Friday, October 30, 2009

The Bankers II

Moral: Where we have several topics to discuss, yet, in regard to this ilk.


Why bankers? Well, it has been allowed to develop that these types rule the roost (see below). What? How can this be? Their derivatives are suspect, versus those ideas (of great utilitarian value) that are built upon the work of Newton. They maneuver the game's rules for their advantage (to wit, those letters now being distributed). That 'game' is used, in this context, suggests the reality of casino capitalism. That 'too big to fail' is a common concept points to bloat beyond any natural semblance, oh yes, the dead carcass of a beached whale might come to mind (but, they're still raking in the dough!).

Tech Ticker had someone from FT talking about the bailout that has unfolded in the recent year. To paraphrase, we, the taxpayers, have lent, via Big Ben and his infinite wisdom, to bankers by opening the pot of our gold; these bankers could not resist the temptation to extract (that's from our pockets - a less-than-zero reality for us, forget near zero) huge chunks (at zero interest). Then, these bankers make money off our gift and turn around with thoughts to distribute to their share holders and themselves (via bonuses) these smelly gains (they are not real gains, folks - new types of book cooking abound).

Too, they have not emphasized what might be needed to get the economy going which is one role for bankers. Somehow, the siren song related to markets (and their manipulation) has become the major focus (opinion, of course, but likely to be sustained through analysis).

Oh, wait, it's not the bankers' faults. No, they're just naturally exploiting the situation since they can! Yet, the situation has many factors of which some are very much related to what banks have argued for, and done, in the recent past.

Ah, twisted, indeed. How do we unravel the mess? It's not impossible, folks.


01/03/2010 -- More news on Goldman Sachs as the uber example of 'not on the behalf' comes to fore regularly. It'll need to be a separate subject at some point. Thanks to McClatchy: Nov 1, 2009 & Jan 3, 2010 (update). Goldman has to respond, of course.

12/19/2009 -- Dead peasant, indeed.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

12/10/2009 -- It's interesting to see 'fiction' used in connection with banking. Old Karl, he who never left, would love that.

12/09/2009 -- The Street loves Ben who loves 'em back: The Street utterly loves the Fed's largess, earning massive profits from trading unstable currencies, the carry trade (borrow short-term dollars near zero, buy longer-term assets abroad), and the high-margin process of transferring America's capital abroad.

11/10/2009 -- Glass-Steagall, again. Why not? Also, more on the gab standard.

11/06/2009 -- There ain't no train, just like there ain't no free lunch (TANSTAAFL).

11/01/2009 -- Goldman Sachs, bankers taking a low road.

Modified: 01/03/2010

Thursday, October 29, 2009

The Bankers I

Moral: Wherein we have to ask: how hard can this role be? The banker one, that is.


Let us see. In the old days (1800s or so), the banker was the guy in the suit who exuded some aura of stability and who stood up for the right. You know, the backbone of the community. Oh, wait, that was some caricature from the movies. Actually, in some westerns, the bankers cowered as bullying bad guys shot up the town and ran off with the bank's safe (or its contents).

There are some real tales, though, of the town's people helping save a bank, such as Northfield, MN and Coffeyville KS. This is real stuff, folks, and there are probably many other examples from frontier stories. How many such stories will there in the future be about these times?

We now have bankers that think that their rates (way beyond usurious -- 29% and above) are not so bad because they're legitimate (that is a long story and will require more analysis at some point, gosh, thanks Lawmakers, way to go). For now, these same bankers are sending out their (somewhat CYA-ish) letters about the new rules which will be in effect soon. The tone of the letter is ominous, actually it's irritating. What makes them think that we want their money (or credit) anyway?

For instance, one may be on their rolls because some merchant company decided to out-house its accounts receivable processing. Oh, we know, that was considered a step up at the time of the decision. Except, it was not in many cases. Have we not heard, of late, that all sorts of decisions were less than what we would expect of those who (ought to) think about fiduciary duty? How much fraud has been associated with this type of out-housing? Does anyone know? What cut does the bank take? That is, are the merchants making as much as they thought that they would?

There are all sorts of banker types to look at. Even Big Ben is one, albeit somewhat indirectly as his academic self has been thrust into a role of managing our trust (yes, of the American people) and of trying to control all those who want their fingers to be in the pot. Sorry state of affairs, one might think, yet we supposedly have the best system, since the industry is so full of the best and brightest.

We'll get back to all this soon and look at how banking ought to be and not to be (not be involved, at all, with casino capitalistic gaming, for instance). Of course, there will be a look at what is, to boot.


12/19/2009 -- Dead peasant, indeed.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

12/09/2009 -- The Street loves Ben who loves 'em back: The Street utterly loves the Fed's largess, earning massive profits from trading unstable currencies, the carry trade (borrow short-term dollars near zero, buy longer-term assets abroad), and the high-margin process of transferring America's capital abroad.

11/10/2009 -- Glass-Steagall, again. Why not? Also, more on the gab standard.

10/30/2009 - Of course, we're just doing a little jaw-boning, in the beginning. Listen to these following views from FT. Gives one pause.
  • Banks borrowing at 0 and making oodles - some of which they want to pay out as dividends or bonuses (we know, two different types of payouts), yet, the economy is in the dumpers except for a few fat cats who are rolling in their take.
  • Big Ben redefining profligacy - he ought to have unwound long ago, we thought. Ah, yes, someone said, oh, yes, Alan, finance is at the heart of the economy. Oh, that's the particular physiological piece? We thought differently.
Modified 12/24/2009

Monday, October 19, 2009

Gray areas

Moral: Wherein, it's nice to see the Nobelists check in on an important subject.


Also some bloggers, and their commenters, have a good grasp on the fundamental issues. The following was very much on the mark.

By anonymous: Because oligarchs draw incorrect conclusions about human evolution from Dawkins, “The Selfish Gene”, misunderstand mythological self-determinism fables from Ayn Rand, and don’t grok that Adam Smith’s tales about the “Invisible Hand” were allegorical, we all must suffer. And, somehow we believe our angry powerhouse of a cleptocracy is the absolute zenith of human existence. Absolute f***ing madness.

Ah, that person is more than on the mark. Absolutely brilliant.

So, people, what are we going to do about this? Ben, listen up. You're part of the problem.

By the way, Harvard, how do you support the autodidact's dilemma?


11/04/2011 -- Tech Ticker asks a good questions about the darker side of Apple. Are any of the other tech companies any better? These are not 'gray' areas; nope, they're black as night.

05/25/2010 -- Who will (or can) lead out of the morass?

11/30/2009 -- From 'Our basis' can grow a whole bunch.

Modified: 11/04/2011

Friday, October 16, 2009

201K, 401K, 801K

Moral: Wherein we consider the middle (401K) as it was nicely provided to us by IRS code and has become a cultural icon.


Why didn't the IRS also allow us to put more into IRAs (constrained, of course, but with a higher limit). For those who are too young to remember, in the early days (decades ago, yes, with the 's' but within recent memory of many), the limit was a mere $2,500 per family.

What are the 201K and the 801K? Well, the former is the situation of many who lost with the recent equity drop, or any of those drops within those decades alluded to earlier. That is, those folks who bought the equity hype which is going to be deconstructed here (give me some time to do so).

As an aside, and at the same time, a conservative strategy based upon more a more reason approach has sustained a growth that has been impervious to all the drops, including the latest, except for the fact of being slightly susceptible to the idiocy of one role, namely big guy Ben, and before him, Alan, of course. Their antics are more irritations than of any real substance. Oh wait, Ben's trashing the dollar; we'll all pay for that.

The 201K joke was used recently in a session dealing with a pension problem in a State, for which the 401K was offered as an alternative strategy. Oh, yes, the 401K which is an archetype for alleviating manager and leader of their concerns since they can just throw the problem over to the unsuspecting worker. This has been seen, up close and personal, many times (except for the approach mentioned above as an aside).

There is not much respect, yet, here for those in the financial advisement game, yet some more wise souls of that ilk could very well play a necessary role. And, that whole financial structure ought to be non-profit, in the classic sense.

How do you un-bankrupt a pension system? Plenty are asking. Why is this particular system in trouble? Well, under-funding may be an issue. But, behind that is a buy-in to the usual mania of the market. Oh yes, put in a little, earn a lot. Is not that mantra sickening with its implications of ignorance?

Gosh, these finance guys (and mangers) need to learn something about how attractive is the siren of the perpetual motion machine. Yes, they're all after that old 801K. It does not exist, folks, except for the few.

Granted we do see people earn a lot in the markets; well, with proper accounting we would also see multitudes more losing their shirt. That's called near zero. That old win-win presupposes a whole lot of stuff being pushed under the rug. Well, a State has to deal with that reality. Good ones actually pull this off and deserve kudos (intractable issues, for sure).

The issue is that pension funds, with the backing of the taxpayers and using more conservative rules, would be more able to pay when the time come. Leaving the matter to the worker, in the sense of the 401K, seems to, typically, end in the 201K. That is not necessary and would not be if those in finance thought about fiduciary responsibility.

Their malfeasance needs to be described. It's very much a type of malpractice. With the computer, which is now being exploited for the fat cats, we could very well put into place what is better for the commonweal. Of course, States are supposed to worry about that.

Finance, as currently defined and played as a game, is basically for 801K derivation (ah, many times by derivatives); wait, actually, they want the 25601K. Yes, indeed.


06/05/2012 -- This piece was 1/2 jest and mostly not. Of course, at its time, October of 2009, we hadn't seen how things would unfold. Double-dip, as in W, was still a concern. The 787 had not flown (that was about two months away). We hadn't heard, yet, from the OWS (see 10/18/2011 Remarks, below). But, from this, you can see that 801K and 25601K are of the uppers (less than some small fraction of a percent). Savers didn't know that Ben was going to keep sacking them until 2014 (and probably beyond, thanks guy). Then, we have people arguing for unbridled leveraging.

10/18/2011 -- Hopefully, the OWS will bring this type of thing to public awareness.

11/08/2009 -- The gigantic chimera needs proper attention.

10/21/2009 -- Of course, Congress authorized the plan. IRS is the front man. Retirement USA's suggestions are interesting.

Modified: 06/05/2012

Wednesday, October 14, 2009

The autodidact's role

Moral: Wherein we ask: who is to know? Well, let's take that theme a little further.


We can say, within the framework of the US as our rights are defined by the Constitution and its Amendments, we all are. Who is this 'we' referred to here? Well, citizens and residents. Even some elsewhere. Perhaps, everyone, if the real dreams of America were to be entertained.

What does the Title mean? Ah, that is one issue to discuss. The autodidact, essentially, is someone who is self-taught. Examples abound in history, but Eric Hoffer, the longshoreman philosophical writer, is one example.

You know what? Those who serve us in Washington, DC ought to be such. That is, knowledge and truth ought to outweigh money and lobbyists. To be fair, some do try. And, some who lobby actually know what the hell they are talking about.

So, why stress the autodidact's role? Well, everyone, no matter how schooled or learned, can be expert only in their field, or a small set of fields; know any know it alls? Knowing, in this sense, is like a laser light shining in the darkness. It's very focused.

In fact, some would argue that one of the problems of the modern world, especially the dismal science of economics, is that we've succeeded into reducing things to where a whole lot of anything is really nothing. That's a t-issue, by the way. Also, business handling of their employees relates directly to this theme.

The computer has exacerbated the problem since we've learned to accept an expert's opinion; does not the computer have the greatest aura of infallibility in some minds? One might say that mathematics has enjoyed its little aura, to boot.

One of the most learned minds would be he or she who holds a joint MD and PhD degree. You see, the MD is the epitome of a schooling grind that results in maximal decision making in one area, essentially the medical specialty. Then, the PhD, by definition, is indicative of attainment of knowledge in one area or field. Trouble is that these disciplines, and fields, are becoming more and more specialized.

Any PhD, who has to weigh in on something outside his or her expertise, needs to do so as an autodidact. Now, would their self-learned role be superior to some others? Meaning, does knowledgeable-ness leverage to other areas?

Yes, indeed. Better than does the financial leveraging that we saw so rabidly expanding prior to the latest problem.

We're not done yet, as there are other items to touch in regard to this subject. However, here is one comment. It may very well be better for those who face financial decisions to do so as an autodidact, as the financial community has shown its true colors. They are after their own gain, folks, believe it.


02/26/2014 -- Acknowledgements for Lucio Arteaga.

05/14/2013 -- This is the fourth most-read post. Interesting. Eric can serve as a poster boy, of types. Could Jamie learn from this?

01/17/2013 -- One characteristic of the autodidact could be being mentor-less. Rather, we all learn from others. For normal families, one's parents would be the early mentors. Then, take it from there. However, the true autodidact will not see some superior on this planet, and, in that sense, they are iconoclastic as hell, for the most part. Think of it this way. The emperor may have clothes; but, he craps like the rest. Which brings up another point of the autodidact: they are not, typically, unaware that their shite stinks as we see with many who are in power roles (head trips - anyone know what that is?).

01/17/2013 -- Motivated by Rick Bookstaber's post. It's not the PhD or MD that is the epitome, especially not if they use their knowledge to get bulging pockets. I'm now convinced of that (and will say why, over time). Yet, how do we measure knowledge and effectiveness? For one, we need a better understanding of human potential (again, that will be covered). Too, in various collectives, one important one is the firm (Coase is 102 this year). For many, such are enslaving devices. Even, the likes of Jamie is not free from the chains of his (nod to Dylan). Then, we have roles that need certification. Yet, we need free thinkers, too, whatever that is. Engineers, and their roles, are a special breed. Finance? Not so much.

03/08/2012 -- This theme will be looked at further. For one, the MD/PHD is not, by necessity, the best basis. There are others that need to be considered. The issue? People who can see what is what and can think within their own cognitive setup (in other words, they know their 'holes'). I like Chaitin's approach, somewhat.

11/25/2011 -- Due to this characteristic's importance to our future, we'll need to redo this a little. For now, rank and file.

10/17/2011 -- If we're to challenge Harvard on its duty, then we'll need to beef this up. For one, is education only operationally important, measured in bucks? Ah, so much to discuss.

05/24/2011 -- Lemons problem, dark pools, ... Oh, so much to look at! Autodidacts have (and will continue to have) a very large role in taming those dynamics that spawn lemons (yes, we need some bankers to step up to the task -- where are the good bankers?).

04/03/2011 -- Need to look at some background. Too, tranche and trash

09/28/2010 -- Capitalism is for the good of us, let's bring that forward.

12/10/2009 -- More roles include the consumer and the economy.

11/30/2009 -- No one climbs above our neuropeptidergic limitations. From 'Our basis' can grow a whole bunch.

11/10/2009 -- The mountain, and the mole hill, belong to the same range.

11/09/2009 -- One trait of the autodidact is measurable intelligence (discussions will follow). However, working alone also impairs peer review, a fact that needs discussion about resolution.

11/08/2009 -- The gigantic chimera needs proper attention.

10/16/2009 -- 201K -- lt;-- 401K -- gt -- 25601K, this denotes the current financial gaming.

Modified: 02/26/2014

Monday, October 12, 2009

Who is to know?

Moral: Wherein we consider all sorts of claims coming out of the Street and beyond. The bulls are running amok, it seems; those in Chicago are emoting with glee at their take.


What's one to think? Some say, to the bulls, watch out. On the other side, some say that the pessimists are wrong. The DOW, it is said, will run way beyond 10,000.

Well, let's start a point of view that says, who cares? That is, equity is way overplayed except for those touting casino capitalism and for those who get their take from the churning.

As well, for any who makes a bunch, near zero says that many, many more lose. Basically, if we looked, we would see that many, many make sacrifices. Trouble is that the noise from the racket spewed out by those who grab mega-ly overshadows what is real.

Then, once we get the mania out of our minds, let's go back to fundamentals and look at what might be what. And, let's take our time. We can go about this without worrying about those hyped up on spin, and such.

We need to go back to see why the interest in capitalism. The WSJ had an op-ed talking about Samuel Johnson's time. Of course, he was an acquaintance of Adam Smith, yet those minds had no way of knowing about the current mess that we (admitting part of the blame, here, just from not watching that many of the idiots did not know about fiduciary duty) have made.

So, we all know that knowing adults want freedom to choose and freedom from worrying about those who want to leech your assets. Too, we all know that committee work can be problematic. Yet, all have played on teams and know that a squad (take any team sport) is more than one person.

We see this notion mentioned by one who worked for Goldman Sachs, yet worried about being true to Ayn Rand. To that latter, we could say, what? From whence is there anything from Ayn Rand that is cut in granite for all to consider outright truth?

Yes, we all know about teaming; most do it except for a few executives (namely, the CEOs who are paragons, in their minds).

So, there will a series of posts related to knowing. It might be worthwhile here to mention that those who really know usually are of an autodidact nature. We'll go into that further.

So, away with the day-to-day, thankfully it's only 5 days a week, exuberanced, or angsted (depending upon the day's results) mindsets. It's hard to believe how much money and time has gone into this whole gaming scheme. But, it is not of enduring consequences to ourselves unless we want it to be.

Actually, getting the sandbox bounded, and controlled, will be one topic for discussion.


04/08/2010 -- From the gigantic chimera to ill-begotten gains.

01/03/2010 -- More news on Goldman Sachs as the uber example of 'not on the behalf' comes to fore regularly. It'll need to be a separate subject at some point. Thanks to McClatchy: Nov 1, 2009 & Jan 3, 2010 (update). Goldman has to respond, of course.

11/08/2009 -- The gigantic chimera needs proper attention.

11/06/2009 -- There ain't no train, just like there ain't no free lunch (TANSTAAFL).

10/16/2009 -- 201K <-- 401K --> 25601K, this denotes the current financial gaming.

10/13/2009 -- Always timely, a WSJ op-ed (Don't Get Hit by Crash at Finish Line) gives an appropriate message to the theme.

Modified: 08/24/2011

Tuesday, October 6, 2009

Near zero

Moral: Wherein we consider that the current times, and debates, really bring to fore the notion that someone always pays (of course, parents know this).


That is, TANSTAAFL is a real issue, except for this sense: the universe and its energy are here, ready for our use (to answer the question of why is a t-issue that is being deferred for the moment -- also, remember that there is no perpetual motion machine -- except that which might exist in the fantasies of some CEOs).

Who pays and when can be swept under the rug using techniques that filter, supposedly extraneous, information and that determine that an economy can be a non-zero-sum game. You've heard it said before: win-win.

Lately, we've been hearing a lot about this: Heads, I win - Tails, You lose (think of this as privatization of gain, socialization of loss -- bluntly, fat cat bailouts by we the little people). Yes, the little pun refers to that stacked deck recently given a proper description of casino capitalism. But, let's not go there until much later.

What we must do, it will be argued, is to see that the concept of near zero is what we need to consider. The question is how to describe the notion so as to make it understandable and of use (ah, does that imply value as utility?).

In short, near zero is seen around the world everywhere we find those with (very small set cardinality) and those without (gigantic set, usually). So, to not get labels of Marxist, or other aspersions, thrown this way, please mind your blinders (rose-colored and otherwise) and consider the following from a viewpoint of first principles (of course, it is very much reasonable to ask whose principles).

One doesn't have to expect Egalité to know when things smell: to wit, some bank practices that essentially bleed the more poor customers with ridiculous fees (no need to belabor the point, as we all know the issues). Given that we're supportive of law and order, one still has to wonder how some ideas generate and get support, such as the notion that a Corporation enjoys rights like a citizen or that some brilliant stars (read CEOs) think that they are the essence of the human race and we're all to kiss their rings: to wit, even CEOs of non-profit organizations taking extractions worth millions yearly. What? Many times, these positions have regal (or is it royal?) benefits. Do they need their big pay, too? Whose pockets are being picked in those situations?

What does all that have to do with near zero? Well, in terms of big-buck pay, it comes from somewhere. In terms of a corporation, many pay up, including shareholders. In terms of personal wealth, this arises through various means and requires maintenance.

The recent events have everyone wondering about capital and markets. We hear of tremendous losses (not all by shenanigans) and some gains. Of course, 'gain' includes that take from run-ups of the stock markets like we've seen this summer. Is that type of gain essential to economics (ah, think back to what lies behind capital and its use - utility again)?

Business Week, of late, was kind enough to provide a graph of S&P and Treasury Bond trend lines from 1926 to now. This shows that $1 would grow to $28K on the equity side while it would only be $89 with the Treasury. Of course, we would really have to look at the corporate bonds for a better comparison. Notice, though, that since 1980 there has been a steady rise for both.

We saw this in the beginning of the graph. Then, from about 1945 to 1980, something suppressed the Treasury line (we'll look at this) while equity grew. Of course, we all know that the Treasury paper is rock solid (we, the American taxpayers, have never defaulted), hence returns will be low due to limited risk. That suppresses the Treasury line.

And, if we could account during the timeframe shown in the chart for those whose pockets bulged and those who lost hugely, what would we see? Has anyone successfully tried that? Is it, by necessity, something that has to be done as a thought experiment (quasi-empiricism)? Near zero is still constrained by our UUUN limitations (saying this does not excuse malfeasance).

Over the past year, we have been looking at reductions all around that are not equally spread. Due to the downturns, topics include a need to reduce benefits, to assess more taxes, to make people work longer, and the related.

In actually, folks, a proper accounting may show that the two sides of capital (see Modigliani) would play more closely. Remember this. The long term line says nothing about an individual's choices since we're talking about a 30-40 year timeframe in which there could have been gains or losses that are significant (that is, in the long run we all perish). We see that now with people who are close to the time for their retirement and who are without the proper means because of equity fluctuations. On the other hand, there are plenty of examples of people retiring quite well with bonds being the main investment.

What is not seen in the hype about equity is that a lot of the payout (or supposed gain) is actually coming from other investors. Yes, it's true; as some have tried to describe, our economy's ways (gab standard and all) are Ponzi, at best. Have we not seen a lot of discussion about how the future generations are being set up to pay for current choices?

How many high-flying stocks of late have had no earnings (in the classic sense, folks, as gains with casino capitalism need to have another label)? Ah, yes, we like dividends. But, does not that assume profits to share?

Note: So, how to explain the rise in the equity line and still argue near zero? That is the task here as we continue to expand the discussion about the 'near zero' notion starting, as mentioned, from the foundational considerations, like economic growth and the need for sustainable ways and means. There have been other ways proposed which we'll look at further.


06/11/2014 -- The old chimera is still with us, a train at 17K (DOW).

12/22/2012 -- Fair and open actually used in a WSJ article.

10/12/2012 -- Hedge fund mirageChimera works, too. Harvard. Its big endowment is the envy of all (but the rational). Yet, Harvard, talk to us about how you feel you deserve big earnings (what? earned?) in term of near-zero. I really need to bring this up to date.

05/04/2012 -- win-win, if it happens, always is accompanied by sacrifice (yes).

03/23/2012 -- Renewal of the idea (and related energies) via Cooper and CiE.

11/04/2011 -- Tech Ticker asks a good questions about the darker side of Apple. Are any of the other tech companies any better?

10/18/2011 -- Hopefully, the OWS will bring this type of thing to public awareness.

09/21/2011 -- On Wealth and the CEO MVP.

06/16/2011 -- Golden sack'd scandals. There have always been over-accumulators. However, a sustainable economy would dampen that. How? We have not seen such an economy, as of yet.

04/03/2011 -- Need to look at some background. Too, tranche and trash.

03/23/2011 -- The hopes spring, again, forgetting, of course, near-zero, all because of M&M. See the real story. But, Big Ben ought to know better.

03/22/2011 -- It's spring, and the garble uses gambling metaphors.

03/15/2011 -- The M & Ms are apropos.

01/19/2011 -- For the most, things are dire, not by necessity.

12/05/2010 -- Raj Patel has the proper grasp on the 'financial madness' that is threatening us.

09/27/2010 -- Capitalism is for the good of us, let's bring that forward.

05/25/2010 -- Who will (or can) lead out of the morass?

04/27/2010 -- Need to add the political set of truths, such as cat and mouse.

02/10/2010 -- We could probably use the auto (and recent events) as a way to characterize this concept. Of course, we have the value versus quality mis-think as part of the problem. Business Week reports that Toyota was asking suppliers for a 10% cut. Well, such scrimping would have an effect, even if it was only in looks. However, cutting into the life of a system may appear smart but, actually, relies on the same unstable basis as does a lot of economic thinking.

01/16/2010 -- Fundamentally, near-zero means that what people talk about with a win-win actually requires that some get less than they wanted. That is, the term 'sacrifice' has been applied from certain viewpoints. But, that scares us from looking at the thing correctly. The topic is simple from certain perspectives and not so from others (what isn't?). But, using 'sacrifice' is too strong. Why? That which those who take less lose, from a 'truer than not' perspective, is overwhelmed by the collective marginal, smaller gains of those who get more than they would not have gotten with zero sum (essentially, zilch). It's a foundational issue, folks. So, for now please ponder this: a financial heart, that is robust, run by those who have higher goals, and morals (oh, is that ethics?), involved in their operational viewpoint (monks, as an example, has not been used facetiously - marines, too, as disciplined and self-less).

12/29/2009 -- Thanks, Krugman, for agreeing with the concept; yes, we've just had 10 years of zero. Now, everyone ought to know why.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

12/08/2009 -- Consider current CEOs in relation to Paul. Not fair? Well, these guys/gals have set themselves upon some supposed plane that is above the rest of us.

11/30/2009 -- From 'Our basis' can grow a whole bunch.

11/08/2009 -- The gigantic chimera needs proper attention.

10/20/2009 -- Actually, we're dealing with less than zero.

10/16/2009 -- 201K <-- 401K --> 25601K, this denotes the current financial gaming.

10/13/2009 -- Always timely, a WSJ op-ed (Don't Get Hit by Crash at Finish Line) gives an appropriate message to the theme. Holding stock over time does not reduce risk of losing.

10/11/2009 -- Near-zero says that someone always has to suffer. The actuality? Fat cats only suffer monetarily and in pride. Those who lose do so viscerally (yes, as real as you can think). Business Week recently (BW) had an article that weighed in on the issue of India's progress being held back by some property matters. Recall, if you would, that Tata did not succeed in placing one plant where they wanted and then moved over 1000 miles elsewhere. BW described one of the controversies, which demonstrates near-zero. Oh yes, some involved say win-win. Now listen carefully, it's a situation where 5000 souls need to be moved off of land that they have farmed subsistence-wise for generations because it is wanted by some development for manufacturing purposes. Okay, it's estimated that 1000 souls may obtain jobs. Granted some little bit of monies is paid (remember, that it is pittance in relation to the big pockets of the developer), but who suffers here? The 4000, obviously. Too, the 1000, especially if they become enslaved which can (does) happen with industrialization. The whole story is never told. Why? Things that are considered too minor are thrown out, even though they weigh very large, comparatively, to those to whom the suffering is being imposed. Ah, the ways of capitalism cut deep. Yet, we, the people, are the ones supposedly with power (t-issue, of course). So, where is the humanistic capitalism that will show casino capitalism the door? In the US, the Constitution and Bill of Rights are supposed to afford such. Right?

10/08/2009 -- We all want win-win, says former President Clinton. Yes, but a true accounting would show that many times (probably always) that which makes these things near-zero is considered outside of the scope. That is, we push the costs to unfortunates who have no current say. And, in terms of the markets, we don't usually go around and collect the losses to see the longer term aspects. Why? Because the game is limited by time. The Quants make great use of an insight that we obtained from Markov, among other things. Yet, the longer term ramifications are exactly what an enlightened system (society) would consider. No, we forget the losers (large cardinality) and hear too much, ad nauseum (who cares what Buffett thinks), about the winners (very small cardinality).

Modified: 06/11/2014

Monday, October 5, 2009

On the behalf of

Moral: Wherein we consider that one may need to act on the behalf of another is an age-old situation in human affairs. Parents perform this role for their children. As we can see in many cases, a grown child may accept fiduciary duties for an aging parent.


All civilized people point to the 'golden rule' as a primary in this regard. This is true, as well, in economics in so far as ethics may apply. Trouble is that some want to use a metaphor more from what we think of nature and its dwarinistic ways.

So, there is the issue of caveat emptor. In financial affairs, one might think that some counselor is looking out for one's interest, however, in many cases, this is not the case. The financial guy is more into selling something that will line his or her pocket, not in really considering the client's interest.

Then, we have the Madoff type (thanks, WSJ). As said earlier, we need to update the label for this type of thing as Ponzi was so long ago (we now have Made-off).

On 10/2/2009, the USA Today reports that there are many schemes being uncovered all the time. That somewhat points to having something like Fisher's view about smelling a rat to be taught on a regular basis. That is, the nose is a talent to hone.

Other notions that apply here are accountability and being aware. On the former, whatever role one has ought to have some type of review from time to time. Just being prepared to give an accounting can be a good discipline in any endeavor. Trouble is, under what circumstance can such a report be warranted? Some business methods have gravitated toward yearly reviews for employee evaluation. Also, in terms of work, the efforts to determine earned value have some appeal. Yet, these are not easy problems; even doing assessment of fair value is not without problems.

In term of the latter (being aware), we have to consider how the counseling role evolves. The fact of the matter is that there are more things that we do not know than that we know, the hubris of the know-it-all aside. That is, no one is expert at everything. Using the medical experience as an example, all one has to do is try to talk to some doctor about anything that is outside of his or her specialty interest or training.

So, given the existence of things like innumeracy, one can see why the financial adviser community as grown to be so large. Let's forget, for the moment, the whole thing of whether financial engineering (despite MIT's involvement) is even a valid field and consider the need with a few questions that we'll consider in more details.

Does the need for the financial expert really exist? How do we know that the flim-flam of casino capitalism isn't the main culprit? If that is the case, ought not the brains (yeah, best-and-brightest) be looking at more robust ways and means?

Can all this be put in framework that allows the normal person to make reasonable decisions about financial affairs? Is it by necessity that the underlying instability is exploited by those who have been allowed to game the system?

Note: Just because we have the difficulties involved with determining value is no reason for those who can (like anyone close enough to the market's workings to extract regular pocket fillings -- hey, work under a vow of poverty people, that is, anyone dealing with other people's money) to exploit the situational issues arising from complexity and undecidability.


05/11/2012 -- Rick getting grief from quoting Marx.

05/17/2011 -- Golden sacks (leftmost mug of the rogue table), by Rolling Stone and Daily Ticker.

03/16/2011 -- On the rise of the professional politician (will there ever be the citizen polico? that is, those who do not salivate when a buck is passed beneath the nose) toward robber barony. The M & Ms are apropos. As well, need to bring in Schervish's viewpoint.

05/25/2010 -- Who will (or can) lead out of the morass?

01/06/2010 -- Poor Ben, getting grief and criticism.

01/03/2010 -- More news on Goldman Sachs as the uber example of 'not on the behalf' comes to fore regularly. It'll need to be a separate subject at some point. Thanks to McClatchy: Nov 1, 2009 & Jan 3, 2010 (update). Goldman has to respond, of course.

12/29/2009 -- Time calls Ben an uber-Nerd.

12/28/2009 -- Ben was named the Time Person of the Year. Nice. We can't call him 'King' as we saw with Alan's 'cult of personality' reign.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

12/09/2009 -- The Street loves Ben who loves 'em back: The Street utterly loves the Fed's largess, earning massive profits from trading unstable currencies, the carry trade (borrow short-term dollars near zero, buy longer-term assets abroad), and the high-margin process of transferring America's capital abroad.

11/08/2009 -- The gigantic chimera needs proper attention.

11/06/2009 -- There ain't no train, just like there ain't no free lunch (TANSTAAFL).

10/16/2009 -- 201K <-- 401K --> 25601K, this denotes the current financial gaming.

10/06/2009 -- Ah, yes, on the behalf of. It is clear that Alan and Ben act on our behalf, though one has to wonder what 'our' means as it sure is not the little guy. Finance, people, can be (probably ought to be) run as a non-profit affair. AND, the CEO (or whatever the titles at the top) would not make $1M and more! That is absurd. We have people who put their lives on the line for this country and its ideals for pittance. As said before, we really need a national service (Remarks 09/03/09) experience for the young'uns, especially for those of the privileged classes.

Modified: 05/11/2012