Turkiye!!!

No country has the confluence of cultures and religions like Turkey does. Its a country at peace with its own religion but also its place in the world. It is fond of its culture. But it is very forward looking. It is secular but proud to be Muslim. It has wide roads and disciplied traffic but its cities have a lot of life!

I believe that geography defines history in the long term. Nowhere is it as visible as it is in Turkey. The strategies location it had in the ancient as well as medieval times kept it at the global centrestage - initially as the eastern roman empire (Byzantines in Constantinople) and later as Ottoman Empire (Turks with their capital in Istambul - new name for Constantinople). Over time as the centre of action shifted to Western Europe, Turkey became a backwater of sorts econo-politically speaking. However, post World War 1 and its battle for independence from Greeks (after a brief 3-4 year period of occupation) the country broke away from its Arab peers in its orientation. Under the visionary leadership of Mustafa Kemal Ataturk, Turkey embarked on a path of modernization. Like the proverbial two paths of Robert Frost, Turkey could have gone the way of the European countries or the Arab countries. After all, it is slotted right between the balkans and Greece on one side and Syria and Iran-Iraq on the other!!

As Ataturk thought fit, Turkey chose the path of secular growth. Its choice is most obviously visible in the way it chose to shun the Arabic script for Turkish launguage and instead went for the standard Eurpoean letters. In a similar vein, in other walks of life as well, Turkey chose to follow a primarily western model of growth and governance. The rest is History! Today Turkey is attempting to enter EU - however on its own terms.

The country is a great place to visit for its history as well as the beauty of its sites. Istambul, Konya, Ephesus, Troy all have their own character. Istambul is one fifth of Turkey in terms of population - and I guess it might be larger in terms of share of the economy. It was in its heydays the equivalent of today's New York in terms of its relevance to the world. While far lesser today in terms of significance the city does not strike as a yestercentury's city at all. It owns its culture with a lot of pride but has moved on to a modern existance in general. Hence for most parts the city is a nice friendly place to move about in once you are done with the historically significant tourist attractions.

The war memorial at Ankara is quite a magnificent piece of architecture as also representation of history. While it is relatively more recent, the respect it signifies for the heroes of the country makes one thoughtful. Capadokya is a world in itself. A very queer place in terms of its geography, it is beautiful as it is distintive. The cotton terraces at Pamukkale are a case in point! Come Ephesus and one starts to realize the melting pot nature of Turkey as a country. This western side of the country has deep Greek and Roman influence in its architecture and perceptibly in its day to day life today as well. Much of Troy is destroyed. However, as our tour guide told us, if one has good imagination a lot can be experienced in Troy as well. Especially the story of Trojan war!

All in all, 21st Century Turkey is a place which in a way stands testimony to the power of positive governance just as its previous century Avatars stood for the importance of Geography in History!

(I have not written much on the site seeing etc since the purpose of this piece was to summarize my thoughts about Turkey as a country as against Turkey as a vacation destination.)

The unbearable lack of influence for the Indian Middle Class!

The recent debate about the Lokayuktas goes back to the perennial tension between the movers and shakers and the powerless. A recent article in Business Standard mentioned that the movement by Hazare and the support it gathered came from the middle tier between the influencing few and the utterly powerless mass. Another article sometime ago mentioned a worry that all kudos aside, Hazare's movement represents an extra-constitutional arm-twisting of the elected representatives.
At the heart of it is the worry about the creation and sustainance of institutions to uphold the interests of the majority. Indian democracy is increasingly becoming hostage to smaller and smaller group of very wealthy and mostly unscrupulous politicians. What is more, it is a vicious circle in that this class seems to self-select similar elements in its ongoing inclusions as well. The picture of the hardworking and people-oriented politician is at best a utopian dream. Most of those aspiring to get into politics have no major dreams of chaging anything for people they represent. It is mostly a race for power - which is then to be abused to amass wealth. To what end, one often wonders!!

The issue is that if and when Lokayuktas become powerful enough to take on the vested interests in the society, they will get politicised. They are left alone now because they are toothless. Give them teeth and we will soon see very questionable elements becoming lokayuktas!!

A society gets what it deserves. Indian society is 80% masses, 19.95% middle class and 0.05% ruling lot! The masses and the ruling class seem to have gotten into a seemingly unbreakable system of electing to office the most powerful and wealthy. The middle class has no influence but a fair degree of intelligence and bandwidth to comment to things. Which is pretty much what they end up doing! The angst represented in all the media is the voice of this powerless but intelligent middle class.

What's the way out? For selfish reasons as well as for the betterment of the masses, the middle class and its thinking constituents need a way to influence the polity. But the supertanker argument about the polity would tell us that small nudges will get mostly ignored in the massive structure of the influencers manipulating the masses for their personal agendas.

It almost seems like the Indian freedom struggle, which in 1920s or thereabouts might have looked fairly hopeless! The masses did not care about who ruled them, the few thinking men and women took the struggle to the massive empire. What eventually gave was a combination of the struggle, historical forces acting against the imperialists and the second world war. One does not know how the impasse of potential oligopoly in Indian politics will be broken and how soon!
 
There is a weak hope of sorts. Often small nudges at the right place and time act as a very strong influencer in the medium term to bring about massive change. The lightly powered middle class can hope to keep giving numerous small nudges some of which post facto might turn out to be pretty decisive. The key word here is post facto!

Statistical arbitrage

Lately I have been doing some reading on statistical arbitrage - largely for my work. Several interesting ideas exist in the domain. The practitioners in the advanced markets have explored various aspects of this idea and have in fact implemented a large variety - with varying degree of success. What interested me at a diffent level though was the curious fact that it exists.

It is quite debatable whether statistical arbitrage is arbitrage in the true sense of the term. Most practitioners anyway declare that it is not. Unlike "regular" arbitrage, the returns and success of a trade are not guaranteed. However the idea is that one is looking for an edge - success ratio of 70% will do excellently in most cases!!

Let us assume it exists and the total monies deployed in statistical arbitrage are making returns which cannot be explained by noise or randomness a la Taleb! The very existence of this sort of arbitrage is quite intruiging though. Why does it exist? Pattern theory may have some insights. Behavioral finance may have some ideas to throw at the question too!

My own limited thinking on the matter has reached thus far. It exists because there are not enough market paerticipants chasing it! Unlike the more visible movement in spot markets, the movements in the spreads between different underlings and in some cases even real and synthetic assets is not visible to a screen watcher. If and when sufficient automation spots these opportunities in time and exploits them at the very onset, the easy returns will go away. Something already underway in the developed markets!