Harry Seldon's blog :

iPhone or iPad synchronization with iTunes, iCloud and Outlook

Thu, 10 Nov 2011 11:34:00 +0100

Since I had installed iOS5, when syncing my iPhone with iTunes and Outlook on Windows, I got the error message :
“Unable to retrieve conflict information from sync server. Please try again next time conflict resolver window is presented”
or in French:
“Impossible d’obtenir les informations sur les conflits depuis le serveur de synchronisation. Veuillez réessayer à la prochaine présentation de la fenêtre de résolution des conflits.”

You may have this message because you have activated iCloud on the iPhone, on iTunes, but not on Windows. To solve this you need the iCloud Control Panel for Windows :
Search for iCloud in the Windows search bar. If you don’t have it, you can download it here.
Launch the iCloud program and simply enter you iCloud login / password. Select what you want to synchronize with iCloud (Mail, Contact, Calendars, bookmarks or pictures flow). Apply. Then go back to itunes and sync your iphone or iPad. It should work better but prepare to have some duplicates in your calendars or contacts.

If you have too many duplicates, for instance for your contacts, first make sure you have a backup of your contacts, a backup independent from iTunes. Then one option is to turn off iCloud / Contacts, to delete the iCloud contacts, then to synchronize and finally you reactivate iCloud / contacts and you resynchronize.

One more thing, don’t forget you can directly check what is on iCloud by going to https://www.icloud.com/.

I hope it helped.

Symposium : Tribute to Benoit Mandelbrot at the Ecole Polytechnique

Mon, 28 Feb 2011 21:31:00 +0100

A symposium specific to a tribute to Benoit Mandelbrot will take place at the Ecole Polytechnique on the 17th and 18th of March 2011. Entrance is free but upon registration :

http://events.polytechnique.fr/accueil/hommage-a-benoit-mandelbrot/

Title of the event is “Universalities and fractals”. You can find the absolutely fascinating program at the previous address.
Here are just a few presentations :

Heinz-Otto Peitgen. University of Bremen and Florida Atlantic University « The Mandelbrot Set: Revitalizing Iteration Theory and Popularizing Mathematics »
Luciano Pietronero, Universita La Sapienza, Rome « Fractal Cosmology »
Laurent Calvet, HEC Paris et National Bureau of Economic Research (USA) « Risque extrême et régularité fractale en finance » (Extreme risk and fractal regularity in finance)
Jens Feder, Physics of Geological Process, Université d’Oslo, “Fractals flow and Fracture”
Peter Jones, Yale University « Product Formulas for Measures and Applications to Analysis »

By the way of this blog, I much thank the organizing committee as it seems to me that Mandelbrot was one of the greatest genius of the XXth century. I have been much awaiting this kind of tribute in France. That’s why I will deeply regret for a long time the fact that there is no way I can come on the Friday.

Here is a reminder of the few articles I wrote about Mandelbrot:

Best videos about fractals chaos and Benoit Mandelbrot

Tue, 19 Oct 2010 22:03:00 +0200

Everything you have always wanted to know about fractals without daring to ask.

These two movies about fractals and chaos are amazing.

Fractals: hunting the hidden dimension

In French and in only one part here

The Secret Life of Chaos

Thank you Prof. Mandelbrot for teaching us how to describe nature !

Tribute to Benoit Mandelbrot

Mon, 18 Oct 2010 22:41:00 +0200

Benoit Mandelbrot is, imho, the biggest genius of the XXth century and our time. His work has already technologically changed our world (CGI, cell phone antennas, processors shapes, unerstanding stock market krachs, etc.). But the day, the philosophy, the epistemology, behind his work is understood, the day, the “language of nature” that Mandelbrot taught us, is understood, this day, the world will be a lot more peaceful.

Back in February 2009, I wrote that the celebrity I would love most to meet was Benoit Mandelbrot. I could partially fullfill that dream almost exactly one year ago (on the Sunday 24th of October 2009). While he was in Paris to present the amazing movie Fractals: Hunting the hidden dimension I got the privilege to talk to Benoit Mandelbrot on the phone. I have never posted about that because the talk was quite personal but I guess I will someday. For now, I can say for sure that Benoit Mandelbrot was a great man with an amazing kindness and a very nice sense of humor. He was so kind to tell me to call him after I sent him an email. And on the phone, when I asked him why he was not giving more conferences, he answered me : “you know, I am old, most people think I am already dead.”

Well before that encounter I grew up reading Mandelbrot’s books, among them “The Fractal Geometry of Nature”. Prof. Mandelbrot, I already miss you.

About memories, here is a best of the posts I wrote about fractals, Benoit Mandelbrot, chaos and controls. The first article was a short portrait of Mandelbrot where I campaigned for him to have the Nobel Prize in ALL categories : economy, physics, medecine (biology), chemistry, and even litterature and peace.

If you wish to pay a tribute to Benoit Mandelbrot, please, feel free to do so in the comments.

Children making a snow battle under a magnificient fractal tree.

Benoit Mandelbrot, father of the fractal theory, has just died

Sun, 17 Oct 2010 11:06:00 +0200

Benoit Mandelbrot is leaving us way too soon, even at 86. There is still so much to do to educate people about fractals.

I got the incredible luck to speak to him on the phone almost exactly one year ago (on the Sunday 24th of October 2009). He was still in good shape and he had quite a lot of projects. Among them, he was preparing a book of his memories. I hope he had the time to finish it.

I am shocked by this news.
All my thoughts go to his familly.

In an interesting but sad coincidence that life can do, I met this current week Nassim Nicholas Taleb who is, in some sort, Mandelbrot’s disciple.

The king is dead. Long live the king.
Mandelbrot is dead. Long live Taleb.

For more information, see the links given by the message sent by the Finance and Mandelbrot Facebook group :

Philippe Herlin October 17 at 10:01am R.I.P. BENOIT MANDELBROT, 1924-2010

“He Gave Us Order Out of Chaos” — R.I.P. Benoît Mandelbrot, 1924-2010, Wired
http://www.wired.com/geekdad/2010/10/he-gave-us-order-out-of-chaos-r-i-p-benoit-mandelbrot-1924-2010/
Benoît Mandelbrot, Novel Mathematician, Dies at 85, New York Times
http://www.nytimes.com/2010/10/17/us/17mandelbrot.html?_r=2&partner=rss&emc=rss
Le mathématicien Benoît Mandelbrot est mort, Le Monde http://www.lemonde.fr/carnet/article/2010/10/16/la-mathematicien-benoit-mandelbrot-est-mort_1427385_3382.html

—
Finance & Mandelbrot
http://www.facebook.com/group.php?gid=53108760302

My best jokes about the French Football Team

Tue, 22 Jun 2010 23:48:00 +0200

I have already tweeted these joke but here is a summary:

If you want to see Blues who run and are joyful see the Smurf trailer : http://yhoo.it/blOxoh

The French team on strike? Well they have been on strike for 4 years!

American joke : what is the shortest French joke ? French resistance. At least Anelka is fighting against Domenech, waiting for the landing…

Domenech is the Kerviel (or Madoff if you prefer) of the French football.

Domenech / French Football Federation is to football what Kerviel / Societe Generale is to finance.

The Blues is a very nice example that the lack of control leads to chaos.

The state of natural catastroph is declared for… the Blues (there are heavy flooding in France).

Let’s hope that Laurent Blanc will clean all that whiter than white (blanc means white in French, no other meaning intended).

Today, I got fired for saying aloud what everybody thinks silently about my boss. FML Nicolas A. (FML = Fuck My Life see also this website for a good laugh).

At last, the football spill is finally closed for the French team.

Why this disaster of the French Football team?

Tue, 22 Jun 2010 23:29:00 +0200

To non French Football fans, here is an exchange with a friend about the mess in the French football team.

Message 1
First : Sorry for all this mess !
Second, notice that all of this is not so surprising. If you check my forecasts, like about all French Football fans, I forecast the very early elimination of France. The reason for that is pretty simple : Domenech is the responsible for all this disaster. Domenech is a scam, a swindler. The only reason he is still there after the other disaster of Euro 2008 is because the leaders of the French Football federations are also swindlers. Domenech is totally incompetent and so is the Federation president.

The rest is only a consequence of that. If anything, it is not bad that Anelka and others dared to rebel. One can only wish they would have done it earlier. Unfortunately, it is almost impossible, it is like fighting a dictature. They could rebel but then they are simply not selected. Which by the way explains the non selection of some other French players far better than the one we had.

Nothing complicated. Only a crazy mafia of friends at the Federation.

PS. I thought France would lose all their games. So, if anything, they actually did a great WorldCup (1 draw) !!

A friend :
The thing is, France deserves better than this. I have no doubt that Domenech was a terrible coach (he refused to shake the hand of the South African coach!) but as you said, the revolt should have happened earlier. To have it happen at the world cup is about as bad as it could get.

Here’s hoping Petit can fix things in time for Euro 2012. Or at the latest Brazil 2014.

Answer
Last revolt was the one of Zidane. He was both a great player and a coach for the French team. Then, the team had to be rebuilt after the departure of the France 98 players. Unfortunately instead of a mason we got a fool.

With all the power in the hands of the Federation and Domenech nobody could revolt. Some tried (former France 98 players, journalists, the public who whistled all the games since 2006) but we were in front of a wall.

Because of FIFA rules, even the government who wanted changes at the Federation was totally helpless.

So when I say the FFF is an oligarchy and a dictature, I mean it.

As a joke, think that the Technical Director is the coach that was eliminated of the World Cup 94 even before the final phase (G. Houllier). He may be worse than Domenech.

Finally let’s hope Blanc (not Petit) will be able to clean all that. I do have some good hopes but unfortunately, if nothing happens at the Federation, things can stay as bad (worse would be very difficult!).

Conclusion:
Escalettes, Houllier, Domenech : just resign. (Anyway Domenech is out)

PS for my faithful readers: “The French team is a very nice example that the lack of control leads to chaos.”

PPS My pronostic for the final winner is Argentina. Entonces, vamos Argentina !

Controls vs Chaos, a simple illustration

Sun, 14 Feb 2010 20:29:00 +0100

A visualization of chaos is given by fractals. I showed you the pictures of fractal trees taken during a walk at the Parc de Sceaux after a snowfall in Paris. But I had taken a few more pictures of the very beautiful French garden of this Park.
A French garden (“jardin à la française”) is a nice illustration of control. Basically, the gardener controls the shape of the trees. The proximity of the natural trees with their fractal shapes and the gardened trees allowed me to take great pictures that show this contrast between chaos and control.

Let’s begin with my preferred one:

I love the contrast between these cute spherically pruned trees and the majestic naturally shapped oaks behind. Notice that the apparent complexity of the fractal shape of the tree does not imply it is very difficult to prune a tree. It is more the size and the hardness of the branches that will decide how hard it is to prune the tree into a round shape.
Which tree shape is complex, the natural fractal shape or the artificial round shape? In terms of time, to accurately describe the shape, it is quicker to draw a circle than a fractal, so the circle is much simpler.
In terms of work to obtain the shape, it is the opposite. To get the fractal shape all you need to do is let nature do its job (with simple algorithms). To get a nice spherical shape you will need to prune the tree regularly. It is thus complex to get simple shapes.
Pruning a tree might not sound a complex process. However, the complexity comes from the fact the gardener will want to minimize his work on each tree. He will want to know the minimum frequency at which he needs to prune each of his trees. When in the season, which branch length (according to the tree halth), which tools, that makes many questions that complexify the control algorithm.
So yes gardeners as many other people do optimal control engineering without knowing it. Each time you ask yourself a question such as at which frequency should I do this, you are asking you the central question of control engineering. Too slow and you don’t get the performance you want, too fast and you overwork, you overconsume your energy.
A key factor of success is to do things at the good frequency. Unfortunately, this optimal bandwidth is complex to obtain.

To get back to the simple vs complex question, the key of the simplexity paradox lives in these points:

A simple natural algorithm leads to a complex shape.
A complex control algorithm leads to a simple shape.

More generally, we can sum this up like explained in this figure:

Notice that the line from nature to artificial world is continuous. I am not excluding mankind from nature.
Notice also that this separation between a chaotical world and a controlled world is very similar to Nassim Taleb’s separation between extremistan and mediocristan. I had already quickly talked about this description of extremistan and mediocristan as unstable (chaotical) and stable (controlled) systems in a previous post.

Then, here are a few more pictures of the snowed gardened.

Garden with naturally shaped trees in the background

Trees pruned in a conic shape.

Trees pruned in a cubic shape.

Feel free to leave your comments.

How did we get here? Chaos vs God

Mon, 18 Jan 2010 23:07:00 +0100

I love the description given by the BBC for their documentary “The Secret Life of Chaos” (which you can watch here).
As I have written a few articles about fractals, chaos and controls lately, I have added links internal to this blog to the text.

“Chaos theory has a bad name, conjuring up images of unpredictable weather, economic crashes and science gone wrong. But there is a fascinating and hidden side to Chaos, one that scientists are only now beginning to understand. It turns out that chaos theory answers a question that mankind has asked for millennia - how did we get here?

In this documentary, Professor Jim Al-Khalili sets out to uncover one of the great mysteries of science -

how does a universe that starts off as dust end up with intelligent life?
How does order emerge from disorder?

It’s a mindbending, counterintuitive and for many people a deeply troubling idea. But Professor Al-Khalili reveals the science behind much of beauty and structure in the natural world and discovers that far from it being magic or an act of God, it is in fact an intrinsic part of the laws of physics.

Amazingly, it turns out that the mathematics of chaos can explain how and why the universe creates exquisite order and pattern. The natural world is full of awe-inspiring examples of the way nature transforms simplicity into complexity. From trees to clouds to humans - after watching this film you’ll never be able to look at the world in the same way again.”

Notice that this introduction can be sum up by “Chaos vs God” or “Chaotical Design vs Intelligent Design”. However, anyway, one question remains: who created the laws of physics? Or how were created these laws of Physics, if you prefer ;-)

I have often privately said that James Gleick’s Chaos book gives clearer answers than the Bible about our world. Now is the time to say it publicly!

Enjoy the documentary!

The Secret Life of Chaos (BBC 2010)

Mon, 18 Jan 2010 21:24:00 +0100

The BBC aired on Thursday, January 14th an excellent documentary about Chaos, Fractals and Nature. You can watch it right here thanks to YouTube. If you are in UK you can also watch it on the BBC website at this address.

I am glad the BBC helps making these subjects popular and fashionnable more than 20 years after James Gleick’s Chaos book.

Part 1

All parts follow.

Part 2

Part 3

Part 4

Part 5

Part 6

Enjoy!

The fractal Google logo

Thu, 14 Jan 2010 23:42:00 +0100

Thx Pixgeeks for reminding me of this nice Google logo involving fractals.

It was in memoriam to Gaston Julia’s Birthday.

In case I need to precise, the fractals you see on the logo are called Julia sets because the French mathematician Gaston Julia described them first. However, most of my readers already know that, right? ;-)

To say something only initiated people can understand: “The Mandelbrot set contains all Julia sets”. (That is why the fractal on the left is actually the Mandelbrot set.)

You can check all google logos here.

Winter is the enchanting fractal season: Snow and Naked Trees

Sun, 10 Jan 2010 19:54:00 +0100

You probably already know that the snowflake and the tree branches are the canonical examples of fractals.

So, as in Paris we have the chance to have currently a lot of snow, I went to the “Parc de Sceaux” to make these wonderful pictures.
I only regret the sky was not as blue as in Normandy.

Children making a snow battle under a magnificient fractal tree.

Enchanting ghost trees.

Sceaux Castle Forest under the snow.

Sceaux Castle under the snow.
This picture will be the inspiration for a future post. Can you see why?

If you have pretty winter pictures you want to show, you are welcome to link to them in the comments.

Do not hesitate to contact me if for some reason you want the pictures in full size (5 MegaPixels).

Happy new fractal year!

PS: In the first picture the tree is not the only one to be naked, can you see the naked young lady in the picture?

Wow, this naked young lady under the naked tree must be freezing. ;-)

Happy new fractal year!

Sun, 10 Jan 2010 18:50:00 +0100

Picture showing the fractal invariance of scale in a tree. Background is the Battle of Normandy (D-Day) Memorial, in memoriam to the allied forces who liberated Europe from the Nazi yoke, Caen, France.

I wish you to have all your wishes realized. But to be a little more accurate, I actually wish you to precisely know what you want and wish. Because wishes have a much better chance of becoming true if you can clearly formulate them.

That-is-to-say, in order to clearly know what you want, and how you can get it, you will need:

Aims (requirements)
A plan to reach them (control system)
Means to act (actuators)
Means to measure your effort (sensors)
The ability to adapt to your environment and to what you have measured (back to the control system) Notice a good control system does allow you to change your aims as well as your plans along the road. Heading straight into a storm is probably not a good idea…

So, as you follow where I am heading to, yes I do wish you to be a full pilot of your own life, not a passenger. And do not forget “Goals are dreams with a deadline” as one says.

If you find your life is too much of a fractal it might be because you don’t control enough your life. It is normal to perceive the world outside of you as a fractal, with its good and bad news, with positive or negative black swan. But inside of you the way news affects you is very much under you control. The way you behave is under your control. World might be fractal, your mind might not if you master it.
All the fun of life is knowing what you can change and what you cannot.

Be in control of the first thing you can readily control in that world: yourself ;-)

If you are interested in knowing more about how you actually control yourself, check the subject of NLP: Neuro-Linguistic Programmation.

7 lifechanging books about fractals, chaos, nature, philosophy and even finance for the holidays

Mon, 14 Dec 2009 23:52:00 +0100

Mandelbulb by Daniel White

As we are still at the beginning of the holiday season, maybe you haven’t bought all your gifts yet. In that case, here are a few lifechanging books you can offer to your loved ones.
By lifechanging, I mean you will never look at the world in the same way after reading one of these books. There is even a good chance you will find the world a lot more simple after your reading because these books give you keys to the behaviour of nature and mankind.

If you don’t like too much specialized books, you will like these ones because each one of them will speak about several topics among geology, economy, biology, social sciences, and climate.

Moreover, you will find some element of answers for several popular questions of our days like:

How does the climate evolve?
Why are we in the middle of a great economical crisis? (By the way, if you want good new about the crisis)
Why politicians appear to be “all rotten anyway”?
Is the key to success luck or hard work (or both)?
Why species disappear?
Why can’t we predict the weather nor the stock market?
Can Chaos Theory be actually useful to something? (Chaos theory is also about knowing what you can’t predict exactly so that you can prepare for the worst)

So, let’s go to the point, here are these absolutely marvellous books. Notice, they are somehow sorted by order of importance.

The Fractal Geometry of Nature, by Benoît Mandelbrot; W H Freeman & Co, 1982
Chaos: Making a New Science, by James Gleick
The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb (If you have already read it, be sure you have read this post about mediocristan and extremistan)
Simplexity: Why Simple Things Become Complex (and How Complex Things Can Be Made Simple)
The (Mis)behaviour of Markets: A Fractal View of Risk, Ruin and Reward.
Fooled by randomness by Nassim Nicholas Taleb
Fractals: Form, Chance and Dimension, by Benoît Mandelbrot; W H Freeman and Co, 1977

So, in case it was not clear, now you see why my Twitter name is @Fractalharry ;-)

You can propose other books in the comments.

Enjoy your reading.

PS I have linked to Amazon for your convenience but I don’t touch any commission!

Need a Google Wave invite? Just add a (nice) comment

Sun, 29 Nov 2009 17:12:00 +0100

I have got 8 remaining invites for Google Wave. If you want one, just add a (nice) comment below with your email in the email field (not in the comment itself). I will invite you from Google Wave, asap. It will take a day or two before you receive an email from Google that will give you the actual access to Wave.

Once you are surfing the wave, remember, to search for public waves, use this query: with:public. To search for French public waves, use with:public tag:fr.

If you want to create a public wave:

Add public@a.gwave.com to your contact list (press enter even if it tells you the user does not exist)
Create a wave and add this contact.

Enjoy Wave.

For Taleb's Black Swan's Readers, Mediocristan and Extremistan are Stable and Unstable Systems

Mon, 02 Nov 2009 21:37:00 +0100

As a control system engineer and Mandelbrot/Taleb fan, I want to bring this quick clarification (It will be worth a longer post another day):

Extremistan is the world of unstable systems (predicting a final state on an unstable system is a mathematical nonsense and predicting a transient state is computationnally impossible).
Extremistan is the fractal world of Mandelbrot.

Mediocristan is the world of stable systems (you can predict the final state and even the transient if you are good but it is already difficult to predict the transient state for a stable system).
Mediocristan is the Linear / Gaussian Paradise.

My conclusion (1) is that in order to be able to predict a system behaviour you need to be able to stabilize it, that is you need to be able to control it or equivalently speaking to regulate it.
I cannot predict what you are going to do tomorrow. But If I can order you what you are going to do tomorrow, then there is a good chance I can also predict what you are going to do !

Bonus thought
Linear systems are very rare. Most systems are non-linear. But control engineers use and abuse of linear systems. The important reason is that systems can be locally linearized. Then, locally, you can apply linear control tools. You can stabilize your system and because it is stable you remain in the initial local place and you remain stable. That is all the beauty of it. So yes, somehow, linear systems are not as rare as they seem. Otherwise, there would be no aircraft autopilots because aircraft or spacecraft dynamics are not linear systems.
About Economics / Aerospace comparisons, you can also read this post:
2 lessons Economics should learn from Aerospace

(1) (not engaging Taleb, he does not seem much against regulation, for instance he wants companies to be prevented from becoming “too big to fail” but he is probably less regulation prone than I am. I am for instance for a safety authority on financial products like there is an aviation safety authority in charge of certifying airplanes (FAA).)

2 lessons Economics should learn from Aerospace

Fri, 30 Oct 2009 01:04:00 +0100

Let’s imagine that economy is an airplane. This airplane goes through a severe zone of turbulence, transforming the cruise in an heavily uncomfortable bumpy ride. Passengers start to complain, and feel more and more insecure. One of them finally calls the stewardess and asks: “What are the pilots doing ? Can’t they move us out of this unbearable situation ?” “Well… there is actually no pilot in this plane”, the stewardess answers politely. The passenger now gets really nervous, and says “What ??? Then we should run to the cockpit and try to do something before it is too late !”. The stewardess, feeling really sorry, replies with a “Uh, I’m afraid there is no cockpit in this plane, Mister”. And the story ends there, with the krach of the “economy” airplane.

I had read this little comparison a year ago already in a French newspaper. The author was Jacques Attali, a French economist. As a pilot, I have wanted to blog about this since that time.

To be a little more accurate, an analogy would assimilate companies to airplanes and market to Air Traffic Control (ATC). The problem is the market does not control anything. Imagine air traffic without ATC. Air space would be a mess. Aircrafts would collide all the time and basically nobody would trust air traffic. Finally nobody would take the plane. The air traffic system would be quickly dead. Yet, that is what is happening with the economy. Companies crash and collide because they have secant routes and nobody to help them. Economy is a mess. Most of the time ATC helps pilots by guiding them among the traffic and by giving them slots to take off and land. But sometimes ATC prevents pilots from going too fast to their destination because they would compromise safety of other airplanes. Unfortunately companies have no “market controllers” to talk to, hence the crisis.

Economy should learn 2 lessons from aerospace system engineering:

Systems must be controlled.
An airplane is highly unstable. It can fly because it is very actively piloted. Air traffic is unstable too, it is controlled by ATC. In the same way economy needs guidance, navigation and control. To say it differently economy needs regulation.
Systems must be robustified.
Even once an airplane is controlled and made stable there is still a lot of work to do to ensure that it is robust to all kinds of failures, even some non-anticipated failures.
Economy needs safety engineers. Currently there is only one safety engineer for the economy. He is Nassim Nicholas Taleb, the author of the Black Swan and Benoit Mandelbrot’s spiritual son. Else financial engineers behave more like terrorists than safety engineers. OK it is a bit harsh.

I began this post by the first point. So let’s develop now the second point.
An airliner has redundancy by design. It has 3 flight computers (and more). It has 3 fly by wire circuits. It has 3 hydraulics circuits. It has 2 wings (just kidding). It has 2 pilots. To design the airplane there is a whole team of engineers whose only role is to evaluate and improve the aircraft safety. They will verify that the airplane is as black swan proof (rare catastrophic event proof) as it can be. For instance, they will check that in the case of an engine explosion the projections won’t cut all the flight control wires. Obviously, propulsion engineer (in engine companies) will make sure an engine does not explode but, all the same, aerospace safety engineers do not take anything for granted. So they study the worst cases and they robustify the system. Moreover, they also robustify the system without any specific case of failure. For instance, the logic behind having several circuits is as simple as “something could happen”. You do not always need to know the exact failure scenario to robustify the system. Obviously, nothing (and no human pilot) being perfect, there are crashes. However, it is still safer to be in an airplane than in a car.

To come back to business, notice that safety by redundancy is the 6th point in the absolutely excellent article ”The Six Mistakes Executives Make in Risk Management” by Taleb. The mistake is “We are taught that efficiency and maximizing shareholder value don’t tolerate redundancy”. (A blogger sums up the six mistakes here).
If you are a manager, don’t leverage too much your department. Don’t think that each competency must be hold by only one person. Don’t make your best to reduce all redundancies. On the contrary identify your key activities and put redundancy on it. On the short term, reducing all redundancy gives you more profits but on the medium term it leaves you exposed to very easy failures (a sick person, an expert who leaves, etc.).

To conclude I will point out that Taleb loves to compare financial analysts to blind drivers. Here is one of his last sentence: “There were so many wise people around, but whom does Obama pick? The same people who were driving a schoolbus blindfolded, who have now been given a bigger bus.” You can find the citation in this article: Black swan now elephant in the room

Simplexity: Things are a lot simpler than they seem and vice versa

Tue, 20 Oct 2009 21:39:00 +0200

Have you ever heard of simplexity ?

Some systems are a lot simpler than they look like. For instance, let’s consider the shape of a tree. It looks complex, especially if you compare it with a straight line. However, if you have read Mandelbrot or heard of fractals, you know that all you need to draw a tree is a 2 lines pattern, which you repeat a big number of times introducing at each step some light randomness. You can model pretty easily this tree shape. At least you can generate at your will tree shapes. That is typically the way used in computer graphics to generate natural virtual 3D scenes. However, this does not mean you can predict the accurate shape of a tree from its seed.

So, is the tree shape complex or simple? Thanks to Mandelbrot we know now that the shape is a lot simpler than it seems. Associating the notions of predictability and simplicity, the converse is also true: it is more complicated than you could think even if you have heard of fractals. Hence this notion of simplexity, contraction of simplicity and complexity.

Here are a few good books on the subject:

If you know about fractals and chaos, you must be already familiar with that fact that simplicity can bring complexity quickly and easily. But you might not know this term of simplexity.
More generally, each time you think “this thing is a lot simpler than I had imagined at first”, you experience simplexity: in fact, you changed your first impression of overall complexity by discovering the underlying simple principles.

While we are at it. There is a field where simplexity shows all its magnificence: it is in finance. International finance looks complex but there are a limited number of principles behind it. You can even fairly easily model a stock chart. (Even if this model has nothing to do with the actual models used by financial analysts). But even with a good model you cannot predict easily the stock chart of a determined company.
For more info, you can have a look at the Facebook group “Finance & Mandelbrot”.

And at last, because I cannot prevent from saying it again, If you want to keep things simple, then regulate them. Contrary to what you could think, you do not need very accurate models to control a system.

Petroleum industry is too profitable, so what?

Mon, 07 Sep 2009 21:11:00 +0200

Petroleum is even more profitable than finance. Do you need a proof ? This post is extracted from the longer (too long?) post revenues per employee sum up world’s troubles. First, I give you again the chart of revenues and profits per employee of a few top companies

But, maybe you do not believe me when I say that oil is more profitable than finance. Indeed if you look closely at the chart, the profits per employee of Goldman Sachs are 380k$/E while it is only “379.18k$/E” for Exxon. That it is about the same, but still, finance wins.
So, to support my point, let me add other data: (from Fortune 2008 and 2009 - though notice that the results do not change much between both years)

List of the industries generating most revenues per employee
List of the 10 highest paid CEOs Ok the first one is from a finance company (Blackstone), the second one is from a software company (Oracle) but, be seated, “The next seven highest paid CEOs all helm energy companies: Ray Irani of Occidental Petroleum (OXY, Fortune 500), John Hess of Hess Corp (HES, Fortune 500), Michael Watford of Ultra Petroleum (UPL), Aubrey McClendon of Chesapeake Energy (CHK, Fortune 500), Bob Simpson of XTO Energy (XTO, Fortune 500), Mark Papa of EOG Resources (EOG, Fortune 500) and Eugene Isenberg of Nabors Industries (NBR).” (CNNMoney) Shouldn’t we feel sorry for traders who are not working in the oil industry?
25 top-paying companies First one is a law firm (Bingham McCutchen), second one is a Medical Doctor firm (Lehigh Valley Hospital & Health Network), interestingly, the 3rd, 4th, and 5th company are also law firms (Orrick Herrington & Sutcliffe, Alston & Bird, and Perkins Coie). And the 6th one at last is an oil company: Devon Energy “The largest independent oil and natural gas producer in the U.S., Devon pumps half a million barrels of oil a day” (CNNMoney). One word about lawyers and MD: I am really not shocked to see them first because a lawyer or a MD has much more responsibility than an engineer. So even if their job may be in some cases less complex (does not mean easy obviously) than engineering, it is definitely worth more money per person. Back to our subject, Goldman Sachs is only 11th, behind, another oil firm (EOG Resources) and behind sofware companies (among other Adobe Systems).
Best big companies to work for The first one is… an oil company: Valero Energy the Largest oil refiner in North America! And the second one is nothing else than Goldman Sachs! However, notice that the ranking puts a high weight on the size of the company because else in the ranking of the best companies to work for Goldman Sachs is before Valero and that the first company is Google (2007).

Petroleum industry is way too profitable, so what?
Petroleum industry is the most profitable because oil is the most useful thing around. Oil is energy and the world needs energy. There is a high demand for energy so energy should be expensive. OK but this does not explain why oil companies revenues per employee (and wages) and profits are so high.
In fact, wages and profits should be greatly lowered by the expected high cost for unextracted crude oil. Cost of crude oil should appear in the balance sheet of an oil drilling company, and then in all the supply chain. Well, crude oil costs do appear in terms of concessions. But they are way undervalued. As an approximation you can neglect these costs. You can think that current cost of unextracted crude oil is ZERO$. That exactly means that nobody owns it and that reserves are unlimited. In my opinion everybody owns it, just like every natural resource, and it is limited. The market of natural resources (oil among others) should take into account in its pricing process all the natural reserves and not only the extracted reserves.
And to pronounce a taboo word : taxes. Profits from petroleum companies should be more taxed because these profits are not merited. They are not justified by an extraordinary complexity or by an extraordinary innovation. The useful innovation would be to find substitutes to petroleum.
Maybe if, like many, you really hate taxes, one other solution would be to force petroleum companies to highly invest in fundamental research for new energies.

Money is energy and energy is money

Sun, 30 Aug 2009 14:23:00 +0200

When I made the short study about finance and petroleum industries, my main point was to insist on the fact that regulation is much needed for this world. But it appeared that this study was bringing much evidence that money is energy. So I am going to make a shorter post on this particular subject out of the previous post.
Behind the answer ”money is energy”, the question is naturally ”what is money?”

A common answer is “time is money”. But, are you able to buy a travel in time with money? Are you able to buy more lifetime when you have a deadly disease? Not really. When speaking about “time is money”, one thinks that he can buy someone’s work to do his work, so that he has more free time. Or one can buy someone’s work to do more work and earn more money. Good, but what is bought here, is work and work is energy. Besides that, notice that the dimension of energy is proportional to the inverse of the square of time ([E=ML²/T²]). So even if I do not think that time is the best definition of money it is clear that energy, time and money are linked.

In fact, nowadays, people think about money as a mean to exchange goods. This mean is controlled by the government who decides of the value of money. This is called fiat money. But this does not sound to be the best definition of money. The best one - at least from my point of view - is the definition that was used during most of the short man kind history, that-is-to-say “money is price of gold”. In this case, money is called Commodity money.
We know that energy is mass (thanks Albert, E=mc²). So saying money is energy, or gold (mass) or oil (mass) is about the same. Moreover, money, like energy, can be exchanged, converted and transformed. Therefore, defining money as energy includes both definitions: money is something that can be exchanged for products, and the intrinsic value of money is gold.
If you look at the chart in the post about about profits in finance or petroleum industries, fiat money is represented by finance, whereas commodity money is represented by oil industry. The chart shows that oil industry is the biggest money generating industry. Seen the way the economy is working, the closer you are from money the more money you make. In this sense, the chart proves that the best definition of money is its definition as a commodity, and further in the analogy, as energy.
There was commodity money, there was fiat money, now is the time of “energy money”. And today, the best representation for (energy) money is petroleum. So, when a company is pumping free petroleum, it is exactly as if they were pumping free cash. Because petroleum exists in a limited quantity on Earth, because Earth belongs to all people, this cash belongs to all people, else why not make pay for oxygen while we are at it. So there are a bunch of people that are being stolen. I would not say the same about solar energy because it is not limited (at least the limit has not the same order of magnitude as for oil). So if one makes huge profits from selling solar energy, I would not call that stealing.
That being said, this asks the question of how to integrate the internal value of resources in the law of supply and demand? Well, I have no easy answer but if you have a decent proposal I would love to hear from you. And in this case you are probably a good candidate for a next Nobel Prize.

Remember, money is energy and equivalently, energy is money. With this in mind it is clear that in order to bring back order in this world governments need to regulate finance and energy. But essentially finance and energy are one and the same. Governments would not be able to regulate one without regulating the other. For instance the speculation on oil is made by the finance industry (and also by the petroleum companies themselves). So, to forbid speculation on petroleum, governments must act both on the finance industry and the petroleum industry.