Swiss surprise, broken laws and a pink Learjet

I know it has been ages since I blogged. The developments of the past weeks and especially yesterday compel me to draw your attention to the events. And no, this blog isn't about terrorism. So what am I referring to?

Yesterday the Swiss central bank let the CHF loose. Finance you say? Yes finance but with global consequences. You all know that since the 2008 financial crisis, central banks worldwide have thrown all care and common sense out of the window and are using their own equivalent of nuclear weapons to keep their currencies and economy adrift. The US and Japan have created enormous amounts of money (and still there is no inflation, isn't that strange), the ECB reportedly is on the brink of going down the same path next week, and no one is blinking an eye. Except for the Swiss. They blinked yesterday.

During the euro-crisis many were running out of the euro into the CHF which led to the CHF quickly becomming more expensive. As an expensive CHF is problematic for the Swiss economy, the Swiss central bank interfered and decided to keep the Euro/CHF rate at 1,2. For years they have done this by constantly interfering in the exchange rate. And yesterday they stopped.
This was the result:

On one day the CHF became 15% more expensive, so the Swiss export suffered suddenly a 15% hurddle. Just check the Nestlé shares what it means.

So why did they do this? Why does a central bank suddenly punish its own economy with 15% in one day? They must have a very good reason, they surely know something we don't. Some say it is because next week the ECB will start the printing press and the Swiss don't want to follow suit (which they would have to if they wanted to keep the CHF at an unchanged 1,2 exchange rate). I don't know if that is the reason, future will  tell. Fact is that the Swiss move took everyone by surprise. Yesterday we were all turkeys (Taleb afficionades will get this). Even the IMF was not informed and quite appalled that they were not. Here are some quotes from Lagarde:

“This was a bit of a surprise…I find it a bit surprising that he (Swiss central bank chief Thomas Jordan) did not contact me, but you know, we’ll check on that.”

According to Lagarde, Thomas Jordan may not have warned European Central Bank chief Mario Draghi and others about the move, either: “I would hope that it was communicated with other colleagues from central banks. I’m not sure it was.”

There you go, Switzerland surpised the world.

Some other development that is underreported in the news (and that is an understatement) is the situation in Greece. Next week they have elections and the party that is likely to win has said that they will reform taxes and renegotiate the national debt. Result: people don't pay taxes anymore. Why should they if the new government would abandon those taxes? It surely is a bit silly to still pay them now. Secondly, if Greece would leave the euro (I know euro politicans keep on telling that the law forbids it - but hey politicians never break laws do they) then new Drachma would quickly and sharply devaluate. So any Greek who believes the Grexit is a possibility what does (s)he do? Go to the bank and withdraw all savings in euro. That's what I would do too. When banks run out of cash as a consequence they can ask the ECB to use the ELA (Emergency Liquidity Assist). That's what Greek banks had to do at the height of the eurocrisis and two Greek systemic banks asked for the ECB ELA on Wednesday as well. 3 billion € was withdrawn in December and almost the same amount already this month.


So there you go: Swiss lets its CHF appreciate with 15% in one day, the ECB may start money creation next week, and the Greeks are preparing for the possibility of a Grexit. But do we read this in our national press? Nope. Does anyone care to explain the consequences of this on a global, European or local level? Nope. Does someone explain what it means for our personal wealth (irrespective of the size of that wealth)? Nope.


But lets end this blog in good tradition with some aviation stuff. I came across a movie which made my eyebrows raise. It's a Learjet cutting a ribbon being held up by two guys on flyboards. Crazy crazy crazy. Just watch. But the thing that threw me most is: who in his right mind paints his Learjet pink???

Bright sparks, wow and a cute little thing

After last week's doom and gloom I thought I'ld better make up for it.
Driving to work early in the morning this time of year means that I'm in my car before sunrise. The day is breaking but the sun not up yet which results in vibrant colours. Nope, no pictures, I'm driving :-)

Two bright "stars" were clearly visible against the blue sky and these two "stars" were very close together making me conclude that they probably weren't stars as it were the only two heavenly objects visible (except for the moon). The next day they were still there but a bit further apart so I deduced that they had to be planets. But which? A quick internet search learned me that it was Jupiter and Venus:

Monday 18 August 05:45 (local): Venus is 11,9' north of Jupiter (-1,3m). They are closest at 07:10,at a height of 21°. The planets are in ENE about 8° above the horizon, 12' separation.

Those of you who saw it too may have marvelled at it just like I did. Staring at the infinity of universe always is very comforting to me.


Talking about the universe, here's a picture from astronaut Reid Wiseman currently serving as flight engineer aboard the International Space Station for Expedition 41. If that ain't "wow" I don't know what is...

The US celebrated Aviation Day this week. Wiki learned me that it was established in 1939 by Franklin Roosevelt, who issued a presidential proclamation which designated the anniversary of Orville Wright's birthday to be National Aviation Day.So let's celebrate as well with a picture from the unlimited Farnborough source. This time it is from this year's event, and I chose something that epitomises the joy of flying: the Starduster. It's a nice little homebuilt, if you want one, you can order plans and parts here.

And to get you into the right mood, here's the brave show it put up at Farnborough:

Do you have the stomach for it, promisses promisses and backfire

To all of you whom believe we are living in countries that defend the basic principles of human rights, freedom, privacy and democracy, please read this book: 'No Place To Hide' by Glenn Greenwald. I bought it in a whim and didn't regret it. Put all your prejudices and everything you heared about Snowden aside and read it with an open mind. Then draw your conclusions. But beware: you have to have the stomach to do it because reading it risks making you sick.





In the mean time Rasmussen, NATO's boss, tweeted this yesterday whilst there was unclarity about Ukraine and Russian fighting:

Things like that make me worry, really worry. They all hapilly come over to Belgium to commemorate the start 100 years ago of WWI and make speeches who horrible it all was, but they don't seem to grasp that they are playing with fire once again.


In the mean time on the financial markets, George Soros is making one big bet on stocks crashing. When people like him do that, people tend to take notice. When that news broke it became official that Germany and France are in a recession (not that they call it like that). The Portuguese bank which went belly up was bailed out by the taxpayers and broken into a 'good bank' and a 'bad bank'. Compare this with what Mr Barroso said 6 months ago: "Banks, not taxpayers, will carry the cost for their own mistakes". Right copy that Mr Barroso. Reality is yet again different from the statements and promisses made by politicians.

This is turning out a rather dark blog isn't it...

So let's brighten it up. One of my friends (@Arielshocron) posted some wonderful pictures of a Tu-22M on twitter. I know, it's a Soviet bomber. That's not why I put it up, I do this beacuse for us aviation nuts it is an emblemic airplane and a very beautiful one as well. I saw it only once back in 1992 in Farnborough. Here is the proof!

Just a question, social media prevents war, byebye US Dollar and some happiness

Lots has happened in the world since my last blog. And not much of it is good.
MH17 went down, Gaza is under attack, Libya becomes more unstable by the day, Syria goes from bad to worse,  Argentina was pushed into bankruptcy by a US court. I could write pages and pages about every single catasptophy but the net is already overflowing with propaganda and other nonsense so I won't.

Just 2 things before we move to another subject that maybe brings a smile on your face. If only people would smile more, we wouldn't be in such a mess.
First the serious stuff:
1. Just a question no mass media journalist seems to ask: if MH17 was shot down by a rocket, why is there shrapnell damage to various sections of the airplane? With all propoaganda (from all sides) that started flowing minutes after MH17 went down, I found social media (twitter, youtube) to be very useful as it quickly uncovered lies and misinformation that was (purpously or not) reported in mass media. With the 100 year commemoration of WWI it makes me think: if social media would hae been around in 1914, would the people have been able to prevent war from errupting? And the other way around, if social media would not have been around today, would MH17 and the mass media reports have pushed us helplessly into another period of cold war (at best) or war (at worst)?

2. On July 15, something happened that did not hit the mass media in our Western world and it should have as it will fundamentally change the world as we know it today. The BRICS set up their own "IMF", providing it with capital and undertaking to trade beteen them not in US dollars but through currency swaps. You can not overestimate the importance of BRICS telling the world "scr#w the US Dollar". The US will not take this lightly and if BRICS is succesful it will mark the beginning of the end of US (Dollar) world dominance. Here's an excerpt from the press release:
"We are pleased to announce the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements.... The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures."

That were the serious bits, now for the smiles:

With my change of job I upgraded from an old cell phone (the boring stuff that can only make phone calls and send a text messages), to a smartphone. I'm still struggling to make the smartphone do what I want it to, making me wonder why on earth they call it a 'smart'-phone. And then I came across this:

And my new job brought me to Farnborough for business! First time I went was back in 1990 and 1992. As I said during a speech I had to give during a reception: in those days the stars of the show were a big twin engined airliner from across the Atlantic and some fighter aircraft from a country that had just opened its borders. Since then the world has changed a lot. In those days I could spend 2 full days taking pictures at the threshold of runway 24. This time, although being there for a week, I could only sneek out once to get some quick shots. But hey, I'm not complaining!

The good thing about the WorldCup, library books and change of command

The good thing about the WorldCup football is that there is nothing to watch on tv if you don't like football (like me). So that leaves plenty of time to read a good book.
Number two of my recent harvest is now also consumed. 'Flash Boys' is written in the same investigative style we know from Michael Lewis. It tells the (true) breathtaking story of Wall Street boys who come to realise that they are getting screwed by HFT's (high frequency traders) an decide to fight them. It shows that even well meant regulation is just another tool for people apt in finding loopholes to take benefit. I wonder why there no Belgians on Wall Street... we're good in finding loopholes in regulations! Maybe the Russians are just better than us (lots of HFT firms are stacked with Russian traders).
The "benefit" for HFT firms equals billions of dollars per year. With >90% of all orders placed on the stock exchanges coming from HFT's and >50% of all orders executed coming from HFTs one can rightfully wonder if this is still worthy the name of investing. Afterall they only hold shares for some microseconds and only execute an order when they can act as middle man: meaning only when they have someone to sell it from and someone else to sell it to, so they never take any risk either. The book is highly recommended except if you have some shares yourself and suffer from imsomnia, then reading the book will not help you...


With that book being finished I was strolling around my local library desparatly trying to find something else to read. And it struck me that the fate of library books are to be rejected more than chosen while owned books are read once but cherrished forever. I'm still recovering from that rare moment of insight...


On June 12, I was invited to attend the official ceremony of the change of command of one of the Belgian airforce basis. The ceremony was very impressive and the reception afterwards very well attended! As the picture below tells you I was sitting on the second row :-)

Buy a microscope, first harvest and I saw Joey

There you have it. The ECB lowered once again the interest rate so you can bet that banks will follow suit. So throw away that magnifying glass you used to look for your interest payments on your savings account and go find yourself a microscope. Before the crisis the public had no clue what "percentagepoint" meant. Now we are all too familiar. If the ECB and banks continue like this we will soon hear a new financial term "per mille". The overnight interest rate even goes into negative teritory for the first time in history. This means that when banks park cash with the ECB overnight, they have to PAY for it. If you have a savings account, do not expect any return soon (soon = years).

My former colleagues gave me a book voucher (much appreciated), and this is the first harvest.
I started off with "The theory that would not die". This book should be compulsory reading for anyone who wants to study mathematics and for anyone who hates mathematics. It reads like a "whodonnit" and shows with fascinating stories how Bayes rule helped in the cracking of the enigma code in Bletchley Park, how it helped in searches for U-boats during WWII and how it was used to locate the wreckage of AF447. Those who don't know Bayes rule here's a simple quote from the book "it's a logic for reasoning about the broad spectrum of life that lies in they grey areas between absolute truth and total uncertainty". The book also discusses who could claim the discovery of the mathemathical practice. Frankly I don't care but I did like how they described Laplace's important role in it. Wonderful reading, just wonderful.

And I saw Joey! In my blog of January 10 of this year, I mentioned the that Aurigny Air Services (the carrier operating from the Channel Islands) is considering the Dornier 228 as a replacement for their Britten Norman Trislander. As I was holidaying in Guernsey I wanted to at least get a glimpse of the Trislander (affectionately referred to as Joey by the islanders). And here you have it in final to EGJB (Guernsey airport).

Whom shall we vote for, minds of our own and a thing of beauty

The European elections are just over one week away and at least here in Belgium we hear hardly anything about them. Of course they are overwhelmed here by the national and regional elections but still. With Europe determining the largest part of our laws and holding the keys in its hands of our financial and economic future, a little bit more attention would be welcome.

In comes Joe Stiglitz. The regular reader of this website will know him (for the others: Stiglitz is one of the most renowned economists globally and Nobel price winner). He just published a slide presentation where he effectively slams the European politics and policy and he proposes a way out of this mess. His main message: the eurocrisis is not over contrary to what politicians now shout from the rooftops. Some of the proof can be found below but I do recommend anyone that wants to cast an informed vote to go through the full presentation.
Not that I agree with (all) his proposed solutions but his analysis does give plenty of food for thought. And, be careful, he also says that the US will never have a eurocrisis because the US can print as many dollars as they want. Of course he is right, but what he fails to mention is that every time, and throughout history there has been NO exception,  any nation that has printed money in the amounts the US is doing now at least one of the following (and often all of the following) happened: inflation, hyperinflation, recession, breakdown of the financial and economic system, war.

All slides from Joe Stiglitz presentation

Two weeks ago the main Flemish economic newspaper offered a small book to its readers that came with the weekend edition. The title: Modern Minds. The subject: is our brain coping with the ever increasing speed of society, work, technological developments? Because after all, our brain has not developed any further since we were living in caves. So this caveman brain that we still have, is it able to cope with today's world? And, won't we be overpowered soon by computers? Will computers not be smarter than us humans? There is too much in the book to explain it all here, but a few things jumped out for me. Firstly, we seem to be able to cope with maximum 100 to 150 social contacts. Anything bigger we can't manage. I've read this before in another book (Tipping Point - Malcolm Gladwell) and some companies organise themselves such that any business unit is never bigger than 150 people. Secondly, recent studies have shown that we daydream about one third of the time. The thing is, when we daydream our brains become very active! It is often when we stop putting pressure on our brain (by thinking intensively about a certain problem) that suddenly out of the blue the solution pops up in a 'eureka' moment. Seems that what is happening in our brains when we relax and daydream, our grey cells light up like a Christmas tree in Harrods. What is happening is that we see some kind of chaotic behaviour that suddenly creates something new (in this case an idea or a solution). And I have read about this in another very recommendable book: 'The Edge of Chaos' by Mitchell Waldrop. Isn't it wonderful when pieces fall together! All this to say that Modern Minds is a very enjoyable little book that makes you think... which is not good because our brains perform better in idle!

I had the chance to wonder around the Airbus 350-900 this week and found myself staring at what is possibly the most beautiful piece of design on any airplane in the last decades. The curved winglet appeals to anyone with a sense for geometry, style and design. I would have to see a drawing of it to do some calculations but I wouldn't be surprised if the golden ratio is hidden in its dimensions (golden ratio: if the ratio of two quantities is the same as the ratio of their sum to the larger of the two quantities).
Marcel Dassault once said that if an airplane looks good, it flies good. If that is the case, the 350 will be one smooth ride!