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.

Remarks:

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

Leverage and truth

Context: See Tru'eng anew, focus going forward, mathematics.

--

As said before, some of the financial methods lead to fiction, and leveraging is one of these. Let's look at the problem.

According to the Modigliani-Miller theorem, capital structure is immaterial given certain conditions, such as the presence of an efficient market and absence of information asymmetry. There are other factors but notice how the two stated conditions are extremely abstract and wishful. In terms of the first, efficient market, computation is thought to be key. But, too, we need things like Sarbanes-Oxley for the second.

So, what is the point? Well, a lot of the recent problems came from the use of leverage. It used to be that there was caution about margin trading. Using Bill Buckley's concept, 'Stop', that is, don't borrow to speculate. And, the issues have not all been resolved; many are concerned about amount of margin trading that is extant in the current market.

The point is not to argue against modern trading schemes, such as the futures market, much of this goes back to something real; rather, some realism needs to be imposed. The arguments would probably follow closely those related to monetary standard (for example, gold) that is other than the current illusory one (the Fed can print at will).

Taking one recent example, the Fed's low rate allowed cheap short-term borrowing. Many borrowed to create long-term instruments which were inflated via 'magic' from their native junk state.

Well, some fundamental change is required. Supposing someone's hot idea needs funding with cheap money (will that become a rare commodity?). The original source of the funds ought to share in the take, to boot. What about risk? Well, in some cases, the original loaner lost when risk, that was supposedly filtered out, came down the line.

Reinsurance (ah, yes, AIG comes to mind; we had all the risks handled, didn't we guys? 10/26/2008) is supposed to help with some of this. But, how often of late have we seen people puzzled that the model broke down under severe stress such that what was supposedly good showed its junk-ness.

The discussion will continue.

Remarks:

01/05/2015 -- Renewal, see Context line.

11/22/2010 -- Tranching, under the guise of securitization? Silly games.

11/02/2010 -- Two years later, the message is the same, except some changes have occurred. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

10/06/2009 -- Near zero applies to this discussion.

06/17/2009 -- Michael Milken says that structure counts (see WSJ article). Remember, the theme here is that a lot of securitization is bunk, many times. Sheesh, talk about a perpetual motion machine, always moving monies from the pockets of the hapless to that of the fat cats.

03/01/2009 -- Sufficient time has elapsed to allow things to unfold in ways that are of interest to our analysis.

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

10/26/2008 -- Yes, things fell apart for several reasons: fiction, leverage, and more.

03/31/08 -- This post took little steps in looking at problems related to leveraging, somewhat feeling the way. However, the concepts of leveraging and de-leveraging are found used more often now in books and articles that look at current financial problems.

Modified: 01/05/2015

Truth, fiction, and finance III

Engineering has science as its basis. Science can learn from engineering experience. These two have played together well over the years.

Finance has what? Gaming? That's it, folks. The modern mind has brought that ontology forward as the main coherency for our future selves, culminating, one might say, in 'fairy dusting quant' applications.

Well, it stinks even though millions play the game daily, and all sorts of technology has been developed to make the game interesting.

At the end of the day, people lose. Big time. Those who gain change our norms (or try to) into accepting greed, huge payouts, large expenditures, and overall troubles.

So, can we do it better? Well, yes. The world needs it. That will be discussed.

Remarks:

01/14/2015 -- Chimera and charade? One example.

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

01/29/2009 -- Earlier, there were some words put here about Truth, Fiction, and Finance. Well, pick up the 1/28/09 Wall Street Journal and look at an article about a 'proliferation' of ponzi schemes. We all know about Madoff as he mis-handled a lot of moeney over a long period of time. But, a lot of states are finding that they have a madeoff/ponzi going on within their borders. How much of finance is a sham?

The WSJ mentions that the hedge funds' claims to high returns is one possible cause as people try to duplicate that. Sort of a Jones' keep up thing, we can suppose. Well, a reading of hedge fund tacits raises all sorts of suspicions to the rational mind. Just how legit are these things and why are they even allowed? Are we that much into some mass insanity?

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

07/31/2008 -- It's not enough to rant and spout off. So, let's start something constructive by looking at money and what it is.

Modified: 01/14/2015

4th January

Just as we looked at the December entries, across four years, and picked a few to spotlight, we can do that off and on this year. However, since we're still in January, we'll not have one for 2011.

We'll start with 2008 and come forward.

• 2008 (4 posts) -- Transparency and truth -- Posturing seems to be the political way, yet these folks' doings affect everyone. Too bad that we cannot engineer it more. Trouble is, that would be worse than financial engineering (next bullet) in many cases. What are we to do? Well, no matter the effort, we cannot observe 100% of anything. Even CSPAN is only capturing some small portion of the reality and the beingness behind what is going on in DC. Now, at the same time, we need accounting. Like this, do you know where your feet are? Or, what is on your head? Somehow, finance, and money, issues seem to take on this separate existence. It's funny money, folks (see gab standard, et al). Truth, fiction, and finance -- Did we not see a two-year effort to find culprits boil down to a 6-4 political vote? 'Nuf said. (related material: wikipedia, naked capitalism, NY Times)
• 2009 (5 posts) -- Hype cycle -- Of course, today there are two games about which we've heard a lot of chatter. We expect fans to rah rah. In anything in life, attitude plays a large part. Yet, if we're to apply a scientific method, can we really prognosticate prior to realization and still be true to the process? Think about that. It's one reason that business cannot (I repeat this for those who are enamored of six sigma, and the like) be run scientifically. However, it can have some large percentage conduct that is science-like. Ever heard of management science, et al?
• 2010 (1 posts) -- Lordly prince trap -- There are many ways to cut the 'entitlement' pie. Too, hubris can probably be found more in business than in government work, that is, if the political aspect is removed from the latter.

Remarks:

02/26/2011 -- Added links to the months' archives. Another go.

02/08/2011 -- A topic of a year ago: there was a report today concerning a study on the SUA problem that has been going on quietly. More news will be coming later when the report is technically analyzed.

01/27/2011 -- The chimera shines.

01/24/2011 -- Here are a couple of related items.

• Turn the clock, and score, back by destroying the evidence.
• Chaos engineering is the ultimate Quant dream, in terms of conquering complexity (SOS and application -- we'll look at this closely).

Modified: 02/26/2011

Effort and truth

From a cynical view (and in many situations today), we get our information fed from some PR machine which we are to take passively. Opinions differ about the amount of believability we can assign to such phenomena. Though, there are laws that attempt to maintain that information is not too problematic.

In more analytic terms, we always have a disparity between substance and surface; we just expect that the mappings that project from interior information to the exterior are not manipulated beyond some reasonable extent (that which is necessary).

Whether we put forth effort to go beyond the message depends upon several things, such as whether there is money involved (we want to control book cooking), whether there is personal interest (an extreme example would be the airplane), and more.

Actually, any effort requires resources, getting back eventually to money. Regular assessments of 'truth' will be costly, hence we would want them to be effective.

Opinions, without any backup, are easily captured using blogs and comments. Would one weight more heavily a signed comment as opposed to that one provided anonymously?

Would a technique, like bet2give, has a better way to weight than would the poll (7oops7)? The former is a permutation on the idea that the market can be used as a measure.

Remarks:

01/20/2013 -- Changed link for bet2give.

09/02/2009 -- Let's face it, folks, undecidability needs to be discussed and adopted in any complex situational setting, especially if computers are involved. Only hubris pushes us to make loud exclamations about what we're going to do in the future.

01/27/2009 -- At the time of this post, engineering was the main focus. Then, other areas become of interest due to overlaps in the problems: map-territory, computation and being, and much more. There will be more integrating posts to bring some cohesion, such as leveraging and fiction.

10/18/2007 -- This post was timestamped early am. Later the same day, there was an announcement of a delay in the case of a particular program that is of interest. With the announcement was a disclaimer (Forward-Looking Information is Subject to Risk and Uncertainty) that is encouraging in that it recognizes the forward-looking problems.

Sometimes, one wonders if reporting wants to be based upon a static view that can be impossible to attain. It's even more difficult assessing how well risk was defined and managed.

Further discussion will pull together earlier posts dealing with earned-value and status checking.

Modified: 01/20/2013

Celebrating our frailties

In another context, while discussing Ben's largess to business (gamblers) but not to labor (or savers) - though, he claims his rolling out the dough is to create jobs, the notion of someone being perfect came about. Essentially, to err is human. The corollary is true, too: to be human is to err (even for those high-falutin' types that claim to be divine, et al).

To try to be perfect is not human; it's machinations in action. As in, someone doing something 'perfectly' does not mean that the person is perfect. No, that sort of thing is not much different from equating the map with the territory (a real problem nowadays, with ubiquitous computationally motivated intrusions in our lives).

So, does this mean that we cannot be better, etc. (or strive to be so?)? As in, practice makes perfect? No, as systems (and role playing - with effects, of course) are the things that we can have approach perfection. People, while in a system, can get better, to the extent to which they can overcome human limitations. As in, roles and essence are two different things.

But, do we expect that systems are perfect? Well, we do trust them a whole lot more than we ought to. See the comment on the main page about computablity, and problems thereof.

However, we can change the context to that dealing with expectations and realizations. As in, we can get close to fault-tolerant states, even if that comes about from error-fixup techniques that are, undoubtedly, clever.

---

Why do you think that the borg (to wit, Star Trek's type, et al) idea is so strong? People sense that we can have a symbiotic relationship (with what?) that is uplifting. But, too, we can descent into slavery (ah, financial indebtedness is just that).

---

The corollary thought is that 'labor' pertains to a class of people. Whereas, our progress rests upon us seeing that 'labor' relates to roles which are attempted (or fulfilled) by people. No matter that most who descend to this type of activity do so with little choice. Not all people who work with their hands are incapable of more advanced challenges. For some, it's a matter of choice.

Perhaps, that choice is seldom made nowadays. Not true, though, from my experience. One has to listen with the right ear to hear intelligence covered with the detritus from having mostly gross experiences from life. Some never get to shine themselves up. Yet, their potential is there.

---

As an aside, to the young mucks. The thing of having succeeding waves of people entering the market with the latest knowledge running things is part of our problem. Actually, a very large part. That sort of thing is a recent phenomenon, brought on by advances in technology and computation. So, its analysis can be done now since we have had several downturns over the recent times for people to recognize the problem, if it is expressed so as to be obvious (the stench goes all the way to heaven).

Expect some more attention to this theme; too, proposed ways to handle things better will be in the offering. Why not?

Remarks:

09/28/2012 -- One type of hope.

09/21/2012 -- This discussion ties into 7oops7's bailiwick (see Remarks 09/21/2012). We know that we cannot, too much, celebrate our faults. Why? Descent into the quagmire. Oh, wait! Being concerned with the faults of others has the same downward spiral. I have to admit that we need to find a way out of the mess (will it happen in the U.S. any time soon given how screwed up election dynamics have become (partly due to the Court's claiming the fiction that a corporation is a person and that its money is free speech?). Virtues come to mind as essential. Yet, many argue not. From whence, then, we have to ask them, come the motivators (lifters)? Hope is one of the virtues. We hope that we not get pulled into some type of downturn. We just went through one that was caused by those (see prior Remarks) who could run amok yet have not learned their lessons. Ben saw to that with his largess. Well, it's Friday; we'll get back to this later.

09/20/2012 -- It's imperative that I mention the best and brightest. Yes, we've talked of them before. Here is another definition. They might be considered as those whose arrogance causes them to see themselves as perfect. The real tragedy is that these types have always mucked up, and seem to continue to trash, the common world shared by all of us (now, and our progeny in the future). Too, those whose attributes are less stellar (by what is their ascendancy measured anyway? ..., very short term looks? ...) have to clean up after these type whose crap falls on the world from leaks in their diapers.

09/19/2012 -- Rick starts out: perfect memory.

09/19/2012 Let's say, for now, that perfection, like beauty, is in the eyes of the beholder (Wiki has a nice historical view of the concept's breadth of use). See, 09/19/2012 Remark (Fedaerated).

09/19/2012 -- Any sense of 'perfection' would require some way to judge whether something has attained the state, or just is such. All sorts of issues lurk about. So, let's look at the role aspect, for now. We'll get back to the need for 'ídeals' in this matter. That, too, raises considerations for us to look at. In terms of sensors and actions, one might think about adaptability as being an indicator. Yet. we all know about the pejoratives cast'd at the person who is good at playing the chameleon. Thinking of faults, are they not abundantly clear? Oh wait. Much effort goes to covering these up, not unlike our clothes hiding all sorts of imperfections (for the most). So, we're not far from the core issue of truth engineering. How do we know? Even if we can (are allowed to) see under the kimonos, do we know what exactly we're expected to see or even how to do other than react? One approach might be to look at what is considered perfect by category. And, then identify things that are almost perfect in that case, to wit ballplayer, surgeon, and much more. Some might even be 'perfect' in several roles. Others may have few such qualities. Ah, that is nudging up against an important subject, to be discussed later (per usual).

Modified: 09/28/2012

Posts of interest - 2011

As a means (an attempt) to freeze a point in time (which we know is not possible), the last post of 2011 will list the top four posts in terms of having been read (well, views, anyway). Perhaps, this will be a yearly event.

Aside: As said in Mission and Method, posts are to contribute to a theme, though there may be divergent ones from time to time. Blogs allow categories, but these are problematic since they collect and present in a time order. From time to time, there ought to be a super-post that gives a more coherent view (here is an example - Truth, Fiction, and Finance). Perhaps, that type of thing will be done more often in the coming year.

Posts of interest, as of today:

• --  Leverage and truth II -- From 2008. We all love leverage. Engineering has applied this everywhere with all of our gadgets. But, we also know about limbs; too far can be problematic. What about cutting the limb between yourself and the tree? You see, we do this latter with computation. I can explain if you give me time; it's one motivation for what I've been trying to do here for the past few years. Why no hurry?  You see, every bit of time elapse makes the argument stronger. The big problem is that the boys (and some girls) who like risk (emotional failure on their part - this, too, can be explained) do not just incur it themselves. No, they drag along the hapless. The 99% need to get a grasp on the themes of this blog; it's at the core of computational modeling where we can bring in the human element in a way that has only been considered peripheral. 

• --  Last post for 2008 -- From 2008. Too many seats-of-the-pants decisions by the best and brightest keep things in turmoil. Somehow, we've accepted that as the norm. But, then the dryness of a scientific approach becomes more than tedious, it's a distraction. What ought to be the balance, and how do we attain such a thing?

• -- Extrapolation, calibration, truth -- From 2007. So much is wrapped in knowing. Always has been. The newer methods can be more problematic, though, that we've seen in the past. Now, who is to do the knowing? Obviously, the way things are now, not everybody. Perhaps, that will always be. But, would it not be nice to think that those who have the talents, the resources, et al are not just looking out for themselves? Actually, whom can be trusted is a key issue that we'll address, again and again? Also, how we know the value of things is key, too. 

• --  OWS Occupy Wall Street News | Plutocracy Files -- From 2011. Have to love these people who not only put themselves into the class of the 99% but also do something to get attention and to try to attempt change. Before this happened, it seemed that the pall thrown on everyone by the uppers (CEOs, et al) had become an interminable yoke. That is, this pall: if you're not the best and brightest, or if you are not motivated by greed, or a whole number of other things that needs to be listed, then you're of no use. The pall says: we'll export any potential job for you off to the hapless elsewhere who can be more easily exploited; too, we'll make is so that you're indentured forever.   

Remarks:

12/29/2012 --  Summary - 2012.

Modified: 12/29/2012

Truth, fiction, and finance II

The lack of activity on this blog resulted from downtime to catch up with the world's craziness, especially as it deals with those aspects for which we would like to see a stronger 'truth' (finance, for instance).

Well, the Fed is bailing out a failure with our money, again. The other day, one financial writer mentioned all the new instruments that have come about, creatively, the past few years. Well, let's hope that our choking on these help us learn some lesson.

The trouble is that we don't seem to, as a group. Those who get burned may learn something; for the most part, some idiot is always waiting in the wing to try a new trick. It has gotten worse, of late, due to the computer's availability to leverage and multiply gains. But, there is a risk involved which we need to understand better.

For those who fail in the financial world, if they are large enough, they don't have to accept the consequences of their risky behavior, as we get to bail them out of their stupidity.

As one looks at what is seen as progress, one can get baffled. Of course, those who create these new instruments, and line their pockets thereby, enjoy the game. In many cases, value is created out of nothingness by acclaimed wizards. Of course, this is age-old, it's just that the computer, and the globalization fostered by the computer, spread the hurt.

And, there is usually no payback of outrageous bonuses.

Something is awry. We will slowly be arguing for, and looking to build, a stronger foundation through truth engineering.

Remarks:

01/14/2015 -- Chimera and charade? One example.

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

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

Modified: 01/14/2015

People matters

The Grant Study, and similar research, can contribute to discussions related to truth and to how we need to be cognizant of, understand, and know how to use truth engines.

Why? Humans will continue to be an important factor despite progress in our artifacts in terms that have human analogs, such as intelligent automatons. That humans have interesting attributes that have not been, and may not ever be (big T issue), replicated by a machine has to be addressed and not avoided.

A recent Atlantic article (about the work of Dr Vaillant) is a good place to start to get an introduction to this work. One aspect that will be looked at further is the defense mechanism response which is a functional output to input. That is, as our artifacts evolve, some analog of this characteristic may very well come to fore.

But, we don't have to reach that far, as it can be observed that traits of leaders can be understood in this sense. Who doesn't know of a CEO whose personality may border on megalomania, for instance? Too, organizations of humans can exhibit properties that appear as some aggregate of the members.

That humans will be central to truth processing is one given to the endeavor related by the blog. Of course, people matters will involve much more than psychology.

As said elsewhere, the epitome of truth processing may very will be some type of 'borg' arrangement where human intuition is sustained, augmented (yes, augmented reality is definitely one of the many things to look at), traced, and otherwise enabled to be more functional. Of course, the context is not science fiction here, though some tendency to futuristic thinking can be expected.

Remarks:

10/22/2010 -- We need more like Perelman in order to have a fair economy.

10/14/2009 -- People matter, especially the autodidact.

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

05/21/2009 -- Series on class acts started. Unfortunately, the first example is negative.

Modified: 10/22/2010

Endless insanity

One might blame recent actions (of the Fed and Treasury) on the fact that this is an election year whose resolution is quickly approaching. Why the use of insanity?

Well, the real-time experimentation (by the Fed and Treasury) continues based upon a gab-standard. Those who got us in this mess like to use 'financial engineering' as their chief flag to salute. Hah!

Well, we do know better than that. That so much has been spent in bolstering up the infrastructure for the gaming and in putting our taxpayers money in the game could be seen as really troublesome. But, it's only money; yet, the lives of real people are impacted by the decisions of the few.

Has it ever been different? Well, no. But, the problem now is that technology exacerbates the effect; too, the gaming ontology is technologically based and unstable.

It really can only provide fraud power to the new colonialists through more types of fairy dusting.

Where is the science? Ben Stein reminds us that Paulson pushed junk bonds, making oodles doing so, to boot.

Remarks:

07/31/2013 -- Ben cannot unwind or taper down; he has too many Doves.

08/04/2012  -- Over five years, we had a lot of side trips. We'll try to focus more. BTW, Rumsfeld has recently had his say.

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.

08/27/2009 -- Madoff exemplifies (albeit somewhat indirectly) systemic risk.

01/29/2009 -- Earlier, there were some words put here about Truth, Fiction, and Finance. Well, pick up the 1/28/09 Wall Street Journal and look at an article about a 'proliferation' of ponzi schemes. We all know about Madoff as he mis-handled a lot of moeney over a long period of time. But, a lot of states are finding that they have a madeoff/ponzi going on within their borders. How much of finance is a sham?

The WSJ mentions that the hedge funds' claims to high returns is one possible cause as people try to duplicate that. Sort of a Jones' keep up thing, we can suppose. Well, a reading of hedge fund tacits raises all sorts of suspicions to the rational mind. Just how legit are these things and why are they even allowed? Are we that much into some mass insanity?

12/17/2008 -- Too, many factors lead to things like made-offing and other schemes.

Modified: 07/31/2013

Leverage and truth III

A recent post on 7oops7 was motivated by finding a blog related to finance. That the topic is leverage tells a lot. Two earlier posts on Truth Engineering looked at this method and how it has become a central idea (Leverage and truth, Leverage and truth II).

You see, leverage (other people's money, in short) can produce wild returns. At the same time, it can kill everyone. That gaming has been accepted at the core of finance is something to ponder and to argue about. Hopefully, a more true economy can emerge.

This reliance upon wild risks would not have even come about without advances in mathematics, modeling, and computation. All of these, and related themes, are what this blog is about. The above-mentioned blog struck a chord; for one thing, the blog author is retired and not in the game; for another, the roles played by that author were business focused.

See Remarks below for some info about the Truth Engineering motivation. This will be incorporated, at some point, back into the Mission and method. In the beginning of this blog, there was no 7oops7 or WhoseNoseKnows; these developed as a means to cover the necessary bases.

Remarks:

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

11/22/2010 -- Tranching, under the guise of securitization? Silly games.

11/02/2010 -- Two years later, the message is the same, except some changes have occurred. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

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

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

10/26/2008 -- Yes, things fell apart for several reasons: fiction, leverage, and more.

05/31/2008 -- Let's suppose that a blogging viewpoint can be based upon advanced educational efforts from 30+ years ago, where there was continuing education over the years in terms of specifics of modeling improvements and of the basis for mathematical advancements.

If we go back 30+ years, the 'gaming' metaphor was not so prominent, except in theory. Also, finance was the game of the few who were on the floor of the Street and at auxiliary sites, though this is not to imply that only a small set was involved.

Crashes were still possible, as history shows. However, things were different.

How different? Here is one example. In the beginning of the 401K times, companies had experts involved with the management of the assets. And, they predicted that the rewards of participation would be nice - not stating, of course, that there was a growing use of risky methods.

So, how was this handled? Well, it was in the mid-1990s when companies started to remove themselves from responsibility of handling these bucks and threw those in the plans to the wolves. So, one cannot argue that everyone ought not to know about their monies; yet, opening up a game that is not a level playing field has an impact just like we have seen evolve (growing inequity in wealth - wolves and sharks win).

Too, leverage was more verboten than not; evidently, it came back into a much greater play than was allowed after the big Crash. Betting with other people's money has always had some moral smell; how did it get to be thought of as a nice scent? By the way, that the higher-educational institutes (who are of superior membership) play the game is by no means any moral support.

Now, supposing the above-mentioned educational foci were economics and related modeling as well as the necessary mathematical frameworks. That experience, including PhD level work in Economics, involved computation (albeit, of that time) and culminated in a Master's. So that, right there, provides a comparative basis that will be explored.

Let's say the work since then of the blogger had an increasing focus on computation as it provides the basis for management decision, for science, and for engineering that operated on all platforms to within the past three years and that covered over 40 languages and related environments. As well, let's say that there was involvement in the whole notion related to artificial means for doing the above which is at the center of issues to explore.

Given the particular demands of the work, the drive over time would be oriented toward empirical prowess, with finance playing a minor role.

So, would not one with such a world view say "what the heck happened?" upon reviewing recent problems (tranching and trenching, for one) and would attempt a quick re-education especially in those realms that have been active since Chicago opened up the door to the over-the-counter madness.

So, what do we see? A scheme has emerged where brilliant moves that are lucky make oodles of money, while, at the same time, brilliant moves that are not so lucky (and this may be a factor of timing, for instance) kill the hopes of literally millions.

Considering the first, well, perhaps we ought to give those people a playpen where they can exalt in their big pockets. Considering the second, well, we cannot build the sustainable world (as we see with problems on every front) that we humans need with such techniques.

So, that brings us to the current situation where we see people making decisions that impact everyone yet they are mostly shots-in-the-dark, it would seem to some views.

That is, economics (and finance) are both dismal sciences, though some have tried to apply physical insights to these two.

But, guess what? Even the exalted realms of physics and engineering have their problems. The basis for these can be understood partly by knowing about quasi-empirical issues.

We'll be looking further at that. Too, we'll bounce around the ideas, hopefully retaining some coherence.

Modified: 04/03/2011

FED gives Wall Street its wishes

I ran across this article, today.

This 4-fund combo wallops the S&P 500 index    

Gosh, what a title. Then, it tells us that the funds did so for 87 years. Hyperbole? Well, finance seems to have a lot of that. How do we get more science and engineering into the discipline (as opposed to pocket picking)?

So, the response might be, the S&P has been here for 60 years. Yes, close enough. But, the other funds were not around.

What gives? Well, looking at one comment, and the response of the author, tells us the story. And, there was one bit of truthfulness, so I had to put it here. Notice the caveat (buried in a comment).

Of late, I have been doing a series to help answer questions. Now, how well I am doing is open to opinion, however, give me a little more time.

Too, if I am being hypothetical, I will say so up front. Too many financial pieces are fictional (again); yet, they have brought over physics experts. Why? To make the pocket picking more sophisticated might be one answer.

Note: These types bewail that humans are not particle, so their mathematics/modeling can get twisted. Sheesh, the topsy-turvy (from Chaitin) nature with which we have to deal is a fact (however, people are the focus and not just those whose pockets are heavily laden with their wealth).

Here are some questions and issues that bear a new look and further discussion:

Why are there such wild upswings? Ah, 'tis magic, indeed (for the takers, anyway). 

Why do things drop so quickly? Aerated underpinnings, essentially (too, loses are exacerbated by the fact that the game players suck off the cream; and, much worse, the big boys are allowed shenanigans, almost legally).

Bigs boys, shenanigans? For one, dark pools. Then, quant-ifications of various sorts. 

What are the poor people to do? Well, it is true that only a handful (comparatively) can take advantage of this gaming based upon fiction. But, we intend to show that that extreme is not necessary. In fact, much of it could (ought to be) pushed to a sandbox situation where the boys/girls can play at their own will (the rest of us would be protected).

But, look, folks. This guy is talking 87 years. Marx (not a follower, so no need to go there) talked of "fictitious capital."  We have a whole slew of laws and of expectations of good behavior that have been in affect, over the years (say, fiscal responsibility, etc.).

Yet, we're in this state of being in which players trashed the economy, got helped, are continuing to get help, things from the common view are crap - worse than ever, the golden teat has not been withdrawn, and more.

Hopeless? No, we intend to define the necessity for conservative methods and sustainable ways. For now, let's use stable value.

Context: Talking to a friend who was puzzled why some financial expert was saying that most will not get what their 401K shows, I got into the "cheshire multiple" spiel (look at the magical multiplier, above). But, too, we need to find the number where people are guaranteed losers. ... Put it this way, I said to the friend. If you went to the bank to get your CD money as it had matured, and you were expecting $1000 (we can figure, based upon the rate, what principle would attain that value), would you like it if you got $500? What about $750? ... No, said the friend, even a $1 off would cause some grief. ... That, folks, is the story of the esteemed market approach being pushed by Janet, the Street (not Main), and many others. ... We must not let the stories of those who pull in millions (billions) fool us and detract from the truth (under that scheme of things, most are losers).

Remarks:   Modified: 04/24/2015

03/22/2015 -- Jealous? No way, Jose. FED gives Wall Street what it wishes. -- By the way, I know that the article was topical. Yet, it is arguing a point that is wrong on so many accounts. The fact that it is offered within the context of the game that is now the only one in town does not change the nature of the faults. ... I'm not arguing for data-driven (purgatory), either. ... Perhaps, the air will clear when the FED gets its head out of the cloud'd smoke being pushed its way by those who are enjoying their easy takes.

03/23/2015 -- Moral hazard? Remember that? Anyone? By going with big-data's emergence (leading to studies such as the article provided), normative views have gone to hell. Or, the hellish nature that was there has become visible. Hazard? Again, bailing out those who game the system (including the house) leads them to be continue their dependence (while at the same time spouting capitalism, Smith - poor guy, and their smarts). Now, the mania is worldwide, as in, others see the U.S. taking the easy route and want it for themselves. ... On multipliers? Of course, economics/finance has these as integral to the basis; yet, we can smell test (better than stress test) the ways and means.

03/23/2015 -- Pew Research's reports will be useful: Only upper-income families have made wealth gains in recent decades. In some of the responses to comments, one author expresses disbelief in the Fed's influence. Well, we can work on helping clarify that (by more than griping about the addicts). Our research deals, in part, with how many simple folk get to experience, and enjoy, the book-based wealth that their financial reports offer them. That is, that which is beyond Social Security (but, being sensitive to take-backs as we see, recently, happening with retirees being informed that their pension is being cut). From my experience, it is a small percentage (comparatively). The one fact of the upper crust? They have more protection which we can enumerate and illustrate.

Leveraging anew

With a new year looming and with a coming change to the political and economic landscapes, the tone of the blog will need to adapt. All things are not by nature fraudulent (made-off shows the need for due diligence, but some people are trustworthy - yes, Boy Scouts, for one). Too, some know how to handle the map/territory problem.

So, let's start with leveraging (and its associated fiction). Earlier posts seem like diatribes in some cases, as they were not complete. As an aside, that is one drawback of the blogging paradigm; as, even with extensive linking, coherence is not as readily attained as it can be in sequential text.

Leveraging is not bad, in itself. After all, we have used the lever since Archimedes explained the principle and use. But, financial types went overboard with leveraging many times, including in the great market drop of 1929. Laws were put into place to limit using debt for things that were highly risky. These laws seem to have been forgotten, of late, as fairy dusting allowed magical returns to become realistically expected. Then, we had a mess; made-offing was the most recent example.

Friedman, in a recent article, noted that we need an ethical as well as a financial bailout. He used "I'll be gone" to describe a syndrome related to leveraging. In short, we had people thinking that someone else would have to clean up their mess. Why care about it when the perpetrator was long gone? (Yes, CEOs as diaper messers (we've said it before)). Friedman said that Madoff was the "cherry" on this cake of ours.

By the way, the article notes that we were not walking our talk. We were trying to shovel the 'casino' of capitalism under the rug while telling everyone else that we're the best.

One could probably argue that leveraging went awry due to misunderstandings. A common theme here is that computational and mathematical ideas have been interloped and used to screw things up. Take what we learned from the Modigliani-Miller theorem in which a type of equivalence is shown between debt and equity (to put it loosely). Gosh, folks, just look at the list of assumptions. A whole bunch of economists have built careers just looking at implications of this list.

One that we'll quibble about is the efficient market bit of fairy dust. Too, MM deals with a firm, yet who is usually a large holder of equity. The public, consumers all!! Yet, we counsel them to not indebted themselves in order to play the market (or used to, as a lesson from the Great Depression).

In short, there are intrinsic differences twixt equity and debt that MM does not eliminate. The discussion here would ask how anything wrong for those behind the firm could not hold in the collective. You see, look at the tranche mess (where crap was gathered, sliced/diced, then rated to not smell).

Okay, now, to look at an example of leveraging financially, consider the mortgage. Some of the older folks like to pay cash, for whatever reason, for their houses. Or, we saw movement of monies this way from sales in high-valued (using the term advisedly) area to a buy in a low-valued area (think CA to AZ, if you would). But, let's consider a normal situation.

If you want to buy a house with some form of down payment and then make periodic payments, that loan is a type of leverage. You will have some equity, with a lien, of course, and enjoy current benefits based upon future payment. One assumes that the future payment requirements will be met. Also, various risks are handled with things like home-owners insurance. All in all, this model has worked well for millions over the years. One could think of several examples like this. Perhaps, an enumeration of these would be a good thing to do here.

But, there are many things that went wrong. Such as, allowing leverages to be built (almost ad nauseum) upon leverages which is very suspect, just by definition. As well, some were put into mortgages without having the means to pay. We'll look at all of these at some point.

Remarks:

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

11/22/2010 -- Tranching, under the guise of securitization? Silly games.

11/02/2010 -- Two years later, the message is the same, except some changes have occurred. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

03/03/2010 -- Applies to the debate about MM and equity/debt.

10/14/2009 -- Knowledge can, and ought to, be leveraged.

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

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

Modified: 04/03/2011

Magna Charta

Recently, Facebook, with some academic cohorts, did an experiment on FB users. As in, manipulating them without their knowing what is going on.

Sound sophomoric? Well, with young guys in charge, I ask, what do you expect? "Lord of the Flies" comes to mind. Some point to Orwell (one of the Georges).

But, we do not have to invoke fiction. We have the reality of the Magna Charta and the times thereof. Starting in 1215, with the first sealing, the King went through cycles of agreeing and then disagreeing (more than 45 times).

About what? The rights of anyone besides himself. You see, Barons of the time wanted constraints on the king (who claimed divine right). But, those Barons were, for the most part, cousins of the king. And, they held, in bonds, oodles of serfs and others.

Yet, many claim that the Constitution was enabled by the machinations of the Barons (who were looking out for their own self-interest).

Was anyone looking out for the rights of the little people? Well, some priests and nuns and others (like Saint Margaret), I would suppose, who took Christ's admonitions to heart.

---

Andreessen and sarcasm

So, come to the present and FB. This behavior shows a provider stomping on the rights of users. But, who speaks for users? What are their rights?

Well, we can point back to the Magna Charta. The modern analogs is that the provider role leads people to think like kings/barons (as do corporate bosses). The users are equivalent to the old barons who know that they need to stand up for their rights.

Also, we have the issue of the layers of cognitive ability. The cognitive elites might be (not all, as some of us are wise) considered as the kings/barons. The rest along the cognitive scale are the barons/serfs, of old, who tolerate the "jerkiness."

---

What does truth engineering have to do with this? Lots. Firstly, the whole computational framework rests on shaky grounds. Then, when we add in the predilections of humans, we get a messy affair which is not outside of control. But, we do have a lot to learn; some of the issues are age-old (and, our 100+ years of experience pales in terms of the magnitude). Secondly, recognizing that there is a problem is essential. Even then, though, the mind baffles. ... Rich makes smart (Smart and its money)?

Remarks:   Modified: 07/03/2014

07/03/2014 --

Leap Day, 2016

We started this blog in 2007. So, this will be our third Leap Day. It might be interesting to see what was going during each of those earlier times.

2008 By February of 2008, the focus was on finance. One post dealt with whether smart had to be rich. Or, the inverse, are the richer smarter? One major post, in January of that year was this one: Truth, fiction, and finance. It was in 2008 that Made-off's schemes were exposed to the public.

2012 February of 2012 was the month that my older brother died. By June, I had a post about fathers and sons. By August, there was a re-look which still applies. 

Now, having spent eight months on Quora, there is a better understanding of the issues and how to address these both philosophically and technically.

Remarks: Modified: 03/01/2016

02/29/2016 --

Last post for 2008

Context: See Tru'eng anew, focus going forward, mathematics.

--

The posts have gone on long enough that they serve a basis for the necessary expositions (recent example). As mentioned before, there will be some posts that integrate within a theme from time to time. Examples are leveraging and fiction, in terms of the financial area (mainly, fairy dusting).

Then, through time, the posts will be, hopefully, coherent (as far as can be done with the temporal disparity of the web blog), and the integration posts will allow a better view than can come from categorizing.

Needless to say, those who think that the best and brightest offer what cannot be understood, by necessity, are way off base and probably deserve to lose THEIR money, but definitely these smarties ought to not have access to other peoples' money in many cases.

On the engineering side, there will be things to harp at, too.

But, the view, hopefully, will be balanced. Engineering needs money to do its thing. Perhaps, the money side of things could learn from engineering and science. In that latter note, the work would go far beyond game theory to include a more broad philosophy.

Look to more discussion, and use, of arguments about being.

Remarks:

01/05/2015 -- Renewal, see Context line.

12/31/2013 -- A popular post.

12/29/2012 --  Summary - 2012.

01/01/2011 -- We have four last posts of December under our belt.

Modified: 01/05/2015

Greek to many

As mentioned before with the topics of fiction and leveraging, there needs to be some time occasionally where things lay quiet during a catch-up activity, such as looking more deeply into the recent advances (if one could call them that) of finance. Given that the gaming behind the market is mathematically colored and given that we need to get technical, some time will be spent immersed in details of the CBOE and related efforts, such as Options Monster.

Today, volatility was the theme that has a few interesting twists in its influence on the pricing of options. So, to look at that, we need to start with "the Greeks" and the related etiology.

All one has to do is consider the strategies related to option trading (pages and pages of tables) to see the relation to gaming.

Our future, in general, requires better than that albeit that many do support themselves quite well through the auspices of CBOE, et al.

Remarks:

11/21/2010 -- Three years ago, it was said: Computational foci raise miraculous need. Still applies.

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

02/18/2009 -- We can look at why securities become toxic, almost by necessity.

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

Modified: 11/21/2010

December, 2007

That was awhile ago. Since then, things tumbled (the DOW got to about where it ought to be). The chimera started to re-inflate, yet not without lots of help from Big Ben who just recently kicked the printing presses up to high gear.

---

So, again, December, 2007. After awakening to the idiocy that had abounded while the blogger was working on real problems, it became apparent that the financial guys had gone too far (that post was written on Christmas day, of 2007).

Tranche and trash was added later.

---

It's obvious that the wizards are confounding issues with their money, their lobbyists, and snowing people with mathematics and computation (the most popular post of the FEDaerated blog). How do we get a 'reset' going that would help build a better basis?

---

So much has gone into building the 'market' economy, is it possible to delta off of that in some incremental mode? To what, though?

OWS talks about symptoms. It is not a solution definitional system.

---

Politics? We have seen how that descends. The story now is that those who get elected to Washington come away rich. They even pull silly games with the Street. Ah, yes, are politicos not those who salivate with they see (or think of) a buck (or have it passed beneath their nose by lobbyists)?

---

If you haven't noticed, it's a real mess. Of course, the 1% likes it since they can muddy themselves, and us, as they rake in their takings. The 99%? Of course, that is where the real hurts always happens.

This is a new meme; perhaps, it'll be helpful.

---

Disclosure: In 2007, I started to look at finance to see why the younger ones had queued up there in droves during the prior 10 years. Well, given the shenanigans, it was obvious that the open field (relaxed oversight, greed as good, etc.) allowed many to make money; at what cost? Oh, yes, impoverishing of the many (near-zero). So, it was seen, in 2007, that the walls were beginning to shake; who thought to what extent? Those who were benefiting still were expecting bonuses. You see, the whole game quit (markets froze, bankers sat on their money, people like Jamie became focals of too much attention, et al) since the players knew that it was a crooked game (wake up, Ben) and stopped playing when it became clear that they could make decisions that would cost them (ah, Bank of America, et al). Yet, at the same time, these people didn't acknowledge the reality (given that we can know the actual state -- too, they play to win, expending enormous energies to ensure that they win -- ah, then, the re-insurance scheme was shown to be faulty, to boot). The lemon lesson kicked in; if you and your peers are crooks, who do you trust? Oh, the American taxpayer from whom can be extracted oodles without any side-effect (not so, says the OWS - before them, the tea-party). So, it became obvious that finance was a lot of fiction (recap -- how did we allow this?). It was unsettling to see Iceland fail, since they listened to the idiots (see Remarks 02/03/2011) and made themselves vulnerable. So, too Ireland. England (with its thrust on finance) ought to have known better. And, now we're seeing holes all over Europe which Ben is trying to fill with his cheap bucks. Since 2007, we have had changes in laws. Yet, there is truth to the statement that those who legislate now become rich while in office. Too, they let those who skim off the top do so without any threat (the stench comes from systemic pustules). The ca-pital-sino needs to be reigned in; so too, those new kings who run rampant over the populace. That the 1%-99% meme brought forward some recognition was nice to see, too, albeit a little reminiscent of earlier times.

Remarks:

05/29/2012 -- Jamie's bank in the news, again.

12/07/2011 -- Jim Rogers sees saver sacking, too.

12/06/2011 -- Congress wants to clean up its act.

Modified: 05/29/2012

is Math discovered?

Is math discovered or not?

Actually, this video caught my eye since it represents a new way to discuss matters. And, I was astounded at how well it does cover the issues. But, there are several points where the video ought to be stopped, to allow discussion. Perhaps, at some point, I'll get to that where comments point back to the particular second/frame in the video.

---

Now, to the question. It is both discovered and created, as we find with all human endeavors which are embedded in the natural systems. Think of it this way: this issue is very much analogous to the discrete/continuous debate. In fact (if there is a fact that can be claimed in regard to things like this), the question really is a continuum (we'll get back to that).

The problem has been trying to determine where the demarcation line ought to be placed (fuzzy existence) in specifying where we go from discovered to not. In an operational sense, many of the choices taken for people to do things work and, thereby, resolve the problem from that perspective.

Of course, some workarounds (math is full of these) have worked better than others. Yet, the underlying conditions that prompt the query and debate do not abate.

---

Aside: Here is a recent Common core op-ed. It applies (no, there is no digression here). In this op-ed, there is an implied criticism of fuzzy techniques (a system, if you would). So, this is another of those age-old bifurcations. The view expressed in the op-ed stresses, too much, numeric foundations which then lead to all sorts of mis-guided mathematical shenanigans (yes). That "demarcation line" mentioned above?  By necessity, it is fuzzy (in a metaphoric sense, okay?). That we have been overlaid with an insidious mesh that entraps, in part, is the responsibility (karmic) of bad math. That the advertising (marketing) ilk have spawn so rapidly, and, essentially, ruined the Internet is one of the direct results of those bad choices.

I love the emphasis on rules (very much inconsistent, in this op-ed). Learning to follow someone else's footsteps implies rules. Success in mathematics requires memory abilities as well as the other facilities, such as pattern recognition, etc. We cannot get rid of that.

Why don't we try to be peripatetic and teach via play (yes, as in acting out what those abstract notions are supposed to be representing - actually, we're talking a strong type of intuitionism (say what?)  that has not been tried, that I can see.). For one thing, it would meld with a whole lot of problems that we see related to trying to get some kids to keep still.

As long as we're on the subject, having mathematics based upon a less pure platform goes right along with this is/or (discovered/not) paradox. You see, it's AND (has always been). Along with the play attempt suggested above would be an almost flip-flop of the model (advised use). But, no one seems to have been allowed to try this, that I know of.

---

A larger ramification? When choices have a large sphere of influence, then more care is needed. Yet, everywhere we see cowboy (no offense to the real cattle persons) acting as if the world (despite the potential impacts on us) is their lab and little play thing. Care, in that sense? Unfortunately, we have gotten to the point where "care" is not part of the model (lots to discuss in this regard).

---

Beside pointing to the quasi-empirical (it's briefly alluded to in the video - extra points if you find this -- later, I'll put in the frame) issues, we'll weigh in, soon (PTIME, perhaps), with a novel approach, on the question in the title of the post.

---

In the meantime, see the recent renewal of faith.

Remarks:  Modified: 01/16/2015

09/21/2014 -- Very important subject. Watch the video.

11/03/2014 -- We'll be getting back to this, but some feel that progress comes from those who can see patterns in a new light or bring them to light. Almost like the Flynn effect, subsequent thinkers can see more clearly, especially if patterns are handled in a manner that persists. That is, patterns can be chimera-like as can any problem of the human mind (and, that is not in any way meant to criticize imaginative efforts -- nope, some patterns may only be accessible within the framework of fiction - sci fi, for instance). Now, to the crux, how one handles the issues of either/or is very much pattern'd and ought to be thought of that way. We'll go on, in time. Choosing on the side that does not relate well to reductionism is as amenable to reason as is the stance denier (remember, perception is very much dependent upon one's time and resources).

01/16/2015 -- Discussing this (or any part of the old Queen's accoutrements) and deciding which way to go would depend upon one's view of normative mathematics; this is a subject about which we intend to weigh in from the truth engineering (quasi-empiricism) frame work.

Leverage and truth II

Context: See Tru'eng anew, focus going forward, mathematics.

--

There are several connotations of leverage, but one that pertains to discussion here deals with a multiplier effect that is almost recursive (see "mathematization", below). In his book, the 'Trillion Dollar Meltdown', Charles R. Morris considers that the current crisis that may be facing the financial sector may be just an indication of more things to come.

But, of interest here, are his thoughts about why things are in such disarray. Well, Morris names three developments of the past 20 or 30 years that have been touched upon here in various posts. These are, namely, according to Morris: structured finance, expansion of derivative markets, and mathematization of trading.

All three of these relate to the issue of the appeal and problems of abstractions which have led us a jumbled up state of affairs. One has to wonder how computational froth is of any more substance than the natural type. One thing that Morris mentions is the AAA problem which rating appeared out of the air though the underlying instruments were no more than junk.

Effectiveness in capitalism and the market ontology evidently became associated with how well the Street people (gigantic bonuses) and their management (immense wealth) did. Of course, how could we blame just the finance folk who are, necessarily, removed from reality when similar problems crop up in engineering when the issues of quasi-empiricism are ignored?

Except that there is one difference. In areas where engineering deals with the critical, there are processes and policies that help ensure the general public's safety and means to support those who experience accidents.

In the financial world, there is no such science; there is motivation and creativity, where the measure seems to be greed (can "market dogmatism" ever get away from this?).

Some claim that the financial game is more a prisoner dilemma rather than zero-sum (see Fedaerated). Yet, analysis may lead one to see it more of the latter due to the advantages on the financial side (unless, there is oversight such as that being suggested recently by Paulson).

Remarks:

01/05/2015 -- Renewal, see Context line.

12/31/2013 -- A popular post.

05/02/2013 -- This has been a popular post (third most popular), of late. Perhaps, it's the growing awareness of the ever-increasing gap twixt the haves and those without. The post ought to be re-done using insights gained over the past six years. It seems like a life-time ago. Well, the theme of the blog needs to look at lessons from the past (such as, we not learning Anselm's message). Too, money does not solve existential problems. Never has. And, one does not need a pot load to figure that out. Too, playing games with other people's money and lives ought to be a given (ah, smarts or not - the most popular post).

09/29/2011 -- The question remains. Even with 'financial engineering' what is the science behind finance? Gaming, only? Who has the basic ontology (other than wealth for the few)?

04/04/2011 -- The M & Ms are apropos. Need to look at some background.

02/26/2011 -- When this was written, I was still incredulous (shocked) at the idiocy (which abounded beyond limit, and was held by supposedly smart people) that we can just wish 'value' out of nothing. Of course, that value did come from something: the sacrifice of the people by fat cats (need to think of a more appropriate characterization).

11/22/2010 -- Tranching, under the guise of securitization? Silly games.

11/02/2010 -- Two years later, the message is the same, except some changes have occurred. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

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?).

06/17/2009 -- Michael Milken says that structure counts (see WSJ article). Remember, the theme here is that a lot of securitization is bunk, many times. Sheesh, talk about a perpetual motion machine, always moving monies from the pockets of the hapless to that of the fat cats.

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

10/26/2008 -- Yes, things fell apart for several reasons: fiction, leverage, and more.

Modified: 01/05/2015