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Size Doesn’t Matter

November 23, 2009

Well maybe it still does for the organ with which many people perform the majority of their cogitation, but in this case we’re talking about the brain.

Often you’ll hear from anthropologists who say that homo sapiens possesses greater intelligence than other animals and its own homonid forebears and the evidence can be seen in the increased size of the brain case that evolution has given us. It always made me wonder that if that were really the case, why aren’t whales building space ships and why aren’t ants wallowing in their own filth rather than building complex societies.

Scientists looking into that notion have found that having a bigger brain doesn’t always make you smarter.

“Animals with bigger brains are not necessarily more intelligent,” according to Lars Chittka, Professor of Sensory and Behavioural Ecology at Queen Mary’s Research Centre for Psychology and University of Cambridge colleague, Jeremy Niven. This begs the important question: what are they for?

Research repeatedly shows how insects are capable of some intelligent behaviours scientists previously thought was unique to larger animals. Honeybees, for example, can count, categorise similar objects like dogs or human faces, understand ‘same’ and ‘different’, and differentiate between shapes that are symmetrical and asymmetrical.

“We know that body size is the single best way to predict an animal’s brain size,” explains Chittka, writing in the journal Current Biology. “However, contrary to popular belief, we can’t say that brain size predicts their capacity for intelligent behaviour.”

~snip~

While some increases in brain size do affect an animal’s capability for intelligent behaviour, many size differences only exist in a specific brain region. This is often seen in animals with highly developed senses (like sight or hearing) or an ability to make very precise movements. The size increase allows the brain to function in greater detail, finer resolution, higher sensitivity or greater precision: in other words, more of the same.

~snip~

Chittka says: “In bigger brains we often don’t find more complexity, just an endless repetition of the same neural circuits over and over. This might add detail to remembered images or sounds, but not add any degree of complexity. To use a computer analogy, bigger brains might in many cases be bigger hard drives, not necessarily better processors.”

If Chittka is correct it would go a long way towards explaining the curious case of the the hobbit fossils (homo floresiensis) which were discovered a few years back. The fossils were dated to about 18,000 years ago meaning that they lived at the same time as modern humans. There has been much debate about whether these diminutive hominids were modern humans suffering from some genetic disease or were of a separate lineage. Archaeological evidence shows that the hobbits were using stone tools, fire, and hunting in groups which is pretty similar technology to what modern humans were using at the time. If the theories of anthropologists like William Jungers are accurate and the hobbits really were a separate species from homo sapiens , then Chittka’s theory would explain how the hobbits were able to develop these technologies despite having brains only 1/3 the size of homo sapiens.

Not only does the size of one’s brain not necessarily determine intelligence, but a pretty strong case can be made that evolution does not select for increased intelligence at all, or at least not any more among human beings. It all boils down to the fact that nobody likes a smarty pants.

We have evolved to the point where as a species we can manipulate the environment around us so that every day is no longer merely a struggle for basic survival. As a result the pressure to continually adapt has been taken off and there is no need to get better when just getting by will suffice for the continuation of the species. You can read a fairly scientific discussion of this idea here, although take it with a grain or two of salt since the author Kyle Skottke was an undergraduate at the time the paper was written.

Two main theories concerning g [general intelligence] are the dependent domain and the independent domain models. The domain dependent model has general intelligence as a broad category which is divided into smaller more specific intelligences, including mate selection, cheater detection module, and face recognition module. Under this model, it can be inferred that if an individual’s g is high, then their ability to select and obtain a mate, detect lies, and recognize people’s faces would also be higher. It also follows that someone with a low IQ would have trouble finding a mate and detecting when people were lying.

The independent domain theory states that general intelligence is only one of several psychological mechanisms, along with mate selection, the cheater detection molecule, and the face recognition module that have evolved. It is important to note that in this model, general intelligence is defined as the ability to use deductive logic and abstract thought.

I believe the independent domain model is more realistic since there have been numerous studies showing that the psychological mechanisms of the brain are unlinked. One such study was done to compare the correlation between IQ, which measures g, and the success of individuals in finding a mate, which was measured in terms of marriage. The studies found shown that very intelligent individuals (with IQs above 125, at or above the 95th percentile of the IQ distribution) are the least likely to marry of all the cognitive classes (Kanazawa, 2004). This data suggests that mate selection and general intelligence are unrelated, such as in the field independent model.

~snip~

It is clear that as a species, Homo sapiens exhibits a broad range of intelligences, of which heritability can account for 50 percent. The fact that there are genes which control intelligence provides a platform for evolution and natural selection to act upon. During the early development of the human race, there would have been many more challenges in finding food and reproducing than we face today, which would have made the mechanisms of natural selection much more important. In today’s society, nearly anyone can survive and reproduce, which negates the principles of natural selection, which only function if there are more individuals born than a given environment can support. In essence, since we have effectively eliminated hunger and disease, we have removed any pressure from the environment to keep adapting and become more fit.

You can read a less scientific but much more humorous discussion of that same notion here.

Since human intelligence has come so far since the Stone Age, can we say that because of nothing more than evolution we will all become geniuses in the next hundred years or so? The short answer is – no. Evolution favors only those mutations that are somehow more favorable to procreation. It doesn’t make decisions based on Man’s assumptions of what’s right or what’s wrong or on any sense of moral progress or the greater good.

~snip~

And besides, is higher intelligence truly an asset when it comes to success in the 21st Century? Surprisingly, many high I.Q. individuals don’t do as well as their less bright fellows. There are several reasons for this being the case. One is that employers don’t especially like employees smarter than themselves. The result here is that many individuals who belong to high IQ societies wind up under employed; working at jobs far below their potential. The same is true when it comes to school and marriage. Kids hate geeks who go around screwing up the grading curve and men are often off-put by women smarter than themselves. In fact, it’s been demonstrated (though not often publicized in this PC culture we currently inhabit) that complete and effective communication between those separated by more than fifteen I.Q. points is unlikely. Just think about that. It means there is no way, repeat NO WAY, that people with IQ’s of 115 are ever going to explain to people with IQ’s of 85 why it’s important to graduate high school and not make babies instead.

~snip~

Solving problems today is easier than ever but implementing those same solutions is next to impossible. When taken in combination, the fact that high IQ humans are born less frequently and then selected as world leaders less often points toward a Space Age marked by a decrease in those very same little gray cells that got us out of the Stone Age.

That last bit is the crux of the problem. Even as our technology increases exponentially, our ability to use it wisely appears to have stagnated. We have known about the power of the atom for over a century and have been able to physically unleash it for decades. But instead of using this discovery to figure out how to provide clean and nearly unlimited energy for all of humanity which would have gone a long way towards ending ceaseless wars over resources, it was used to build weapons that threaten to devastate civilization altogether. Now we have thousands and thousands of nukes but not one fusion power plant and we won’t see one any time soon either as fusion power is a few decades away – just like it has been since the 1950s. As a species, that doesn’t exactly show a whole lot of intelligence.

So, while humanity has managed to raise itself out of the mud, for the foreseeable future we may be doomed to just muddle along no matter how big the old noggin becomes.

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48 Comments leave one →
  1. cometman permalink*
    November 23, 2009 11:03 am

    Of course if we really fuck things up on our little blue marble, which seems pretty likely at this point, maybe the nerds will become more important again after all.

  2. cometman permalink*
    November 23, 2009 12:52 pm

    On a related note, can’t somebody just make Caribou Barbie go away?

    As the faithful wait in line in small towns across the country (some for more than a day) to see Sarah Palin on her book tour, the question of whether the US is deprived of a competent political class or gets the leadership it both deserves and truly desires seems as pertinent as ever.

    ~snip~

    In her world, Ivy League is a slur; cities are not the “real America”; and those who know the price of arugula but cannot handle a rifle are not to be trusted. Palin is the antithesis of an aspirational figure. Her supporters love her not because they want to be like her, but because they already are like her.

  3. cometman permalink*
    November 23, 2009 12:57 pm

    As we post more and more here, the persistence of my memory begins to disintegrate. Did we already talk about this new movie on the financial meltdown- American Casino? Anyway, there’s the link to the website and here’s a brief review.

    • Stemella permalink*
      November 23, 2009 1:25 pm

      I don’t remember this flick being mentioned here before. Looks like a good one. In that interview of Klein, Stiglitz etc I linked to yesterday, they discussed how the foreclosure trends in the country are like a slow motion Katrina. This morning I saw an article about Buffalo on Reuters that used the same theme.

      “Tour de Depression” of Buffalo’s slow-moving Katrina

      Meanwhile the Obamas are planning their soiree State Dinner for 400, black tie only and only the finest in food and entertainment, and I can’t help but think of Bush and McCain sharing Cake while NOLA flooded. Obama’s response to this crisis is equally ineffectual and detached.

      • cometman permalink*
        November 24, 2009 9:20 am

        I just had a chance to watch that Klein/Stiglitz interview. They all made very good points about where the problems lie, including de Soto who I hadn’t heard of before. I liked the point he made about the documentation of property and how the shadow banking system that developed got away from that. If you are concerned about inequality, you still need documentation so you know just how unequal it is. They seemed to be talking past each other a little bit about whether the documentation, regulation, or enforcement was the biggest issue but they did seem to agree that all of those things were necessary for a properly functioning economy. Very good discussion. Of course it’s a year after that discussion now and we still don’t know which banks hold what bad assets.

        I got to see what’s left of the Ninth ward in New Orleans first hand several weeks ago and it was really sad to see. Buffalo looks very similar judging by the pictures in that article. In Buffalo’s case I’m sure there are many reasons why the city has fallen on hard times over the years and at this point I doubt the city is going to be repopulated anytime soon. Since we’re in dire economic straits, why not re- or un-develop areas like that? Those areas are ones where I would favor eminent domain if it were done properly. Since nobody even wants to live there, why not pay off the owners of the crumbling property, giving them a financial boost for land that appears pretty useless. Then put people to work razing the property and turning it into something useful. Not sure if it could be turned back to farmland or not, but even turning it into a park or letting it go wild would be better than a bunch of rotting houses. Maybe a wind farm. Anyway, those are just some thoughts off the top of my head but with a little forethought I’m sure something useful could be done there, but that seems to be in short supply with today’s governments.

  4. cometman permalink*
    November 23, 2009 1:09 pm

    Pretty sure we have talked about The Census of Marine Life before, but they have some new information out. Here’s the press release about their latest deep ocean discoveries. Some news about our friend the dumbo octopus in there as well as this interesting little tidbit:

    On a 2007 voyage in the Gulf of Mexico by COMARGE explorers:

    * At 990 meters (~.6 miles): A solitary tubeworm (formally known as Lamellibrachia), in what looked like ordinary surroundings. After a robotic arm lifted the worm from a hole in the Gulf floor, however, crude oil streamed from both the animal and the open hole. The “wildcat” tubeworm had hit a gusher and was dining on chemicals from decomposing oil.

    Lots of cool pics at both of the above links.

    • Stemella permalink*
      November 23, 2009 1:34 pm

      Marine biologists are strange people ;) Cute dumbo? New dumbo? Jumbo dumbo? haha

      Jumbo dumbo, our new overlords …

      Interesting about the wildcat. I wonder if they could be employed to help with oilspills?

  5. cometman permalink*
    November 23, 2009 1:17 pm

    Interesting graphic from zerohedge on why our money is worthless. Got a chuckle out of the “We are fucked” tag he used for the post.

  6. Stemella permalink*
    November 23, 2009 1:19 pm

    I have believed for some time that our brain sack size has not been as useful to us that the text books have told us. So called primitive man, the hunter and gatherer, expended far less energy in acquiring his and her food, shelter and all around sustenance and was a far better neighbor in his and her ecosystem.The ancestors were also far less wasteful that we their descendants.

    I tried to look up a book I read about this topic many years ago now and couldn’t find it. I did come across this general principal of energetics, though, which summarizes where I think we should be leaning if we are going to survive as a species. We need to adopt a more systematic approach, first dumping the unsustainable exploitative and destructive systems that have put us where we are today. As I’ve mentioned before, I tend to go with smaller is better when it comes to organizational structures.

  7. cometman permalink*
    November 23, 2009 1:22 pm

    Yikes – IMF warns second bailout would ‘threaten democracy’.

    Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.

    “Most advanced economies will not accept any more [bailouts]…The political reaction will be very strong, putting some democracies at risk,” he told delegates.

    ~snip~

    Mr Strauss-Kahn said that while the global economy had made “remarkable” progress in exiting recession, and was on the cusp of recovery, it remained “highly vulnerable” to shocks.

    Of course, all that assumes we have a democracy to begin with. I’m not so sure about that.

  8. Stemella permalink*
    November 23, 2009 2:37 pm

    William Black calls out the Obama Wrecking Crew, suggesting:

    1. Can the Wrecking Crew. Fire the senior leaders of Bush’s and Clinton’s financial Wrecking Crews and stopping treating them as financial experts. President Obama should not reappoint Bernanke as Fed Chairman. He should dismiss Geithner and Summers and cease to take any advise from Rubin. Replace them with the Reconstruction Crew — people with a track record of getting things right and being effective economists, regulators, and prosecutors. Members of Bush’s financial Wrecking Crew run far too many regulatory agencies, often as “Actings.” They can, and should, be replaced promptly.

    2. End “too big to fail.”

    3. More white-collar watchdogs.

    4. No more executive compensation looting.

    5. Kill TARP and PPIP. Use the funds to help honest homeowners that would otherwise lose their homes because of predatory loan terms.

    6. Make the Federal Reserve System public.

    7. Defeat any proposal to make the Fed the “Uberregulator.”

    8. Ensure a robust CFPA. Sever the Consumer Financial Product Agency portion from the broader (and deeply flawed) regulatory reform bills in the House and Senate and adopt it into law. Revise the broader bill to strip out its many anti-reform provisions.

    9. End the waste of long-term unemployment. Anyone able and willing to work should be employed by the government as an employer of last resort and should help repair our crumbling infrastructure. Paying people to do nothing or allowing them to become homeless (the status quo) is an insane system.

    10. Adopt a250 billion revenue sharing program.

    • cometman permalink*
      November 24, 2009 9:28 am

      Sounds exactly right to me. And #9 speaks to what I mentioned above about fixing up some of our run down areas. With 10-20% of the population out of work, I’m sure the government could find many people willing to work to reclaim areas like Buffalo, Detroit, etc. Obama’s stimulus is not sufficient because it doesn’t put people to work directly like FDR’s programs did, instead it just throws money around and hopes that will create jobs somehow.

      • Stemella permalink*
        November 24, 2009 10:05 am

        A few months ago I read about programs established in Michigan and Ohio and probably others now among the Rust Belt states, that were doing just as you suggested. Abandoned residential and even commercial properties were being dozed and land reclaimed.

        So much of that land used to be arable. It could take a while due to compacting and topsoil loss, but in time it could be converted to crops and orchards to help reduce food costs for those now limited former city centers. Basic open space is always good too. The birds and critters appreciate it.

        I am not hopeful that the Obama people will do the long term foundational work required to rebuild the American workforce. They’ll do something superficial that seems expedient for the purpose of elections, but the long term plan will not exist. They’re kickin’ it down the road, just like their predecessors. Cowards and tools.

  9. Stemella permalink*
    November 23, 2009 6:45 pm

    I saw a story a few days back that the charges against a Blackwater guard for the 2007 massacre of civilians in Iraq – US prosecutors have asked for charges

    against one of five Blackwater security guards accused of killing up to 17 unarmed Iraqi civilians to be dropped.

    No reason was given for the move to dismiss charges against Nicholas Slatten, of Tennessee.

    Tonight I ran across this new piece from Jeremy Scahill about Blackwater’s Secret War in Pakistan

    If there is one quality that has defined Blackwater over the past decade, it is the ability to survive against the odds while simultaneously reinventing and rebranding itself. That is most evident in Afghanistan, where the company continues to work for the US military, the CIA and the State Department despite intense criticism and almost weekly scandals. Blackwater’s alleged Pakistan operations, said the military intelligence source, are indicative of its new frontier. “Having learned its lessons after the private security contracting fiasco in Iraq, Blackwater has shifted its operational focus to two venues: protecting things that are in danger and anticipating other places we’re going to go as a nation that are dangerous,” he said. “It’s as simple as that.”

    As I read from a commenter on ZH today regarding the story you linked on the dollar’s demise –

    “We are so beyond fucked – we won’t even be able to catch a bus back to fucked!!”

    • cometman permalink*
      November 24, 2009 9:29 am

      Haha! That last part sums up the overall situation very well.

  10. cometman permalink*
    November 23, 2009 8:32 pm

    Here are a couple more videos in the same series as that Carl Sagan one you posted a while ago.

    This one is brand new today I think.

  11. Stemella permalink*
    November 24, 2009 8:07 am

    Relating to the evolution of our brains and associated skills,

    How our brains learned to read

    Dehaene calls this the “neuronal recycling hypothesis”, which he enjoys announcing to considerable fanfare as a “novel” solution to the reading puzzle, though many neuroscientists have turned to exaptations to solve such mysteries. He sees the hypothesis as staking a middle ground between tabula-rasa and hard-wired-determinist views of human nature. The neuronal recycling hypothesis is the idea that “human brain architecture obeys strong genetic constraints, but some circuits have evolved to tolerate a fringe of variability”, Dehaene writes. “Part of our visual system, for instance, is not hard-wired, but remains open to changes in the environment. Within an otherwise well-structured brain, visual plasticity gave the ancient scribes the opportunity to invent reading.”

    Dehaene speculates that our reading ability is connected to our ancestors’ reading of animal tracks in hunting.

    A further tidbit. Socrates was illiterate! :)

    • cometman permalink*
      November 24, 2009 9:50 am

      That last part questioning whether reading will become obsolete or not reminded me of “Rainbow’s End” by scifi writer/computer scientist Vernor Vinge. The book is set in the not-too-distant future and everyone has smart clothing or contact lenses and is wired into the internet at all times. A lot of the economy is devoted to mining data, gathering information, or producing entertainment and those who succeed are basically those who can blog the most effectively, ie those who can use the media at their fingertips to present the information a client wants. You get a message on your contact lens monitor that somebody needs a video presentation on the fluctuations of commodity prices in Eastern Europe for example and you pull together various media, put the presentation together and send it off and your account gets credited for the job. All of it takes just a few minutes or less. Vinge touches on that concept a bit in this discussion of his book.

      “These people in ‘Rainbows End’ have the attention span of a butterfly,” he said. “They’ll alight on a topic, use it in a particular way and then they’re on to something else. Right now people worry that we don’t have lifetime employment anymore. How extreme could that get? I could imagine a world where everything is piecework and the piece duration is less than a minute.”

      • Stemella permalink*
        November 24, 2009 10:14 am

        Seems like those tasks could easily be outsourced to robotics. Human brain power already is and will become ever more obsolete.

        As to people with attention spans of butterflies; I have met many of them, multitudes of the 18-20 yr olds at the nearby University.

    • artemis54 permalink
      November 24, 2009 12:41 pm

      The animal track thing sounds a little out there. There might have been a lot more to be “read” than animal tracks. Aseesing the condition of fruit without having to climb it, for instance, or cross the stream to get at it.

      This whole thread is interesting to me as I am considering buying a Kindle, but I just don’t know. The plus side is largely just a matter of space, and the fact that my back isn’t going to take many more times moving house.

      But it ain’t Powell’s, is it?

  12. cometman permalink*
    November 24, 2009 8:12 am

    Looks like Greece’s economy isn’t doing so hot either. Interesting that the statistics cited about the budget deficit and total public debt as percentages of GDP are very similar to those in the US if I remember correctly.

    The newly-elected Hellenic Socialists (PASOK) of George Papandreou confess that the budget deficit will be more than 12pc of GDP this year, four times the original claim of the last lot.

    ~snip~

    Brussels says Greece’s public debt will rise from 99pc of GDP in 2008 to 135pc by 2011, without drastic cuts.

    Pretty sure our deficit is around 10% of GDP and our debt is close to 100% of GDP and will be more in a year or two.

  13. Stemella permalink*
    November 24, 2009 8:26 am

    A couple of music related stories

    Composer reinvents the piano Dear Santa. Me likey.

    Where Music Meets Science

    • cometman permalink*
      November 24, 2009 11:49 am

      Thanks for those. I’d love to see that opera about Kepler! And that piano is really cool. Trying to incorporate non-western sounds reminded me of a band I heard about a little while ago called Slavic Soul Party. It’s kind of a blend of American jazz and eastern European folk music with some other stuff thrown in too.

      And this one featuring some sort of mutant carnivorous tribble was pretty good too.

      • Stemella permalink*
        November 24, 2009 12:12 pm

        mutant carnivorous tribble — otherwise known as Tready reanimated with a vengeance. :-P

        What an odd subject for a music video. Fun music, though!

  14. Stemella permalink*
    November 24, 2009 10:22 am

    Just lovely

    U.S. pitches unique F-35 fighter jet to Israel

  15. cometman permalink*
    November 25, 2009 8:41 am

    Another good article from Robert Scheer on the raw deal the taxpayers got with the bailout. Not too much new in there but it does seem that Scheer has taken Matt Taibbi’s suggestion for Blankfein’s new nickname.

    He concludes that contrary to popular belief, those boatloads of money Lloyd “God’s Work” Blankfein (I’m officially calling for the systematic insertion of that nickname into any reference to Blankfein from now on) and his crew have made this year have not come from the bank’s ingenious trading decisions.

    Here’s Scheer:

    …the same folks who are most culpable wrote the laws that made this, and the other scams at the heart of the banking collapse, perfectly legal. And guess what? They’re back at work in the government, writing the new laws that will, they claim, prevent us from being had once again. As a telling example of that process at work, check the official response of the Department of Treasury to the devastating report by the special inspector general for the Troubled Asset Relief Program (TARP), Neil M. Barofsky, titled “Factors Affecting Efforts to Limit Payments to AIG Counterparties.” The main factor was that Timothy Geithner followed the lead of Goldman Sachs CEO Lloyd “I’m Doing God’s Work” Blankfein in crowding the lifeboats with bankers.

    Barofsky is one of the very very few people in government even trying to hold these crooks accountable and he isn’t buying Geithner’s bullshit for one second.

    Geithner, now treasury secretary, was previously the president of the Federal Reserve Bank of New York (FRBNY), where he negotiated the deal to pay Goldman Sachs and the other top banks in full to cover their bad bets on securitized mortgages. Barofsky’s report concluded that Geithner’s scheme represented a “backdoor bailout” for the financial hustlers at the center of the market fiasco. Noting that Geithner denies that was his intention, the report states, “Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions—indeed, the very design of the federal assistance to AIG—was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties.”

    So when is Obama going to start listening to him instead of clowns like Timmeh?

  16. cometman permalink*
    November 25, 2009 8:54 am

    The Brits are leaking again, telling us what anyone who was actually paying attention already knew – Saddam options ‘discussed a year before Iraq war’ and Iraq report: Secret papers reveal blunders and concealment.

    I found those by following some links in this excellent naked capitalism post – Instead of Fixing the U.S. Economy or Creating Jobs for AMERICANS, Obama Will Spend The Money in Afghanistan and Iraq .

  17. cometman permalink*
    November 25, 2009 9:23 am

    Another post from naked capitalism discussing the rapid rise in gold prices and how the dollar is so worthless that currently it actually costs money to hold on to them.

    As part of the quantitative easing regime, the Fed has so debased the financial system that dollar debt is paying negative interest rates once again as it did in the 1970’s.

    In other words, it is costing money to hold dollar financial assets because of the mispricing of risk being engineering by the G7 central banks.

    Lots of libertarian philosophy in there, blah blah blah, but the main reason I link to this is because I keep seeing people commenting on financial sites that they are doing just great because they’ve invested in gold recently and I have a question about that. I’m sure that many people who own gold actually go somewhere and physically purchase it and have the actual gold. But I don’t believe that’s always the case. If all you actually have is a line in an investment portfolio somewhere that says you bought x amount of gold, how can you be sure that you are the only one who actually owns this gold and the same gold hasn’t been sold a few times over? We’ve already seen rampant naked short selling where stock certificates are never actually delivered and the market gets flooded with counterfeit stock. So how can we be sure something similar isn’t happening with gold?

    There is obviously a huge demand for gold right now and the dollar isn’t doing so hot. Now the dollar tanking is deliberate to a great extent since some inflation allows debts to be paid off easier, but the oligarchs are playing a risky high wire act because they don’t want the dollar to tank too much or inflation to be too high. The banksters are doing everything in their power to keep the system afloat and make sure there aren’t bank runs. So flooding the market with fool’s gold would seem to serve their purposes – they can profit from brokering the growing number of trades in gold and at the same time it keeps the price of gold from rising too high and the dollar from sinking too fast.

    Just speculation on my part but I definitely wouldn’t be surprised if some of these gold investors wind up holding pyrite instead. If that’s the case, remember you heard it here first!

    • cometman permalink*
      November 25, 2009 9:38 am

      On a related note, it looks like we may have reached peak gold too – We’re running out of gold.

      Gold production will continue to fall, despite a brief boost in 2009 and soaring prices, as deposits are exhausted and new discoveries remain elusive, say miners.

      In terms of production, “2009 is the outlier as far as the trend,” Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, told AFP.

      Overall, “it’s a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year,” said Vincent Borg, spokesman for number one producer Barrick Gold.

      “It sort of goes down about one million ounces every year and our forecast is that it will continue to decline despite the higher price” for gold nowadays, he said.

      Almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain.

      • Stemella permalink*
        November 25, 2009 12:25 pm

        I have an old schoolmate who is up mining gold in Alaska, making a fortune. He isn’t alone and he says its going fast.

        Some people buy gold as jewelry as coinage and as bullion. Others buy it as paper, fools gold, as you mentioned above. You were right, I think, about calling that out as a huge risk.

        Lately I have thought of investing some of my savings in silver coin and bullion, which I could actually afford. Silver isn’t as rare, but is still valuable as an industrial metal and will probably keep its value, which the dollar definitely is not doing.

  18. cometman permalink*
    November 25, 2009 9:44 am

    The FDIC is fucked and there are still plenty more bank failures to come.

    The fund had a negative balance of $8.2 billion at the end of the third quarter, federal regulators said Tuesday. Bank customers, however, should remain confident that their deposits would be protected since most of the amount reflects money that Federal Insurance Deposit Corporation has already set aside to cover the losses from future bank failures.

    Officials of the F.D.I.C. said in October that the deposit insurance fund had been depleted, but the third-quarter report card on the banking industry issued on Tuesday was the first time that hard numbers had been released. Even amid early signs that the economy is recovering, the report suggested that the country’s 8,100 lenders remain in fragile condition.

    In its state of the industry report, the F.D.I.C. reported that banks posted a $2.8 billion gain in the third quarter, after a $4.3 billion loss in the previous period. Meanwhile, the number of “problem banks” that run the biggest risk of collapse increased to 552, from 416 in the second quarter. The number of bad loans of nearly every stripe — credit cards, mortgages, small business and commercial real estate — continue to grow, albeit at a slower pace.

    • Stemella permalink*
      November 25, 2009 12:18 pm

      Calculated Risk has been keeping an unofficial tally of the banks in trouble and their list is well over 500 now too. It is only going to get worse as there are more and more foreclosures in the coming months and years. At least two more years of the housing downturn to go, especially in the burst bubble areas of Florida, California and the Southwest. Meanwhile, all bets are off if there is any kind of black swan event during this period. Proceed with caution.

  19. Stemella permalink*
    November 25, 2009 12:13 pm

    Have a great Turkeyday. May the food be delicious, the liquor tasty and soothing, the conversation and company delightful and the dishes washed by short people.

    Rest, eat and be merry and thankful for what we all do have. Do know though that the pilgrims absolutely sucked!

    • cometman permalink*
      November 25, 2009 12:52 pm

      Thanks and enjoy your holiday too!

      The pilgrims weren’t all bad. Christopher Walken seems pretty nice :)

      • Stemella permalink*
        November 25, 2009 1:56 pm

        Oh my god. That was something else.

        Remarkably, Christopher Walken also went to Burning Man and ate disco biscuits!

        • cometman permalink*
          November 27, 2009 6:28 am

          Haha! That one was even funnier.

          • triv33 permalink
            November 27, 2009 6:58 am

            My grandmother was an avid collector of salt and pepper shakers. She had hundreds of sets. You have opened my eyes to a world of possibilities…I have those shakers. Mwa-ha-ha!

            • Stemella permalink*
              November 27, 2009 11:59 am

              I hope you’ll share what results from this inspiration. Happy Holidays to you, Triv.

  20. Stemella permalink*
    November 26, 2009 8:39 am

    Have the wings of the black swan fluttered in Dubai?

    Dubai defaults on debt

    While American markets feed on Turkey and pray for Black Friday the rest of the world’s markets are freaking over Dubai exposure.

    Banking stocks tumbled on concern about their potential exposure to Dubai. Indeed, the cost of insuring against default by the emirate jumped, with Reuters reporting the Dubai five-year credit default swap being quoted as high as 500-550 basis points. This means it would cost about $500,000 a year to insure $10m of Dubai’s debt. On Tuesday it would have cost about $360,000.

    Greek and Irish government five-year credit default swaps also moved higher as nations with supposedly precarious fiscal positions were punished. In contrast, investors sought out comparative haven assets, pushing the yield on the German Bund down by 7 basis points to 3.17 per cent.

    I wonder what Taleb is thinking this morning?

    Here’s another helpful assessment: Dubai’s financial crash mirrors that of Florida

    • cometman permalink*
      November 27, 2009 10:04 am

      Here’s a little more about Dubai and how the country rose to prominence in the first place – on the backs of slaves.

      Dubai is finally financially bankrupt – but it has been morally bankrupt all along. The idea that Dubai is an oasis of freedom on the Arabian peninsular is one of the great lies of our time.

      ~snip~

      The people who really built the city can be seen in long chain-gangs by the side of the road, or toiling all day at the top of the tallest buildings in the world, in heat that Westerners are told not to stay in for more than 10 minutes. They were conned into coming, and trapped into staying.

      In their home country – Bangladesh or the Philippines or India – these workers are told they can earn a fortune in Dubai if they pay a large upfront fee. When they arrive, their passports are taken from them, and they are told their wages are a tenth of the rate they were promised.

      • Stemella permalink*
        November 27, 2009 11:58 am

        There are several good posts about Dubai and the reaction on ZH today. Marla has an especially good one here What Dubai says about capitalism, not much

        and one of her sources for that piece

        Fear and Money in Dubai

        Called Milton’s Friedman’s beach club, built by slave labor akin to Egyptian pyramids. Home to Halliburton and one of Trumps many hideous towers …

        Dubai, in other words, is a vast gated community, the ultimate Green Zone. But even more than Singapore or Texas, it is also the apotheosis of the neo-liberal values of contemporary capitalism: a society that might have been designed by the Economics Department of the University of Chicago. Dubai, indeed, has achieved what American reactionaries only dream of—an oasis of free enterprise without income taxes, trade unions or opposition parties (there are no elections). As befits a paradise of consumption, its unofficial national holiday, as well as its global logo, is the celebrated Shopping Festival, a month-long extravaganza sponsored by the city’s 25 malls that begins on 12 January and attracts 4 million upscale shoppers, primarily from the Middle East and South Asia.

        The depth of the effects of this ripple won’t be known until after the holidays, here and in the Middle East. It remains to be seen if Abu Dhabi or other of the Emirates will bail Dubai out again.

        I see it as a reminder that the system is still clogged and the toxic shit is still plugging all the tubes of the globalized financial sewer system. Dubai is a reminder that the US toilet can overflow again on a moments notice. This country and the world markets need real plumbers and they aren’t named Tim, or Larry, Ben or Barry. One might be named Joseph, but he certainly isn’t a Joe.

  21. cometman permalink*
    November 27, 2009 9:07 am

    What to make of this? – Lobbyists pushed off advisory panels

    Sounds pretty good at first:

    Hundreds, if not thousands, of lobbyists are likely to be ejected from federal advisory panels as part of a little-noticed initiative by the Obama administration to curb K Street’s influence in Washington, according to White House officials and lobbying experts.

    ~snip~

    Under the policy, which is being phased in over the coming months, none of the more than 13,000 lobbyists in Washington would be able to hold seats on the committees, which advise agencies on trade rules, troop levels, environmental regulations, consumer protections and thousands of other government policies.

    “Some folks have developed a comfortable Beltway perch sitting on these boards while at the same time working as lobbyists to influence the government,” said White House ethics counsel Norm Eisen, who disclosed the policy in a September blog posting on the White House Web site. “That is just the kind of special interest access that the president objects to.”

    But just how strongly does the president object? Not all that much evidently, because if you make it all the way to the end of the article you find this little tidbit:

    Administration officials remain sanguine, saying the criticism is overblown and arguing that top corporate officers are free to sit on advisory panels as long as they aren’t lobbyists.

    So lobbyists aren’t allowed, but the people who hire them and tell them what to lobby for are. So what the hell exactly is the difference?

    • Stemella permalink*
      November 27, 2009 12:11 pm

      It seems like musical chairs on the Titanic. Switching out corporate influence pushed by people who are registered as lobbyists to corporate officers who are not registered as lobbyists. Those officers are still there to influence on behalf of the same corporations.

      Whenever the Administration remains sanguine, I find reason for suspicion. Their hopey changey sanguine attitude reeks of sanguinarian cepholopodittude to me.

      • cometman permalink*
        November 27, 2009 12:58 pm

        Sanguinarian huh? Don’t tell me you’ve started on those Twilight books :)

        • Stemella permalink*
          November 27, 2009 2:20 pm

          god no! I was thinking more along the lines of vampire squid. I didn’t know that sanguinarian was a word until I googled it. I was originally going for sanguinity, but that’s not a real word.

          Anne Rice cured me of bad vampire novels a long time ago. It is a guilty admission of younger daze. I also admit to having enjoyed a couple of S. King novels too and the occasional People magazine while in laundromats. :P

          • cometman permalink*
            November 30, 2009 7:11 am

            I just saw all the vampire book ads at the link and decided to be a wise acre. And as you know I’m still a big fan of cheesy sci fi novels written by nerdboxes. You can’t read Proust every day, or in my case, ever… :)

  22. cometman permalink*
    November 27, 2009 11:09 am

    Mind candy – dark matter and black hole starships.

    The main problem with a dark matter starship would seem to be that physicists don’t know what dark matter is or if it really exists. But they’re pretty sure about the black holes at this point. Here’s how a spaceship would work:

    To create a black hole, says Crane, you need to concentrate a tremendous amount of energy into a tiny volume. He envisages a giant gamma ray laser “charged up” by solar energy. The energy would be collected by solar panels 250 kilometres across, orbiting just a few million kilometres away from the sun and soaking up sunlight for about a year. “It would be a huge, industrial effort,” Crane admits.

    The resulting million-tonne black hole would be about the size of an atomic nucleus. The next step would be to manoeuvre it into the focal range of a parabolic mirror attached to the back of the crew quarters of a starship. Hawking radiation consists of all sorts of species of subatomic particles, but the most common will be gamma ray photons. Collimated into a parallel beam by the parabolic mirror, these would be the starship’s exhaust and would push it forward.

    Sounds doable. Let me know when it’s finished because I’d like a ride ;)

    • Stemella permalink*
      November 27, 2009 12:22 pm

      I thought that is how cometmen got around the universe already!

      Fuel as you go, magnetic fields generated by scooping up the tenuous gas of interstellar space. ;)

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