Bull markets need to rise the farthest with the rewest people on them. So if the gold market is to remain in a bull market, something has to be done to cool off the market.
These short sharp drops of $50 or so just aren't doing it anymore. The price and enthusiasm comes roaring back each time.
In the 1970s, during gold's run from $35 to $800, there was an 18-month interlude where the price was cut in half (from about $200 to $100). I've thought for a few years now that a similar correction has to occur sometime during this bull market in gold. Now, however, I think that the level of patience in the market in general is such that only half of such a correction is necessary--say 25% over nine months.
This could be achieved by a slow grind downward at a rate of $50 per month for nine months.
Can you imagine the mindset if the price of gold were $900 in nine months time? The gloating on financial TV. That would definitely look like the end of the bull market. And that is the perception that has to come.
Of course, it wouldn't be a straight grind downward. It would be punctuated by brief $50 to $100 rallies to suck speculators in repeatedly and destroy them. That's how you destroy speculators.
So if such a correction is coming (it may or may not be starting now) what is the plan?
First of all I never sell any physical metal. In previous selloffs I find you can never get it back at the lower price.
I am building cash in stock trading acccounts, but holding core positions. Just selling a little in to strength, and occasionally buy on weakness.
Friday, October 29, 2010
Monday, October 25, 2010
Ghanaians: The Beautiful People
Ghanaians are among the most beautiful people in the world. This is based on careful observation over several years.
Kwame visits a herbalist, Makola Market, Accra 2010.
Coffin-makers in Axim, 2002.
Bartender, Shama, 2008 (left). Electrician near Bortianor, 2010 (right).
Father and son, Central Region, 2007 (left). Egg-seller and children, Adabraka, 2010 (right).
Artisanal miner, Western Region, 1997 (left). Hotel staff, Axim, 2008 (right).
Market seller and daughter, Agbogbloshie, 1997 (left). Grasscutter vendor, Mankessim, 2007 (right).
Village elder, Kakum, 2007 (left). Women and child at block plant, Central Region, 2005 (right).
Visiting dignitaries at the funeral of the Asanta Chief, 2008.
Corn vendor, Awuna Beach Village, 2002.
Children returning from school in SCC-Mandela, 2007.
Workmen near Oshiye, 2010. They said I could take their picture but had to help them find wives.
Communal labour day in Axim, 1997.
Parade in Axim, 2002.
Looking at these pictures I see the majority of the people are Nzema (from the Western Region). Not to say these are the most beautiful in Ghana, just I spend most of my time there.
Sunday, October 24, 2010
What has made you rich has made you poor
Electricity has been at a premium since a fantastic lightning storm here in Accra ten nights ago damaged the local power grid. We have had electricity over only about 24 hours in the first five days. It's been better since.
Such things get me thinking about scarcity in general. The prices of many commodities have soared over the past two decades, particularly in the last ten years. What’s behind it?
Some have argued for “peak everything”.
Much has been written on the concept of peak oil. The idea here is that once we reach the point where we have produced about one-half of all oil in existence, oil production will decline. Some might argue we can keep production up awhile longer, but the idea is that as the amount remaining declines, eventually production must decline.
Hubbert said “We cannot produce what we have not discovered.”
The Earth is large, and for the most part we have barely scratched the surface. If the world were the size of a billiard ball, the depth to which we have plunged in search of resources would not even be visible. From my perspective as a geologist whose prime interest is in metals, we are nowhere near the peak ability to produce metals.
A paper published some years ago proposed the existence of a sphere of uranium (and other heavy metals) at the centre of the Earth, and some preliminary evidence that this sphere would have a radius of up to 6 km. Quite a lot of uranium, but I don’t care to hazard a guess as to the cost of its extraction*.
Oil, however, is a different matter. Given what we know of its formation, there cannot be substantial and increasing pools of accessible hydrocarbon at successively greater depths within the Earth beyond some level fairly close to the surface. Alternative theories of deep hot biospheres or primary hydrocarbon have extremely limited evidence in their favour, and in any case, the few molecules of hydrocarbon which may have been demonstrated to have drifted up through the basement geology from the deep Earth are but a small drop in the ocean of world demand. Oil is definitely a commodity which could be at or near its peak of production.
Having said that, I think we would find that at a price of about $1000/bbl (in constant 2010 dollars—no fair printing your way to this price!) we would still find a lot of oil at depth. But for geological reasons, this oil will be extremely expensive to discover and produce (hence the need for $1000/bbl).
The deeper the rocks are, the more tectonic episodes they have experienced. An oil reservoir is very simply the volume contained within a fold in the rocks. The deeper you go, the more complex the folding, and the smaller the individual volumes. You have two technical challenges, leading to greatly increased costs—first, the targets are small, so they are difficult to “image” using geophysical techniques, and difficult to hit with a drill; and second, the reservoir is small, so there is not much economic benefit to offset the much higher costs (except by a much higher price).
Beyond this depth, you don’t have much chance of finding anything at all, as the temperature is too high to preserve the most valuable hydrocarbons.
Most of the data we have collected to date in the search for oil (and there are reams of it—I once heard that a major oil company was prepared to donate its entire collection of eastern Canada seismic data to the Geological Survey—just the tapes alone would fill a small building) are useless for looking for these deeper, smaller structures. It hurts to admit it, but there it is.
There is a small problem called spatial aliasing. You have a complex curve as in the figure. But your sampling is limited. How you sample is called CDP stacking. A series of shots are set off and the results recorded on geophones, and simply, all the reflections occur off one common point at depth, which is the sampled point. Then the entire array is dragged along some distance and repeated. But the smallest target that can be resolved is a function of your sampling interval. In particular, you need two samples to define a bend in the rocks (defining it accurately requires more).
If exploration geophysicists had unlimited budgets and placed no value on time, I have no doubt they would sample more frequently. But budgets are limited, and so geophysicists collect the minimum amount of data necessary to define their targets of interest, which over the past couple of decades have been that second layer of hydrocarbons in my cartoon of oil distribution. This data is not nearly dense enough to resolve the smaller targets on the third layer above.
What happens when you try to interpret geology without adequate data?
Oh yeah--you have to click on this figure for it to do anything.
Holy crap! Those hundred-million dollar holes that were supposed to be into a fat juicy anticline went into nothing! Not only are you fired and blacklisted from the industry, but you and your extended family are hereby sold into slavery.
So let’s leave aside oil for a moment.
What about metals? If we are nowhere near their peak production, why have their prices risen so sharply?
One reason may be inflation. More dollars chasing the metals.
There could be another—and that has to do with the fall of the price of metals (and most commodities) that began in the early 1970s. This fall had more to do with the rise of commodity futures trading than it did a sudden per capita increase in metals production. Many charts showed a drop in per capita production of basic commodities.
The per capita production of copper has risen through the 20th century, but four declines are apparent--WWI, the Depression, WWII, and the period from 1975 to 1985 or 90. Other commodity graphs appear similar. Was there an economic implosion equal to a Great Depression or a World War in that period?
When I was teaching early in the last decade, it was fashionable to look at such graphs and wonder if production for many of these metals was peaking.
The real reason for the drop in per capita production has to do with the fall in price. For producers, price is a signal. A rising price tells you to increase production. A falling price tells you to reduce production.
The problem comes from the paper pushers. If you have a certain amount of wealth, it seems intuitively obvious that if the price of what you have to buy falls, then you become wealthier. But this is only true if price falls due to an increase in supply.
If the price has fallen because of the ability of large corporate and banking interests to control the price downwards through the issuance of paper, then your wealth is not actually increasing.
After all, what is wealth? Isn’t wealth actually stuff—gold, oil, copper, grain, meat? If you drive the price down, but at the same time you have less stuff, then you have become poorer—for wealth is an abundance of oil, of gold, of food; but not of paper (or its electronic equivalents).
Creating all this paper has not made us richer! It has made us poorer!
Notice how per capita production of copper has increased over the past fifteen years. Do you feel richer? You should . . . except that much of that extra copper has gone to China, so unless you have been Chinese over that interval, you are not much wealthier (much like how the rapid growth from 1950 to 1975 was mainly experienced in North America).
We are a long way from the peak of everything (oil being the probable exception). We are currently in the process of revaluing real commodities in terms of paper. This revaluation is the equivalent of a complex system leaping from one metastable state to another. Huge volatility lies in our future, as corporate and banking interests, backed by huge government bailouts, double and redouble their efforts to regain control of commodity prices.
*The cheapest way to extract it may be to blow up the Earth. But there is an easy way to protect yourself. You simply buy land futures and take delivery after the Earth is destroyed!
Blogging by battery. Unfortunately I blew up the inverter last night.
Such things get me thinking about scarcity in general. The prices of many commodities have soared over the past two decades, particularly in the last ten years. What’s behind it?
Some have argued for “peak everything”.
Much has been written on the concept of peak oil. The idea here is that once we reach the point where we have produced about one-half of all oil in existence, oil production will decline. Some might argue we can keep production up awhile longer, but the idea is that as the amount remaining declines, eventually production must decline.
Hubbert said “We cannot produce what we have not discovered.”
The Earth is large, and for the most part we have barely scratched the surface. If the world were the size of a billiard ball, the depth to which we have plunged in search of resources would not even be visible. From my perspective as a geologist whose prime interest is in metals, we are nowhere near the peak ability to produce metals.
A paper published some years ago proposed the existence of a sphere of uranium (and other heavy metals) at the centre of the Earth, and some preliminary evidence that this sphere would have a radius of up to 6 km. Quite a lot of uranium, but I don’t care to hazard a guess as to the cost of its extraction*.
Oil, however, is a different matter. Given what we know of its formation, there cannot be substantial and increasing pools of accessible hydrocarbon at successively greater depths within the Earth beyond some level fairly close to the surface. Alternative theories of deep hot biospheres or primary hydrocarbon have extremely limited evidence in their favour, and in any case, the few molecules of hydrocarbon which may have been demonstrated to have drifted up through the basement geology from the deep Earth are but a small drop in the ocean of world demand. Oil is definitely a commodity which could be at or near its peak of production.
Having said that, I think we would find that at a price of about $1000/bbl (in constant 2010 dollars—no fair printing your way to this price!) we would still find a lot of oil at depth. But for geological reasons, this oil will be extremely expensive to discover and produce (hence the need for $1000/bbl).
The deeper the rocks are, the more tectonic episodes they have experienced. An oil reservoir is very simply the volume contained within a fold in the rocks. The deeper you go, the more complex the folding, and the smaller the individual volumes. You have two technical challenges, leading to greatly increased costs—first, the targets are small, so they are difficult to “image” using geophysical techniques, and difficult to hit with a drill; and second, the reservoir is small, so there is not much economic benefit to offset the much higher costs (except by a much higher price).
Beyond this depth, you don’t have much chance of finding anything at all, as the temperature is too high to preserve the most valuable hydrocarbons.
Most of the data we have collected to date in the search for oil (and there are reams of it—I once heard that a major oil company was prepared to donate its entire collection of eastern Canada seismic data to the Geological Survey—just the tapes alone would fill a small building) are useless for looking for these deeper, smaller structures. It hurts to admit it, but there it is.
There is a small problem called spatial aliasing. You have a complex curve as in the figure. But your sampling is limited. How you sample is called CDP stacking. A series of shots are set off and the results recorded on geophones, and simply, all the reflections occur off one common point at depth, which is the sampled point. Then the entire array is dragged along some distance and repeated. But the smallest target that can be resolved is a function of your sampling interval. In particular, you need two samples to define a bend in the rocks (defining it accurately requires more).
If exploration geophysicists had unlimited budgets and placed no value on time, I have no doubt they would sample more frequently. But budgets are limited, and so geophysicists collect the minimum amount of data necessary to define their targets of interest, which over the past couple of decades have been that second layer of hydrocarbons in my cartoon of oil distribution. This data is not nearly dense enough to resolve the smaller targets on the third layer above.
What happens when you try to interpret geology without adequate data?
Holy crap! Those hundred-million dollar holes that were supposed to be into a fat juicy anticline went into nothing! Not only are you fired and blacklisted from the industry, but you and your extended family are hereby sold into slavery.
So let’s leave aside oil for a moment.
What about metals? If we are nowhere near their peak production, why have their prices risen so sharply?
One reason may be inflation. More dollars chasing the metals.
There could be another—and that has to do with the fall of the price of metals (and most commodities) that began in the early 1970s. This fall had more to do with the rise of commodity futures trading than it did a sudden per capita increase in metals production. Many charts showed a drop in per capita production of basic commodities.
Global copper production in tonnes per thousand population. Data compiled from
USGS and UN 2004 projections, digitized at five year intervals.
The per capita production of copper has risen through the 20th century, but four declines are apparent--WWI, the Depression, WWII, and the period from 1975 to 1985 or 90. Other commodity graphs appear similar. Was there an economic implosion equal to a Great Depression or a World War in that period?
When I was teaching early in the last decade, it was fashionable to look at such graphs and wonder if production for many of these metals was peaking.
The real reason for the drop in per capita production has to do with the fall in price. For producers, price is a signal. A rising price tells you to increase production. A falling price tells you to reduce production.
The problem comes from the paper pushers. If you have a certain amount of wealth, it seems intuitively obvious that if the price of what you have to buy falls, then you become wealthier. But this is only true if price falls due to an increase in supply.
If the price has fallen because of the ability of large corporate and banking interests to control the price downwards through the issuance of paper, then your wealth is not actually increasing.
After all, what is wealth? Isn’t wealth actually stuff—gold, oil, copper, grain, meat? If you drive the price down, but at the same time you have less stuff, then you have become poorer—for wealth is an abundance of oil, of gold, of food; but not of paper (or its electronic equivalents).
Creating all this paper has not made us richer! It has made us poorer!
Notice how per capita production of copper has increased over the past fifteen years. Do you feel richer? You should . . . except that much of that extra copper has gone to China, so unless you have been Chinese over that interval, you are not much wealthier (much like how the rapid growth from 1950 to 1975 was mainly experienced in North America).
We are a long way from the peak of everything (oil being the probable exception). We are currently in the process of revaluing real commodities in terms of paper. This revaluation is the equivalent of a complex system leaping from one metastable state to another. Huge volatility lies in our future, as corporate and banking interests, backed by huge government bailouts, double and redouble their efforts to regain control of commodity prices.
*The cheapest way to extract it may be to blow up the Earth. But there is an easy way to protect yourself. You simply buy land futures and take delivery after the Earth is destroyed!
Wednesday, October 13, 2010
Bifurcation to come in our economic decline?
I have been trying to finish this entry forever, but power has been out here for almost three days now due to an electrical storm a few nights ago. I have been running off portable batteries, charging once in awhile when we run the generator.
One debate I seem to have over and over again with one of my fellow expats here in Ghana is the success (or lack thereof) of central banks in controlling the unfolding economic decline.
This friend of mine insists that central banks will do what they have always done, which is oversee a gradual decline of economic power in the West, while ensuring enough volatility that it is hard for someone to sit in a long (or short) position and profit all the way down.
My thinking is informed by the behaviour I have observed in dynamic systems. Systems behave simply and change slowly over more than 99.9% of observable time, but behave unpredictably and change very rapidly during the remaining <0.1% of observable time.
The behaviour of dynamic systems, like climate, is nearly linear much of the time, but is characterized by episodic reorganizations. These reorganizations resemble car accidents, in that your life afterwards may have no similarity to your life beforehand. Consequently, trying to predict the behaviour of a system after a bifurcation is as difficult as predicting you will be in a car accident next week.
About all we can do is anticipate when the bifurcation will take place.
Central banks normally try to hide what they are doing, because they don't want the general population protecting themselves against the consequences of their actions. If you need deflation, you also need the general population to be hurt by it, otherwise there is no benefit. However this requires a prediction of what the general populace is going to do, and I think that this will prove the weak point of central bank operations.
For instance, the future operation of the system may well depend on people continuing to make their mortgage payments, even if the value of the house has fallen below the amount owing. Between the holy hell of MERS and all the recent foreclosure failings, it seems likely that more and more people are going to give up on those mortgage payments.
Whenever the central bank tries to interfere with the workings of the economy in order to bring about a desired change, the general population is going to have to act in the manner predicted by the genius economic modelers at these banks. But modeling is really hard, in this case because the behaviour of the population is unpredictable.
Here is an example. Some years ago the Canadian Mint introduced a one-dollar coin with a picture of a loon. The coin was made of nickel. The official opinion expressed was that Canadians would love these things and would call them “dollar coins” or “dollars”. But even before the coin was released, Canadians began calling them “loonies”, a name which has lasted to the present day.
A few years later, the Mint decided to introduce a two-dollar coin. This coin depicted a polar bear (now two polar bears). Once again, there was an official opinion—the public would call this coin the “Bear”. Of course, they were almost immediately known as “toonies”.
So much for the official prediction of public behaviour.
When the tipping point comes—and it likely won’t be recognized until afterwards—the changes will be broad and deep. I don’t know what our new world will be like. But I would guess it would have a lot less government and the economy would be more focussed on actual production and real wealth creation rather than the growth of paper assets.
One debate I seem to have over and over again with one of my fellow expats here in Ghana is the success (or lack thereof) of central banks in controlling the unfolding economic decline.
This friend of mine insists that central banks will do what they have always done, which is oversee a gradual decline of economic power in the West, while ensuring enough volatility that it is hard for someone to sit in a long (or short) position and profit all the way down.
My thinking is informed by the behaviour I have observed in dynamic systems. Systems behave simply and change slowly over more than 99.9% of observable time, but behave unpredictably and change very rapidly during the remaining <0.1% of observable time.
The behaviour of dynamic systems, like climate, is nearly linear much of the time, but is characterized by episodic reorganizations. These reorganizations resemble car accidents, in that your life afterwards may have no similarity to your life beforehand. Consequently, trying to predict the behaviour of a system after a bifurcation is as difficult as predicting you will be in a car accident next week.
About all we can do is anticipate when the bifurcation will take place.
Central banks normally try to hide what they are doing, because they don't want the general population protecting themselves against the consequences of their actions. If you need deflation, you also need the general population to be hurt by it, otherwise there is no benefit. However this requires a prediction of what the general populace is going to do, and I think that this will prove the weak point of central bank operations.
For instance, the future operation of the system may well depend on people continuing to make their mortgage payments, even if the value of the house has fallen below the amount owing. Between the holy hell of MERS and all the recent foreclosure failings, it seems likely that more and more people are going to give up on those mortgage payments.
Whenever the central bank tries to interfere with the workings of the economy in order to bring about a desired change, the general population is going to have to act in the manner predicted by the genius economic modelers at these banks. But modeling is really hard, in this case because the behaviour of the population is unpredictable.
Here is an example. Some years ago the Canadian Mint introduced a one-dollar coin with a picture of a loon. The coin was made of nickel. The official opinion expressed was that Canadians would love these things and would call them “dollar coins” or “dollars”. But even before the coin was released, Canadians began calling them “loonies”, a name which has lasted to the present day.
A few years later, the Mint decided to introduce a two-dollar coin. This coin depicted a polar bear (now two polar bears). Once again, there was an official opinion—the public would call this coin the “Bear”. Of course, they were almost immediately known as “toonies”.
So much for the official prediction of public behaviour.
When the tipping point comes—and it likely won’t be recognized until afterwards—the changes will be broad and deep. I don’t know what our new world will be like. But I would guess it would have a lot less government and the economy would be more focussed on actual production and real wealth creation rather than the growth of paper assets.
Tuesday, October 12, 2010
Monetary debasement and Canadian coins
As the value of money has declined over the past several years due to government mismanagement of the economy, the price of commodities has similarly risen. As a result, the metal content of numerous coins in the late 1990's greatly exceeded the face value of the coins.
In particular, Canadian nickels (pre-1982), each contain 1/100 of a pound of nickel and are worth about 10 cents each (metal content), but were as high as 27 cents a couple of years ago.
Canadian pennies were made out of copper until 1996, and are worth more than face value.
In 2007, the Canadian Mint began its Alloy Recovery Program, by which it removed old circulating coins and melted them down for the metal content, replacing them by clad steel coins, which are nearly worthless.
The problem I have with this is that coins are traditionally the only way the general populace has to protect itself against financial mismanagement by government. As coins were gradually debased, far-seeing individuals would hoard valuable coins (normally gold or silver) and only spend the debased coins.
But the Canadian government has jumped the gun, and is pre-empting the Canadian citizen. Poor Canadians no longer have any reasonable way to protect themselves from inflation, except by waking up and buying gold or silver. Luckily for the Canadian government, most Canadians are asleep at the switch. If they were to wake up in large numbers and start hoarding copper and nickel coins (still lots of pennies and nickels, though the dimes and quarters are effectively gone), the government's plan would fail.
In particular, Canadian nickels (pre-1982), each contain 1/100 of a pound of nickel and are worth about 10 cents each (metal content), but were as high as 27 cents a couple of years ago.
Canadian pennies were made out of copper until 1996, and are worth more than face value.
In 2007, the Canadian Mint began its Alloy Recovery Program, by which it removed old circulating coins and melted them down for the metal content, replacing them by clad steel coins, which are nearly worthless.
The problem I have with this is that coins are traditionally the only way the general populace has to protect itself against financial mismanagement by government. As coins were gradually debased, far-seeing individuals would hoard valuable coins (normally gold or silver) and only spend the debased coins.
But the Canadian government has jumped the gun, and is pre-empting the Canadian citizen. Poor Canadians no longer have any reasonable way to protect themselves from inflation, except by waking up and buying gold or silver. Luckily for the Canadian government, most Canadians are asleep at the switch. If they were to wake up in large numbers and start hoarding copper and nickel coins (still lots of pennies and nickels, though the dimes and quarters are effectively gone), the government's plan would fail.
Monday, October 11, 2010
Resignation over disgust at global warming
I have already tried to make the point of easy funding drawing scientific effort towards the problems, and ultimately the conclusions desired by the funding authorities.
I hate to say I told you so, but . . .
Here is Dr. Harold Lewis , emeritus professor of physics at UC Santa Barbara, and a giant in his field, resigning from the American Physical Society.
I hate to say I told you so, but . . .
Here is Dr. Harold Lewis , emeritus professor of physics at UC Santa Barbara, and a giant in his field, resigning from the American Physical Society.
Dear Curt:
When I first joined the American Physical Society sixty-seven years ago it was much smaller, much gentler, and as yet uncorrupted by the money flood (a threat against which Dwight Eisenhower warned a half-century ago). Indeed, the choice of physics as a profession was then a guarantor of a life of poverty and abstinence—it was World War II that changed all that. The prospect of worldly gain drove few physicists. As recently as thirty-five years ago, when I chaired the first APS study of a contentious social/scientific issue, The Reactor Safety Study, though there were zealots aplenty on the outside there was no hint of inordinate pressure on us as physicists. We were therefore able to produce what I believe was and is an honest appraisal of the situation at that time. We were further enabled by the presence of an oversight committee consisting of Pief Panofsky, Vicki Weisskopf, and Hans Bethe, all towering physicists beyond reproach. I was proud of what we did in a charged atmosphere. In the end the oversight committee, in its report to the APS President, noted the complete independence in which we did the job, and predicted that the report would be attacked from both sides. What greater tribute could there be?
How different it is now. The giants no longer walk the earth, and the money flood has become the raison d’être of much physics research, the vital sustenance of much more, and it provides the support for untold numbers of professional jobs. For reasons that will soon become clear my former pride at being an APS Fellow all these years has been turned into shame, and I am forced, with no pleasure at all, to offer you my resignation from the Society.
It is of course, the global warming scam, with the (literally) trillions of dollars driving it, that has corrupted so many scientists, and has carried APS before it like a rogue wave. It is the greatest and most successful pseudoscientific fraud I have seen in my long life as a physicist. Anyone who has the faintest doubt that this is so should force himself to read the ClimateGate documents, which lay it bare. (Montford’s book organizes the facts very well.) I don’t believe that any real physicist, nay scientist, can read that stuff without revulsion. I would almost make that revulsion a definition of the word scientist.
So what has the APS, as an organization, done in the face of this challenge? It has accepted the corruption as the norm, and gone along with it. For example:
1. About a year ago a few of us sent an e-mail on the subject to a fraction of the membership. APS ignored the issues, but the then President immediately launched a hostile investigation of where we got the e-mail addresses. In its better days, APS used to encourage discussion of important issues, and indeed the Constitution cites that as its principal purpose. No more. Everything that has been done in the last year has been designed to silence debate
2. The appallingly tendentious APS statement on Climate Change was apparently written in a hurry by a few people over lunch, and is certainly not representative of the talents of APS members as I have long known them. So a few of us petitioned the Council to reconsider it. One of the outstanding marks of (in)distinction in the Statement was the poison word incontrovertible, which describes few items in physics, certainly not this one. In response APS appointed a secret committee that never met, never troubled to speak to any skeptics, yet endorsed the Statement in its entirety. (They did admit that the tone was a bit strong, but amazingly kept the poison word incontrovertible to describe the evidence, a position supported by no one.) In the end, the Council kept the original statement, word for word, but approved a far longer “explanatory” screed, admitting that there were uncertainties, but brushing them aside to give blanket approval to the original. The original Statement, which still stands as the APS position, also contains what I consider pompous and asinine advice to all world governments, as if the APS were master of the universe. It is not, and I am embarrassed that our leaders seem to think it is. This is not fun and games, these are serious matters involving vast fractions of our national substance, and the reputation of the Society as a scientific society is at stake.
3. In the interim the ClimateGate scandal broke into the news, and the machinations of the principal alarmists were revealed to the world. It was a fraud on a scale I have never seen, and I lack the words to describe its enormity. Effect on the APS position: none. None at all. This is not science; other forces are at work.
4. So a few of us tried to bring science into the act (that is, after all, the alleged and historic purpose of APS), and collected the necessary 200+ signatures to bring to the Council a proposal for a Topical Group on Climate Science, thinking that open discussion of the scientific issues, in the best tradition of physics, would be beneficial to all, and also a contribution to the nation. I might note that it was not easy to collect the signatures, since you denied us the use of the APS membership list. We conformed in every way with the requirements of the APS Constitution, and described in great detail what we had in mind—simply to bring the subject into the open.<
5. To our amazement, Constitution be damned, you declined to accept our petition, but instead used your own control of the mailing list to run a poll on the members’ interest in a TG on Climate and the Environment. You did ask the members if they would sign a petition to form a TG on your yet-to-be-defined subject, but provided no petition, and got lots of affirmative responses. (If you had asked about sex you would have gotten more expressions of interest.) There was of course no such petition or proposal, and you have now dropped the Environment part, so the whole matter is moot. (Any lawyer will tell you that you cannot collect signatures on a vague petition, and then fill in whatever you like.) The entire purpose of this exercise was to avoid your constitutional responsibility to take our petition to the Council.
6. As of now you have formed still another secret and stacked committee to organize your own TG, simply ignoring our lawful petition.
APS management has gamed the problem from the beginning, to suppress serious conversation about the merits of the climate change claims. Do you wonder that I have lost confidence in the organization?
I do feel the need to add one note, and this is conjecture, since it is always risky to discuss other people’s motives. This scheming at APS HQ is so bizarre that there cannot be a simple explanation for it. Some have held that the physicists of today are not as smart as they used to be, but I don’t think that is an issue. I think it is the money, exactly what Eisenhower warned about a half-century ago. There are indeed trillions of dollars involved, to say nothing of the fame and glory (and frequent trips to exotic islands) that go with being a member of the club. Your own Physics Department (of which you are chairman) would lose millions a year if the global warming bubble burst. When Penn State absolved Mike Mann of wrongdoing, and the University of East Anglia did the same for Phil Jones, they cannot have been unaware of the financial penalty for doing otherwise. As the old saying goes, you don’t have to be a weatherman to know which way the wind is blowing. Since I am no philosopher, I’m not going to explore at just which point enlightened self-interest crosses the line into corruption, but a careful reading of the ClimateGate releases makes it clear that this is not an academic question.
I want no part of it, so please accept my resignation. APS no longer represents me, but I hope we are still friends.
Hal
Sunday, October 10, 2010
The scientific method and the human condition
The scientific method is fairly straightforward. You formulate an hypothesis to explain some observations. You determine a method of testing your hypothesis. You test it and either verify it or discard it.
As time passes, hypotheses which have formerly been in favour are found to be at odds with some observations and are either modified or discarded and replaced by new ideas.
Scientists are human and have human frailties. As a result, sometimes observations warrant discarding a heavily favoured hypothesis in favour of some other, but the expected does not happen and the scientific community hangs on to the older idea.
This is much more likely to occur if the older idea is part of a larger interrelated series of ideas which we might call a paradigm. The last significant paradigm shift that occurred was the plate tectonics revolution, which overthrew geosynclinal theory (and many other aspects of earth sciences). Arguably, we are entering another paradigm shift in which we may be replacing (or augmenting) the Newtonian mechanistic worldview with Liebnizian metaphysics.
Can scientists be held liable for scientific errors?
Not in a legal sense. But isn't there some kind of cachet for making errors of the worst kind?
For most it is a character trait for most scientists. It is reflected in their diligence and the need to get things right. But there is a downside to this trait which is experienced when the scientist in question has been in error--and especially if that error has been drawn out over a very long time.
Some years ago I was contracted to take some scientific software, which had been designed for a mainframe, and modify it to run on a PC. This was in 1989, and the client had the first 486 machine I had ever seen. It had a tower architecture (a first) and cost over $11,000. The program used a particular algorithm, the Blackman-Tukey algorithm to evaluate a Fourier transform of a time series. The time series was usually a paleoclimatic data set that in the case of my client, was either an isotopic data or on relative abundances of certain species of foraminifera from deep-ocean cores.
The software in question was widely used by Quaternary paleoclimatologists to assess the presence of cyclicity within their time series. In particular, the most were looking for evidence of astronomical forcing in climate change, and the majority of the energy was found in cycles of approximately 100,000 years in length (changes in eccentricity of the earth’s orbit); 40,000 years in length (variations in the earth’s axial tilt) and about 23,000 years in length (precession of the earth’s rotational axis).
Cycles of other lengths can be found as well, some due to nonlinear combination of the above orbital parameters, but also characteristic resonances of dynamic systems within the earth system, and their responses to astronomical forcings.
The software was part of a very large package that is related to SPECMAP. Much of the analysis of SPECMAP still forms the basis of widely available records (including those used by this author). I don’t have an issue with the software used to produce the averaged dated curves of various parameters through the Quaternary. I have an issue with some of the conclusions published in the past.
The Blackman-Tukey algorithm is generally considered to be archaic now. In fact, it was considered to archaic even back in 1989, but it was widely used in part because the confidence level of the results was easily quantified. Also, as a human endeavour, scientists like to do what other scientists are doing—it gives them confidence that they are doing the right thing.
The program made two estimates of the Fourier transform from a given data set—one from a high-resolution subsample of the original data set and one from a low-resolution subsample. To be considered significant, a spectral peak had to be higher by some multiple in the hi-res spectral estimate than it was in the low-res spectral estimate.
In order to implement this, there was a subroutine for drawing the appropriate subsamples, and a second one for designing a “window” to be applied to both subsamples. It was important to taper the ends of a data set before calculating its spectral estimate or else there would be a lot of noise in the power spectrum. And if the two endpoints don’t match, the effect is like adding an impulse to the original data, and the resulting noise has energy at all frequencies.
An effective window tapers the data by reducing the endpoints to zero, but doesn't change the rest of the data very much.
The particular subroutine was one which calculated the coefficients, which would be between zero (at the ends) and one (across the middle). Since there were two subsamples being compared, each consisting a different number of observations, a separate window needed to be calculated for the hi-res and low-res subsamples.
In this implementation, there was an error in the subroutine which calculates the window coefficients—sort of the equivalent of failing to dot an ‘i’ or cross a ‘t’. It was a trivial error in the sense that the program would run. But its output was meaningless.
The programmer forgot to calculate the window coefficients for the low-res subsample, and simply applied the coefficients for the window for the hi-res subsample. Of course, the subroutine runs out of data to taper while still near the middle of the window.
The low-res spectral estimate was calculated from a subsample that was tapered on only one side. Noise was smeared through the entire spectrum. The effect overall was to greatly inflate the apparent significance of spectral peaks in the spectral estimate from the high-resolution subsample.
Considering that the significance of the spectral peaks was the main point of many many academic publications using this software, this was potentially a major issue.
As fate would have it, one of the originators of this software package was coming to my little university to deliver a lecture on something or other (not spectral analysis, but possibly some results using it). So I took the opportunity to ask him afterwards (privately) about the problems outlined above.
Picture the great Shackleton, author of hundreds of papers and the head of this international movement to apply Blackman-Tukey spectral estimates to paleoclimatological data, approached by a young graduate student about some minor technical detail in the SPECMAP series of programs.
I understood from his response immediately that he had no understanding of my point. From the way he flew into a rage, it was clear that reasonable discussion was impossible. He simply shouted, "The software works. The software works!" Clearly he had simply hired some programmer to write the software. His over-reaction was unexpected and left me at a loss.
This is the human condition. He cannot admit to a problem with the software, as it is his name on it, and it is in wide use. If the error had been pointed out before distribution, it would have been a different matter.
Over the next couple of years I engaged a few of the scientists who were using the software, and they couldn't understand the problem either. Everybody was using it, so everyone was confident that it worked. Additionally, the users had no fundamental understanding of the mathematics of the Fourier transform, nor the limitations of its application, which lead to a cavalier approach.
The entire situation was appalling.
The transform was treated like an infallible black box. The data went in one end, and usable results came out. Or so it was assumed.
Are there any changes? The only change is that the black box has changed. Instead of using custom-written software, most of these guys use Matlab or its equivalent. Now I will agree that Matlab is probably better written (and has been through more iterations) than the Pisias/Shackleton software, but there is still an important problem.
The scientists are not fully aware of the mathematics that they are using.
Update (October 25):
To reiterate an earlier point--there comes a time when the emotional involvement with an idea is so strong that one cannot easily discard it even in the face of contradictory evidence. With the SPECMAP story, I have no doubt that had I discovered the flaw at the time of the programs' release, it would have been easier for Shackleton to accept their existence. But at the time of our discussion, the programs had been in common use for several years, and there were many refereed publications which presented conclusions on their basis. By that time the whole SPECMAP thing was like this vast armada sailing across the ocean and it could scarcely notice the lunatic in a lifeboat trying to wave them back with an oar while shouting, "Turn back! Turn back! You're about to sail over the edge!"
It is a human thing, not a scientific thing.
As time passes, hypotheses which have formerly been in favour are found to be at odds with some observations and are either modified or discarded and replaced by new ideas.
Scientists are human and have human frailties. As a result, sometimes observations warrant discarding a heavily favoured hypothesis in favour of some other, but the expected does not happen and the scientific community hangs on to the older idea.
This is much more likely to occur if the older idea is part of a larger interrelated series of ideas which we might call a paradigm. The last significant paradigm shift that occurred was the plate tectonics revolution, which overthrew geosynclinal theory (and many other aspects of earth sciences). Arguably, we are entering another paradigm shift in which we may be replacing (or augmenting) the Newtonian mechanistic worldview with Liebnizian metaphysics.
Can scientists be held liable for scientific errors?
Not in a legal sense. But isn't there some kind of cachet for making errors of the worst kind?
For most it is a character trait for most scientists. It is reflected in their diligence and the need to get things right. But there is a downside to this trait which is experienced when the scientist in question has been in error--and especially if that error has been drawn out over a very long time.
Some years ago I was contracted to take some scientific software, which had been designed for a mainframe, and modify it to run on a PC. This was in 1989, and the client had the first 486 machine I had ever seen. It had a tower architecture (a first) and cost over $11,000. The program used a particular algorithm, the Blackman-Tukey algorithm to evaluate a Fourier transform of a time series. The time series was usually a paleoclimatic data set that in the case of my client, was either an isotopic data or on relative abundances of certain species of foraminifera from deep-ocean cores.
The software in question was widely used by Quaternary paleoclimatologists to assess the presence of cyclicity within their time series. In particular, the most were looking for evidence of astronomical forcing in climate change, and the majority of the energy was found in cycles of approximately 100,000 years in length (changes in eccentricity of the earth’s orbit); 40,000 years in length (variations in the earth’s axial tilt) and about 23,000 years in length (precession of the earth’s rotational axis).
Cycles of other lengths can be found as well, some due to nonlinear combination of the above orbital parameters, but also characteristic resonances of dynamic systems within the earth system, and their responses to astronomical forcings.
The software was part of a very large package that is related to SPECMAP. Much of the analysis of SPECMAP still forms the basis of widely available records (including those used by this author). I don’t have an issue with the software used to produce the averaged dated curves of various parameters through the Quaternary. I have an issue with some of the conclusions published in the past.
The Blackman-Tukey algorithm is generally considered to be archaic now. In fact, it was considered to archaic even back in 1989, but it was widely used in part because the confidence level of the results was easily quantified. Also, as a human endeavour, scientists like to do what other scientists are doing—it gives them confidence that they are doing the right thing.
The program made two estimates of the Fourier transform from a given data set—one from a high-resolution subsample of the original data set and one from a low-resolution subsample. To be considered significant, a spectral peak had to be higher by some multiple in the hi-res spectral estimate than it was in the low-res spectral estimate.
In order to implement this, there was a subroutine for drawing the appropriate subsamples, and a second one for designing a “window” to be applied to both subsamples. It was important to taper the ends of a data set before calculating its spectral estimate or else there would be a lot of noise in the power spectrum. And if the two endpoints don’t match, the effect is like adding an impulse to the original data, and the resulting noise has energy at all frequencies.
An effective window tapers the data by reducing the endpoints to zero, but doesn't change the rest of the data very much.
In this implementation, there was an error in the subroutine which calculates the window coefficients—sort of the equivalent of failing to dot an ‘i’ or cross a ‘t’. It was a trivial error in the sense that the program would run. But its output was meaningless.
The programmer forgot to calculate the window coefficients for the low-res subsample, and simply applied the coefficients for the window for the hi-res subsample. Of course, the subroutine runs out of data to taper while still near the middle of the window.
The low-res spectral estimate was calculated from a subsample that was tapered on only one side. Noise was smeared through the entire spectrum. The effect overall was to greatly inflate the apparent significance of spectral peaks in the spectral estimate from the high-resolution subsample.
Considering that the significance of the spectral peaks was the main point of many many academic publications using this software, this was potentially a major issue.
As fate would have it, one of the originators of this software package was coming to my little university to deliver a lecture on something or other (not spectral analysis, but possibly some results using it). So I took the opportunity to ask him afterwards (privately) about the problems outlined above.
Picture the great Shackleton, author of hundreds of papers and the head of this international movement to apply Blackman-Tukey spectral estimates to paleoclimatological data, approached by a young graduate student about some minor technical detail in the SPECMAP series of programs.
I understood from his response immediately that he had no understanding of my point. From the way he flew into a rage, it was clear that reasonable discussion was impossible. He simply shouted, "The software works. The software works!" Clearly he had simply hired some programmer to write the software. His over-reaction was unexpected and left me at a loss.
This is the human condition. He cannot admit to a problem with the software, as it is his name on it, and it is in wide use. If the error had been pointed out before distribution, it would have been a different matter.
Over the next couple of years I engaged a few of the scientists who were using the software, and they couldn't understand the problem either. Everybody was using it, so everyone was confident that it worked. Additionally, the users had no fundamental understanding of the mathematics of the Fourier transform, nor the limitations of its application, which lead to a cavalier approach.
The entire situation was appalling.
The transform was treated like an infallible black box. The data went in one end, and usable results came out. Or so it was assumed.
Are there any changes? The only change is that the black box has changed. Instead of using custom-written software, most of these guys use Matlab or its equivalent. Now I will agree that Matlab is probably better written (and has been through more iterations) than the Pisias/Shackleton software, but there is still an important problem.
The scientists are not fully aware of the mathematics that they are using.
Update (October 25):
To reiterate an earlier point--there comes a time when the emotional involvement with an idea is so strong that one cannot easily discard it even in the face of contradictory evidence. With the SPECMAP story, I have no doubt that had I discovered the flaw at the time of the programs' release, it would have been easier for Shackleton to accept their existence. But at the time of our discussion, the programs had been in common use for several years, and there were many refereed publications which presented conclusions on their basis. By that time the whole SPECMAP thing was like this vast armada sailing across the ocean and it could scarcely notice the lunatic in a lifeboat trying to wave them back with an oar while shouting, "Turn back! Turn back! You're about to sail over the edge!"
It is a human thing, not a scientific thing.
Saturday, October 9, 2010
Kwame Sikani and the magic blocks: a Ghanaian fable
(Today we have a cautionary tale. For notes, the numbers represent author's notes, and the letters represent comments from our housekeeper here in Ghana when I told her this story).
As he did every time a good catch came in, Kofi kept aside a little money to buy cement block. He had been saving this way diligently for several months, and already had a pile of over 60 blocks in front of his small house. One day he would have enough to build a much better house for himself and his wife and young son--the first of which would one day be many.
As did his neighbours, Kofi saved in block because prices kept going up. But block was always block, and it’s price rose along with the price of bread or fuel, and it was a useful thing in its own right. But if you saved in money, all that happened was the price of bread would rise and soon you would need twice as many cedis to pay for it. But if you saved in block, the price of the block would also be twice as much, so you could sell block if you were short of cash and still buy bread (1).
But as happy as he was with the ever-growing pile of blocks in front of his house, he was saddened by the inevitable signs of wear on his savings. Days of rain and sun and wind in the harmattan pelting the blocks with Saharan dust had rounded the edges and corners of his blocks. And he could see in the buildings of his neighbours even more dire consequences of erosion—the wall of Kwesi Andoh, which was a mass of rectangular holes, where the block had eroded away entirely, leaving only the mortar remaining.
Ah! If only he could protect his savings from the weather.
And as he walked down the street to the Nyame Bekyere block plant (2), his friend Yaw the Younger called him “Eh! Kofi! Don’t buy block there! Come with me to Magic Block!”
“Yaw, how are you? What are you saying?”
“You must come to me to Magic Block. It is a new block plant owned by Kwame Sikani (3). His blocks are magic—they don’t wear away in the weather.”
Now Kofi thought that this sounded like fine block, but such fine block must surely have a high cost. Yaw laughed and told him that Kwame Sikani’s block cost just as much as any other. So the two friends walked along the road to Kwame Sikani’s block plant (a).
It was a solid-looking, new building at the edge of town. The sign over the door read “God Willing Magic Block”. Kwame Sikani, dressed in tribal regalia greeted them warmly as friends. He called his girl to bring his guests water.
Kofi asked about the properties of this block. Was it good?
Kwame Sikani brought them in to the building. Virtually the entire building was devoted to storage. It was perhaps half full of concrete block. Kofi inspected them, and found they were of excellent quality. The edges and corners were sharper than the blocks he had bought even when they were new.
“I only make 25 blocks from one bag of cement,” said Kwame Sikani proudly. “Many others around here will make 30 or even 40 blocks from one bag, so they fall apart—there is not enough cement for one block. My blocks are strong.”
Kofi asked that if cement was so expensive, and he was using more of it, how could he afford to sell blocks so cheaply. Kwame Sikani smiled. I have made long-term arrangements with the sand miners, and they have agreed to deliver a lot of sand a fixed price. The same is true of the cement. And I deal in large amounts, so it is much cheaper for me. That is how I can deliver a better block for the same price as the other shops.”
Kofi decided he couldn’t lose to buy a few of these new magic blocks. He said he would buy five.
Kwame Sikani smiled broadly. “Now Kofi,” he asked, “are you building something right now with your block, or are you still slowly accumulating it?”
Kofi admitted he was accumulating it. When he had enough he would build a house, but he knew that day was at least two years away.
So Kwame Sikani told him, “Listen Kofi. The block is heavy. You are going to buy it, and carry it all the way across town to your home. Once it is there, it will stay in your yard for many days. The rains will come and take away some small-small part of the block. The sun will shine and the blocks will flake. The harmattan wind will take away the block small-small.”
“But I thought your block did not crumble in the weather.”
“My block does not crumble away in the weather, because they stay here. Listen Kofi. You buy some blocks, and instead of keeping them in front of your house, you keep them here. Here inside my warehouse they are safe from the elements, and any time you want you can come and see that they are there.”
“I can’t keep my blocks here. How will I be able to get the blocks when I need them? And how will I know which are mine?”
“That is the part that is special to my company,” said Kwame Sikani. “When you buy blocks, I issue you a receipt. I call it a certificate. The certificate says you own however many blocks you buy.” He showed Kofi a book with notations for each purchaser. “You see, Yaw here has already bought fifteen blocks from me.”(b)
Yaw grinned with pride. Kwame Sikani directed their gaze to a large pile of block. “Yaw’s blocks are in that pile.”
“Which ones are they?”
“Does it really matter? All the blocks are the same. When Yaw wants his blocks delivered to his house, he will come and choose the ones he wants.”
Kofi thought and asked, “Yaw is clumsy. What if he loses his certificate?”
Kwame Sikani said, “In that case I still have my records. Yaw will still be able to take his blocks.”
Kofi thought it sounded pretty good. “And you have sold many blocks this way?”
Kwame Sikani showed Kofi more of the receipts. Manager Paul has bought 43 blocks. Yaw Arthur has bought seven. Kwabena Daniel has bought sixteen. Look—even Kofi the Wise has bought ten blocks.
There were many more names on the list, all of them people Kofi knew from the village (c). But Kofi still liked the security of seeing the pile of block in front of his house—his blocks—growing with each purchase. “Well, in this case, I would like to buy them and take them to my house.”
Kwame Sikani exploded with anger. “You want to buy my block and let it rot in the elements with all the others?! If you are too backwards a villager to buy block by my modern methods then go buy somewhere else! I am trying to help you buy good ones but if you don’t want to take it then stop wasting my time. I have a lot of other customers, and I don’t need your custom!”
“Kwame, please don’t be angry with me,” said Kofi. “This is all so new to me. But if Kofi the Wise is one of your customers, then how can I not be one too?” So Kofi agreed to buy five blocks, and take home only the certificate.
And so it began. The weeks passed, and Kofi bought more and more magic blocks. He kept his certificates safe at home. He and his neighbours discussed their plans for their growing piles of block at the Magic Block plant.
Kofi asked Kofi the Wise how it was that the pile of block in front of his house had continued to grow. Had he taken delivery of his block from Kwame Sikani? But Kofi the Wise shook his head and said that after his one purchase of Magic Block he had decided to keep buying block from Nyame Bekyere block plant. After all, it was a business that had been in the village a long time, and with everyone else buying block from Magic Block, he wanted to support his friend.
“But his blocks are not as good as Magic Blocks,” said Kofi, “and they cost the same.”
“We shall see,” said Kofi the Wise.
One day Kofi met Yaw along the road. Yaw was pulling a truck behind him (4). Yaw told Kofi that he had bought a plot of land and was now going to build a wall around it. Could he come with him to help him move the block. Kofi agreed and the two friends went to the Magic Block plant.
Yaw presented his certificates to Kwame Sikani and asked to start choosing some blocks to load on his truck and take home. But Kwame Sikani said, “You know Yaw, when you bought block from me, I told you I would deliver them to you when you demanded. So let my boys come and bring the blocks on my diesel to your new plot so you don’t have to haul so many blocks in the sun.”
Yaw thought that this was a fine idea. “Will they come later today.”
“In fact,” said Kwame Sikani, “they are on a delivery now in Aketekyi, and will not be back until late tonight. So I will deliver your blocks tomorrow morning.”
Yaw was happy. It would have taken many trips back and forth with the truck. Yaw pulled his truck back home and invited Kofi for some apeteshi to celebrate.
The next morning Yaw went to the Magic Block plant to see to his delivery, but Kwame Sikani was not there. The house girl told Yaw that Kwame Sikani was travelling. Well perhaps Yaw could start taking some of his block then. But the girl showed Yaw that the gate to the warehouse was padlocked, and there was no way in. “Perhaps tomorrow,” she said.
By the afternoon, four of the villagers, including Kofi the Wise had gathered outside Magic Block, trying to find out from the girl where Kwame Sikani had gone. But she did not know, and kept insisting that perhaps he would return tomorrow.
Word spread, and by morning many people of the village were at the gate, excitedly demanding to receive their blocks. The girl told them that Kwame Sikani had phoned early in the morning to say he would come in the afternoon and he would satisfy every last customer. This calmed the crowd somewhat, but it only partially dispersed.
Kofi saw Abela Frances there. “Where is Yaw?” he asked.
“Eii! My stupid husband has drunk himself into a stupor, so I will have to carry his blocks for him.”
Manager Paul asked the crowd to calm down and wait. He, too, had many blocks to be delivered, and was as worried as the rest of them, but reassured them that all would be well. This seemed to calm the crowd a little, which dispersed and sought shade, but remained in sight of the Magic Block plant.
Kofi found himself sitting beneath a mango tree beside Kwesi Andoh, who was now nearly blind. Kwesi said that he hoped to replace the wall around his property with Magic Blocks, as the old blocks had nearly rotted away.
The day slowly passed, and the villagers grew agitated. More people began to arrive, including Kwame the Younger, Kofi the Wise, and Arthur Hammond. Again the crowd surged around the block plant, but stopped short of breaking down the doors. The girl was very apologetic and asked people to return tomorrow.
The next morning, the entire village was at the door, demanding their block. The poor girl was swept aside as the crowd smashed the padlock on the door and swept into the warehouse. The sight of the great piles of block within, instead of calming the villagers, only increased their excitement and in moments they were swarming the piles, grabbing blocks and taking them away. But Kofi the Wise urged them to stop.
“Now that you have seen the blocks are there, let us tally all the blocks and all the certificates so that everyone will get their blocks.” And Manager Paul chose two assistants to help him count the blocks in the warehouse, which took much of the day, and then spent a couple of hours in the afternoon tallying the certificates.
At sundown he was able to present his final tally. “The certificates total 12,117 blocks. However there are only 2,109 blocks in the warehouse. It seems that each block has been sold to six people.(5)”
There was pandemonium. Some cried. Some raged.
Kofi had lost his investment, and now had to face his wife and son. Most of the block he had saved at Magic Block was gone. Kwame Sikani was no doubt off to swindle another village.
That is why you always take delivery of a commodity you buy to protect yourself from inflation.
Notes:
(1) We would say that purchasing block preserves Kofi’s purchasing power.
(2) Nyame Bekyere = The Lord will provide
(3) Kwame Sikani could be translated as 'Moneybags Kwame'
(4) think of this as large wagon
(5) This guy is a piker next to the gold market.
Comments by Ghanaian housekeeper
(a) "I would not buy anything from someone named Kwame Sikani."
(b) "Are these people stupid?"
(c) "I am not listening any more. This entire village is stupid! Why would anyone buy block and not take it and go?" So I told her that this story is for people in Abertyuri who buy gold but only receive certificates. "Then they are stupid too!" Hahahahahahahaha!
As he did every time a good catch came in, Kofi kept aside a little money to buy cement block. He had been saving this way diligently for several months, and already had a pile of over 60 blocks in front of his small house. One day he would have enough to build a much better house for himself and his wife and young son--the first of which would one day be many.
As did his neighbours, Kofi saved in block because prices kept going up. But block was always block, and it’s price rose along with the price of bread or fuel, and it was a useful thing in its own right. But if you saved in money, all that happened was the price of bread would rise and soon you would need twice as many cedis to pay for it. But if you saved in block, the price of the block would also be twice as much, so you could sell block if you were short of cash and still buy bread (1).
But as happy as he was with the ever-growing pile of blocks in front of his house, he was saddened by the inevitable signs of wear on his savings. Days of rain and sun and wind in the harmattan pelting the blocks with Saharan dust had rounded the edges and corners of his blocks. And he could see in the buildings of his neighbours even more dire consequences of erosion—the wall of Kwesi Andoh, which was a mass of rectangular holes, where the block had eroded away entirely, leaving only the mortar remaining.
Ah! If only he could protect his savings from the weather.
And as he walked down the street to the Nyame Bekyere block plant (2), his friend Yaw the Younger called him “Eh! Kofi! Don’t buy block there! Come with me to Magic Block!”
“Yaw, how are you? What are you saying?”
“You must come to me to Magic Block. It is a new block plant owned by Kwame Sikani (3). His blocks are magic—they don’t wear away in the weather.”
Now Kofi thought that this sounded like fine block, but such fine block must surely have a high cost. Yaw laughed and told him that Kwame Sikani’s block cost just as much as any other. So the two friends walked along the road to Kwame Sikani’s block plant (a).
It was a solid-looking, new building at the edge of town. The sign over the door read “God Willing Magic Block”. Kwame Sikani, dressed in tribal regalia greeted them warmly as friends. He called his girl to bring his guests water.
Kofi asked about the properties of this block. Was it good?
Kwame Sikani brought them in to the building. Virtually the entire building was devoted to storage. It was perhaps half full of concrete block. Kofi inspected them, and found they were of excellent quality. The edges and corners were sharper than the blocks he had bought even when they were new.
“I only make 25 blocks from one bag of cement,” said Kwame Sikani proudly. “Many others around here will make 30 or even 40 blocks from one bag, so they fall apart—there is not enough cement for one block. My blocks are strong.”
Kofi asked that if cement was so expensive, and he was using more of it, how could he afford to sell blocks so cheaply. Kwame Sikani smiled. I have made long-term arrangements with the sand miners, and they have agreed to deliver a lot of sand a fixed price. The same is true of the cement. And I deal in large amounts, so it is much cheaper for me. That is how I can deliver a better block for the same price as the other shops.”
Kofi decided he couldn’t lose to buy a few of these new magic blocks. He said he would buy five.
Kwame Sikani smiled broadly. “Now Kofi,” he asked, “are you building something right now with your block, or are you still slowly accumulating it?”
Kofi admitted he was accumulating it. When he had enough he would build a house, but he knew that day was at least two years away.
So Kwame Sikani told him, “Listen Kofi. The block is heavy. You are going to buy it, and carry it all the way across town to your home. Once it is there, it will stay in your yard for many days. The rains will come and take away some small-small part of the block. The sun will shine and the blocks will flake. The harmattan wind will take away the block small-small.”
“But I thought your block did not crumble in the weather.”
“My block does not crumble away in the weather, because they stay here. Listen Kofi. You buy some blocks, and instead of keeping them in front of your house, you keep them here. Here inside my warehouse they are safe from the elements, and any time you want you can come and see that they are there.”
“I can’t keep my blocks here. How will I be able to get the blocks when I need them? And how will I know which are mine?”
“That is the part that is special to my company,” said Kwame Sikani. “When you buy blocks, I issue you a receipt. I call it a certificate. The certificate says you own however many blocks you buy.” He showed Kofi a book with notations for each purchaser. “You see, Yaw here has already bought fifteen blocks from me.”(b)
Yaw grinned with pride. Kwame Sikani directed their gaze to a large pile of block. “Yaw’s blocks are in that pile.”
“Which ones are they?”
“Does it really matter? All the blocks are the same. When Yaw wants his blocks delivered to his house, he will come and choose the ones he wants.”
Kofi thought and asked, “Yaw is clumsy. What if he loses his certificate?”
Kwame Sikani said, “In that case I still have my records. Yaw will still be able to take his blocks.”
Kofi thought it sounded pretty good. “And you have sold many blocks this way?”
Kwame Sikani showed Kofi more of the receipts. Manager Paul has bought 43 blocks. Yaw Arthur has bought seven. Kwabena Daniel has bought sixteen. Look—even Kofi the Wise has bought ten blocks.
There were many more names on the list, all of them people Kofi knew from the village (c). But Kofi still liked the security of seeing the pile of block in front of his house—his blocks—growing with each purchase. “Well, in this case, I would like to buy them and take them to my house.”
Kwame Sikani exploded with anger. “You want to buy my block and let it rot in the elements with all the others?! If you are too backwards a villager to buy block by my modern methods then go buy somewhere else! I am trying to help you buy good ones but if you don’t want to take it then stop wasting my time. I have a lot of other customers, and I don’t need your custom!”
“Kwame, please don’t be angry with me,” said Kofi. “This is all so new to me. But if Kofi the Wise is one of your customers, then how can I not be one too?” So Kofi agreed to buy five blocks, and take home only the certificate.
And so it began. The weeks passed, and Kofi bought more and more magic blocks. He kept his certificates safe at home. He and his neighbours discussed their plans for their growing piles of block at the Magic Block plant.
Kofi asked Kofi the Wise how it was that the pile of block in front of his house had continued to grow. Had he taken delivery of his block from Kwame Sikani? But Kofi the Wise shook his head and said that after his one purchase of Magic Block he had decided to keep buying block from Nyame Bekyere block plant. After all, it was a business that had been in the village a long time, and with everyone else buying block from Magic Block, he wanted to support his friend.
“But his blocks are not as good as Magic Blocks,” said Kofi, “and they cost the same.”
“We shall see,” said Kofi the Wise.
One day Kofi met Yaw along the road. Yaw was pulling a truck behind him (4). Yaw told Kofi that he had bought a plot of land and was now going to build a wall around it. Could he come with him to help him move the block. Kofi agreed and the two friends went to the Magic Block plant.
Yaw presented his certificates to Kwame Sikani and asked to start choosing some blocks to load on his truck and take home. But Kwame Sikani said, “You know Yaw, when you bought block from me, I told you I would deliver them to you when you demanded. So let my boys come and bring the blocks on my diesel to your new plot so you don’t have to haul so many blocks in the sun.”
Yaw thought that this was a fine idea. “Will they come later today.”
“In fact,” said Kwame Sikani, “they are on a delivery now in Aketekyi, and will not be back until late tonight. So I will deliver your blocks tomorrow morning.”
Yaw was happy. It would have taken many trips back and forth with the truck. Yaw pulled his truck back home and invited Kofi for some apeteshi to celebrate.
The next morning Yaw went to the Magic Block plant to see to his delivery, but Kwame Sikani was not there. The house girl told Yaw that Kwame Sikani was travelling. Well perhaps Yaw could start taking some of his block then. But the girl showed Yaw that the gate to the warehouse was padlocked, and there was no way in. “Perhaps tomorrow,” she said.
By the afternoon, four of the villagers, including Kofi the Wise had gathered outside Magic Block, trying to find out from the girl where Kwame Sikani had gone. But she did not know, and kept insisting that perhaps he would return tomorrow.
Word spread, and by morning many people of the village were at the gate, excitedly demanding to receive their blocks. The girl told them that Kwame Sikani had phoned early in the morning to say he would come in the afternoon and he would satisfy every last customer. This calmed the crowd somewhat, but it only partially dispersed.
Kofi saw Abela Frances there. “Where is Yaw?” he asked.
“Eii! My stupid husband has drunk himself into a stupor, so I will have to carry his blocks for him.”
Manager Paul asked the crowd to calm down and wait. He, too, had many blocks to be delivered, and was as worried as the rest of them, but reassured them that all would be well. This seemed to calm the crowd a little, which dispersed and sought shade, but remained in sight of the Magic Block plant.
Kofi found himself sitting beneath a mango tree beside Kwesi Andoh, who was now nearly blind. Kwesi said that he hoped to replace the wall around his property with Magic Blocks, as the old blocks had nearly rotted away.
The day slowly passed, and the villagers grew agitated. More people began to arrive, including Kwame the Younger, Kofi the Wise, and Arthur Hammond. Again the crowd surged around the block plant, but stopped short of breaking down the doors. The girl was very apologetic and asked people to return tomorrow.
The next morning, the entire village was at the door, demanding their block. The poor girl was swept aside as the crowd smashed the padlock on the door and swept into the warehouse. The sight of the great piles of block within, instead of calming the villagers, only increased their excitement and in moments they were swarming the piles, grabbing blocks and taking them away. But Kofi the Wise urged them to stop.
“Now that you have seen the blocks are there, let us tally all the blocks and all the certificates so that everyone will get their blocks.” And Manager Paul chose two assistants to help him count the blocks in the warehouse, which took much of the day, and then spent a couple of hours in the afternoon tallying the certificates.
At sundown he was able to present his final tally. “The certificates total 12,117 blocks. However there are only 2,109 blocks in the warehouse. It seems that each block has been sold to six people.(5)”
There was pandemonium. Some cried. Some raged.
Kofi had lost his investment, and now had to face his wife and son. Most of the block he had saved at Magic Block was gone. Kwame Sikani was no doubt off to swindle another village.
That is why you always take delivery of a commodity you buy to protect yourself from inflation.
Notes:
(1) We would say that purchasing block preserves Kofi’s purchasing power.
(2) Nyame Bekyere = The Lord will provide
(3) Kwame Sikani could be translated as 'Moneybags Kwame'
(4) think of this as large wagon
(5) This guy is a piker next to the gold market.
Comments by Ghanaian housekeeper
(a) "I would not buy anything from someone named Kwame Sikani."
(b) "Are these people stupid?"
(c) "I am not listening any more. This entire village is stupid! Why would anyone buy block and not take it and go?" So I told her that this story is for people in Abertyuri who buy gold but only receive certificates. "Then they are stupid too!" Hahahahahahahaha!
Sunday, October 3, 2010
Chaos in African border crossings
I arrived in Ghana a couple of days ago, but my luggage did not. As so often happens here, am told "Finished for today. Maybe tomorrow."
It was actually a little better than that. They gave me a toothbrush and a razor. And a t-shirt. The razor was so dull as to be useless.
The next day, drove for three hours to get luggage from the airport, but had to ransom them.
Apart from the usual clothes there were a few business items--a 12 V battery charger, some weatherproof light fixtures, electronic gear for the sidescan. The woman in charge told me I had to pay a “duty” for importing these items into the country. Unfortunately I had already been separated from my handler at this point and was being held in a back room with my passport in the hands of this minor official. What she actually said as she detailed all of the electronic gear I had brought into the country was that we would have to “organize something”.
I actually think she may have been the same security guard who had detained me leaving the country years earlier. The problem is the same—we can’t pay irregular fees. But I have come to an accommodation, which is that if we are demanded to pay something under threat, I can look at it as a robbery.
So I said nothing. She then went through another couple’s baggage. They were from Mauritania. I watched closely to see what was offered, but couldn’t quite make anything out. This would be a lot easier if my local handler were here. So I kept waiting, until she asked specifically for money. Luckily, it was a small amount, the equivalent of about $15, so I paid it and took my bags and left. It was more interesting the first time.
This was way back in 1997. Much of what follows would probably be impossible now at any airport.
I was returning to Toronto with geological samples, which had already been cleared by the Ghanaian Geological Survey to leave the country. Alex, our driver, came to get me and Peter, who was a summer student working for us, and we went to the airport to check our luggage in.
Security x-rayed my bags, and decided they didn't like what they could see. It was the samples. They wanted to see what they were, as they probably looked black on the monitor. Actually, I think that something else interested them, as they were asking about my bag of personals, but they eventually got to the samples. Somehow, our luggage got taken by the porters to the airline desk, and the security guards asked me to bring it back so they could have a look at it.
But the porters were arguing that I should just ignore them, and things will be all right. It was ultimately checked in, and the security guards were still making noise, but the porters said to me that of course everything was all right, I should not have shown my letter to the security guards, because they now wanted a fine. I asked how much one would normally give, and they said it would have to be about $50 (US). Well, this was a problem, because I didn’t have any money left. It was also not clear who should receive it.
The woman is in charge, the porters told me, but if I give her anything, I have to be sure that the fat man does not see me. Difficult--he was standing virtually over her shoulder. As soon as I appeared, the woman flew into a simulated rage, saying that what we had done was terrible, and would cost us a lot of money. Because for all they knew, we could be smuggling gold out of the country in our samples, and so forth, and for that reason, whatever we gave them, it had to be heavy.
Well, all I could muster was $30, and she went on a long tirade, saying was that all we could pay? She gave it back, and said I would have to get a signature from the big man in charge of customs, duties, and excise or some such, over across the airport, and the fees I would have to pay would be as much as ¢5 000 000 (which was probably about $2,000 at the time). Since it was clear that no more money would be forthcoming, I had to enter hell.
I said, that being the case, I would prefer to do things the proper way. The first step would be to get back the sample bag, as it had already begun on the journey to the plane.
I returned to the ticket counter, and asked about my luggage, saying that security wanted me to bring one of my bags back. The woman at the counter gave me an initial look of disbelief, but she allowed me to pass across the luggage rack, from which I descended the luggage chute, exiting the airport onto the tarmac.
A uniformed baggage handler waved me down to where my luggage was waiting to be taken to a plane, and I wrestled the awkward bag back up the baggage chute. As I emerged, a baggage handler demanded a toll. Everyone in sight also has to paid off, and I was lucky to get away having only lost ¢5000 (about $2).
From the terminal, we got in the car and drove over to the shipping and storage area, where we found an agent. I told the agent in no uncertain terms that he would take me to the customs and excise officer in exchange for a set amount of money. He instantly agreed, and I knew I had offered too much. In a trice we were back in the office of the chief of whatever department, who signed the letter (keeping a copy for himself). Luckily, it turned out to be unnecessary to remove the bag from the back of the cab.
I was very happy to have gotten over this hurdle so easily, however, the security goons simply raised the bar when I returned to the airport. They now said that the package had to be inspected by the chief of customs and smuggling prevention. So the porters helped us to yet another restricted part of the airport, where we lugged the bag to an office (this was in the arrivals portion of the airport).
The officer there was sympathetic to my situation, but the officer in charge was not yet on duty, so he asked if there was somewhere we had to go for an hour or so. By now it was after five, so I had to pick up the some report figures from the printer. We went there, got the figures, and on the way back to the airport, Alex asked to stop in at a hospital, “to visit someone he knows”.
We waited outside for him, and he returned, taking us to the airport. On the way there, he told us that he was visiting his wife, who had just given birth to a daughter that morning. We were somewhat taken aback, but he was pretty cool about it. She had given birth in a small clinic, but had to be moved to the hospital to receive post-natal care. It was the second time I had encountered such a casual response to the arrival of a new baby amongst the Ghanaians. I gave him my last American money (probably about $10), trusting to fate that I wouldn’t need it. He said that if the security guards had not been so greedy that money would have been theirs.
Then we returned to the airport for the final battle. Alex dropped us off at the usual spot, and instead of picking up porters, we reported to the secure area for our inspection, merely telling one of the guards that we had been sent here by security. He complained that we should not show up just by ourselves, but should have been accompanied by somebody, but he believed us anyway, and sent us on inside.
His aide asked us for a fee, but it was waved off by the officer who allowed us to enter. There was one other checkpoint (we were walking against the flow of people arriving in Ghana), and they also allowed us in. The man I had talked to earlier was not in, so we talked to whoever was occupying that office. He took us to the correct office, but the man who should have done the inspection was too busy with all the new arrivals, and, finally, got annoyed and returned with us to the security desk, where he gave the security crew a thorough chewing-out, and got us back to the ticket counter. My luggage was not inspected again before being loaded on the plane.
It was actually a little better than that. They gave me a toothbrush and a razor. And a t-shirt. The razor was so dull as to be useless.
The next day, drove for three hours to get luggage from the airport, but had to ransom them.
Apart from the usual clothes there were a few business items--a 12 V battery charger, some weatherproof light fixtures, electronic gear for the sidescan. The woman in charge told me I had to pay a “duty” for importing these items into the country. Unfortunately I had already been separated from my handler at this point and was being held in a back room with my passport in the hands of this minor official. What she actually said as she detailed all of the electronic gear I had brought into the country was that we would have to “organize something”.
I actually think she may have been the same security guard who had detained me leaving the country years earlier. The problem is the same—we can’t pay irregular fees. But I have come to an accommodation, which is that if we are demanded to pay something under threat, I can look at it as a robbery.
So I said nothing. She then went through another couple’s baggage. They were from Mauritania. I watched closely to see what was offered, but couldn’t quite make anything out. This would be a lot easier if my local handler were here. So I kept waiting, until she asked specifically for money. Luckily, it was a small amount, the equivalent of about $15, so I paid it and took my bags and left. It was more interesting the first time.
This was way back in 1997. Much of what follows would probably be impossible now at any airport.
I was returning to Toronto with geological samples, which had already been cleared by the Ghanaian Geological Survey to leave the country. Alex, our driver, came to get me and Peter, who was a summer student working for us, and we went to the airport to check our luggage in.
Security x-rayed my bags, and decided they didn't like what they could see. It was the samples. They wanted to see what they were, as they probably looked black on the monitor. Actually, I think that something else interested them, as they were asking about my bag of personals, but they eventually got to the samples. Somehow, our luggage got taken by the porters to the airline desk, and the security guards asked me to bring it back so they could have a look at it.
But the porters were arguing that I should just ignore them, and things will be all right. It was ultimately checked in, and the security guards were still making noise, but the porters said to me that of course everything was all right, I should not have shown my letter to the security guards, because they now wanted a fine. I asked how much one would normally give, and they said it would have to be about $50 (US). Well, this was a problem, because I didn’t have any money left. It was also not clear who should receive it.
The woman is in charge, the porters told me, but if I give her anything, I have to be sure that the fat man does not see me. Difficult--he was standing virtually over her shoulder. As soon as I appeared, the woman flew into a simulated rage, saying that what we had done was terrible, and would cost us a lot of money. Because for all they knew, we could be smuggling gold out of the country in our samples, and so forth, and for that reason, whatever we gave them, it had to be heavy.
Well, all I could muster was $30, and she went on a long tirade, saying was that all we could pay? She gave it back, and said I would have to get a signature from the big man in charge of customs, duties, and excise or some such, over across the airport, and the fees I would have to pay would be as much as ¢5 000 000 (which was probably about $2,000 at the time). Since it was clear that no more money would be forthcoming, I had to enter hell.
I said, that being the case, I would prefer to do things the proper way. The first step would be to get back the sample bag, as it had already begun on the journey to the plane.
I returned to the ticket counter, and asked about my luggage, saying that security wanted me to bring one of my bags back. The woman at the counter gave me an initial look of disbelief, but she allowed me to pass across the luggage rack, from which I descended the luggage chute, exiting the airport onto the tarmac.
A uniformed baggage handler waved me down to where my luggage was waiting to be taken to a plane, and I wrestled the awkward bag back up the baggage chute. As I emerged, a baggage handler demanded a toll. Everyone in sight also has to paid off, and I was lucky to get away having only lost ¢5000 (about $2).
From the terminal, we got in the car and drove over to the shipping and storage area, where we found an agent. I told the agent in no uncertain terms that he would take me to the customs and excise officer in exchange for a set amount of money. He instantly agreed, and I knew I had offered too much. In a trice we were back in the office of the chief of whatever department, who signed the letter (keeping a copy for himself). Luckily, it turned out to be unnecessary to remove the bag from the back of the cab.
I was very happy to have gotten over this hurdle so easily, however, the security goons simply raised the bar when I returned to the airport. They now said that the package had to be inspected by the chief of customs and smuggling prevention. So the porters helped us to yet another restricted part of the airport, where we lugged the bag to an office (this was in the arrivals portion of the airport).
The officer there was sympathetic to my situation, but the officer in charge was not yet on duty, so he asked if there was somewhere we had to go for an hour or so. By now it was after five, so I had to pick up the some report figures from the printer. We went there, got the figures, and on the way back to the airport, Alex asked to stop in at a hospital, “to visit someone he knows”.
We waited outside for him, and he returned, taking us to the airport. On the way there, he told us that he was visiting his wife, who had just given birth to a daughter that morning. We were somewhat taken aback, but he was pretty cool about it. She had given birth in a small clinic, but had to be moved to the hospital to receive post-natal care. It was the second time I had encountered such a casual response to the arrival of a new baby amongst the Ghanaians. I gave him my last American money (probably about $10), trusting to fate that I wouldn’t need it. He said that if the security guards had not been so greedy that money would have been theirs.
Then we returned to the airport for the final battle. Alex dropped us off at the usual spot, and instead of picking up porters, we reported to the secure area for our inspection, merely telling one of the guards that we had been sent here by security. He complained that we should not show up just by ourselves, but should have been accompanied by somebody, but he believed us anyway, and sent us on inside.
His aide asked us for a fee, but it was waved off by the officer who allowed us to enter. There was one other checkpoint (we were walking against the flow of people arriving in Ghana), and they also allowed us in. The man I had talked to earlier was not in, so we talked to whoever was occupying that office. He took us to the correct office, but the man who should have done the inspection was too busy with all the new arrivals, and, finally, got annoyed and returned with us to the security desk, where he gave the security crew a thorough chewing-out, and got us back to the ticket counter. My luggage was not inspected again before being loaded on the plane.