Slovenia's crisis

A good post about Slovenia's economic troubles:

Slovenia Is Not The Next Cyprus, but That Doesn’t Mean It’s Not in Trouble

To summarize my take on it:

When the global economic crisis hit, countries like Latvia, Lithuania, and Estonia took immediate austerity measures. This had the short-term effect of deepening the crisis, but their economies recovered swiftly thereafter, and have been doing well since then.

Slovenia, on the other hand, had massive protests against austerity, and so austerity measures were not implemented. Instead, the state used its control over major banks to influence lending decisions in an attempt to prop up the economy. As a result, the share of non-performing loans held by Slovenian state banks rose from 2-3% in 2007, through 5% in 2009, all the way to 30% in 2012. Part of this was corruption, but you don't get to 30% of non-performing loans through corruption alone; not in Slovenia.

Now the banks are broke, and need a rescue, and the suffering endured as the crisis is dragged out will have been higher than if the population had allowed austerity measures to happen when they were needed.

Much like Greeks, the Slovenian people brought this upon themselves. They cherish the illusion of having things for free - so they pay for them much more dearly, later.

Glimpses of rarely observed reality #2

This story was related to me by my wife. I thought I should write it down before the memory becomes too old to be trusted. It may already be too old; it has been 20 years since this experience.

J was 9 years old when this happened, but the story starts before that. J's parents had a close relationship with a neighboring family; the families frequently visited. The neighbor's wife, M, was living with cancer, which she first developed about 15 years prior to these events. She had a strong will to live, and tried everything she could - modern as well as alternative medicine. She had quite a few "bioenergists" working with her over the years. Some helped her for some time; others refused to treat her.

Around the time of these events, M was receiving help from a bioenergist from Rijeka. Apparently, this bioenergist taught M how to tap into his energy if she needed to, when her disease took a turn for the worse. Some time later, the bioenergist died.

When J was nine, she was with her grandmother during a period when M's battle with cancer took a turn for the worse. At about the same time as M was hospitalized, J woke up one morning feeling sick, and needed to vomit. Ten minutes later, she needed to vomit again, and then again, and then again. Her parents were called, and took her to a primary care physician, who sent them to a nearby children's hospital. The hospital performed a variety of tests; blood work, urine tests, gastroscopy, tests for meningitis, a bone marrow sample (which she recalls was exceedingly painful). Meanwhile, J continued to vomit, she could not eat, and needed infusions to stay hydrated. If she did start to vomit, she was unable to stop.

After several days, the hospital was unable to determine the cause of her illness. The diagnosis was "stress". J's condition had improved slightly, most likely due to the infusions, and she was released into the care of her parents. She was nevertheless very weak, and was unable to sit up, even during the trip home. During the trip, she felt nauseated and exhausted. Upon returning home, J was too weak to do anything herself; she could not stand or walk, nor wash herself.

Shortly after, J's parents called a bioenergist. Upon her arrival, she observed that the child had practically no energy left, and that her energy was draining. She began their first session the same evening, "channeling energy" to J through hovering hands. J recalls how, even though the bioenergist did not touch her while hovering, the proximity of her hands felt very warm; but the hands themselves were cold when she physically touched them.

The following day after the bioenergy session, J was able to get up and wash herself. Her condition improved from there, slowly. She was able to start eating again, still vomited from time to time, but increasingly rarely. The bioenergist continued to visit at first; as J improved, she would then visit the bioenergist. After several weeks, J was back to her former self, and apparently healthy.

About a year later, J was in school, when she suddenly fell ill in the middle of a classroom session. She became nauseated, started to visibly sweat, and got a terrible headache. Her teacher was concerned, and called J's parents. J's mother came to pick her up and took her home. J laid on the couch for the rest of the afternoon, continuing to feel sick and nauseous, when eventually, the phone rang. It was someone calling to inform J's mom that M had died, finally succumbing to her battle with cancer.

By the following day, J felt well again, and went to school.


Roland's Roasted Soybeans (Edamame)

Just today, I found this product in our local store (Auto Mercado in San Jose, Costa Rica). If they have it here, they're pretty sure to have it most places in the US:

Never mind the "feng shui" crap. This is the perfect snack!

  • It's tasty in a similar way as roasted nuts (just less fatty).
  • Whereas nuts are largely fat, with some protein, these roasted soybeans claim to have a large portion of protein, with the remaining content balanced between fats and carbohydrates. (And none of the fats are saturated! If it matters.)
  • It's filling! Eating the same amount of nuts just leaves me wanting more nuts (and calories), but eating 30 grams of this is satisfying.
  • At 13g of protein per 130 kCal, I could literally eat this all day, and not depart from my diet!
  • It has a better protein/kCal ratio than most protein bars, without the overbearing sweetness!
  • All dat fiber, it helps you poop! (Probably.)

Yummy. I'm sure most people will continue to prefer their Doritos, but I love to have this as an option for when I would otherwise crave junk food (which for me is all carbs or fat, and no protein).


Bitcoin needs a secure hardware wallet with 3G capability

The greatest obstacle to Bitcoin's widespread acceptance is this:

  • The only way to actually own BTC - as opposed to trusting others to manage them for you - is by installing wallet software on your desktop PC or tablet.
  • The only way to purchase things conveniently online is with a credit card, or an equivalent. Online credit card transactions can be charged back for months afterwards, which makes them useless to buy BTC.
  • Therefore, the only way to acquire BTC on a moment's notice is by going out and paying someone cash, or some other payment method that's final.

So, where you can buy BTC conveniently and on a moment's notice, you can't use it (unless you bring a laptop or tablet with connectivity in that particular location). And where you can use BTC, you can't easily buy it (at home at your PC).

If it was just that, this would be resolved in time as more people start to go around with Bitcoin-capable smartphones, and/or 3G tablets.

But there are more problems:

  • If BTC is widely adopted, most people running Bitcoin wallets on their computers, smartphones and tablets will be hacked. Regardless of the platform. There will be no safety. If there are millions of iPads out there with BTCs on them, they will be hacked.

    Let's not kid ourselves, 95% of the population aren't savvy enough to dodge an elementary exploit, or patch the applications they're using. No one can defend against a zero-day attack.

    Software security will not improve, because 95% of developers can't write secure code in the first place, and even the 5% who can, make mistakes.
  • Because of Bitcoin's irreversibility, even people who trust others to store Bitcoins for them, will have their accounts hacked. This will be done much more relentlessly than with people's bank accounts. The law can chase after fraudulent bank transfers, but they can't chase after stolen BTC.

What would solve these problems is a practical, secure hardware wallet. A rock-solid, mobile-phone-like device - think rugged like a Nokia - dedicated to Bitcoin.

Why not just a regular smartphone?

A mobile phone that has other functionality on it, let alone an open platform for applications, is at least as hackable as an unpatched Windows PC. Put Bitcoins on millions of smartphones like that, and watch them get jacked while you're out shopping. A device with a narrow focus can be made secure. An open platform can't; not with today's platforms.

A secure hardware wallet would be a brilliant way to get Bitcoins into people's pockets. The wallet can come preloaded with Bitcoins! You could preload it at the point of purchase, with whatever amount the customer wants.

The wallets would have 3G connectivity, so they would work anywhere where there's a mobile phone signal. They would be able to discover other nearby wallets, and make it easy to make payments to them.

To keep cost reasonable, the wallet would have to be a "light" Bitcoin client. It wouldn't store the entire Bitcoin transaction history, but would rely on super-nodes to handle that. However, it would store the private keys that control access to your Bitcoins, and would be the only device capable of spending them.

If someone does that, Bitcoins are bound to take off.


Bitcoin overvalued, given its current usage potential?

These are approximate currency emissions for various established world currencies - from large to small:

                        Euro (EUR)  1035 billion USD
                   US Dollar (USD)   850 billion USD
             Chinese Renmibi (CNY)   492 billion USD
                 Swiss Franc (CHF)    50 billion USD
           Australian Dollar (AUD)   32 billion USD
           Costa Rican Colon (CRC)   1.7 billion USD
    Eastern Caribbean Dollar (XCD)   1.1 billion USD

Sources: major currencies, CRC, XCD.

The total number of Bitcoins mined so far, and potentially available for use (not accounting for people who lost their keys), is nearly 11,000,000. At $140 per Bitcoin, the current value of Bitcoin emissions is $1.5 billion.

This is larger than the Eastern Caribbean Dollar (used by some 600,000 people, as well as partially in off-shore banking). It is almost as much as the Costa Rican Colon (national currency for some 4 million people).

Does Bitcoin even have 4 million people who have access to it? Does it have 600,000 people who use it on a daily basis? It seems doubtful.

According to the 2010 Federal Reserve Payments Study, in 2009 there were 115 billion of just non-cash transactions in the US:

    Checks        24.5 billion
    ACH           19.1 billion
    Credit card   21.6 billion
    Debit card    37.9 billion
    Prepaid        6.0 billion
    ATM            6.0 billion
    Total        115.1 billion

In the US in 2009, that averages out to about 1 non-cash transaction, per person, per day. I have no estimate for the number of cash transactions in addition.

Meanwhile, the average number of Bitcoin transactions per block right now is 335. That's on the order of 50,000 transactions per day. Drawing a parallel to USD, that's, perhaps... equivalent to 40,000 people regularly using Bitcoin? But with many of those transactions being speculative, due to recent publicity it has received?

Bitcoin has promise, but it has major shortcomings that have not yet been overcome.

If it becomes more successful, those who benefit from the current financial system may act to make exchanges into and out of Bitcoin a lot more difficult - it may become a currency only exchangeable in black markets.

It does not seem to me that a price of $140 reflects real, long-term demand for Bitcoin that's sustainable given the options that exist right now. If you're buying it at $140, you're making a bet that it will be more successful in the future, and it won't run into major obstacles.

That may turn out to be the case, but the more the price goes up, the more it's jumping to a conclusion before it has happened. In other words, a gamble.