An open invitation to risk my money, justice exists and aerobatics

This is it. I have warned about it a couple of times but now it's agreed: bail-ins will be possible as of 2016. The eurogroup finance ministers adopted a new "Bank recovery and resolution directive" that puts your savings at risk when your bank goes belly-up. What are the rules? Pretty simple:

• First the shareholders have to cough up. They have to take a minimum of 8% of the banks losses.
• Savings are guaranteed until 100000,- €, anything above that is up for grabs.
• Every member state has to establish within 10 years a 'resolution fund' that has to reach 1% of all deposits covered. All banks have to contribute to this fund.

Before you start applauding a couple of small remarks:

• The 8% minimum coverage of bank losses by shareholders will quickly become a maximum when the dirt hits the fan. Shareholders will argue that they only have to cover 8% of the losses before savings above 100000,-€ can be shaved. With many governments now shareholder of banks, I expect they will also argue this way.
• It is noteworthy that there is no cap above 100000,-€. In other words, you don't risk loosing a part of what you have saved above 100000,-€, no you risk loosing everything above 100000,-.
• There is no differentiation between a personal saving account or an account of a small or medium enterprise. They too will suffer the same fate.
• That 'resolution fund' only needs to be established within 10 years. I would surely hope that we are out of the woods by then! What happens in the mean time (if bank goes bust and no 'resolution fund' available yet) does not bode well for our savings.
• A 1% 'resolution fund' is not going to resolve anything if a big bank is in trouble. A quick calculation: in Belgium there is about 250 billion € on saving accounts. That means the fund will have to be at least 2,5 billion € big. This is peanuts if one of the bigger banks goes bankrupt as they hold tens of billions of € in savings! And it'll be interesting to see how banks can be convinced to depart from 2,5 billion €.
• A lot of that 250 billion € is on Belgian saving accounts but from foreign banks (example PNB Paribas, a French bank, that took over Fortis). So the Belgian fund has to guarantee savings deposited at and controlled by a foreign bank over which it has no control. Am I the only one who sees this as an open invitation for foreign banks to take risks with money collected abroad?

Justice exists in the financial world... but you have to go to Iceland for it. Those at the helm of the Icelandic Kaupthing Bank that threw the whole country into the abyss got sentenced to 5 years of imprisonment. The rest of the world could learn an important lesson from this.


One of my friends started his own company called AURTE: Aerobatic & Upset Recovery Training Europe. Anyone who followed civil aviation and pilot training discussions over the past years, knows there is an issue with degrading manual flying skills. So this new start-up is very welcome. But it made my heart beat faster for another reason. They are using a Corvus Fusion. Ultralight adepts (like me) know what this means: a fast aerobatic ultralight. Watch how they take it through its paces. In summary: I want one!!!

I heard you Barack, forget Nature and colour schemes

When world leaders gather at a funeral I always get a feeling of unease. Maybe I am just too sceptical but I can't help wonder if they attend because they want to pay their respect to the deceased or because they want to bask in the shine and glory the deceased has left. Looking at how respectful world leaders were by posting selfies on twitter during Mandela's memorial service I get the impression they are there for the second reason, not for the first.
Also it is striking that in all speeches I heard during the service not a single one apologised to Mandela and the South Africans. Apologise? Yes indeed apologise. UK and US supported Apartheid until just before Mandela was released. CIA helped jail Mandela  in 1962. UK and US put Mandela on their terrorist list. The US kept him on the terrorist list until 2008!
Also I heard Obama say following:
"There are too many of us who happily embrace Madiba's legacy of racial reconciliation, but passionately resist even modest reforms that would challenge chronic poverty and growing inequality.
There are too many leaders who claim solidarity with Madiba's struggle for freedom, but do not tolerate dissent from their own people. And there are too many of us who stand on the sidelines, comfortable in complacency or cynicism when our voices must be heard."

I heard you Barack. You want a place in history books? Then go and really do what you preach and maybe the world will become a better place in some parts of the world.

In the mean time lets listen to N'Kosi Sikeleli, South African's national anthem in a a-typical but very good and powerful version by Perpetuum Jazzile:

The Nobel price winners received their price on the same day as the Mandela memorial so that news got a bit snowed under. There is one article that I recommend reading because Randy Schekman (winner of the Nobel price for medicine) declared he will no longer send papers to the top scientific magazines. Why? Because: "Leading academic journals are distorting the scientific process and represent a "tyranny" that must be broken. Schekman said pressure to publish in "luxury" journals encouraged researchers to cut corners and pursue trendy fields of science instead of doing more important work. The problem was exacerbated, he said, by editors who were not active scientists but professionals who favoured studies that were likely to make a splash."
You can read the full article here.

Talking to a pilot this week, he told me he got on an Alpha Jet flight. Blimey! I would love to have a go as well. It reminded me of the lively colour schemes that our Belgian Airforce came up with every year before the start of the airshow season. Ok, granted, not all were works of art, but colourful they were. Below a selection of the schemes between 1989 and 1994.

The best Belgian colourscheme ever was not on an Alpha Jet but on a Belgian Air Force Mirage V. I shot below picture in Bierset (then still partly a military airfield) of BR15 in the celebration scheme for 70 Years of the 42nd Squadron Mephisto. What a beauty!

The big picture²

I took half a day off this week to join a speech from Barry Ritholtz. Those of you who don’t know him, Barry is world renowned in the economic and financial world. He has his own wealth management company, is a regular guest on Bloomberg tv and his blog (the big picture) is ranked by TED amongst the top 100 sites one has to know and it has more daily pageviews than USA Today.

So when I received an invitation to attend his speech I immediately put in my request for half a day off.

Now Barry threw a lot of interesting graphs at his audience but the one thing that made me think was something he said. In the late 19th century companies were laying down a complete railroad network across the States. These companies struggled for survival because of the high cost of the endeavour but everyone wanted to invest because the future was here. Until it all went ‘pop’, the bubble burst, companies went bankrupt and the infrastructure was bought up by others for pennies on the dollar. The buyers made a fortune as they had in their hands the basic infrastructure at a very cheap price upon which a whole new economy developed. Fast forward to the turn of the 20th century and companies were laying down fibreoptic cables across the country. A very high investment (100s of dollars cost per mile) but everyone wanted to invest because the future was here. Until it all went ‘pop’, the bubble burst, companies went bankrupt and the infrastructure was bought up by others for pennies on the dollar. The buyers made a fortune as they had in their hands the basic infrastructure at a very cheap price upon which a whole new economy developed (e-commerce, social networking, ...). Fast forward another decade. Debt was build up and everyone was out for a loan because investment was plentiful and a sure bet. Until it all went ‘pop’, the bubble burst, companies went bankrupt and ... Nothing. Here is the difference between the current crisis and the above big crisis. The railroad and fibreoptic crisis gave us, after the bubble burst, infrastructure at low cost upon which a new economy developed. When the bubble burst in 2008 it left us with debt. Conclusion: it will take a lot longer to recover from this crisis.

What made me wonder is where the next ‘useful’ bubble is. ‘Useful’ meaning giving us something to build on at low price. If I knew I would be in for some serious money making but I don’t know. However I am just wondering if green energy is not a good candidate. Windmill parks, solar parks, ... are developed with a lot of incentives and government support. Once this support falls away (due to austerity cuts), these new energy parks seem to run into trouble as they have too much debt and without the incentives, too few revenue to pay off the debt. So, if these go belly-up, the interesting bits will be up for sale at a cheap price. To those of you with deeper pockets than me, maybe this is worthwhile reflecting upon.


Off to space! This week China sent a lunar rover to the moon and SpaceX (from Elon Musk) put its first satellite into orbit. I include two pictures posted by Elon Musk on his twitter account.

Fascinating as it all is, it is dwarfed by these breathtaking pictures from Cassini. Talking about a big picture, they rarely come more beautiful than these! No one understands how that hexagon was formed on Saturn’s north pole. Researchers are running all kind of hypothesis to get a grip on it. Nature is wonderful isn’t it.