Tuesday, June 17, 2008

Fool's Gold

Two states in competition for regional status, both major oil producers, both with drastically different roles on the global stage, Saudi Arabia and Iran have both reacted to near record oil prices today. Saudi Arabia, the pliant, desperate and profligate friend of the US has announced an increase of regular production of approximately 200,000 barrels. It is unknown how much of a dent this will make in market prices, but perhaps the strategy lies in leading the way for other OPEC nations to take similar measures and attack prices as a supply side issue.

However, so much speculation still revolves round the actual causes of the record prices. Some say it’s the weak dollar, increased demand from China and India, even market speculation that has driven prices artificially higher and separating price from supply and demand considerations. It is most likely - as is usual in complex systems - that all factors play some role, with emergence likely occurring between factors (such as a feedback mechanism by which food-miles increase the price of foodstuffs, and currency being made available for basic resources is increased, thus driving the dollar down further exciting the price of oil against US dollar reserves, etc.).

Iranian President Ahmadinejad has almost simplified it for us, calling the price of oil "fake" and the result of political and geopolitical machinations. Strangely, and perhaps a bit frighteningly, his explanation has so far proved one that is at least willing to consider the complex systems explanation for macro-level events, such as setting the global price of oil. Wall street has a tendency to find a narrow angle and exploit it, using one or two factors, but never much more than that, if for no other reason than the fact that complex analysis is time consuming and often blurry at the fringes, and not perceived as a useful model for business. So I must, with a bit of reluctance, give credit to the Iranian prez for doing two things that the Walking narcoleptic is very interested in: 1) Looking at macro events as non-reductionist, structural events embedded within complex systems, and 2) Defying the redctionist tendencies of oversimplified discourse that obscure in the name of clarity.

Remember, truth requires rigour!

Wednesday, June 11, 2008

Khan Younis

We don't need reminders of the cost of war. At the time of this writing, the American economy staggers in the wake of predatory and avaricious finance schemes, and while the high definition chatter bemoans the "blood on the streets" in the gilded halls of Corporate Board rooms, the cries pass silently over the dying inner cities, the withering middle class neighborhoods build on flimsy dreams and too much sweat. While the average American watches decades of wealth slowly disappear, the war machine rages on.

According to recent studies, at least $10 billion dollars has gone completely unaccounted for in Iraq. In the Pakistani Tribal regions, a dozen Pakistani soldiers lost their lives today in a hail of confusion, confusion compounded by the digital fog of instantaneous information, equally agile in deception as truth.

Israel, the nation that receives the largesse of our American generosity, raided Gaza today, resulting in the death of Hadel Afnere, an 11-year-old girl. Surely it was a mistake. One that happens all to often on both sides, on all sides.

Our contemporary economic system depends on factors such as risk management, externalities, hidden costs, and cost/benefit analysis. Taken at a glance, when the system is looked at holistically and with emergent properties accounted for, it doesn't take long to realize that the "endless" war in which we currently find ourselves engaged, is about as bad as business can get.