Wednesday, March 20, 2013

Problem Solving

  If you enjoy reading my blog but don’t play chess, please bear with the next couple of paragraphs.

  Here is one of my favorite chess puzzles. It is in the beginning of one of my chess books:

pgn4web chessboards courtesy of
  When I first tried to solve this I got the part about the king walking the rook down to the edge of the board so the pawn could promote without fear of the skewer by Rd1 and Rc1+, but completely missed the threat of Black giving up the rook for a stalemate IF White promoted to a queen and the forced win after underpromoting. That last point really captivated me and whenever I show this puzzle it has never failed to captivate whoever I’m showing it to.

  What made me think of this puzzle? This puzzle that I successfully solved on the site on Sunday morning:

  I was pretty pleased with myself for catching the fact that promoting to a queen would have left Black with the same stalemate as the first puzzle. To me, the point of doing chess puzzles is to recognize the patterns of the tactics in order to not have to figure them out under the pressure of game conditions. From a practical point of view, the chances of needing to recognize that promoting to a queen would lead to a stalemate but promoting to a rook would win are so remote that my time would have been better spent learning the two or three movers that win a piece or a pawn that come up so often in my games.

  Playing chess requires a lot of problem solving ability. Perhaps that’s why study after study after study shows that learning chess helps students learn (Here is one example). It’s not that only smart kids can play chess or that playing chess makes kids smart: learning how to solve problems over the chessboard equips students to solve problems in the classroom and adults to solve problems at work.

  I ran into a lot of problems to solve trying to set up my summer outdoor chess tournaments. The covered shelter I rented the last two years has doubled their rental fee and in the fashion made famous by the 16 ounce soda, 46 ounce bottle of vegetable juice, and 1.5 quart ‘half-gallon’ of ice cream, has split the whole-day rental into a morning-afternoon rental ending at three and an afternoon-evening rental starting at four. In order to have a morning and afternoon tournament like I did last year I would have to pay four times the amount for the use of the shelter. I don’t think there is anything insidious going on here since the other shelters have stayed the same price but possibly some statistical analysis performed by Des Moines Park and Rec determined an unusual spike in the amount of rentals at one particular shelter and prompted them to raise the price.

  With my already razor-thin margins not able to withstand a fourfold increase in rent, I decided to only have morning tournaments this summer. That will leave me two free hours in the afternoon, where I’m going to try to have a quick chess tournament where the higher rated players have to offer time odds to the lower rated players. From my experiences at my Christmas speed chess exhibitions for the Salvation Army, I think I have a good feeling for what time odds to give the lower rated players. The goal is to get a mix of experienced and younger players to come out for a couple of hours of fun chess. I’m sure some of the morning players will stick around, but based on my attempts to have outdoor speed chess tournaments at the park two years ago, I expect very few adult players will want to spend an afternoon playing. In any event, I’ll have gotten use of the park during the time I have rented it. Chess problems are reasonably easy to solve, avoiding paying four times the park rental less so. I hope I’ve solved my park problem for this year, but ultimately time will tell.

  An interesting solution to a more serious problem in occurring in Cyprus, where the nation’s banks invested billions and billions of dollars in Greek investments and lost over 10 percent of the nation’s GDP in one year (Here is a good explanation). The Cypriot banking system has been living off of European Central Bank (ECB) emergency funding and is trying to negotiate a thirteen billion dollar bailout from Germany. Germany is willing to fork over the money and save the small countries banking system IF Cyprus can raise 7.5 billion dollars.

  Now banks have stockholders and I would assume the first place the Cypriot banks would look to for capital would be the stockholders. In America the Federal Reserve would serve up a new round of ‘Qualitative Easing’ and print the 7.5 BILLION DOLLARS and give it to the banks for some of their worthless investments. This is how a government like the United States can be 16 TRILLION DOLLARS in debt but have such low interest rates. At least until the printing press runs dry and other countries refuse to accept our ‘funny money’.

  As part of the European Union, Cyprus has no access to the printing presses and so they must look for another solution. Another way to solve the problem is to just let the banks go belly up. The Cyprus government insures the first 100,000 euros in each deposit but since 68% of all the uninsured deposits are held by foreign customers there would be an international incident if a default were to happen.

  The way the Cyprus government has chosen to solve their problem is to raise the 7.5 BILLION dollars by levying a one-time tax on bank deposits. Balances in excess of 100,000 euros will be taxed at a rate of almost 10 percent while balances up to the insured limit will be taxed at the rate of 6.75%. Depositors will receive an equal amount of bank stock in return for the amount paid.

  Once news of the plan got out the Cypriot people who have rushed to the bank and ATM machines to withdraw their savings have found that while the ATMs will still give out a limited amount of money, the banks are closed for a ‘bank holiday’. The Cyprus lawmakers have overwhelmingly rejected the ECB proposal and the matter is unresolved. Since without the bailout the uninsured deposits would be lost I can see taxing the deposits over 100,000 euros, but it makes no sense to me that people who have their deposits ‘insured’ by the government would be forced to trade their savings for ‘bank stock’. The situation is complicated by the fact because Cyprus had been considered a safe haven for foreign investment, their largest depositors are Russian millionaires. The European Union doesn't want to be seen to subsidize Russian millionaires, Cyprus wants to keep their status as a parking spot for foreign money, and the Russians want to know that their investments in Europe are safe.

  I wonder what the US would do if posed with a similar problem, say the Chinese calling in 10 or 12 TRILLION of dollars of debt at once? Would the government tax our bank accounts and retirement accounts? Sure – it’s already been thought of here. Just like the old saying ‘When all you have is a hammer, every problem looks like a nail’, when governments have a problem, every solution looks like taking money from those who have some. It seems to be the only pattern they have memorized.

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