Sunday, November 27, 2022

Charles V: French scientists decode 500-year-old letter

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IMAGE SOURCE,BIBLIOTHÈQUE STANISLAS DE NANCY
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French codebreakers finally cracked the 500-year-old code

A coded letter signed in 1547 by the most powerful ruler in Europe has been cracked by French scientists, revealing that he lived in fear of an assassination attempt by an Italian mercenary.

Sent by the Holy Roman Emperor Charles V to his ambassador at the French royal court - a man called Jean de Saint-Mauris - the letter gives an insight into the preoccupations of Europe's rulers at a time of dangerous instability caused by wars of religion and rival strategic interests.

For historians, it is also a rare glimpse at the darks arts of diplomacy in action: secrecy, smiling insincerity and disinformation were evidently as current then as they are today.

Cryptographer Cecile Pierrot first heard a rumour of the letter's existence at a dinner party in Nancy three years ago. After lengthy research she tracked it down to the basement of the city's historic library.

Setting herself a challenge to decode the document within a few days, she was disconcerted to find the task rather harder than she had thought.

The three-page letter - consisting of about 70 lines - is mainly written using about 120 encrypted symbols, but there are also three sections in plain contemporary French.

"The first thing was to categorise the symbols, and to look for patterns. But it wasn't simply a case of one symbol representing one letter - it was much more complex," says Pierrot.

"Simply putting it into a computer and telling the computer to work it out would literally have taken longer than the history of the universe!"

IMAGE SOURCE,GETTY IMAGES
Image caption,
Charles V was the Holy Roman Emperor from 1519-1556

Little by little she and her team began to make progress. There were, she found, two types of symbol: simple and complex. Vowels were in the main not written as letters, but added as diacritical marks as in Arabic. The 'e' vowel though had no diacritical mark, so was largely absent.

They also found that while most symbols represented letters or combinations of letters, others represented whole words - like a needle for English King Henry VIII. And there were symbols that had apparently no function at all.

Finally the breakthrough came when historian Camille Desenclos pointed the team to other coded letters to and from the emperor. On one of these, kept at Besançon, the recipient had made an informal translation.

"This was our Rosetta Stone," says Pierrot, referring to the inscriptions which help decode Egyptian hieroglyphics. "It was the key. We would have got there in the end without it, but it saved an awful amount of time."

IMAGE SOURCE,BIBLIOTHÈQUE STANISLAS DE NANCY
Image caption,
The code was much more complex than initially thought

The rarity of the letter 'e' is a sign that the codemakers knew their stuff. Because 'e' is the most common letter (in old as in modern French), it is what codebreakers would be looking for first. And the fake symbols were simply put in to sow more confusion.

"Of course by today's standards it is pretty basic," says Pierrot, who spends her normal time thinking about quantum physics and massive prime numbers. "But given the tools they had, they certainly put us to work!"

So what is in the letter?

The team has not yet issued a full translation, which they are saving for an academic paper. But this week they set out the themes.

February 1547 was a time of rare relative peace between the rival powers of France and the Holy Roman Empire. Emperor Charles V - ruler of vast areas including Spain, the Netherlands, Austro-Hungary and southern Italy - was no longer actually at war with King Francois I. But mistrust still prevailed.

Two recent events were in both rulers' minds. The first was the death of the Henry VIII just a few weeks before. And the second was the rebellion in Germany by a Protestant alliance called the Schmalkaldic League.

In the letter, Charles V reveals his concern to maintain the peace with France so that he can focus his forces against the League. He tells the ambassador to keep himself abreast of thinking in the French court, in particular any reaction to the death of King Henry.

What he wants to avoid above all is the French and English combining to lend more assistance to the Protestant rebels.

IMAGE SOURCE,THE CAMBRIDGE MODERN HISTORY ATLAS
Image caption,
Charles V ruled over a swathe of land, spanning across western and central Europe

Charles V then speaks of a rumour which is circulating - that he, the emperor, is to be the target of an assassination attempt by the Italian condottiere (mercenary leader) Pierre Strozzi. Saint-Mauris is to find out as much as he can about this story. Is it just gossip, or a genuine threat?

And finally in the longest part of the letter Charles V sets out for his ambassador the current state of play in his campaign against the League. There has been a new outbreak of rebellion in Prague, and the emperor's nephew Ferdinand of Tyrol has been forced to flee.

But Charles V gives instructions on how Saint-Mauris is to "spin" the news at the French court. The Prague rebellion is a minor affair, he is told to say, and Ferdinand has left the city because he wants to join his father - the emperor's brother - on campaign.

For the historian Camille Desenclos, the fact that some parts of the letter are encrypted and others not is significant.

"They all knew there was one chance in two that the letter would be intercepted. In which case there were messages that were worth passing to the French," she says - like the fact that the emperor was co-operating on confidence-building measures in northern Italy.

"These were left in plain language. But there were other matters that had to stay secret - like the true state of affairs with the Protestant rebellion, and they were put into code."

What followed? Only a few weeks later the French king François I died, to be replaced by his son Henri II. Charles V defeated the League the next year, but Protestantism was in Germany to stay. In 1552 Henri II formed a new alliance against the emperor with the Protestant princes.

And there was no assassination attempt. Charles V died in a Spanish monastery in 1558.

The S&P 500 is Not the Economy

Technology stocks make up nearly 24% of the S&P 500.

And that number is probably understating things since many of the biggest companies aren’t technically in the tech sector.

Amazon and Tesla are two of the biggest holdings in the consumer discretionary sector.

Facebook, Google and Netflix are in the communications sector.

Many of these companies are now such a part of our lives that it’s difficult to classify them in just one sector, but you could make the case that technology stocks actually make up more like one-third of the S&P 500.

We’re now seeing mass layoffs in these companies that are so embedded in our daily lives and such a big part of the stock market:

This seems like it has to be worrisome for the rest of the economy…right?

I suppose we could be looking at a canary in the coal mine situation where this is the first domino to fall but the tech industry isn’t nearly as important to the overall economy as it is to the stock market.

Carl Quintanilla pointed out a research note from Goldman Sachs this week that put the tech layoffs into perspective.

Goldman notes that even in the unlikely scenario where every single worker in internet publishing, broadcasting and web search were all laid off immediately, the unemployment rate would rise by less than 0.3%.

In fact, technology only makes up 2% or so of the entire U.S. labor force.

Part of this is because technology companies are more efficient. They don’t need as many employees as a steel mill.

But this mismatch also stems from the fact that the stock market is different than the economy in many ways.

Sam Ro shared a great chart this past week on his Substack that shows the difference in composition between the S&P 500 and the U.S. economy in the form of earnings and economic growth:

Sam notes, “The S&P 500 is more about the manufacture and sale of goods. U.S. GDP is more about providing services.”

The stock market is mostly corporations that make and sell things.

The economy is mostly the stuff we do with those things.

Most of the time the stock market and the economy are moving in the same direction but they also diverge on occasion.

The S&P 500 also receives roughly 40% of revenues from overseas. For technology stocks, that number is closer to 60%.

Profits for the broader economy continue to hit all-time highs:

The same is true for the stock market this year:

Unfortunately, investors aren’t willing to pay as much for those profits this year because inflation and interest rates are higher.

Sometimes investors pay a high multiple of corporate profits and sometimes they pay a low multiple.

The same is true of economic growth.

Take a look at the inflation-adjusted annual returns for the U.S. stock market compared to real GDP growth by decade:

Economic growth was higher in the 1940s but stock market returns were higher in the 1950s.

Real GDP growth was basically the same rate in the 1970s, 1980s and 1990s. Yet the stock market was awful in the 1970s and terrific in the 1980s and 1990s.

Growth has been subdued in each of the first two decades of this century. One of those decades experienced phenomenal stock market performance while the other was dreadful.

Sometimes the stock market takes its cues from the economy.

Sometimes the stock market decides to do its own thing.

I don’t know what’s going to happen with the economy in 2023. I wouldn’t be surprised by continued growth or a recession.

But even if you had a crystal ball that foretold which one of those scenarios was coming in the new year, it probably wouldn’t help you predict what’s going to happen to the stock market.

Michael and I talked about the difference between the stock market and the economy and more on this week’s Animal Spirits:

Subscribe to The Compound so you never miss an episode.

Further Reading:
It’s OK to be Confused Right Now



BEN CARLSON, CFA

A Wealth of Common Sense is a blog that focuses on wealth management, investments, financial markets and investor psychology. I manage portfolios for institutions and individuals at Ritholtz Wealth Management LLC. More about me here.  For disclosure information please see here

Saturday, November 26, 2022

2nd earthquake in as many days off Vancouver Island
A 4.8-magnitude earthquake shook homes on Vancouver Island Friday night, but no damage has been reported, according to Earthquakes Canada. (Earthquakes Canada)

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Published Nov. 26, 2022 2:38 p.m. MST

A 4.8-magnitude earthquake shook homes on Vancouver Island Friday night, but no damage has been reported, according to Earthquakes Canada.

The federal agency says the quake happened at 7:50 p.m., 34 kilometres west-northwest of Tofino, at a depth of 32 kilometres below the Pacific Ocean.

Former Tofino mayor and current MLA Josie Osborne reported on Twitter that her "whole house shuddered," and urged residents to check their earthquake preparedness.



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Others on social media reported feeling the quake in the Comox Valley, and Earthquakes Canada shows reports that the quake was felt as far away as Powell River and the Lower Mainland.



Friday's quake was the second off the west coast of Vancouver Island in as many days.

Around 5:10 a.m. Thursday, a smaller earthquake was detected considerably farther from shore, but was nonetheless lightly felt by some Island residents.

That quake occurred 288 kilometres southwest of Tofino, at a depth of one kilometre. It had a magnitude of 4.0.



Sask. farmers, researchers worry investor-bought land 'empties out the countryside'

About 2% of land controlled by ‘non-farmers,' and that 

trend will continue: academics

Farmer Terry Boehm is concerned about the future of his community and other farming towns as the price of land creeps up. (Sam Samson/CBC)

As Terry Boehm sits on a tractor-powered snowblower on a cold winter day and clears a path to his shop, the grain and seed producer thinks about a more important path: the one his town and its young farmers will travel moving forward.

Boehm comes from a long line of farmers near Colonsay, Sask., starting from when his great grandfather arrived more than 100 years ago to the area, about 50 kilometres southeast of Saskatoon.

Saskatchewan, a resource-rich province, makes up about 40 per cent of Canada's farmland. Family farms like Boehm's own the vast majority of it, but researchers say large agriculture companies or investors who rent out farmland now control about two per cent.

Boehm, who has long advocated for farmers' rights, and researchers say this trend could speed up rising costs and force smaller, local farmers to expand or get out of the industry altogether, which could ultimately lead to fewer people in small rural communities.

"This is creating a situation where farmers are really the cash cow to be milked on every teat," Boehm told CBC News. 

Boehm says if fewer people are involved in agriculture, it’ll be more difficult to sustain services such as schools and hospitals in small towns. (Sam Samson/CBC)

More investors 

André Magnan, an associate professor in the department of sociology and social studies at the University of Regina, said that in the last decade and a half, more institutional investors, private investors and corporations have become interested in owning farmland in Saskatchewan.

"The amount of land that they own across the board is not huge in terms of percentage, but in certain cases they may own tens of thousands of acres or even more sometimes," he said.

Most communities are withering. There simply aren't enough people.- Farmer Terry Boehm

Magnan said buying farmland is used as a strategy to diversify a person or company's portfolio and to hedge risks such as inflation.

While it's a good investment, it's a blow to small towns, Magnan said.

"What we're finding is that ownership is in fewer and fewer hands and that has a really tangible effect on local communities. It empties out the countryside," he said.

He and Boehm worry that if fewer people are involved in agriculture, it will be more difficult to sustain services such as schools and hospitals in small towns.

"Most communities are withering. There simply aren't enough people," Boehm said.

"Just being able to have enough people to be engaged in the day-to-day requirements of operating in a small community, it falls on less and less shoulders."

Katherine Aske, a field co-ordinator at the University of British Columbia (UBC) Farm, was recently part of a research team based at the University of Manitoba looking into how farmland tenure is changing on the Prairies.

She said the market value of farmland in Alberta is now completely disconnected from how much farmers can make on the land through producing.

"This is a massive problem," Aske said.

"As farmland prices rise, this becomes more of a pervasive problem because fewer and fewer actors or people are able to purchase land at all."

Katherine Aske recently researched how farmland tenure is changing on the Prairies. (Sam Samson/CBC)

Land ownership rules

Saskatchewan's land ownership rules changed almost two decades ago. Until 2003, people had to live in Saskatchewan to own land in the province. Now, ownership is open to Canadians or Canadian companies that are not publicly traded. 

"It's really since those rules were changed … that you've seen investor groups and other wealthy individuals acquire quite a bit of land," Magnan said.

"With a lot of inflation I expect to see a lot more interest in purchasing farmland by non-farmers."

Saskatchewan still has some of the strictest land ownership rules in Canada. However, the province does grant exemptions — many on the condition that owners rent out to locals.

Annette Desmarais, Canada Research Chair in human rights, social justice and food sovereignty at the University of Manitoba, said renting land can have its problems, including landlords not taking care of the land enough or creating strict rules.

"What if you wanted to start farming organically and you were renting land from an investor who's not interested in organic farming? Your autonomy to make decisions about how you want to farm are going to be affected," Desmarais said. 

A farm tractor is silhouetted against a setting sun near Mossbank, Sask. Until 2003, people had to live in Saskatchewan to own land in the province. (Adrian Wyld/The Canadian Press)

One of the largest investors in Saskatchewan land is Robert Andjelic, who rents out more than 225,000 acres.

He said tenants bid on his land and therefore control the prices.

"If you get 10 bidders, they're the ones that dictate the price," he said.

Andjelic said renting offers farmers a chance to start or grow their careers without the risks of ownership — as long as they take care of the land.

"Land is our bread and butter. We have to take care of it the best we can, return the nutrients and everything else back to it, and not just mine it. We farm it, not mine it. If they mine it, they're not going to be my tenant," he said.

Policy changes 

Canadian farmers and academics, including Desmarais, are fighting for protections against agricultural monopolies amid concern that investors will make up an even larger chunk of the land ownership base. 

"Assuming that most people would want to see many more farms, many more opportunities for young farmers to be able to access, then you develop policy to make sure that that happens," Desmarais said.

Some researchers say provinces should hike taxes to discourage vast land ownership. Others want caps on how much land one operation can own.

But the province's agriculture minister says the Saskatchewan Party won't go down that road.

"If someone wants to come along and offer me X-amount of dollars for my property, that should be my choice to have the right to sell it," David Marit said in a recent interview with CBC News.

"But if the government puts a policy in that says 'no, you can't sell it to him because he's hit his cap,' and you have to sell it to someone else, you know what you've done? You've controlled the whole sale of land."

Saskatchewan Agriculture Minister David Marit says he doesn't support putting a cap on the amount of land that any person or company can own. (Matthew Howard/CBC)

When asked if he's concerned about the harm to small towns and disappearing farmers, Marit said "we're just seeing evolution in time."

"The community I came from 15 years ago lost a school too, as well, just because of people moving on, you were seeing this intergenerational change in farming," he said.

"That just seems to be what's happening."

As for farmer Terry Boehm, he said he does want to sell or rent his land when he gets older. He is adamant on keeping his town alive.

"You can't control everything. My preference would be to sell to a local farmer that's still living in the area or to a younger person that wants to start up in agriculture," he said.

TD Bank pauses Canada Post loan program weeks after national expansion

A loan program delivered by Canada Post and Toronto-Dominion Bank has been paused weeks after the partner organizations announced plans to expand it across the country.

A spokeswoman for TD Bank confirmed that the MyMoney Loan program has been placed on pause indefinitely because of unspecified issues with processing.

“Since the launch, the product was paused both online and in physical locations, after experiencing processing issues,” Amy Thompson said in an email to BNNBloomberg.ca. “We're still working through this and will update accordingly.”

Canada Post referred questions about the status of the program to TD Bank.

The loan program offered variable or fixed loans ranging from $1,000 to $30,000. Repayments could be spread over one- to seven-year terms.

People did not need collateral security for the unsecured-term loans that were based on credit scores. Eligibility requirements included that people had an annual income of $1,000 or more, had not declared bankruptcy and were Canadian citizens or permanent residents.

Earlier this fall, the Crown corporation and TD announced a national expansion for the program that was first launched in 2021 at locations in Nova Scotia, Manitoba and Ontario.

An October Canada Post news release promoted the program as aimed at expanding financial services access to more Canadians by “combining the reach and trust of Canada Post’s national post office network with personal loans for amounts as low as $1,000 and competitive interest rates.”

The national launch was intended to make the program available in rural, remote and Indigenous communities, the release said, noting that the initial market test “demonstrated the potential of the MyMoney Loan to help meet the needs of many Canadians, including those who are new to credit.”

Canada Post Officially Launches Nationwide Loan Program With TD Bank Group