Wednesday, January 30, 2008

Capitalism and truth

Who screwed up this wonderful concept of Adam's? Well, it'll be part of the discussion. Why? There is a truth-engineering way to sustain an economy that is going to be necessary for 'savers' who are those who, for various reasons, cannot continue the game.

Today, the Feb threw money in the 'morally hazardous' game again, with lame arguments. The Dow had been unsettled (like choppy waters all day) but took a leap at the news. Who was behind this rise? Those who believed that the economy would be better. Ah, so many questions?

Well, after reaching a peak, in short order, there was a fall. Now, the only explanation of who was selling off cannot point back to those originally bought into the climb. Most probably, that class was still buying.

No, there was profit taking from another class or two (or more).

You see, this scenario dreamt about by Adam Smith has descended into a computationally based mayhem which has lost its mathematical, political, and spiritual basis and upon which there cannot be a sustained economy. The corpses of the system litter the landscape.

There has to be brought back to fore the ideals of the American dream (with globally appropriate extensions, of course), that allows mature management of money. The gamesters need to be relegated to a sand box, albeit of very large scope.


11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

08/18/2009 -- As promised, FEDaerated is here.

07/31/2009 -- Let's see, 5,000 got over $1M for services rendered. Well, that's probably a sign of being a best-and-brightest, at least to certain eyes; it's called rolling-in-the-dough.

Now, this can be used to illustrate how the game it to fill the pockets of a small set to an exorbitant amount. Does the game need to be that way? Hell no. We'll look at that some more.

06/20/2009 -- Yes, rent can go to labor (new look at capitalism), and finance can have a higher calling.

01/26/09 -- One question is will anything be learned. Some of the bail out money went to Merrill Lynch who was taken over by Bank of America and who paid out $4B (yes, billion) in bonuses. We need to re-look at finance and its use, in depth.

09/30/08 -- Well, things do get curiouser through time. Now, a major bailout is underway, but the bases of the problem are ignored.

05/31/08 -- More types of gaming problems become more evident every day. The trouble is that the economy runs on; we experiment on the fly. Does the Fed learn?

02/01/08 -- The players, now, are not like the 1930s, Ben. Though the human element may be playing a large factor (as it will continue to), there is a growing presence of 'virtual' (we ought to get a better characterizing word) via computation that essentially enabled the silliness that has evolved since the 70s (of last century). The analysis here is not being Luddite driven; rather, economics needs to step up to its roles related to quasi-empirical; gaming theory, notwithstanding everyone's debt to Nash, is not the basis for the future (..., more on this in time, ...).

There used to be a concept called 'saver' that was touted as important. If those types exist (and they do), there ought to be some long-term return that could be defined, preserved, and managed (for argument, let's just use 4%).

Later, there was the concept called 'spender' who was the new basis for the economy. Of course, they got rewarded with huge anti-returns (18% and up). From whence came the means to manage the accumulated 'spending' for this class? Essentially debt, many times with little chance that the 'spender' could repay (indentured servant, indeed).

How could this be? Does it not sound stupid to the reasonable mind?

Well, you see, there is the 'player' who has always been there defining the game, raking in the dough, and keeping things muddy enough for unbounded gains.

Starting in the 1980s, there have come about better ways to support this gaming-scheme of the 'player' with computation creating an environment compared to which the web's supposedly wild-west, dangerous reputation pales.

New York's Street is the new Las Vegas (oh, is there still the purported mob affiliation?).

For some reason, the Fed seems to be on the side of the 'player' and not the 'spender.' Actually, the 'spender' has been loaded with so much debt that its inter-generational effects are going to be more problematic than we allow.

You see, it probably could be guaranteed that the 'saver' and the 'spender' share several attributes. For one, both dealt with real things concerning what we might eat, wear, or use.

Is it probably as likely that the 'player' set includes many (the majority?) who do not know where their feet are? Is this an economic model about which to be proud?

The true capitalist would be turning over in his grave about now.

Modified: 11/04/2010

Thursday, January 17, 2008

Transparency and truth

We hear the use of 'transparency' a lot in the financial world. Supposedly, this is one factor related to having a level-playing field. Is it not ironic that we know that finance is a 'game' yet we think that transparency is necessary? So, where does the old poker face fit in?

Of course, there are many uses that for 'transparency' in this context, such as knowing that we're playing the same game, that one party isn't out to exploit the other, ... Hey, wait! Finance is mostly jungle-ish in its present form.

In a milieu where the modus operandi is advantageousness and opportunism, how transparent ought we expect someone to be? Would transparency in relationship imply more something that was cooperative and collaborative?

Ought the finance guys/gals find another word?

We have some examples to look at. In a recent Atlantic Monthly, James Fallows writes about China's big bucket of money that comes from all the flow of consumer goods made there and that is largely placed in US dollars. So, the US is in hock to China to a very great extent. Some fear that China's sneezing would have an impact on the US economy. Okay. That's true.

But, the thing is that people want China, and other SWFs, to be more transparent. What? Well, the US Fed Reserve is more open than not. Some hedge funds are not transparent. Perhaps, 'transparent' is more oriented toward being audit-able rather than understandable.

On another note, we have a recent report of a delay on a new plane. One commentator thinks that the maker ought to be more transparent. Okay, perhaps what is meant is more truth, yet even that can be problematic.

Why? Let's look at it this way. Suppose a person went to the library and got all the books on some type of engineering, collected all the related 'wiki' material, and gathered everything else related to the subject. That is, suppose you have all information that is known.

Isn't that transparency? Now, does that mean that the person could read the material and do something effective. No way. That is, not without time and effort. Some things are so gnarly that we have, at best, only a glimmer of what's involved. One does not become a doctor by having access to medical textbooks and material (despite the temporary success of some, like the Great Impostor).

In financial terms, even an open US Fed Reserve stance does not make things easy. That is, we see the market (DOW, etc) jumping around in response to FED statements as if these were from some sort of oracle.

So, what is a country or company to do in this regard? Well, we'll look at that further at some point.


10/11/2011 -- Finally, some are trying to put out a message, hopefully not via madness.

04/03/2011 -- Tis tranche and trash.

07/23/2009 -- After the bust and the rebound, toxic assets are still a problem due to tranche realities.

Modified: 10/11/2011

Saturday, January 12, 2008

Truth, fiction, and finance

Fiction is a respected genre of literature, yet we use the word, sometimes pejoratively, to characterize non-truthness.

Finance deals with money. That some parts of finance approach fiction is troublesome (see Business Week, Jan7, about the Bear flu), yet some might actually want that as a means to line their pocket (and we cannot just blame Ponzi). Finance, unlike building a plane, has a problem in that evaluations deal with nothing real (thanks to decisions in the 20th century). Therefore, expertise, opinion, and other human traits are the main devices. Yet, some types of 'empirical' effort are possible and essential, such as verifying that a borrower has a good potential for repaying.

Engineers, at least, can go up against nature and the real world with their ideas. Yet, finance has been adopting scientists in its modeling; one wonders if these new players, who were supposedly well-grounded, have let froth grow between their ears; but, hey, who cares if you're making millions?

A WSJ article (1/10/08, David Wessel, "How to Unbreak the Banks") touches on this subject which is near and dear to truth engineering. In fact, Wessel addresses computer modeling and risk analysis as two major culprits. Wessel also points a finger at the Basel agreements as they leave too much leeway in leveraging (techniques for the few to bilk the many) among other things.

Truth engineering sees it as a generational issue, cultural rather than biological. That is, the advent of the computer's ubiquity and usefulness has turned things topsy-turvy (Chaitin) and brought to fore the importance of those concepts first approached by Wigner and others under the umbrella of quasi-empirical issues. Yet, we have major operational differences through time with generations; the younger only have their limited experience to control their enthusiastic use of new stuff; the older haven't kept pace with changes (not true in general, as the writer of this blog is of the generation now approaching comparatively advanced age).

So, such statements, by the WSJ, denoting insight into the bases of some problems are encouraging.

We can use issues related to both finance and engineering to understand and to apply truth engineering.


05/25/2011 -- Lemons problem, dark pools, ... Oh, so much to look at!

04/19/2011 -- We have to get back to the basics.

11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

10/11/2009 -- Discussion has gone over to FED-aerated. Note the 10/11/2009 Remarks about the Business Week article on India's progress' inhibitors. 'Near zero' recognizes that some always suffer more than others, especially in win-win situations, as the whole notion of characterization minimizes visceral reactions by diminishing the real in favor of the abstracted (ah, the modern world, you say?).

05/27/2009 -- That we have topsy-turvy needs to be addressed more fully in both an epistemologic and an operational sense.

12/18/2008 -- Leveraging, in and of itself, is not bad.

10/21/2008 -- Yes, it's time to re-look at this theme.

10/20/08 -- It got even worse throughout the year, from Ben's blink, through spitting in the face of savers, to bailouts (what?) of those touting capitalism.

03/14/08 -- Lots of water under the bridge, yet the financial games continue. A whole lot of industry and resources have gone into the infrastructure for finance. That these would inflate the gaming aspect is natural consequence.

01/18/08 --- We'll need to look again at three ways to evaluate in more detail. These are market (which goes beyond the gaming that we have seen), model (a necessity, though wizards of mathematics and computation can be problematic without the quasi-empirical framework), and myth (that is, myth may be a function along the belief axis).

01/17/08 --- Some call for more openness, yet effort is required to know.

01/16/08 --- Stories from yesterday relate to this theme. Many argue that the market (whatever that is) is not zero-sum. That's saying that the system is open. To what? Shenanigans?

Granted the advances in handling abstractions (the gift of the 19th century) and the ubiquity and power of the computer (the gift of the 20th century) have opened the door. To date, the old human traits (gifts of nature, etc.) have come to fore, namely greed and others.

If there is a market, and if it is built upon mathematics and computation, then the 'value' ought to have a broader basis than we see with pocket lining, one upmanship (unless, of course, we allow gaming in a controlled fashion), etc.

Modified: 05/25/2011

Tuesday, January 1, 2008

Blog and truth

'Truth in blogging' might be an interesting subject, perhaps, to look at further. It is apropos now, as with the turnover of the year, reviews are in order. Yet, reviews need to be part of a continual process, to boot.

As mentioned in the Mission, posts here evolve, and posts changed a dates later than the original will be marked as modified.

But, what are the working rules for this type of media where the author, editor, publisher, and whatnot are all rolled into one entity?

One question involves modify rather than rewrite. In case of a rewrite, perhaps the original post, if replaced, would have a pointer to the new material.

Another would consider whether to use a major word processor and then cutting the text over to the blog space. That seems a little beyond the intent, though most likely many of the blogs sponsored by groups (including companies) are developed like that (with steps for review by others including legal).

So many other issues that probably have been discussed elsewhere (so expect links to appear here at some point).

Given the topic of this blog, most posts will be opinionated expository. For the most part, modifications will remove stream-of-consciousness requirements. But, things like Jungian contractions (see example and Remarks) will like remain in place.

As mentioned before, the blog is part of a triad, truth engineering, 7 'oops 7, and whosenoseknows, dealing with the theoretical/abstract basis, the operational issues, and measurement, respectively, aspects of a very important subject.

Slogan: we're after minimizing 'hogwash' in all affairs.


01/27/2009 -- Now a new day and way to consider these matters.

Modified: 01/27/2009