that thief who
steals your blood and slyly replaces it with lead--has done
something very valuable: He has waded into the contentious debate
about the efficacy of antidepressants. It's an important and
confusing subject. One in eight Americans rely on these medications,
hardly a trivial number. Dr. Kramer shouldn't risk losing readers so
early in the climb with rickety little cairns of humblebrag.

You have read, I am guessing, about recent studies that cast doubt
on the effectiveness of Prozac and its extended family.
"Antidepressant Lift May Be All in Your Head," said USA Today in
2010. "Why Antidepressants Are No Better Than Placebos," Newsweek
contended the same year.

Dr. Kramer regarded these studies warily and wearily, knowing that
they flew in the face of his clinical experience. Yet his own
patients had started to internalize the message of this research.
Could their improved mood and function be chalked up to a placebo

Dr. Kramer's answer is an unequivocal no. And he spends much of
"Ordinarily Well" trying to prove it.

Evidence-based medicine, or E.B.M., has gained an awful lot of
currency in the last two decades. Its aim is simple: "To get
practitioners to rely less on clinical experience and more on
findings from formal outcome trials."

In theory, this is an unobjectionable standard--what
self-respecting doctor could possibly oppose science?--but it also
assumes that clinical trials are somehow inviolable, impervious to
error. It is Dr. Kramer's contention that they are not. They are
rife with confounds, biases and all-around distortions. Even the
shiniest diamonds show cracks beneath his loupe.

"Ordinarily Well" can be slow going. While I delight as much as Dr.
Kramer does in scrutinizing studies for flaws in design and
execution--he talks effect sizes, dropout biases, additivity--
his writing is maddeningly turgid in places. (It's never a good sign
when you're rereading sentences for the third time.) But stick with
him. He has done some much-needed synthesizing and debunking.

Take the meta-analysis, a staple of mental-health research. A
meta-analysis compiles the results of many smaller studies to tell
us, presumably, what they say in aggregate. All well and good, you
might think--until you see how problematic the selection process
becomes. Include every study ever done, and you're bound to include
trials that were incompetently designed or only marginally relevant.
Include too few, and you might be unconsciously (or deliberately)
gerrymandering evidence in your own favor.

"Few discussions of the antidepressant controversy acknowledge this
truth," Dr. Kramer writes. "In psychiatry, we lack large trials, and
meta-analyses are imperfect substitutes."

One of those meta-analyses, not coincidentally, was the first paper
aimed directly at Dr. Kramer, published in 1998: "Listening to
Prozac but Hearing Placebo: A Meta-Analysis of Antidepressant
Medication." Dr. Kramer argues that the author deliberately "seemed
to cull studies in which antidepressants underperformed," and
treated some drugs as placebos even though they may have had
antidepressant effects.

Of course, Dr. Kramer also uses meta-analyses to make his own
points. Two can play this game. It would be nice if he had
acknowledged this explicitly. But his dissections of the most
incendiary studies are careful, and his conclusions--that they
overestimate placebo effects and underestimate the potency of
antidepressants--will invite a reckoning of some kind.

He is particularly devastating on the subject of recruiting test
subjects. One of the most damning chapters features an unnamed
facility where antidepressant trials are frequently conducted. Many
of the participants are unemployed or underemployed--lonely,
dispossessed and eager for the money. Suddenly, they're getting
paid, interacting with others and receiving the careful attention of
doctors and nurses. "Even on placebo," Dr. Kramer writes, "these
patients ought to get better."

But my favorite chapters, by a long chalk, are his "interludes"
describing his own experience treating patients. They are beautiful,
philosophical, ambivalent--brimming with all the humility that his
opening pages lack.

He tells the story of a patient he calls Olivia. Years after a
difficult divorce, she finally starts to date someone--someone who
underwhelms her, yet still somehow breaks her heart. "The sequence
cries out for psychotherapy," Dr. Kramer writes. "But Olivia
scarcely has the resources to participate in conversation. She
recycles recriminations against herself."

So go ahead. Rate her depression on a scale; assign her a label; try
to plot the mess and distress of her life on a graph. But really:
What does a double-blind, placebo-controlled trial say about how we
can help her specifically, at that moment? "Could a doctor rely on
randomized trials only," he asks, "and treat real people?"

Ultimately, Dr. Kramer seems to be saying, doctors need to treat the
human beings who are suffering in front of them. In this case, he
puts Olivia on Zoloft to snip the loop of her circular thinking,
because he's seen Zoloft work in these situations many times before.
And it works now. She stabilizes. At some point--soon he hopes--
he'll take her off.

Depression is confounding. It resists neat categorization and morphs
over time. But the one thing Dr. Kramer finds consistently--in his
practice, but also in the research he re-examines in new ways--is
that antidepressants work in cases both mild and severe. He cites
studies that show antidepressants' efficacy in other contexts
entirely: helping patients in the aftermath of a stroke, for
instance, or in countering the effects of the drug interferon.

Dr. Kramer will no doubt set off a new round of debate with this
book. But he stands by his story: Antidepressants help people regain
custody of their lives. When medicine concerns something so delicate
and mysterious as the human mind, it is as much an art as a science.
"Doctors don't see averages; they see patients," he writes. "In
patients, the drugs work."
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Re: [tt] David Stockman: Commodity Prices Are Cliff-Diving Due To The Fracturing Monetary Supernova--The Case Of Iron Ore

Thanks for this, Tom. The question is why the UK steel industry went
broke. Or rather why the UK steel industry was in such a fragile position.

On 2016-06-28, Tom Nowell opined [message unchanged below]:

> Date: Tue, 28 Jun 2016 18:59:35 +0000 (UTC)
> From: Tom Nowell <>
> To: "" <>
> Subject: Re: [tt] David Stockman: Commodity Prices Are Cliff-Diving Due To The
> Fracturing Monetary Supernova--The Case Of Iron Ore
> Frank wrote:
> "Note that the article is a year and a half old. Did the world collapse? 
> I'm glad I read it. Stockman is often worthwhile."
> Maybe the world didn't collapse, but China did dump a lot of cheap steel
> and the UK steel industry just went broke. Currently the last smelters
> in the UK and many thousands of jobs rely on an official selling-off
> process finding a bidder who preserves jobs. This kind of malinvestment
> can drive crazy things (see - empty houses in US and parts of Europe
> from the mid 2000s property boom).

> Tom

Monday, June 27, 2016

[tt] PhysOrg: To strengthen an opinion, simply say it is based on morality

To strengthen an opinion, simply say it is based on morality

May 31, 2016 by Jeff Grabmeier

Simply telling people that their opinions are based on morality will
make them stronger and more resistant to counterarguments, a new
study suggests.

Researchers found that people were more likely to act on an opinion
- what psychologists call an attitude - if it was labeled as moral
and were more resistant to attempts to change their mind on that

The results show why appeals to morality by politicians and advocacy
groups can be so effective, said Andrew Luttrell, lead author of the
study and a doctoral student in psychology at The Ohio State

"The perception that an attitude we hold is based on morality is
enough to strengthen it," Luttrell said.

"For many people, morality implies a universality, an ultimate
truth. It is a conviction that is not easily changed."

The key finding was how easy it was to strengthen people's beliefs
by using the 'moral' label, said Richard Petty, co-author of the
study and professor of psychology at Ohio State.

"Morality can act as a trigger - you can attach the label to nearly
any belief and instantly make that belief stronger," Petty said.

Other co-authors of the study were Pablo Bri�ol of the Universidad
Aut�noma de Madrid in Spain and Benjamin Wagner of St. Thomas
Aquinas College. The results are published in the July 2016 issue of
the Journal of Experimental Social Psychology.

In one experiment, 183 college students read an essay favoring the
adoption of a senior comprehensive exam policy at their university.
They were asked to provide their thoughts in response to the essay.

The students were then told by the researchers that the views they
expressed seemed to be based on morality, tradition or equality.

Participants were then asked to rate how willing they would be to
sign a petition in favor of the exam policy and to put their names
on a list of students who favor the exam policy, and which way they
would vote on the issue.

The results showed that the attitudes of students who were told that
their views on the exam policy were based on morality were more
likely to predict their behavior than the attitudes of students who
were told their views were based on equality or tradition.

"Morality had a lot more impact than the values of tradition and
equality," Luttrell said.

"Students were more likely to act on their opinion of the student
exam policy if they thought it had to do with morality."

Two other experiments involved a more universal issue - recycling.
One of these studies involved college students and the other
involved older adults who were not in school.

In these experiments, participants read a brief introduction to the
topic of recycling and then were asked to list the thoughts they had
about the issue.

In this case, the researchers told the participants that their
thoughts related to either morality or to the practicality of
recycling. Participants then reported their attitudes toward

Nearly all of the participants had positive views on recycling. So
the researchers then asked them to read a short persuasive essay
with arguments against the benefits of recycling.

Then, the researchers again measured the participants' views on

Results showed that participants who were told their views on
recycling were based on morality were less likely to change their
minds than those who were told their views were based on practical

"People held on to their moral beliefs in a way they didn't for
other values we studied, like tradition, equality and practicality,"
Luttrell said.

"But what was remarkable was how easy it was to lead people into
thinking their views were based on moral principles."

The results suggest that appeals to morality can be very effective
to groups and political candidates trying to appeal to their

"People may be more willing to vote for a candidate or give money to
an advocacy group if they believe it is a matter of morality,"
Luttrell said. "They're also less likely to be swayed by the

Explore further: People reject popular opinions if they already hold
opposing views, study finds

Journal reference: Journal of Experimental Social Psychology search
and more info website

Provided by: The Ohio State University search and more info website

[tt] NYT: Kentucky's Ark Defies Science but Evokes a Version of Christianity

Kentucky's Ark Defies Science but Evokes a Version of Christianity


A Biblical Ark for the Secular Age

WILLIAMSTOWN, Ky.--In the beginning, Ken Ham made the Creation
Museum in northern Kentucky. And he saw that it was good at
spreading his belief that the Bible is a book of history, the
universe is only 6,000 years old, and evolution is wrong and is
leading to our moral downfall.

And Mr. Ham said, let us build a gargantuan Noah's ark only 45
minutes away to draw millions more visitors. And let it be
constructed by Amish woodworkers, and financed with donations, junk
bonds and tax rebates from the state of Kentucky. And let it hold an
animatronic Noah and lifelike models of some of the creatures that
came on board two-by-two, such as bears, short-necked giraffes--
and juvenile Tyrannosaurus rexes.

And it was so.

Mr. Ham's "Ark Encounter," built at a cost of more than $102
million, is scheduled to open on July 7 in Williamstown, Ky. Mr. Ham
and his crew have succeeded in erecting a colossal landmark and an
ambitious promotional vehicle for their particular brand of
Christian fundamentalism, known as "young earth" or "young universe"

But it was hardly smooth sailing. The state tried to revoke the tax
rebates after learning that Mr. Ham would require employees to sign
a "statement of faith" that would exclude people who were gay or did
not accept his particular Christian creed. Mr. Ham went to court and
in January, he won.

On a recent afternoon, the Australian-born Mr. Ham looked out on the
workers in hard hats affixing pine planking to cover the Tyvek
plastic wrap still visible on the stern. The ark stretches
one-and-a-half football fields long, rises as high as a seven-story
building and is said to be the largest timber-frame building in the
world. Mr. Ham is betting it will become an international pilgrimage
site, as well as a draw for the curious, the seculars and even the

"The reason we are building the ark is not as an entertainment
center," Mr. Ham said in an interview in a cabin overlooking the
construction site. "I mean it's not like a Disney or Universal, just
for anyone to go and have fun. It's a religious purpose. It's
because we're Christians and we want to get the Christian message

The ark is also intended to serve as a vivid warning that, according
to the Bible, God sent a flood in Noah's time to wipe out a depraved
people, and God will deliver a fiery end to those who reject the
Bible and accept modern-day evils like abortion, atheism and
same-sex marriage. "We're becoming more like the days of Noah in
that we see increasing secularization in the culture," Mr. Ham said.

Yet his interpretation of what he calls "the Christian message" is
derided by most scientists and educators, and resented even by some
Christians who consider it indefensible and even embarrassing. Young
earthers believe that God created the universe in six 24-hour days,
and since all of history is only 6,000 years, humans coexisted with
dinosaurs. An exhibit at the Creation Museum shows two smiling
children playing in a lush garden next to two petite Tyrannosaurus

Bill Nye, best known as "the science guy" on television and in
books, said in a telephone interview, "Humans and ancient dinosaurs
did not live at the same time. It's completely unreasonable."
Science has established that the earth is billions of years old, and
no worldwide flood occurred in the last 6,000 years.

"We're going to raise a generation of kids who are scientifically
illiterate," said Mr. Nye, who debated Mr. Ham at the Creation
Museum in 2014, a matchup watched online by millions.

A group of local atheist activists, the Tri-State Freethinkers,
recently tried to put up billboards on the highway approaching the
ark, calling it the "Genocide and Incest Park," but no billboard
company would agree, said the Freethinker's founder and president,
Jim G. Helton, so they plan to protest at the ark's grand opening.
"The moral of the flood story is horrible," Mr. Helton said. "We're
not saying he can't build his park. But we don't think it's
appropriate for a family fun day."

Young earth creationism gained currency only about 60 years ago, and
has remained a marginal creed within Christianity. Even many
Bible-believers and evangelicals accept the science showing that the
universe is billions of years old--some reasoning that each of the
six "days" of creation in the Book of Genesis may have lasted
millions of years, not 24 hours. And of course, many Christians
accept evolution.

But now the young earthers are having a heyday, thanks largely to
Mr. Ham and his supporters. Their ministry, Answers in Genesis,
produces books, magazines, videos and curriculums used by thousands
of churches and home schoolers. The Creation Museum--which sells
these materials in its gift shops--claims 2.7 million visitors
have come in the nine years since it opened. But about half of those
visitors came to the Creation Museum in the first three years,
suggesting that interest may have dropped off. The ark could change
that. Mr. Ham projects that the ark will attract 1.4 to 2.2 million
visitors in the first year, and will double the attendance at the
Creation Museum.

Inside a cavernous warehouse in an office park in Hebron, a few
miles from the museum, about 50 artists, designers, carpenters,
sculptors and volunteers have been working six-day weeks to prepare
the exhibits for the ark.

A sculptor inserted stiff gray-brown hairs one at a time into the
chin of what looked like a wild boar. Another wiped off the black
dye on a bear's chest to make it look less like a contemporary black
bear. A giraffe with a short neck was being baked in a large oven to
set the dye on its fur.

Tim Chaffey, a content manager and writer for the Answers in Genesis
ministry, explained that most of the models do not resemble animals
the way they look today, but extinct species. According to young
earth creationists, the ark carried up to 1,400 kinds of creatures
that gradually evolved into the animals we know today. Young
earthers accept the notion that nature makes small adaptations over
time--but do not accept that humans and chimpanzees descended from
a common ancestor.

The ark designers had to scale back their initial ambition to have
live animals living on board to demonstrate the truth of the Noah
story, said Mr. Chaffey, a graduate of Liberty University, a
Christian college in Virginia founded by the Rev. Jerry Falwell.

And there will be only about 30 pairs of stuffed animals on the Ark
Encounter because there just isn't enough space. "We have to have
dozens and dozens of bathrooms for visitors. Noah didn't have to
have that," Mr. Chaffey said.

Drawings of Noah and his seven family members hung on a wall. Their
skin is "middle brown" and their faces are a blend of racial
features because, as the only survivors of the biblical flood, all
the races and ethnicities on earth would have descended from these
eight people, Mr. Chaffey said. But in some of the displays in the
warehouse, there were indications of the ministry's dark vision of
humanity. An artist, Stephanie Fazekas, stood at a computer drawing
figurines of women in togas. They were prostitutes for a diorama
portraying the morally decadent society that the Bible says was
wiped out in a flood.

The site of the ark under construction in Williamstown, Ky. Credit
Kyle Grillot for The New York Times

William Trollinger, a professor of history at the University of
Dayton, has been studying Mr. Ham's museum, website and blogs for a
new book "Righting America at the Creation Museum," written with his
wife, Susan L. Trollinger, a professor of English also at University
of Dayton.

"He calls on Christians to participate in a culture war," Mr.
Trollinger said, of Mr. Ham. "He says, if you're really going to be
a Christian, you're in this war against the atheistic, humanistic

In an interview, Mr. Ham railed against atheist groups for trying to
prevent his project from receiving tax incentives from the state of
Kentucky. Answers in Genesis claimed that the state's denial of
those tax credits violated the group's First Amendment rights. Judge
Greg Van Tatenhove of the United States District Court for the
Eastern District of Kentucky agreed, writing in his January decision
that tourist attractions--even those that advance religion--meet
the neutral criteria for the tax incentives.

The ark is now in calmer waters. The workers, standing on hydraulic
lifts, have covered over the Tyvek, and just in time. The Tyvek was
printed all over with the slogan of its maker, Dupont: "The Miracles
of Science."
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[tt] David Stockman: Commodity Prices Are Cliff-Diving Due To The Fracturing Monetary Supernova--The Case Of Iron Ore

Thanks to Gilo for this. The Austrian Theory of Business Cycles is common
sense enough. It says that government inflates the money supply and that
hard-headed businessmen are taken in, invest too much. In the end, many
businesses created by this artificial boom go bust, in what could be a
recession or depression.

To make this work, you have to suppose that how inflation spreads
throughout the economy is beyond the capacity of businessmen to
understand, unlike everything else. And the theory says nothing about how
long the artificial boom will last. The whole exercise ultimately becomes
Deuteronomistic and non-falsifiable.

Nevertheless, I would be wary of investing in Red China.

Note that the article is a year and a half old. Did the world collapse?
I'm glad I read it. Stockman is often worthwhile.

David Stockman: Commodity Prices Are Cliff-Diving Due To The Fracturing
Monetary Supernova--The Case Of Iron Ore
December 31, 2014

Crude oil is not the only commodity that is crashing. Iron ore is on
a similar trajectory and for a common reason. Namely, the
two-decade-long economic boom fueled by the money printing rampage
of the world's central banks is beginning to cool rapidly. What the
old-time Austrians called "malinvestment" and what Warren Buffet
once referred to as the "naked swimmers" exposed by a receding
tide is now becoming all too apparent.

This cooling phase is graphically evident in the cliff-diving
movement of most industrial commodities. But it is important to
recognize that these are not indicative of some timeless and
repetitive cycle---or an example merely of the old adage that high
prices are their own best cure.

Instead, today's plunging commodity prices represent something new
under the sun. That is, they are the product of a fracturing
monetary supernova that was a unique and never before experienced
aberration caused by the 1990s rise, and then the subsequent lunatic
expansion after the 2008 crisis, of a cancerous regime of Keynesian
central banking.

Stated differently, the worldwide economic and industrial boom since
the early 1990s was not indicative of sublime human progress or the
break-out of a newly energetic market capitalism on a global
basis. Instead, the approximate $50 trillion gain in the
reported global GDP over the past two decades was an unhealthy and
unsustainable economic deformation financed by a vast outpouring of
fiat credit and false prices in the capital markets.

For that reason, the radical swings in commodity prices during the
last two decades mark the path of a central bank generated
macro-economic bubble, not merely the unique local supply and demand
factors which pertain to crude oil, copper, iron ore, or the rest.
Accordingly, the chart below which shows that iron ore prices have
plunged from $150 per ton in early 2013 to about $65 per ton at
present only captures the tail end of the cycle.

What really happened is that the central bank instigated global
macro-economic bubble ripped commodity pricing cycles out of their
historical moorings, resulting in a one time eruption of price
levels that had no relationship to sustainable supply and demand
factors in the mines and petroleum patch. What materialized,
instead, was an unprecedented one-time mismatch of
commodity production and use that caused pricing abnormalities of
gargantuan proportions.

Thus, the true free market benchmark for iron ore is the pre-1994
price of about $20-25 per ton. This represented the long-time
equilibrium between advancing mining technology and diminishing ore
grades available to steel mills in the DM economies.

But as shown below, after Mr. Deng institutionalized export
mercantilism and printing press prosperity in the form of China's
red capitalism in the early 1990s, iron ore prices broke orbit and
soared to $100 per ton in the second half of the decade and
then went parabolic from there. After peaking at $140 per ton on the
eve of the financial crisis,China's mad cap "infrastructure"
stimulus boom after 2008 drove the price to a peak of $180 per ton
in 2011-2012. To wit, iron ore prices peaked at nearly 9X their
historic range.

The crucial point is that there was nothing normal, sustainable or
economic about the $180 per ton peak. It was a pure deformation of
central bank credit expansion and the accompanying false pricing of
debt and other forms of long-term capital.

Needless to say, the same thing is true of copper. Its historical
benchmarks were in the 60 cents to 100 cents per pound range. Yet
after 1994, the global bubble--again led by the enormous
credit explosion and currency exchange rate suppression in China and
its BRIC satellites--carried the price to $4 per pound in the eve
of the financial crisis, and then to nearly $5 during the peak of
China's post-crisis credit explosion.

Indeed, in the case of copper, not only was the cycle driven by
unsustainable construction demand; it was also powered by dodgy
forms of financial engineering that turned copper inventories into
financing collateral that was sometimes re-hypothecated many times

The exact same considerations apply most especially to crude oil.
China's GDP grew from $1 trillion to $9 trillion during the 13 years
after the turn of the century. Growth of such enormous proportions
is not remotely possible in an honest economy based on productivity,
savings, investment and sound money. Likewise, China's call on the
global oil supply system---which soared by 4X from 3 million
bbls/day to nearly 12 million---is also a drastic aberration; it is
a product of runaway credit creation that financed false "demand".

And that was only the beginning of the aberration. The China engine
pulled additional false petroleum demand into the world
market equation due to the boom among its suppliers--such as Brazil,
Canada and Australia for raw materials and South Korea and Taiwan
for components and parts. Output levels and petroleum
consumption in Germany and the US were also goosed by China's
voracious demand for German capital goods and Caterpillar's heavy
machinery, for example.

Accordingly, the crude oil price path shown below reflects the same
global monetary supernova. The $20 price in place during the 1990s
was no higher in inflation adjusted terms than it had been one
century earlier when the mighty Spindletop gusher was discovered in
East Texas in 1901. By contrast, the 5X eruption to north of $100
per barrel during this century represents the impact of fiat credit
and false capital market prices deforming the entire warp and woof
of the global economy.

Self-evidently, we are now in the cliff-diving phase, but unlike the
bounce after the September 2008 financial crisis, there will be no
rebound this time around. That is owing to two reasons.

First, most of the world is at "peak debt". That is, the ratio of
total credit market debt to current national income ranges between
350% and 500% in every major economy; and that is the limit of what
can be serviced even at today's aberrantly low interest rates.

As Milton Friedman famously observed, markets are ultimately not
fooled by the money illusion. In this case, the illusion is that
today's sub-economic interest rates will last forever and that debt
carrying capacity has been elevated accordingly.

Not true. Short-term interest rates may be temporarily and
artificially pegged at the zero bound by central bankers, but at the
end of the day debt carrying capacity is tethered by real economics
and normalized costs of money and debt.

Accordingly, the central banks are now pushing on a string. The
credit channel of monetary transmission is over and done. The only
remaining effect of the residual level of money printing still
underway is that ZIRP enables carry trade gamblers to drive
financial asset prices ever higher, thereby setting up another
thundering collapse of the financial bubbles being generated for the
third time this century by the world's central banks.

The second reason for no commodity price rebound is the monumental
overhang of the malinvestments which have been made, especially
since the 2008 crisis. That is obviously what is now pummeling the
petroleum sector.

The huge expansion of high cost crude oil capacity---in the shale
patch, tar sands and deep off-shore---was due to the aberrationally
high price of oil and the inordinately cheap cost of capital which
were generated during the last two decades by the global central
banks. The above price chart for the WTI marker price of crude, for
example, is what explains the eruption of shale oil production from
1 million bbls/day prior to the financial crisis to more than 4
million at present., not an alleged technological miracle called

However, the iron ore capacity expansion story is no less cogent. On
the eve of the financial crisis, the Big Three miners---Vale, BHP
and Rio--had already doubled their mining capacity from 250 million
tons annually at the turn of the century, to 195 million tons per
quarter or 780 million tons annually.

Q production

But when prices soared to $180/ton in 2012, investment levels were
drastically scaled-up even further. Currently, the Big Three have
combined capacity of more than 1.1 billion tons annually that is not
only in the investment pipeline, but is actually so far advanced
that completion makes more sense than abandonment. Accordingly, not
withstanding the massive over-supply already in the market, several
hundred million more tons will compound the surplus and drive prices
even closer to the out-of-pocket cash cost of production in the
years immediately ahead.

Curent n planned capacity

The above depicted capacity expansion is a quintessential reflection
of the manner in which false prices in the capital markets drive
excessive and wasteful investment, and cause the crash following the
credit driven boom to be all the more destructive. So the
cliff-diving price action here is not just another commodity cycle,
but instead is a proxy for the fracturing global credit bubble, led
by China department.

During the course of its mad scramble to become the world's export
factory and then its greatest infrastructure construction site,
China's expansion of domestic credit broke every historical record
and has ultimately landed in the zone of pure financial madness. To
wit, during the 14 years since the turn of the century China's total
debt outstanding-including its vast, opaque, wild west shadow
banking system--soared from $1 trillion to $25 trillion, and from 1X
GDP to upwards of 3X.

But these "leverage ratios" are actually far more dangerous and
unstable than the pure numbers suggest because the
denominator--national income or GDP---has been erected on an
unsustainable frenzy of fixed asset investment. Accordingly, China's
so-called GDP of $9 trillion contains a huge component of one-time
spending that will disappear in the years ahead, but which will
leave behind enormous economic waste and monumental over-investment
that will result in sub-economic returns and write-offs for years to
come. Stated differently, China's true total debt ratio is much
higher than 3X currently reported due to the unsustainable bloat in
its reported national income.

Nearly every year since 2008, in fact, fixed asset investment in
public infrastructure, housing and domestic industry has amounted to
nearly 50% of GDP. But that's not just a case of extreme of growth
enthusiasm, as the Wall Street bulls would have you believe.
It's actually indicative of an economy of 1.3 billion people who
have gone mad digging, building, borrowing and speculating.

Nowhere is this more evident than in China's vastly overbuilt steel
industry, where capacity has soared from about 100 million tons in
1995 to upwards of 1.2 billion tons today. Again, this 12X growth in
less than two decades is not just red capitalism getting
rambunctious; its actually an economically cancerous deformation
that will eventually dislocate the entire global economy. Stated
differently, the 1 billion ton growth of China's steel industry
since 1995 represents 2X the entire capacity of the global steel
industry at the time; 7X the size of Japan's then world champion
steel industry; and 10X the then size of the US industry.

Already, the evidence of a thundering break-down of China's steel
industry is gathering momentum. Capacity utilization has fallen from
95% in 2001 to 75% last year, and will eventually plunge toward 60%,
resulting in upwards of a half billion tons of excess capacity.
Likewise, even the manipulated and massaged financial results from
China big steel companies have begin to sharply deteriorate. Profits
have dropped from $80-100 billion RMB annually to 20 billion in
2013, and are now in the red; and the reported aggregate leverage
ratio of the industry has soared to in excess of 70%.

But these are just mild intimations of what is coming. The hidden
truth of the matter is that China would be lucky to have even
500 million tons of annual "sell-through" demand for steel to be
used in production of cars, appliances, industrial machinery and for
normal replacement cycles of long-lived capital assets like office
towers, ships, shopping malls, highways, airports and rails. Stated
differently, upwards of 50% of the 800 million tons of steel
produced by China in 2013 likely went into one-time demand from the
frenzy in infrastructure spending.

Indeed, the deformations are so extreme that on the margin
China's steel industry has been chasing its own tail like some
stumbling, fevered dragon. Thus, demand for plate steel to build dry
bulk carriers has soared, but the underlying demand for new bulk
carrier capacity was, ironically, driven by bloated demand for the
iron ore needed to make the steel to build China's empty apartments
and office towers and unused airports, highways and rails.

In short, when the credit and building frenzy stops, China will be
drowning in excess steel capacity and will try to export its way
out--flooding the world with cheap steel. A trade crisis will soon
ensue, and we will shortly have the kind of globalized import quota
system that was imposed on Japan in the early 1980s. Needless to
say, the latter may stabilize steel prices at levels far below
current quotes, but it will also mean a drastic cutback in global
steel production and iron ore demand.

And that gets to the core component of the deformation arising from
central bank fueled credit expansion and the drastic worldwide
repression of interest rates and cost of capital. The 12X expansion
of China's steel industry was accompanied by an even more fantastic
expansion of iron ore production, processing, transportation, port
and ocean shipping capacity.

On the one hand, capacity could not grow at the breakneck speed of
China's initial ramp in steel production--so prices soared. And
again, not just in the range of traditional cyclical amplitudes. As
indicated above, prices rose from $20 per ton in the early 1990s to
$180 per ton by 2012--meaning that vast windfall rents were earned
on the difference between low cash costs on existing or recently
constructed iron ore capacity and the soaring prices in spot and
contract markets.

The reality of truly obscene current profits and the propaganda
about endless growth in the miracle of red capitalism, combined with
the cheap debt available in global capital markets, resulted in an
explosion of iron ore mining capacity like the world has never
before witnessed in any mineral industry.

Stated differently, the Big Three miners would never have expanded
their capacity from 250 million tons to 1.1 billion tons in an
honest free market. Nor would they have posted such egregious
financial trends as have occurred over the past decade. To wit, even
as the global iron ore (and also copper) boom gather steam in the
run-up to the financial crisis, the three miners spent $55 billion
on CapEx during the four years ending in 2007.

By contrast, during the four most recent years they spent 3.2X more
or $175 billion. Not surprisingly, the residue on their balance
sheets is unmistakable. Their combined debt went from about $12
billion in 2004 to more than $90 billion at present.

But now, prices will be driven down to the lowest marginal cost of
supply, meaning that Big Three EBITDA will violently collapse,
causing leverage ratios to soar and new CapEx to be drastically
downsized. In turn, Caterpillar's order book will take a giant hit,
and so will its supply chain running all the way back to Peoria.

So the collapse of the mother of all commodity bubbles is virtually
baked into the cake. As one industry CEO recently acknowledged, his
company's truly variable, cash cost of production is about $20 per
ton and he will not hesitate to keep producing for positive variable
profit. That means iron ore prices will also plunge far below the
current $66 per ton quote now extant in the market.

In short, when the classical Austrians talked about "malinvestment"
the pending disasters in the global steel and iron ore industries
(and also mining equipment and other supplier industries) are what
they had in mind. Except none of them could have imagined the
fevered and irrational magnitudes of the deformations that have
resulted from the actions of the mad money printers who now run the
world's central banks.
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[tt] NYT: Kate Crawford: Artificial Intelligence's White Guy Problem

Kate Crawford: Artificial Intelligence's White Guy Problem

Kate Crawford is a principal researcher at Microsoft and
co-chairwoman of a White House symposium on society and A.I.

ACCORDING to some prominent voices in the tech world, artificial
intelligence presents a looming existential threat to humanity:
Warnings by luminaries like Elon Musk and Nick Bostrom about "the
singularity"--when machines become smarter than humans--have
attracted millions of dollars and spawned a multitude of

But this hand-wringing is a distraction from the very real problems
with artificial intelligence today, which may already be
exacerbating inequality in the workplace, at home and in our legal
and judicial systems. Sexism, racism and other forms of
discrimination are being built into the machine-learning algorithms
that underlie the technology behind many "intelligent" systems that
shape how we are categorized and advertised to.

Take a small example from last year: Users discovered that Google's
photo app, which applies automatic labels to pictures in digital
photo albums, was classifying images of black people as gorillas.
Google apologized; it was unintentional.

But similar errors have emerged in Nikon's camera software, which
misread images of Asian people as blinking, and in Hewlett-Packard's
web camera software, which had difficulty recognizing people with
dark skin tones.

This is fundamentally a data problem. Algorithms learn by being fed
certain images, often chosen by engineers, and the system builds a
model of the world based on those images. If a system is trained on
photos of people who are overwhelmingly white, it will have a harder
time recognizing nonwhite faces.

A very serious example was revealed in an investigation published
last month by ProPublica. It found that widely used software that
assessed the risk of recidivism in criminals was twice as likely to
mistakenly flag black defendants as being at a higher risk of
committing future crimes. It was also twice as likely to incorrectly
flag white defendants as low risk.

The reason those predictions are so skewed is still unknown, because
the company responsible for these algorithms keeps its formulas
secret--it's proprietary information. Judges do rely on
machine-driven risk assessments in different ways--some may even
discount them entirely--but there is little they can do to
understand the logic behind them.

Police departments across the United States are also deploying
data-driven risk-assessment tools in "predictive policing" crime
prevention efforts. In many cities, including New York, Los Angeles,
Chicago and Miami, software analyses of large sets of historical
crime data are used to forecast where crime hot spots are most
likely to emerge; the police are then directed to those areas.

At the very least, this software risks perpetuating an already
vicious cycle, in which the police increase their presence in the
same places they are already policing (or overpolicing), thus
ensuring that more arrests come from those areas. In the United
States, this could result in more surveillance in traditionally
poorer, nonwhite neighborhoods, while wealthy, whiter neighborhoods
are scrutinized even less. Predictive programs are only as good as
the data they are trained on, and that data has a complex history.

Histories of discrimination can live on in digital platforms, and if
they go unquestioned, they become part of the logic of everyday
algorithmic systems. Another scandal emerged recently when it was
revealed that Amazon's same-day delivery service was unavailable for
ZIP codes in predominantly black neighborhoods. The areas overlooked
were remarkably similar to those affected by mortgage redlining in
the mid-20th century. Amazon promised to redress the gaps, but it
reminds us how systemic inequality can haunt machine intelligence.

And then there's gender discrimination. Last July, computer
scientists at Carnegie Mellon University found that women were less
likely than men to be shown ads on Google for highly paid jobs. The
complexity of how search engines show ads to internet users makes it
hard to say why this happened--whether the advertisers preferred
showing the ads to men, or the outcome was an unintended consequence
of the algorithms involved.

Regardless, algorithmic flaws aren't easily discoverable: How would
a woman know to apply for a job she never saw advertised? How might
a black community learn that it were being overpoliced by software?

We need to be vigilant about how we design and train these
machine-learning systems, or we will see ingrained forms of bias
built into the artificial intelligence of the future.

Like all technologies before it, artificial intelligence will
reflect the values of its creators. So inclusivity matters--from
who designs it to who sits on the company boards and which ethical
perspectives are included. Otherwise, we risk constructing machine
intelligence that mirrors a narrow and privileged vision of society,
with its old, familiar biases and stereotypes.

If we look at how systems can be discriminatory now, we will be much
better placed to design fairer artificial intelligence. But that
requires far more accountability from the tech community.
Governments and public institutions can do their part as well: As
they invest in predictive technologies, they need to commit to
fairness and due process.

While machine-learning technology can offer unexpected insights and
new forms of convenience, we must address the current implications
for communities that have less power, for those who aren't dominant
in elite Silicon Valley circles.

Currently the loudest voices debating the potential dangers of
superintelligence are affluent white men, and, perhaps for them, the
biggest threat is the rise of an artificially intelligent apex

But for those who already face marginalization or bias, the threats
are here.
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