When the pill is the problem, not the solution

August 16, 2013 in Global Crisis Blog, Innovation Blog | 2 comments

When the pill is the problem, not the solution

By Shlomo Maital      

Prozac

  I’m afraid this blog very often sins, by becoming ‘preachy’.   Even if blogs are meant to convey strong opinions, they can be tiresome if they incessantly preach.

  This blog is about the criminal overuse of anti-depressant drugs, fueled by the greed of Big Pharma, with some doctors complicit as well.

   Here are the data. Judge for yourselves.  (source: Global New York Times, Aug. 14: “Medication blues”, by Roni Caryn Rabin). 

  *  1 in 10 Americans now takes an antidepressant medication.  Among women in their 40s and 50s, it is one in 4.

* 2/3 of more than 5,000 patients diagnosed as depressive in the previous 12 months DID NOT MEET THE CRITERIA FOR MAJOR DEPRESSIVE EPISODE, according to the DSM, Diagnostic & Statistical Manual of Mental Disorders. Published in Psychotherapy and Psychosomatics. 

* 6 of 7 elderly patients 65 and older diagnosed as depressive did not meet the criteria for depression.

  * Most people stay on anti-depressants for at least two years; some take them for a decade or more.  These drugs have side-effects. Some are serious. 

* A NYC woman was prescribed an anti-depressant a few weeks after her husband died, even though she thought feelings of grief and sadness were appropriate.

     Once, we knew that life had ups and downs.  When you’re experiencing the downs, you fight through them.   The drug culture that says, “pop a pill for every possible symptom of occasion” has led to a different drug culture, one that consumes a variety of drugs, mostly illegal, to make us feel good.      

   Recently a well-known Israeli doctor, speaking on TV, admitted that he had given testimony about certain drugs before a Knesset committee – but he admitted, he forgot to mention that he had received large grants from the drug company. 

   Can we trust our doctors, who get trips, junkets, research grants and other perks from drug companies?  Can we trust the drug companies, struggling to maintain obscene profit margins with a dwindling pipeline of over-costly drugs?  Are we over-medicated?  

     What is most angering is that American soldiers, struggling with post-traumatic stress disorder, and there are thousands of them, appear to get minimal care, if any.  Why are some people popping pills for imaginary disorders, while others are not getting the treatment they need? 

 

Who Will Bail out the German Banks?

August 9, 2013 in Global Crisis Blog, Innovation Blog | Tags: | Leave a comment

                                                                        Who Will Bail out the German Banks?

By Shlomo Maital       

             Allianz

 As Europe’s biggest, wealthiest and most influential nation, Germany has played a dominant role in bailing out failed European banks and failed European governments in Greece, Spain, Portugal, Cyprus and Ireland.   Germany and its leader Angela Merkel have frequently and sternly lectured the deadbeat southern European nations for overspending and over-borrowing,  neglecting to mention that it was largely the German banks who did the lending.    

   Now it turns out that the German banks themselves are endangering Europe.  According to Jack Ewing, in the Global New York Times, “where in Europe is one of the worst banking systems, with bad management, corruption, loans to political insiders that cost taxpayers billions of euros?  Not Italy, Greece or Spain, but – Germany…  the German banks invested in almost every bad asset they encountered —  American subprime mortgages to Greek Govt. bonds”.  According to the EU,  $860 b. were spent in bailing out German banks from 2008 through Sept. 2012.   Only the UK spent more taxpayer money on bank bailouts.  Even Spain and Italy spent less.

    Ewing reports that German banks lend 50 euros for every euro in capital they hold.  This is considered excessive leverage.   Perhaps the German government has been reluctant to bail out Greece, Portugal or Ireland, because it needed (and will need in future) to bail out its own banks. 

     Germany’s banks are enormous. According to the Global Fortune 500,  the largest German banks are Allianz ($130 b. in revenues, in 2012), Deutsche Bank ($87.5 b.),  Landesbank Baden Wurttemburg ($53 b.) (the Landesbanks are controlled by politicians), and Oz Bank ($34 b.).    Their saving grace has been the strong German economy, and its huge export surplus, which kept their balance sheets strong because few loans had to be written off.  But all agree that German banks need radical reform, and many still carry toxic assets on their books. 

     If I were the Prime Minister of Greece, Portugal or Spain,   I would offer to advise the German government on fiscal reform, austerity and bank reform.  All that “friendly advice” by Germany, to Greece and Cyprus,  should first be applied at home.

     Physician, heal thyself.

Governments DO do good things!

August 9, 2013 in Global Crisis Blog, Innovation Blog | Tags: , , | Leave a comment

Governments DO do good things!

By Shlomo Maital     

     good-gov

 American Republicans would have us believe that nothing, nothing about government is any good.  We need less government, maybe even (if you’re a Tea Party fan) NO government, they say. 

  But Clyde Prestowitz (Reagan’s trade advisor), in his latest Foreign Policy blog, says otherwise. 

     “… the truth is that virtually none of America’s great inventors and entrepreneurs did it on their own. In the overwhelming majority of cases, they received taxpayer supported federal help along the way.   For example, sometimes I ask audiences if any of them know who invented the Internet.  Answer: the Defense Advanced Research Projects Agency (DARPA) which was the real inventor and developer of the basic Internet technology.   Nor does anyone ever mention the National Science Foundation’s long years of nurturing the Internet before it became commercially viable.  

   Shale gas, too, could not have happened without government help, as Prestowitz shows.

     “… the U.S. government spent billions over three decades to make shale gas and oil a reality. The effort began in the 1970s as a somewhat quixotic, patriotic undertaking by the government’s energy agencies and then the Department of Energy to respond to the oil crises of the time and to prevent the United States from becoming dependent on imported energy. Long known as lacking in innovation, the private companies of the energy industry showed little or no interest when the feds showed up offering them funds for joint research and development. Mostly, the oil and gas companies turned it down and told the feds to get lost.   [The Government played a key role, providing:  *The Eastern Gas Shales Project, a series of public-private shale drilling demonstration projects in the early 1970s in response to the energy crisis;  * Collaboration  with the Gas Research Institute (GRI), an industry research consortia that received partial funding and R&D oversight from the Federal Energy Regulatory Commission;  * Early shale fracturing and directional drilling technologies developed by the Energy Research and Development Administration (ERDA, later the Department of Energy), the Bureau of Mines, and the Morgantown Energy Research Center (later the National Energy Technology Laboratory); *  The Section 29 tax credit for unconventional gas production, in effect from 1980-2002;  *  Public subsidization and cost-sharing for demonstration projects, including the first successful multi-fracture horizontal drilling play 1986 and Mitchell Energy’s first horizontal well in 1991; *   Three-dimensional microseismic imaging, a geologic mapping technology developed by Sandia National Laboratories.

    Prestowitz reminds us to  pause for a moment to thank our great bureaucrats,  as well as  of course the late George Mitchell,  the entrepreneur whose passion created the natural gas generated by ‘fracking’ in America. 

 

Failure University: A Diploma We All Need

August 7, 2013 in Global Crisis Blog, Innovation Blog | Tags: | Leave a comment

Failure University: The Diploma We All Need

By Shlomo Maital      

           Failure

  In my latest column for the fortnightly magazine Jerusalem Report (Marketplace, Aug. 26 issue), I write about Failure University – how almost all successful people have massive failures in their track record, and how failure is a stepping stone to success, as Michael Jordan always said.  As the design firm IDEO says:  “Fail early to succeed faster”. 

   Here are two examples:  Dov Moran and Abraham Lincoln.

    Who is Dov Moran?  He is the Israeli inventor of the memory stick (also called thumb drive, or in Israel disk-on-key).  His company M-Systems was sold to San Disk for $1.6 b., an exit that made him wealthy.  Retirement?  Uh uh.  He then started Modu, which made the world’s smallest (and perhaps first) smartphone, only 3 inches long.  But Modu had a competitor called Apple (iPhone)….    And investors wouldn’t back him.   At 12 noon on a chilly November day in November 2010, Moran closed the doors of Modu.  But he was unemployed for only 30 minutes. At 12:30, he was already in his new offices, of a company called Comigo (TV/mobile interface), with some of his Modu veterans.  Moran, now 58 years old, still works 20 hour days and flies Economy to Japan, to show respect for investors’ money and “to hang out with my workers”.  Modu’s collapse led to at least 15 other startups, by Modu ‘alums’. 

    And Abraham Lincoln?  The man who led America out of the abyss of slavery, as the Spielberg movie shows brilliantly?  Here is his record of failure.   * In 1831 his   business venture failed.  * In 1832 he lost the election for the state legislature. *  In 1833   another business venture failed. *  In 1835 his future wife passed away destroying him.  * In 1843   his election  to Congress was defeated. * In 1848 Lincoln failed to win a seat in the Congress. * In 1855  he   lost the US senate elections.  * Trying for Vice President in 1856, he was defeated. * Another attempt to run for the state senate in 1859   once again failed.   * Against all odds, he was elected the 16th President of The United States in 1860.    All those failures tempered Lincoln’s stubborn steely resolve – he needed every bit of it to get the anti-slavery Amendment through Congress, after leading America in its bloody Civil War.

     In Silicon Valley, it is well known – if you have 3 failures on your record, VC’s regard you more favorably than if you have a clean record.  Same in Israel.   It does seem that what separates Michael Jordan (huge failures in his past) from lesser athletes, and great entrepreneurs from mediocre ones, is not genius, but resilience and perseverance. 

      Harvard diploma?  Great.  Failure U. diploma?  A lot better. 

   

How America Creates Something From Nothing

August 2, 2013 in Global Crisis Blog, Innovation Blog | Tags: | Leave a comment

How America Creates Something From Nothing

By Shlomo Maital   

       Something                

   Here’s a neat trick – Create something from nothing. America just did it.  The Bureau of Economic Analysis has redefined how it computes GDP, and at one fell swoop added $560 b. (more than twice Israel’s entire GDP) to America’s GDP, or 3.6 per cent.   How?

    By creating a new category called “intellectual property products”, including “entertainment originals”, and treating them as part of capital investment.  So not only will America’s GDP rise, so will its moribund gross capital formation (investment), which ranks a dismal 123rd in the world (at only 16.2 % of GDP, barely enough to cover obsolescence). 

   How does this work?  As Jared Bernstein notes in the Global New York Times, long-lived TV shows like “Seinfeld” that generate a stream of revenues for many years will now be treated as investment.  Makes sense – capital, after all, is simply a product that generates an annual flow of other products, or services. 

    So, not only did America get some GDP from nothing, it is now counting ‘nothing’ (by everyone’s clear admission, Seinfeld is a show about literally nothing) as investment.   

   The big problem with this, is that in modernizing the GDP national accounts,  America has left behind the financial accountants, whose rules (GAAP Generally Accepted Accounting Practices)  do not permit the same definitions.  Intangible assets are hugely important in today’s high-tech world, yet find little expression in balance sheets.    At some point, the accountants will have to fall in line with the national accounts GDP people.

    Bernstein makes another good point.  If we’re modernizing GDP, it’s time we also took into account the huge damage we do annually, through pollution, to our environment. That’s a negative investment.  If you count Seinfeld, as positive, you should count all the CO2 belchers as negative.   That, however, would make politicians look bad, and perhaps force us to face up to the damage we do daily to our environment.  The economists aren’t yet ready for that challenge. 

When Will They (Microsoft) Ever Learn? The Answer is Blowin’ in the Wind

August 1, 2013 in Global Crisis Blog, Innovation Blog | Tags: | Leave a comment

When Will They (Microsoft) Ever Learn?

By Shlomo Maital

Microsoft bin Laden     

    To paraphrase Peter, Paul & Mary:   When will Microsoft ever learn?

    To paraphrase Bob Dylan: “ …how many times must Microsoft look up  before it can really see the sky?   Yes, how many ears must Microsoft have  before it can hear people cry?”

    Writing in the Global New York Times, Nick Bilton (“Microsoft finds habits die hard”,  Monday July 29, p. 14) asks,  what if Microsoft made the iPod? 

    Simple. It would be named “The iPod Pro 2005 XP Human Ear Professional Edition with Subscription”.  It would promote 3,495 technical features  and the box would look like a Times Square billboard.   It would achieve maximum marketplace confusion.

    Why?  Because like many high-tech companies, Microsoft is basically run and managed by engineers.  They think like engineers, not like people.  They give us needlessly complex software, they keep piling on feature after feature we don’t need, and they don’t understand the need for simplicity, for beauty, for clean design. 

   When will they learn?   Not for a while.

   Microsoft, Bilton reports, last month took a $900 million write-down (!!) for unsold inventory of its Surface RT tablet, which went on sale just a year ago.

    Why did it fail?  For starters: MS offered two products, the Surface RT and Surface Pro.  One came with a pen.  They had two different screen resolutions and two types of Windows software. Confusing? 

   As the founder of Gdgt website Ryan Block observed, “Windows is a hammer and everything looks like a nail” to Microsoft.

    Some Microsoft products are empathic with consumers, like Windows Phone 7 and Xbox.  But most are not. Why doesn’t giant MS learn from its successful consumer-empathic products, and above all, from its competitors, like Apple and Samsung?

     For those of us who use Office, how many of its features do we really use daily?  One percent?  Or less?

     I urge Microsoft CEO Steve Ballmer to read John Maeda’s little book, The Laws of Simplicity.  Microsoft breaks every single one.  And despite endless failures, it seems to stubbornly insist on continuing to do so.   Must be part of Microsoft’s DNA.

   

Why You Must Not Trust Your Memories – Or Anyone Else’s

July 28, 2013 in Global Crisis Blog, Innovation Blog | Tags: , | Leave a comment

            Why You Must Not Trust Your Memories – Or Anyone Else’s

By Shlomo Maital   

            memory

    The writer Vladimir Nabokov once said,  “ the more you love a memory the stronger and stranger it becomes.”       Emphasize STRANGER.   Because scientists at MIT have shown, each time we retrieve a cherished memory and relive it,  we alter it.  And if you do this 100 times, the memory itself can bear no relation with what actually happened.   Humans are not elephants, which, as we know, never ever forget anything. 

   Writing in the July 25 edition of The New York Times, * James Gorman reports this:

     “….scientists at the Riken-M.I.T. Center for Neural Circuit Genetics at the Massachusetts Institute of Technology say they have created a false memory in a mouse, providing detailed clues to how such memories may form in human brains.   Steve Ramirez, Xu Liu and other scientists, led by Susumu Tonegawa, reported Thursday in the journal Science that they caused mice to remember being shocked in one location, when in reality the electric shock was delivered in a completely different location.    The finding, said Dr. Tonegawa, a Nobel laureate for his work in immunology, and founder of the Picower Institute for Learning and Memory, of which the center is a part, is yet another cautionary reminder of how unreliable memory can be in mice and humans. It adds to evidence he and others first presented last year in the journal Nature that the physical trace of a specific memory can be identified in a group of brain cells as it forms, and activated later by stimulating those same cells.

   How was this scientific magic done?   Dr. Tonegawa’s team first put mice in one environment and let them get used to it and remember it. They identified and chemically labeled the cells in the animals’ brains where that memory was being formed. The mice were not shocked in that environment.   A day later, in a completely different environment, the researchers delivered an electric shock to the mice at the same time that they stimulated the previously identified brain cells to trigger the earlier memory.   On the third day, the mice were reintroduced to the first environment. They froze in fear, a typical and well studied mouse behavior, indicating they remembered being shocked in the first environment, something that never happened. The researchers ran numerous variations of the experiment to confirm that they were in fact seeing the mice acting on a false memory.   The tools of optogenetics, which are transforming neuroscience, were used to locate and chemically label neurons, as well as make them susceptible to activation by blue light transmitted by a fiber optic cable. With these techniques the researchers were able to identify and label which neurons were involved in forming the initial memory of the first environment, and to reactivate the labeled cells a day later with light.

    Dr. Tonegawa said that part of the importance of the research is “to make people realize even more than before how unreliable human memory is,” particularly in criminal cases when so much is at stake.    That unreliability, he said, prompts a question about evolution: “Why is our brain made in such a way that we form false memories?”

    His answer:   “No one knows, he said, but he wonders if it has to do with the creativity that allows humans to envision possible events and combinations of real and imagined events in great detail. That rich internal experience fuels work in the arts and sciences and other creative activities, he said. “Unless you have that kind of ability, there is no civilization,” he said.

   In a previous blog, I reported on Dan Ariely’s research, showing that creative people are less honest.  Dr. Tonegawa’s theory fits well with this.  Creative people simply invent things – in the past, as well as in the future.  

        Precisely because we can re-imagine the past,  we can also imagine the future. 

        Personally, I find it very helpful to re-imagine the past.  If you are troubled by a memory,  simply reinvent it.  Soldiers suffering from post traumatic stress disorder (PTSD), and there are many thousands of them, relive the traumatic event precisely as it happened, again and again and again.  Perhaps we can help them reinvent it…. Or simply get the neurons that fire up the memory to turn off.    

      Also, many thousands of innocent persons have been sent to jail by testimony of witnesses which proved wrong.  We now understand why.   They are not liars. They simply remember events differently than they actually happened.  The legal system will now have to take this into account. 

* New York Times, July 25, 2013  “Scientists Trace Memories of Things That Never Happened”.  By JAMES GORMAN    

 

 

    

Switching Engines While the Train is Moving: Mind the Gap!

July 27, 2013 in Global Crisis Blog, Innovation Blog | Leave a comment

Switching Engines While the Train is Moving:

Mind the Gap!

By Shlomo Maital   

           Mind the Gap

  Two difficult, complex and crucial transitions are underway today, in the world. One is in China. The second is in the U.S.   And possibly a third, in Japan.  There is a big difference between the theory that guides those transitions, and reality.  Mind the gap!

  For the world to endure and prevail, all three must succeed. 

  First the Chinese.  China is shifting from an export-driven capital-driven economy to a consumption-driven economy.  China’s phenomenal growth has been export led, which in turn created an investment boom (the capital formation has gone to building enormous factories, and then doubling their size).   With world export markets slowing, China must shift to internal demand as its growth engine.  China will not likely achieve its 7.5 % GDP growth this year, and even that is  much below the 10% rate achieved in recent years.  This will impact the whole world.  But if China fails in the transition – which is like changing locomotive engines while the train is speeding along the track at 200 km/hr. —  first Asia and then the world will suffer. No country has yet made such a transition. Japan tried and failed.

   Second, the U.S.   America is shifting to weaning Wall St. away from cheap infinite amounts of money, as the Fed gradually reduces its monthly bond purchases amounting today to $85 b. each month.   If Larry Summers becomes Fed head, he will make this shift more abruptly; he doesn’t believe QE (quantitative easing, the euphemism for pumping money endlessly) works.  If it’s Janet Yellen, she’ll move more slowly.  Banks are making record profits; anyone would, if you borrow at zero and lend at high interest.  What happens when interest rates rise?  And will the massive mountain of money the Fed created induce runaway inflation, as the mountain unfreezes and starts to move?

    Two crucial transitions.  Both extremely difficult.  Both have to work.  And in the wings, Japan, with its  national debt of 212 % of GDP (only 168% in 2008); when Japanese interest rates rise, how in the world will the government pay the interest on this massive debt?  Another complex transition.   For contrast, Greece’s debt is only around 120% of GDP, and its government bonds have been downgraded to near-junk. 

    Watch these three countries,  the three biggest economies in the world, each of which is undergoing a complex tricky transition—US, Japan, China.  Will  all three transitions work smoothly and successfully?

   Stay tuned. 

Rearranging the Deck Chairs on the Sinking Titanic: The Modern Version

July 26, 2013 in Global Crisis Blog, Innovation Blog | Tags: , | Leave a comment

Rearranging the Deck Chairs on the Sinking Titanic:

The Modern Version

By Shlomo Maital  

     Titanic          

 

    History will (and SHOULD rightly) judge today’s world leaders very harshly, for their incompetence in dealing with the global crisis, which really began with the bankruptcy of Lehman Brothers, Sept. 17, 2008.   To use an old metaphor:  They have been rearranging the deck chairs on the Titanic, while it sinks.

   Only, the deck chairs are the massive amounts of debt generated by the crisis.

   To summarize, and oversimplify a bit —    Greedy Wall St. types created massive amounts of new financial assets (mortgage backed securities, credit default swaps, collateralized debt), hidden from the eyes of regulators or nearly anyone, because they were named “swaps” (by US law, hence not subject to regulation).   The value of these ‘assets’ collapsed, as it inevitably would.  But the debt left in their wake remained.  Thus, nearly instantly, many banks and financial institutions were bankrupt (try cutting your assets in half, then leaving your liabilities as they were…net worth becomes negative, which is bankruptcy). 

    The desperate solution was for governments to assume the private debt, because “banks were too big too fail” (translation: the wealthy were too powerful politically to swallow their losses, caused by their own greed and misbehavior). 

   So the “deck chairs” (debt) was not changed, it was simply moved onto the shoulders of us ordinary taxpayers.  And then the crisis shifted from being one of private sector financial services institutions, to one of government, because the capital markets (those folks who got us into  hot water in the first place) placed enormous risk premiums on sovereign government bonds as governments tried to roll over their debt and pay off old bonds with new bond sales.  Why? Because governments were ‘risky’ – precisely because governments had swallowed the huge risk created by the private financial sector. 

   That’s where we stand now.  The deck chairs have been rearranged. The Titanic is still sinking. 

    In the end, that massive debt will have to be wiped out, because the assets balancing it have been wiped out.   American banks have done this most efficiently, because America is superb at creating financial crises and hence terrific at cleaning up the mess.   European banks have barely begun. Their balance sheets still haven’t ‘marked to market’ the losses they will have to swallow.  So Europe is simply deferring the real crisis, in its major banks.

    History will judge world’s political leaders, and many of the financial leaders, very harshly, for all this incompetence and bad behavior.   Meanwhile, all over the world, people suffer because political leaders lack the guts to administer the bitter medicine the world needs.  

       Clean up the mess.   And then let’s move on.   

The World’s Most Incredible Invention

July 22, 2013 in Global Crisis Blog, Innovation Blog | Tags: , , | Leave a comment

The World’s Most Incredible Invention

By Shlomo Maital   

                                                                       photosynthesis

Thanks to an outstanding BBC World Service program, “Discovery”, I have new appreciation for what must be the greatest invention ever:  Nature’s invention of photosynthesis, as a lucky accident through evolution.

   The word itself comes from two Greek roots meaning “light” (phos) and “putting together” (“synthesis”).  Plants use light energy from the sun, together with water and carbon dioxide, to produce two vital things:  carbohydrates, e.g. glucose, and oxygen.  The process is mediated and catalyzed by green chlorophyll.  What happens is:  six carbon dioxide molecules combine with six water molecules, using solar energy aided by chlorophyll, to make one glucose molecule and six oxygen molecules:

     6CO2 +    6H2O  =    C6H12O6 +   6O2  

     Photosynthesis does two things for life on earth: It provides all the organic compounds, and most of the food energy needed for life,   and it maintains atmospheric oxygen levels.  

   The rate at which photosynthesis captures solar energy is incredible:  130 terawatts, which is six times greater than the total power consumption of the human race. 

   We humans are incredibly arrogant.  But to date, we have nothing that comes close to photosynthesis, as a way of capturing solar energy and storing it as food energy.  Photovoltaic cells are a joke in comparison.  If we humans could store energy as plants can, we could produce power at night, when usage is nil, and use it during the day, thus almost halving our daytime production capacity.  But we can’t.  Only Nature can. 

   And just think – photosynthesis originated as an accident of evolution, one that just happened to work nicely, and that made possible life on earth. 

   Now, THAT’s an innovation!

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

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