Sunday, February 19, 2017

It's All About the Bike

Bicycles have a fascinating history. In the 1890s, the bicycle was the "thing". It sparked a massive increase in mobility. Companies were springing up all over to manufacture this revolutionary transportation device. Many athletic competitions were launched using the bicycle to showcase a human's speed. Even today, it remains the most efficient means for a person to propel themselves. It helped support women's suffrage movements. It also led to the adoption of good roads. Alas, the good roads and the speed ended up being commandeered by the automobile, allowing humans to travel faster, but at a much greater expense (to society, the environment, and people themselves.)

The bicycle also played a key role in industrialization and engineering. Ball bearings helped improve the efficiency of the rotating parts. Rubber tires and tubes helped allow for a smoother ride. The double-triangle frame supported weight efficiently. The spokes on the wheel provided a stronger, comfortable wheel. Chain drives and gears transferred power with minimal loss and allowed the wheels to be reduced in size. Assembly lines and large factories were developed to help meet the demand for bicycles. Most of the modern age owes its debt to the bicycle.

The bicycle also changed culture. The ease (and low cost) of travel enable people to live further away from crowded central cities. Sporting events also sprang up around the bicycle, with both long distance and sprint races having their following. Bicycle even led to its own downfall. Cars could exceed bike speeds. The manufacturing innovations could make cars faster and cheaper. The bike companies that survived often earned most of their revenue from non-bicycle lines. Bikes eventually were reduced to "toys" and not seen as serious transportation until they have had a renaissance today.

In It's All About the Bike, a serious cyclist goes about trying to build the best transportation bike. He travels the world to get the most durable, high quality components. These will not necessarily be the most expensive components. Carbon fiber dominates the world of bike racers. However, steel is still a much better choice for a "regular" bike. (It also has the benefit of being "moldable" and repairable.) A quality hand-built wheel will last longer than a machine built one. The "best" is sought out for each component, providing the author an opportunity to describe the evolution of the component as well as visit the artisans that are doing it best. In the end, he gets his bike, and we are enriched with a history and a knowledge that high quality workmanship still exists.

The Big Short: Inside the Doomsday Machine

Out of the ashes of the dot-com crash rose the housing bubble. Low interest rates and relaxed underwriting standards allowed anyone to buy a home. Loans were available for anybody, reagardless of their ability to pay. (In some cases, borrowers were encouraged to lie outright.) Lenders offered low teaser rates with options to limit payments further. They would gather fees when the loan was made and then securitized the loans to sell them to others. Borrowers would be expected to refinance or sell their property after the teaser rates expired. This system would work as long as home values are rising. However, once the prices start to fall (or even increase at slower rates), the house of cards would start to fall as teaser rates expired.

In the early 2000s, bankers had convinced themselves that sub-prime was where the money was. They created complex finance instruments to package them together in a seemingly "safe" manner. The highest rated securities would keep all their values if defaults continued at their "normal rates". Wall street thought they had eliminated most work. Even this risk could be eliminated by purchasing credit default instruments that would pay out if the bond payers failed. These additional layers helped to mask the true risk exposure.

While most people saw safety, a few people could see the house of cards falling. "The Big Short" focuses on these people. They saw the subprime situation as a super-complex ponzi scheme that was destined to fail. However, it was difficult to take a short position in "subprime". They would invest in Credit Default Swaps as well as short stocks of banks with heavy subprime exposure. Alas, the market for swaps were controlled by the banks that had exposure to subprime. They would continue to keep the value nearly constant, disregarding the possible exposure. Despite mounting subprime problems, the positions failed to show an increase in value until the bottom fell out of the market. However, once the bottom fell out, there was a risk that the counter parties would be able to fulfill the default swaps. Due to the complexity and massive exposure, there was a risk that the entire financial system would fail. However, the government jumped in and "saved" the financial system, allowing many to continue business as usual and continue to collect their big bonuses in spite of the fact that they nearly brought down the entire economy.

The subprime crisis hurt a lot of people. Supposedly safe mutual funds had their value greatly reduced due to exposure to "AAA" subprime instruments. Many people lost their houses and many others saw the value of their houses plummet in value. Many jobs were lost. Retirement savings were wiped out. Ironically, many of the people that caused the mess continued to do fine. They had already collected their big bonuses and had little "skin" in the game. Fund manager Michael Burry, who had correctly predicted the fall, left investing for a while after the fall. Despite predicting the crisis and making a ton of money for his investors, he was viewed as somebody "outside" and not given much credit.

With the abundant availability of information, there is little "low hanging" fruit for traders and bankers to justify their huge bonuses. Thus we end up with complex derivatives to help juice yields. We saw a near collapse of the system during the subprime collapse. Is this only a preview of the full collapse to come? At one time, gold was use to help exchange goods. The coinage had an intrinsic value. Then paper money replaced the coinage. It was valued for what it stood for. (At one time it represented a gold value. Now it is just a "Faith") Today, paper money is largely out of the picture, with most transactions merely involving numbers moving from one account to another. On top of this, there are numerous complex instruments. How stable is this system?

Monday, February 13, 2017


Michael Pollan always has great things to say about food. His books make me want to eat "good food". McDonald's tastes many times worse after reading the great things he was to say about quality food.

In Cooked, he looks at the ways that we have prepared food. He found the most common ways correspond with the "four elements": fire, earth, air and water. For Fire, we looks at BBQ, the most "masculine" way in which food is prepared. He tries out BBQ in North Carolina. Historically, it was done after a tobacco harvest and united the white and black residents. A whole pig was slow cooked over a natural fire. The places he tries adopt different parts of the "traditional" way as sacrosanct. For one, the wood is most important, for another natural (as opposed to feed-lot) port is important. The North Carolina definition of BBQ also differs from that of other regions. (In Texas it always seemed to be brisket) In ancient cultures, the butchering and cooking of animals often involved a priestly ritual. Today, it is often a man on his grill.

Food is typically boiled in water. The components are usually chopped into small pieces for a stew made by "grandma". Air transforms ground up grain and water into a delicious bread. (He takes a break to lambaste the insanity of us taking all the "healthy" parts out of flour only to add some back again.) Bread is made with the fermentation assistance of yeast - the representative of "earth". Fermentation is the final way in which food is often altered. Pickling, cheese-making and brewing all involve "Earthy" processes to transform food.

Today we miss out on many of the historic food producing processes. We stuff ourselves full of prepared food. Often this is done to "save time". However, this time savings can be a false hope. He did a test where everybody chose their own frozen entree from the grocery store. It took so long to get everyone's dish microwaved that the family of four was not able to eat together. Taking the effort to cook "from scratch" allowed them to eat together, and provided multiple meals. This becomes a central theme of the book. Cooking does take effort. But it also allows people to have positive experiences together cooking and eating. We would be better off if we did dedicate a little more time to quality food preparation.

The Gene: An Intimate History

The history of the understanding of DNA and genetics is a fantastic tale of science marching forward and backwards in a quest for knowledge. There were plenty of detours and missed opportunities in the development of understanding of genetics. The Greeks had many ideas, most of which led scientists down the wrong paths. Mendel had a clear understanding of genetic crosses through his pea experiments. However, his work was ignored for decades due to his lack of "credentials". Darwin had some keen insights, but also had some guesses that turned out to be totally wrong. Eugenics appeared to be to the wave of the future and a way to help "improve" the human race. Then the Nazis adopted it, and it become verboten. (Today, however, it is carried out in a more "unofficial" format with genetic testing and elective abortions of "defective" fetuses.)

In "The Gene", the author uses his family's history of mental illness to weave together a history of knowledge of genetics and the human applications of this knowledge.

Today we have learned a great deal more about how DNA encodes "us". We also have the power to make changes to the genetic code. We have used this power to make extensive changes to plants. We can also make changes to animals and even humans. This gives us great power, but also poses a great risk. Many genes work together to produce a certain outcome. Research is primarily through a "guess and check" approach. We try to change certain genes in an animal model to see the impact. We may look at various people with a similar condition and try to find similarities. It may be tempting to "turn off" a certain gene that leads to a disease. But what will be the ramification? Will this also turn off immunity to a future unknown disease? Will that cause some unknown negative problem in the future?

The power to make genetic changes is perhaps one of the most scary abilities we have today. People are having fewer children and using more medical assistance and genetic screening. Will we accidentally screen out an unknown important mutation that is needed for our species' survival? Will we create a homogeneous society that differs only superficially? Or will we accidentally hit the self-destruct button? The state of the art in genetics lends itself towards a justification of an intelligent design. We have the ability to manipulate genes. Why not create entire species? Are we the first to do it?

I could envision a past world where dinosaurs wanted to be the best dino-league athletes. They engineered themselves to be larger and larger until they reached the gargantuan sizes of the day. This was wildly successful for a time. However, problems arose when the environment changed in unexpected ways. The cultural bias to bigness was so prevalent that they ended up having a dino-war rather than adapting to smaller sizes. Eventually they became mostly extinct. That is, all except a renegade group that decided they wanted to get smaller and smaller. They figured out how to change their DNA to shrink them to be smaller and smaller. They then used the genetic knowledge to create other organisms to house them. Other animals were merely biological "houses" were these beings could live and reproduce. They created their harems and started reproducing like crazy. They were able to get the last laugh in as they "dominate" the big species of today.

What will we humans do with our genetic knowledge? Will we try to do too much before we know enough? Will we cause irreparable before we know what we are doing? Or are we doing things at the proper pace now. We have power, but we are only beginning to understand. I hope we can make good decisions.