Monday, October 28, 2013


Moral: Wherein we look at what will change in the future.

Of course, Ben will go; someone new will come in. Janet? My question is, will that person know the importance of savings? Right now, we can find high-class pawners who get 200% or so for providing money to people who need it. And, people who generally pay it back. Why is this necessary? Bankers are not doing their business. Where the hell is the old banker who was the upright citizen of the community and who helped people with cash flow?

He has gone the way of Jamie, I'm afraid. Or, the way of the Jamies of the world. Which brings up the first point: Made-off's two-decade reign. Hey, King Alan was there. USA Today reminds us that some are still looking for a payout. Is JPMChase culpable? Them and who else? Made-off could not have pulled this off, for so long, without some one somewhere smelling the crap. You see, though, money filters the bad odor. The more money, the more perfume comes in.

But, that perfume is deadly, for several reasons.

Aside: In the King Alan post, note the Remark (yesterday) that considers how Ben broke the buck. USA Today also copied a Fools article about what not to do with your money. Buy into a CD's strangle'ment is one (as Ben will slap you silly). But, we ought to be able to get a good CD. Ben prevents this. Let's take $100 that we would put out as a pawn broker (high-class type). We could get back, in a year, around $200. Nice, right? Except, ill-begotten, for several reasons. What would Jamie pay us for our $100 (the last man standing)? Less than a buck. Coins, to be exact. How many? We would be lucky if it were more than a dime. Ben, Ben, what the hell economic world are you inhabiting?


We have another point. USA Today's Wolff talks about CEOs not knowing technology. Of course, we have all sorts of technology a lot of which is loved for its own sake or for its ability to be cool. Even Obama falls into the trap. Mind you, Obama is more than a CEO, yet the attributes of those realms are similar. Obama has a nation under his feet (what about the servant thing, of the people?). CEOs might be geographically spread, but their domain is different.

Still, those in the upper echelons expect others to know the details and nuances, as says Wolff. But, Wolff also quotes the Google guy as saying that Obama smugly (quote-unquote -- we'll get back to this as Obama might be used to represent the realm that needs more explanation - than has been done to date from a techno-fluent viewpoint, okay? ) asked about something. Yes, hubris abounds in the CEO realm, even among some in the tech world. Why wouldn't it with people laying money at their feet (like twit-ville's 1B plus evaluation, some think)?

Aside: King Alan bemoans the lack of rationality. But, don't throw in the towel, guy. Get a grasp of the situation with the proper approach which we'll help you lay out.

But, technology is like a ball and chain, to boot. Ah, let me explain this ad infinitum (I am old and have years under the belt of this stuff - hands on, mind bongle's, etc.). You see, Wolff uses clueless. However, in a sense, we are all clueless - it is quasi-empirically imperative that we are so. Hubris gets people to run amok (and, Facebook, et al, needs more scrutiny in this fashion) despite their failings. Hugh accumulations of money seem to smooth out rough spots, somewhat.

We'll have to point to 7oops7 discussion where the original impetus was related to an extremely challenging set of technologies going toward something real (not bits on a screen - mobile device - that mainly titillates - in many senses of that concept).


These are a couple of points motivated by recent articles. The tone seems to have changed in many cases so that necessary ideas can be expressed and that concepts can be discussed. That is, we have to get beyond rhetoric, grandstanding, and such.

Why? We have let several genies out of the bottle; handling these appropriately will be crucial. What genies? For one, letting the Internet loose (we'll have to do an exhaustive look at the associated billionaires - as in, those whose fortunes come from exploiting that which was let loose) without sufficient thought to consequences. The besieged DOD is one example (tsk, tsk).

Remarks: Modified: 10/31/2013

10/30/2013 -- USA Today, recently, had an op-ed piece about the website issues and how expectations were too high, partly due to inordinate pushing by the political agenda. They use the experience of South Park (which missed an air time deadline) and GTA (release being delayed). But, there are many others (just recall all of the delays that we have seen, over the years, with MS). Nowadays, some things are pushed out with the user community expected to adapt (but, the whole thing of requirements is another issue). The fact, though, is that computation has a shaky basis that we work hard to keep stabilized. For one thing, trying to do complete testing (proving) is prohibitively expensive (if not downright not possible) due to inherent complexity. But, we can all learn to live within the limitations; also, we need to know when limits are coming into play (safety nets, for example, come about from knowing these). For one thing, phasing in can be a good strategy; too, hard dates need to be met way before they occur (as in, you fuel the plane long before the scheduled take off time). In general, it's nice to see these considerations being presented in a public forum so that we can have a discussion that removes us from finger-pointing and other worthless stances. Hardness (of problems) is what it is; we need to respect that. At that rarefied level of managers, saying that something should be does not get the thing done (those at such heights are "clueless" of more than technology's details).

10/31/2013 -- CNBC article on the aerated market situation.

10/31/2013 -- Finally, a voice of reason. Just the headline tells the tale: Tapering without tears - how to end QE3 - by Ronald McKinnon, WSJ, 10/28/2013 (PDF is at Stanford - the WSJ version is locked down for subscribers only). Essentially, going to zero was an error. Thanks, Ben. There are too many negative effects. Besides, trying to control unemployment with that little knob (which Ben dialed to the maximum, early on -- see "out of bullets" discussions from 2008/9 -- which, by the way, was untrue as Ben creatively ventured into new areas, taking us down the perdition path). Actually, what Ben is trying to do is push string (try that for ringing a bell -- push needs to be changed to pull). McKinnon uses 'fetish' in relation to the monetary illusion related to interest rates (that, essentially, have been used the past few years to slap the savers silly).

Monday, October 21, 2013

Map and territory

Moral: Wherein we consider these two concepts, further.

Why? Alan Greenspan's (King Alan's) new book (soon to be released) uses them in the title. Nice. See pre-Review at WSJ.


Alan (the awakening?)
from WSJ review
We first broached the subject in 2007, under the auspices of 7oops7: Territory and map. Essentially, the problem causes lots of oops. You know what? It's not a simple little thing, rather the subject deals with the basis of our knowledge and effectiveness (has from the get-go, actually the topic allows to address broad-ranging issues that are of great depth - you see, the modern ilk with its computational frameworks (and money searching) tries to normalize, reduce to nothing the related complicated set of issues).

That centrality is why the next usage was under the umbrella of Truth Engineering: Territory, map, truth. Our effectiveness principally encourages hubris, it would seem. But, folks (especially the rich ones), there is more to the reality (if you don't know of near-zero, it's time to discuss and learn). Notice, too, slogans (Joel Orr is the source for one of these) can apply.


Now, in the context of FEDaerated, we have brought up the subject a time or two. The intent is to keep the discussion going, due to its importance (the whole issue is further troubled by computation, which is a bane of the worse sort).

Here are the posts, in reverse order.
  • To computational hell and back (May 2013) -- Depicting a type of hell that results from several things, but two of the largest contributors are: over-reliance on systems to the extent that the map becomes the territory, inordinate chasing after the buck causing shortcuts to become the norm for systems.  
  • Money and value (Jan 2010) -- Fiat money is an issue. Human nature is problematic. Where is the glimmer of sanity with regard to money (which could be a simple matter with the proper viewpoints allowed to surface)?  
  • Year-end recap (Dec 2009) -- One has to ask: is it the best-and-brightest set, and those with numeracy abilities, that is more prone to the idiocy of map-territory mashing? Yes, Harvard, come talk to me about that. 
  • Why not? (Sep 2009) -- Dealing with fundamental issues that some might see as a closed case. Ah, is that not hubris talking? A little while ago, risk managers were making claims about their prowess. Not long after, the mess started from which Main Street has not recovered, as of yet. Were lessons learned?     

Now, at the level at which Alan reigned, we see politics as being more important than reality (Oh, polls are supposed to be as strong as sensor input? By the way, markets have the same fallibility, though their usefulness has been demonstrated (without proper delineation of the limits that are necessary) somewhat.). We'll have to look at that in depth.

So, I'm looking forward to reading more about Alan's side of things. Of course, it can be fun to run after money, and big bucks. But, that is not the smart thing (yes, the Warrens, et al, notwithstanding) by necessity.

As I've said before, the whole financial thing ought to be run by people who are money-driven (just like the military is not run by the power-driven) and for whom morals are more important than big pockets. And, we can do this, despite the fact that those who lean to fat-catted'ness have run things (amok'ly) from the beginning.

Remarks: Modified: 10/27/2013

10/22/2013 -- Three articles of note: Interview with Druckenmiller (hearing the 0.001% talk about ill-begotten gains, not his, of course), HFT Algorithms (on bragging about short holding times), Barbarians at the Gateways (contrite?, but without mea culpas).

10/27/2013 --Ben has sacked the savers for years now, slapping them silly. Why? A WSJ article looked at high-class pawnshops a couple of days ago. These fill the need for people who need money but cannot get it from the banks (stupidity there, too). So, they use collateral for a loan and pay high interest. How high? Some pay over 200%, per year. What is Ben paying or having banks pay their savers (customers)? Way less than 1%. That is the best example of being out of whack with economic realities that one could ask for. Yet, does the Fed see? Why is the interest low? To push savers toward higher risk? To appease the gaming crowd (most likely this, as these are big-pocketed folks)? To help people afford housing (on someone else's back?)? ... Janet's take on this is unknown, but she has to know that they're looking like idiots. You know what? Most of those loans are paid, even with the high interest. And, still, Ben slaps the savers (King Alan mentioned saving, of late). We ought to ask the Fed, what happened to prudence or does it like to reward profligacy?

Monday, October 14, 2013

Nobel Prize

Moral: Wherein we stop to pay attention to the winners of the Prize in economics.

To be truthful, the first thing noticed was a feed from The Atlantic. Derek Thompson wrote with this title: This Year's Nobel Prize in Economics was a Big, Fat Critique of Financial Media. Derke says, and I quote, "Three economists won for showing it's impossible to predict short-term stock prices." Derek goes on to poke fun at the talking heads who spend an ungodly amount of time and energy in hyping a chimerical situation (Investors I).

Well, we had a similar reaction from Niels Bohr decades ago. One could "win" only with insider information or other types of rigging.

But, it's nice to see how these three views come together. Not so nicely in the eyes of some (see comments at Marginal Revolution, such as the post of Cowen and Tabbarok). Tabbarok tries to explain Hansen's contribution. We'll not look at that, for now, but we'll get back to these fellows'work under the general guise of being more technical.


At the page provided by The Atlantic, see the comment by Alpha Wolf for an overview of the situation. From a quick read, I think that AW has a good assessment with with I would agree.


Meanwhile, we'll get back with the details of this since it's so fresh. Too, Hansen's work is right along the line of those things that can lead us astray (see Transitions). Perhaps, I'll get a chance to be more specific. The old argument is that economics (even when augmented with behavioral views, neuro-economics, or what have you) cannot be like engineering with its domains resting upon the more hard of the sciences. Now, having said that, those empirical approaches, like Hansen's, are going to be important. Too, we'll have to topsy-turvy things so as to bring in a more full model of humans and their glorious natures. Such will take inspired intuition and modeling the likes of which we haven't really seen yet. Works, like these guys, are a start. It's nice to see the work offered up for public viewing.

Remarks: Modified: 10/15/2013

10/14/2013 -- Nice, an overview of part of Hansen's work (with an example) for the general audience: Jeff Leek.

10/15/2013 -- Minsky comes to mind when thinking of markets and churn (like fog, what is it being used to hide?). We could propose a hierarchy, perhaps, starting with savers (prudent ones looking for a future payment - as in, not expecting the cheese to be moved nor to be eaten by others), investors/traders (ranging from low-risk conservatism to just below those gaming the system), speculators (again, ranges: prudent hedging, collaring, etc.), gamesters (going for broke, knowing that the prudent will bail them out), and, then, idiots. --- Aside: Jamie used "moral" while talking about his bank. Lesson to learn, therein?

Friday, October 11, 2013

New game in town?

Moral: Wherein we pause while the transition unfolds as we have to await Janet's imprint.

Ben will be missed. But, it's a few months until he goes, so he'll still have the ability to sway matters.

Our prime concern is that he so willingly slapped the savers (from silly onward) in his effort to bolster those things that are called markets but, in reality, are chimerical game settings (or, if you would, ca-pital-sino). It took awhile, but about a year ago, things finally inflated to where new heights were seen almost daily. Yes, the grand old illusion came back.

How could this be called an illusion? Well, go talk to Main streeters, for instance. But, that's a punt. Talk to people, like myself. I'm as trained as Ben albeit I focused my energies on different problem sets. Given that I'm not in academia is not a bad mark, from where I sit. Actually, I'm allowed more freedom of thought than any of those institutionalized minds.

So, to answer the question: how is this all an illusion? There are several ways to characterize the thing. Firstly, I don't hear people talking near-zero (perhaps, we'll get this with Janet once she spreads her wings). You see, folks, those who have been enriched (always) get their takings off the backs of others (not arguing Marxism, but just go around and talk to folks doing the real work - let me be a guide - I'm eminently qualified to do so when you consider the wide range of jobs that I've had and environments within which I worked - to wit, Bachelors and Masters when in my 30s (prior to that, many, many jobs) after which I sampled life with the egg heads). Secondly, there have been trappings put upon the "market" such that it is far removed from being effective. How is this? Crap, abstraction-philos have had their way. Why? Money, power, ... From where I sit, I can show the shaky basis, the fact of which is too hard to see when you're playing with the jerks - which the Fed does, by the way -- all sorts of trappings of the rich (don't get hung up in the mahogany, Janet).

Aside: There's this thing called the C-suite where like knows like. Hah! I've seen members; too, I've seen those who got there as they progressed through the hoops (working since I was a kid and I'm 71).

Thirdly, carrying on from earlier, those things that the egg heads (though, endowments need to be re-considered in a newer set of lights and measures) think of have been enabled (fostered) by computational progress (by real engineering, by the way). Unfortunately, the lack of a sandbox is more than problematic. What we have is analogous to a plane loaded with people being experimented on in real-time while in the air.

Aside: A 737 went into the drink from just that type of thing where the ground crew was having the pilot run through some tests that made things worse when they ought to have landed while there was sufficient control. Those in the know will recall this incident.

Fourthly, along with the thinking and the computational resource improvements, there is a belief in mathematics that is unwarranted'ly held. How did this come about? Application focus, essentially, and an inordinate reliance on regression to the mean. Oh, we can go on about this at length, after we get some agreement about how not to use operationalist'ic urging (or, how to be more mature while succumbing to the sirens of money/wealth/greed/, et al.

Fifthly, ..., let's quit this for awhile.


We have to let Janet find her sea-legs, get her bearings, and any other number of types of things that a new person ought to be honeymooned for when starting a new venture. That is easy enough.


The focus here could be back to the Cosmology series. Too, we'll propose and discuss things not done.
  • Why did Ben have to break 1%? There is no place where those who need a small income can go. No, he actually is drawing from these folks in order to lay flowers in the path of the idiotic fat cats (who, by the way, got the crap to hit the fan -- sheesh, Ben). 
  • Given the dire straits into which Ben has forced the saver (note, please, that the loss did not come about for these types until there was an accumulative negative payout due to declining rates over the past few years) to go toward risk (as if someone will bail these people out for following the idiots) as that becomes the only choice (only those who cannot hold on for the longer term while awaiting for the economic brains to wise up). At any point along that route we've been on since 2008, Ben could have awakened to the reality of the set of people that he's tortured, willingly. 
  • Tapering? The sillies got all anxious. Ben has been of so accommodating the past few years. For what? Yes, the fat cats love it. But, most are being taken to the cleaners. One example would be those who are leaving the job market due to its warped nature nowadays. 
  • ...
In 2009, we posted A New Day, twice (Truth Engineering, 7oops7) plus More on New Day. We will have to take a re-look at the years since then. Many things, that could have been, did not come to be (we could have nationalized the stupid banks - the mess would not be any worse than it is now, folks). Jobs programs, training (several things here were not done). 

Janet's advent, "hope"fully, will be as expectant as then. How many months for a honeymoon? 

... mostly complete, except for editing, and links ...

Remarks: Modified: 10/26/2013

10/26/2013 -- Ben has sacked the savers for years now, slapping them silly. Why? A WSJ article looked at high-class pawnshops a couple of days ago. These fill the need for people who need money but cannot get it from the banks (stupidity there, too). So, they use collateral for a loan and pay high interest. How high? Some pay over 200%, per year. What is Ben paying or having banks pay their savers (customers)? Way less than 1%. That is the best example of being out of whack with economic realities that one could ask for. Yet, does the Fed see? Why is the interest low? To push savers toward higher risk? To appease the gaming crowd (most likely this, as these are big-pocketed folks)? To help people afford housing (on someone else's back?)? ... Janet's take on this is unknown, but she has to know that they're looking like idiots. You know what? Most of those loans are paid, even with the high interest. And, still, Ben slaps the savers (King Alan mentioned saving, of late). We ought to ask the Fed, what happened to prudence?

Thursday, October 3, 2013

Best and brightest of what?

Moral: Wherein we consider, just who are the best and brightest and why are they so important?

It has been awhile since I've seen an opinion, such as this one from the head of CME Group, but it does motivate a re-look at this subject. The op-ed is in the WSJ and was written by Mr. Duffy of CME.
  • A new financial crisis: Keeping the best and brightest - Mr. Duffy argues the opposite position (see disclosure, next) from the one of this blogger. Nice that he does so. Since the link from the page on the CME's site to the WSJ article goes to a page that is locked down (requiring a subscription), I have provided a couple of images (that are photos taken from the print edition) below with commentary. 

Firstly, though, a recap, and disclosure. The first use of "best and brightest" was May 8, 2009. This was a reaction from hearing of big bonuses in times when things were dire. Why the bonuses? "Because, if we don't have the proper remuneration," said the Wall Street crowd, "we'll lose the best and brightest." Please note that a major theme for the blogger, in those times, dealt with the fiction in finance (truth engineering context - and, the inspiration for that concept was not Karl Marx' fictitious capital).

One main issue dealt (and still deals) with the gall of naming something financial engineering whose scientific basis has not been identified. As we come forward in time (all the while, the Wall Street, and its ilk, were being baby-glove'd by the Fed), several notions come to fore. For one, that talents differ among folks is as old as the hills leading to all sorts of problematic situations (not the least of which is the Lord/Serf dynamic, especially as demonstrated by the new phenomenon of CEO and more -- Wall Street type as serf (do you really see these as servants? - more below, due to Duffy).

For another, just because someone is facile enough to propose, and has the ability to dispose, of gnarly systems (I am prepared to discuss this at length, in depth, and to any degree necessary - both technically and philosophically - Out of control, May 7, 2010) does not give them the right to run the risks (despite the existence - perceived acceptance - of privatized gain and socialized loss). Of course, in the older days, I blamed the old fat cat who led the young, innocent best-and-brightest down the primrose path to our (and, perhaps, in some cases, their) perdition).

You see, the old fat cats could not handle the technical aspects (again, I'm a 70+ technically competent who can handle any of the discussions, at any level - at the same time, reminding all concerned of the larger issues that seem to fade out of the picture due to various things, of which the old anti-virtues (err, vice, but that relates to a squad?) loom prominent) so they get the younger set to run rampant (I've seen this many, many times while living with the results of emerging prowess - essentially, an advanced technology worldview). But, it was not just the fat cats who are at fault. Culprits abound . Some of this has been resolved; a lot has not.

WSJ op-ed
Now, to Duffy's op-ed. Notice, how WSJ's editorial staff (image) emphasized that there has been a decline in Harvard graduates (Duffy points to an article about MBAs; what about the undergraduates?) going to finance. There was a similar reduction found with Yale's and Princeton's graduates.

But, let's remind ourselves of something. We can be more specific, as required, but there had been an earlier movement around the time of the tech boom and bust (late 1990s to early 2000s) from other fields to finance. The blogger mentioned that he had wondered why (not interested enough to really look into the matter -- Nov 23, 2008) finance could be so attractive (if done correctly, it's fairly boring, folks). Well, it turns out that the finance types were given almost carte blanche (best and brightest gone wild) to play with their models. Why? There are all sorts of factors involved here. But, the prime one is that money does talk.

We'll use Duffy's words, though, to frame the issue. He says that "institutional money" does not exist. Why? Of course, ultimately, money is traced back to individuals who have entrusted finance types to care for their little accumulation meant for "savings, retirement or education" (their's, as in, Secured payment, Nov 28, 2012, not the finance guy's/gal's, okay). Duffy says that Wall Streeters can easily forget about Main Streeters (say what? Fiduciary duty - Oct 30, 2008)). From there, Duffy goes into finance's importance.

Yes, but he says that only "a few bad actors" were the culprits behind the latest downturn. We need to remind him that banks froze because they knew that their ilk wasn't trustworthy. How can these types forget those things, so easily - it's like they took their balls home, wouldn't play the game, due to knowing that the whole things was crookedly configured?

Duffy, of course, his firm deals with these matters, talks as if creativity is essential to something that ought to be as mundane as paving a street (by the way, I've been there - it's hard work that ought to receive more compensation than it does). We can characterize this thing many different ways, but, folks, the utility aspect of finance has been put to the background (by the way, not that utilities are angels - quite the contrary).

 ... much more could be said ...

But, let's go to the sweet ending. Duffy uses integrity with respect to Wall Street's business. Imagine that! Yes, Wall Street ought to think of helping people and influencing the world. One would hope that the influence would be for the better; Duffy didn't say. But, how does one get from the supposed reality of the situation where "help" seems to be more involved with picking pockets than not? As in, from the pockets of the hapless to that of the few (Jan 15, 2010). More recently,

All in all, it was nice to see the WSJ print this. Why tie it down so that people cannot see it in order to foster the necessary discourse?

We need Wall Street'ers to wake up and smell the reality related to their ilk. But, it's like the old adage of working oneself out of a job. As it works now, the whole thing, by necessity, runs toward a continuing of the ca-pital-sino. We cannot stop (nod to William F. Buckley), but we can improve, given the proper approach. Can anyone point out improvement activity (to the benefit of the commonweal, not of particular pockets) that occurs on a regular basis?

Again, let's thank Mr Duffy for starting the conversation.


01/06/2015 --  Best and brightest3rd most read (7'oops7),  1st most read (Tru'eng)7th most read (FEDaerated)

01/08/2014 -- We're patiently waiting for Janet to get her feet wet. At some point, she'll get out of Ben's shadow. Hopefully, it will be soon for the savers who are being slapped silly by the day.

10/21/2013 -- Alan has a book coming out. Ben still slaps savers silly; a new day is coming.

10/03/2013 -- Oh, yes, two posts (Fed-aerated and 7oops7), but no mention of savers being slapped silly. Notice in the savers post that an image says no bullets left. Ah, yes, Ben panicked and used up his ammo. But, has he not shown all of us (and the world) that there was a whole lot of other maneuvering possible? But, too, does he know that he's cowboy'ed us into a corner?

Modified: 01/06/2015