The news that stroke me in recent days was that of Jeff and MacKenzie Bezos divorcing. It’s because their marriage was quite a story and it is sad to see a great thing go.
MacKenzie met Jeff after she graduated from Princeton and took a job at D. E. Shaw (a hedge fund), where Bezos worked. In 1993 they married, and by 1994 they were driving to Washington, with MacKenzie reportedly at the wheel of the car. The couple gave up a really comfortable lifestyle and successful careers to move across the country and start something on the internet. The only reason Jeff Bezos was able to do that is because he had an extremely supportive spouse. It was an incredible risk and one that they both took on jointly. There is a clip of the net where Bezos explains how he held over 60 meetings to try to rise the first million dollars. And he had to give up 20% of Amazon for that.
It’s interesting to try to imagine the mindset behind it.
Intel’s founder Andy Grove wrote the book “Only the paranoid survives”’ with his opinion on what it takes to make it big – one needs to be a little crazy, often antisocial, and what he meant by this is not falling into cliché thinking.
If you are antisocial by the age of 5, there isn’t an intervention that is effective, they say. Male aggression peaks around the age of 15, and then declines and normalizes around the age of 27. Basically, if you have someone who is a real trouble, throw him in the prison until he is 27. Then they age out of it. Problem is, that the worst thing you can do with anti-social people is to group them together, which is what we do in prisons.
The troubled people all show a deficit in problem solving ability, or so the thinking goes. But there is more to it – they have problems in accepting reality as they see it. They have their minds set and will not bend. Extremely successful people seem to have the same personality trait. Like a structural engineer sees his life as concrete, square walls, and everything has to fit between them. It’s for them “my way or the highway” as the American saying goes. The others will hear, and react, to what they choose and want. Which may likely define the IQ, it’s just that not everyone is comfortable with it.
If your job is simple, which means you do the same thing every day, then IQ predicts how fast you learn the job but not how well you do it. But if you job is complex, which means the demands change on a regular basis, then the best predictor of success is general cognitive ability. That’s fluid intelligence, or IQ as I understand it. Another big one is freedom from negative emotion, as is openness to experience which means creativity.
All these dynamics result in the creation of social hierarchies, which are a feature of our environment, not just purely based on social contract and this is a huge thing to understand. This is where Karl Marks and the likes of him went wrong. Our institutions may be malleable, but our biology is much less so. In every century people were surprised that the life goes on the same way – and so are many today.
Male testosterone level is about 20 times that of women, so there is no surprise that prisons are filled with mostly men. Women are wired for cooperation, men are wired for individual performance. If you find your match, you’re the luckiest guy in the world. If you don’t, life gets bumpy fast.
It’s quite possible that Bezos had his chance and just blew it big time.
There is an interesting development taking place in Eastern Europe - the Intermarium initiative, which receives US support and backing. The proposed multinational polity would extend across territories lying between the Baltic and Black Seas, hence the Latinate name, meaning “between seas”. The concept is not new – it was originally conceived in Poland in early 20th century.
It came back to life because both, Germany and Russia are weakening at the same time, opening the door for countries located between them. And while it is clear that Russia is not a major world power anymore (its defense budget is a quarter of that of China), then the statement about Germany (and EU by extension) requires some explanation.
Their large dominant corporations were modeled in the 1950’s and they never re-engineered themselves. That’s why there is no European Google. And the German welfare system ultimately depends on these corporations.
The country exports more than 50% of their GDP, which is clearly unsustainable. Half their exports go into the European free trade zone, so the Euro was priced somewhere on the borderline of preventing inflation in Germany, while facilitating German trade. Of course, southern Europe needs a much cheaper Euro, they need a mechanism to limit German exports otherwise they can’t develop. And with the introduction of the Euro they lost it. The entire periphery of Europe is not benefitting from the free trade zone and they are going to do something about it, it’s just a matter of time.
Simply put, a social catastrophe is taking place in Europe and it will result in the re-drawing of the geo-political order.
The problem is that history of Europe is solving problems by violent spasms. Between 1914 and 1945 about 100 million Europeans died in wars, conflicts and exterminations of all kinds. Things changed after 1945 – the decisions on what goes on in Europe were no longer made in London, Paris, Berlin or Rome, but in Washington and Moscow. And the Russians and Americans were more constrained facing each other, despite many reasons for an all-out war. You may call the Americans cowboys, but they kept cool heads. Just try to imagine what would happen in Europe in 1914 or 1939 if the sides of the conflict had nuclear weapons. In the battle of Somme 600 thousand men died in September of 1916 and the Europeans didn’t even blink – they continued on.
The key country in the Intermarium concept is Poland, which is now leading this multinational coalition in trying to pressure the EU into enacting pro-sovereignty reforms and decentralization, challenging the economic status quo. U.S. sponsorship, moreover, directly challenges one of Europe’s most defining institutions, NATO.
The Intermarium sets the stage of a more integrated economic drive. It will be in the EU, but it will behave differently from the EU – more entrepreneurial, more closely resembling the United States.
Poland is attempting a game-changing geostrategic pivot while technically under the boot of a foreign power, in this case Brussels (shadow-managed by Berlin) to forge a Central and Eastern European union. If it can pull it all off, then the country will once again earn its place in history as one of Europe’s Great Powers.
Gold’s price in December recorded the largest jump since January 2017.
And that’s after the last quarter of 2018 that saw investors pile into exchange-traded funds backed by bullion - the biggest increase over a comparable period in more than 18 months. The critical words here are “backed by bullion”, which is a statement that could mean anything or nothing.
Since times immemorial gold is money. Based on physical ownership, not on trust in the willingness and ability of another party to honor their promises. However, gold is not freely traded, it’s the most artificial market in the world. The daily gross trading on the LBMA (London Bullion Market Association) is about 16 times annual mine production (not the settlements but trading). So, it’s a real casino with paper claims that can never possibly be settled. The price of gold is where it is right now only because of this artificial trading.The only way the system will unravel is when people holding the paper claims will start worrying if they can take delivery. And they won’t be able to – there is just not enough physical gold to go around.
Germany has a stronger relationship with gold than most nations. The country’s experience with hyperinflation during the years of the Weimar Republic is ingrained in the national consciousness. Gold, above all, stands for stability. Today, Germany is one of the biggest holders of gold in the world: it owns 3,378 tonnes, second only to the US.
This time the critical word is “owns”.
In the times of the Cold War, the Germans, flush with cash from their export surplus, were hesitant to hold their gold in Frankfurt, which was not far from a Russian controlled part of Europe. They moved the gold west, to Paris and New York. This practice is not unusual, the Dutch, for example keep a big chunk of their gold in Ottawa. With the fall of Soviet Union and unification of Germany everything changed. When the Bundesbank first asked the New York Fed “can we please have our gold back?” they were politely told to go focus on something else. Then they requested to at least audit their gold storage but got a similar response. Eventually, in 2012 serious negotiations began with the goal to move German gold to Frankfurt. The German negotiating position was much enhanced by the leakage of a report from the German Court of Auditors, which was very critical of the conditions under which German gold was being held in New York.
Later, with big fanfare, Deutsche Bundesbank announced on February 9, 2017 that ahead of plan they had repatriated 300 tons of gold from New York. This put a positive spin on a rather disturbing fact: 1236 tons of gold that is supposed to be part of Germany’s currency reserve will continue to be kept outside of German control in New York.
Having to give a rationale for the more than 1200 tons of German gold in New York, the Bundesbank came up with the fact that it is so convenient to have it at the Fed, because many other countries have gold there. That way, you do not have to move the gold around, the logic went, if you want to sell it to some other country, you just have to re-designate it inside the Fed building.
Note, that the only situation in which it would become necessary to do this quickly and in large amounts would be when the dollar-based currency-system brakes down and countries insist on payment in gold again.
I guess the Bundesbank is keeping its options open.