The goal: to see if illiterate kids with no previous exposure to written words can learn how to read all by themselves, by experimenting with the tablet and its preloaded alphabet-training games, e-books, movies, cartoons, paintings, and other programs.  Early observations are encouraging, said Nicholas Negroponte, OLPC’s founder, at MIT Technology Review’s EmTech conference last week.

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Earlier this year, OLPC workers dropped off closed boxes containing the tablets, taped shut, with no instruction. “I thought the kids would play with the boxes. Within four minutes, one kid not only opened the box, found the on-off switch … powered it up. Within five days, they were using 47 apps per child, per day. Within two weeks, they were singing ABC songs in the village, and within five months, they had hacked Android,” Negroponte said. “Some idiot in our organization or in the Media Lab had disabled the camera, and they figured out the camera, and had hacked Android.”  Elaborating later on Negroponte’s hacking comment, Ed McNierney, OLPC’s chief technology officer, said that the kids had gotten around OLPC’s effort to freeze desktop settings. “The kids had completely customized the desktop—so every kids’ tablet looked different.  We had installed software to prevent them from doing that,” McNierney said. “And the fact they worked around it was clearly the kind of creativity, the kind of inquiry, the kind of discovery that we think is essential to learning.”

When private-sector companies account for their pension schemes, therefore, they discount liabilities with a corporate-bond yield. Lower yields have pushed up liabilities and led to big deficits. Moody’s, a ratings agency, will in future use a long-term bond yield to discount American public-pension schemes, resulting in much larger liabilities than before.

Even if you use the expected-return methodology, the discount rate used by public-sector pension funds should fall. That is because all pension funds tend to own some bonds, and low bond yields mean low future returns. But the paper finds no link at all between the discount rates used by public-sector funds and the level of bond yields. The motto seems to be: if reality is challenging, just ignore it.  The Governmental Accounting Standards Board (GASB) did change the rules for public pension funds last year. But the revised rules still throw up absurdities. In a paper for the Financial Analysts Journal, Robert Novy-Marx of the University of Rochester argues that by destroying assets invested in cash a scheme can reduce its deficit by increasing the expected return on remaining assets. “A plan can sometimes improve its funding status by literally burning money,” he remarks.

]]> http://www.cookandbynum.com/obscuring-pension-reality/feed/ 0 http://www.cookandbynum.com/5g-in-2020/ http://www.cookandbynum.com/5g-in-2020/#comments Mon, 13 May 2013 20:33:37 +0000 C & B http://www.cookandbynum.com/?p=8943 Continue reading ]]> If this proves achievable, all of the ideas about the “last mile” will disappear in the next ten years.

Samsung Electronics Co. said Sunday that it successfully developed a core technology of the fifth-generation network (5G) for the first time, aiming to enable users to access faster data services by 2020.  The new wireless technology will enable customers to access a stream of data faster than the current fourth-generation network and download an entire movie in less than a second, the world’s largest smartphone maker said.  Under the new platform, users can download and upload data at speeds of up to tens of gigabits per second (Gbps), compared to 75 megabits per second (Mbps) posted by the fourth-generation long-term evolution (LTE) service.

Samsung Electronics said it has successfully tested the platform using the 28 Gigahertz (GHz) waveband to transmit data at a speed of 1 Gbps, which earlier had been considered as a conundrum by global industry players.  The tech giant said it used 64 antenna elements to overcome the issue, which allowed the device to exchange real-time signals under the platform.

Google is on the verge of unveiling an à la carte subscription service for some of YouTube’s specialist video channels, to finance a broader range of content and add a second revenue stream to the digital video market leader.  The move, which has been in the works for months, could be announced as early as this week. It will apply to as many as 50 YouTube channels, people familiar with the plan say. Viewers will be able to subscribe to each channel for as little as $1.99 a month.

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Cable and satellite channels, which traditionally rely on a dual revenue stream model, are eyeing YouTube’s subscription service to generate revenue from older shows and new programming, according to another person familiar with the project.  YouTube has moved away from its early days as a destination for user-generated content to professionally produced video that would not look out of place on television. In the past 18 months it has spent more than $200m on advances to dozens of start-up channels…

Time Warner, The Chernin Group, Bertelsmann, Discovery Communications and Comcast have all invested in companies that create or aggregate YouTube content.  Traditional media companies are also eyeing audiences flocking to individual YouTube channels: DreamWorks Animation, the company behind the Shrek movies, this week acquired Awesomeness TV, a “teen-focused” YouTube network in a deal that could be worth $117m if earnings targets are met.

“But if winning streaks have some rational basis, then by inference so would losing streaks, which makes the latest of the new studies, of basketball game play, particularly noteworthy. In that analysis, published last month in the journal Psychological Science, Yigal Attali, who holds a doctorate in cognitive psychology, scrutinized all available shooting statistics from the 2010-11 N.B.A. season.  He found that a player who drained one shot was more likely than chance would suggest to take the team’s next shot — and also more likely than chance would suggest to miss it.  Essentially, he found that in real games, players developed anti-hot hands. A momentary success bred immediate subsequent failure.

The reason for this phenomenon might be both psychological and practical, Dr. Attali wrote; players seemed to take their second shots from farther out than their first ones, perhaps because they felt buoyed by that last success. They also were likely to be defended more vigorously after a successful shot, since defenders are as influenced by a belief in hot hands as anyone else.  But what the findings underscore, more subtly, is that patterns do exist within the results. The players were more likely to miss after a successful shot. And this anti-hot hand phenomenon, said Dr. Yaari, who is familiar with the study, was itself a pattern. “It is not completely random and independent” of past results, he said.

The platinum-iridium kilograms have begun to vary in weight as they collect dust from the atmosphere, and regular steam cleanings aren’t enough to keep them all consistent. It’s estimated that the kilograms are seeing an average “relative drift” from the international prototype of .5 micrograms a year. That’s why the Swiss Federal Office of Metrology (METAS) issued a call for a new method, one that doesn’t rely on a physical object. Teams of researchers are developing agnostic ways to measure the unit, including counting atoms and measuring against gravity.

Researchers at Mettler Toledo, a global maker of precision measuring instruments, have developed a tiny, ultraprecise weighing cell that allows for measurements accurate within .1 micrograms, significantly more precise than the 1 microgram requested by METAS. Mettler Toledo is collaborating with Federal Institute of Technology in Lausanne (EPFL) and the European Organization for Nuclear Research (CERN) to develop the so-called “watt balance,” an experimental scale that will allow the kilogram to be measured electronically according to the voltage required to lift the prototype in an electromagnetic field. The new weighing cell is a critical component of the watt balance.

Below is the best, middle, and worst case scenarios for stocks of sixteen countries from 1900-2011 (real return series on a log graph).

Just about anyone can measure the absence of candor in communications.

“… start reading with a red pencil or pen in hand and use it to underline clichés such as “employees are our greatest assets,” “our future is bright,” “advancing momentum,” and “we aim to create shareholder value.” This kind of meaningless jargon and platitudes diminishes our understanding of the business and our trust in the leadership.”

When you’re done, look back. If there’s a lot of red on the page, consider yourself warned.  Consider this passage, which happens to come from Enron’s shareholder letter for the year 2000, but could come from any company anywhere:

Our talented people, global presence, financial strength and massive market knowledge have created our sustainable and unique businesses. EnronOnline will accelerate their growth. We plan to leverage all of these competitive advantages to create significant value for our shareholders.

In one short paragraph, Enron introduced six popular clichés:

1. Talented people
2. Global presence
3. Market knowledge
4. Financial strength
5. Leverage competitive advantages
6. Significant value for our shareholders

This is meaningless to a reader. It doesn’t speak to candor and it doesn’t speak to the fact that the people in charge know what’s going on. Reading between the lines you can spot trouble and a void of leadership. Perhaps they are hiding something malicious through obfuscation and meaningless jargon, or, perhaps they are hiding their own incompetence. Either way, it’s a red flag.  Rittenhouse coined an acronym for the absence of candor: “FOG.” It stands for “fact-deficient, obfuscating generalities.”

The gravitational field created by the pulsar is so strong that the scientists suspected they might notice deviations from the predictions of general relativity in the motions of the white dwarf around it. General relativity posits that massive objects warp the space and time around them, causing other objects, and even light, to travel along curved paths when they pass nearby.  General relativity also predicts that a close binary system such as this one will radiate gravitational energy in the form of ripples in space-time called gravitational waves. This loss of energy would cause the orbital period of the system to change slightly over time. Alternative theories of gravity offer slightly different predictions for the white dwarf’s motions.

“Our radio observations were so precise that we have already been able to measure a change in the orbital period of 8 millionths of a second per year – exactly what Einstein’s theory predicts,” said Paulo Freire, another team member at the Max Planck Institute.

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Scientists know general relativity, proposed by Albert Einstein in 1915, isn’t the complete story. While it does very well describing large, massive systems, it’s incompatible with quantum mechanics, which governs the physics of the very small. For something extremely small, yet extremely massive – such as a black hole – the two theories contradict each other, and scientists are left without a physical description.  Rare systems like this binary star pair offer a chance to probe the boundary between the two theories, and search for possible openings toward new physics that could reconcile them.

“We thought this system might be extreme enough to show a breakdown in general relativity, but instead, Einstein’s predictions held up quite well,” Paulo Freire, an astronomer at the Max Planck Institute for Radio Astronomy in Germany, said in a statement.

The troubles in the eurozone periphery are reversing the flow of migrants in Europe. If Poland was known just a few years ago for huge outflows of workers, now Spaniards, Portuguese and Italians are being tempted east. “My home is here now – I think of Portugal mainly in terms of eventually retiring by the sea,” says Hugo Varzielas, 33, a native of Portugal now working as a business analyst for HP’s Global Business outsourcing centre in the western Polish city of Wroclaw. “If you look at the long term in Poland it’s going up, up, up, while the other countries of western Europe not so much,” he says.

Mr Varzielas is not alone. As many as 10 per cent of the 100,000 people now working in the outsourcing sector are foreign nationals, according to Jacek Levernes, head of the association of Business Leaders in Poland, a lobby group representing the fast-growing sector. Poland’s outsourcing industry is expected to expand by about 20 per cent this year. Official statistics show about 7,000 EU citizens moving to Poland in a given year, but the data are not very sound because migrants are not required to register with Polish authorities, said Krystyna Iglicka, a demographer with Warsaw’s Centre for International Relations, a think-tank. “This is an invisible flow based on anecdotal evidence, but there is no doubt that such a flow exists,” she said. “We can assume that the trend will strengthen, although of course it does not compare in size to the outflow of Poles.” The reason they are coming is Poland’s relatively strong economy. It was the only EU member to dodge recession in 2009. Now, despite a sharp slowdown, the economy is still eking out growth of about 2 per cent, far better than in the troubled fringes of the eurozone.

Zhang Ke, head of leading Chinese accounting firm ShineWing, said he had all but stopped signing off on bond sales by local governments as a result of his concerns.  “We audited some local government bond issues and found them very dangerous, so we pulled out,” Mr Zhang said in an interview. “Most don’t have strong debt servicing abilities. Things could become very serious.”

The International Monetary Fund, rating agencies and investment banks have all raised concerns about Chinese government debt. But it is rare for a figure as established in the Chinese financial industry as Mr Zhang, who serves as vice-head of China’s accounting association, to make such stark comments.  “It is already out of control,” Mr Zhang said. “A crisis is possible. But since the debt is being rolled over and is long term, the timing of its explosion is uncertain.”

* * * * *

Mr Zhang said many local governments had invested in projects from public squares to road repairs that were generating lacklustre returns, and so were relying on financing rollovers to pay back their creditors. “The only thing you can do is issue new debt to repay the old,” he said. “But there will be some day down the line when this can’t go on.”  Mr Zhang added that he grew alarmed when smaller towns and counties discovered that investment vehicle bonds were an easy way to raise financing. “This evolution was quite frightening,” he said. “China has more than 2,800 counties. If every county issued debt, it could lead to a crisis. It could be even bigger than the US housing crisis.”

Just weeks after the end of the long delayed auction of 4G spectrum, British policy makers are already turning to plans for the next generation of superfast mobile broadband that will be called, inevitably, 5G. Ofcom, the communications regulator, will this week launch an industry consultation about freeing radio frequencies for 5G internet services many times the speed and capacity of today’s best 4G networks. The early start to 5G planning signals determination by policy makers and industry to avoid the delays that have seen the UK fall behind many other developed countries in rolling out 4G services. It also reflects fears of a future capacity crunch in the airwaves as rapidly growing usage of mobile broadband devices, such as smartphones and tablet computers, increases pressure on networks.

Steve Unger, chief technology officer for Ofcom, says: “There are three ways to meet the demand for more data – more spectrum, better use of spectrum and more cell sites. We need to progress on all three fronts, which is in effect what we mean by 5G, to meet the 80-fold increase in data usage we predict by 2030. “We expect 5G will be about making mobile data ubiquitous – you won’t lose reception, or worry that your service will be too slow. It will always be there, always reliable, to the extent that it will become a fixed line substitute.”

In a report published today in the journal Nature, researchers at Stanford University described the method that replaced fats in the brain of mice with a gel that made the organ transparent. The scientists were able to make images of the brain’s structures and see down to the cells and molecules, according to the paper.

The approach also was used on a human brain, the report said…“The BRAIN Initiative recently announced by the White House is designed to facilitate innovative strategies to better understand the brain,” Freund said in a video released by the institute. “In order to do that, we need new technologies, and clarity is a great example of the type of technologies that will enable future brain studies.”  Previous methods required scientists to slice brains into small sections to look at anatomy. This slicing deformed the organs and made it difficult for researchers to see large-scale information running across the slices.

Early in his career, Mr. Breit figured out that models for markets aren’t like those for physics. They don’t come from nature. It was necessary to know the math, if only so that he couldn’t be intimidated by the quantitative analysts.  But the numbers more often disguise risk than reveal it. “I went down the statistical path,” he said. He built one of the first value-at-risk models, or VaR, a mathematical formula that is supposed to distill how much risk a firm is running at any given point.

The only thing from capital markets math he came to embrace was this immutable law of nature: Investors make money by taking risk. “If it’s profitable and seems riskless, it’s a business you don’t understand,” he told me.  Instead of fixating on models, risk managers need to develop what spies call “humint” — human intelligence from flesh and blood sources. They need to build networks of people who will trust them enough to report when things seem off, before they become spectacular problems. Mr. Breit, who attributes this approach to his mentor, Daniel Napoli, the former head of risk at Merrill Lynch, took people out drinking to get them to open up. He cultivated junior accountants.  “They see things first,” he said. “Almost every trading debacle was sitting on some accountant’s desk.”

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Yes, a big market move might reveal a fatally flawed trade, but that volatility is not the root cause of an oversized loss.  The problem, as Mr. Breit sees it, is that this has nothing to do with how risk management is practiced today, or what the regulators encourage. Regulators have reduced risk managers to box checkers, making sure they take every measure of risk and report it dutifully on extensive forms. “It just consumes more and more staff, turning them into accountants and rotting brains.”

Take VaR. In Mr. Breit’s view, Wall Street firms, encouraged by regulators, are on a fool’s mission to enhance their models to more reliably detect risky trades. Mr. Breit finds VaR, a commonly used measure, useful only as a contrary indicator. If VaR isn’t flashing a warning signal for a profitable trade, that may well mean there is a hidden bomb.  He despises the concept of “risk-weighted assets,” where banks put up capital based on the perceived riskiness of the assets. Inevitably, he argues, banks will “pile into” the same types of supposedly safe investments, creating bubbles that make the risks far more severe than the initial perceptions. Paradoxically, risk-weighting can leave banks setting aside the least capital to cover the biggest dangers.  “I could not be more disappointed,” he said. “The cynic in me thinks this is all in the interests of senior management and regulators to avoid blame. They may not think they can prevent the next crisis, but they then can blame the statistics.”  Instead, Mr. Breit says he believes that regulators should encourage firms when they reach different conclusions on what is risky and what is safe. That creates a diverse ecosystem, more resilient to any one pestilence.

You can buy a Coke pretty much anywhere on Earth. Thanks to a vast network of local suppliers, Coca-Cola has almost completely solved distribution, getting its product into every nook and cranny where commerce reaches. There are places in the world where it’s easier to get a Coke than clean water. In the 1980s, Berry was an aid worker in Zambia, and when he looked at Coke’s success, he saw an opportunity.  “Child mortality was very high and the second-biggest killer was diarrhea, which is simple to prevent,” he says. The standard treatment is oral rehydration solution, or ORS, which is essentially salt, sugar and water. “I had the idea of transporting ORS through the Coca-Cola system.”

In April 2008, he began a campaign on Facebook. A groundswell of support gave his project, dubbed ColaLife, the attention it needed to get noticed by the BBC and, through the British broadcaster, by Coca-Cola itself. ColaLife began collaborating with one of Coca-Cola’s African bottler/distributors, and the beverage giant shared advice and information about how its distribution network operates…The result of their efforts so far is the AidPod, a wedge-shaped container that fits between the necks of bottles in a Coca-Cola crate. For the pilot program, they are using the AidPods to distribute an anti-diarrhea kit, called “Kit Yamoyo” (“Kit of Life”).

The AidPod’s are a clever packaging solution, born of a very particular design problem. Because the vision was to physically piggyback on Coke’s distribution system, they needed to work with the crates used to move the popular soda to retailers. Initial designs experimented with pouches on the side and tubes that could be slotted in place of a bottle. Neither option would have worked, as both would have meant less space for Coke. Then, genius struck.  “My wife said, ‘Why don’t we make use of the unused space?’” says Berry.