If You See Something, Say Something

Voters in the United States are learning more about the contacts between President Trump's administration and Russia. In Ben Macintyre's 2018 book, The Spy and the Traitor, they can learn what a country is capable of doing to its enemies:

• Gather and analyze information about enemies
• Recruit informants, agents, and double agents who are: lonely; hurt by fate or nature (they might be ugly or short); have inferiority complexes; crave power, influence, a promotion; need money; can be compromised/blackmailed
• Aid a spy's career by helping him or her rise to positions that provide greater access to information and to influence on polity decisions
• Infiltrate anti-government movements
• Deploy "illegals" who live as ordinary citizens in foreign countries, are more difficult to detect by counterintelligence investigation than spies under diplomatic or consular cover, and can be mobilized for any purpose
• Employ methods to avoid surveillance
• Create escape/exfiltration routes for a spy who is compromised
• Provide secret communication and copying equipment for spies
• Establish sites where secret information about where to meet or when can be signaled to spies in plain sight, such as by chalk marks on mailboxes or orange peels under park benches
• Establish secret dead drop sites for hiding messages or money without personal contact with spies
• Transfer information to spies during an undetected quick brush pass by another person
• Manipulate media to influence public opinion, create fake news, cultivate officials and opinion makers sympathetic to a cause
•  Provide disinformation; create false evidence about foreign dangers, such as packages of arms labeled "Made in China"; provide inflammatory posters
• Forge documents and foreign currency
• Implement sabotage, supply arms
• Bug homes and offices
• Kidnap, drug, torture, kill

Conclusion: As long as a country has enemies, citizens are not free to accept everything they see at face value. They need to report their suspicions to authorities. 

Cryptocurrency for Kids (and adults)

Strip away its digital aspect, and cryptocurrency transactions are monetized barter exchanges between two people. Or, you can think of cryptocurrency exchanges as one person deciding how much of a new kind of money he or she has and is willing to pay for an item or service. No paperwork is involved in what is essentially a secret transaction between two people.

    In a regular barter trade, a young person might try to find a student willing to trade a Pikachu card for one or more Pokemon cards. But in a cryptocurrency-like system, a young person offers to buy the Pikachu card with, let's say, some Monopoly money (or money students themselves design and distribute). A student is willing to sell the Pikachu card for a certain amount of Monopoly money, because she or he needs that amount of Monopoly money to buy a bag of chips from a student willing to accept that amount of Monopoly money. A student could, for example, use created currency to make a major trade, or a number of smaller trades, to receive items that could be sold, maybe at a yard sale, for a lot of real, government-issued money.

     Unless all Monopoly money is going to disappear from all Monopoly games, families, students, and classrooms need to begin designing their own currency and agreeing how much each person receives in his and her accounts. It can be lots of fun to begin listing the items that can be sold: candy and cookies; unusual pens and pencils; socks; hair accessories; little stuffed animals; friendship bracelets and key chains. Services also can be exchanged for new currencies. Students can be paid to teach others to make different types of paper airplanes, braid hair in a certain way, throw a football or Frisbee, solve a math problem, or fold an Origami crane. Around the home, parents and children might sell services for new currencies to buy privileges. Of course, it is unlikely that services, purchased with created currency, could be resold for real money.

     A do-it-yourself cryptocurrency system exposes some of the problems associated with cryptocurrency, such as Bitcoin, in the real world. You have to find another person who has what you want; who is willing to accept your particular kind of cryptocurrency (There is more than Bitcoin); who is willing to create no paper trail of the transaction; who will accept no changes, such as merchandise returns; and who wants to keep the transaction secret. Basing a subscription service on cryptocurrency is unlikely. Who would be wiling to hand over currency to receive a cupcake every moth or a weekly classroom newspaper, if they received no receipt showing they were entitled to the cupcakes or newspapers? Then, there is the problem of someone stealing your currency. In real life, cryptocurrency systems based on digital transactions currency has been known to disappear with the click of a key before a transaction is confirmed. Unlike savings held in a bank and protected by a government agency, cryptocurrency funds enjoy no such guarantee.

     Bitcoin cryptocurrency uses the SHA256 algorithm to confirm each transaction as part of a blockchain, to notify all participants in its network of each transaction, and to enable participants to keep track of the balances in each other's accounts. But, before a transaction is confirmed, it can be altered. 

Want An Exciting Career?

Students who will begin their careers in the next five to 20 years will be working to about 2060 to 2075 or longer. They can worry about being unemployed by robots or discover Africa.

     Of course, Africa already has been discovered as an exotic home of wild animals, gold, diamonds, rubber, slaves, and the origin of mankind. Because of the scramble for colonies, English, French, Italian, German, Spanish, Portuguese, and Dutch are spoken there along with local languages. Currently, with advances in mobile communication; transportation, including by drones; and medicine, Africa is on track to come into its own normalcy. The middle class is growing. And the size of the continent suggests regional divisions into northern, western, southern, northeastern, and southeastern markets. A recent acquisition recognized the opportunity to finance trade in Africa. Helios Investment Partners, the private equity investment firm founded and managed by Africans, Tope Lawani and Babatunde Soyoye, in 2004, acquired the UK's Crown Agents Bank and Crown Agents Investment Management in April, 2016.

     What might be most attractive to the world's future tech-savvy, well-educated, independent workforce is the challenge Africa presents. The enticing work environment Sydney Finkelstein describes in his new book, Superbosses, is one where creative energy is purpose-focused on a vision, commitment to a task is satisfying, and talent is recognized and rewarded at an early age.

     Some international bankers already are enjoying unique opportunities to figure out how to handle complicated financial deals in Africa. Lending for African projects from Asia's investors, Japan, China, and India, for example, is secured by assets, such as the turbines Japan provided for a coal-fired power plant in Morocco, and repaid from revenue that the projects, such as the power plant, will generate. Similarly, when a loan for buses will be repaid by future bus fares, bankers have to know what questions to ask. Which government agency has authority to make the purchase? Will the buses be able to handle African road and climate conditions? Who will train drivers and maintenance workers? Is payment to be made in local or hard currency? Is there a way to hedge against the devaluation of local currency, and what are the options should emergency measures prevent hard currency from leaving the country?

     Gaurav Wahi of India's Jindal Steel and Power Limited, a company with operations in South Africa and Mozambique, called attention to a May 16, 2016 Forbes article that provided excellent practical advice about doing business in Africa. Companies looking for immediate, low-risk African opportunities have limited options in South Africa, Botswana, Namibia, and Swaziland. Half of China's $12 billion investment in Africa between 2005 and 2015, for example, went to South Africa. Few African countries currently have relatively high per capita GDP incomes and reliable infrastructure (ports, roads) and institutions (legal, police, and educational systems).

     Elsewhere in Africa, companies that can become "early pan-African powerhouses" need patience and moxie to do the following:

• Identify home office talent with the ability to live in a foreign environment, to accommodate company policies and processes to local cultures, and to connect with local employees.
• Manage relations with governments (secure agreements and contracts)
• Deal with a lack of government regulations and poor land ownership records
• Develop self-sufficiency that might require vertical integration from raw material sourcing to production and distribution
• Provide low-cost products and services
• Expand uses for mobile phones (prepaid bank accounts, marketing, customer service)
• Train employees and provide benefit retention packages that prevent poaching by competitors
• Establish firm guidelines (ethical reputation requirements, experience working with other foreign companies) for evaluating potential local partnerships
• Provide security
• Form contingency plans for insurrections and political instability
• Anticipate economic volatility from commodity price swings
• Gain guarantees from multilateral organizations, such as the World Bank 

     No one doing business in Africa will be stuck implementing a bureaucratic playbook. Marketers will be reading the accounts of explorers and missionaries to identify routes to their target markets along rivers and in desert oases. Freight forwarders will fill their Rolodexes with importers and exporters, if they know which carriers can be counted on to meet delivery schedules and if they know how to fill shipping containers to get the best cargo rates. Manufacturers will prosper when they attract the best employees, because they have a reputation for providing excellent training programs and benefits.

     Just considering a normal bell curve distribution of talent, not only business, but African agriculture, sports, education, security, law, fashion, and the arts are all fields ripe for development in the coming years. An exciting career awaits those willing and able to work together with Africans.

(Also see the later post, "There's No Business Like Bug Business.")

Time to Revisit China's and the World's Foreign Currency Exchange Rates

Watching how a change in the amount one country's currency, such as a US dollar, can buy of another country's currency, such as Chinese yuan, illustrates globalization at work. Currency exchange rates certainly demonstrate how countries are interconnected.

     What brings this subject to mind (after it was addressed in the earlier post, "When to Buy/Sell in the World Market") is today's Chinese devaluation of its currency by about 2% against the US dollar. Based on information in the earlier post, kids who have an interest in finance might conclude China was attempting to reduce the price of its exports in order to compete with lower priced goods from other countries. China's imports of luxury goods and electronics from the US would cost more, and US tourists in China would get more for their money.

     In the past, China selected a midpoint currency conversion rate that fluctuated between 2% above or below the US dollar. As a result of China's first devaluation, the US dollar could buy 6.22 yuan compared to 6.11 the day before. The next day the value of the yuan dropped a little over 4%, but that is nothing like the 20% to 40% devaluation that would be needed to compete with much lower priced competitors like Vietnam or Burma. Although China did not want to risk losing investment capital that would exit a country whose currency has this kind of weak buying power, subsequent devaluations have caused capital to flee.

     The truth is, demand is weak within China, as shown by Alibaba's slowed quarterly growth. China's $50 billion canal project in Nicaragua has been put on hold until 2016. While no reason was given, the stock market dip has caused the fortune of Wang Jing, CEO of the HKND Group funding the canal, to fall from $10.2 billion to $1.1 billion. Yet, in December, 2015, President Xi Jinping announced China would be giving Africa emergency food and $60 billion in grants and loans.

     Weak demand throughout the world is hurting all exporters, including South Korea and Taiwan. Countries that depend on their commodity exports to China are especially hard hit as reported in the later post entry, "Falling Commodity Prices Spur Diversification in Emerging Markets." A 2% currency devaluation and even a 20% devaluation will not cure sluggish worldwide industrial and consumer demand.

   

   

   

   

   

An Example Helps Understand the World Economy

For dairy farmers in the United States, 2014 is an excellent year. Revenue from good prices for milk and milk products is up, and feed costs are down. Farmers can pay off debts and buy new equipment. Profits in 2015 are not expected to be as good. Why? Not because milk prices are expected to go down, and feed costs up, but because exports of cheese, whey, milk powder, and other dairy products are expected to decline.

     The U.S. dollar is strengthening in relation to foreign currencies. You  can check the value of the dollar against the Japanese yen, Russian ruble, and other foreign money at finance.yahoo.com/currency. On October 31, 2014, for example, one U.S. dollar only bought 109.21
Japanese yen or 41.01 Russian rubles. Today, a dollar can purchase 118.32 Japanese yen or 44.97 Russian rubles.

     How does the greater purchasing power of the dollar affect U.S. exports? People in foreign countries need to buy U.S. dollars before they can buy U.S. goods, such as cheese and whey. When their money can buy less expensive foreign currencies, they will buy less expensive products from U.S. competitors, and U.S. dairy product and other exports will decline.

     On the other hand, if a U.S. farm family always wanted to visit a foreign country, 2015 might be a good time to plan a trip. It could take fewer U.S. dollars to pay for foreign hotel rooms, food, and souvenirs, if foreign currencies are weaker in relation to U.S. dollars. (Learn more about foreign currencies at the earlier blog post, "When to Buy/Sell in the World Market.")

   

Airport (and train station) Outings

Every rainy season presents both a challenge for entertaining children and an opportunity to introduce them to travel. No tickets (except maybe for parking) are required to push strollers or to let older children pull their own roller suitcases filled with toys and snacks through major airports, including those that have separate buildings for international flights, and railroad stations. Since these environments cater to travelers who need information and who have waiting time to kill, they provide some unusual teaching experiences.

     Just consider the "Arrivals" and "Departures" boards with their cities, times, concourse and gate/track numbers. Help children choose a city, see the current time, figure how long it will be before a plane or train arrives or leaves, and begin the process of going to the concourse letter, gate or track number. Once there, watch people arrive or go through security. See how they might have to take off their shoes, put metal items in a basket, or how they might set off an alarm. Count how many travelers are women/men, how many carry their own luggage or wear hats/caps, how many have people welcoming them or seeing them off.

     What if a family misses the next plane or train? Check the airport's board to see how long they would have to wait for the one after that. See if there is a paper train schedule and help children study what stops a train makes, if trains have different schedules on weekends, and the cost of tickets for children and adults.

     In the area where travelers claim their luggage, see if there is a rack of brochures describing local attractions. Choose a few that might lead to your next outing. Watch luggage arrive on carousels. Look for signs that tell where travelers can get buses and taxis, go to a parking lot, make hotel reservations, exchange currency, or rent a car. Explain why someone would need a currency exchange (See the earlier blog post, "When to Buy/Sell in the World Market.") or to rent a car. And why would someone in the luggage claim area be holding a sign with a person's name on it?

     Some transportation centers might offer a bit of foreign language study. Look for signs identifying telephones and restrooms in languages other than English. What are these languages and why are they needed? At an airport or train station there also might be some attraction brochures and restaurant information printed in a variety of languages.

     The chairs and benches provided for waiting travelers give little visitors a chance to sit, have a snack, listen to announcements (or even a piano or musical group), and look for people arriving in their native dress. Once rested, there often are exhibits to visit and even playsets to climb. In Milwaukee, Wisconsin, the airport has a ping pong table and an exhibit of foreign coins found in the airport's "wishing well" pasted on cards with the flags of their countries. Some airports and train stations have art exhibits and display items from local museums. Then, there are the gift shops and book stores. Since these market to travelers, they have items for amusing children on trips that also can amuse them at home.

     After an airport or train station outing, when kids start thinking about taking their own trips, you'll find some family travel ideas at the earlier blog post, "See the World."

    

When to Buy/Sell in the World Market

Not only do countries have their own languages, they often have their own currencies. To name just a few, there are: Indian rupees, Mexican pesos, South African rand, Swiss francs, Turkish lira, British pounds, and Chinese yuan. You may see Chinese currency called renminbi (RMB) and wonder why. Just as "pounds" are units within British pound sterling currency, "yuan" are units within the overall renminbi currency of the Chinese Communists People's Republic. Smaller units of the yuan are the jiao (10 jiao = 1 yuan) and the fen (10 fen = 1 jiao). In every day "slang," Chinese people often refer to money as a "kuai" (piece), like the British would say a "quid" or Americans, a "buck."

     Within the European Union, euros have replaced the national currencies of countries such as France, Germany, Greece, Ireland, Italy, Portugal, and Spain. Euros also are the official currency of Andorra, Monaco, Slovakia, Vatican City, and several other countries outside the European Union. If students have never seen foreign currency, adults can pick up a TipPak (registered trademark) of coins and currency from Australia, Britain, Canada, Japan, or Europe at a local AAA office. Prior to an international trip, AAA is able to provide international travelers with more than 70 varieties of the foreign currency they will need on arrival to pay for taxis, tips, and other situations where credit cards are not accepted. Find out more at aaa.com/TravelMoney.

     Foreign currency has a different exchange value in relation to the U.S. dollar and other currencies. Since many of these values float, or change, the amount of currency needed to purchase another currency can go up and down within a day. Therefore, experienced travelers keep an eye on currency fluctuations and convert their Travelers Cheques to just enough local currency for a day or two. In order to make quick calculations, travelers also try to learn the value of foreign coins that are similar in size to the coins of their own countries. The website, finance.yahoo.com/currency, provides brief descriptions of foreign currency concepts. This website also is an easy way to keep track of the changing relationships between the U.S. dollar, Japanese yen, euro, Canadian dollar, U.K. pound, Australian dollar, and Swiss franc.

     An alumni magazine posed a clever foreign currency problem for its graduates. It said that a professional tennis player wanted to buy a diamond tennis bracelet for his girlfriend that was priced at 100,000 Swiss francs at the airport in Geneva. He was en route to a tournament in Spain, so he called the friend meeting him at the Madrid airport to ask the cost of a diamond tennis bracelet there. The friend said it was 40,000 euros. Rather than go to finance.yahoo.com/currency, the tennis pro saw that a copy of the International Herald Tribune was selling for 4 Swiss francs or 1.5 euros. He bought the tennis bracelet in Geneva, since at a 4 to 1.5 ratio, the bracelet should have cost 37,500 euros in Madrid, not 40,000.

     Ratios are the basis for determining foreign exchange rates. During the first few years after the euro's introduction in 1999, the annual average rate of exchange for one U.S. dollar was about 1.25 euros.
                                                      
                                             $1                                    x
                              _______________     =            _______________
                                        1.25 euros                           1 euro
                                                                             1
                                                       x        =      _________     
                            
                                                                           1.25

                                                       x        =      $0.80
                                                                                                                              
 Consequently, U.S. tourists realized their stronger dollars bought wonderful vacations in Europe and U.S. retailers took advantage of the opportunity to import European luxury goods. When one U.S. dollar purchased 1.25 euros and one euro was worth only $0.80 in 1999, a U.S. tourist paid $160 to purchase the 200 euros needed to stay in a European hotel room priced at 200 euros. By 2008, however, one U.S. dollar purchased only 0.64 euros, less than one euro. At that point, the purchase of European goods and travel to Europe grew prohibitively expensive. A U.S. tourist then had to spend $312 to buy enough euros for the same European hotel room that cost $160 in 1999.

     On the other hand, as the value of the U.S. dollar declined, the United States became an attractive destination for European tourists. U.S. manufacturers also found that the weaker dollar helped them expand their exports. When 1.25 euros were needed to purchase one U.S. dollar in 1999, European consumers paid 25,000 euros to purchase the $20,000 needed to buy a $20,000 U.S. automobile. In 2012, however, when only 0.77 of a euro was needed to buy one U.S. dollar, a $20,000 automobile sold for 15,400 euros. Likewise, European tourists could purchase $400 to stay in a $400 hotel room in New York City for 308 euros, compared to the 500 euros the same room would have cost in 1999.

     Children who track changing monetary relationships online at finance.yahoo.com/currency can become the family's financial advisers. They know when U.S. dollars will buy the most imported goods, international travel, and foreign currency. A family trip to Vancouver, for example, was a very attractive option in 2000, when the U.S. dollar was worth almost $1.50 Canadian dollars. In early October, 2012, however, one U.S. dollar was worth only 0.98 Canadian dollars. Ask youngsters to figure out how much a $100 hotel room in Canada would cost a U.S. tourist in 2012, compared to 2000.
           $1                                x                                          $1                               x
_____________    =     ____________                 ______________    =     _____________

       0.98                      1 Canadian dollar                        1.50                     1 Canadian dollar
       
                     x      =      $1.02                                                     x         =     $   0.67
  
The answer: $102 compared to $67.

     While worldwide economic stability makes planning for personal travel and business much easier, the art of forecasting foreign exchange fluctuations is an attractive career option for students who develop an interest in tracking foreign exchange rates. A company that expects to build a factory in Canada within the next year wants to buy the necessary Canadian dollars, when the U.S. dollar is strongest. Which way is the U.S. dollar moving in relation to the Canadian dollar, and what economic conditions, such as growth in gross domestic product, unemployment, inflation, and weather conditions, are likely to affect foreign exchange rates? It is up to would-be traders in the foreign exchange market (forex) to come up with these answers.

     Finally, girls need not shy away from becoming financial whizzes. The new U.S. Chair of the Federal Reserve Board is Dr. Janet Yellen, and Christine Lagarde is Managing Director of the International Monetary Fund.

(Also, check out the later post, "Time to Revisit China's and the World's Foreign Exchange Rates.")