Is it possible to create a whisky futures market?

Whisky is currently much in demand. The integration of India and China into the world economy brings more than 2 billion new consumers to global product markets. Of course, whisky producers, like producers of any other product, hope that at least some of these 2 billion consumers will choose to consume whisky - and to that end, they are reopening old mothballed distilleries and building new ones. And not only in Scotland - they are being built in Japan, Ireland, England and very likely in India and China too, perhaps in the not too distant future.

Unfortunately, whisky distilling is a long term game. Whisky can't be called whisky under the rules of the Scotch Whisky Association until it has been aged for 3 years in a barrel, and obviously more if one wants a decent product. The time taken from distillation to sales is therefore fraught with financial risk. One needs to cover the operating costs of the distillery for 3 to 15 years before one has sales to generate cash flow. Whisky distilleries therefore offset their costs in the following ways:

1. Cask sales to independent bottlers.

The distillery can sell off casks of their distillate before they mature fully to independent bottlers (IBs). The IBs then take some of the risk on each cask (even single malt whiskies are vatted from several casks in order to maintain consistent quality), and therefore would only be prepared to pay a low price.

2. Diversify their product range.

Other spirits, like vodka and brandy, have shorter maturation times. A whisky distiller could divert capital into setting up a vodka sales operation, say, or make liqueurs using ready distilled spirits, building up a brand in the process, and cross-subsidising the distillery and its costs. This runs the risk of diverting consumer attention away from the whisky product however.

3. Sell futures.

Some distilleries already offer this. One buys futures on a cask of whisky, essentially buying the cask forward, to be bottled either at a date of one's choice or at the discretion of the distillery manager. All very well and good for the whisky connoisseur, but what would he do if he changed his mind. Nope he can't sell it - this sort of product is non-tradeable.


Would it therefore be possible to set up a tradeable market in whisky futures? Futures markets depend on several factors: standardised contracts, liquidity and few restrictions on price discovery (usually no restrictions on short sales) are the more important ones. Taking these 3 pre-requisites as necessary and sufficient conditions it's easy to see that the third helps create the second, and the first is a tough one to meet.

Because each distillery's output is different, there is no easy way of categorising whiskies neatly enough such that standardised contracts can be created with sufficient liquidity. There would certainly be insufficient liquidity to trade outputs of individual distilleries. Larger groupings along geographical lines might work, but would be difficult to categorise because the concept of terroir doesn't apply to whisky. A contract for a case of Islay whisky to be delivered in 10 years time would be confusing - which Islay did you want? Ardbeg, Laphroaig or Bunnahabhain? Peated or unpeated? Still, this might work - after all, government bond futures settle using the "cheapest to deliver" bond, and perhaps something similar could be created.

Now for some Fermi estimation. What's the size of a whisky futures market?

• The size of a whisky futures market could be supported by potentially up to 200m litres of production a year. Most annual whisky production would go into blends, but 200m litres of single malt distilled and sold is a reachable target within the next decade, if one believes the China and India story.
• If one assumes average open interest of 10 times contracts held to delivery, then there could be contracts with value of up to 2 billion litres traded a year (not including possible futures for blends and grain whisky...).
• Say average price is 100 sterling a cask (a guesstimated figure), then the market is worth 200 billion pounds sterling, or $400bn. Definitely a market that could achieve reasonably good liquidity!

So a whisky futures market is possible and feasible, if producers decided to band together and spread their financial risk around.

10 members of Proboscidea

Elephants are incredible creatures. They are probably as intelligent as dolphins, and communicate in a similar way, using infrasound (low frequency sound waves) instead of ultrasonic clicks. Unlike dolphins and other members of the order Cetacea however, there are only 3 species extant today. In no particular order, 10 interesting members of the order that elephants belong to - Proboscidea:

1. Gomphotherium

This elephant ancestor lived during the Miocene and Pliocene. It is considered to be a member of the gomphotheres, a group of proboscids directly ancestral to mammoths and modern day elephants. It stood about 3m tall, and had 4 tusks, two upper incisors and 2 lower incisors. Conjecture has it that Gomphotherium used the bottom tusks to dig up aquatic vegetation.

2. Platybelodon

This is another gomphothere. The upper two tusks were reasonably small compared to the size of the animal, and were probably used for defensive purposes. The bottom 2 tusks were fused, forming a kind of shovel, which helped the animal dig up more solid vegetation than aquatic plants. It also let the animal scrape bark off trees, as modern-day elephants do. Platybelodon lived during the Miocene.

3. African elephants

The African elephants are members of the genus Loxodonta, and there are thought to be 2 extant species, the African bush elephant (familiar to everyone) and the African forest elephant, a smaller species that inhabits the African jungles, has more toenails, and shorter tusks. There are probably around 10,000 elephants of both species left in the wild.

4. Mastodons

Mastodons were members of the genus Mammut (no, not mammoths, although we'll come to those). Although some species were furry like woolly mammoths, they had larger heads and differently shaped teeth compared to mammoths, and had a differently curved spine. Their tusks were up to 5m long, and they may possibly have been hunted to extinction by humans in North America 4 million years ago.

5. Mammoths

Mammoths were members of the genus Mammuthus (confusing? Yes, I know). They survived till relatively recently, up to 4,500 years ago. Some species were up to 5m at the shoulder, and there were some furry ones (see, for example, woolly mammoth). They have been found to be more closely related to Asian elephants than to African elephants. They lived mostly in the northern hemisphere, and some examples have been preserved in permafrost till excavated by scientists (and the occasional hungry hunter). Pygmy woolly mammoths were found to have lived on several islands off the coast of California and in Siberia.

6. Asian elephants

Asian elephants belong to a genus all their own, Elephas. They split from the African elephant lineage about 5 million years ago in North Africa, and then migrated across to East Asia and the sub-continent. There are several extant subspecies, the most famous one living in India and Sri Lanka. There are also populations in Malaysia, Thailand, Indonesia and Vietnam. The Chinese one however, is extinct.

7. Palaeomastodon

Palaeomastodon was a member of an eponymous genus. It lived about 38 million years ago, and was fairly small at 1 to 2m. They had 2 short tusks in the upper jaws, and flat broad protruding teeth (not quite tusks) in the lower (also protruding) jaws to scoop swamp vegetation out of the water. It did have a trunk, although it was short and probably not as flexible as those of later proboscids.

8. Moeritherium

This is an extremely basal member of Proboscidea, so basal, in fact, that it doesn't have a trunk. It lived about 50m years ago, and is regarded as the common ancestor for all members of Proboscidea so far discovered. As with many of the others it was a swamp creature than subsisted on vegetation. It looked like a tapir, and was less than a metre high. It already had slightly protruding incisors on both the upper and lower jaws, the forerunners of tusks.

9. Stegodon

Stegodon is another proboscid that may have survived into historical times. A dwarf species was present on the island of Flores (part of Indonesia) till about 12,000 years ago. The first member of the genus however stood about 4m high, and had straight tusks that were up to 10m long. These tusks were so close together that the trunk would not have been able to hang down between them, and must have been been supported by them. Intriguingly, some may still survive today.

10. Anancus

As with most of the creatures described here, Anancus refers to both a genus and the first discovered member of that genus. This proboscid died out around the same time as the mastodons did, and looked very much like modern day elephants, and was about 4m high. However, it had shorter legs and much longer tusks in proportion to its size. These tusks jutted out straight ahead, and helped the animal push trees and shrubs over in its forest habitat.


While googling around for images for this post, I discovered a creationist website claiming to "disprove" evolution using elephants as an example. The counterproof was photographic evidence of the stegodont-like elephants in Nepal (and a page that claimed that mammoths were not extinct, but showed a rather rheumatic Asian elephant). How sad - there are so many pieces of evidence to support the existence of evolution, but some people still insist in sticking their heads into the ground and denying reality. Why? Aren't these creatures amazing enough to admire without bringing ideology (I won't dignify such claptrap with the word "religion") into it?

I don't like to end on that sour note, so I'll add one more fantastic proboscid:

11. Deinotherium

According to Wikipedia, the 3rd largest land mammal to have existed - up to 5m tall and 12 tonnes in weight. It also lived during the Miocene and the Pleistocene, and had recurved tusks in the lower jaw and no tusks in the upper jaw. The shape of the tusks is puzzling - what did the animal use them for? Digging for roots is a possibility, but the animal's size and weight suggests that it also used its lower jaw as a bark stripper, or a bulldozer to push trees down.

10 literary epics of mythic proportions

I really enjoy great sweeping historical epics that become the stuff of legend. Here are a selection of the best and most readable.

1. Romance of the Three Kingdoms (三国演义).

Written in the 14th century AD by 罗贯中 (Luo Guanzhong), this epic describe the events in China at the end of the Han dynasty and during the Three Kingdoms era. Three warlords, Liu Bei, Cao Cao and Sun Jian lead the kingdoms of Shu, Wei and Wu, allying and betraying each other as they vie to unify China once more. Each kingdom has many generals and strategists, and vast numbers of men under arms. It was highly Machiavellian before the word was even invented.

2. The Arthurian cycle.

Britain's national epic. It tells of Arthur Pendragon, his rise to the kingship of the British Isles, his founding of the chivalric order of the Knights of the Round Table, his court's search for the Holy Grail, his betrayal by his wife Guinevere and his death at the hands of his son Mordred, around about the 5th century AD. All around good clean fun, with just enough soap opera naughtiness to make it interesting. The definitive version is by Thomas Malory.


3. The Lord of the Rings.

Completely fictional - but then, some of the other ones on this list probably are too. Written by JRR Tolkien over 15 or so years, and published in 3 volumes in 1954 and 1955. It was meant to be a single book. It tells of Middle Earth and the struggle to defeat evil personified in Sauron ans his One Ring. Frodo, hobbit and Ringbearer, is tasked to carry the Ring to Mount Doom and drop it into the depths of a volcano. Obviously he succeeds, but not without cost. Tolkien's world appears particularly well-realised and detailed, probably because he made up a whole supporting mythology before he actually set pen to paper to write a word of the trilogy.

4. The Kalevala.

This is the Finnish national epic, and was compiled by Elias Lonnrot in the 19th century in verse form. It follows the adventures of Vainamoinen, a warrior-bard who is looking for a wife, Lemminkainen, a handsome rake who holds the source of all good fortune (something called the Sampo), and Ilmarinen, a blacksmith who can make anything (including the Sampo). The 3 heroes have to quest for the Sampo when Lemminkainen loses it. The story ends with a Christian allegory - a virgin birth occurs, and the baby judges Vainamoinen, causing him to leave the earthly world. The baby is then declared king of Karelia.

5. Beowulf.

Classic story of hero kills monster, and helped win Seamus Heaney a Nobel Prize in Literature. Beowulf is a thane of the Geats who helps King Hrothgar, king of the Spear Danes kill a monster called Grendel, for making a habit of eating Hrothgar's men. Beowulf battles Grendel alone, ripping off one of the monster's arms. Grendel flees back to the lake where he lives, and dies at his mother's feet. She then attempts to take revenge, but fails, and flees. Beowulf follows shortly after, and kills Grendel's mother. He then returns to Geatland, where he becomes a king, and after long life, fights and kills a third monster, a dragon. However, he dies of his injuries. Heaney provided a page of the epic in Old Anglo Saxon in his translation - it must have been some song when sung.

6. The Mahabharata.

This "poem" is 1.8 million words long, written in Sanskrit, in both verse and prose. It is divided into 18 parts, or parvas. Broadly, they describe a battle for the throne of Hastinapura between 2 branches (the Kaurava and the Pandava) of one family. The struggle takes the form of a vendetta initially, with the Kauravas trying to assassinate the Pandavas, and then escalates into a huge battle between 2 armies. The Pandavas win, and try to ascend to heaven, but fail, all except one, the purest in heart and mind.

7. The Ulster Cycle.

Describes the adventures of Cuchulainn, hero of Ulster. Cuchulainn is the son of two gods, and is the defender of Ulster. He's the forerunner of Superman (and perhaps Achilles), as he is invincible and goes into a battle frenzy when roused. His finest hour is when Medb, queen of Connacht, attacks Ulster to steal a prize bull. Cuchulainn enters the most severe battle frenzy of his life, and slaughters Medb's army singlehandedly. Cuchulainn is eventually betrayed by his enemies and killed (along with his horse and chariot driver) by 3 magic spears.

8. The Iliad and the Odyssey.

Written by Homer around the 7th or 8th century BC. The Iliad is about the re-entry of Achilles into the Trojan war, the conquest of Troy by the Greeks, after Menelaus King of Sparta is cuckolded by Paris, prince of Troy. Many Greek and Trojan heroes die during the decade-long war, but eventually the Trojans are defeated by the Trojan horse stratagem (although most of these events are not in the Iliad). The Odyssey is about one of the survivors, Odysseus, and his trials and travails during his (also) decade-long journey home to Ithaca and his wife, Penelope.

9. The Epic of Sundiata.

Got to have some cultural diversity - let's look for an African epic. This one is the national epic of Mali. Full disclaimer - I haven't read this one, only a couple of summaries, but it seems to fit all the criteria for inclusion into this list. It tells of the birth of Sundiata Keita, the Muslim founder of the Mali empire, how he was born crippled and learned to walk, how he was exiled from his kingdom by the dowager, and how he returned with an army to retake it. If it sounds a bit like The Lion King, that's because the movie and the musical are based on this story.

10. The Water Margin (水浒传).

Written by Shi Naian (施耐庵), whom some believe to be Luo Guanzhong, or at the very least a student or a teacher thereof, the Water Margin tells of a band of outlaws that slowly grows to number 108 heroes and leaders. These men are in revolt against the Emperor, but the Emperor offers an amnesty if the band will put down revolts within the kingdom, fighting in both the North and the South of China. The band succeeds, at the cost of most of its members. At the end, few survive.

Jin Kichi

London doesn't have many places that serve good yakitori. Yakitori (usually bits of chicken meat) is usually available in most Japanese restaurants, but I am aware of only 2 London restaurants that make it a specialty. There is a new hip place in the Oxo Tower called Bincho Yakitori (of which more later), and there is the old Hampstead faithful, Jin Kichi.

Jin Kichi
73 Heath Street
London NW3 6UG
020 7794 6158

Situated a couple of minutes' walk from Hampstead tube station, Jin Kichi is something of an izakaya (at least, as close as one gets in London), a Japanese pub. There are a number of interesting selections on the drinks menu, including a hot shochu and water with a salted ume in it. This particular drink is fantastic in winter, especially if one has been caught in the rain and is sitting down slightly damp at the yakitori bar.

The restaurant has 2 floors, seating perhaps 30 people both on the ground floor and in the basement. The ground floor is where the yakitori grill is, surrounded by a bar, around which are arranged 10 or so seats. This is a great place to sit, as one can place orders for individual yakitori and receive them as hot from the grill as possible.

The yakitori are the stars on the menu. There are about 20 selections, ranging from chicken, ox tongue and duck to mushrooms. There are 2 sets available, of which Set B is particularly good value for money, if you like chicken offal. Highly recommended skewers include chicken gizzard, chicken liver, salted ox tongue, duck and spring onion, pork and shiso maki, and shiitake mushrooms.

The kitchen downstairs serves sushi and sashimi (which is run of the mill), and also does great tempura. Vegetable tempura is particularly good, with octopus tentacles a close second. Deep fried baby shrimp are also available (they come in a heaped pile), along with grilled fish head (labelled on the menu as fish bones). The occasional special makes its appearance on the menu, ranging from fried calamari to several types of chazuke (Japanese rice drowned in stock and flavoured with fish flakes).

The service is perfectly adequate, and as I usually sit at the bar, as prompt as it is anywhere else. Prices are reasonable for a restaurant that is the best at its specialty in London. Well worth a visit, but don't sit in my place at the bar.

Scores:

22 Nov 2007: TFQ = 25, CS = 26, S = 15, AD = 6, VfM = 8. Total = 80 points.

What does this mean?

Yakitori

Cutting up meat into small pieces, skewering them on a long thin stick and roasting the kebab over an open flame is a universal dish. All cultures discover it eventually, and incorporate it into their respective cuisines. Some later than others, and some in more ways than others, but everyone has their own version. Japanese cuisine has its own version, and has extended the use of the technique to more than just any available protein. In fact, it's almost a genre on its own.

Grilled foods on skewers are referred to as yakitori in Japan, literally "grilled chicken". All parts of the chicken are used, however - gizzard (shown left), liver, hearts, wings, breast, thigh, skin etc. The chicken pieces are threaded onto bamboo skewers and dipped in a mixture of soya sauce, mirin vinegar and honey prior to grilling. The skewers may also simply be salted. Once grilled to moist doneness, the skewers are served, plain, or with plain sansho pepper or shichimi pepper (sansho mixed with chili flakes and sesame). The genre's repertoire has expanded to include other meats as well - beef, pork, duck, seafood, occasionally married to vegetables, with different marinades.

In Japan, yakitori is eaten at specialist yakitori shops or stalls (known as yakitori-ya) which may have a capacity of less than 10. Red lanterns are traditional signs of yakitori-ya, usually wreathed in a cloud of smoke from the charcoal grill. Skewers are also served at izakaya, or the Japanese version of a pub. Once inside either a yakitori-ya, one draws up one's stool, orders several skewers (they usually come in orders of two), and a cold beer. Once replete with grilled chicken, the traditional way to finish the meal is with chazuke, a bowl of rice drenched in stock and tea, flavoured with fish or fruit. Meals at izakaya tend to be more focused on the alcohol, with the yakitori taking the role of stomach padding.

Yakitori dates from around 1700, where it was first developed as a technique for quickly cooking the meat of wild birds, which were relatively rare at the time. The meat was first taken off the skewers prior to serving, but this soon became confined to the nobility. Farmers and peasants found it much easier to eat the skewers on the move, while walking or working (the very definition of street food!). Nevertheless, the scarcity of wildfowl kept consumption limited to whatever the lucky farmer or noble could trap. In the 20th century however, the dish found its metier with the introduction of the chicken.

Yakitori encapsulates not only chicken skewers, but combinations of meat and vegetables which are extremely varied, yet unmistakably Japanese due to the ingredients, the marinade and spices, and the grilling style. The traditional Japanese respect for food and their insistence on using the freshest and most appropriate ingredients have created many different types of yakitori, making their style the most flexible among all the styles of grilled skewered meat that have arisen in cuisines around the world.

Glengoyne 17 yo (Wo-o-oh, sweet child of mine)

This whisky is just... wow. It's a brilliant digestif, and certainly better than any sherry, cognac or brandy I've ever tasted. It beats calvados, ouzo and any beer out there (sorry, my pint of black gold, but you've been surpassed) as an after-dessert tipple. However, given the flavour profile, the objective of this particular exercise in whisky and food pairing is to make this whisky the dessert itself.

My trusty tasting notebook says:

Glengoyne 17 yo (OB)
Single malt - Highlands
Orange honey gold
43% ABV

Nose: Chocolate covered raisins, dark chocolate and oak. Grapes and apricots. Some faint minty, grassy notes.
Mouthfeel: Thick and viscous.
Taste: Sweet, winey and rich. Chocolate and grappa. Sweet, juicy California raisins.
Finish: Medium length, salty and sweet. Coffee and toast. Chocolate bonbons.

And so on to the experiments. There must be there must be a dessert out there that will fit this whisky like a glove.

1. Chinese white pear.

While I was initially considering warm dairy-based desserts as a complement to the chocolate and oak notes, my nose caught the scent of two ripe Chinese pears in my fruit basket. Definitely worth a try. These pears have firm juicy white flesh, and taste like a cross between pear, apple and orange. The juice is sweet and fragrant, almost floral, with a tartness at the finish. It changes the flavour profile of the Glengoyne, toning down the chocolaty notes and transforming the oak and raisin into something savoury, almost rancio. Cheddar and boiled beef notes appear, followed immediately by apple cores, woody and bitter. Very interesting - probably takes some getting used to. Better than the whisky alone? I can't decide.

2. Sticky toffee pudding.

I chose this as a generic warm dessert to see how that goes with the Glengoyne. Oak, raisin, and sweet luscious sticky toffee pudding - sounds like a match made in heaven. Well, almost. There are good bits and bad bits.

The good bits first. The sticky toffee pudding mutes the Glengoyne's natural sweetness, making it wine-like and oaky. This is very powerful - the whisky actually tastes like an oak-laden Cabernet Sauvignon, with spicy chocolate cherry notes. It shows how much oak actually hides within this Glengoyne expression.

Now the bad bits - the heat of the pudding (cold sticky toffee pudding just doesn't work) evaporates the alcohol in the whisky very quickly. It really prickles, like good wasabi (the usual remedy for wasabi works too - open one's mouth). Not particularly unpleasant, but probably not my bag. Slightly cooled pudding works better whisky-wise, but the pudding isn't as good.

3. Chocolate ice cream.

After the generic warm dessert comes the generic cold dessert. I chose chocolate flavour to see whether or not I could develop the winey richness of the whisky. Heat seems to make the chocolate and fruit pop out, perhaps cold can mute these notes.

Unfortunately, with the ice cream, the Glengoyne tastes a little flat. The oak has become quite subtle, fainter than when drunk neat. Not much spice either, just alcohol and sugar. The chocolate ice cream acquires a fruity tang though, which is quite tasty.

And the winner is...

I think the most interesting combination is the pear, as it changes the Glengoyne into something different and unusual. As a dessert however, it doesn't work very well. Perhaps as an amuse bouche, or even an aperitif, but not as a dessert. The other two desserts are not noticeably improved by the whisky, nor is the whisky improved by them. So Glengoyne 17 yo remains unpaired, best and most delicious as a dram on its own.

US sub-prime mortgage losses

The current turmoil in the US and global economy due to losses in US sub-prime mortgage debt (and sub-prime mortgage debt in other countries too) is fed partly by the fact that no one is able to quantify the losses exactly, and partly by the fact that no one is quite sure who has those losses, including the banks who hold some of the debt. This uncertainty prevents banks from lending aggressively, as they need to conserve their capital in case their exposure to sub-prime mortgages, whether directly, through structured credit, or through SIVs, turns sour.

I'm going to try to answer the first question using Fermi estimation. This approach is unlikely to work for the second question however, so we'll resort to plain old guessing.

What are the losses on US sub-prime mortgages?

• The total stock of US sub-prime mortgages is certainly more than $1.3 trillion. Say $1.8 trillion to be conservative, although in reality we are interested in the 2003-2007 vintages.
• The major losses will be on the 2006 and 2007 vintages. According to Moodys, approximately 7% of October 2006 loans were delinquent in March 2007. Eyeballing the figure in the document, it's quite possible that 15% of loans written in October 2006 are delinquent now. Loans written in 2007 would probably have higher delinquency rates, say 18-20% by mid-2008. This would be a reasonable upper bound, given that loans of 2003, 2004 and 2005 (probably about 30-40% of the total stock) would have a lower delinquency rate.
• Total eventual losses on US sub-prime mortgages are likely to be around $1.8 trillion * 18-20% = $320-360bn. Remember, this is an upper bound estimate.

Who's got them?

Well, the following major writedowns have already taken place, or been part announced - Citigroup = approximately $17bn, Barclays Capital = $3bn, Merrill Lynch = $4.5bn, UBS = about $10bn, HSBC = $3.4bn, Bear Stearns = $2bn, Morgan Stanley = $3.7bn, Deutsche Bank = $3.1bn, Credit Suisse = $2bn, AIG = $2.7bn. That's more than $50bn so far, but not all of it will have been in US sub-prime mortgages. Some of it will also have represented mark-to-market losses, not defaults which are unlikely to be recovered. So there could be more than $300bn of writedowns still to come.

Last gasp of the minnow

This week's Economist ran a story on Proton, Malaysia's car manufacturing national "champion". Proton is apparently in talks with various parties to launch an "Islamic" car for sale to Muslims worldwide. This is a silly waste of money, for the following reasons.

1. Proton is not a viable company.

With annual sales of 130,000 vehicles, uncompetitive in export markets and in its home market, Proton is losing money. According to the Economist, it lost RM591m in the year to March. This is, sadly, both a huge amount and a tiny amount. It's a huge amount for a Malaysian government-supported company, as it's ultimately underwritten with Malaysian taxpayers' money (although this hasn't happened yet). It's also a tiny amount in international terms, as it is barely 90m pounds sterling, serving to highlight how small Proton is.

Carmakers need to marry volume, with the attendant economies of scale, to good design, which brings a premium in sale price, in order to make a profit. Good design often necessitates lots of niche products though, which is one reason why the US carmakers are struggling. General Motors sells 4.1 million vehicles in the US alone, and it can barely make an operating profit. Proton has neither volume nor good design (nor indeed technical knowhow - the basic Proton model is based on a combination of Korean and Japanese technology, which hasn't been improved much in the last 30 years).

2. Barriers to entry in its new niche are low.

According to the Economist, the top-of-the-range Islamic car will contain a direction finder for Mecca, a compartment for a headscarf and a special box for the Qur'an. I have no problem in believing that these are the extent of the innovations, as it's hard to innovate in the automotive industry, and Proton simply does not have the resources, financially or in brainpower, to do the difficult things. I also don't believe that these innovations are in any way hard to copy. The Chinese carmakers will be duplicating them before the second week of production is out, and will undercut Proton on price.

Assuming, of course, that Muslims want to buy an Islamic car with indifferent performance that allows them to store the occasional headscarf. If Proton is relying on Muslim solidarity to make them money, then they shouldn't be selling to Turkey (a major Muslim market that Proton has identified as key), as I find it hard to believe that hard-nosed, cosmopolitan Turks will accept an Islamic car made from decades old Japanese and Korean technology.

Will sales in Pakistan and Indonesia help? Probably not - India has its own automotive firms that are already in Pakistan, and Indonesia already has its own automotive industry (that could easily create an Islamic car).

3. Proton's partner wants know-how, not a partner.

Proton apparently intends to partner with Iran, who came up with the idea but has even less technological know-how. The Iranians are likely to be as nationalist about this as they are about their oil and gas industry, and their nuclear designs. After all, they are the ones with the big internal market. Proton will probably open a factory or two in Iran, make a few cars, and be swiftly dumped for a more technologically advanced partner (or sucker, as the case may be).


Proton has already burned through enough cash and subsidies in the 30 or so years it has been in existence. It was nothing more than one of Mahathir Mohamed's vanity projects, and has even less use after he has stepped down. The company should have been sold to a foreign buyer long ago, or simply shut down, but this will not happen. All too often in Malaysia, ego trumps sense, in a country that can ill afford such an overinflated self-image.

Beetroot and fried eggs

There are a number of food combinations and twists that are plain genius - simple, tasty, unique and instantly identifiable. Perhaps one of the more simple ones - but no less clever and tasty for that - is the inclusion of beetroot, and perhaps a fried egg, in Australasian burgers. The beetroot is essential, and non-negotiable, while the fried egg is a luxury, a special touch if you will.

Did I say the beetroot was essential? Maybe not - last week on 15 November, the Sydney Morning Herald reported that McDonalds doesn't serve beetroot in burgers ("McOzzes") in South Australia and Western Australia due to lack of demand. You can see the shock and horror in the article.

It's a shame that this is dying out in its native land. For making a good burger great, you can't beat adding beetroot. The sweet beetroot melds perfectly with the mayonnaise and ketchup in the burger, and the fried egg (yolk has to be soft and runny) oozes velvety goodness into the mix. It's all sopped up by the bun, allowing one to bite into soft soggy bread replete with salty sweet tangy eggy flavour. The meat is almost an afterthought (although it can add some oomph if it's good meat). The Kiwis add pineapple to this mixture, which is nice, but unnecessary.

According to the same Sydney Morning Herald article, beetroot was already present in burgers in milk-bars (Aussie versions of diners) in the 1960s. There's no information on who the genius who first thought of combining beetroot and burgers was. The seeds (boom boom) of the idea were probably there though - Queensland produces 90% of Australia's crop of beetroot, which mostly goes to supplying domestic consumption. And Australia has acres of dairy farms, which means that there are lots of eggs around. The only mystery is why Aussies didn't invent the beetroot cheese steak sandwich (leaving it instead to Philadelphia, who left out the beetroot).

Sadness and light

The brilliant folks at the Whisky Exchange in Vinopolis here in London sell whiskies in the cask, bottled at your convenience. A few weeks ago I had a close look at the 5 casks they had in store - 1 was empty (used to contain Pampero rum I think), the rest were Ardbeg Quite Young (gone now, sadly), an Aultmore, a Clynelish 1992, and a Rosebank 1990. Rosebank 1990? I was quite attracted to that - hadn't heard of Rosebank before, not any bottlings or of the distillery itself. I bought a bottle unnosed and untasted, and brought it home.

I didn't try it until a few days after, but when I did... oh boy! Lovely notes of apples, lemons, rhubarb and custard sweets, marmalade and hay. All this in the nose, and a lot more powerful in the mouth, with the tannins adding some tea and grass notes to accent the fruit. Spring and south Scotland in a bottle.

My next thought was what official bottlings there were out there, so I could get my greedy paws on some. Unfortunately, it appears that Diageo closed the distillery back in 1993 (apparently because the other Lowland distillery they owned, Glenkinchie, was prettier and more easily accessible to tourists from Edinburgh), sold the site to the British Waterways Board in 2002. The BWB has now given permission for the site (see aerial photo right) to be converted into upmarket flats. The distillery has already been demolished and the stills and equipment removed.

Diageo continues to bottle a Rosebank every so often and release it on the market. It's a great profit spinner, as prices can only go up due to the lack of supply. Witness Brora, closed in 1983, whose whiskies now sell for several hundred quid a bottle, and well beyond my price range (*sniff*).

Could Diageo revive Rosebank if they chose to? Unlikely now - they've just decided to expand their Cameronbridge grain distillery and build a new 100m pound distillery called Roseisle in Speyside, to supply whisky for blends. Surely they could have held on to Rosebank and spent a few million quid reviving it? By 2002 the whisky boom was well and truly underway, and Rosebank is probably more suited to emerging market tastes than the peatier whiskies. The output could easily sell for 40 pounds a bottle, more than Diageo are charging for their Talisker 18yo (another delicious whisky). I know I'd pay that much, and possibly more, for a bottle of Rosebank on taste alone, and I'm by no means the richest drammer around.

So, a toast to Rosebank. So light and refreshing, but laden with sadness, as every dram I drink is one less dram left in the world.

10 head dishes that taste good (maybe)

Heads, and bits of heads - neglected parts that usually don't make it into food, despite actually being quite delicious in many cases. One rule of thumb for choosing dishes at good restaurants - if it doesn't look good, it probably tastes good. Otherwise they wouldn't be able to sell it.

In no particular order:

1. Fish head curry.

Well-known in South East Asia, and frequently shunned by children who don't know any better. Once they try it - usually with eyes screwed up and trembling in trepidation - they realise why all the adults are slurping like there's no tomorrow. This is true of the curry version, the asam (tamarind) version, and the version with rice vermicelli (beehoon for the initiated).

Combine 1 red snapper head with curry paste, cardamom, turmeric, ginger and many many other spices. Add tamarind (reduce the curry paste) if needed, stew for a long time, scoff with rice or rotis. I like the version with grouper heads, because the cheeks and lips are bigger and thicker, but I shouldn't really. My better half's (we'll call her the Pretty Lady) mother (to avoid confusion, the Pretty Lady's Mummy) loves the eyes.

2. Brawn.

As food (er, good, Freudian typo - sorry) as the finest foie gras, according to Rick Stein (TV chef extraordinaire) and I have to agree. Brawn is pressed pig's head terrine, where the head (brain removed first) is simmered with spices (salt - yes, it's a spice; peppercorns, herbs - juniper berries in one version I found; and saltpetre as a preservative) until the meat comes off the bone. The meat is picked through and sliced, and the gelatine from the bones sets the lot into a sliceable, savoury mass. True British food, and most Brits are unaware of it, and wouldn't eat it even if they were aware of it.

3. Prawn heads.

The best and sweetest part of all. It's hard to eat them properly here in Britain (where a prawn is a headless strip of flesh that is pre-cooked and stinks of boric acid), but in Asia, where you get bigger prawns, they are a real treat. Peel the prawn head off a cooked prawn (careful not to rip the bladder) and slurp gently. The best bit of a male prawn's head is the bit over the neck, which has some sweet flesh, and the best bit of a female prawn's head is the roe. Prawn heads also make fantastic stock and prawn paste.

4. Tête de veau.

Okay, any bovine nervous tissue, as well as the flesh near any nervous tissue, is probably not too good for you now because of mad cow disease. However, the French make tête de veau, which is a piece of flesh taken from the calf's head (it runs from the forehead to the tip of the nose), which is then rolled up with the thymus gland and some of the tongue. This roll is poached in a light court bouillon, then served with sauce ravigote. London's Racine restaurant serves it with some calf's brain on top. Very bad for you (nervous tissue from any creature is probably a no-no now because of prion diseases), but very tasty.

5. Goat's head soup.

Full disclosure: I've never tried this yet. However, as it was immortalised as the name of the classic Rolling Stones album, it must have had some oomph to it. The album title refers to a Jamaican dish also known as Mannish water. According to various recipes I've been able to find, the goat's head is first charred to get rid of the hair (after being first debrained), and then charred further to cook the meat. The flesh is then flensed off the skull, and chopped. To make the goat's head soup, the chopped meat is simmered with potato, yam, garlic, spring onions, green banana, and Scotch bonnet peppers. There's a Nigerian version that's more of a stew, done with tomatoes and chilli.

6. Cockscombs.

Gelatinous bits of meat that taste a little gamey (not like chicken at all). A lot like chicken feet or duck's tongue (see below), in that most of the flavour comes from the sauce or marinade used, with the flesh itself contributing mostly texture.

7. Duck's tongue.

Cooked many ways in Chinese cuisine - my favourite is steamed and then stewed with rice wine, five spice powder and ginger. The collagen melts out of the tongues to give the sauce a lovely smooth texture, which goes very well with the crunch of the spike of cartilage that attaches the tongue to the bone.

8. Icelandic sheep's head jam.

Something the Icelanders eat during Þorri, which is a midwinter festival. The sheep's heads are salted, boiled, flensed, blended with brains and made into terrine, which is then either eaten fresh or preserved in whey. Very similar to brawn, as you can tell. The heads are also sometimes eaten whole, in which case the boiling period is shorter and the whole head is served at the table.

9. Lion's head meatballs.

Okay, these aren't made from heads. But they do taste good though - meatballs (big ones) made with pork and crab meat, then simmered in broth with some chinese leaf added at the last minute to create the manes.

10. Live (or recently deceased) monkey brains.

The story about special tables that strap the monkey in place live, so that its skull can be opened up and its brain eaten while it is still alive is probably apocryphal, and untrue. I've heard that it is possible get it in some parts of China (Yunnan, and other parts of the south west near the Burmese border) though, where they butcher the monkey and marinate the fresh brain in mao tai before bringing it to the table. This story may also be apocryphal, as I've yet to encounter anyone who's actually had it.

10 famous horses

Ha, horses. Interesting, useful and beautiful creatures, with a long history of association with mankind. Members of the Chinese zodiac, and representative of loyalty, steadfastness and speed. In no particular order, 10 horses that for some reason or another, are still remembered today.

1. Incitatus

Horse of Caligula, 4th emperor of Rome. According to the historian Suetonius (and wikipedia), he was lucky enough to have a stable of marble, an ivory manger, purple blankets and a collar of precious stones. He also had a wife, although from a stallion's point of view having to go from a herd of mares to 1 mare probably wasn't an improvement. Caligula wanted to appoint him consul, which would have created slight problems if and when Incitatus came to preside over an angry Senate.

2. Barbaro

Famous for not winning races. In the 2006 this horse broke its legs and should have been euthanised. However, the story somehow caught the US public's imagination and the horse was operated on 7 times before he developed problems in all four legs and had to be put down.

3. Red Hare (赤兔马)

Famous steed from the Three Kingdoms period (AD 184-263) in China, said to be able to run a thousand 里 in a day. Was ridden by 3 generals, one of whom nearly became a king (Dong Zhuo), one who was the greatest warrior of the day (Lu Bu), and one who was eventually venerated as the god of war (Guan Yu). It's not known for sure why this horse was called the Red Hare, but there are occasional reports of horses that have reddish sweat from the Turkestan-Xinjiang area.

4. Marengo

One of Napoleon's many Arabian horses. This one though, survived the retreat from Moscow and was captured at Waterloo along with the French emperor. Was sold to Britain and eventually became a snuffbox for the British Army (well, his hoof did, anyway). Sadly.

5. Clever Hans

A horse that was said to be able to count and perform simple mathematical operations in early 20th century Germany, giving answers by tapping his hoof. Was eventually rumbled when a psychologist discovered that Hans' trainer was giving him (unconscious) clues as to when to stop tapping to give the correct answer.

6. Red Rum

Won the Grand National 3 times and came second twice from 1973 to 1977. Presumably very tired after that, he retired and lived a long and chaste life, dying in 1995 and was buried at the winning post at Aintree.

7. Bucephalus

Horse that belonged to Alexander the Great. Was tamed by Alexander, and was ridden by him in his conquest of Asia. Finally died in the Punjab, killed at the Battle of the Hydaspes River, and was buried somewhere in what is now Pakistan. Alexander built a city on his grave and named it Bucephala. Wikipedia says it's near modern-day Jhelum.

8. Seabiscuit

Racehorse. There's a pretty good movie made about him. Typical runt to champion story, the Rocky of horse racing. But Seabiscuit did exist, unlike Rocky Balboa, and he was small and perceived to be slow. The underdog-wins tale was a potent feel-good pick-me-up during the Great Depression. Seabiscuit ran a head to head race against, and beat, the US Triple Crown winner War Admiral in 1938, which in hindsight shouldn't have been too surprising, because both Seabiscuit and War Admiral were descended from...

9. ...Man o' War

Consensus is that this horse was the best racehorse of all time. He won 20 out of 21 races, and, in what was probably an even greater achievement, sired 200 champions. Yes, 200 offspring who would later on go to win races.

10. Hidalgo

A mustang that supposedly won a 3,000 mile race across the Arabian desert ridden by Frank T. Hopkins, beating the finest Arabian horses. This was made into the movie Hidalgo. However, the race was probably never held (i.e. the movie is pure fiction). Nevertheless, Frank Hopkins was an activist for the preservation of the wild mustang, and he did win many endurance races, although probably not all on Hidalgo.

The cost of carbon trading schemes

Plenty of numbers being bandied around, but one which many conservative Americans are quoting is this number from the Free Enterprise Education Institute (FEEI) - 5.2% of US GDP by 2020, equivalent to a reduction in income of $10,800 for a family of four (here), if the US used a cap-and-trade scheme to move to a putative Kyoto protocol target (carbon dioxide emissions of 7% under 1990 levels). The FEEI is a think tank which has managed to secure the services of Arthur Laffer, known to econ undergraduates as the chap who came up with the Laffer curve (something also very popular with the Bush administration, who used it as one justification for cutting US taxes).

5.2% smaller isn't that bad, especially when it's an opportunity cost number. It represents a difference of a few tenths of a percentage point a year in GDP growth rate, if we're talking about a horizon of 13 years. This is well within the bounds of error, and would probably be drowned out by other factors (say the current sub-prime mortgage crisis). But there's a different way to see this, using Fermi estimation and the equivalence example (family income) quoted for easy understanding.

What's the total reduction in GDP?

1. 5.2% reduction in US GDP being the same as a reduction in income of $10,800 for a family of four.
2. Say there are approximately 100m families in America (a population of 400m people - I'm deliberately overestimating here, to allow for growth).
3. Then the total reduction over 13 years is $10,800 * 100m = about 1 trillion dollars. That's today's dollars.

How much GDP will the US economy generate over that time?

1. On the same basis, the US economy this year is worth about $13 trillion and a bit (real), let's say 13 trillion.
2. Then over the next 13 years (2008-2020), it should generate $169 trillion of GDP (again, let's be conservative and not put any growth rate in).

What's the opportunity cost each year?

1. The cumulative opportunity cost of a cap-and-trade scheme and the Kyoto protocol is approximately $1 trillion out of $169 trillion, or about 0.6% of GDP.
2. Let's say that's a per annum figure (it's not, most the costs will be front-loaded, but this is Fermi estimation, so we're allowed to make it easy). Then that's about $77 billion a year in opportunity cost. This compares favourably to the cost of financing the war in Iraq, which is about $100bn a year according to the last Congressional report on the matter.

What's a similar number for the world?

1. World GDP is about $48 trillion at PPP and today's dollars.
   
2. Using the heroic assumptions that the global economy has similar energy intensity and energy sensitivity to the US economy, then the global economy would suffer approximately $284 billion a year in opportunity cost. Call that $350 billion a year to account for more energy intensive countries.

The sense to attach to those numbers, even the ones being pushed hard by the US government in response to pressure for it to control emissions, is that they are actually rather small. Although they are significant, they aren't a major obstacle to growth. Remember, these numbers are before the impact of any alternative energy sources (say from more nuclear power plants) are taken into account. They merely describe the impact on economic growth of reducing carbon-based energy consumption and allocating the remaining consumption more efficiently.

Balvenie 12 yo DoubleWood (Hit me baby one more time)

There are a whole host of bloggers who are dedicated to the fine and noble art of whisky tasting (see, for example, Dr Whisky, Serge Valentin, and Colin's great effort to harness the creative commons). It's hard for me to add a great deal to what's already on their sites with regards to how whisky tastes (besides, they all get to drink a lot more, both in quantity and variety, than I do - isn't envy ugly?).

Instead, I want to try to pair whiskies with food. Most formal tasting is done without food (except for cleansing the palate, and this is done with bland foods that don't interfere with the whiskies - say an oatcake). I confess that this is the main way I drink my drams, on the sofa, out of the tasting glass, and in contemplative mood. However, since we enjoy wine with food, it must be possible to pair whisky, which is just as complex and interesting, with food as well. Not all combinations work well, but that's exactly the same risk one runs with wine. Somewhere out there, there's a perfect companion for each whisky. I only hope my supplies don't run out before I manage to pair them up.

First stab at this mini-project is with the Balvenie 12 year old "Double Wood". The extract from my tasting notebook runs as follows:

Balvenie 12 yo Double Wood (OB)
Single malt - Speyside
Amber, tinge of pink
40% ABV

Nose: Oak, sherry (typical Speyside), then lots and lots of oranges (peel, marmalade, juice etc).
Mouthfeel: Medium body, expands in the mouth, turns watery.
Taste: Vanilla, toffee, honey, lavender and something very like raspberries.
Finish: Medium to long in length, faint but lingering, peanuts and burnt sugar.

Experiments:

1. Sliced oranges.

Slightly counter-intuitive perhaps. The nose of the whisky screams oranges in many ways, shapes and forms - you can taste the marmalade, the dried peel, and freshly cut oranges redolent of d-limonene. Why put more orange in?

Probably because while whisky suggests pleasant impressions, and it's fun deciphering them all, sometimes I want to confirm my impressions with a little of the real thing. Whatever the reason, munching on an orange segment then sipping the Balvenie (with hands coated with limonene) intensifies the other flavours and scents, particularly the honey and raspberries. I end up thinking of raspberry jam, while imagining sitting in an orange grove where the fruits are just ripening, and beginning to give off their scent.

2. Smoky bacon.

This may well be a personal peccadillo. I recently developed a thing for marmalade and bacon sandwiches, as I like the combination of bittersweet orange and smoky meaty charred-fat-smelling bacon. Pairing the bacon with the whisky seems a reasonable way of replicating the experience. Alcohol improves all foods right?

Not always, it seems. The mistake lay in assuming that the orange in the nose of the whisky could provide enough scent and sweetness to create the effect of sweet-and-smoky. There's a texture difference too - thickly slathered marmalade melting over hot bacon is part of the pleasure. Smoked bacon overpowers the whisky, cutting out all the subtle flavours, like the lavender. It's like shutting a window when a band is playing outside.

3. Manchego cheese.

Sounds logical - sherry (vino de Jerez) and Spanish cheese go together don't they? This expression of Balvenie has a sherry thread running through it, as it spent 6 months in a sherry cask after all. So, I tasted a dram of the Balvenie with a slice of Manchego and some membrillo jelly.

Result - nothing remarkable, objectionable or otherwise. The nuttiness of the cheese and the sweetness of the membrillo went very well together as always, but the whisky didn't add anything. The cheese and quince muted the sweeter flavours and brought out some woody notes (damp pine, some cedar) that weren't there before, but somehow the Balvenie became one-dimensional. Not a good use of the whisky, unfortunately.

4. Chinese preserved plums - the sweet black kind.

Randomly selected, just for experimental purposes. They come from a big bag left on my shelf by my sister (for future reference, the Tough Cookie). Dried and preserved with sugar and salt.

Again, no joy. Sometimes these random things work, but most of the time they don't. Really woody this time, cedar and oak barrels, all damp and pungent. No sweetness at all, and precious little other flavour. Maybe some toffee. Again, not a good use of the whisky.

And the winner is...

The sliced oranges come out the clear winner here. I stumbled on the combination by accident, but it really works very well. This Balvenie doesn't need to be accompanied by something sweet to bring out the more complex flavours, it needs an accent, a smell, to mute the primary notes in order to bring out the shyer scents lurking underneath. Oranges do the job well - the orangey scents just keep hitting the nose again and again.

Whisky, and why I drink it

Mainly because it tastes good.

The funny thing though, is that it didn't at first. My first sip of whisky (although it might possibly not have been) was from a bottle that had the label torn off, was relegated to the back of the cupboard behind the cognac and the brandy, and was occasionally liberated only so that the contents could be used as rubbing alcohol or as an antiseptic. It was a sneaky sip at a fairly young age (definitely under 12 years old), just so I could find out what it tasted like, seeing as it was always mentioned in the same breath as vodka, gin and brandy. The first two would remain mysteries for nearly another decade, while brandy had been tasted, assessed and set aside about 5 minutes before I reached for the whisky.

It reminded me of this:



Or more precisely, the smell that one associates with cockroaches, something acrid and choking, with an almondy edge to it. It's a mixture of phenol and p-cresol, together with some hormones, and Oriental cockroaches secrete it as a defence mechanism. Not something one expects to taste in a bottle of whisky.

For about a decade and a half after that, I took care to drink whisky only in the company of Coke, lemonade or some other mixture to mask the taste. It was mostly Jack Daniels, which probably explains why I never had the urge to try it neat for 15 years (even a bottle of Chivas Regal became chocolate truffles). About 2 years ago though, someone gave me a dram of Teacher's Highland Cream. I wasn't too inclined to try it, but googled it on a whim one day, only to find that there are at least as many tastes to whiskies as there are distilleries - that is, about 300 globally, some of which distill more than 1 distinct type. And this is before vatted malts, blended malts and bourbon are considered. That dram of Teacher's eventually went into my tasting notebook, and very fine it was too (although in this case it was more of a textural pleasure - more later).

Funnily enough, phenol and its derivatives are what gives good peaty single malt whisky its distinctly delicious flavour. The barley used to make the mash is dried with peat smoke after it's malted (begins to germinate after being soaked in water). The peat flavours the barley with certain compounds that imbue the final product with flavour. Most of these compounds are phenolic in nature (and they do include p-cresol and phenol, although probably not the hormones).

Be that as it may. There's a lot of stuff (smells, flavours and textures) lurking under the surface of the brown liquid. And technically it's not always brown either, as the colour comes from the wood finish (many rosy gold whiskies are matured in port pipes) , is sometimes enhanced by added colouring, and frankly the marketing departments find it easier to sell whiskies that are deep brown or sort of goldy. Plain faecal matter brown doesn't shift off the shelves very well.


After some practice (frequently, after all it makes perfect), I've discovered a host of impressions lurking in the brown liquid, mostly fruity and spicy ones, but others evoke the sea and the mountains, and maybe grass in the sun after a rain shower... it's in the smell, the taste, the way it rolls across one's tongue, how it lingers and transforms after swallowing...

Whisky, the water of life. Not the stuff that tastes of cockroach.

Welcome to Eclectic Elephantism

This is my attempt at starting a new religion, and hopefully getting rich in the process.

Actually, it's a home for my rantings, musings, wry observations and sermons - stuff that reflects the depth, unconnected variety and subtle irony of life, I hope. It would be nice if it became a religion though, because someone somewhere (a "prophet", say) might be able to put some structure to it, thereby giving some underlying meaning to my chaotic constellation of interests. Cold hard cash would be nice too.

Welcome to the journey. Seatbelts aren't required, but you may have one if you like. I hope you enjoy your stay. It's good to have you with me, even if it's just for the day.