Are the Rich Really Less Generous than the Poor

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Is Socially responsible capitalism losing?

Over at the New Yorker, Sheelah Kolhatkar talks about how companies are being forced to take decisions that aid investors and not their employees or other stakeholders.

The most thought provoking lines are these –

When American Airlines agreed to give raises to its pilots and flight attendants in April, analysts at a handful of investment banks reacted bitterly. “This is frustrating,” a Citigroup analyst named Kevin Crissey wrote in a note that was sent to the bank’s clients. “Labor is being paid first again. Shareholders get leftovers.” Jamie Baker, of JPMorgan, also chimed in: “We are troubled by AAL’s wealth transfer of nearly $1 billion to its labor groups.”

Read the article here

Sapiens – A Brief History of Humankind

Over the past few months, I have made a concerted attempt to read more history.  We live in a time where it feels like there are a million newsworthy events occurring every single day. Reading history of course gives us the opportunity to take the long view on current events.  More importantly, reading history helps us to understand change – especially the events that led to it – something that becomes more relevant with every passing every day. 

Unfortunately in most education systems world wide, history is taught more as a collection of facts, figures and events and not as timelines or interconnected events. We are taught that Adolf Hitler came to power in 1933 and are made to read pages and pages with all the facts about the War but the sequence of events that led to him coming to power are summarized in a couple of paragraphs.

In Sapiens – A Brief History of Humankind, Yuvan Noah Harari – a professor in at the Hebrew University in Jerusalem who attempts to put together the sequence of events, ideas and forces that led to Homosapiens becoming the dominant species on the planet.  It’s a very ambitious project with a scale that can only be captured by the fact that Harari starts at the very beginning – nearly 6 million years ago – when the first similarity between our ape – like ancestors and us starts to emerge.

The tale of hunter gatherers  

Source: http://www.bradshawfoundation.com

Harari traces the evolution of the multiple human species – including Homo erectus, Denisovans, Homo Sapiens  among others.  I had always assumed that human history was a linear progression that ultimately led to the evolution to us – i.e. Homo Sapiens.  And it was amazing to learn that in fact, for most of human history, the planet had multiple human species walking around!  In fact, the Homo erectus species was around for close to 2 Million years (!), a record that will probably not be broken by Homo sapiens.  Harari points out that our current exclusivity is an anomaly considering there are multiple species of animals such as foxes, dogs and pigs that exist.

 

He also points out that pre-historic humans had lesser impact on their surroundings than animals such as gorillas and lions. Harari’s tone is akin to a dispassionate librarian who is making meticulous notes on the planet without taking the side of his own speices. He talks about how early human  societies spread across the planet and how the arrival of the human species resulted in the destruction of the entire ecosystem. He also calls (rather controversially) the evolution of agriculture as one of the worst things to happen to human beings – as homo sapiens went from living in egalitarian societies to one characterised by rigid hierarchical societies where a the elite (kings / priests) monopolised wealth, land and resources.

Wheat – Did it domesticate us? 

Harari takes the example of wheat – the grain that really drove the agricultural revolution. Till the revolution, humans lived as hunter gatherers – foraging in forests and living in small tribes. Harari lists  multiple data points to suggest that hunter gatherers lived peacefully and in equal societies before the revolution.  From an evolutionary stand point – the grain gave sapiens a chance to propagate (and build ever increasing DNA copies) – it could be cultivated comparatively easily and it grew in many parts of the world. However, what it also did was trap millions of people into a lifetime of drudgery and ailments (the body of sapiens was not designed for the hard labor of agriculture).  According to Harari,  the agricultural revolution also led to more violence – as rival tribes and kingdoms fought over arable land, a trend that would not stop till World War II.

The currency of evolution is neither hunger nor pain, but rather copies of DNA helixes.  If a species boasts many DNA copies, it is a success, and the species flourishes. From such a perspective, 1,000 copies are always better than a hundred copies. This is the essence of the Agricultural Revolution: the ability to keep more people alive under worse conditions.

Enter Myths – Monetary, Political and Religious 

Without doubt, the most interesting (and most unsettling) part of the book is Harari’s concept of myths.  Harari defines a myth as a shared fiction that allows large groups of to people to cooperate with each other. In Harari’s opinion anything that is not physical ( a box or a car or a mountain), or a scientific fact (like gravity) is a myth. This is hard to grasp at first – especially when Harari calls everything we value from political laws, human rights to democracy to large corporations as myths.

As far as we know, only Sapiens can talk about entire kinds of entities that they have never seen, touched, or smelled. Legends, myths, gods, and religions appeared for the first time with the Cognitive Revolution. Many animals and human species could previously say ‘Careful! A lion! Thanks to the Cognitive Revolution, Homo sapiens acquired the ability to say. ‘The lion is the guardian spirit of our tribe.’ This ability to speak about fictions is the most unique feature of Sapiens language…You could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.

it’s essential to note that Harari does not use the word myth with a negative connotation, but as the perfect examples of the power and imagination of sapiens.  According to Harari, the three most universal myths essentially emerged at the same time – money, politics and religion.

Political myths ranged from the belief that kings essentially descended from heaven to the concept of nationhood (a state for Romans or a state for the Germanic tribes).  This helped a few individuals consolidate their land and increase their power of influence. Over the past thousand years,  a more powerful political idea (or dare I say a myth) has emerged and that is that every individual in a society has the equal right to say who will have the power to govern that society. This replaced the earlier “myth” that kings had divine rights.

Religion emerged at the same time from a series of pagan gods to of course the biggest monotheistic religions such as Christianity and Islam. What these myths also did was “unite” people from different geographies – for instance the Haj brought together Muslims from the Middle East, Africa, and of course South Asia  – all of whom would otherwise probably  would not have met. Interestingly, the lines between politics and religion have blurred throughout history and right till the present day. For instance, Christianity really started to spread only when Constantine decided to “adopt” the religion as the official religion of the Roman empire.

Money – the most powerful myth of them all 

If you had a dream to open a bakery, and had no ready cash, you could not realize your dream. Without a bakery, you could not bake cakes. Without cakes, you could not make money. Without money, you could not build a bakery. Humankind was trapped in this predicament for thousands of years. As a result, economies remained frozen. The way out of the trap was discovered only in the modern era, with the appearance of a new system based on trust in the future. In it, people agreed to represent imaginary goods—goods that do not exist in the present—with a special kind of money they called “credit.” Credit enables us to build the present at the expense of the future. It’s founded on the assumption that our future resources are sure to be far more abundant than our present resources. A host of new and wonderful opportunities open up if we can build things in the present using future income.

The most powerful myth to emerge was money and the section on money is probably my favourite part of the book. Harari traces how the evolution of money enabled people from across cultures and geographies to transact on the basis of a common denominator.  Even people who have contrasting religious and political views believe in the power of money (for instance Osama Bin Laden had to fight his wars by funding people via American dollars). What’s also interesting is that so many of history’s pivotal political transformations primarily happened because of economic crises – from imperialism to the French Revolution to the rise of Hitler and even to the lack of world wars in the modern world. (It’s the economy stupid!)

Harari ends the book talking about the future of humankind including how the world needs to come together to solve truly global problems such as global warming, and the rise of artificial intelligence. Themes that he returns to in the sequel to Sapiens – Homo Deus.  In summary, the book will make you uncomfortable in many parts but Harari’s attempt at framing a narrative will give you a lot to think about and certainly lead you on your own quest in understanding how we got here and where exactly we are headed.

Turn Off the News

It is hard to believe, but there has never been a better time to be alive.  There is growing consensus that things, by and large, are getting better. For starters, numbers indicate this is the most peaceful era in the history of the world.  A few exceptions notwithstanding,  violence rates across all nations are down, (although there is an increase in religious violence), and there are fewer wars.  Other indicators are improving – most notably the human development index levels but we don’t realize these positive changes unless we truly go looking for them.  

Bad NewsIf you watch or read the daily news, be it on TV,  the daily newspaper or any news website, it seems like the world is just one giant theatre of of wars, rape, murders and corruption.  Some estimates suggest that the ratio of negative to positive news is as much as 17 to 1. 

My initial hypothesis around this was that negative events especially are easier to report as they tend to be sudden and factual (a blast or a murder) as opposed to really good news which typically tend to be improvements over a period of time. Also, bad news tend to be dramatic as opposed to good news – reporting that 10000+ planes landed on time and safely is not really as shocking as reporting on the one plane that crashed.

In fact, as the Huffington Post itself points out , the rise in coverage of murders in the media surged after television networks and newspapers noticed the ratings bump that news related to murders and violence received.

In the 1990s murder coverage increased more than 500 percent — even as homicide rates dropped more than 40 percent

And as our very own beacon of journalism -Times of India – reports,  murder counts in India have fallen to their lowest levels since the 1960s and yet one would never realize this, considering the space devoted to violence and murders in India. In fact, the same article ends with these lines –

It is not clear why the murder rate first increased rapidly and then has dropped equally sharply, but what is clear is that impressionistic ideas of society getting increasingly violent may need to be revisited.

Why does the media love stories about violence?

As it turns out, negative news actually sells a whole lot more than positive news – so publishing grim stories just ends up making more business sense. Look at the below stat based on research done by OutbrainIt suggests that readers were 65% more likely to click a negative headline than  a positive one! Research also seemed to indicate that although readers said that they would like to read more positive news – they were more likely to click on and subsequently read more of the negative ones! 

The average click-through rate on headlines with negative superlatives was a staggering 63% higher than that of their positive counterparts.  

Superintitles

This was the aha moment for me: that negative news in the media is demand-led and not led by supply! Considering the relentless competition and the explosion of TV channels, there is a clear incentive for the media to go after negative news. But then why do we click or watch negative pieces of information so closely?

Introducing the Amygdala – 

amygdala (1)

Inside your brain there exists a very little fella called the Amygdala. This guy has played a crucial role in your survival since the day you were born  – he is the guy who scans all the visual and sensory inputs from all your organs and immediately puts your brains on high alert if you are in danger. When your life is in danger – your brain does not have the time to process the signals, its the amygdala that puts your body on survival mode.  This is why when someone sneaks up on you – you instinctively turn around because the Amygdala gets your body to think that you are under attack. This is the same guy that makes you immediately double check that link that deals with a murder or corruption or violence. He is just watching out for you.

So it is a vicious circle –  media houses know that negative stories sell and we continue to click on the links thanks to our own preconceived notions and of course the Amygdala.

Why should you care?

When questioned,  individuals across the world confess that they feel more pessimistic about the state of their nation and the world than about their lives or their immediate surroundings. Even though we might not have experienced crime in our daily lives, just reading about it every single day would mean that you fear that the nation is going to the dumps. 

 

UK Poll

And this directly effects the type of governance we want to see  –  we want our government to spend more on crime even if  it’s not necessary. 

More importantly, negative news (and this came as a big surprise to me) makes you less productive at work. Harvard and Huffington Post conducted a study where one set of individuals were shown really negative stores and another set stories of grit, determination and reward. The results couldn’t be more stark.

Individuals who watched just three minutes of negative news in the morning had a whopping 27% greater likelihood of reporting their day as unhappy six to eight hours later compared to the positive condition.

Finally, and most importantly, although research doesn’t indicate any sort of connection between reading negative news and depression, it is proven to have an effect on our sense of optimism.  And there is enough concrete evidence to indicate that optimism is an important ingredient to long term health and happiness. 

So go ahead and click on the story of the cold blooded murder of the family of four and indulge your morbid side, but even as you shake your head in horror, it would be good to be aware that all of the city is not murder and mayhem.

Stumbling on Happiness

Stumbling_on_HappinessI first came across Daniel Gilbert when I heard his 15 minute TED talk on happiness last year. As it turns out, this talk is one of the most viewed TED videos of all time. The TED talk led Gilbert to write a best-selling book – Stumbling on Happiness. The book isn’t is a self-help book with the panacea to all our problems but more of an extremely entertaining thesis written by a professor about our pursuit of happiness. The author goes to great lengths to point out our delusional behaviour but also affirms that it is okay to be so.

The main premise of the book is how much we love simulating the events of the future but how wrong we tend to be in predicting what will make us happy. We are very good in knowing exactly what would make us happy in the short term (i.e. a great cup of coffee right now or a date with a loved one) but lousy in predicting what will make us happy in the long term.

Early in the book Gilbert talks about three different types of happiness:

Emotional Happiness – a phrase for a feeling or an experience for instance eating an ice cream, hugging a loved one, or even listening to that favourite song from when you were a teenager

Moral Happiness – when you feel virtuous after doing something morally right

Judgemental Happiness – Happiness that comes from the occurrence of certain events that you want: a promotion at work, getting into your dream college, or even your favourite football team winning an important match

Unfortunately, human beings tend to place the most importance on the third kind of happiness and individuals spend a lot of time constructing tomorrows that we hope will make our future selves happy. This also causes us to question the happiness of other people who claim to be happy despite what we believe to be difficult circumstances (the person who did not get promoted). Gilbert narrates stories of individuals who say that they were happy in jail or of studies proving that cancer patients aren’t as unhappy as others expect them to be.

Pete Best, the original drummer for the Beatles, was replaced by Ringo Starr in 1962, just before the Beatles got big. Now he’s a session drummer. What did he have to say about missing out on the chance to belong to the most famous band of the 20th century? “I’m happier than I would have been with the Beatles.”

The problem according to Gilbert is not the part about our planning our future but that we constantly project our present situations into the future. We tend to over-exaggerate the positive effects of events that will make us happy or the negative effects of the events that will make us unhappy.

Simply put, “the good news is that going blind is not going to make you as unhappy as you think it will. The bad news is that winning the lottery will not make you as happy as you expect”.

Individuals tend to revert to their emotional baselines quickly after the occurrence of events – bad breakups, losing their job, or even when they lose a loved one. Our brain has a fantastic immune system that kicks in helping us to deal with these negative events (call it rationalisation or the synthesis of happiness). Further, events that should make us happy don’t give us as much joy as we expect them to (buying a car or a house or even having a child) – we imagine them to be life changing but more often than not the joy tends not to last for long.

Gilbert points out one of the best ways to improve our prediction of our happiness is to (surprise, surprise) seek out other individuals who have gone through the same experience (cue the growth of review websites). However, Gilbert also points out that human beings tend to have very high belief in their own uniqueness and therefore do not seek out opinions as often as they should or to disregard the opinion of others. My only issue with the book is that Gilbert gets too caught up with the ideas and research he puts forward that he does a very poor job of bringing it together in the end. I kept waiting for a punch line but never found it coming.

I loved the book and I recommend this to any one who seeks an interesting and thought provoking read. My best advice would be to watch Gilbert’s video and to get the book if you find it interesting.

The Big Short – Michael Lewis

Big-short-inside-the-doomsday-machineI couldn’t have picked a better book to start the 52 week challenge – ‘The Big Short’ by Michael Lewis turned out to be a brilliant and very informative read. Michael Lewis has great flair for making nerdy and seemingly dull topics such as complex financial instruments very sexy.  I know this book is now 4 years old but expect the book to be in the news in a few months when the movie version comes out.  And the movie is going to star (And I swear I am not making this up) Brad Pitt, Christian Bale, Marissa Tomei, Ryan Gosling, Selena Gomez and Steve Carrell.

The book provided a very comprehensive and readable summary of what happened in the U.S. sub-prime mortgage bond market in the years leading to the 2007 meltdown. It does so in a very unconventional way – by telling the story of three guys – Michael Burry, Steve Eisman and Greg Lippman who end up shorting the market (essentially betting against the sub-prime mortgage bonds).

Some of the characters are fascinating, for instance Michael Burry (a doctor who later starts his own hedge fund), who has a glass eye and is diagnosed with Asperger’s syndrome and locks himself in his room for days together to read 10K documents. Eisman on the other hand who is described by his wife to have a talent for offending people rants to anyone who would listen that sub-prime mortgages is an elaborate ponzi scheme that is doomed to collapse.

It’s probably the only book where I ended up reading many paragraphs at least three times – the second time to understand what was going on and the third just to remind myself that this was not fiction. For instance, there is a fascinating section where the then CEO of JP Morgan is absolutely clueless when questioned on how his firm could lose $9 Billion because of the strategies of one trader. (His exact words are “We had been sprinting. Now we will be jogging. But we are in a risk business, and we will be in the market taking risk.”)

In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $724,000

As you read the book, you begin to understand why millions of really smart people completely missed the crash – there was (is?) a complete and utter lack of transparency on Wall Street, many financial instruments were (are?) so complex that even the ones selling them do not understand them and the rating agencies (Moodys and Standard & Poor’s) rated many of the mortgage bonds AAA without understanding the risk they actually carried. Worse, rating agencies had incentives to rate bonds to carry less risk than they actually did.

The book also describes in great detail the complete lack of accountability on Wall Street and especially in the Bond market. You have investment banks such as Deutsche Bank, and of course Goldman Sachs, who sell debt instruments to investors on the one hand and end up shorting the same instruments on the other hand. The banks For instance, Goldman’s 2007 Q3 report talks about how ‘Significant losses on non-prime loans and securities were more than offset by gains on short mortgage positions’

The book winds down essentially with all the “heroes” making obscene amounts of money that is hard to even fathom ($500 million+). A few of the banks made a lot of money (Goldman for instance) and many went bust (Bear Sterns & Lehman). Finally, of course it turns out that much of the risk in the market was actually being carried by the insurer of these securities – AIG, which would ultimately have to be bailed out by the American taxpayer.

Mother Tongue

downloadBill Bryson (who also happens to be one of the best selling authors in the20th century) has mastered the art of making seemingly dull topics interesting and accessible to everyone. Bill Bryson is also like an old friend – I discovered his work back in high school and have often found myself going back to his books especially when I need a fun read.

Bryson is most famous for his travel writing (Down Under, African Diary) but also books such as A Short History of Nearly Everything – a book that answers all sorts of scientific questions for the general audience. Bryson traces the origin of universe right from the big bang to the evolution of homo sapiens in a very lively manner (much unlike those dull CBSE text books). As Bryson himself says – it’s as if all our school text books wanted to keep the good stuff secret by making all of it soberly unfathomable.

Mother Tongue is one of Bryson’s earliest books and at over 300 pages long it is one of his shortest books. In the book he marvels at the beauty and the idiosyncrasies of the English language especially in comparison to other classical languages. He also traces the development of the English language through the past 1000 years. In true Bryson style he also comes up with gems of trivia such as

the Gaelic speakers of Scotland, have a word for the itchiness that overcomes the upper lip just before taking a sip of whiskey. (Wouldn’t they just?). It’s sgriob.

Bryson also covers how difficult a language English can be especially for someone who learns it for the first time as an adult.

Sanction, for instance, can either signify permission to do something or a meaure forbidding it to be done. Cleave can mean cut in half or stick together. A sanguine person is either hotheaded and bloodthirsty or calm and cheerful.


Although the book is mostly funny,  Bryson overwhelms you with the sheer number of facts and trivia he throws at you every page (something he corrects in later books where he takes his time with each topic).  Although the book aims to cover how the language is used in different parts of the world, it doesn’t exactly explain why English is spoken in many parts of the world (international trade doesn’t merit any mention).
Further, since the book was written in 1990, Bryson doesn’t cover how English has spread across the world especially in countries in Asia.

An Astronaut’s Guide to Life – Chris Hadfield

chris-hadfield-book-astronautUnless you have spent the last few years living on Mars you probably have heard of astronaut Chris Hadfield. Not only was Hadfield the first Canadian to go up in space but he is also one of the most popular individuals on social media – whether through his Twitter stream where he posted incredible images of Earth from space or through his live Q&A sessions with children when he was on the International Space Station. More importantly, Hadfield has played a very important role in rebuilding the image of NASA –something that took a serious beating post the Atlantis tragedy.

Among other things, Hadfield was a fighter pilot, a test pilot, and the head of Operations at NASA…  Oh, Hadfield is also an incredibly talented musician – his version of David Bowie’s Space Oddity was the first music video to be shot in space and ended up garnering 12 million + views on YouTube in the first week alone. (It is a must watch!).

In ‘An Astronaut’s Guide to Life on Earth’ Hadfield chronicles his life from childhood to the defining moment of his career – his stint as the commander of the International Space Station (ISS).  When one is as accomplished as Hadfield it can get very difficult to write an autobiography without coming off as a little cocky but Hadfield is so humble and grounded that I had to remind myself just how successful he has been!

chris-hadfield-book-tour

The parts about space are interesting – particularly the bit about reentering the earth in a Soyuz capsule (or what can be basically described as a giant metal ball of fire) and also the difficult process of the human body to adjust to life on Earth after an extended period of time space.  However, the best parts in the book really are when Hadfield muses about all that he has learnt from his stint as an astronaut both in space and on the ground.  There are a few that are generic – the importance of preparation, hard-work, sweating the small stuff but the ones that I found the most interesting are as follows –

 

Enjoy the process and not fixate on the goalAlthough the defining moment of an astronaut’s life are the days he or she spends in space, this is actually less than 1% of the time taken to prepare for the visit.  The odds of actually going into space are also quite grim (you could prepare for months together and find that the launch gets delayed due to bad weather) that it’s important to actually enjoy the process of preparation and learning on ground.

In short, the single minded pursuit of a goal should not be destructive.

If you start thinking that only your biggest and shiniest moments count, you’re setting up to feel like a failure most of the time.

Invest in other people’s success – It might seem very counter-intuitive to invest in the success of your peers but as Hadfield points out, investing in others could mean that there are people to help you survive and succeed in a time of crisis. This is especially important while up in space, but also down here on Earth.

Do not be an a**hole – In Hadfield’s opinion, astronauts only wanted other astronauts they could collaborate with on space especially in difficult situations. Anyone who was unpleasant to work with had basically ruined his or her chances of going up to space.

Aim to be a zero – This turned out to be one of the best takeaways from the book. The power of creating a positive impact by being neutral. In Hadfield’s own words –

“In any new situation, whether it involves an elevator or a rocket ship, you will almost be viewed in one of three ways. As a minus one: actively harmful, someone who creates problems. Or as a zero: your impact is neutral and doesn’t tip the balance one way or the other. Or you’ll be seen as a plus one: someone who actively adds value. Everyone wants to be a plus one, of course. But proclaiming your plus-oneness at the outset guarantees you’ll be perceived as a minus one, regrardless of the skills you bring to the table or how you actually perform

Needless to say I highly recommend the book either if you are interested in space or if you just want to read something different and inspiring.