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

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