The Purchase Brothers

June 11, 2009 at 8:23 pm (Anything) (, , , , , , )

It’s hard to believe you can get anywhere these days solely on creativity. After all, money talks, and the only way to generate spectacular movie material is to throw boatloads of cash at a project. Right? Wrong. The Purchase Brothers are small independent filmmakers who´ve managed to create high quality videos on very, very limited budgets. While on paper the ideas seem cheesy, they work quite well. Here´s some samples of their work:

Escape from City 17

A true masterpiece of independent film, this 5 minute short was made with only a 500 dollar budget.It´s hard to believe that when this action movie based on the Half-Life videogame looks better than several high-budget projects. However, credit is given where credit is due; the video is possible in large part thanks to the excellent Source engine developed by Valve.

Coke Babies

Don´t worry, it´s not about infants newly born to crack addled mothers. Rather, it´s a very creative ad made by the Purchase Brothers for Coca-Cola. I´m not sure of the budget for this one, but again, it wasn´t that much.

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Of Pigs, Mexicans and Wars

April 29, 2009 at 11:35 pm (1)

It’s hard to get past the torrent of information surrounding the influenza (H1N1) outbreak. The amount of questions answered pales in comparison to those new ones that emerge. The fact is until more information becomes available, we can’t really predict the outcome. I’ll try my best to clear up some issues about the 1918 epidemic, the virus itself, and the recent outbreak. However, I’m not an expert on the subject.

Why has this particular strain got everyone so worried?

H1N1 was the virus responsible for the Spanish Flu of 1918, the deadliest epidemic in human history. Estimates are inaccurate but place the death toll at 50 to 100 million. That’s more than both world wars put together. But that’s not what all the brouhaha is about. The fact that this particular strain of influenza targets healthy human beings, as opposed to the young and the elderly, is what’s really terrifying.

Why are only healthy people dying?

That’s the thing about H1N1, the healthier you are, the more likely you’ll die. Seriously. Here’s the why of the paradox: when the body detects a pathogenic invader, cytokines will signal macrophages to travel to the site of the infection in order to fight it. In addition, cytokines activate those cells stimulating them to produce more cytokines. However, when fighting H1N1 the reaction looses all semblance of control and cytokines are mass produced waaaay beyond sustainability.

What results is a painful death, not from influenza, but from the overreaction of a healthy and vigorous immune system to a highly pathogenic invader. The better your immune system is, the likelier you are to produce these fatal “cytokine storms”. The symptoms are very high fevers, severe muscle aches and nausea. Oh, and death of course.

Is there a cure?

For Influenza? No, it’s basically a cold, albeit a strong one, so you’ll have to ride it out yourself. The cytokine storms can be prevented if you are issued antiviral at the first sign of infection. This can’t be stressed enough, if you let the virus reproduce enough in your body, your own immune system will overreact and eat you alive. Painfully. Better to be safe than sorry right now: even if you have a cold go see the doctor for an antiviral. 48-72 hours into the illness and it’s too late to do anything other than call funeral services.

Is this different than 1918?

Yes! During 1918 the world was in a pitiful state. They were just finishing WW1 and sanitation systems were all bust. Every productive force had gone over to the war effort, or been destroyed in the process. Hospitals and running water were a luxury, not a right. During the 1918 outbreak, people not only died from cytokine storms. Even if they survived them they were left quite weak, and, when coupled with poor sanitation services, they were prone to bacterial infection. Survivors wound up getting killed diseases that they would have finished off with simple antibiotics. But of course, antibiotics were few and far in between, especially when the cases started to compound.

Furthermore, the chaos of the war let the disease spread far and wide before any serious consideration was taken of it. Soldiers were dying every day in the trenches not only from bullets, but from simple illnesses. People did not spot the Spanish Flu until it was too late. Historians attribute a sizable amount of responsibility for the defeat of the Central Powers to the Spanish Flu, since it started in Austria.

Why is it called the Spanish Flu then?

While the other countries were embroiled in the war, Spain remained neutral. This meant that their newspapers reported news of the flu, given that the war was not a priority for them. Simply put, Spain was where the flu got the most media coverage, since the other countries´ news outlets tended to count the dead as “war casualties”.

How bad did it get in 1918?

As I said before, between 50 and 100 million people died. But this is not the whole extent of it. It would mean that between 5-10% of the world population at the time ceased to be. Given that H1N1 has a death rate of about 15%, the number of infected reached more than 1000 million, half the world population at the time. As a side note, this means that if it gets really bad today, no preventive measures will avail you: you will get infected.

But to put it bluntly, this little bugger killed more people than the black plague. This little bugger killed more people than both World Wars put together. Yes, it’s that bad.

Are we prepared today to deal with it?

H1N1 is the most feared virus nowadays. More than HIV. For that same reason, most containment protocols and epidemic war games are based on a fictional outbreak of the virus. Yes, it’s dangerous, but it’s also been present in our leader’s minds. People may say the measures being taken today are exaggerated. No they aren’t the virus is that bad.

Nowadays, we’ve got the WHO doing worldwide monitoring; we’ve got highly advanced medicine they didn’t have in 1918. And more importantly, we have advanced transportation. In 1918, a surplus of antibiotics in Anchorage did the world no good. Nowadays, a surplus of antibiotics in Anchorage can be flown overnight to anywhere in the world. Despite the higher concentrations of people and ease of travel, I consider we are better prepared than in 1918.

Won’t there be a vaccine?

Eventually. When it comes to the flu, we’ve always been playing catch-up. It evolves and then scientists have to task themselves with finding a particular vaccine to that particular strain. Previous vaccines don’t work because the immune system won’t recognize the newly-mutated virus. Worse, with H1N1 it’ll deal with it with cytokine storms and kill you. So yes, one day this particular strain will be isolated, dumbed down, and put into vaccines. But that’ll most likely be after this outbreak.

Is there still the possibility everything goes to shit?

There always is. So long as people commit simple mistakes such as handshaking and kissing for the next few days, the virus will spread. The problem is that it may achieve a critical mass so that healthcare systems around the world begin to collapse. Timely preparations and good habits will keep it at bay long enough to be dealt with. If you’re snuggling with your girlfriend you’re part of the problem.

Can I get the swine flu from eating pork?

No. Go ahead and gorge yourself until you rupture, but wash your hands first.

Finally, why are only Mexicans dying?

Mexican ineptitude. The WHO warning was out a few weeks ago, the Mexican government paid no heed to it until a private company blew the whistle. In civilized countries, they’ve been screening for H1N1 quite exhaustively and providing appropriate antiviral despite being in its early stages. But that’s the weak sissies, true macho men cover the well after the child has drowned.

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A few terms explained

April 22, 2009 at 5:07 pm (Economics)

Vexed by all the technical finance terms right now in the news? At a loss when trying to understand how markets work? Can’t tell a stock from a bond to save your life? Try as we might, the world of finance is hard to understand. It’s not a natural system or a human system based on natural laws, so for that reason there are sometimes things that appear counterintuitive or simply don’t make sense. Read on if you wish to understand a little better the terms that are now thrown loosely on the news.

So, first things first, what is high finance?

Finance is divided into two main sections: corporate finance and high finance. Corporate finance focuses on a company’s internal handling of money. Where’s it getting it from, where to unload excess reserves of cash, how to make its handling more efficient; the works. People who work In this area are usually determining optimum inventory purchases and figuring out that the company can make an extra .01% return on investment if its sweatshop workers don’t get bathroom breaks. At all. It’s, all in all, a dull and tedious affair that has little more redeeming qualities than accounting.

High finance, on the other hand, is the sexy side of the profession we see glorified in movies like Wall Street. In essence, it’s the handling of financial assets such as stocks, bonds and derivatives. People in this area dedicate themselves to speculation and chasing after easy money in the markets. The most visible of these being the stock market.

What kinds of markets are there?

Besides the glamorous stock market, which, incidentally, is the smallest one of these, there are several other more important kinds. There’s the derivatives market, which has recently been getting a lot of bad rep because of their involvement in the current financial mess we’re in. The bond market, in which the debt of companies and countries is bought and sold like so many chickens at a bazaar, and the Forex market, where currencies are exchanged between banks, corporations and private investors.

Each of these varies in size, influence and impact on the real world. For example, the derivatives market, several times larger than the bond market, does not make governments tremble as the bond market does. More on that later. Involvement in these markets entails higher risk than playing in stocks, thus, you have to know what you´re doing if you decide to trade here.

How can Bond markets be so powerful? I thought they were boring and for old geezers

Simple. Bond markets are where the debt of countries and companies is traded. Bond markets are boring they same way plumbing is boring. Both are supremely important in their respective niches. A house with faulty plumbing is a real headache. So is an economy with a faulty bond market.

How? Well, imagine you’re asking for a loan to the bank. If you’re a responsible, forward thinking person, the bank won’t hesitate to hand you the money and you’ll probably get a better interest rate. But if you’ve spent the better part of your life smoking pot and other illegal shrubbery, then the bank will be loathe to loan to you. If they do, you’ll get a very high interest rate, to denote your high risk of default. Your supply of cash will be limited. The same things happen to corporations and countries, if they´re good, they can get a constant supply of cash from loans and continue to operate smoothly or finance large expansions. If they’re risky, they’ll be saddled with large interest rates and won´t have as much money available to finance their operations.

In this way, bond markets affect the workings of companies in the real economy. When the market freezes, like right now, even good companies cannot get loans at agreeable rates and are forced to perform unanticipated cutbacks.

What the hell is the Forex market? I’ve never heard of it!

In the Forex market banks, corporations and private investors exchange different types of national currency. Forex means “Foreign Exchange”, and that’s precisely what goes on. It´s purpose is not entirely speculative. Volkswagen may need to convert the reales they earned from selling in Brazil to Euros to pay their German employees. IBM may be looking to expand into Israel and must convert their initial dollars into shekels.

Forex markets are also powerful when it comes to politics. A run on a specific currency may cause that currency to crash and the impoverishment of its issuing nation. Such runs are common among third world countries, and can happen when their conditions deteriorate and investors scramble to pull their money out. Examples include the Mexican peso crash of 1994 and the Argentinean crisis of 2001.

Are the derivatives markets all bad? What do they really consist of?

The answer is still up for debate on that question. Derivatives are assets whose value depends on an underlying financial asset; at least, that’s the official definition. Derivatives essentially are bets that can be bough or sold.

Imagine we’re watching a Germany-Brazil soccer match. I make a one way bet with a friend over $100 that Germany will win. 40 minutes into the game the score is 4-1 with the Krauts at an advantage, but I suddenly have to go. I turn around and sell my bet to you at $60, after all the Germans are winning but there’s still about 50 minutes left to the game. If the Germans win, my friend pays you and you pocket $40 dollars profit. If Brazil turns around and wins, well, the bet was one-way, so you lost those 60 dollars you paid me for the right to own the bet. There’s a derivative for you. The underlying asset was the German team.

It’s the same concept in finance only that with more carefully planned out risks, rewards and probabilities. Derivatives are useful for companies when hedging against unfavorable exchange rate swings, for example, but they’re not limited to that. Employee stock options are derivatives too. They come in many shapes and sizes, but they’re also the ideal instrument for speculating, given they are, essentially, bets.

You mentioned hedging, what is that?

Hedging is simply the practice of protecting yourself against certain risks, in financial terms. For example, if you bought Euros because you thought they would rise, but were unwilling to take a loss, you could hedge by buying a derivative on Euros. This derivative would be an option that gives you the right, but not the obligation, to sell those Euros at a certain price.

On an unrelated note, what are Credit Default Swaps?

A Credit Default Swap (CDS) is a type of derivative that fundamentally means buying insurance on a loan. That is, if I loan you money, and want to make sure I´ll get my money back, I´ll go with AIG and buy a CDS on that loan. That means that if you fail to pay, AIG will give me my money, so I really don´t have to worry.

The problem right now with CDSs is that they were taken out on very funny loans, with the banks believing that the CDDs completely nullified the risk of giving deadbeats the possibility of buying up McMansions. Of course those loans were going to default and the CDSs were going to have to be paid. Think of a company that sold fire insurance to the Japanese for their paper houses in 1940, just before WW2 and the wave of American firebombing that swept Japan. The current crop of CDSs shows about just about the same business sense as our hypothetical Japanese insurer.

And then of course, there´s the bigger problem of naked Credit Default Swaps.

What’s a naked Credit Default Swap? Financial Porn?

I imagine that a naked CDS is as exiting to the financial guys as porn, but no, it doesn’t have sexual denotations. A naked CDS is loan protection without having to own the actual loan. Let’s go back to the houses and the fire. Normal people buy fire insurance for their own houses. Insurance compensates them in the tragic case their own house burns down and their family dies in a fiery hell. Screaming.

But enough with the sadism, what if an insurance company started selling fire insurance on other people’s houses? And for more than their market value? I could buy insurance that promises me $10 million if my neighbor’s house burns up. Of course I would stock up on gasoline cans and matches! Selling such schemes would be criminal in real life and yet, in the financial world they are known as Naked Credit Default Swaps.

What is a default, mind you?

It is when a borrower suddenly stops paying their debt. They don’t necessarily deny they owe anything; they simply can’t make the scheduled payment.

I’m interested in finding out more about this topic; can you recommend any good additional sources?

The Ascent of Money is a pretty good and intelligent book on the esoteric world of finance. PBS recently turned it into a full blown documentary. Barring that, there’s always www.investopedia.com, a finance encyclopedia.

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Credit Crisis FAQ! All you ever wanted to know but were afraid to ask.

March 10, 2009 at 1:53 am (Economics)

It’s about time I started posting original content on this blog, not just rip-offs from other sites. I’ve decided that for the sake of keeping interest alive, I’ll be posting a series of FAQ (Frequently Asked Questions) on several topics rather than essays as I’d originally planned. It’s easier reading than a wall of text on highly esoteric affairs. So, for my first topic, and complement the video I posted earlier: The Credit Crisis.

Who are the responsible culprits of the affair? Who should we hang?

Everybody. Nobody. Truth be told, it was a failure by all three parties involved that led us to this mess. On the one side, we have the bankers, the objet of everybody’s ire nowadays. Yes, they’re a bunch of thieving, cheating, lying scoundrels who are only in it for their short term gain, consequences be damned. They subjected their banks, sometimes hundreds of years old, to Enron-style practices that were guaranteed to make them crash and burn.

So it’s only the bankers fault?

Such a massive fraud would not have been possible without government protection. Enron was a single company and required a massive effort to keep their practices secret. But what happens when you have dozens of institutions incurring in the same illegal practices? Somebody had to know, surely. And indeed they did. It’s well recorded that the incompetence and outright corruption of the regulators, the SEC and OTC, facilitated this mess. They are in it up to their necks, and can’t plead ignorance. And of course, knowing that the government will bail you out because “you are too big to fail” facilitated Citigroup and Bank of America loading their balance sheets with toxic debt.

What of the people who lied about their income?

Of course, there’s the people themselves. They knew it was too good to be true. Mortgages on dream houses with ridiculously low monthly installments and no down payments? The right question to be asked is, Where’s the catch?, not: where do I sign up? Nothing comes for free. People have been so caught up on trying to keep up with the Joneses that they lost all semblance of reality and started living on a fantasy world. They thought housing was the perfect get-rich-quick scheme. But lets be realistic, McDonalds workers cannot afford, under any circumstances, five bedroom, lake-view mansions. They thought they were getting rich by beating the bankers at their own game. In hindsight it does sound ridiculous.

The stock markets are just paper changing hands among speculators. Why should such activity impact the real economy?

Imagine the world economy like a house. The stock markets are the décor and paint job of the house. They make it seem pretty, and usually lead to a pointless overvaluation of its price based on such little details. But as any realtor would tell you, you’ve got to have a look at what’s important in the house before buying it: the cabling, the plumbing, the functionality, and the foundations. In economics, all these are represented by the bond market. Sure, just like the plumbing, it’s not half as sexy as its stock counterpart, but it’s ten times more important.

In the stock market, ownership of companies is traded. You buy IBM stock, you own a small part of the tech giant. But you don’t buy IBM stock directly from the company; you buy it from somebody willing to sell it. The company earns nothing when you buy their stock in a secondary market. In the bond markets, it’s debt that’s traded. You buy IBM bonds; you are owed money by IBM itself. This little part is crucial to the economy, as corporations and governments, require their bonds to be sold in order to finance their operations. What happens when their bonds aren’t being sold? You guessed it, companies freeze. Without credit, contractors can’t build houses, farmers can’t transport their goods to the cities, and factories can’t buy raw materials. This leads to a downturn in economic activity, with only the companies that are engineered to operate without debt being able to continue in business.

But why isn’t anybody lending? Weren’t the trillion dollar bank rescues aimed at solving that problem?

There’s enough money in the world to lend to everybody. But this is not a crisis of credit. It’s a crisis of confidence. What’s happening is that lenders and investors are stuffing money under their mattresses because they don’t trust anybody anymore. Companies and corporations are falling like flies these days because they’ve loaded themselves with toxic debt thinking they could make a cheap profit, even if they don’t focus on finance! What’s happening now is that risk is being multiplied by a vicious cycle.

What of the honest business and tradesmen?

I’m a farmer. I produce tomatoes. I won’t make any money until after I sell my harvest in the city. But I need money to get my tomatoes to aforementioned city. How do I get it? I ask for a loan. Now, I haven’t indulged in any funny business with exotic finance products. Why is nobody lending to me? Because they lack confidence. Perhaps not in me, I’m an honest hardworking farmer. But in my clients. How am I going to sell my tomatoes when the convenience stores are going bankrupt?

This chain reaction is threatening to halt the entire economy.

But we’ll start recovering at the end of the year, right? Obama said so!

Right. Obama says a lot of things. Have you noticed every time he or his tax cheating Treasury secretary open their mouths the markets plummet even more? Obama has been as worthless a president as Bush. He inherited a bunch of problems, true, but he’s done nothing solve them. Why? Because that would involve locking up his banker buddies back in New York.

What is the solution, then?

Obama does not need to inject more money and debt into the American system. They’re already overloaded with it. It’s confidence that’s needed. Confidence that businesses are once more are incurring in honest practices and are not just ticking time bombs because they loaded themselves with funny finance products. The moneylenders and investors are not going to release more money into the markets until all the fraud and corruption has been watered out. There’s two ways to do this, either the government prosecutes and locks up the criminals responsible for this mess, including high ranking bank executives, government regulators, and Wall Street titans, or the market deals with it.

Granted, the first option is a titanic job and requires a lot of political capital. But it will restore confidence, attack the root of the problem, and the economy might actually begin recovering by 2010. But they don’t seem to be close to doing anything like it. Hell, they’ve even left the same boards of directors responsible for this mess in the companies that they’ve nationalized.

So what happens if the market deals with it?

The market cannot target and prosecute individuals. It’ll try to price in all the fraud and corruption in the system, leading to an undervaluation of all stocks. By doing so, it will wash out the fraud, but it’ll also take the honest businesses with them. It’s the financial equivalent of nuking a city to eliminate the gangs and criminals in it. A lot of innocent people would die, just like right now, a lot of solid companies are being brought under.

And what are the prospects for the future?

Unless Obama and his useless administration start fulfilling on the promises of their campaign, the future looks bleak. When the fraud is finally washed out by the markets, there won’t be much left of the economic landscape to speak of. But in short, it’ll be Depression, not Recession. Depressions come in cycles, just a little after the generation that remembers the last one has left power in society. After those who lived through the Long Depression in 1873 died or retired, new leaders took over, forgot the lessons of the past, and caused the turmoil of 1929. Now, those who actually remember the Great Depression of the 1930s are dead, dying, or retired, and a new generation has taken over. A new generation that refused to learn from history.

We, as a society, have been living beyond our means for a very long time. What follows will be a brutal corrective move that’ll try to reverse this. The consequences will be dire and the future is not promising. And, I don’t have to remind you, World War 2 was a direct consequence of the Great Depression.

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Credit Crisis Explained

March 1, 2009 at 10:04 pm (Economics)

Hands down, this is the video that explains the crisis in laymans terms best. Keeps it short and to the point while somehow managing to leave the esoteric parts out (though, quite evidently, it doesn’t cover the whole breadth of the sordid affair). So, without further ado, here’s the link, believe me, it’ll be 10 minutes of your life well spent:

Part 1

Part 2

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Remind me where you learned about marketing?

January 28, 2009 at 10:54 pm (Humor) (, )

bambi1

Now, I knew the first bambi had some sad parts, but it seems the sequel will put a whole new spin on the series!

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Interesting World Wide Fund Campaign

January 23, 2009 at 11:18 pm (Anything) (, , )

Originally known as the World Wildlife Fund, the WWF is an organization that theoretically sets out to protect the planet. While it’s original mission was to ensure the survival of endangered species, nowadays it’s expanded its operations to encourage sustainable development

In spite of its laudable mission, it’s notorious for its administrative incongruences.  Some of its biggest financial backers are sworn enemies of all things nature, ExxonMobil for example. While this guarantees that the fund will have it’s hands tied, it has not stopped them from working in a very creative marketing campaign.  So, hereby I give you some of its best ads from around the world:

1.-  15 KM of rainforest dissapears every Minute

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2.- You can help stop global warming

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3.- Where is your home?

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4.- Where is your home?

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5.- Dont buy exotic animal souvenirs

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6.- Not recycling this newspaper is the same as cutting down another tree

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Anatomia del Fracaso

January 22, 2009 at 2:05 am (Humor)

Fail – Fracaso: m. Malogro, resultado adverso de una empresa o negocio; m. Suceso lastimoso, inopinado y funesto.

1.- La revulsion que Jimmy sentia por sus compañeros solo podia ser expresada de una manera

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2.- Los verdaderos machos no se afectan por jotadas como quimicos potencialmente letales.

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3.- He aqui el futuro de algnos ingenieros civiles  y arquitectos que conozco

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4.- “Ok querida, tal vez esta vez si sea conventiente pararse a preguntar por donde vamos…”

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5.-“¿Como que no hay espacio de estacionamiento? ¡todavia podemos meter dos coches ahi cuando menos!”

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6.- Creo que alguien se tomo eso del drive-thru muy enserio

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7.- El escultor debio de haber tenido serios complejos en su infancia

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8.- “¿Pero como no le vamos a dar ride? Se ve que es una persona amigable e inofensiva”

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