9/19/16

A few questions to WADA on therapeutic use exemption

As a scientist I am involved in monitoring of nuclear tests worldwide including  finding of the most recent events and its aftershocks. We have a very specific rule to exclude from analysis all events which with extremely  high probability do not have features of nuclear tests (like some earthquakes). Many natural events cannot be screened out by data, however,  despite almost all of them are NOT nuclear tests. This approach is adapted in order not to miss any possible test. For the case of therapeutic exemption (TE)  used by WADA it would be appropriate to formulate  a similar hypothesis.

Can WADA guarantee that TE never gives advantage to any of the sportsmen?

A few extra requests related to the distribution of TE over countries and sportsmen
1. Sport community has to be informed about country distribution of TE.
2. Sport community has to be informed about the frequency of TE among Olympic medalists and other sportsmen.

As any sportsman signs specific documents on fair play and compliance with doping restriction I do not see any problem with other people to be aware of possible personal advantages given by TE to people they compete with.  It is like Trump and Clinton publishing their health reports.

P.S. I recall that long jumper  Markus Rehm was expelled from competitions because he had a carbon-fiber leg  which is similar to TE.


9/8/16

Consebsence

The absence of consensus is a trademark of the day. There is no conceptual and even working understanding between parties of almost all conflicts ( from trade to hot war) except those within the parties themselves. It gives a new prospective to the probability of future fractures, also within the consolidated parties as we have already observed in the UK (Brexit considered as improbable) and currently observe in the US.  For me, the Austrian president elections in a month will be one of pivot points to evaluate the depth of possible fractures. And I will observe it from my window. A new world order is coming and this will be the world of consebsence.

P.S. There is also absence of proper clue for voting envelopes in Austria. Somehow, Austria lost traction between nature and human beings. Waiting for elections is boring.  

8/9/16

Demoneycracy to destroy - time for counterproductive conflicts

Actual clash in the US presidential elections is not between Clinton and Trump. The latter is not a political actor but harvests the opposition to the current step of (so called) democracy - "demo-ney-cracy". Most arguments against Trump, like the arguments against Brexit, are focused on the potential loss of profit by the most rich people. They are privatizing the whole gain of the US economy during the last half century.

Poor people, whom Clinton abuses every minute as stupid and lazy, are happy to hear that the rich may lose. It is hard to predict who wins, but similar arguments by Cameron definitely were counterproductive.  Demoneycracy can and has to be destroyed. Moreover, it is a self-destruction process as in the UK.  

Any society  progresses when  conflicts and imbalances between various fractions of population are productive. Fighting  for a better positions with all possible means is a duty not a right. As in all biological system, any small advantage may  evolve  into a insurmountable barrier. Western democracy has been following the same general rule with money becoming a one-sided filter of all benefits and advantages, including political power. Poor people have no chance to get money and power beyond pure stochastic fluctuations. Conflicts have been eventually reduced to clashes with police, however the imbalances  have been growing to enormous extent with top 0.1% of population possessing practically everything including all other people.

Productive conflicts are not possible any more and it has come time of counterproductive conflicts. Poor people cannot win benefits and power of the rich. However, they can diminish if not destroy the source of these benefits and power using democratic procedures. When Cameron or Clinton say that Brexit or Trump will result in dramatic fall in economic and financial  indicator it is a romantic song for poor ears. They are not stupid or lazy - they are deprivied of their lives from birth. What makes poor people happy is the loss of money and power. The more the better.

6/28/16

Brexit and the EU future: Prisoner's dilemma

Brexit was an unexpected outcome. In any case, the UK will soon regain overall control on its future and recover healthy economic and financial links with the whole world. Palmerston said in 1848
- I say that it is a narrow policy to suppose that this country or that is to be marked out as the eternal ally or the perpetual enemy of England. We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow...  

So, Brexit does not contradict this  historical view on the duty of England.

On the other hand, the future of EU as a conglomerate of unequal members  is unclear and likely grim. Here, game theory might be of service. In the situation when one can minimize own loss conditional on bigger loss of other companions it is not excluded that rational choice is to leave the EU first (or second after the UK). This is a well-known prisoner's dilemma. One cannot also excluded the influence of external forces who may propose a good deal to one of a few "prisoners". 

5/29/16

The worthless efforts of the Board of Governors of the Federal Reserve System and investment opportunities


Four years ago, we wrote in this blog about the strict proportionality between the CPI inflation and the actual interest rate defined by the Board of Governors of the Federal Reserve System, R. Briefly, the cumulative interest rate is just the cumulative CPI times 1.4. There are periods when the interest rate deviates from the long term inflation trend, which has been almost linear since 1972. Here, we extend observational dataset and discuss the most probable reason why the FRS actually not controlling inflation by presenting the actual economic force behind price inflation, as we presented in a series of papers [e.g., 1, 2, 3, and 4].  Overall, inflation is a linear lagged function of the change in labor force. The latter is driven by a secular change in the participation rate in labor force (LFPR) together with general increase in working age population. In other words, increasing labor force inflate process and decreasing labor force leads to deflation.
Introducing new data obtained from 2012, we depict in Figure 1the effective rate R divided by a factor of 1.37 (see our previous post for details) and the consumer price inflation. One can see that R lags behind the CPI since 1980, i.e. inflation grows at its own rate and R has to follow up. The idea of interest rate is that a higher R should suppress price inflation when it is high due to the effect expensive money. During deflationary periods with slow economy, low (in some countries negative) R has to channel cheap money into the economic growth. The reaction of inflation is also expected not shortly but with some time lag. The
The cumulative influence of the interest rate should produce a desired effect in the long run and inflation should go in the direction towards acceptable values. Figure 2 displays the cumulative effect, i.e. the cumulative values of the monthly estimates of R and CPI multiplied by 1.37. This is an intriguing plot. In the long run, the R curve fluctuates around the CPI one and returns to it. It is hard to believe that the sign of deviation of R from the 1.37CPI curve affects the behavior of the CPI, which is practically linear. Therefore, the influence of monetary policy is under doubt.
The FRS has tried all means to return the CPI to R without any success and have to return R to the CPI!
We have already described the secular changes in LFPR in 2013, 2014, and 2015. Figure 3 illustrates the evolution of LFPR as measured by the Bureau of Labor Statistics. The LFPR curve is accurately approximated by a simple function: LFPR(t) = 62.7+4.3SIN(2π[t-1978]/T). The period T=74 years and the double amplitude is 8.6, i.e. the largest LFPR change is 8.6%. Currently, the LFPR is strictly in the center of the range and in the middle of the fall from 1996 to 2034.
Our concept is based on the observation that the periods of high inflation are related to accelerated labor force growth. Therefore, we have highlighted the most recent and the next period of accelerated growth as marked red (start) and green (end) vertical lines highlight two periods. These periods of accelerated growth lasts 1/4T =18 years. Figure 4 presents the first and second time LFPR derivatives, which are used to select the accelerated growth, i.e. the period when both derivatives are positive. There is a clear coincidence between the period of two-digit inflation and the peak in the first derivative near 1978.  This is one of many facts supporting our concept of inflation. This is not the purpose of this post, however. Here, we compare the FRS decisions on discount rates and the behavior of the LFPR curve.
Figure 5 compares the difference between the R and 1.37CPI in Figure 2 (red curve) and the product of the LFPR’ and LFPR’’, i.e. the curve representing the change in acceleration. The latter curve is shifted by 6 years back in time (phase shift of approximately -30 degrees for period of 74 years). The peaks in the difference curve are well synchronized with the acceleration curve, which is leading by 6 years.  In reality, FRS decisions are fully driven by the LFPR. Moreover, the FRS is very slow in understanding status quo.
Now, R and 1.37CPI in Figure 2 coincide.  This means that the best R has to be 1.37 of the current CPI, but we all know that R will be retained below this value at least before 2020.  We are thinking now on the investment opportunities resulting from the predictable FRS behavior.

Figure 1. The federal funds rate, R, divided by 1.37 and the rate of consumer price inflation, CPI, between 1955 and 2016.

Figure 2. Cumulative values of the curves in Figure 1.


Figure 3. The rate of participation in labor force (LFPR). LFPR is accurately approximated by a simple function: LFPR(t) = 62.7+4.3SIN([t-1978]/T). The period T=74 years. Red (start) and green (end) vertical lines highlight two periods of accelerated growth. The periods of accelerated growth lasts 1/4T =18 years. The next period will start in 2034.

Figure 4. First and second time derivatives of the approximating SIN function.

Figure 5. The difference between the cumulative sum of effective federal funds rate (monthly, not seasonally adjusted) and the cumulative sum of the monthly rate (y/y) of consumer price inflation compared to the acceleration periods in the LFPR.



Strong leadership or democracy?



The figure below is self-explanatory. This is the cumulative real GDP growth in the former socialist countries (FSC) after 1990 (i.e. the past 25 years) as presented in the Total Economy Database.  The most successful (>60%) countries are Armenia, Azerbaijan, Belarus, Estonia, Kazakhstan, Poland, Slovakia, Turkmenistan, and Uzbekistan. Three to four of them are recognized democracies and the other five are under strong leadership (euphemism for pure economic discussion).  The absolute losers are Tajikistan and Ukraine (the winner with -26.2%), Serbia and Montenegro, with Moldova being still below the 1990 GDP level. All four countries have quite a controversial political configuration. Other FSC are above the zero line ranging from Croatia (4%), Kirgizia (7%) and Georgia (10%) to Latvia (55%), Bulgaria (44%) and Slovenia (43%).
It is hard to deny the general observation that strong leadership was able to create better economic conditions for growth in the countries of the former Soviet Union, except Baltic countries. Political turmoil is not creative, but we know it very well.  
I would not invest in a country without a stable political configuration.




Figure 1. The cumulative real GDP growth between 1990 and 2015 in the former socialist countries


Figure 2. The evolution of real GDP in the FSC

5/25/16

Reasons for distrust of mainstream political parties

The Gardian wrote: “What is on the march across Europe may not be the far right, but distrust, disillusion, even full-scale rejection of the political establishment”

What are the reasons behind such attitudes to the political establishment? 

Is it related to its

-         Irresponsibility
-         Irrelevance
-         Impunity
-         Ignorance
-         Bureaucracy
-         Arrogance
-         Estrangement
-         All in one


I feel that all of them are definitely at work in Russia but the effect is still opposite. Or it just needs 50 years to get to this point of disillusion?