Aspergers Syndrome (High Functioning Autism)
The term Asperger’s Syndrome^1(AS), first coined by UK psychologist Lorna Wing, was recorded almost at the same time, independently, by Leo Kanner of the Johns Hopkins University (in 1943) and a paediatrician Hans Asperger in Vienna (in 1944)^2. The curious set of behaviours in children having this abnormality was a marked inability to make friends and to socially interact as “normal” children do. People with AS have trouble perceiving the intentions or emotions of other people, due to a tendency to ignore or misinterpret such cues as facial expression, body language, and vocal intonation. They may appear awkward or rude, and unintentionally upset others. They also have restricted patterns of behaviour, activities, interests and impaired nonverbal behaviors in areas such as eye contact, facial expression, posture, and gestures. However unlike autism, people with AS are not withdrawn and do interact socially albeit in an awkward fashion such as engaging in long winded one-side conversations in their narrow field of interests without any regard to their listener’s feelings.
People with AS typically demonstrate behavior, interest and activities that are restricted, repetitive and abnormally focused. In fact, the pursuit or obsession with a narrow range of interest in a specific area, is one of the more pronounced features of people with AS. Their intense, narrow, time-consuming personal interests, sometimes eccentric in nature, usually results in social isolation, or interfere with the completion of everyday tasks. On the positive side, some interests can lead to social connection and even careers. For example, there are children and adults with an encyclopaedic knowledge of cars or an obsession with coding software. However, this obsession is usually within a specific part rather than the whole or larger picture.
Further, people afflicted with AS exhibit a clear dislike for any change in their normal routine. In fact they crave routine. Also, they usually demonstrate inflexibility and resistance to change. Change may trigger anxiety, while familiar objects, settings, and routines offer reassurance. This usually results in difficulty transitioning from one activity to another, from one class to another, from work time to lunch, or even from talking to listening. Moving to a new school, new town, or new social role can be an enormous challenge. People with AS have extreme sensitivity, to sights, sounds, smells, tastes, or textures. However many outgrow these sensory issues at least to some extent as they mature.
High Intelligence & Asperger’s Syndrome
Recent studies seem to show that people with AS typically compensate their “disabilities” with traits that often could be considered as above average:
Normal to very high intelligence
Good verbal skills, including rich vocabularies
Originality and creativity including a propensity for “thinking outside the box”
Honesty and ingenuity
Careful attention to details
Strong work ethic, with particular attention to accuracy and quality of work
Special interests that can be tailored toward productive work or hobbies; individuals with AS who have intensive knowledge in one or more specific areas can channel their expertise toward new discoveries and creations in their chosen field.Keen senses allow some people with AS to see, hear or feel subtle changes in the environment that others do not, resulting in phenomenal powers of observation.
In an article in the BBC in 2003^3 scientists at both Oxford and Cambridge Universities, surmised that both Einstein and Isaac Newton may have had AS. Einstein displayed signs of AS a child, being a loner with extreme if not obsessive interests at a young age. Newton hardly spoke and was so engrossed with his work that at times he forgot to eat and was often bad-tempered with the few friends that he had. Both had intense focus in specific areas of interest. Both had difficulty in interacting in social situations and were poor communicators. But both physicists are also considered by many of their peers to be the giants in their respective fields of physics, if not outright geniuses.
In one of Dr. Temple Grandin’s articles “Genius May be and Abnormality”^4 she postulates that genius may be an abnormal condition. For example, there are 2.5 times as many engineers in families of people with autism than the norm (Dr. Grandin’s family includes several). In fact in some circles in Silicon Valley, AS is called the “the engineers’ disorder”. This postulate seems to agree with an article in Wired magazine in December 2001^2, which posits a link between the higher incidence of AS in children of Engineers and computer professionals in Silicon Valley. What was once thought to be a rare affliction in the range on one in 10,000 appears to be 20 times more in the state of California. A familiar joke in the industry it seems is that for the many hard-core programmers working for IT firms such as Intel, Silicon Graphics, Adobe who come to work early and leave late, confining themselves in their cubicles coding for hours could very well be residing somewhere in the domain of Asperger’s Syndrome themselves. It seems that even Bill Gates is frequently diagnosed in the press. His seemingly single minded focus on the smallest technical detail, rocking motions and flat tone of voice are all indicative of an adult with AS. That is probably why now AS is also known as “The Geek Syndrome”.
This is further reinforced by Simon Baron-Cohen who spent 2 decades studying autism^5. He found some evidence (in 1997) of a link between autism in children and a propensity for engineering in their parents. In a study of about 1000 families^6,7 where autism occurs they found that the occurrence of an engineer in the family was about 12% (28% in another study)^10 compared to the general population which was about 5%. A disproportion of about 2 and a half times, compared with the general population. In his 1997^10 study he goes on to postulate that the data collated suggests that AS doesn’t strike at random and may occur in families that have a genetic predisposition to such offspring, i.e. families with engineers.
In relation to giftedness, it has been reported that members of Mensa (IQ > 148 SD24) have been found to have three to six times the normal frequency of autistic siblings and children (Sofaer & Emery, 1981)^8,9. Indeed in a study by Henderson, Lynette M. (22 June 2001) the prevalence of giftedness among those afflicted with AS seems to be higher than that compared to the general population10.
A recent survey study in Cambridge^11, carried out on 378 mathematics undergraduates and 414 students in control disciplines (medicine, law, social science). The results seem to suggest a link between systemizing capabilities and autism. Simon Baron Cohen found that the main features of the autistic spectrum are impaired empathizing concurrent with intact or even superior systemizing. Systemizing being “the drive to analyse” and/or build a system (of any kind) based on identifying input operation-output rules. Engineering, mathematics, music, architecture, and biology are all clear examples of systemizing. It seems that that the genes underlying autism are not always only associated with just social disability but may also be associated with talent or enhanced abilities in non-social fields.
Recent Neurobiological Understanding
Studies^12 done in the past 30 years at Harvard Medical school on brain tissue of autistic individuals that passed away at ages ranging from 5 to 74 revealed abnormalities in the limbic system which includes the amygdala (the brain’s primitive emotional centre ) and the hippocampus (an area of the brain responsible for memory). These appear small and immature compared to normal.
Another abnormality discovered by neuroscientist Eric Courchesne, of the University of California at San Diego is the unusually small number of Purkinje cells in the cerebellum which are critical for data integration by receiving large mounts of information from the outside world and preparing the other areas of the brain to respond to appropriately. What he found recently by brain imaging studies, is that autistic children by the age of 2 to 3 show unusual growth of the brain to a size much larger than normal packed with grey matter of the cerebral cortex and the fibrous white matter that provides the connections between the cerebral cortex and other parts of the brain including the cerebellum. Courchesne surmizes that what leads to autism may be an otherwise normal process that switches on too early or too strongly and shuts off too late and that process would be controlled by genes.
Asperger’s Syndrome vs High Functioning Autism
Many still considered AS part of the continuum on the autism spectrum i.e. High Functioning Autism (HFA). However recent studies using MRI imaging at Stanford University^13 reveals that there were no difference in total cerebral volume (grey and white matter) between subjects with AS and HFA nor were there differences between subjects with AS and the control group with who were not afflicted with either AS or HFA. However the amount of grey matter was highest among HFA, intermediate among AS subjects and lowest amongst the control group, suggesting an increasing volume of grey matter with the severity of the condition. When neuropsychological testing (verbal and performance IQ tests) were carried out it seems that the continuum breaks down with large discrepancies in the performance between the 2 groups (HFA & AS). Subjects afflicted with AS in general have unimpaired linguistic development. The testing suggest that AS and HFA may be may be clinically and neurobiologically different from each other.
The above data and studies to date are however inconclusive but does tend to infer a connection between AS (and HFA) and intelligence. It may be the beginnings of the stream of more conclusive evidence that link AS with another form or state of the human brain that is not defective but simply different and even enhanced in some specific areas (such as engineering and computing), although these somewhat increased abilities are uneven or or asynchronous. A different type of ”wiring” if you like.
It a way, it seems a bit ironic that although our cultures readily accept that some people exhibit superior physical abilities, yet they seem reluctant to do the same for intelligence albeit if it comes as part of the package with social ineptness or with a perceived ”disability” (for anything outside of the accepted ”norms”of behaviour). The increasing numbers of those afflicted, whether natural or environmentally induced tends to suggest that it may be part of evolution or even human development. Hence rather that treating these people as outcasts or weirdos, we should be coming up with ways to understand them better, ways to utilize their intelligence for the benefit of society.
Asperger's Syndrome may be just a fancy way of calling the class genius a ”geek”.
Notes: This article is simply the author’s opinion and interpretation of the various studies and research done by experts on Asperger’s Syndrome and High Functioning Autism, and in no way represents the author’s “original work” nor does it represent the views and opinions of Hong Kong Mensa or it’s members.
1. http://en.wikipedia.org/wiki/Asperger_syndrome
2. http://www.wired.com/wired/archive/9.12/aspergers_pr.html
3. http://news.bbc.co.uk/2/hi/health/2988647.stm
4. http://www.autism.com/individuals/genius.htm
5. http://www.wired.com/wired/archive/9.12/baron-cohen.html?pg=1&topic=&topic_set=
6. http://www.abc.net.au/rn/science/ss/stories/s13209.htm
7. http://www.autismresearchcentre.com/docs/papers/1997_BCetal_Engineer.pdf
8. http://cogprints.org/4664/1/AUTTHEO(cog.pdf - page 8
9. http://jmg.bmj.com/cgi/content/abstract/18/6/410
10. http://www.accessmylibrary.com/coms2/summary_0286-27110020_ITM
11. http://www.springerlink.com/content/21t03377610752g0/
12. http://www.time.com/time/europe/magazine/2002/0715/autism/scautism3.html
13. http://www.wisconsinmedicalsociety.org/savant_syndrome/savant_articles/aspergers
Thursday, March 19, 2009
Friday, March 13, 2009
SPEARMAN'S "G" AND HIGH RANGE IQ TESTS
For you high IQ types, mensa may not be selective enough. But for mere mortals 132 is very respectable. On the subject of entrance requirements, I would like to refer you to this article by the late Grady Towers;http://www.eskimo.com/~miyaguch/grady/societies.html Please pay particular attention to the last 3 paragraphs. You will find his conclusions simply astonishing.
He is simply saying that for those who sat for just one test like the MEGA and assuming a minimum of 0.7 correlation between the MEGA and the mensa test, then 86% would not pass the mensa test based on his calculations.
In detail here:http://www.eskimo.com/~miyaguch/grady/followup.html
Personally I have a lot of doubt on the high range tests of various societies. First of all, they were not created by psychologists, hence the construct validity is in serious question. Is it measuring what it's suppose to be measuring? Is it measuring psychometric "G". Or is it measuring a specific ability that has very low correlation with "G" .
In this interview between Chris Langan and Arthur Jensen:http://eugen.leitl.org/tt/msg12769.html A. Jensen basically says that IQ tests (even today) become less "G" loaded the higher we go ( Q12). Also, there is the problem of getting sufficient sample size (obviously) to obtain statistically significant conclusions (remember some societies claim rarities of 1 in a billion!). In fact Chris Langan point blank questions him (Q6) about "power-tests" to which he politely replies that there are standard ones out there that could be used (Ravens + Concept mastery) - read : "the ones out there created by ultra high IQ societies dont count".
Unless the test createors can provide rigourous proof that it is a test of cognitive abilitives of some sort (and what it is exactly that it is measuring), we can only say that they are puzzles. Granted one requires a certain amount of intelligence to solve it. I am certainly not a trained psychologist nor did I take any psychology units at UNI and my grasp of basic statistics is at a basic level (Statistics 101) and simple regressesion analyses. However from what I have read so far on psychologists like John Raven (son I think of John C Raven - the guy who first created the Raven's Matrices) is that they usually start out with what they want to measure and then devise a test to measure it (kinda obvious isnt it?) and one of the main tools psychologists used in the past were statistics because things like reaction time measurement, MRI scans of the brain (more neurological investigative type techniques) were simply not available then.
In fact John Raven never stated that any of his tests were tests of "intelligence" (page 54 bottom left corner): http://www.eyeonsociety.co.uk/resources/CognitiveAbilityAndOccupationalPerformance.pdf
On page 52: We can now return to our conclusion that the IRT-based item analysis of the RPM really does show that there is a continuum in "cognitive (actually "conceptual") abilitiy" and that this continuum can be assessed using a range of items running from easy "perceptual" items to difficult "analytic" ones. It involves the ability to discriminate figure from ground; the ability to discern order and meaning in (or make meaning out of) confusion; the ability to form high-level, usually non-verbal, concepts which enable one to make sense of the evironment. Spearman used the Latin word educere - to draw out to characterise and discuss this componenet of general intellogence - g- and contrasted it with reproductive ability, the ability to reproduce already verbalised knowlege.
He goes on to say that one's performance on such tests may even comes down to motivation (page 55 top left hand corner), rather than just pure cognitive ability.
J. Raven isnt even sure his tests measure "intelligence" but knows that it is measuring some kind of "meaning-making" ability. Back to the Langan-Jensen interview; Jensen's answer to Q12, he mentions that once you approach the high ranges e.g. 4-Sigma, you are not measuring "g" anymore but a specialized ability.
You see "g" depends on a high correlation with the performance of testees to many other types of abilities (e.g. maths, abstract logic, verbal e.t.c validating the concept that an intelligent person will perform equally well on all types of tests of cognitive abilities). Once a testee approaches the higher ranges the correlation drops (think of it, there are less people scoring at this range for the same correlation compared the lower ranges, as you extrapolate upwards you will ultimately reach 0 correlation which would be the ceiling of "g").......which is counter to the concept of "g" and since "intelligence" in the psychometric sense is anchored to "g" , you cant call it intelligence anymore. Jensen logically concludes that you are then measuring a specialized ability but not intelligence. A real live example would be, that someone who says score very high on one of the spatial high range tests like LS36 may not score at the same level on the Mega (which have a range of problems and not just abstract-spatial type). But if both tests are measuring "g" accurately, the testee should score equally high on both tests.
My undestanding of G based on what I read on Spearman and what he tried to do: He carried out a series of tests on a sample group of students in a school on a varied ranges of cognitive tasks such as mathematics, literature, reading comprehension e.t.c.He then "discovered" that if a student does well in one domain he tends to do well in most of the others. Spearman then postulated that there is something general of about "intelligence" in that if one does well in one task, he "tends" to do well in other types of tasks.A test A is then said to be "g" loaded if a testee does well in test A and then does well in test B,C,D and so on (high correlation).
If Test A is "the" test, then test A will have "predictive" power for other types of tests/tasks of cognitive abilities.Also it is not sufficient to claim "correlation" unless there is proven correlation for many many testees (note the correleation is on the results of the tests taken by many testees).
Question : Based on the above; How does a test maker in one of these ultra high IQ societes prove that their test is "g" loaded (read high correlation on varied tests of other types, for many many testees)? Note : at the very high ranges there are so few results to correlate with (read Arthur Jensens reply to Q12 from Chris Langan):http://eugen.leitl.org/tt/msg12769.html
Also the higher you go the less "g" loaded the test becomes (for obvious reason).And since psychometric tests are dependent on "g" what are we then measuring?
However, I certainly cannot disagree that the high range tests is in fact measuring some form/component of intelligence.But is it "g"? Maybe a better question at this point is what is "g"? Spearman's concept of "g' is actually a statistical one that relies on correlates. The factor analyses he carried out is suggestive of "g" but he could never extract it? certainly words like "it points to" , "is suggestive of", but he never really defined exactly what it was. He did distill it down to a few common factors such as being able to discern similarities or differences, grasping new concepts, speed of processing, working memory, all evident in subjects that tend to do well in a diverse range of mental tasks (he found that even the ranking of the subjects in every type of mental tasks stays the same for each).
However other psychologists arrived at different conclusions about "g";
Raymond Cattell - posits two types of "g" namely fluid and crystallized.
John Carrol - suggests the Three Stratum theorem e.t.c
But still no one to this day that I know off have defined exactly what it is or rather at least agree to the range of of cognitive abilities that it is composed off?
I would like to share with you the recent finding of an American Psychologist Douglas K. Detterman.http://books.google.com/books?hl=en&lr=&id=2OjruFlEWukC&oi=fnd&pg=PA223&dq=Detterman,+D.+K.+(1982).+Does+%22g%22+exist%3F&ots=eBm-ilkIgH&sig=6IPJwp9jwWnH6QniXM55AWHzVZg#PPA235,M1page 235-236
They speculated that subjects who have damaged or inefficient central processes should perform similarly on all tasks (equally badly) because the damaged central process causes the whole system to perform badly. On the other hand , those with efficient central process will be more variable on all tasks because any limitation on any particular tasks will be dictated by peripheral processes that do not affect the entire system hence maintaining efficiency for the "whole".To investigate this, they divided up the distribution into 5 equal parts. Within each division of the distribution, they correlated subtests of IQ tests with each other. They did the same for basic cognitive tasks from a battery of basic cognitive tasks.
What they found was simply shocking. They found that "g" correlates twice as high among those with low "IQ" compared to subjects with high IQ, lending support to the above.
If true, it is certainly suggestive of no existence of a unitary "g". But many abilities especially at the high ranges.
He is simply saying that for those who sat for just one test like the MEGA and assuming a minimum of 0.7 correlation between the MEGA and the mensa test, then 86% would not pass the mensa test based on his calculations.
In detail here:http://www.eskimo.com/~miyaguch/grady/followup.html
Personally I have a lot of doubt on the high range tests of various societies. First of all, they were not created by psychologists, hence the construct validity is in serious question. Is it measuring what it's suppose to be measuring? Is it measuring psychometric "G". Or is it measuring a specific ability that has very low correlation with "G" .
In this interview between Chris Langan and Arthur Jensen:http://eugen.leitl.org/tt/msg12769.html A. Jensen basically says that IQ tests (even today) become less "G" loaded the higher we go ( Q12). Also, there is the problem of getting sufficient sample size (obviously) to obtain statistically significant conclusions (remember some societies claim rarities of 1 in a billion!). In fact Chris Langan point blank questions him (Q6) about "power-tests" to which he politely replies that there are standard ones out there that could be used (Ravens + Concept mastery) - read : "the ones out there created by ultra high IQ societies dont count".
Unless the test createors can provide rigourous proof that it is a test of cognitive abilitives of some sort (and what it is exactly that it is measuring), we can only say that they are puzzles. Granted one requires a certain amount of intelligence to solve it. I am certainly not a trained psychologist nor did I take any psychology units at UNI and my grasp of basic statistics is at a basic level (Statistics 101) and simple regressesion analyses. However from what I have read so far on psychologists like John Raven (son I think of John C Raven - the guy who first created the Raven's Matrices) is that they usually start out with what they want to measure and then devise a test to measure it (kinda obvious isnt it?) and one of the main tools psychologists used in the past were statistics because things like reaction time measurement, MRI scans of the brain (more neurological investigative type techniques) were simply not available then.
In fact John Raven never stated that any of his tests were tests of "intelligence" (page 54 bottom left corner): http://www.eyeonsociety.co.uk/resources/CognitiveAbilityAndOccupationalPerformance.pdf
On page 52: We can now return to our conclusion that the IRT-based item analysis of the RPM really does show that there is a continuum in "cognitive (actually "conceptual") abilitiy" and that this continuum can be assessed using a range of items running from easy "perceptual" items to difficult "analytic" ones. It involves the ability to discriminate figure from ground; the ability to discern order and meaning in (or make meaning out of) confusion; the ability to form high-level, usually non-verbal, concepts which enable one to make sense of the evironment. Spearman used the Latin word educere - to draw out to characterise and discuss this componenet of general intellogence - g- and contrasted it with reproductive ability, the ability to reproduce already verbalised knowlege.
He goes on to say that one's performance on such tests may even comes down to motivation (page 55 top left hand corner), rather than just pure cognitive ability.
J. Raven isnt even sure his tests measure "intelligence" but knows that it is measuring some kind of "meaning-making" ability. Back to the Langan-Jensen interview; Jensen's answer to Q12, he mentions that once you approach the high ranges e.g. 4-Sigma, you are not measuring "g" anymore but a specialized ability.
You see "g" depends on a high correlation with the performance of testees to many other types of abilities (e.g. maths, abstract logic, verbal e.t.c validating the concept that an intelligent person will perform equally well on all types of tests of cognitive abilities). Once a testee approaches the higher ranges the correlation drops (think of it, there are less people scoring at this range for the same correlation compared the lower ranges, as you extrapolate upwards you will ultimately reach 0 correlation which would be the ceiling of "g").......which is counter to the concept of "g" and since "intelligence" in the psychometric sense is anchored to "g" , you cant call it intelligence anymore. Jensen logically concludes that you are then measuring a specialized ability but not intelligence. A real live example would be, that someone who says score very high on one of the spatial high range tests like LS36 may not score at the same level on the Mega (which have a range of problems and not just abstract-spatial type). But if both tests are measuring "g" accurately, the testee should score equally high on both tests.
My undestanding of G based on what I read on Spearman and what he tried to do: He carried out a series of tests on a sample group of students in a school on a varied ranges of cognitive tasks such as mathematics, literature, reading comprehension e.t.c.He then "discovered" that if a student does well in one domain he tends to do well in most of the others. Spearman then postulated that there is something general of about "intelligence" in that if one does well in one task, he "tends" to do well in other types of tasks.A test A is then said to be "g" loaded if a testee does well in test A and then does well in test B,C,D and so on (high correlation).
If Test A is "the" test, then test A will have "predictive" power for other types of tests/tasks of cognitive abilities.Also it is not sufficient to claim "correlation" unless there is proven correlation for many many testees (note the correleation is on the results of the tests taken by many testees).
Question : Based on the above; How does a test maker in one of these ultra high IQ societes prove that their test is "g" loaded (read high correlation on varied tests of other types, for many many testees)? Note : at the very high ranges there are so few results to correlate with (read Arthur Jensens reply to Q12 from Chris Langan):http://eugen.leitl.org/tt/msg12769.html
Also the higher you go the less "g" loaded the test becomes (for obvious reason).And since psychometric tests are dependent on "g" what are we then measuring?
However, I certainly cannot disagree that the high range tests is in fact measuring some form/component of intelligence.But is it "g"? Maybe a better question at this point is what is "g"? Spearman's concept of "g' is actually a statistical one that relies on correlates. The factor analyses he carried out is suggestive of "g" but he could never extract it? certainly words like "it points to" , "is suggestive of", but he never really defined exactly what it was. He did distill it down to a few common factors such as being able to discern similarities or differences, grasping new concepts, speed of processing, working memory, all evident in subjects that tend to do well in a diverse range of mental tasks (he found that even the ranking of the subjects in every type of mental tasks stays the same for each).
However other psychologists arrived at different conclusions about "g";
Raymond Cattell - posits two types of "g" namely fluid and crystallized.
John Carrol - suggests the Three Stratum theorem e.t.c
But still no one to this day that I know off have defined exactly what it is or rather at least agree to the range of of cognitive abilities that it is composed off?
I would like to share with you the recent finding of an American Psychologist Douglas K. Detterman.http://books.google.com/books?hl=en&lr=&id=2OjruFlEWukC&oi=fnd&pg=PA223&dq=Detterman,+D.+K.+(1982).+Does+%22g%22+exist%3F&ots=eBm-ilkIgH&sig=6IPJwp9jwWnH6QniXM55AWHzVZg#PPA235,M1page 235-236
They speculated that subjects who have damaged or inefficient central processes should perform similarly on all tasks (equally badly) because the damaged central process causes the whole system to perform badly. On the other hand , those with efficient central process will be more variable on all tasks because any limitation on any particular tasks will be dictated by peripheral processes that do not affect the entire system hence maintaining efficiency for the "whole".To investigate this, they divided up the distribution into 5 equal parts. Within each division of the distribution, they correlated subtests of IQ tests with each other. They did the same for basic cognitive tasks from a battery of basic cognitive tasks.
What they found was simply shocking. They found that "g" correlates twice as high among those with low "IQ" compared to subjects with high IQ, lending support to the above.
If true, it is certainly suggestive of no existence of a unitary "g". But many abilities especially at the high ranges.
Friday, January 9, 2009
THE ASPIE QUIZ
The following quiz would be able to tell you if you are could possibly be afflicted with Asperger's syndrome. Try it:
http://www.rdos.net/eng/Aspie-quiz.php
Apparently it is more prevelant amongst you high IQ types:
http://www.wired.com/wired/archive/9.12/aspergers_pr.html
The above edition of Wired Magazine had an article on the growing affliction of Asperger's amongst the children of the software programmers.
http://www.rdos.net/eng/Aspie-quiz.php
Apparently it is more prevelant amongst you high IQ types:
http://www.wired.com/wired/archive/9.12/aspergers_pr.html
The above edition of Wired Magazine had an article on the growing affliction of Asperger's amongst the children of the software programmers.
Sunday, October 12, 2008
700B BAILOUT AND SHOULD HONG KONG GET OFF THE PEG
Someone asked the other day since the Fed is printing so much money which would fuel inflation, devalue the US$, then should Hong Kong de-peg and float their currency?
1.I would first like to touch on the misnomer which is "printing". It's a difficult statement to respond to because there is just too much media hype around. These days there is no physical printing of money needed to increase the money suply because extension of credit is also money, i.e. credit = money. The recent bailout is simply that. An electronic transfer that simply says the recipient bank has "x" amount of dollars in a "ledger" balance and thats it!
2. It doesnt matter how much money is created. If very little makes it's way to the economy i.e. if there is no one borrowing to spend it then its still a case of "little money chasing too many goods" which results in deflation. This is happening now. The Fed has literally pumped billions into banks but there is no inter-bank lending (no one borrowing) because of a lack of trust. Credit is not being extended to commercial enterprises so businesses have no credit to make simple transactions such as payroll, purchases e.t.c. Hence no matter how much money is created, if there is no borrowing/lending which means prices do not go up, there is no effective debasement of the currency!
3. Inflation/debasement only happens if there is too much money chasing too few goods or when easy credit is available , such as the buildup of the housing bubble a few yeasr ago, where even a jobless vagrant could get a no-money-down load to buy a house! But now the reverse is happening no matter how much money is made available, because at the end of it borrowed money still has to be paid (which was not for a period of time, until this disaster).
HK could float the currency. Although I still think a free-float is too risky for an economy so small. It is easily open to a currency attack/manipulation if say a few hedge funds decide that the free-floated Hong Kong dollar is ripe for attack.This is basically what happened in 1998:
1. Hedge Funds shorts the HK dollar (i.e. borrow the HK dollar and sells it. a few days later they have to buy it back to cover their positions.). They then buy it back a lower level . They could not make much out of shorting the HK dollar because it is pegged (only allowed to fluctuate within a defined band)!
2. However this action (selling the HK dollar means USD is leaving HK) caused the inter-bank rate to sky-rocket because the HK dollar was being oversold.
3. When the interest rate shot up, guess what? the Stock market went down. Then the Hedge fund shorts the Hang Seng Index (most of the blue chips). Here is where they thought they could make a killing! http://www.hkbu.edu.hk/~econ/web988.html
4. Enter Donald Tsang, who spent something like 120B HK to buy back the stocks. This resulted in the creation of the TRACKER FUND. This caused a lot of hedge funds to loose money because they had to "unwind" their trades at higher prices than their sell price. http://en.wikipedia.org/wiki/Tracker_Fund_of_Hong_Kong
Hence I believe HK has 2 practical choices:
a. peg to CNY in the future
b. peg to a basket of currencies like Singapore.
1.I would first like to touch on the misnomer which is "printing". It's a difficult statement to respond to because there is just too much media hype around. These days there is no physical printing of money needed to increase the money suply because extension of credit is also money, i.e. credit = money. The recent bailout is simply that. An electronic transfer that simply says the recipient bank has "x" amount of dollars in a "ledger" balance and thats it!
2. It doesnt matter how much money is created. If very little makes it's way to the economy i.e. if there is no one borrowing to spend it then its still a case of "little money chasing too many goods" which results in deflation. This is happening now. The Fed has literally pumped billions into banks but there is no inter-bank lending (no one borrowing) because of a lack of trust. Credit is not being extended to commercial enterprises so businesses have no credit to make simple transactions such as payroll, purchases e.t.c. Hence no matter how much money is created, if there is no borrowing/lending which means prices do not go up, there is no effective debasement of the currency!
3. Inflation/debasement only happens if there is too much money chasing too few goods or when easy credit is available , such as the buildup of the housing bubble a few yeasr ago, where even a jobless vagrant could get a no-money-down load to buy a house! But now the reverse is happening no matter how much money is made available, because at the end of it borrowed money still has to be paid (which was not for a period of time, until this disaster).
HK could float the currency. Although I still think a free-float is too risky for an economy so small. It is easily open to a currency attack/manipulation if say a few hedge funds decide that the free-floated Hong Kong dollar is ripe for attack.This is basically what happened in 1998:
1. Hedge Funds shorts the HK dollar (i.e. borrow the HK dollar and sells it. a few days later they have to buy it back to cover their positions.). They then buy it back a lower level . They could not make much out of shorting the HK dollar because it is pegged (only allowed to fluctuate within a defined band)!
2. However this action (selling the HK dollar means USD is leaving HK) caused the inter-bank rate to sky-rocket because the HK dollar was being oversold.
3. When the interest rate shot up, guess what? the Stock market went down. Then the Hedge fund shorts the Hang Seng Index (most of the blue chips). Here is where they thought they could make a killing! http://www.hkbu.edu.hk/~econ/web988.html
4. Enter Donald Tsang, who spent something like 120B HK to buy back the stocks. This resulted in the creation of the TRACKER FUND. This caused a lot of hedge funds to loose money because they had to "unwind" their trades at higher prices than their sell price. http://en.wikipedia.org/wiki/Tracker_Fund_of_Hong_Kong
Hence I believe HK has 2 practical choices:
a. peg to CNY in the future
b. peg to a basket of currencies like Singapore.
Sunday, July 6, 2008
THE HIGH PRICE OF CRUDE
It seems that it will be a matter of time before crude oil reaches $150 per barrel or more. Would this be so bad?
On the face of it, yes, as it would feed inflation exacerbating the cost of food and the price of everything, slowing down growth, causing some reserve banks to raise interest rates further crimping growth and potentially slowing down the world economy.
But would this be so bad? The high growth rates of some countries have in itself caused a whole raft of other problems such as the usage of more oil causing greenhouse gases and other negative effects to the environment. It seems that unchecked growth is unsustainable.
The rise in price of crude, while worrying (mainly to our own personal budgets), will check growth rates, reduce unsustainable consumption which in turn will have a "deflating" effect on the economy in the medium term. This will then self correct in a sense because if there is less growth and consumption, then there would be less demand for oil in the long run, which would then cause the price of oil to return to more reasonable levels.
On the face of it, yes, as it would feed inflation exacerbating the cost of food and the price of everything, slowing down growth, causing some reserve banks to raise interest rates further crimping growth and potentially slowing down the world economy.
But would this be so bad? The high growth rates of some countries have in itself caused a whole raft of other problems such as the usage of more oil causing greenhouse gases and other negative effects to the environment. It seems that unchecked growth is unsustainable.
The rise in price of crude, while worrying (mainly to our own personal budgets), will check growth rates, reduce unsustainable consumption which in turn will have a "deflating" effect on the economy in the medium term. This will then self correct in a sense because if there is less growth and consumption, then there would be less demand for oil in the long run, which would then cause the price of oil to return to more reasonable levels.
Friday, May 9, 2008
THE RICE CRISIS
Is there one? I mean how did this come about? O.K. let's put aside the latest disaster to befall Burma (a rice growing country). Did you hear of any rice-crop failures in the past few weeks? months? years? I didn't think so? So what gives?
Something doesn't feel right.
A shortage in corn would be logical because of all the focus in recent years related to bio-fuels, hence diverting food production to fuel production. But rice?
Now if they said that there is a rise in prices due to the fall in the US$ relative to the Asian Currencies across the board, it seems more plausible? mmm....so how do we trust the media to report accurately?
Something doesn't feel right.
A shortage in corn would be logical because of all the focus in recent years related to bio-fuels, hence diverting food production to fuel production. But rice?
Now if they said that there is a rise in prices due to the fall in the US$ relative to the Asian Currencies across the board, it seems more plausible? mmm....so how do we trust the media to report accurately?
Saturday, April 19, 2008
MENSACCINO+
The "+" stands for games on top of well........you get the picture. It was my first time meeting up with some members of the local mensa here in Hong Kong since I joined in early April and it was quite a warm gathering. The atmosphere was relaxed and informal. If this 1st meeting is anything to go by, it seems the chapter here in Hong Kong is represented by a wide spectrum of age groups as well as nationalities consistent with the international status of Hong Kong.
But the thing that really surprised me most is that all of the functions including today's and the day to day administrative duties are organized and carried out by the members themselves voluntarily, which is how the costs are kept low. I find this special.
But the thing that really surprised me most is that all of the functions including today's and the day to day administrative duties are organized and carried out by the members themselves voluntarily, which is how the costs are kept low. I find this special.
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