INDIA IPPON DESU
Sunday, May 23, 2021
Thursday, May 20, 2021
When cicadas cry
Trillions of cicadas are coming to the U.S. Here’s why that’s a good thing.
Don’t be afraid or annoyed of the coming periodical cicadas. It’s a once-in-a-17-year chance to enjoy a wondrous natural phenomenon.
In the late spring of 1634, pilgrims in Massachusetts witnessed an incredible sight: Millions and millions of winged, red-eyed insects sprung from the earth. Not knowing better, the Puritan immigrants likened them to pestilential swarms from the Old Testament and called them “locusts.”
But they were wrong. This was the first written record of periodical cicadas, seven species of which emerge every 13 or 17 years in the U.S. Midwest and East Coast. This year, trillions of the insects will once again burst from the ground and take to the trees, making loud mating songs as they harmlessly sip tree sap.
The 2021 cicadas, known as Brood X, are the biggest of the 15 known periodical cicada broods. These inch-long insects will soon emerge throughout large swaths of Indiana, Ohio, Pennsylvania, Maryland, Washington D.C., and beyond.
Not everybody is thrilled, with many on social media fearing the shrill sounds of the cicadas, as well as their disgust overall. “If the cicadas ruin summer 2021, I will scream,” said one Twitter user. Even today, nearly 400 years after the Puritans arrived, some Americans still mistakenly refer to the cicadas as locusts, a completely different type of insect that’s known for devouring crops.
With cicadas, though, there’s nothing to fear—and witnessing such a huge arrival of insects is actually a rare privilege, says Jeffrey Lockwood, an entomologist and professor of natural sciences and humanities at the University of Wyoming
“It’s a phenomenon that ought to generate awe and respect and wonder,” he says.
“Wonderfully humbling”
For one thing, the scale of Brood X is massive, a relic of a time, before European colonization, when North America teemed with insects and other animals. In some forests, up to 1.5 million cicadas can surface in a single acre. By some estimates, there could be several trillion of the insects emerging this summer, Lockwood says.
“We’ve done such a thorough job of decimating the natural world that any organism, at least any animal, that appears in these sorts of numbers—it’s wonderfully humbling,” Lockwood says. It’s a reminder that humans are not the only animal on this planet and that we need to share the space with others, he says.
Richard Karban, an entomologist at University of California, Davis, says that these insects “are the herbivores of eastern forests,” more impressive in number and mass than any other. Although we see them only every 17 years, they are there all the time, slowly growing underground while drinking fluids from tree roots. (Read more about why U.S. cicadas lie dormant for over a decade.)
One study estimated that the total biomass of cicadas in a given area of forest is greater than the biomass of cattle the same area could support if it were turned into pasture. These estimates “are the highest recorded for a terrestrial animal under natural conditions,” the scientists wrote.
“You’re taking insect biomass that’s been underground for years and then quickly moving it aboveground—and this has far-reaching positive impacts,” says Elizabeth Barnes, an entomological educator at Purdue University
Besides being a source of food for predators, the cicadas’ emergence helps move nutrients around the ecosystem, aerate the soil, and relieve predatory pressure on non-cicada insect populations, she says.
Why 17 years?
There are about 3,000 cicada species on Earth, but only seven are periodical cicadas, which are unusual in that they come out every 13 or 17 years and are almost all found in North America. But why do they choose such long time periods, which are both prime numbers?
There are several theories. One is that these periods evolved to optimally avoid predators, Barnes says. The second is that by using prime numbers, the periodical cicadas minimize overlap with other periodical cicadas, thus avoiding genetic hybridization and competition for resources.
But these theories are speculation, Karban says, as there’s currently no real way to test them.
Another unusual aspect of the insects’ behavior is that, unlike almost all other non-noxious insects, “they do very little to escape predators,” Karban says, which is why some call them foolhardy in the face of a hungry animal.
“Anything with a mouth is going to eat them, so it’s going to be a good year to be a bird” or any other predator, says John Cooley, an entomologist at the University of Connecticut.
The synchronized swan song of such large masses likely evolved because they overwhelm predators, becoming so numerous that only a small percentage of the total can be eaten. (Check out these cicada recipes.)
This phenomenon, and the loud noises they make, is all about procreation, Lockwood adds. “They’re coming out in the biggest orgy that you’ll see in your lifetime,” he says.
Incredible phenomenon
The least we can do is not be afraid. “They don’t sting, they don’t bite, they’re not going to try to come after you,” Barnes says. Fear of insects generally comes from a lack of education and experience, she adds.
“I think Americans in particular are kind of trained to abhor insects—they don’t have a lot of contact with them and think of them as being dirty,” Cooley says. (Learn more: Murder hornet mania highlights dangers of fearing insects.)
But Brood X’s arrival is a chance to change that, Cooley says, by stopping to take a closer look at cicadas and appreciating their long, synchronized life cycles, including their brief, four-to-six weeks of life aboveground.
People should also appreciate that these insects have been around for about five million years, about the time that the ancestors of humans and chimpanzees split from one another, Cooley says.
The Brood X emergence offers hope, too, he says: “It’s an indication that the forests are healthy enough to function.”
In the late spring of 1634, pilgrims in Massachusetts witnessed an incredible sight: Millions and millions of winged, red-eyed insects sprung from the earth. Not knowing better, the Puritan immigrants likened them to pestilential swarms from the Old Testament and called them “locusts.”
But they were wrong. This was the first written record of periodical cicadas, seven species of which emerge every 13 or 17 years in the U.S. Midwest and East Coast. This year, trillions of the insects will once again burst from the ground and take to the trees, making loud mating songs as they harmlessly sip tree sap.
The 2021 cicadas, known as Brood X, are the biggest of the 15 known periodical cicada broods. These inch-long insects will soon emerge throughout large swaths of Indiana, Ohio, Pennsylvania, Maryland, Washington D.C., and beyond.
Not everybody is thrilled, with many on social media fearing the shrill sounds of the cicadas, as well as their disgust overall. “If the cicadas ruin summer 2021, I will scream,” said one Twitter user. Even today, nearly 400 years after the Puritans arrived, some Americans still mistakenly refer to the cicadas as locusts, a completely different type of insect that’s known for devouring crops.
With cicadas, though, there’s nothing to fear—and witnessing such a huge arrival of insects is actually a rare privilege, says Jeffrey Lockwood, an entomologist and professor of natural sciences and humanities at the University of Wyoming
“It’s a phenomenon that ought to generate awe and respect and wonder,” he says.
“Wonderfully humbling”
For one thing, the scale of Brood X is massive, a relic of a time, before European colonization, when North America teemed with insects and other animals. In some forests, up to 1.5 million cicadas can surface in a single acre. By some estimates, there could be several trillion of the insects emerging this summer, Lockwood says.
“We’ve done such a thorough job of decimating the natural world that any organism, at least any animal, that appears in these sorts of numbers—it’s wonderfully humbling,” Lockwood says. It’s a reminder that humans are not the only animal on this planet and that we need to share the space with others, he says.
Richard Karban, an entomologist at University of California, Davis, says that these insects “are the herbivores of eastern forests,” more impressive in number and mass than any other. Although we see them only every 17 years, they are there all the time, slowly growing underground while drinking fluids from tree roots. (Read more about why U.S. cicadas lie dormant for over a decade.)
One study estimated that the total biomass of cicadas in a given area of forest is greater than the biomass of cattle the same area could support if it were turned into pasture. These estimates “are the highest recorded for a terrestrial animal under natural conditions,” the scientists wrote.
“You’re taking insect biomass that’s been underground for years and then quickly moving it aboveground—and this has far-reaching positive impacts,” says Elizabeth Barnes, an entomological educator at Purdue University
Besides being a source of food for predators, the cicadas’ emergence helps move nutrients around the ecosystem, aerate the soil, and relieve predatory pressure on non-cicada insect populations, she says.
Why 17 years?
There are about 3,000 cicada species on Earth, but only seven are periodical cicadas, which are unusual in that they come out every 13 or 17 years and are almost all found in North America. But why do they choose such long time periods, which are both prime numbers?
There are several theories. One is that these periods evolved to optimally avoid predators, Barnes says. The second is that by using prime numbers, the periodical cicadas minimize overlap with other periodical cicadas, thus avoiding genetic hybridization and competition for resources.
But these theories are speculation, Karban says, as there’s currently no real way to test them.
Another unusual aspect of the insects’ behavior is that, unlike almost all other non-noxious insects, “they do very little to escape predators,” Karban says, which is why some call them foolhardy in the face of a hungry animal.
“Anything with a mouth is going to eat them, so it’s going to be a good year to be a bird” or any other predator, says John Cooley, an entomologist at the University of Connecticut.
The synchronized swan song of such large masses likely evolved because they overwhelm predators, becoming so numerous that only a small percentage of the total can be eaten. (Check out these cicada recipes.)
This phenomenon, and the loud noises they make, is all about procreation, Lockwood adds. “They’re coming out in the biggest orgy that you’ll see in your lifetime,” he says.
Incredible phenomenon
The least we can do is not be afraid. “They don’t sting, they don’t bite, they’re not going to try to come after you,” Barnes says. Fear of insects generally comes from a lack of education and experience, she adds.
“I think Americans in particular are kind of trained to abhor insects—they don’t have a lot of contact with them and think of them as being dirty,” Cooley says. (Learn more: Murder hornet mania highlights dangers of fearing insects.)
But Brood X’s arrival is a chance to change that, Cooley says, by stopping to take a closer look at cicadas and appreciating their long, synchronized life cycles, including their brief, four-to-six weeks of life aboveground.
People should also appreciate that these insects have been around for about five million years, about the time that the ancestors of humans and chimpanzees split from one another, Cooley says.
The Brood X emergence offers hope, too, he says: “It’s an indication that the forests are healthy enough to function.”
Friday, May 14, 2021
Archegos Capital meltdown
Archegos meltdown: What happened at Bill Hwang's firm and how it is affecting global markets. Archegos, set up by Bill Hwang, had its meltdown triggered after some of its portfolio stocks witnessed a significant price fall
NEW YORK (BLOOMBERG) - Alarms were blaring inside Wall Street's corridors of power in the middle of last week, as executives realised they might be facing the biggest hedge fund blowup since Long-Term Capital Management in the 1990s.
Global investment banks, gathering in a hastily arranged call, needed a swift truce to deal with Bill Hwang's Archegos Capital Management if they were to head off billions of dollars in losses for banks and a potential chain reaction across markets. Yet by Friday (March 26), it was everyone for themselves.
The forced liquidation that sent bellwether stocks tumbling last week and continues to send shock waves across capital markets, was preceded by bickering in the highest rungs of international finance that quickly devolved into finger-pointing and now fury, according to people with knowledge of situation. Banks are just starting to tally the carnage.
So far, Credit Suisse Group and Nomura Holdings have told shareholders their businesses face "significant" losses. Goldman Sachs Group, ahead of the pack on unloading positions, is telling investors the impact on its financial results will probably be immaterial. Deutsche Bank said it escaped too. Morgan Stanley, another big player that was still shopping blocks of stock as late as Sunday night, has yet to specify any toll.
Emissaries from several of the world's biggest prime brokerages tried to head off the chaos by holding a call with MR Hwang before the drama spilled into public view Friday morning. The idea, pushed by Credit Suisse, was to reach some sort of temporary standstill to figure out how to untie positions without sparking panic, the people said.
But any agreement was elusive, and by Thursday night, some banks had shot off notices of default to Archegos to seize collateral and potentially shop it to buyers to contain the banks' potential losses, the people said. Yet even then, it wasn't clear when terms with Archegos would allow sales to proceed, one of the people said.
Soon came the finger-pointing over who was breaking ranks, the people said. Some emerged from the talks suspicious that Credit Suisse wasn't fully committing to freezing sales. By early Friday, rival banks were taking umbrage after hearing that Goldman planned to sell some positions, ostensibly to assist Archegos. Morgan Stanley began drawing public attention with block trades. <\br><\br> Representatives for the banks declined to comment.
The worries over Archegos had begun mounting earlier in the week after a series of wrong-way bets exposed its fragility. The firm, little known outside finance circles, had amassed tens of billions of dollars in stock bets, much of it using opaque derivatives and borrowed funds, the people said. It included some giant bets on a small group of stocks. Then came ViacomCBS's announcement this month of a US$3 billion (S$4 billion) stock sale, which prompted a share slide that hurt Archegos.
While block trades are common, the size of Archegos's positions and their disposals rocked the market, as a US$20 billion selling spree gained momentum on Friday. Goldman Sachs and Morgan Stanley led the way, the people said. Other banks were left to follow, selling positions at a potential disadvantage.
Given Archegos's size, unwinding its positions could generate losses of around US$2.5 billion to US$5 billion for the industry, depending on how hard it is to liquidate holdings, JPMorgan Chase & Co analyst Kian Abouhossein wrote in a note to clients.
SINGAPORE - Banks are facing billions of dollars in losses after a little-known US investment firm, Archegos Capital Management, defaulted last week on margin calls, forcing a brutal near US$30 billion (S$40.4 billion) stock fire sale.Global investment banks, gathering in a hastily arranged call, needed a swift truce to deal with Bill Hwang's Archegos Capital Management if they were to head off billions of dollars in losses for banks and a potential chain reaction across markets. Yet by Friday (March 26), it was everyone for themselves.
The forced liquidation that sent bellwether stocks tumbling last week and continues to send shock waves across capital markets, was preceded by bickering in the highest rungs of international finance that quickly devolved into finger-pointing and now fury, according to people with knowledge of situation. Banks are just starting to tally the carnage.
So far, Credit Suisse Group and Nomura Holdings have told shareholders their businesses face "significant" losses. Goldman Sachs Group, ahead of the pack on unloading positions, is telling investors the impact on its financial results will probably be immaterial. Deutsche Bank said it escaped too. Morgan Stanley, another big player that was still shopping blocks of stock as late as Sunday night, has yet to specify any toll.
Emissaries from several of the world's biggest prime brokerages tried to head off the chaos by holding a call with MR Hwang before the drama spilled into public view Friday morning. The idea, pushed by Credit Suisse, was to reach some sort of temporary standstill to figure out how to untie positions without sparking panic, the people said.
But any agreement was elusive, and by Thursday night, some banks had shot off notices of default to Archegos to seize collateral and potentially shop it to buyers to contain the banks' potential losses, the people said. Yet even then, it wasn't clear when terms with Archegos would allow sales to proceed, one of the people said.
Soon came the finger-pointing over who was breaking ranks, the people said. Some emerged from the talks suspicious that Credit Suisse wasn't fully committing to freezing sales. By early Friday, rival banks were taking umbrage after hearing that Goldman planned to sell some positions, ostensibly to assist Archegos. Morgan Stanley began drawing public attention with block trades. <\br><\br> Representatives for the banks declined to comment.
The worries over Archegos had begun mounting earlier in the week after a series of wrong-way bets exposed its fragility. The firm, little known outside finance circles, had amassed tens of billions of dollars in stock bets, much of it using opaque derivatives and borrowed funds, the people said. It included some giant bets on a small group of stocks. Then came ViacomCBS's announcement this month of a US$3 billion (S$4 billion) stock sale, which prompted a share slide that hurt Archegos.
While block trades are common, the size of Archegos's positions and their disposals rocked the market, as a US$20 billion selling spree gained momentum on Friday. Goldman Sachs and Morgan Stanley led the way, the people said. Other banks were left to follow, selling positions at a potential disadvantage.
Given Archegos's size, unwinding its positions could generate losses of around US$2.5 billion to US$5 billion for the industry, depending on how hard it is to liquidate holdings, JPMorgan Chase & Co analyst Kian Abouhossein wrote in a note to clients.
In an era of easy money, Archegos was able to borrow so much that its failure created shockwaves large enough to ripple across global financial markets. Here's how it happened: Bill Hwang and the family office New York-based Archegos was set up by Mr Bill Hwang, formerly a stock analyst with storied hedge fund Tiger Management, founded by legendary fund manager and US billionaire Julian Robertson. Mr Robertson closed his fund in 2000, but handed Mr Hwang, one of his proteges or "Tiger cubs", about US$25 million to launch his own fund, Tiger Asia Management, in 2001.
Mr Hwang grew his firm's assets to over US$5 billion at its peak. But Mr Hwang shut the fund in 2012 after pleading guilty to US insider trading, paying US$60 million to settle charges of manipulating Chinese stocks. He was also banned from trading securities in Hong Kong for four years in 2014. So Mr Hwang went private. He converted Tiger Asia into a single-family office, Archegos, in 2013 to manage his personal wealth. These firms that manage the money of wealthy families are generally outside regulatory scrutiny in the US and most of their information is not in the public domain. Secret swaps Archegos had assets of around US$10 billion but its real exposure to stocks was much more, with some reports putting it at US$50 billion.
What Mr Hwang did was that he did not buy stocks directly - he bought complex "derivative" instruments or swaps from banks called contracts-for-difference or CFDs. CFDs allow traders to place a directional bet on the price of a security without actually buying or selling the underlying instrument. If the price went up, the seller pays the buyer the difference, and vice versa. Under US rules, investors who own a stake of more than 5 per cent in a US-listed company usually have to disclose their holdings and subsequent transactions. But using CFDs, Mr Hwang did not have to declare his holdings.
CFDs are also "leveraged" bets, where investors can use borrowed money at a fraction of the cost of the underlying asset, typically around 10-20 per cent. So you can get a position worth US$1 million on a stock and only need US$200,000 in margin. Using the swaps, Mr Hwang built huge and highly leveraged positions in listed companies like Viacom CBS Corporation, Discovery Communications, along with Chinese giants Baidu and Tencent.
When margin calls Archegos' meltdown was triggered last week after some of its portfolio stocks witnessed a significant price fall. This in turn triggered margin loan calls from the banks. Archegos' failure to meet those calls forced big banks, including Nomura, Credit Suisse, UBS, Deutsche Bank, Goldman Sachs and Morgan Stanley, to liquidate its stock positions. Shares of Archegos' portfolio stocks were battered by the banks' giant block trades in the selling spree. The banks' losses have been estimated at US$6 billion to US$10 billion from the fire sale, while billions were also wiped from their market value with their own shares hammered. What now? The collapse of Archegos is another strike against the lightly regulated non-bank or "shadow banking" sector and has renewed calls for tighter regulation.
Wednesday, May 12, 2021
Painfully efficient
The other day, one of my favourite bloggers, Shane Parrish, who writes the Farnam Street blog, wrote a post titled 'Efficiency is the Enemy'. The title sounds like heresy but the argument makes sense. Being efficient sounds great but means that you have no room for error and are always just this short of being stretched beyond limits. Early during the pandemic, when the resumption of significant businesses activity was still under a cloud, I wrote an editorial in the Wealth Insight magazine which was 'In Praise of Inefficiency'. That was mostly about businesses and the virus, but the principle certainly applies to many other things, including personal finance
Parrish writes of a hypothetical visit to the outer office of a successful CEO where he observes that most of the CEO's secretarial staff does nothing much of the time. This looks like inefficiency but is it? The job of the CEO's personal staff is to be available to work on whatever is needed without delay. Their job is not to stay busy but that the CEO stays as busy as needed. This means that they have to be free to take up anything that comes up without delay, which in turn means that much of the time, they must stay free. In other words, they must have slack capacity. Going by the naive idea of efficiency, this is extremely inefficient. In reality, it's very efficient indeed.
Parrish bases his idea on 'Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency,' a book written by management expert Tom DeMarco some 20 years ago. Needless to say, the idea that slack is good hasn't made much headway towards corporate life. However, the pandemic actually points towards the idea that slack is good and efficiency is inefficient. I first noticed that the pandemic had exposed efficiency and productivity as weak spots of modern businesses and wrote about it in July last year.
I first realised this when a friend who knows the private healthcare business deeply pointed out as early as February that the top hospitals all had very little spare ICU capacity because that was inefficient from a business point of view. However, this is not just about healthcare. The businesses that suffered the most are the ones that are operating on a razor's edge of efficient use of resources. These were the ones that were getting by before the pandemic with what looked like precision. Their revenues, costs, debt and profits were tuned just so precisely for them to grow and make money.
However, the lockdowns and the coming slowdown hit them very badly. A severe reduction of sales has immediately made them deeply uneconomic. There were no reserves of any kind at all. A globally dependent just-in-time supply chain was efficient. Extra inventory was inefficient. These were unchallenged beliefs that turned out to be time bombs.
There's an obvious equivalent in personal finance as well. There are way too many people - especially young people - whose entire incomes are earmarked for just EMIs and basic expenses. There is no slack at all, no buffer, no emergency fund and no easy way of building one. The slightest disruption of income, as has happened to some during the pandemic, has blown apart their personal financial situations. Again, I'm not blaming anyone here on an individual basis. Many people have no leeway to do anything better. However, even amongst those who do, many don't.
Despite the hardship and suffering, adversity is a great teacher. Surely, for individuals, it will be one. Perhaps people will spend less and only on more necessary things. Or perhaps not, who knows? This hasn't happened in those countries where the pandemic has died down and did not happen in India either during the brief off-season when COVID-19 had taken a back seat.
Parrish bases his idea on 'Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency,' a book written by management expert Tom DeMarco some 20 years ago. Needless to say, the idea that slack is good hasn't made much headway towards corporate life. However, the pandemic actually points towards the idea that slack is good and efficiency is inefficient. I first noticed that the pandemic had exposed efficiency and productivity as weak spots of modern businesses and wrote about it in July last year.
I first realised this when a friend who knows the private healthcare business deeply pointed out as early as February that the top hospitals all had very little spare ICU capacity because that was inefficient from a business point of view. However, this is not just about healthcare. The businesses that suffered the most are the ones that are operating on a razor's edge of efficient use of resources. These were the ones that were getting by before the pandemic with what looked like precision. Their revenues, costs, debt and profits were tuned just so precisely for them to grow and make money.
However, the lockdowns and the coming slowdown hit them very badly. A severe reduction of sales has immediately made them deeply uneconomic. There were no reserves of any kind at all. A globally dependent just-in-time supply chain was efficient. Extra inventory was inefficient. These were unchallenged beliefs that turned out to be time bombs.
There's an obvious equivalent in personal finance as well. There are way too many people - especially young people - whose entire incomes are earmarked for just EMIs and basic expenses. There is no slack at all, no buffer, no emergency fund and no easy way of building one. The slightest disruption of income, as has happened to some during the pandemic, has blown apart their personal financial situations. Again, I'm not blaming anyone here on an individual basis. Many people have no leeway to do anything better. However, even amongst those who do, many don't.
Despite the hardship and suffering, adversity is a great teacher. Surely, for individuals, it will be one. Perhaps people will spend less and only on more necessary things. Or perhaps not, who knows? This hasn't happened in those countries where the pandemic has died down and did not happen in India either during the brief off-season when COVID-19 had taken a back seat.
Monday, May 03, 2021
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