Meeting Minutes

We had an insightful and wonderful meeting at On The Border.  We had 3 attendees: (from left to right) Ry Zamora, Tommy Schultze, and VJ Arjan. 

Computerization of the world

We started off the meeting discussing an article that Tommy had sent to various people, including our attendees, titled "The Future of Employment: How Susceptible Are Jobs To Computerization?".  Written by two Oxford University professors, the article proceeds to explain that more than a half of the current jobs as characterized by the Bureau of Labor Statistics, will have be automatized in the near future.

https://docs.google.com/uc?export=download&id=0B0-ape4ST5Atb0pTSDhib1YzQ3c

They go on, "while technological progress throughout economic history has largely been confined to the mechanization of manual tasks that require physical labor, technological progress in the twenty-first century can be expected to contribute to a wide range of cognitive tasks", involving everything from legal writing, truck driving, medical diagnoses, and even persuading and selling.

Tommy went on to describe the SOC (Standard Occupational Classification) codes that the Bureau of Labor Statistics uses to catagorize each job and even created a spreadsheet that listed probabilities of that category being automated.  The excel sheet is attached here.

https://docs.google.com/uc?export=download&id=0B0-ape4ST5AtNTI4YjFYSHdOTnc

Some noteworthy categories include, Security Guards, which have a 84% probability of being automated, Pharmacy Aides which have a 72% chance of automation, Accountants and Auditors, which have a 94% probability of being done by a computer.

Those that had a lower chance of automation were either a specialized skill or a profession that required dealing with cultivating a relationship with people.

An example of this automation, could include what roofing contractors do today, which is the use of aerial drones to scope out a building or roofing project.  There is a drone called the Parrot AR Drone 2.0, which costs $300, that is currently being used in this manner.

Tommy went on to discuss that Qualcomm has already designed what he terms, "brain-inspired robots", which have artificial intelligence; in other words, they are building semiconductor chips that simulate a positive feedback mechanism. 

http://www.youtube.com/watch?v=8c1Noq2K96c

Some gaming designers are using AI (Artificial Intelligence) in their games where enemies have the ability to surrender and to even negotiate and this is not even scripted. 

In games like 'Stalker", the characters in the game have AI and therefore have the ability to decide whether a situation warrants a choice or not.  The characters in the game can even explore the virtual game environment to look for supplies or find good hiding spots.

It is only a logical conclusion that this technology will be extended to real life military operations as well.  At the moment, robots in the military and even space exploration are being directed by humans.  The time that robots will be able to fight, identify targets, etc. may be a scary day indeed.

VJ asked what theorhetically would happen should half the labor force be unemployed and Tommy suggested to watch the movies Elysium and Metropolis, which illustrate a permanent unemployed and unfulfilled underclass that literally lives below the upperclass.  If nothing else, Tommy went on, the government may be forced to give out more welfare checks to give these people a living - it would be an implicit tax of sorts as a consequence of these advances in technology.

The GOP's Losing Battle

As everyone remembers, between October 1st through the 16th, the U.S. Government entered a shutdown after Congress failed to put through legislation appropriating funds for the fiscal year 2014.  During the shutdown, 800,000 federal employees were fuloughed.  We all discussed the situation and who the winners and losers were.

This situation was created in part by the Tea Party wing of the Republican party, in particular Senator Ted Cruz's efforts, to threated to stop negotiations should Congress approve funding towards the Affordable Care Act.

The net-net was that funding was approved and certain issues were tabled until February 2014, where it may be likely these effects will be dealt with again.

VJ mentioned that the shutdown hurt the public's attitude towards Congress, but was especially harsh towards the Republican party.  After the shutdown, a Fox News poll reported that 42% of voters pinned the blame for the shutdown on the Republicans, while 32% on the Democrats.  

Another Gallup poll during the shutdown reported that only 28% of the public had a favorable view of the Republicans in Congress, while the Democrats had a 43% approval rating.

Just thereafter, in the battleground state of Virginia, the Democratic candidate, Terry McAuliffe, edged out Republican Ken Cuccinelli to win the Governors electoral race.  Both sides admit that the government shutdown was a major key to the Democratic victory.

Mr. Cuccinelli's chief political strategist, Chris LaCivita, said in a recent interview with USA Today that the shutdown was "more than anything...what cost us the race."  He even mentioned how the shutdown and the beating of the GOP brand nationally caused Republican donors to "sit on their checkbooks" and hold on to their political contibutions.

VJ went on that these are low points indeed for the GOP and he believes that any chance for the Republicans to take office in 2016 may have been lost during this shutdown.  It will take a while to lick their wounds before they will be able to bounce back. 

He also mentioned that although the Tea Party had originally helped the Republican party and enthused its base, it may actually be hurting them as the more vocal and extreme wings asserted their dominance alienating those majority moderate Republicans.

China's Plenary

Part of the reason the meeting minutes were delayed in being released was in anticipation of the 3rd Plenary of the 18th CPC (Communist Party of China).  Ry Zamora, who has visited China many times, explained how these Plenums, which took place between November 9th and 12th, are important because it is where the new leader, Xi Jinping, can introduce broader economic reforms and a political blueprint.

The Plenary did not offer much in the form of drastic economic reforms and there will not be any vital changes to its current political policies either.  There was, in fact, lots of re-hashing of previous reforms.  For instance, increasing the role of household consumption, improving energy efficiency, decreasing inequality, etc, were all stated in that last such meeting because all of those issues basically moved in the wrong direction.

However, Mr. Xi did create a new governing body with himself as the head that will cut out the middlemen in the Politburo for approving economic reforms.  This may be his way of fighting a system corroded by rampant corruption.

It looks like Deng Xiaoping's philosophy of "crossing the river by feeling the stones" will remain in place and that more steady and gradual improvements on current policies seems to be the route that the China under Xi Pinjing is going to take.

Market Prognostication

Ry mentioned that many economic indicators he's been following illustrate that economic growth is slowing down and that even though consumer confidence has been increasing, producers confidence has been on the slide.

He believes that the markets at some point may turn between now and the end of the 1st quarter of next year and that investors may want to issue puts on their position or just puts on market indices, while keeping cash available to buy on the selloff. 

Ry also sees an old snake rearing its head again.  There is evidence that the ECB has not been treating all the banks of the member states the same.  For instance, they are being more strict on those banks in say, Greece or Italy, and not so strict on the banks in Germany and France.  According to the statistics that Ry is reading, there may be some major problems in German and French banks in the near future, as illustrated by the results of a round of recent bank stress tests that the ECB conducted. The same capital requirements issue that the PIIGS faced earlier over the past few years may be confronted again very soon by the banks in other member-states.

Ry also recommends to buy into companies that have a strong international presence and are not completely dependent upon and operating on any one country; a strong country diversification can soften the blows that any one country can deliver.

VJ mentioned that the current market environment and increasing consumer confidence suggests to him that there may be a classic "Santa Claus rally" in store, but thereafter the future is less certain.

Tommy suggested that the economic surge during the holidays is so strong that there are several retailers who will operate in the red over the course of the year and make up the entire deficit and more during the holiday season.  He mentioned J.C. Penney, Sears, and Radioshack as examples that fit this mould.

Tommy went on to mention that even for these behemoth brick-and-mortar stores, the day of reckoning is coming.  He estimates that by 2017, 60-70% of all major purchases will be done online.  Today anything from sticky notes, to furniture, to cars can be ordered online and he believes that this trend for online purchases will only become stronger in the future.

The Power of Suggestion

Tommy mentioned to us how comedians and actors are able to lead their audience through conversations and those who can do control conversations without the audience noticing and can set them up to feel a certain thought or emotion are the best in the industry. 

It is similar to a conductor of an orchestra directing an ensemble.

He gave us a demonstration here with the use of his LiveScribe; it is an incredible device and illustrates the point (will need the updated Adobe Reader to view this, it an incredible device.  You may even find when you hear the conversation that we are some straight-up nerds :-). )

You can either click the link below to download the file, or watch it below.

https://docs.google.com/uc?export=download&id=0B0-ape4ST5AtM2t3VmV5a2ZKTW8

The next meeting will be on Sunday, December 8th, 2013.

For those who have not attended a meeting, but would like to attend, please email your wish to VJ Arjan at scarletkings@gmail.com

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