Six Mega Trends – 2018

“If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people.” – Confucius Charting global mega-trends is perhaps a fool’s errand, but there is order in the fractal universe – if you know where to look. Certain historical currents run strongly and are perhaps not immediately apparent, but nevertheless their impact will be felt in 2018 and beyond. 1. Insurance and Climate Change Zillow recently reported that $400 billion in Florida real estate values could be at risk from climate change by 2100. Property insurers will not be willing to insure real estate unless rates are substantially raised. Homeowners will naturally lower coverages to fit their budgets. Many will move away. Behaviors will change. Meanwhile many homeowners whose homes were flooded by Hurricane Harvey have no flood insurance – they cannot afford it. But a wealthy owner of a $2 million home on Bird Key in Florida gladly pays $25,000 a year for that same flood insurance. That owner knows their claim will likely be in the hundreds of thousands, so the federal flood ‘insurance’ subsidy is a bargain. Right now insurance rates are set on arbitrary vectors, such as zip codes. But risk analysis and big data will fine tune these methodologies and homeowners at the greatest risk from climate change will face enormous insurance rates – many will move. These mismatches in insurance coverage and uneven federal flood insurance subsidies will ultimately be reflected at the ballot box, changing political behavior in favor of working to control and plan for climate...

The Uncertainty Principal

The Uncertainty Principal was first articulated in 1927 by the German physicist Werner Heisenberg. It states that the position and the velocity of an object cannot both be measured exactly, at the same time, even in theory. The very concepts of exact position and exact velocity together, in fact, have no meaning in nature. Only with exceedingly small masses of atoms and subatomic particles does the product of the uncertainties become significant. “Any attempt to measure precisely the velocity of a subatomic particle, such as an electron, will influence it in an unpredictable way, so that a simultaneous measurement of its position has no validity. This result has nothing to do with inadequacies in the measuring instruments, the technique, or the observer; it arises out of the close connection in nature between particles and waves in the realm of subatomic dimensions.” But in the world that is our reality we have ‘observed’ what seems to be the Uncertainty Principal at work when buyers circle a company that may be in play as an acquisition. The very knowledge that buyers are ‘observing’ a corporation as a potential acquisition can cause the target’s ownership to change their behavior. The most common question I receive once an offer has been tendered for a company is, “What should we do now?” The correct answer is that ownership should run their business as they always have, but in practice this often isn’t the case. In one case a private seller injected personal cash into the business to meet cash-on-hand requirements, which in turn influenced the purchase price upwards based on the EBITDA multiple being paid. Once it is clear that...

Giants

Alfred Stieglitz posing in front of a painting by Georgia O’Keeffe, as taken by Ansel Adams, New York City, 1939, as photographed at the Booth Western Art Museum in Cartersville, Georgia,...

Spooky Action at a Distance

By Richard L. Wottrich, CEO and Senior Consultant, International Services, July 29, 2017, Atlanta USA  Code Talkers When the U.S. entered World War I, encryption of Allied communications was a major problem, as their codes were generally based on either European languages or mathematical progressions. The Germans routinely broke their codes. Sending out runners proved ineffective, since about one in four runners were captured or killed. Other methods, such as carrier pigeons, or signal rockets, were slow and unreliable. During the war, over ten thousand Native Americans enlisted in the U.S. armed forces to fight the Central Powers, even though America had not yet granted them citizenship. Near the end of the war, on October 26, 1918, members of the Choctaw tribe were put to use for the first time using their native language as a code. They played a major role in an attack on a strongly fortified German position, Forest Ferme. “The enemy’s complete surprise is evidence that he could not decipher the messages,” Colonel A.W. Bloor later wrote in an official report. These so-called “code talkers” were utilized to even greater effect in World War II, when the U.S. government specifically recruited Chippewa-Oneida, Comanche, Hopi, Meskwaki, and Navajo tribal members. The Navajo code talkers developed the most complex code, with over 600 adapted Navajo terms, for use in the Pacific Theater. The Germans did not decipher a single code talker message in either world war. The encryption key (their language) was known to all tribal code talkers, but completely unknowable to the Germans. Today with Big Data, super computers and complex algorithms, codes can be broken through...

Proximate Cause of Climate Change

Richard Wottrich, Atlanta USA Summary Global warming and climate change are linked to overpopulation. Developed Economies experience slowing birth rates, leading to less attention given to overpopulation effects. The earth cannot support its human population today, let alone in 2050, or in 2100. Air conditioning is on track for huge increases in global energy consumption. Perception Charlevoix, Michigan USA, is a tiny wealthy enclave of vacationers in Northern Michigan on the shores of Lake Michigan. It is a truism that as populations of humans in Developed Economies become more wealthy their birth rates decline. Charlevoix’s population has dropped from 3,183 in 1990 to 2,529 in 2016 – a decline of 20.5 percent. These are the rose colored glasses that people of means and ‘influencers’ gaze through in Developed Economies when contemplating climate change and its connection to overpopulation. That global warming and climate change are impacted by humans is a given. Scientists have done the work and the connection is clear. Why then will nobody discuss the proximate cause of climate change – overpopulation? Humans consume and use natural resources to gain consumption opportunities. The more humans we have, the more consumption we have, the more climate change we have. Why is discussing human overpopulation the ‘third rail’ of the climate change discussion? Population growth and climate change are both geometric. The link is unquestionable. Too Many Humans There are 7.4 billion humans on earth today. Over two billion humans have nothing. Over 700 million humans are starving to death at any given time. Leaving the politics of the wealth gap and food distribution aside, earth cannot support the humans it has now....