Seth's Blog : Most people, most of the time (the perfect crowd fallacy)

 

Most people, most of the time (the perfect crowd fallacy)

Most people, most of the time, aren't creative, generous or willing to stand up and contribute worthwhile work to the community. At least not the contributions you're hoping for.

The myth of wikipedia is that, when given the chance, hordes of people stepped up and built it. In fact, 5,000 people contribute most of the value on the site.

The myth of ebooks is that now that anyone can publish, enormous numbers of people will use this new platform to create countless numbers of new classics. In fact, most self-published ebooks just aren't very good.

And the same is true for just about everything that's open. A few people do an enormous amount (non-profit volunteers, community organizations, online sites), a few people are vandals or merely taking what they can take, and the masses participate, but aren't at the heart of the project.

To dismiss the crowd is a huge mistake, though.

Here's the fascinating part, call it the golden shoulder: We have no idea in advance who the great contributors are going to be. We know that there's a huge cohort of people struggling outside the boundaries of the curated, selected few, but we don't know who they are.

That means that the old systems, the ones where just a few people were anointed to be the chosen authors, chosen contributors, chosen musicians--that system left a lot of people out in the cold. The new open systems embrace waste. They understand that most people won't contribute and most contributions won't be any good. But that's fine, because this openness means that the previously unfound star now gets found.

The curated business, then, will ultimately fail because it keeps missing this shoulder, this untapped group of talented, eager, hard-working people shut out by their deliberately closed ecosystem. Over time, the open systems use their embrace of waste to winnow out the masses and end up with a new elite, a self-selected group who demonstrate their talent and hard work and genius over time, not in an audition.

Go ahead and minimize these open systems at your own peril. Point to their negative outliers, inconsistency and errors, sure, but you can only do that if you willfully ignore the real power: some people, some of the time, are going to do amazing and generous work... If we'll just give them access to tools and get out of their way.

(The curated block isn't reality, it's merely what the curator claims--that his magical powers will find all of the great talent, without error or waste. Of course, a quick look at Hollywood or even an expensive mutual fund shows that this is a fable. The 'open' block includes the low-quality stuff as well, but since that work is created without a lot of expense, pruning it is no tragedy. The secret is embracing the talented and dedicated people who choose themselves.)

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Mish's Global Economic Trend Analysis

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• Deal Reached, Damage Done
• Bad Bank Losses 30-90%; Food Supplies Down to Two Days; Plenty of Fuel, Not enough Cash
• UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You’ve Still Got a Chance"
• New Demands Every Half-Hour From IMF; Can Cyprus Be Saved? Impossible Math

Deal Reached, Damage Done Posted: 24 Mar 2013 07:02 PM PDT One could tell from the rise in the futures this evening that a deal was reached, but conflicting reports had me wondering "what deal?" The story now is that president Nicos Anastasiades threatened to resign if the terms were not acceptable (a nice strategy), and euro leaders agreed to a 10 billion euro bailout. Reuters reports Revamped Cyprus deal to close bank, force losses. Cyprus clinched a last-ditch deal with international lenders on Monday for a 10 billion euro ($13 billion) bailout that will shut down its second largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians. The agreement emerged after fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund - hours before a deadline to avert a collapse of the banking system. Deposits above 100,000 euros, which under EU law are not guaranteed, will be frozen and used to resolve debts, and Laiki will effectively be shuttered, with thousands of job losses. An EU spokesman said no levy would be imposed on any deposits in Cypriot banks. A first attempt at a deal last week collapsed when the Cypriot parliament rejected a proposed levy on all deposits. A senior source involved in the talks said Anastasiades had threatened to resign at one stage if he was pushed too far. EU diplomats said the president, flown to Brussels in a private jet chartered by the European Commission, had fought to preserve the country's business model as an offshore financial centre drawing huge sums from wealthy Russians and Britons. The revised bailout plan many not require further parliamentary approval since the idea of a levy was dropped. Damage Done As I mentioned previously, haircuts on deposits above 100,000 euros are likely to be hammered by anywhere from 30% to 90%. I expect the mid-to-upper end of that range as noted in Bad Bank Losses 30-90%; Food Supplies Down to Two Days; Plenty of Fuel, Not enough Cash. Regardless, the damage has been done. There should be and can be no trust. Anyone who keeps more money in Southern European banks than they need to pay immediate bills is a fool. This crisis was resolved, at the last minute, like every other crisis, but I have a prediction.  The next significant crisis will not be resolved easily, if at all, no matter how much blackmail and pressure the nannycrats apply. In the meantime, the safe thing to do in Southern Europe is to get your money out of banks immediately. Nigel Farage says the same thing. For details, please see UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You've Still Got a Chance" Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Bad Bank Losses 30-90%; Food Supplies Down to Two Days; Plenty of Fuel, Not enough Cash Posted: 24 Mar 2013 05:03 PM PDT Capital controls and a good-bank, bad-bank structure is what is now on the table. In spite of what may be agreed upon, I stated earlier today the losses will be bigger than currently perceived. I am not the only one to come to that conclusion, Faz has some estimates in its report striking high cash outflows from Cyprus Despite the closed banks and capital controls in the past week, more money flowed out from Cyprus than in previous weeks, according to payment transfers. Prior to the escalation of the crisis in Cyprus accruing on the payment system "Target liabilities of Cypriot central bank to the European Central Bank (ECB) had increased to a rate of approximately 100 to 200 million euros per day. In the past week, billions of dollars flew in spite of controls. Withdrawals at ATMs have been limited to €260 per day but on Sunday the value was further reduced to €100 per day. Cyprus lists accounts amounting to €30 billion in foreign currency, mainly dollars (86 percent) and pounds (6 percent). The investment bank Goldman Sachs estimated that this money belongs to foreigners, mainly Russians, Britons and Russians living in Latvia. These holders of often very ample bank accounts now have a particular interest in getting money out of the country. All accounts with less than 100,000 euros will land in the "good bank". Other accounts will land in the "bad bank". In the "bad bank" loss estimates range from 30 to 90 percent, depending on how quickly depositors try to withdraw money. Supermarket Food Supplies Down to Two Days In Cyprus, merchants demand cash, but suppliers demand cash only as well. With a shortage of cash, results are as expected: Cash Demands Impact Supermarket Shelves SUPERMARKET shelves are in danger of emptying according to head of the supermarket union Andreas Hadjiadamou. Supplies will only last two or three more days according to Hadjiadamou and there will be severe problems if a solution is not found and if banks remain closed. According to deputy of the supermarket union, Nicos Athanasiou, problems had already started being noticed at certain supermarkets in Larnaca. "Most people are making purchases with a certain amount of care and caution, buying the basics," he said. "Most consumers have been purchasing dry and canned food the last couple of days in case things get worse," he added. Athanasiou said there had not been a large fall in sales although in almost all of the supermarkets there were shortages of goods from suppliers who only accept cash payments. Plenty of Fuel, Just Not Enough Cash Cyprus Mail reports Plenty of Fuel, Just Not Enough Cash SOME petrol stations may have to close down as they do not have enough cash to pay for fuel shipments, the head of the stations' owners said yesterday. "We may have to temporarily close some petrol stations because they have run out of cash. This creates great concerns to those in this profession," said the head of the petrol station owners' association, Stefanos Stefanou. "Petrol stations pay for their fuel shipment only with cash and cash is running out," Stefanou added. "There are some petrol stations that are still accepting credit cards today, but tomorrow no petrol station will do so," he said, asking consumers to take cash with them to carry out transactions. Welcome to Insanity Welcome to the insane world of fiat currencies and fractional reserve lending. If you are looking to assign blame, that's where the blame belongs. Regardless of where the blame is, the safe thing to do in Southern Europe is to get your money out of banks immediately. Nigel Farage says the same thing. For details, please see UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You've Still Got a Chance" Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You’ve Still Got a Chance" Posted: 24 Mar 2013 01:08 PM PDT UK Independence Party (UKIP) leader Nigel Farage makes the same common sense plea that I have been stating for some time. Farage says "Get Your Money Out of Spain While You've Still Got a Chance". The UK Independence Party leader said that the European Union had "crossed a line" by trying to extract funds from savers under the terms of the abandoned Cypriot bail-out. Mr Farage said: "Even I didn't think that they would stoop to actually stealing money from people's bank accounts. "There is going to be a big flight of money and that flight of money won't just be from Cyprus, it will be from the other eurozone countries, too. There are 750,000 British people who own properties, or who live, many of them in retirement, down in Spain. "Now that we see the EU are prepared to resort to anything to keep alive their failing euro project, our advice to expats living down in the Mediterranean must be, 'Get your money out of there while you've still got a chance'." Surge in Support for UKIP The latest poll shows Ukip only 10 points behind Tories. The Conservatives and Liberal Democrats have suffered a double blow as Nigel Farage's UK independence party soared to 17% in the latest Opinium/Observer poll, and a large majority of voters have said they believe coalition economic policies are harming the country. Labour has dipped by 2% to 39% – also a likely victim of the UKIP bounce – while the Tories are down by the same amount to 27%, one of their lowest ratings of recent years. The personal ratings of the leaders of the three main parties in parliament have all dropped, with David Cameron's having fallen by 8 points in two weeks from -18% to -26%. That of Labour leader Ed Miliband has dropped 5 points in a fortnight to -20% while Nick Clegg's rating has crashed a further 7 points from -46% to an alarming -53%. But the findings on the economy will reverberate most at Westminster. Just 20% of all voters now believe the government's economic policies have been beneficial to the economy, against 58% who say they have been harmful. Let's hope there is a run on Spanish banks. The sooner this mad experiment in the eurozone ends, the better. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

New Demands Every Half-Hour From IMF; Can Cyprus Be Saved? Impossible Math Posted: 24 Mar 2013 11:19 AM PDT Cypriot President Nicos Anastasiades was picked up by private Jet and is now meeting with the cardinals in Brussels (IMF, EU finance ministers, ECB, Various Government leaders) according to Cyprus Mail. Quoting an unnamed senior government official, Reuters said Nicosia had agreed with EU/IMF lenders on a 20 per cent levy over and above €100,000 at No. 1 lender Bank of Cyprus, and four per cent on deposits over the same level at other banks. However, an hour or so later, the Cyprus News Agency, also quoting an unnamed Cypriot official, said the two sides were not even close due to the stance of the IMF, which tabled new demands "every half an hour". Racing to placate its European partners, Cypriot lawmakers voted in late-night session on Friday to split failing lenders into good and bad banks - a measure likely to be applied to No.2 lender Cyprus Popular Bank, or Laiki. They also gave the government powers to impose capital controls, anticipating a run on banks when they reopen on Tuesday. A plan to nationalise semi-state pension funds has met with resistance, particularly from Germany which made clear that tapping pensions could be even more painful for ordinary Cypriots than a deposit levy. The senior official who told Reuters of the levy agreement said the pension funds would not be part of the package to seal the bailout. In an Cprus Mail Update, Anastasiades seeking last-minute Cyprus reprieve in Brussels. Cypriot President Nicos Anastasiades, seeking a last-minute reprieve from financial meltdown at talks in Brussels on Sunday, has a "very difficult task" ahead of him if he is to save the island's economy, a government spokesman said. Anastasiades then headed to Brussels in a private jet sent by the European Commission to hold talks with EU, European Central Bank and IMF leaders ahead of a crunch meeting of euro zone finance ministers at 6 p.m. (1700 GMT). Underlining the gravity of Cyprus' position, the EU's economic affairs chief Olli Rehn said there were now "only hard choices left" for the latest casualty of the euro zone crisis. French Finance Minister Pierre Moscovici put it more bluntly: "To all those who say that we are strangling an entire people ... Cyprus is a casino economy that was on the brink of bankruptcy," he told Canal Plus television. Without a deal by the end of Monday, the ECB says it will cut off emergency funds to Cypriot banks, spelling certain collapse and potentially pushing the country out of the euro zone. The tottering banks hold 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros - enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own. Impossible Demands Every time Cyprus agrees to something the Troika increases its demands. Some of those demands are mathematically impossible. For example, the Troika wants Cyprus to wind down its deposits, especially from Russia. Yet it is impossible to wind down assets when there are capital controls preventing just that! Nor can deposits be would down without capital controls because the money is not there. For further discussion, please see Reader Asks "Where's the Money?". Too Late to Save Cyprus With €68 billion in deposits, all of it wanting out, the one thing certain to be true is that any agreement reached will not be the final one. Demands will increase, and the troika will withhold bailout money time and time again, just as happened in Greece. It's too late to save Cyprus. The euro helped ruin it. Although the initial pain may be higher if Cyprus exits, Cyprus may recover faster outside the eurozone where it will not have to suffer from still additional demand of the nannycrats in Brussels, and the parasites at the IMF. Cyprus should tell the EU to go to hell and get it over with. The alternative is 10 more years of pain and suffering at the hands of the Troika. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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SEO Blog

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• Is Guest Blogging Still A Viable SEO Technique?
• Guest Blogging And Article Marketing: What’s Better?
• Top 10 Free & Paid Social Media Management, Monitoring and Analytics Tools

Is Guest Blogging Still A Viable SEO Technique? Posted: 24 Mar 2013 07:56 AM PDT In December of 2012 and then again in January of 2013, Matt Cutts, the director of Webspam at Google and one of the most respected SEO experts on the planet, released a video answering a couple of questions from his followers. These questions both pertained to guest blogs including how... Read more »

Guest Blogging And Article Marketing: What’s Better? Posted: 24 Mar 2013 07:31 AM PDT The way businesses now reach a more targeted and broader audience is different than it was several months ago. Before, small businesses and individuals would use article marketing for expanding their brand and getting the word out on the web about their service or product. Now that Google has changed... Read more »

Top 10 Free & Paid Social Media Management, Monitoring and Analytics Tools Posted: 24 Mar 2013 05:06 AM PDT What is the most important question for any Social Media Marketer? How to boost and manage my social media marketing campaign? So I decided to do some research on social media management tools that are available on net that can facilitate you to perk up your social media campaign. Through this... Read more »

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Seth's Blog : Fomo, joy, jealousy and the lizard

 

Fomo, joy, jealousy and the lizard

Somewhere, right this very moment, someone is having more fun than you.

Making more money than you.

Doing something more important, with better friends, and a happier ending, than you. Or possibly just better at Words with Friends than you are.

You're missing out.

And somewhere, right now, something in your universe isn't right. There's something happening that will affect you, annoy you, make things not "all right."

A crisis is looming.

Of course joy is hard to find, even with all the leverage, assets and privileges we've got. We've set ourselves up to avoid it at every turn. Electronic media profits from connecting us, sure, but mostly it profits from amplifying emotions we don't want in the long run.

FOMO is the fear of missing out. It always existed of course, ever since we were in high school. As freshmen, we knew that some cool kid was at some party that we could have gone to, but didn't.

We've taken this far beyond a story told the next day over lunch, though. The supercomputer in our pocket, amplified by your choice of social media, brings FOMO right to you, wherever you are, with a mere vibration.

At the same time...

The lizard brain is on high alert to make sure that everything is okay. The lizard brain can't rest until it knows that everyone likes us, that no one is offended, that all graphs are ticking up and to the right and the future is assured. But of course, the future (and the present) isn't perfect. It can't be.

The combination of the two, the reverse schadenfreude of FOMO (the pain we may feel from others having good fortune) and the insatiable yet unreachable need for everything to be fine, conspire to make us distracted, unhappy and most of all, somewhere else.

I'm not talking about the dissatisfaction of the artist who wants to challenge herself and to reach new heights. That's an internal discussion, not one that's measured against the instant updates of the world's population.

The only place joy can be found is right here and right now. Everyone who is selling you dissatisfaction is working for their own selfish ends.

(More clicks, saved for the bottom so you could read the above without worrying about what you were missing on other sites: FOMO, XCKD, schadenfreude and the lizard.)

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Mish's Global Economic Trend Analysis

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Reader Asks "Where's the Money?" Posted: 23 Mar 2013 12:54 PM PDT Reader Robert at Americans for Limited Government asks an interesting question. Robert writes ... Hello Mish We are led to believe that taxing Cypriot deposits in the amount of 5.8 billion euros will make the banks solvent. I have a question: Why the need for capital controls after "recapitalization"? How can deposits be used for taxation but not withdrawals? Robert I believe that's a rhetorical question. Robert knows the answer. Even with the EU kicking in 10 billion euros (a loan not a gift), the money is not there. If the banks were sufficiently capitalized, there would not be a need for capital controls. End of the Single Currency in All but Name Jeremy Warner at the Financial Times has an interesting article on this very subject. Warner says If capital controls are introduced in Cyprus, it is the end of the single currency in all but name. With the European Central Bank threatening to pull the plug on Monday by denying further liquidity support, and showing absolutely no sign of blinking, Cypriots have little choice in the matter. The present plan is only slightly more palatable than the last. The two most problematic banks are to be restructured, with uninsured creditors taking a 40 per cent hair cut. That gets the Cypriot authorities some of the way towards the €5.8bn they need, or is that €6.7bn? Reports suggest the beastly Troika has upped the ante. In any case, the balance, whatever it might be, is going to come from "taxing" uninsured deposits above €100,000 in other banks in the way originally proposed. However, the perhaps more widely significant part of the proposal is the planned application of capital controls. This is of course entirely necessary to prevent a further run on the banks the moment they open their doors on Monday. Many Russian depositors are threatening to remove their spoils if they are subjected to any kind of a haircut. This would quickly render these organisations essentially insolvent regardless of the recapitalisations. Almost no amount of capital is sufficient for a bank which has lost the confidence of its depositors. Yet the point is that if capital controls are introduced, it basically makes Cypriot euros into a national currency, rather than part of wider monetary union. The capital controls will severely limit your ability to get your euros out of Cyprus, rending them essentially worthless in the wider eurozone. It would be a bit like telling Scots they can't spend their UK pounds in England. Monetary union is many things, but above all it is about free movement of money and a uniform value wherever it is spent. When these functions are disabled, then you cease to be part of a single currency. This is precisely what happens in a fractional reserve lending system when faith is lost. And faith certainly has been lost. Why shouldn't it be lost? The entire global financial system would be recognized as insolvent if even 25% of the people tried to get their deposits. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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