Peer-2-Peer Banking

According to a BBC report the UK national debt stands at £799bn (or 56.6% of GDP). This is the highest since records began in 1974. One of the major causes of this debt, according to the BBC report, is the banks bail-out package in the UK. Another interesting figure was quoted by Alyssa McDonald (New Statesman Magazine, July 20, 2009), which indicated that the UK national debt had quadrupled since January 2007. Vincent Cable, the economics spokesperson for the UK Liberal Democrats political party, although expressing a political viewpoint, talks about the "institutionalised passivity of UK Financial Investments Ltd (UKFI), the Treasury-backed bank shareholder body" to deal with the activity of large banks, and the conduct of bankers operating through such institutions. In his article (New Statesman, June 29, 09), he asks three important questions: "(1) How can a semi-nationalised banking system best serve the different but overlapping interests of UK bank borrowers, depositors and taxpayers, as well as private shareholders and bank executives? (2) How should the systemic risks of banking – and the City generally – be managed through regulation, in order to safeguard the wider UK economy? (3) Is it actually possible for the UK to play host to a major financial service sector?" Considering the role that the UK has played in financial services, finding answers to these questions could have a profound impact on the financial markets of the world.

Perhaps, one thinking behind such questions lies in the ability to open up the banking sector to more innovative players -- albeit those that are regulated in some way. One approach would be to enable people (borrowers and lenders) to directly interact with others, and provide a more Peer-2-Peer approach to banking. As trust in the centralized banking sector erodes, perhaps trust built through knowledge of people and communities could be used to establish borrowing and lending institutions. Zopa happens to be one such company, operating in the UK, USA, Japan and Italy. The idea here is to allow people not large institutions to lend and borrow to each other, thereby sidestepping banks. Essentially, individuals decide who they want to invest their money in, and the rate of return they will see. A number of credit checks are used to identify the financial status of a lender/borrower. Zopa makes money by charging a fixed fee for each transaction conducted through it's site. In April 2009, Zopa transactions added up to a lending of £3 million, an increase of 3.5 folds from April 2008. Since it's launch in March 2005, over £40 million have been disbursed. Carpet Bagging provides a good summary of such Peer-2-Peer lending/banking approaches -- identifying other market players in this area, such as Prosper (US) and Smava" (Germany).

The role that the state should play in the regulation of such entities should help address some of the questions that Vincent Cable has asked in his article. Although such P2P lending sites could also fail -- as demonstrated in the collapse of Boober in The Netherlands -- affecting almost 1,200 people. Could technology and recent surge in interest in social network lead to a new form of community banking -- akin to the ideas being proposed by Silvio Gesell in his Natural Economic Order?

image from: http://fc.sharon.k12.ma.us/~soreilly/economics

Where can Autonomic Computing be of benefit ...?

There is now an active research community focusing their energy on Autonomic Computing (and the associated conference series) -- utilizing it, primarily, for supporting (computer) systems management. The motivation for this seems to be the observations that as computer/information systems get more complex, it is possible that no one person will fully understand how such (complex) systems operate. It is therefore necessary to enable each component of such a system to be more intelligent, enabling it to self-adapt and modify its behaviour based on detected changes in it's environment. The mechanisms behind this come from autonomic self-adaptation in humans -- although there are also significant overlaps in ideas from Ashby's Viability Zone in his Homestatic system -- a good introduction here (if I may say so myself!). Critics of autonomic computing however say that this is unlikely to ever be realized. It is often mentioned by such individuals that the vision statements in autonomic computing are often too high-level, and unless distilled down to very specific outcomes, make this field vague and uninterresting from a practical perspective. And herein lies the problem. The very nature of autonomics implies that such approaches (often utilizing mechanisms from machine learning (such as reinforcement learning, neural networks), rule-based adaptation and control theory) can only be applied (and, more importantly, validated) in well-defined problems. However, many large scale systems often appear to be "open" and such well defined ideal state -- which drives the autonomic mechanism -- is often hard to specify. Perhaps, what is needed is more work on design (software) and methodologies for applying some of these autonomic mechanisms in more open environments. Perhaps, this is a research area that needs further attention?

Image from IBM Almaden

Busting Cancer with Gold

Gold nanosphere's that contain antibodies that latch on to cancer cells provides a really interesting new way to deal with this disease. Jin Zhang at UC, Santa Cruz indicated that ... "you could send a person home, have them shine a laser on the specific part of the body with cancer for a couple weeks, and they could be cured of cancer". Interestingly, the size of the nanosphere indicates how it responds to different wavelengths of light. Hence, the size of the sphere indicates how big an area is being affected. According to Brown University's Shouheng Sun, "once the nanoparticles have done their job and destroyed the tumour, the kidneys filter them out of a patient's body within a few hours". Most interestingly, the nanosphere can be viewed through an MRI scan, and may also be used to locate tumors -- as they latch on to tumour cells. According to a Science Daily article, such spheres therefore provide a useful sensor for locating cancers, and subsequently treating them using the approach being advocated by Jin Zhang. "What makes this structure special is the combination of the spherical shape, the small size, and the strong absorption in visible and near infrared light," Zhang said. "The absorption is not only strong, it is also narrow and tunable. All of these properties are important for cancer treatment."

Image from: Drug Discovery and Development magazine (http://www.dddmag.com/)

Microcredit in the USA

Grameen Bank supports the microcredit scheme invented by Nobel prize winning Bangladeshi economist Professor Muhammad Yunus. Grameen bank began almost 34 years ago, when Professor Yunus started lending to enterprising women (initially only US $27), enabling them to develop their own businesses. Today, the model has been replicated in over 100 countries, with the simple (and very effective) principle that the "poor need credit, not aid". Staff at Grameen bank work closely with their clients, working alongside support groups to offer advice and money to such clients (many of whom often do not have any bank account at all). According to an article by Sigrid Rausing, "... the sums lent are carefully considered: the right amount is empowering; too little, or, interestingly, too much, is thought to be damaging". The bank uses four aspects as part of its client relationship strategy: (i) the loan; (ii) the savings account -- though banks such as Citibank; (iii) five days of financial literacy training; (iv) partnership with credit scoring organisations such as Experian.

Interestingly, Grameen Bank has now opened a branch in Queens, New York. Although initially intended for developing countries, it has now found that, "... 36.5 million Americans live below the poverty line, and 28 million have no bank accounts. Many of these are immigrants. They rely on payday loans or cheque cashiers, and short term loans (some legal, some not) -- with annual average interest rates of 300 to 400 percent", according to Sigrid Rausing's article. The New York office is led by Mr Chattree (formerly of Insead and JP Morgan), who sees Grameen opening six more branches in the US over the coming years -- reaching up to 20,000 people. Perhaps, this kind of community oriented banking is what is really needed in the Western world, with the current collapse of major banking institutions. Perhaps, the over US $700B that has been used to bail out major Wall Street concerns, should also be used to fund institutions such as Grameen bank, which provides a much more sustainable and democratic model of supporting people to help themselves, and communities to become more self reliant. Interestingly, such grass roots banking seems not only ethical but also safe -- as payback rate on loans for Grameen is almost 99 percent (now compare that with high street banks in the UK and equivalent US concerns).

image from http://37days.typepad.com

Google's Geo

Google Maps and Google Earth have now become almost as essential as the Google search engine itself. Whenever I am going to a conference -- Google Maps provide valuable information about the locality where the conference will be taking place, and where I will be staying. Now, Google has gone one stage further and sponsored a satellite -- through the company GeoEye. According to Dylan Tweney's blog, "the satellite will be able to take photos at a resolution of up to 41 centimeters -- enough to get a pretty decent photo of your Mustang convertible, but not enough identify the redhead in the passenger's seat.
Because of a deal GeoEye has already signed with the U.S. government, Google will only get data with a resolution of 50 centimeters, News.com reports.
A second satellite, GeoEye-2, slated to launch in 2011 or 2012, will have a resolution of 25cm, company representatives promised." The satellite also supports a colourful Google sticker -- although it is on the part of the satellite launcher that will return to Earth. This interesting development introduces an interesting new era for commercial mapping of the Globe -- where technology often reserved for national government agencies is now being used for the benefit of the masses.

Mobile Money Transfer

According to a recent report, over 200 million migrant workers transfer money to their home towns -- using the global Western Union (with over 170,000 agents worldwide) -- and a variety of informal networks (also known as Chinese fei ch'ien ("flying monkey"), phei kwan in Thailand, hundi (Pakistan/Bangladesh), hawalah (India/Middle East), padala (Philippines) and hui kuan (Hong Kong)). Such informal networks work in a number of interesting ways, essentially, an individual pays an agent in the UK who then informs an agent (a shop keeper in Kenya, for instance) to pay an equivalent amount to another individual. According to the report, "globally, the total amount sent home by migrant workers through remittance transfers is roughly $300bn (£170bn); money sent via informal networks and money laundering is believed to add a further $150bn. Remittances far outstrip foreign aid to the developing world and can contribute up to a third of a country's GDP." With the significant recent take up of mobile phone technology in many developing countries (for instance, according to Cellular Networks, mobile subscription growth stood at 39% annually in Africa between 2005-2007, and 28% in Asia over the same period. India and China added 154 million and 143 million new subscribers respectively), G-Cash and M-Pesa are now becoming alternatives to the traditional systems facilitated through mobile telephone networks. Essentially, "Users pay cash into an `mWallet'; and whenever they want to transfer money using their phone, the recipient gets a text message, which provides them with a code to show to a local agent." With the government control that is now being exerted over informal networks (often tied to money laundering and other crimes), G-Cash and M-Pesa are more regulated, and offer an excellent alternative to traditional banking transfers (often with a 1% commission, compared to the 10%-23% or so requested by banks -- depending on the transfer time involved). Additionally, "the mobile transfer networks could also change the way humanitarian agencies administer aid, as a pilot scheme launched during the Kenyan post-election violence this year demonstrated. With the country in chaos, cattle rustlers took advantage of the security vacuum in the remote Kerio Valley to attack communities and livestock, making the transportation of food, money and materials to affected communities unfeasible. The aid agency Concern Worldwide entered into an agreement with M-Pesa, sending money to over 560 households within a month." Perhaps, mobile phone technology, used in this way, could provide an important application for sustaining communities and families relying on overseas remittances, and avoid the need for the involvement of major banking institutions (many of which seem to be collapsing right now!).

image from: http://www.textually.org/

Periodic Videos

The periodic table always provided a reference point when I was doing my Chemistry practicals at A'levels. I was fascinated by how a list of key constituents of my environment could be catalogued in this way. Now a collection of videos from the University of Notthingham provides information about each element in the table. With over 2 million views, this site provides an excellent site for teaching.