Bubble, Bubble, Toil, and Bust

Originally published in the Informanté newspaper on Thursday, 27 August, 2015.

Black Monday. Originally, the term was applied to the events of 19 October, 1987. The United States economy was moving from a rapid recovery to a slower expansion. During the previous year, the oil price had decreased by more than 50%. As the markets opened that Monday in the Far East, stock markets began shedding value, spreading west to Europe and eventually hitting the US after all the other markets had cratered. The Dow Jones Industrial Average fell 508 points in a single day. Sounds familiar?


Black Monday, 24 August 2015. The United States economy has been sluggish lately, following the rapid recovery after the 2008 Financial Crisis. Over the past year, oil has slumped almost 50% from its highs. As the markets opened in the Far East, stock markets began shedding value in a global panic. The panic soon covered Europe, and spread to the United States. The Dow Jones Industrial Average fell 588 points by the end of the day. 



As Elim Garak so deftly put, “I believe in coincidences. Coincidences happen every day! But I don’t trust coincidences.” In fact, this should be followed Tuesday by the classic dead cat bounce in the markets, before the deflation of the bubble continues. This dead cat bounce, derived from fact that even a dead cat will bounce if it falls from a sufficient height, is often seen after a fall in share prices.


All bubbles eventually pop. Bubbles have been around at least as long as there has been a financial market. The earliest, most notable example was the Dutch Tulip bubble of 1636, which had the value of a tulip trading as high as six times the annual average salary. Almost a hundred years later, the South Sea bubble of 1720 had thousands of people losing their life savings based on speculation on the South Sea Company in England. Closer to the present, we are all familiar with the late 90’s internet bubble and, of course, the US housing bubble which precipitated the 2008 financial crisis. 


Economic bubbles are created via the basic economic principles of supply and demand. In other words, more people want to buy (demand) than there are people selling (supply). We know a bubble has formed when the price of an asset has increased well above what it’s intrinsic or fundamental value indicates. This is generally simplified as the net present values of future cash flows. If your asset is, say, a rental property, this would be calculated from the expected monthly rental you’d receive from the property. With shares, you can generally use dividend pay outs or the company’s earnings as a basis for the calculation.


In the wake of the financial crisis, most of the more developed economies rushed to try and ‘stimulate’ the market and prevent a recession. Their method? Low interest rates. When you can borrow money at a low rate, and invest it at higher rates, you effectively make money from nothing – which is what the governments were striving to accomplish. In financial terms, this is called leverage. With banks and corporations able to lend on the cheap, there was a veritable rush to buy any financial instrument that can earn a greater yield than the rate they were lending at. This ‘demand’ has been pushing stock prices upwards for years.


Every return, unfortunately, has a corresponding risk inherent to it. You cannot earn greater returns without greater risk. When, as it must, one of the returns is less than the interest you have to pay on the loan you took out to purchase it, you have to sell to cover your loan. When you multiply this by a thousand or more investors all suddenly having to sell at the same time... 


Supply and demand shifts the other way. And the bubble pops. 


When you look at the S&P 500’s Price Earnings Ratio (basically, how many years’ earnings are included in a share’s price), it peaked at about 21.28 this year. Black Monday brought that down to 19.46. Its historical average is at about 15.55. This bubble’s deflation clearly has some ways to go still. 


This, of course, is terrible news for people who borrowed money to invest. Also for fund managers and the like, who are paid bonuses and performance-related fees. But for the average investor, whose investments are what has been saved, well, the economy is still the same. None of the fundamentals have been changed for the companies you invested in – they’ll keep doing business the same way they’ve always been doing. 


Stock market investments are long-term investments. Markets go down, but eventually, they’ll go up again. As long as you don’t need the money now, say, to pay off any loans you took out to invest, you should be safe just sitting back, and waiting for the market to recover.


As John Lennon and Sir Paul McCartney so famously wrote, “When I find myself in times of trouble, Mother Mary comes to me. Speaking words of wisdom, let it be.” Words of wisdom, indeed. Let it be.

To Teach Dreams

Originally published in the Informanté newspaper on Thursday, 20 August, 2015.

After Independence, the new Government of the Republic of Namibia had a bold dream. Stuck with an education system rooted in Apartheid, the government devised a single, unified structure for education, based on the principles of democracy, equity, access, quality and efficiency. The government has remained committed to these goals, and still today, the Ministry of Education, Arts and Culture commands a lion’s share of the budget (almost 25%), making Namibia one of three countries worldwide with the highest percentage of GDP allocated to education.

On the one hand, it could be said that this drive has been a success. After all, almost 95% of children now attend school, with teachers increasing by 30% and over 3000 new classrooms built. And yet, in 2011, the late Dr Abraham Iyambo, the “Father of Free Primary Education in Namibia” lamented the dropout rates, sub-standard vocational training, lack of facilities, financial difficulties and more that he saw constraining educational development in Namibia. 

But, to paraphrase Shakespeare, the fault is perhaps not in our aims, but in ourselves. Formal and compulsory education has not been around for that long. About 150 years ago, child labour was still commonplace. The Industrial Revolution had kicked into gear, and factories sprung up everywhere. Social unrest followed – adults were incensed that low-cost child labour were taking away their jobs. Factory owners resisted fiercely – saying they could not afford to hire adults. 

Industrialists were eventually sold on the idea – because they were told education would result in more obedient, productive workers. Teaching kids to do what they’re told, after all, will result in adults doing what they’re told, thereby increasing productivity. We thus ended up with a system children are taught to sit and stand in rows, obey their teachers, and become good, compliant citizens.

For many decades, this turned out quite well for the economy. Homogenized, compliant workers fitted well in an industrialized, mass producing economy. But our world has changed. Today, if you do a job where someone tells you exactly what to do, you will be replaced by someone cheaper. Or something. Here in Namibia, we are already witnessing the importation of cheaper labour from China. But the perfect ‘do-as-you’re-told’ workers are already being built. And, after all, robots do not require lunch hours, and can work non-stop.

Tied to this notion was the idea that memorizing large amounts of information was essential. After all, in that time, data was limited. The ability to remember facts, without fresh access to the data, was a key to success. Via the internet, we now have access to more data, individually, than the entire collective knowledge of mankind just a few centuries ago. 

Today, what is needed more than anything else, is the ability to think critically and process all the knowledge we receive on a daily basis. People often misunderstand the term ‘critical thinking’ and focus on the base term ‘criticise’ and the negative connotations associated with it. Too many teachers assume this means criticising a bad idea, and having everybody conform to an agreed version of ‘truth’ when this is far from the case. Indeed, as a principle of the great critic Socrates himself, it is to realise and examine the uncertainties of even those truths we believe to be self-evident.

Critical thought imbues the ability to analyse the way you think and present evidence. It, in short, is how you learn to learn! These are the people that have the passion to see a problem, and drive themselves to solve it, learning all they can along the way. 

Unfortunately, the way schools are structured do not allow for this. By instilling fear and conformity, it crushes the spirits of those with passion. There is no room for something that interests you, that inspires your passion, beyond what the curriculum dictates. Is it any wonder that entrepreneurs such as Bill Gates, Richard Branson, Steve Jobs, Ralph Lauren and Mark Zuckerberg are all drop-outs? 


Indeed, school seems to teach an outright aversion to learning and thinking. Statistics show that one third of high school graduates never read another book for the rest of their lives, and 42 percent of college graduates never read another book after college. Sadly, I’ve heard that sentiment echoed by several colleagues as well.

And, after all, if you had to choose an employee or a co-worker, would you rather have one that was committed, passionate, improvising, incisive, informed, innovating, insightful, and a leader, or would you prefer one that was simply obedient?

No Magic Bullet


Originally published in the Informanté newspaper on Thursday, August 13, 2015.

70 years ago, on 6 August 1945, the nuclear age was ushered in. Japan, already militarily defeated by June 1945, with its once mighty Imperial Navy in tatters, and its air force now non-existent, was near collapse. With no oil available since April 1945, the Japanese were willing to surrender on any terms, as long as their emperor was not touched. The American response was a 15 kiloton nuclear bomb, detonated above Hiroshima. 90 000 people were killed immediately, with 40 000 injured. Only 20 000 were soldiers. Three days later, a 21 kiloton nuclear bomb killed 37 000 people in Nagasaki, and injured 43 000. Nagasaki had no military contingent, and most of those injured in these two bombings succumbed to radiation sickness, dying in agony. The nuclear age was ushered in by eventually killing 200 000 Japanese civilians.

Luckily, these were the only two nuclear weapons used thus far. But the world had come close on several occasions. On 27 October 1962, during the Cuban Missile Crisis, the Soviet Foxtrot-class submarine B-59 was being pursued by a US carrier group. Cut off from communication from Moscow, the captain and political officer believed war had started when the carrier group started to deploy depth charges, not knowing these were practise charges. But flotilla commander Vasili Alexandrovich Arkhipov was on board, and he alone voted against deploying nuclear weapons, and saved the world.

The world again brushed with death on 26 September 1983. At the command centre for the Oko nuclear early-warning system, 100 miles out from Moscow, the system reported 5 launches of nuclear weapons from the United States.  Reasoning that the Americans would not launch only five weapons in an attack, he declared the detection system malfunctioning, and did not report it to his superiors. Given the deteriorating relationship between the Soviets and the USA, such a report would have resulted in an erroneous nuclear retaliation – Stanislav Petrov saved the world. 

But for all the close calls the nuclear age has wrought upon us, perhaps now is its time to shine. While the world has not succumbed to a nuclear winter, it is teetering on the edge of a carbon summer. The spectre of climate change is hanging over the world like the sword of Damocles. Here in Namibia, we are already feeling the effects of global warming. In the last three years the country has experienced the worst drought in decades. And if this coming rainy season does not deliver, the capital will be without water by June 2016.

In the United States, California is struggling in the grips of a drought as well. Two weeks ago, US President Barack Obama unveiled his ‘Clean Energy Plan’ that aims to reduce carbon emissions from power generation by 2030. In Namibia, carbon fuels are still extensively used. Wood mostly, if one takes a look at the smoke cloud hanging over the western side of the capital in the mornings, and especially in rural areas as well. But with the Ruacana Power Station on reduced output due to low water levels, the Van Eck coal-fired station has to carry most of the load – which is certainly not helping keep carbon emissions low. 

By contrast, nuclear energy has no greenhouse gas emissions during generation, and it remains vastly more efficient than alternative energy sources. In fact, only 28g of uranium produces as much energy as is produced from 100 tons of coal. And while the cost per kWh is a bit more expensive than utilizing low-cost fossil fuels, these costs do not take into account the negative externalities of carbon fuel usage – like the aforementioned costs of climate change, or the environmental damage by pollution. 

Nuclear power is also more reliable than current alternative power sources and the development of a nuclear industry also necessitates the development of a skilled, high-tech, well-educated workforce – the development of which has been a proven boon to many a society. 

This is not to say nuclear power is without its own issues. The costs of disposing the waste of nuclear fuel remains contentious, as well as determining where this highly dangerous and radioactive waste should be stored. And as the Three Mile Island, Chernobyl and Fukishima disasters have shown, nuclear power is not a responsibility to be taken lightly. Nuclear power is certainly no magic bullet.


National Geographic has had to make its biggest change to its maps since the break-up of the Soviet Union – in the drastically reduced Arctic Ocean ice shelf. Namibia is poised to feel the worst effects of climate change in the near future, and it is already too late to change that. Yet it is clear we need to start making some changes now – otherwise, our children might not have a Namibia left to inherit.

How Freedom Dies


Originally published in the Informanté newspaper on Thursday, August 6, 2015.


Since the start of his Presidency, President Hage Geingob has been an unceasing campaigner for a more transparent and accountable government. His efforts thus far have been greater and arguably more successful than another ‘most transparent administration in history,’ the presidency of Barack Obama. But now a bill from the Ministry of Information and Communications Technology is set to derail his legacy.

The Electronic Communication and Cybercrime Bill purports to protect the citizenry from defamatory content posted on social media. However, rumours abound that the bill seeks to prevent citizens from criticizing politicians in government and government institutions that deliver poor service. Without the text of the proposed bill being public as yet, it is unclear how the bill attempts to skirt Article 17 of the Namibian Constitution that declares: “All citizens shall have the right to participate in peaceful political activity intended to influence the composition and policies of the Government.”

And while defamation certainly occurs on social media, most sites already have systems in place to report abusive and defamatory content. It is certainly not necessary to provide additional protection against defamation, as Namibia already has existing laws in place for just that. In fact, defamation laws were upheld by a Supreme Court decision just a few scant years ago. 

More troubling, is that regulating the internet and social media is in direct contravention with Namibians fundamental freedoms enshrined in Article 21 of the Namibian Constitution, which states “All persons shall have the right to freedom of speech and expression, which shall include freedom of the press and other media.” ‘And other media’ most certainly includes the internet, and existing defamation laws are already applied against social media, as that is specifically allowed under Article 21(2). 

It is authoritarian governments that most frequently limit access to communication services such as the internet. And it is via social media that an oppressed people frequently co-ordinate their actions to preserve or gain access to freedoms we take for granted. On 25 January 2011, the Mubarak government of Egypt faced a popular revolution spearheaded by social media. By 28 January, those in power cut all internet access in the country in an attempt to scuttle the revolution. Egypt turned into a North Korea in the space of an hour, but even as they did this, the writing was on the wall. The people of Egypt were incensed, and by 13 February the military dissolved parliament. When you attempt to silence the voice of the people, you no longer rule with the consent of the governed.

Sometimes, this is done with good intentions. In the United Kingdom, for example, in the aftermath of the London riots in 2011, the government first considered regulating social media. By 2013, the UK government had implemented filters for pornography on the internet, with many legitimate, non-porn websites blocked accidentally as well. Just last year, in September 2014, Home Secretary Theresa May introduced ‘Extremism Disruption Orders’ which allows judges to ban people who are simply deemed extremists, but have not broken any laws, from broadcasting or accessing social media. And then last week, this program identified a 3-year old toddler as an extremist, and the child was placed in a government ‘re-education’ program. 


After winning the election in the United Kingdom in May 2015, David Cameron proclaimed: “For too long, we have been a passively tolerant society, saying to our citizens: As long as you obey the law, we will leave you alone.” This is how authoritarianism starts, and democracy dies. 

The internet has been a powerful democratising force in the world. It has given everyone with access a way to speak. Here in Namibia, nearly every cellphone now has internet access. Our esteemed President has used social media himself to connect with the people in an unprecedented way, and it has made us proud Namibians to have such a leader. 

As Martin Niemöller so famously said: “First they came for the Socialists, and I did not speak out— Because I was not a Socialist. Then they came for the Trade Unionists, and I did not speak out—Because I was not a Trade Unionist. Then they came for the Jews, and I did not speak out— Because I was not a Jew. Then they came for me—and there was no one left to speak for me.”

Let us hope that the supposed content of this bill is just that, a rumour. And if not, that the Namibian people will not be afraid to speak out.