Monthly Archives: July 2007

On Kurds and Kurdistan

A question from Yahoo! Answers:

Who is Kurdish ? why they do not have country?

An introduction into Kurdish history and culture can be found here:

http://en.wikipedia.org/wiki/Kurds

As to why Kurds do not have a country, the answer is simple: the Turkish government chose not to let it happen. Under the Treaty of Sevre (1920), the imperial Turkish government agreed to allow a trilateral Anglo-Franco-Italian commission to develop “a scheme of local autonomy for the predominantly Kurdish areas lying east of the Euphrates, south of the southern boundary of Armenia as it may be hereafter determined, and north of the frontier of Turkey with Syria and Mesopotamia”. However, around the same time, there was a change in the Turkish government. After some political wrangling, Turkey became a republic. General Mustafa Kemal assembled a new army and proceeded to defeat Armenia in the east and Greece in the west. The new Turkey (with Mustafa Kemal as its president) was able to renegotiate the Treaty of Sevre and re-establish itself as a single nation. The Treaty of Kars (1921) and the Treaty of Lausanne (1923) reaffirmed the Turkish sovereignty over almost all of its pre-war territory, except Mosul and Kirkuk (both of which eventually ended up belonging to Iraq).

Stock market vs. gambling

A question from Yahoo! Answers:

Difference btw stock market and gambling??

well, first of all, I dont know wat a stockmarket is(dont call me dumb) i tried to search in dictionary .com but don’t understand it. and please, tell me some differences.

The difference is that gambling is a zero-sum game (one player’s gain is another player’s loss; players taken together as a group do not win or lose). This is, of course, assuming that there is no house take; if there is, the game becomes a negative-sum game (players as a group lose whatever happens).

Stock market, in contrast, is a positive-sum game (in the long run, players as a group win about 12% per annum in nominal terms).

The causes of World War I (again)

A question from Yahoo! Answers:

1st World War question:?

For people who know about the 1st world war well:

when franz-ferdinand was assassinated, i had thought, well, why would germany want to help Austria hungary to declare war on serbia? yes, she had been ‘throwing her weight around’ previoulsy, but in my history exam i thought that, possibly, if Germany wanted to do this, she could get back at the Triple Entente, by helping fight Serbia, who would turn to Russia for help, and she turn to france and britain… was this the possible plan of the Kaiser? your views please!

Take a step back from the petty squabbles and look at the big picture.

By about 1880, all major European countries adopted the gold standard. Under the gold standard, a nation can expand its money supply only as far as its gold stock allows. To expand its gold stock, a nation must have a trade surplus. So expanding the money supply under the gold standard is only possible if a nation has a trade surplus.

Expanding money supply is the quickest way of ending recessions and thus keeping the population gainfully employed and reasonably happy. But under the gold standard, it is only possible if a nation has a trade surplus, so governments, instead of abandoning the gold standard, started working on ensuring that their nations always have a trade surplus.

In practice, this took the form of pressuring other countries into opening their markets for your exports while keeping imports off your domestic market. The pressure tactics gradually escalated from diplomacy to the threat or war, until everyone was threatening everyone else.

And that’s when Gavrilo Princip fired his FN M 1910… If he didn’t, another “cause” (which, of course, would have as little to do with real problem as the assassination of Franz Ferdinand did) would have been found in a pretty short order…

Inflation and money supply

A question from Yahoo! Answers:

How can inflation be 3 % but the growth in the money supply have increased by 13.8% ?

First of all, where are you getting your data? Between end of May 2006 and end of May 2007, the M2 increased from $6,766.9 billion to $7,215.8 billion:

http://www.federalreserve.gov/releases/h…

which, if I am doing the math correctly, is a 6.63% increase…

However, 6.63% still does not equal 3%, so the mystery remains… 🙂 Let’s try to demystify…

Recall the Hume-Fisher equation of exchange:

MV = PQ

where
M is money supply,
V is money velocity,
P is price level, and
Q is real GDP

Now let’s rewrite the equation:

P = MV / Q

and differentiate it (approximately, of course):

dP = dM + dV – dQ

It is very easy to see that change in price level dP (aka inflation) is determined not only by change in money supply dM, but also by change in money velocity dV and change in real GDP dQ. More specifically to the present-day U.S., inflation is about 3%, growth in real GDP is a little over 2%, change in money supply is just under 7%, so money velocity must have decreased by about 2% (probably as a result of the slowdown in the housing market)…

Outsourcing and manufacturing

A question from Yahoo! Answers:

Are Outsourcings benefits worth the damage to the US economy?

We’ve lost our manufacturing base. We’re losing middle America’s jobs. The quality of what we get is questionable. Some of the products we get are downright inferior if not outright dangerous and the cost savings are not being passed on to the consumer. All the benefits of outsourcing seem to go to Executive Bonuses. I’m not against making money but has this gamble been worth the benefits in how its affected to this country?

Stop reading the popular press; the journalists write what they think the public wants to hear, whether or not it is true. Anyone who professionally studied the manufacturing job loss has come to two conclusions, (1) manufacturing job loss is occurring globally (about 22 million manufacturing jobs were lost globally between 1995 and 2002, with the highest losses observed in… [drum roll]… China), and (2) manufacturing job loss is squarely due to increasing mechanization and automation (between 1995 and 2002, despite the job loss, the world’s manufacturing output increased 30 percent).

This process is very similar to the agricultural job loss that the U.S. has experienced over the years. In 1870, half of the U.S. workforce was employed in agriculture, by 1920, the percentage declined to 25%, currently, it’s less than 3%…

Why is the U.S. the economic superpower?

A question from Yahoo! Answers:

What was it that caused/allowed the United States to become the economic superpower of the world?

The U.S. GDP per capita is not exceptionally high by the standards of developed world; it is, therefore, the sheer population factor that makes the U.S. economy so large compared to the rest of the world.

Before World War I, the U.S. population was about 50% greater than Germany’s; now, it is 250% greater. The U.S. population simply grew much faster than German population. So the answer to your question is rather obvious: immigration and relatively high family fertility…

Forming a hedge fund

A question from Yahoo! Answers:

How do you make a hedge fund or create one?

It depends on who your investors are. There are two types of hedge funds, onshore and offshore. Onshore funds are for taxable U.S. investors and are typically structured as limited partnerships. Offshore funds are for tax-free U.S. investors (such as qualified pension plans and university endowments) and international investors; usually, they are structured as corporations domiciled in jurisdictions that have no income tax (Caymans, Bermuda, etc.)

To form a fund, you will need to engage a specialist law firm, which would prepare an offering memorandum and operating agreement, file requisite paperwork with appropriate governments, etc. For an offshore fund, you typically retain two law firms, one in the U.S., another offshore.

Once your fund is formed, you will need to select a prime broker. The choice of broker will depend on how much money you have under management (some brokers would gladly work with a $1M fund, others would have a $20M minimum) and the instruments you plan to trade.

Normally, hedge funds also have independent administrators who verify fund’s performance and send statements to investors and auditors.

What is a privateer?

A question from Yahoo! Answers:

What was privateer?

Basically, a pirate turned mercenary. The word was used to designate both the vessel and its captain. Between 1500 and 1800, all significant naval powers employed privateers. Privateers attacked military and civilian targets belonging to their employer’s enemy and pillaged them for profit (or received monetary rewards from their employers for destroying specific targets). Normally, privateers were not under any naval command and were by and large free to do what they pleased.

Most European countries abolished privateering in early 19th century. The Paris Declaration of 1856, signed by most European governments, created an international law forbidding privateering.

The last episode of large-scale privateering occurred during the Franco-Prussian War of 1870, when Prussia created a “volunteer navy” of private ships eligible for prize money. However, unlike classic privateering, the “volunteer navy” sailed under a centralized naval command, and its members were required to adhere to regular naval discipline.

Acquiring Sybase DBA skills

A question from Yahoo! Answers:

I want to become sybase sql DBA. i have 15 years prog exp in cobol.Can i learn through e-learning.?

There are really two questions here… Can you learn the DBA skills if you are an experienced programmer? Absolutely, if you have access to a live system you can play with. But do you have a live system with which you are allowed to play? If you do, there is no problem. If you don’t, you will need to set up your own. And this is the real problem. Unlike MySQL, which is free, or Microsoft SQL Server and Oracle 10g, which have free versions of their products (they are fully functional, but have restrictions on the amount of memory they can address and/or the amount of data they can manage, which still makes them suitable for DBA training), Sybase’s Open Server Development and Testing edition costs $7,500…