Nigeria:

Ghana:

My correspondence:

I do not wish to sound extreme or alarmist, but I am becoming increasingly concerned about L’s financial situation. I am not referring to his spending or savings habits as those are beyond reproach, but instead to the currency that L’s financial assets (including his pension) are in.

It is becoming increasingly less inconceivable that the euro will become extinct or that, more likely, the southern European countries abandon or are forced out of the euro. Should this take place due to political pressures and an Italian public unwilling to accept austerity measures, it will happen quickly – more quickly than anyone that is not already prepared can react to.

Here’s how it will look:

On a Friday afternoon, after the banks and the financial markets have closed for the weekend, the Italian government will announce that it is renouncing the euro and returning to the lira. This announcement will be coupled with a passionate speech proclaiming that this is a necessary move for Italy’s future prosperity and to protect its sovereignty. Great focus will be made on nationalistic themes, Italy’s past glory and the evils of allowing foreign powers (focusing on Germany) to dictate Italy’s economic policies. Expect lines such as, “No longer will we allow wealthy bankers in Germany to decide what is best for Italians. From now on, we will do what is best for Italy and not Germany!”

Once the above announcement and speech have been delivered, a bank holiday lasting several days will be declared and, “regrettably”, Italians will not be able to make any withdrawals from their accounts during this period. Meanwhile, all of the euros that Italians hold in their bank accounts will be converted to lira and Italians holding cash will be compelled to make their way to government centers to convert their euros to lira. Armored trucks will fan out across Italy to deliver lira notes to banks, post offices, supermarkets and other merchants.

Naturally, Italians will be given a one-for-one conversion ratio and so an Italian with 10,000 euros will soon have 10,000 lira. Italians will be assured that these lira notes are just as good (if not better) than euros.

Only they’re not… Italians will soon notice that should they wish to convert their lira back into euros that rather than receiving the one-for-one ratio that they were given, that they must pay 2-3 lira to receive one euro. The story is the same if Italians wish to purchase dollars or yen or even basic commodities such as gold, gasoline or rice.

It is called currency devaluation and history is full of them. Currency devaluations destroy the lives of savers and those on a fixed pension.

Politicians love devaluing currency because they can pay off debts with currency that is worth far less. Have a crushing load of debt? Just print out stacks of money and pay off the debts with the money that is hot off the presses…

Large Italian corporations like it because although it may cause a few annoyances at home, they can now export their products abroad and sell them for far lower prices. But, do not be fooled by the politicians and the large Italian firms. Destroying the value of a currency is catastrophic for most individuals and many Italians will experience a dramatic decrease in their standard of living.

While this event is not certain to take place, the risk has increased to the point where I believe your father should have a plan of action in place to prevent the Italian politicians from destroying/stealing what he has worked so hard for during his life.

Love,

Justin

Under no circumstances is this driven home more starkly than when such an event touches us personally.

From the New York Times:

Crime May 11, 2012, 3:14 PM
BREAKING: Man Shot Near Cuyler Gore Park
By GERSH KUNTZMAN, Local Editor

Anyone with information about the incident is asked to call Crimestoppers at (800) 577-TIPS.

The original article can be found here.

On this occasion, the shooter made a very unwise choice when selecting his targets and picked the wrong Italians to fuck with. And even if one merely adopts the selfish perspective of his own desire for self-preservation, I believe he will come to deeply regret his actions.

Nevertheless, his actions serve as a dramatic reminder of the old French expression, “Tout passé, tout cassé, tout lassé“… Everything goes away. Everything breaks down. Nothing is born that does not die. Nothing begins that does not end. There is no morning without an evening, and no silver lining without a cloud. Empires come. Empires go.

It is not a gloomy outlook; it’s just the way things work.

And it is a lesson we would all do well not to forget…

Baccarat Lesson # 6: Watch For Trains

Trying to stop a speeding express train by willpower and luck alone can be hazardous business. This is true in both the literal and metaphorical sense.

A “train” when applied to a game like baccarat is when a trend just keeps going and going and going.

In baccarat, there are only three possible outcomes. Either the player wins, the banker wins or there is a tie (Ties are infrequent in baccarat and have poor odds, so it is best to ignore them and keep things simple: banker or player). So, really, it is like flipping a coin or betting on black or red with roulette.

Baccarat tables these days have a screen next to them that displays the pattern that has unfolded over the duration of the session being played (Baccarat plays for a fixed duration before starting over again). One session of play will use up 6-8 decks of cards in what is known as a “shoe” before starting over again.

On the screen mentioned above, the banker will usually be represented by a red dot and the player by a blue dot. When the player or banker goes on a streak, you will see a long string of connected blue or red dots. This is what they call a “train”.

The good friend I go with, Frank, likes to get on the trains. In other words, if he sees a trend going, he will get on it and keep betting it. The twist is that every time he wins, he takes his new winnings off the table and just keeps his original bet down on the table. So, if he bets $5 on the banker and the banker wins, he will win $5. Then, he takes $5 off the table and keeps $5 on. If the trend continues, he keeps another $5 and on and on until the trend is broken. Alternatively, if he loses the next round, he is just back to even because he already took $5 in new money off of the table. So, Frank likes to ride the trains.

My style is different has been different (I am still evolving as a player). As with investing, I lean toward contrarianism. Therefore, I am inclined to try to get in front of the speeding trains and stop them. If I see a train developing, I will often get in front of it and try to call when the trend will break.

In other words, if I see that “player” has won four times in a row, I would make a bet on “banker”. Of course, the result is random and so it does not matter what the prior results have been. As they say, the table has no memory. So, what I am betting on is mean reversion. Logically, over the course of play, one should expect to see a roughly equivalent number of player wins versus banker wins. So, if I see a long train of player wins or I see that player has been winning 75% of the hands, I will start betting on banker on the expectation that mean reversion will bring the percentages back closer to 50/50.

Sometimes it works and sometimes it doesn’t.

Let’s say I am betting on a player train to stop, so I start placing my money on banker. I’ll start by putting $5 down. Player wins again, so I lose my $5. To get it back and because I have an even higher conviction now that mean reversion is imminent, I will bet $10 – doubling down in other words. Player wins again and so now I have lost a $10 bet and a $5 bet. To get my $15 back and because I have an even higher conviction now that we will witness mean reversion, I will bet $20 – doubling down again. Player wins again and so now I have lost a $5 bet, a $10 bet and a $20 bet. To get my $35 back and because I have an even HIGHER conviction now that we will witness mean reversion, I bet $40. Player wins again. See where this is going? You have to be careful that the train is not longer than your bankroll (I’ll discuss this more below).

Last night I got run over by two trains. The first train I tried to stop or step in front of was after 6 player wins in a row and this was in the context of a record over this round of play so far that had been close to 80% player wins. Time for a mean reversion to banker, no? Player went on to win 14 times in a row!!!!  Even the dealer was surprised by the player run and, naturally, I got ground into a pulp under the merciless steel wheels of that train.

Now, before I go into the casino – and any professional will support this approach – I establish exactly how much I am willing to lose that night. If I lose that much, I am done for the night. I do not go rushing over to the ATM machine to run up my credit card or to start gambling with my Roth IRA contribution.

After getting run over by the train I described above, I got stopped out of the chips I had on hand and backed out. The very next hand, the trend went over to banker as I expected and proceeded on an almost equally epic banker run. Frank would have made a killing on those two if he had not been off playing at another table.

The night before, I had done quite well with my “anti-trend” strategy that I described above. Since I was still playing with the casino’s money for the week, I decided to put the rest of my winnings from the night before to work. After all, there is no way that I would observe another epic run such as had led me to the slaughter described above, right? My mean reversion strategy started bearing fruit again. I recouped 40% of my losses when suddenly another epic train started up. Lightning sometimes does strike twice in the same spot. Well, sort of. This time it was a banker train and for twelve straight hands the banker won. I was out of chips before the trend fully played out and my night was over. So, last night the casino got the money back that I had taken off of them the night before.

Options

Now, what could I (or should I) have done differently?

There are a couple of possibilities…

Frank’s policy is that if he is even or losing for the night, he will stop betting after two losses in a row. If he is ahead (and therefore playing with the casino’s money), he will stop after three losses in a row. This keeps one from being slowly ground into a bloody, red mess by an unexpectedly long train as I was.

Another option is to keep doubling down until the trend does finally go your way. This is known as the Martingale system.  However, this strategy can go to extremes. Consider the consequences of doubling down on a $5 bet and hitting the 14 car train that wiped me out the first time last night.

1st bet = $5

2nd bet = $10

3rd bet = $20

4th bet = $40

5th bet = $80

6th bet = $160

7th bet = $320

8th bet = $640

9th bet = $1280

10th bet = $2560

11th bet = $5120

12th bet = $10240

13th bet = $20480

14th bet = $40960

How often do you get 14 hands with the same result? Not often. But, it does happen. Do you have $40,000 or more in chips to see a trend through? Probably not, unless you are the proverbial “whale” that the casinos so aggressively seek out. The whale has the same problem though. Suppose a whale puts down an opening bet of $15,000. Double that out 14 times and even most whales will run out of money. And there’s another issue - will the table limits let you keep playing long enough for you to get your money back? Suppose the table has a $5000 limit… Following the example above, you just lost $5000 before the train stopped and you are unable to see this trend through to recover your losses.

The Importance Of Venue

Many casinos have a $25 minimum bet on baccarat. However, I don’t like that. I believe one has more flexibility and less pressure with $5 minimums. Therefore, I prefer sleazy, rundown casinos in bad neighborhoods. If I am the only white guy in a place, then I know I am on to a good location.

You want a place like this (minus the white guys):

Asian communities are a great place to find such establishments. The recklessness with which some of the Asian gamblers play and the dollar amounts that they win and lose (more often lose) can be fun to watch. My friend Frank, who is Vietnamese, explained that many of the fellow Asians in there with us are people he has seen countless times at other casinos in the area. He knows many of their stories and they are often first generation immigrants and frequently work at nail salons or massage parlors or as waitresses or auto mechanics. They are paid in cash at these jobs and this cash income does not get reported. Therefore, they are also able to collect welfare payments and food stamps to help them get by. It is the money from the welfare checks that they are in the casinos gambling away. Thus, taxpayer dollars have built many a casino across this nation of ours.

Obviously, the proceeding profile is a generalization and not all Asian or Vietnamese gamblers fit that profile, but a surprising number do. And where you see those players is where you want to be. Those are the sorts of places you want to be in. Places where you can smell the greed and desperation in the air. Places where you have low minimums and reckless, undisciplined gamblers. Discipline and conservative play will provide any gambler an edge in this environment.

Summary

Last night, Lady Luck reminded me that there are no sure things in life and she threw in a lesson about trains.

However, I do believe that prudent money management and mean reversion can equal a winning combination for a baccarat player. Don’t look for the home runs, but conservative play can add some extra income to your day job.

Watch out for trains though…

It may not be quite as tranquil anymore as the above poster would suggest…

However, the impression below that most individuals have of the Palestinian Territories of Gaza and the West Bank is not entirely accurate either:

I will certainly get into that side of the Palestinian Territories in the future. However, before launching into the predictable stories and scenes of conflict, I wanted to demonstrate that there is a lot more to the Palestinian Territories than just refugee camps, Israeli settlements and constant fighting.

Seeing that there is, in fact, more to Palestine also adds a little more context to the conflict. Well, at least for me. When I understand the landscape, I can make more sense of a conflict.

So, in this post, I have intentionally left out scenes of conflict and the occupation. After all, if one looks past the conflict, the Palestinian Territories really do harbor many beautiful landscapes.

*****

Contrary to most expectations, the northern part of Palestine is actually quite green and fertile:

The first glimpse of the Dead Sea when driving south down Route 90:

This first glimpse of the Dead Sea is also a rough marker point for the transition from the greener north to the arid south.

Route 90 entering the deserts of southern Palestine:

Well, “desert” except for the palm plantations which stand out dramtically against the stark backdrop:

Sandstorms can make the drive more interesting:

In between the Palestinian towns and Israeli settlements…

…are open fields, farms and, of course, desert…

…often populated by shepherds…

…and goat herders:

And whatever you call people that look after camels:

They don’t call Palestine the “Land of Olives” for nothing…

It really does have a lot of olives:

They have grapes too:

And the delicious results can be purchased at countless roadside stands such as this one:

Well, I lied a little in the introduction. It is impossible to avoid the signs of war and conflict in the Palestinian Territories. The below, however, are historical rather than contemporary, so I have included them…

A tank destroyed in the 1967 War that still rests along Route 90:

These abandoned homes in the West Bank (of which there are many) used to belong to Jordanians… After Jordan’s unsuccessful offensive during the 1967 Six Day War, Israeli forces seized control of the entire West Bank. The Jordanian occupants of these homes fled before the Israeli invasion and have never returned:

Thousands of years old, home to events such as the crucifixion of Jesus and locations such as the Dome of the Rock which is holy to Jews, Christians and Muslims, conquered by everyone from Nebuchadnezzar to Alexander the Great to the Romans to the Persians to Saladin to the Turks to the British – I am not even going to try to outline Jerusalem’s complicated history… If you’re curious about background, go to Wikipedia.

And today Jerusalem is still a complicated city. So complicated, in fact, that rather than do one post for the whole city, I am breaking it down into sections (such as my earlier post on the Dome of the Rock). This post focuses on the Muslim, Christian and Jewish Quarters of the Old City and I will try to show you what it is like today.

Jerusalem has been un-divided since Israeli troops conquered the eastern half of the city (plus the West Bank and the Gaza Strip) in the 1967 War. The Holy City had been divided since Israel’s war of independence, when its eastern part (including the Old City) came under Jordanian control.

Until 1967, the “Green Line” meant barbed wire, concrete fencing and a border crossing at the Mandelbaum Gate — providing this Middle-Eastern city with a cold-war-like setting more associated with the Europe of that time.

But in Jerusalem, unification has not equaled pacification. The mainly Arab east of the city has been annexed to the mainly Jewish rest of Jerusalem. Palestinians resist Israeli takeovers of houses in the east, and insist their part of the city should be the eventual capital of an independent Palestine. But how can this be achieved without an extension of Israel’s security wall right through the city? In a place where there’s no middle ground, where you’re either from one side or the other, it’s hard to see how a case can be made that both parts of the city belong together, and should grow together.

Entering the Muslim Quarter of Jerusalem’s Old City through the Damascus Gate – my favorite way in and out of the Old City:

The Muslim Quarter is the area of Jerusalem’s Old City that is visited the least, but (perhaps because of this) it is certainly my favorite section:

Jerusalem is not a city that never sleeps, but it does stay up late. Thus, even in the coldest times of winter, the city still has a lot of activity and “goings on” late into the evening:

Jerusalem’s cats, I observed, were following the same schedule:

Even if you find a relatively quiet alley or side street, the next street over will be filled with activity:

The exception to the activity shown above is the Armenian Quarter which locks itself in at night with sturdy gates, but I’ll get into the Armenian Quarter in another post.

Of course, during the day there is more activity at Jerusalem’s main sights, but it is still surprisingly easy to find quiet, infrequently explored sides of Jerusalem.

This is the other side of the Damascus Gate. In other words, the perspective from inside the Old City facing out:

More of the Old City during the day:

Chuck Close
Lucas, 1986-87

Chuck Close
Mark, 1978-79

Andy Warhol
Skull, 1977

Andy Warhol
Still Life, 1976

Malcolm Morley
On Deck, 1966