Prodigies and geniuses

I found an interesting story on Yahoo today about a 13 year old young man, Colin Carlson, who is attending the University of Connecticut. He is doing well in his ecology and environmental studies with a 3.9 GPA (good by any standard) and plans on attending graduate school later in his teens. Obviously, he has an IQ at genius level. These types of individuals are rare and I am guessing his IQ approaches the off the charts level of 200 even at his young age. Many psychological studies have been performed on these types of individuals.

It appears as if our young protege is having problems completing his degree though. He is required to take a course in South Africa and UConn is not allowing him to attend due to safety reasons associated with his age (remember he is barely a teenager). The universities official line is,

Michael Kirk, a spokesman for UConn, would not comment on Colin's case. But he said that generally, safety is the university's first concern when travel is involved.

In true American fashion, the young teenager's mother responds with a lawsuit claiming age discrimination.

He and his mother say university officials told them he is too young for the overseas course. So he's filed an age discrimination claim with the university and U.S. Department of Education, which is investigating.

Finally, to top off these unusual circumstances the young prodigy claims,

"I'm losing time in my four-year plan for college," he said. "They're upsetting the framework of one of my majors."

The article goes on to mention he graduated from a high school curriculum at age 11 and how he felt out of place at school with pupils his own age. Yes, someone that smart would have trouble functioning in middle school where the rest of his cohort currently resides. I do believe we should allow students who are far ahead of their peers to skip a few grades. This case is a little extreme though.

IQ is just one measure of capability. It measure how well an individual solves a certain kind of problem. The test fails to measure other factors that lead to success like hard work, people skills and dedication. These skills develop over time resulting in a successful, mature person. This kid may be intellectually capable, but he will not be mature enough to deal with the kind of work a Ph D performs at only 22. I was considered a young Ph D when graduating at 29. The 7 years of living after 22 rounded out my general knowledge of the world. I fear this prodigy is going to end up as a puppet for some cruel entity wasting away his talent. This even does not touch on the simple concept of doing things that a teenager and young adult does at those ages. No prom, dates or other normal youth activities for him.

Finally, universities should put age limits on full time students. I would guess that 15 or 16 would be appropriate. That would stop these weird situations from appearing. UConn was right in not allowing the genius to travel to a dangerous country like South Africa. UConn was wrong in allowing him to be a full time student on track for a degree.

Ghost chili fights back

Just when you thought every simple, conceivable weapon has been invented, the Indians (India, Asian) are going to weaponize their bhut jolokia or ghost chili. Yes folks, they have figured out the practical application of pepper heat besides burning your mouth and your innards with hot Indian cuisine. What are they going to do beside force you to gulp water in excessive amounts? It appears as if they are going to make a form of mace out it.

"This is definitely going to be an effective nontoxic weapon because its pungent smell can choke terrorists and force them out of their hide-outs," R. B. Srivastava, the director of the Life Sciences Department at the New Delhi headquarters of the DRDO said.

Srivastava, who led a defense research laboratory in Assam, said trials are also on to produce bhut jolokia-based aerosol sprays to be used by women against attackers and for the police to control and disperse mobs.

I always thought the hottest chilis in the world were habaneros, but I was wrong. It appears these ghost chilis are the hottest in the world according to the Scoville scale. The article makes a comparison to the common jalapeno pepper demonstrating their true heat.

It has more than 1,000,000 Scoville units, the scientific measurement of a chili's spiciness. Classic Tabasco sauce ranges from 2,500 to 5,000 Scoville units, while jalapeno peppers measure anywhere from 2,500 to 8,000.

NCAA basketball tournament

It is collegiate spring break in March, thus, the NCAA men's basketball tournament is beginning this week. At time of this post, 1:20 PM CST, the games have begun. This post will cover just a few statistics associated with the 65 team, three week long single elimination tournament. I am playing in a bracket on ESPN.com with my coworkers. I know little about college basketball, but after my last place showing in the bracket last year this year is going to be based on the professional sportscasters' prognostications.

First, we will investigate random picking of winning teams starting at the 64 team start. If one flips a coin, the chances of landing on one side (say heads up) is 50 % or 1 in 2. Flip the coin a second time, there is still a 1 in 2 chance that coin will land heads up. Basic statistics have you multiply the results together for the odds of both coin flips being heads up, 0.25 % or 1 in 4. The simplest way to calculate the odds of every flip being heads up are 1 in 2^n, where n is the number of coin flips. We will apply this to the NCAA tournament. In the single elimination tournament with 64 teams, 63 games are played. The odds of picking every game correctly in a random fashion (50% odds per game) are 1 in 9*10^18 or 1 in 9,000,000,000,000,000,000!

Second, the tournament setup has teams in 4 regional brackets. Each bracket has teams ranked as seeds 1 to 16 according to their regular season record and strength of competition. The first round has the seeds playing against each other in this manner: 1 vs 16, 2 vs 15, 3 vs 14, 4 vs 13, 5 vs 12, 6 vs 11, 7 vs 10 and 8 vs 9. According to wikipedia since 1985 and institution of the 64 team bracket, the following odds apply during first round.

1. The #1 seed has beaten the #16 seed all 100 times (100%).
2. The #2 seed has beaten the #15 seed 96 times (96%).
3. The #3 seed has beaten the #14 seed 85 times (85%).
4. The #4 seed has beaten the #13 seed 79 times (79%).
5. The #5 seed has beaten the #12 seed 66 times (66%).
6. The #6 seed has beaten the #11 seed 69 times (69%).
7. The #7 seed has beaten the #10 seed 61 times (61%).
8. The #8 seed has beaten the #9 seed 46 times (46%).

Using these statistics by picking the highest seeded team through entering points 1 to 6 above in our statistics and assuming that rest of the tournament has 50% odds, the new odds of picking every game correctly is still the astronomically high 1 in 7*10^13 or 1 in 70,000,000,000,000.

Those people who do correctly pick every winner in the brackets are not using random choices, they are using educated guesses (statistics) with some luck to help them out.

Baseball cards as equities

Most Americans know of that sports fanatic who seriously trades baseball cards. I had a little interest in these things when young. Recently, I am had an idea using these sports memorabilia items as an example to explain the general operation of the stock market. First, I will define why stocks and baseball cards have any value.

Baseball card value is dependent upon a collector's desire to own the card. Rarity, nostalgia and the desire to complete a collection often add to a card's value. The actual card has no inherent economic value except what a trader is willing to pay.

Stock shares are portions of a business. Companies sell shares in initial public offerings to raise money. The owner of a share(s) owns a small portion of that company. Most shares are traded publicly on stock exchanges and these are known as public companies. We are going to focus on public companies for simplicity sake in this analogy. The only value a stock has except the listed price on an exchange comes from dividends. In most cases, dividends paid are on the order of a few percentage of a stock's listed value, not the main factor leading to ownership. Excluding dividends, the actual stock has no inherent economic value except what a trader is willing to pay.

Back to the baseball card analogy, we are going to have a giant conference where all of the biggest traders congregate to trade in auctions. The purpose of the auction is for buyers and sellers to get the best price for their cards. It determines a fair value for cards in the auction at that given point in time. English auctions (most common type in the US) work in a simple manner. An auctioneer will start announcing to the crowd a price or ask for a card. In the crowd, investors will start bids increasing the ask price of the card. When the ask price no longer increases, the bid and ask match. The auction for the given card is over and the card is sold to the bidder from the seller at the agreed price.

Alternate the scenario a little and the stock market basic operation will be represented. Picture the baseball card traders ditching their day jobs and trading baseball cards full time? Everyday, the same baseball card is traded at an auction. The mechanics of the auction change as follows:

1) The beginning ask price of the day is the ask/bid price from the previous day.

2) Bids can now take card price in both directions. Price can increase and decrease.

This is similar to the bidding found in stock markets, except this occurs for millions of shares (cards) hundreds of times per individual stock daily. Total stock exchanged on a market is on the order of a few billion daily. The stock market is nothing more than a complex auction house to trade stock between investors buying and selling stock. Stock markets themselves have no inherent value, the participants have the capital and stock. Participants are where a market's value lies.

This analysis covers stock market basics. It does not take into consideration advanced trading strategies such as shorting stock, options and day trading to name a few.

Wine and weight control

Many studies concerning weight gain and loss are always being published. This study recently published is about moderate alcohol consumption and weight gain by women. It hints that alcohol in the subject's diet reduced weight gain. Once again, the supposed evil things in life may help us in moderation. It may help explain the French conundrum of eating rich foods and staying thin (French drink wine). In a prior post, I discussed how cheese has the chemical compound linoleic acid that increases a person's metabolism slightly reducing weight gain. What are the exact benefits to moderate alcohol consumption?

First of all, heavy alcohol consumption is NOT good for anyone. It leads to weight gain and other various chronic health problems. Societal problems also arise with the inability to properly function among people. Alcoholism goes down all the bad paths your mother warned you about. I condemn daily drinking of 3 or more drinks in a setting. Even more damaging to a person's body is binge drinking at 5+ drinks in one setting. We as a society should find ways to reduce such drinking.

Moderation in all things. Drinking a couple of drinks a day will not hurt you. The study linked above followed 19,220 women aged 39 and older who started with a normal body mass index or healthy body weight. The study followed these women 13 years and found:

"An inverse association between alcohol intake and risk of becoming overweight or obese was noted for all four types of alcoholic beverages [red wine, white wine, beer and liquor], with the strongest association found for red wine and a weak yet significant association for white wine after multivariate adjustment," the authors write.

Very interesting. The exact reason why is not speculated in the article. It is another study that questions the dietary orthodoxy we are often hear. We need more studies like this example.

Slippery slope of Greece

The mainstream US media tends to emphasize stories that often bring about passion from their directed audience. Americans are often disconnected from important world events. The cause of this international detachment is our relative large size or isolation from the largest Europe/Africa/Asia landmass is a topic of long debates. In either case, economic events in Europe may be powerful enough to reach our sovereign shores soon. It has to do with national debt of the commonly referred to PIIGS, (Portugal, Italy, Ireland, Greece and Spain) and its influence on the economic entity the European Union (EU). We are going to specifically focus on the current hot spot, Greece.

Greece is facing debt on the order of 120 % of its gross domestic product (GDP). It would take over 1 year and two months of the country's complete economic output to pay off this whopping total. This is one of the highest debt loads in the world. It grew to this large size through many avenues, some of them legal and others illegal underneath the Treaty of Maastricht forming the EU. Greece was supposed to limited its yearly deficit to just 3 % GDP by treaty terms. It seems the the Greece government has been cheating on this promise in many ways. I will avoid details here. What I am going to discuss are potential international responses to this mess from best case scenario to worst case scenario. I call into question any "best case" options though.

Option 1: EU bails out Greece with emergency loans at low rates and Greece implements austerity budget spending.
Results: If the money comes in from the other EU members, it will give Greece a little breathing room to fix problems. This requires the most powerful EU member's, Germany, blessing. If the money does show, I rather doubt Greece will do more than superficial changes to government spending. Greece has cheated on its obligations in the past, thus, why should it change now? EU members know this. The cash influx would last about 6 months and nothing structurally would have changed. Greece would be where it started. Even if the austerity measures were fully implemented, Greeks make is a national past time to protest. The economy would face a decline in productivity resulting in further economic problems.

Option 2: Bailout from the US Federal Reserve in low rate loans
Results: Same as in option 1. The advantage of this scenario is it could be kept secret. For Europeans, it is the best option since Europe do not have to pay. American taxpayers get the bill when option 4 below occurs.

Option 3: International Monetary Fund (IMF) steps in and gives emergency loans to Greece.
Results: Same as option 1 again. Two negative aspects loom here. One, I believe this would break terms of the EU. Other EU states would retaliate, dumping on Greece in various ways. Greece might get thrown out of the EU. Two, the spending restrictions the IMF imposes during its assistance programs are harsh. Greece will enter into an economic downward spiral as socialist union workers shut the country down from mass protests.

Option 4: Greece defaults on sovereign debt
Results: It is impossible to determine what will occur after the actual fact. Greece would enter into a severe depression though. The key is membership within the EU. Will it remain a full or partial EU member? Will it keep the euro as a currency? I am guessing the IMF would step in here and impose their will. Greece would have to accept a bitter pill.

Reviewing the four options above, unfortunately they all will lead to option 4. The amount of debt Greece has accrued is too much. Greece is not positioned towards a future booming economy in their current political and economic position. The bailouts (options 1-3) lead to just more debt down the road, thus, they default eventually. To put in prospective, if they pay 4.5 % annual interest on their 120 % GDP debt (~$340 billion USD according to Wikipedia) that translates into $18.4 billion (5.4 % of all economic activity) annually to service their debt interest alone. This value does not include debt principle repayments (much higher value). In recent Greek bond issues, the interest was north of 6%. They are paying significantly more than just outlined!

We are just using Greece as an example of the debt problems facing all the PIIGS. The other oinkers are much larger nations and have similar debt problems. How this will effect world bond, commodities and equity markets will be determined over the next few weeks to months. The time frame depends on if one or more of the initial three options occur, delaying the event.