That's fiction, we are doing jolly well and all too real wing walking

The dark days between Christmas and New Year are a great time to do some reading. So I embarked on a heavy book (literally and figuratively) titled 'Breaking the code of history'. A beautifully glossy publication written by an interesting guy. Dyslectic as a child David Murrin studied physics and became a geophysicist. He spent two years in Papua New Guinea searching for oil in the jungle where he had interesting encounters with local tribes. He then ended up at the London stock exchange on behalf of JP Morgan. Those of you who wonder about that career switch should know that in those days, banks were on the lookout for mathematicians and physicists to calculate the best way how to trade. The author also has a life long interest in history. And all of that background is felt throughout the book. The first 370 pages (yes...) are a walk through history using numerous examples to prove the author's premise on how empires rise and fall. Empires on large and small scales (he saw the same dynamics in the jungle tribes, the stock exchange, countries, nations and our whole planet and he draws a parallel with fractals). The second part of the book he looks into the future and gives us some predictions on what could happen. This is interesting because the book is from 2010 so 3 years on, one can already get a feeling on how right or wrong he is. Without giving you any spoilers, let's just say that my scepticism grew whilst I was progressing through the book. First of all, he only remotely touches upon the influence of new technology on our future and he barely takes new social structures (through social media) into account. But what really threw me is that he applied basic mathematical principles to social science. His basic premise of rises and falls of empires is represented by a gaussian curve. That is of course utter nonsense because it is a fact that gaussian mathematics work perfectly in physics but are completely useless and wrong when they are applied to social science and economy. So I had an interesting read but believe the whole theory is based on one big flaw. Maybe the author sees himself as a Hari Seldon, the 'hero' in Isaac Asimov's foundation trilogy who calculated to the second the rises and falls of empires for millennia to come. That is fiction of course and it will remain so.

We had some good year wishes from our European President Herman Van Rompuy who said that the crisis is behind us (what else would you expect him saying with European elections in 5 months where anti-European parties may gain a lot of ground?). Mario Draghi almost immediately responded that although the crisis is less acute a lot of work still needs to be done for things to really settle down (he means: politicians you have done nothing with the time I bought for you!). As illustration a graph from @komileva showing the debt as a % of GDP comparing 2010 to 2014 (based on the IMF Oct forecast). We are doing jolly well...

I came across an intriguing picture whilst I was strolling twitter and did some research. Yes that is a man standing on a DC-8 taking the art of wing-walking to a whole new level.

Rick Rojatt – The Human Fly did this in 1976 when he mounted himself atop a Douglas DC-8 and was flown at speeds in excess of 280 mph at 5000ft (watch the full 23 min movie here). Wing walking has been (almost) as old as aviation itself and you can still see it at airshows. There is a British team (here's the website - different colour scheme today) who does the Summer airshow circuit. I saw them a couple of years ago at Beauvechain (EBBE). Not DC-8s but Boeing Stearmans and impressive nevertheless! (Yes the lady is really wing-walking in the second picture, have a close look in between the wings.)

Happy New Year!

Taxes are only for us normal mortals, youfly and one down five to go

The European Commission announced this week that they are going after so-called postbox companies. These are global companies that set up subsidiaries across the world to optimise their taxes. The result is that these global companies hardly pay any taxes at all. The European President stated some weeks ago that all EU members together miss 1000 billion € in taxes per year because of this high-tech financial wizardry.
Needless to say that the announcement was greeted with a lot of acceptance and sympathy both by the media and the public. After all, going after the big bucks from those who apply sneaky tricks is only fair. Or is it? I have some mixed feelings though. Is it ethically and morally questionable when the richest companies on earth use every rule in the book to lower and evade taxes? Hell yes. Is it legally wrong?
The thing is, those 'rules in the books' were voted and implemented by... governments. Countries purposely create rules beneficial to global companies just to attract them and set up shop in their country. In fact countries compete heavily amongst themselves to attract business. My own country, Belgium, is no exception. Belgium invented a very interesting rule (when using their own capital for investing in R&D, companies can deduct it from their taxes as if it was a loan) and then went on a global road show to pitch it to multinationals. Of course many saw the benefits (handy way to lower their taxable income). Can you blame them? Other countries have other incentive schemes. And when companies happily apply (of course!) then suddenly they become the bad guys. Again, it is ethically and morally wrong but shouldn't the Commission go after its own members because it is the Member States that created the rules that companies use? But I guess it is more popular to go after business sharks then go after your own members. And then one another point: Commission officials don't pay taxes on their income as us normal mortals have to do. So who are they to speak about socially unacceptable tax evasion?

I came across a website featuring a flying machine that tickled my imagination. I remember as a kid seeing these things in a comic book ('De speelgoedzaaiers'). But here is this company in Perth that is developing them. Have a look:

We Belgians have always been way ahead of the rest :-).
Ok ok ok, just to prove that I do have some sort of self-relativity as well here is Monthy Python about us Belgians:

For those of you who can't get enough and who missed it (shame of you if you did!), here are they again announcing their new reunion show called "One down, five to go":

A definition, breaking records, stars lining up and approaching Queenstown

There was a fantastic quote circulating the net last week regarding inflation. You can’t switch on the tv last months or you have a central banker or a politician proudly saying that inflation is low. Of course we all know the calculation is rigged (last change in Belgium was to include the Summer and Winter sales in the inflation basket). The bread price on the other hand was taken out years ago already. So inflation is not representative at all about the real cost of living, as anyone who does his weekly grocery shopping himself knows very well. So I give you this wonderful definition of inflation and central banking from Dylan Grice:

“Trying to control a variable you can’t measure (inflation) with a tool you don’t fully understand (money) in a complex system with hidden, unobservable and non-linear interrelationships (the economy) is a guaranteed way to ensure that most things which happen weren’t supposed to happen.”

I came across a graph (courtesy of Bloomberg and Zerohedge) that really spooked me.


It’s the New York Stock Index divided by the US FED balance sheet. Ok so 2008 is Lehman we know that. The thing is since Lehman, the US FED has pumped 4 trillion $ in the economy as reported last week. This has not done anything to the stock exchange if you divide it by the FED balance sheet. So the optimists will look at this graph and say: “Wow! The NYSE can go up another 500% just to reach the 2008 levels. Let’s rock-and-roll!” The realist in me however is scared sh#tless (excusez-le-mot) because 4 trillion $ has done nothing, null, zero, rien. Never mind that stock exchanges are breaking new records. Taking the FED balance sheet as basis, shares haven’t moved an inch. Basically we fell off a cliff in 2008 and since then flat line... The economy and financial system is dead and they don’t know it. Bucket loads of money are acting as defibrillator but no matter how often they push the defibrillator button (printing press) the patient is brain dead and the heart beat is not coming back.


Contrary to the new NYSE records which are in the news almost daily, this piece of very interesting news, hardly got any media attention: Germany argued against the use of European funds to help banks.
From Euroactiv:
“Ahead of the meeting, French Finance Minister Pierre Moscovici told reporters: "France continues to believe that we ... must not exclude direct recapitalisation by the European Stability Mechanism as a last resort."
Speaking just yards away, however, Wolfgang Schäuble, Germany's finance minister, poured cold water on the idea.
"The German legal position rules it out now," said Schäuble. "That's well known. I don't know if everyone has registered that."
Inside the meeting room, people close to the talks said the two clashed again, when Germany asked for the removal of any reference to ESM bank aid from the ministers' statement”.

Just politics you say? Well yes of course but there is more behind it. I see some stars lining up here and it doesn't bode well for us working class who try to save some money.

The ECB is going to do a big bank stress test next year. Contrary to earlier bank tests (which were a joke) this time it seems the ECB intends to do a proper job that risks exposing many banks short of capital (because they still have too much bad loans). Latest estimates talk about 95 billion € of losses.

The question then is: who will pay for the losses? A new European wide system was meant to do this, but this is what Germany now opposes to. And what if some banks are not worth salvaging?

The answer is disturbing: “Any state help will come at a heavy cost by imposing losses on shareholders and junior bondholders. In time, possibly as soon as 2015, senior bondholders and even depositors with more than 100,000 euros will be forced to take losses.”

So yet another confirmation that the ‘never-to-be-repeated-once-in-history’ saving of the Cyprus banks slowly but surely becomes institutionalised.


During a meeting in Auckland we were shown below movie of the approach in Queenstown. Very challenging but oh so beautiful. Watch this tribute to airmanship and enjoy the scenery!

Failing nations, they spotted me and a dramatic low pass

I just finished reading 'Why nations fail'. A bit of a struggle I must admit.
If you are into history: read it. Bear in mind however that history is being told from a very Anglo-Saxon world-view. If that bothers you (like it did with me), still read it but try not to be too irritated by it. There is some good food for thought in the thesis they propose as to why nations fail. Summarised in one sentence it would be something line: extractive economic institutions that are structured to extract resources from the many by the few and are synergistically linked to extractive political institutions which concentrate power in the hands of few.
A bit of a mouthful isn't it (now you know why the read was such a struggle). But it does make some sense. Even though the authors say several times that prosperity is not eternal in a given nation, they do give the impression that in our western world we will prosper on for the next century. And that's what worries me. The authors seem not to have grasped the idea that established democracies with inclusive political and economic institutions can fail too (when they become too top-down heavy). If you want to understand really why nations fail and ignore the sort of colonial Anglo-Saxon speak of this book, I can recommend the very intelligent book 'The collapse of complex societies' by Tainter. I'm not going to spoil it for you by explaining here what it says, but if, no when!, you read it, you will better understand what is happening in our world today.










Since this Summer, the Belgian Airforce seems to have put a low level flying route above my village. It coincides with me starting this blog. Is the Belgian military keeping, NSA-wise, an eye on me ;-)? It is fun though, I used to watch Starfighters, Mirage V's and F-16's on low level flying above my parents place when I was a kid, and now they seem to have found me again! Well the F-16's at least... Just for fun a picture of an F-16 at the 20102 airshow in Beauvechain. Whenever I catch one above my house I'll post it as well.

Talking about low level flying... I came across some fascinating video's of low passes. I know what you are thinking: we've all seen it, all of us who fly have done it (admit it, it is fun). But these are just mind boggling. You remember that TAP A300 routine from a couple of years ago (see http://www.youtube.com/watch?v=26H-WzIe858)? That was impressive. Here is another one unknown to me before. This time a 747-300 from Aerosur, and honestly, when it banks away, it would have scared the living daylights out of me : http://www.youtube.com/watch?v=B6s0pBqIriw