Monthly Archives: September 2021

Lebanon’s public debt default

By Ilias Bantekas – The nature and causes of sovereign debt differ from one country to another. Yet, the popular or engineered narrative of debt usually conceals its true origin or cause.

In the case of Lebanon, currently facing a financial and economic crisis ranked by the World Bank as possibly among the top three most severe global crises episodes since the mid-19th-century, one of the key lessons from the Greek experience is the importance of understanding the cause. The truth about how and why Lebanon reached the current debt crisis, including its suspension of a $1.2 billion Eurobond payment in March 2020, must precede any step toward recovery and restructuring under current solvency conditions.

A look at the Greek experience

At the time of Greece’s sovereign debt crisis, the popular narrative was that successive Greek governments had augmented the public sector and had exceeded their finances. This further supports the popular myth that people in the south of Europe are lazy, take long siestas, aspire to be civil servants, and that their governments are corrupt. Even so, an independent parliamentary committee set up in 2015 disproved this narrative.

The committee’s extensive findings clearly showed that the Greek public sector was the lowest spender among its then 27 European Union counterparts (apart from defense-related expenditures). In fact, until the beginning of the global financial crisis in 2008, Greece’s debt-to-GDP ratio was one of the lowest in Europe and certainly sustainable. So, why did it shoot through the roof the following year? This is because Greek banks had accumulated private debt (in the form of loans) to the tune of about €100 billion.

At the time, Greek banks had largely been acquired by French and German banks and hence the private (and now unsustainable) debt of Greek banks was about to become a Franco-German problem. Instead of this happening, the then-Greek prime minister was ‘convinced’ to nationalize Greek banks and thus transform a purely private debt into a public one. By so doing, it was now the Greek taxpayer that was saddled with the debt and the ensuing austerity this entailed, while Greek banks were restructured (effectively re-financed) and France and Germany were relieved. more>

Updates from McKinsey

Moving beyond agile to become a software innovator
Companies need to borrow a page from the tech industry’s playbook to understand how to use agile to build better products and experiences.
By Santiago Comella-Dorda, Martin Harrysson, and Shivam Srivastava – t the end of the movie The Candidate, Robert Redford is sitting in a hotel room surrounded by cheering staffers after his character has won the election for the US Senate. Looking a little perplexed and forlorn, he turns to his advisor and asks, “What do we do now?”

Many executives who have led their businesses through successful agile programs can probably relate to Redford’s character. They have overseen sizable improvements in software product development thanks to agile; our Developer Velocity research shows that adoption of agile practices at the team level can be one of the most critical dimensions for companies that are in the early part of their journey.

But many of these businesses have run into a ceiling where incremental gains are minimal. The same Developer Velocity research, for example, showed that while third-quartile companies in terms of overall software-development performance scored 41 percent higher on agile practices than fourth-quartile companies, the differences between companies in the first and second quartiles dropped to less than 20 percent. In other words, once a business hits a certain level of excellence, improvements to how teams work in agile alone drive diminishing returns.

For companies that have realized many of the initial gains from adopting agile, there are valuable lessons to be learned from how tech companies develop products. The industry’s intense competition and pace of change have forced tech companies to develop a set of capabilities that take the fullest advantage of agile, of which the following are the most important:

  • grounding every decision on customer value through world-class product management and experience design and adopting an operating model built on products and platforms
  • creating a software-engineering culture that nurtures and celebrates technical craftmanship, empowers teams, and provides them with high levels of psychological safety in addition to supporting developers with automation and world-class tools
  • embedding data and analytics at every level of product development

more>

Why Are Embedded Industrial Control Devices Now Vulnerable To TCP/IP Attacks?

Critical flaws found in embedded TCP/IP stacks may widely affect industrial control devices.
By John Blyler – Cybersecurity experts have found numerous vulnerabilities affecting a commonly used TCP/IP protocol network stack used in millions of Operational Technology (OT) devices. In contrast to IT systems – which manage data – OT devices control the physical world, especially in the industrial and manufacturing spaces.

Further, the affected OT devices are manufactured by hundreds of vendors and deployed in manufacturing plants, power generation, water treatment, and infrastructure sectors. For the most part, the OT devices are part of the industrial IoT marketplaces, all of which are highly susceptible to attacks and flaws that result from issues within the TCP/IP network communications architecture.

Since its inception, the TCP/IP network protocol stacks have formed the backbone of the Internet. Smaller, tailored versions of the full-up Internet stack were created decades ago for embedded systems later used in connected IIoT devices. The embedded TCP/IP stacks – sometimes called NicheStack – combine applications, transport, network, and physical components.

NicheStack is a closed source IPv4 network layer and application implementation for operating systems. It is one of three available from InterNiche Technologies, Inc., designed for use in embedded systems.

Researchers have identified more than a dozen vulnerabilities in the NicheStack TCP/IP stack used by many OT vendors. The vulnerabilities are collectively tracked as INFRA:HALT, which targets NicheStack, potentially enabling an attacker to achieve remote code execution, denial of service (DNS), information leak, TCP spoofing, and even DNS cache corruption. more>

The real stakes of Apple’s battle over remote work

By Shirin Ghaffary and Rani Molla – For the past several months, a fight has been brewing inside Apple, the world’s most profitable company, about a fundamental aspect of its business: whether its corporate employees must return to the office.

Apple expects employees to return to their desks at least three days a week when its offices reopen. And although the Covid-19 delta variant has made it unclear exactly when that will be, Apple’s normally heads-down employees are pushing back in an unprecedented way. They’ve created two petitions demanding the option to work remotely full time that have collected over 1,000 signatures combined, a handful of people have resigned over the matter, and some employees have begun speaking out publicly to criticize management’s stance.

Apple employees who don’t want to return to the office are challenging the popular management philosophy at many Silicon Valley companies that serendipitous, in-person collaboration is necessary to fuel innovation. more>

Updates from McKinsey

A first step to racial equality? “Fundamentally improve job quality.”
MCKINSEY GLOBAL INSTITUTE – JP Julien was nine-years-old when he learned that place matters.

Now an associate partner, JP co-leads our Institute for Black Economic Mobility and led the research for The economic state of Black America: What it is and what it could be. In 1998, he and his Trinidadian American family of six moved from a low-income town in New Jersey to nearby Bloomfield. The 15 miles in between made a world of difference to his life.

Twenty percent of his first town’s residents lived below the poverty line at the time. The grocery store was a 20-minute drive away, and there were few nearby parks or playgrounds. “My mom took two buses to commute to work in New York City every day—sometimes 90 minutes one way,” he recalls.

Several years later, the family moved to Bloomfield, NJ, about a 20-minute drive away on the Garden State Parkway. “I remember the first day we moved in,” he says. “We had our own backyard, a bank on the corner, a diner a block away. My mom’s commuter train stop was a five-minute walk. My parents let me ride my bike throughout the neighborhood.”

“In third grade,” he adds, “I realized for the first time how important place was in shaping opportunity and your life. And so this research resonated with me on a very personal level.” more>

Updates from Chicago Booth

Leading through Unprecedented Times
By Claire Zulkey – Classes for the 2021–22 school year don’t formally begin until September 27, but 40 second-year, Full-Time MBA students arrived on campus shortly after Labor Day to prepare for their role as LEAD facilitators. One of the first experiential MBA leadership development courses at a major business school, LEAD is an integral component of all MBA programs at Booth, with varied formats for Full-Time, Evening, Weekend, and Executive MBA cohorts. All first-year Booth students participate in LEAD, but only a select group of them come back as facilitators their second year to help mentor incoming students.

Traditionally, LEAD is conducted entirely in-person, and even includes an overnight trip to Lake Geneva, Wisconsin, where students participate in ropes courses, improv, scavenger hunts, ultimate frisbee, and other activities that foster collaboration, creativity, and camaraderie. Last year’s programming faced the challenge of moving online due to the COVID-19 pandemic. Even virtually, many first-year students gained valuable experience through the LEAD program, and were inspired to come back as LEAD facilitators this year. That includes Peter McNally, who recently completed a summer internship with the Boston Consulting Group. Prior to Booth, he built a research and consulting organization at the University of Pennsylvania focused on social issues around the globe.

“Last year’s LEAD facilitators did a good job making it feel welcoming. They brought a lot of enthusiasm and made it feel like this is a warm, positive space,” McNally says of his eight-person squad of other first-year students. “That’s easier said than done on Zoom.” He refers to each squad as “this little family.” He continues, “I’m not sure if this is something unique to Booth, but there’s a positive sense of competition: we want our cohort to be the happiest, the most welcoming.” more>

An Open Letter from the Digital Interface Standards Working Group to the SATCOM Industry

An Open Letter from the Digital Interface Standards Working Group to the SATCOM Industry urging the development of an open standard to replace L-band IF, paving the way for interoperability, improved performance and costs.

Twenty years ago, our industry undertook a major transition from 70MHz IF to L-Band IF to improve earth station reliability and reduce complexity. Today, we are embarking on the next radical transition from L-band to a fully digitalized interface. The development of an open standard will enable us to deliver the most advantages at the lowest cost, allowing all manufacturers to build interoperable technologies that work in both open and closed network topologies. The Digital Interface Standards Working Group (DIS) is pleased to announce the work that has been completed to date and our desire to open the Working Group to participation by a larger portion of the SATCOM industry.

Along with increased demand for higher throughputs and the availability of more satellite bandwidth comes the need to deploy and manage networks on a much larger scale. We aim to utilize the available bandwidth more flexibly and enable the use of higher-order modulations to improve bandwidth efficiency. The currently available technologies in the SATCOM industry have reached a point at which the traditional analog L-Band modem to RF interface is impeding realization of these goals.

Leveraging the latest virtualization, cloud computing and network function virtualization technologies, we can improve the performance and scale of satellite hub, gateway and modem equipment with this open standard. Digital signal processing techniques and hardware have advanced to levels at which amplifier impairments such as distortion and gain ripple can be substantially mitigated. Coupling a digital signal representation of the modem Transmit (TX) output and Receive (RX) input to modern frequency conversion techniques will allow flexible mapping of signals onto a multi-GHz RF spectrum allocation without requiring a multi-octave analog IF signal or an arbitrary segmentation of the RF bandwidth. All of these potential improvements to operation and performance can be enabled by a digital modem-to-RF equipment interface. more>

How Carbon Farming Can Help Save the Earth

Regenerative farming can help boost crop yields and fight climate change, and one nonprofit plans to incentivize more farmers to make the switch.
Morgan Stanley – Starting in late 2018, Al Gore’s Caney Fork Farms in Carthage, Tenn. started a research collaboration and gathered a group of scientists to tackle a challenge: Figure out how to use the earth itself to fight climate change by creating a systematic, scalable approach for farmers to better use soil to capture carbon and reduce greenhouse gas emissions that fuel global warming, while also boosting crop yields and profitability.

Two of those scientists who took up the gauntlet were Dr. Bruno Basso, a professor in the Department of Earth and Environmental Sciences at Michigan State University’s College of Natural Science, and Dr. Kristofer Covey, an assistant professor of Environmental Studies and Sciences at Skidmore College. They went on to cofound My Soil Organic Carbon, or MySOC, a nonprofit that aims to create a database of soil carbon for farmland across the U.S., while providing farmers with low-cost tools to collect and analyze their soil samples for crop production and carbon sequestration farming, while modeling prospects for more profitability.

By giving farmers access to standardized data from their own farms and those of their peers, MySOC aims to persuade more food producers to choose regenerative-agriculture methods that can help the world attain net-zero greenhouse gas emissions, vs. more carbon-intensive traditional techniques. MySOC is also an inaugural member of the Morgan Stanley Institute for Sustainable Investing’s Sustainable Solutions Collaborative, an initiative that helps scale sustainability innovations that can benefit from partnerships across private and public industries. more>

How democracy can win again

Democratic erosion in Hungary is symptomatic of structural problems afflicting most democracies, even threatening the future of civilization.
By Gergely Karácsony – My political awakening coincided with the systemic changes that unfolded following the collapse of communism in Hungary in 1989. I was both fascinated and overjoyed by my country’s rapid democratization. As a teenager, I persuaded my family to drive me to the Austrian border to see history in the making: the dismantling of the Iron Curtain, which allowed east-German refugees to head for the west. Reading many new publications and attending rallies for newly established democratic political parties, I was swept up by the atmosphere of unbounded hope for our future.

Today, such sentiments seem like childish naivety, or at least the product of an idyllic state of mind. Both democracy and the future of human civilization are now in grave danger, beset by multifaceted and overlapping crises.

Three decades after the fall of communism, we are again forced to confront anti-democratic political forces in Europe. Their actions often resemble those of old-style communists, only now they run on a platform of authoritarian, nativist populism. They still grumble, like the communists of old, about ‘foreign agents’ and ‘enemies of the state’—by which they mean anyone who opposes their values or policy preferences—and they still disparage the west, often using the same terms of abuse we heard during communism. Their political practices have eroded democratic norms and institutions, destroying the public sphere and brainwashing citizens through lies and manipulation.

Nativist populism tends to be geared toward only one purpose—to monopolise state power and all its assets. In my country, the regime of the prime minister, Viktor Orbán, has almost captured the entire state through the deft manipulation of democratic institutions and the corruption of the economy. Next year’s parliamentary election (in which I am challenging Orbán) will show whether Hungary’s state capture can still be reversed. more>

Updates from McKinsey

The autonomous plant: Entering a new digital era
The requirements of the energy transition present significant industry challenges. Energy companies must embrace new technologies, transform management systems, and expand workforce capabilities.
By Gopal Chakrabarti, Dominik Don, Micah Smith, and Premal Vora – Energy companies are operating in uncertain times. They face societal pressure and increased regulation to significantly reduce fossil-fuel dependency, primarily characterized by reliance on transport fuels, plastics, and other refining and petrochemical products. Under these conditions, companies are looking to maximize the health and resilience of downstream operations—particularly in oil and gas and chemicals—by adopting new automation and digital technologies, enabling increased levels of data usage and performance transparency, as well as faster decision loops.

Many of these changes were already occurring and have only accelerated during the COVID-19 pandemic, resulting in a newfound sense of urgency. Yet digital strategies remain challenging for the energy sector for several reasons, namely keeping up with increased decarbonization efforts, workforce changes, and accelerated technological innovations. Many companies have responded with short-term solutions but remain indecisive about how to identify priorities in the years to come.

Autonomous plants are a promising solution. Such future plants link technology, data, and advanced visualizations with operations to ensure that assets learn from each action taken, as well as from historical data and derived insights. These plants react to asset health and economic conditions and progressively improve their operations over time to run with a lower carbon footprint as well as more safely and more profitably.

Our research shows that all plants, irrespective of their maturity levels, are primed to identify and adopt digital technologies to move toward autonomy. The building blocks are now in place, the technologies are available, and the required skill sets are coming into focus. more>