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Entropy production delusion

It is common in knowledgeable circles to talk about the development of civilization in terms of entropy discussion. The term 'entropy...

Sunday, November 25, 2012

Making money with technical trading

Being a mathematician, I had a natural interest in technical trading in the financial market using the various forms of signals on charts for stocks and commodities. The signals give indications of when buyers are over whelming sellers and vice versa. The trader can make money rapidly, according to the theory, if he/she reads the signs in the way that is put forward. The rhetoric seems to be plausible from a mathematical point of view.

However, the proponents of this strategy do not address some fundamental issues. They claim the strategy will make money. The first question is who loses that money? The brokers obtain some of the money for providing services. So if an amateur trader acquires say $10,000 over a year, who loses it? Insiders and professional traders using high speed algorithms are in a much better position to make money than an amateur. Of course this discrepancy could be partly explained in the past by the creation by governments of money. However, those days are almost certainly over.

Some traders will doubtless continue to make money by wise selection of stocks, bonds or currencies or by having advantages due to insider knowledge and fast trading software. They will continue to take the cream off the top. The amateur trader using pricing signals on charts will probably still have an advantage over those who invest their savings in managed funds. However, as economic growth transitions to contraction, the useful pricing signals will become scarcer and more signals will be fallacious. Ironically, the amateur trader may well make money as it loses value so their real wealth does not improve. So technical trading is a fascinating game in which there will be more losers than winners as the generation of real wealth in the community dies down.

The philosophy underpinning technical trading is that pricing data provides insight into what buyers and sellers will be doing. The data indicates only what they have done up to the present.Those who believe that this data provides a useful forecast should think about forecasting the toss of a coin. There is no possible way of knowing whether it will end up as a head or tail. This inherent uncertainty about forecasting needs to be borne in mind when vested interests make claims about forecasting.

The common view that it is possible to make money will slowly die as the ability to create it out of thin air declines. Society will have to relearn the value of earning money by making a useful contribution to operations.

Sunday, November 18, 2012

Peninulsa Link dilemma

The Peninsula Link is a freeway being constructed to bypass Frankston, a suburb of Melbourne, to improve the flow of traffic down to the attractive holiday regions in the Mornington Peninsula. The works have been carried out with promotion of the care being exercised to minimize social and environmental disruption. The promotion conveys the impression that the latest views on handling transportation problems have been taken into account.

This project is an example of the consequence of the myopia that clouds the thinking of authorities around the globe. It does not take into account:
  • the depletion of the global stock of oil will ensure that the number of vehicles using the Link will decline rapidly in the future as the fuel used becomes too expensive for most residents of Melbourne 
  • fuel cost will be only one factor in the amount of traffic falling short of expectations: the manufacture of vehicles will continue to decline due to economic contraction and declining availability of the wide range of materials used in their construction
  • the continuing requirement of road works on the Link for maintenance purposes will have to compete with many other projects as the declining availability of energy and materials hits home
It is most likely that later in this century many people will wonder what should be done about the 'white elephant' that the Link had become. Continuing to maintain it using some of the remaining natural resources will probably be judged to be not worthwhile, given the small amount of traffic.

Of course, The Peninsula Link dilemma will be only one a multitude of similar fiascos around the globe. The blame game should be interesting!

Denis Frith

Saturday, November 17, 2012

I am tired

I am seventy nine. So my body is tired. My heart finds it more difficult to pump blood through aged arteries and veins. The same consequence of aging applies to my kidneys and other materialistic processes in my body. But it does not apply to my thoughts. I continue to learn what is going wrong in how civilization operates due to the unwise, anthropocentric decisions of our species.

I am tired of the widespread rhetoric that civilization can continue to grow, despite the fact that the operation of civilization entails the irreversible consumption of limited natural resources.

I am tired of the many forms of marketing of the fallacious benefits of consumption as landfills, ground waters and the oceans fill up with toxic wastes as the stuff is thrown away.

I am tired of the rhetoric that fosters working hard to manufacture bits and pieces so the businesses can make money to enhance the ability to devastate the environment.

I am tired of the claims that science is advancing the frontiers of knowledge  when the reality is that science has not provided understanding of the fundamentals. Climate change is but one example of the lack of understanding by scientists of the physical reality that civilization irreversibly devastates its life support system.

I am tired of the promotion of technology as a means of improving our standard of living when it is really improving the ability to use up the remaining natural resources, destroy biodiversity, hasten species extinction and pollute land, sea. air and us.

I am tired of the claims of progress by our leaders when I know that the operation of civilization is unsustainable.

So I am very tired of the hallucinations that society has. I now realize that my generation enjoyed a free lunch. So I am sorry that future generations will have to pay for it.

Denis Frith

Tuesday, November 13, 2012

The depressing way ahead

The operations of the systems of civilization irreversibly use up limited natural material resources and produce irrevocable material wastes as well as devastating the eco systems. It does this in order to provide society with the goods and services people covert. This supply is an unsustainable process although society does not recognize that fact. It is the malaise of civilization. The decline in the availability of a wide range of natural resources coupled with the adverse response of natural forces, such as climate change, are symptoms of this holistic malaise.

The question raised by informed people is what will encourage society to moderate the rate of this ravishing of the life support system. There is much discussion of various aspects of the endemic decision making process. The competing influence of capitalism and socialism is just one of the issues debated. However, the inherent objective of organisms to make the most of what is available does not appear to gain the consideration that is warranted. Humans have the advantage over other organisms in that they have devised tools that give them great leverage to satisfy their desire for a high material standard of living - without taking into account the ecological cost.

Society will continue to make decisions to realize possibilities as much as they can. That is an unalterable fundamental characteristic of society. Education and other means of influencing the attitude of the elite as well as the masses can do no more than slightly moderate the rate of ravishing by civilization of the foundations. The consequential demise of materialistic civilization is certain. The way ahead for the human denizens is depressing as they join the species extinction legion.  

Clearly, what will happen in the future is that the possibilities that the systems of civilization can use will decline, so forcing society to moderate their decisions. There is still appreciable uncertainty about which issues will force societies in the various regions to power down. The present focus in industrialized countries is energy supply while over population and potable water supply head the list in many other countries. Loss of soil fertility is not yet having the impact that declining fertilizer supply will ensure in the future. However, this uncertainty does not affect the fact that the possible rate of utilization of the combination of natural material wealth is declining rapidly. So the possibility of technological systems to supply society with goods is also declining. People, at best, can make smart decisions to meet the challenge of coping. Some will relearn forgotten fundamental simple skills to provide essentials such as food and community communication but that will not ease the stark reality noticeably for city dwellers in particular.